This article first appeared on GuruFocus .
Release Date: November 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
Group revenues increased by 12.3% to over 1 billion NOK, with constant currency growth of 15.2% and like-for-like growth of 14.6%.
-
EBITDA grew 38.5% to 283.5 million NOK, driven by strong revenue growth, improved gross margin, and tight cost control.
-
Gross margin improved by 0.5 percentage points to 62.3%, with Hemtex margin up 1.4 percentage points to 63.4%.
-
OpEx decreased by 0.6% while revenues grew, improving the OpEx-to-sales ratio to 46.2% from 51.9% last year.
-
Warehouse operations are stable and more efficient, with productivity up nearly 30% compared to Q3 last year, supporting product availability and sales.
-
Cash flow from operations was strong at 261.8 million NOK, enabling debt reduction and improved gearing ratio to 1.6x from 1.96x.
-
The board decided to pay a half-year dividend of 2.75 NOK per share, up from 2.50 NOK last year, reflecting strong financial performance.
-
Store portfolio development continues with a pipeline of 17 store projects and five new store openings, supporting future growth.
Negative Points
-
Group online revenues declined by 4.1% in constant currency, with Hemtex online down 10.6%, partly due to strong comparison base from last year's store availability issues.
-
Gross margin was positively impacted by favorable currency effects, including a temporary hedge benefit in Hemtex that will normalize, potentially pressuring future margins.
-
OpEx included a currency tailwind of approximately 10.9 million NOK, which may not recur, and underlying cost development showed a 6% increase when adjusted for non-recurring items and currency.
-
The Norwegian warehouse is only 65% subleased, with full rental costs still incurred, and a long-term solution is pending, which could continue to weigh on costs.
-
The European online pilot in Germany generated only 1.1 million NOK in revenues against 3 million NOK in costs, indicating ongoing investment with uncertain returns.
-
The company did not provide any trading update for October or Black Week, leaving near-term performance uncertain.
-
System modernization is nearing completion but still requires testing and development, with potential for disruptions during implementation.
-
Freight rates increased in the first half of 2026 and are expected to impact cost of goods sold in Q4 and into 2027, which could pressure margins.
Q & A Highlights
Q: Can you comment on the temporary hedge effect for Hemtex and the impact on the gross margin uplift this quarter? A: CFO Max Keegan explained that Hemtex benefited from a favorable historical hedged SEK/NOK effect reflected in the cost of goods sold, which has been in effect during 2026. This supported the reported margin this quarter and will also support the margin going forward, but the effect is temporary and will gradually normalize as more recent exchange rates feed into COGS. The company did not quantify the effect.
Q: OpEx to sales ratio came in strong. What drove this sharp decline from last year, and is this a normal level going forward? A: The CFO attributed the improvement to a combination of strong revenue growth (12.3% reported, 15.2% in constant currency), genuine operational efficiency gains this quarter, a currency impact of close to NOK 11 million on OpEx, and approximately NOK 50 million of non-recurring warehouse-related items in Q3 last year. The 46.2% ratio compares with 51.9% last year and 46.5% in Q3 2024, so it is closer to the historical normal level.
Q: What has changed operationally in the warehouse compared to last year? A: CEO Marianne Fulford said the warehouse has moved from a transition and ramp-up phase to efficiency and higher productivity in 2026, putting the company in a totally different place operationally. The CFO added that the warehouse was close to 30% more efficient in Q3 compared with last year, following roughly 25% efficiency gains in Q2, and is even more efficient than in 2024.
Q: Will in-store product availability in Q4 be impacted by the point-of-sales implementation as it was last year? A: The CEO stated that no disruptions are expected in stores regarding systems or supply of goods in the fourth quarter. New point-of-sale systems have been rolled out in all stores before peak season, and implementation activity is deliberately reduced in Q4 to keep operations stable through Christmas.
Q: Freight rates rose in the first half of 2026 and stabilized in Q3. Have the higher freight costs already passed through COGS or will they mainly hit Q4 and the first half of 2027? A: The CFO confirmed that the increased freight rates are in the cost of goods sold for goods to be sold in Q4 and going forward. Rates have since declined or stabilized, and the company is comfortable with the level. Management reiterated its financial objective of delivering margins in line with the past 10 years.
Q: Can you give an indication of German online revenues and marketing spend so far, and what milestones would trigger scaling up investments in 2027 versus keeping it at pilot level? A: The CFO reported approximately NOK 1.1 million in revenues and NOK 3 million in costs this quarter, primarily marketing spend plus some last-mile distribution costs, in line with the business case and plan. The CEO stressed the European online expansion is a side pilot to the core business, with limited investment and financial risk, and that the company will take the time necessary to learn before scaling.
Q: What must be in place for you to go ahead with a broader rollout in Germany, and what timeline do you see? A: The CEO said Hemtex.de is running as an online pilot and the company plans to open the .com site before year-end. On physical stores in Germany, she said the answer is "I don't know" the company will spend time learning first, and any geographic expansion with physical stores outside the Nordics is a matter of years rather than months.
Q: You have added three new stores since Q2. Can you comment on how the new store pipeline is developing? A: The CEO noted that the timing of which projects and openings land in a given quarter is fairly random, and Q3 activity was low. Going forward the pipeline is substantial: contracts are signed for three new stores and six additional store projects in Norway for Kid, and two new stores plus 11 store projects in Sweden for Hemtex 17 store projects and five new openings across the group. Project activity should be roughly at the same level as before, with hopes of more Hemtex store openings in Sweden.
Q: Are you satisfied with the underlying cost development after adjusting for the extra Nordic logistics costs last year and the FX tailwind this quarter? Should this underlying development continue? A: The CFO said the company is satisfied. Q3 last year was hit by peak warehouse inefficiency and less favorable distribution, including e-commerce deliveries sent directly to customers rather than through the store network. Adjusting last year's OpEx for the NOK 18 million reported and for currency effects shows underlying growth closer to 6%. He cautioned that the additional Norwegian warehouse rental cost remains in OpEx until the premises situation is concluded subleases currently cover about 65% while the company carries 100% of the cost, with sublease income booked in other operating income.
Q: How has trading in October and into Black Week been relative to the Q3 run rate, and has the online decline started to normalize? A: The CEO declined to comment, saying the company cannot say anything about October trading and investors should wait for the Q4 results. Context from the quarter: group online revenues fell 4.1% in constant currency against a particularly strong comparison, with online up 26.3% in Q3 last year when limited store availability shifted demand online.
Q: Can you give more insight into the system modernization work and what to expect going forward? A: The CEO said the multi-year program is at its end: new point-of-sale systems are rolled out in all stores before peak season, new employee systems are implemented, and supply chain and logistics systems were modernized last year. Q4 will involve next to nothing except testing, with focus on peak season, and the final part is planned for completion in 2027. She noted system modernization never truly ends, but the company now has a good platform to build on.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
