This article first appeared on GuruFocus .
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Sales Development:Overall sales declined 12% in Q2, breaking a streak of 25 consecutive quarters of growth; first half-year sales slightly behind last year.
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Own E-commerce Growth:Own e-commerce sales grew 17% in the quarter, with apparel within e-commerce up 28%.
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Gross Margin:Gross margin improved by 5.6 percentage points, driven by reduced discounts, favorable FX effects, and a favorable channel mix.
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Operating Profit:Operating profit increased 11% versus last year, despite the sales decline.
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First Half-Year Profit:The company reported its highest first half-year profit in its history.
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Same-Store Sales:Retail comparable store sales declined 5%, with traffic dropping during the summer.
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Junior Collection Growth:Junior collection sales grew 53% versus last year.
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Footwear Performance:Footwear is declining overall, but growing in own e-commerce and Sweden; still profitable, with rolling 12-month sales around SEK70-80 million.
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Net Debt:Net debt decreased significantly during the quarter.
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Working Capital:Working capital remained stable, flat versus last year at around 20-21% of gross sales.
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Equity/Solidity:Solidity dropped slightly by 0.5 percentage points versus last year but remains at high levels.
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Release Date: August 14, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Own e-commerce sales grew 17% in Q2, with apparel up 28%, and profitability and gross margins in this channel remain very strong.
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Gross margin improved by 5.6 percentage points, driven by reduced discounts, favorable currency effects, and a higher share of high-margin e-commerce sales.
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Operating profit increased 11% year-over-year despite lower sales, and the first half of 2026 was the most profitable in the company's history.
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The junior collection grew 53% year-over-year, and the new golf category launched with strong sell-through, showing the brand's ability to expand into new segments.
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Net debt decreased significantly, and working capital remained stable at around 20-21% of rolling 12-month sales, reflecting solid financial management.
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Return on ad spend for performance marketing reached record highs, up 34-35% year-over-year, indicating strong potential for further e-commerce investment.
Negative Points
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Total sales declined 12% in Q2, breaking a streak of 25 consecutive quarters of growth, and first-half sales were slightly below last year.
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Wholesale sales were a major disappointment, with a weaker order book and early deliveries impacting performance, and the company is not satisfied with the underlying trend.
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Footwear sales continued to decline, with significant drops in the Netherlands and Belgium, despite growth in own e-commerce and Sweden.
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Retail comparable store sales fell 5%, with traffic dropping during the summer, and the company is struggling to grow in Germany, where the consumer outlook remains pessimistic.
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The company's growth is overly dependent on a few large wholesale accounts, and a broader base of partners is needed to reduce vulnerability to individual account decisions.
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The company is not on track to meet its 10% sales growth target, and management acknowledges that growth needs to improve across all channels.
Q & A Highlights
Q: Are you satisfied with the underlying development in the Wholesale segment, evaluating the first half of the year, disregarding the timing effects between Q1 and Q2? A: CEO Henrik Bunge stated that the Wholesale performance in the first half is a "big disappointment," with top-line sales down 1% to 1.4% against a target of 10% growth. He attributed the shortfall to a weaker pre-order book taken in August 2025, which was impacted by reduced purchasing from one or two large key accounts, making it difficult to catch up through reorders and e-commerce.
Q: Is the sales decline a widespread issue or isolated to a few accounts, and how does this compare to the market and your market share development? A: CEO Henrik Bunge clarified that the decline is isolated to a few large accounts, such as Zalando, Boozt, XXL, and Stadium. He noted that sell-through data and own e-commerce performance are strong, indicating the brand is healthy. The core issue is the initial poor order book, and the company needs to strengthen relationships with key Wholesale partners to drive growth across all of them.
Q: How should we view the growth trajectory and the balance between profitability and growth targets, given the various moving parts? A: CEO Henrik Bunge acknowledged that while profitability is well above the minimum 10% target, sales are flat against a 10% growth goal. He emphasized that the company's primary challenge is not profitability but accelerating growth. The focus is on generating more growth in all channels, including e-commerce and Wholesale, to meet financial targets.
Q: Can you break down the drivers behind the strong gross margin improvement in Q2? A: CEO Henrik Bunge detailed that the 5.6% gross margin increase is driven by three roughly equal factors: channel mix (with own e-commerce at 77% gross margin taking a larger share), reduced discounts within Wholesale due to lower sales from high-discount key accounts, and favorable currency effects from buying in USD and selling in EUR/SEK.
Q: Given the strong profitability, are you planning to invest more in growth, particularly in direct-to-consumer channels, and are you happy with the current marketing yield? A: CEO Henrik Bunge indicated that return on ad spend is at record highs, suggesting room for increased investment in performance marketing to drive e-commerce further. However, he stressed a balanced approach: investing in both e-commerce and brand-building activities to support Wholesale partners, ensuring they can sell products at better margins.
Q: What is the key challenge in driving growth with Wholesale customers, and what is the strategy to overcome it? A: CEO Henrik Bunge stated that the main challenge is the over-reliance on a few large customers. The strategy is to broaden the base of strong Wholesale partners through better key-account management to reduce dependency. He emphasized that the product proposition is strong, and the focus is on building close partnerships to help partners drive sell-through.
Q: What is the progress in the German market, and what are the focus areas for growth there? A: CEO Henrik Bunge explained that Germany is a three-pronged approach: growing Zalando sales to German consumers (which is performing well), improving own e-commerce (currently flat), and building a Wholesale base starting in Hamburg. A new Country Manager has been hired to focus on Wholesale. He noted that the German consumer outlook remains pessimistic compared to Scandinavia, but the company's small size should still allow for growth.
Q: What are the drivers behind the impressive e-commerce growth, and do you still have pricing power in this channel? A: CEO Henrik Bunge highlighted that e-commerce is growing strongly with increased sales, gross margins, and profitability. Return on ad spend is up 34-35% year-over-year, indicating strong consumer demand. He expressed pride in the e-commerce performance but reiterated that the company aims to drive growth across all channels, not just online, to achieve the 10% growth target.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
