This article first appeared on GuruFocus .
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Net Revenue:Decreased by 1.8% to 243.3 million SEK.
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Operating Margin:Declined to 3.3% from 8% in the same quarter last year.
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Operating Profit:8 million SEK, down from 19.9 million SEK the previous year.
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Gross Margin:Improved to 55.3%, up 3.7 percentage points from 51.6% a year ago.
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Own Brand Share:Increased to 62.7%, up 12.6 percentage points from 50.1% last year.
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Return Rate:Increased to 27.3% from 24.8% last year.
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Marketing Costs:Increased to 27 million SEK from 24 million SEK last year.
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Admin and Other Operating Costs:Increased to 69 million SEK from 53 million SEK last year.
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Operating Cash Flow:Net cash flow from operating activities was minus 26 million SEK, compared to minus 13 million SEK last year.
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Equity Ratio:42.9%.
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Net Cash Position:215 million SEK.
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Release Date: April 28, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Nelly Group AB ( FRA:CD20 ) achieved a gross margin improvement to 55.3%, up 3.7 percentage points from the previous year.
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Sales from Nelly's own brands increased to 62.7%, up 12.6 percentage points year on year.
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The company's expansion in Germany contributed positively to the active customer base growth.
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Nelly Group AB maintained a healthy balance sheet with an equity ratio of 42.9% and a net cash position of 215 million SEK.
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The flagship store in Copenhagen is generating valuable insights into the Danish market and customer behavior.
Negative Points
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Net revenue decreased by 1.8% to 243.3 million SEK, with a significant drop in operating margin from 8% to 3.3%.
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The company faced challenges in attracting new customers, with a decline in online traffic and conversion rates.
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Return rates increased to 27.3%, driven by current fashion trends and higher returns in the German market.
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Marketing costs rose due to increased spending on paid advertising, impacting the overall cost base.
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The assortment failed to resonate with customers, particularly in key categories like tops and knits, leading to lower sales.
Q & A Highlights
Q: In the CEO letter, investments in long-term development were mentioned. Can you talk more about what kind of investments you made and if you are planning to continue to make investments throughout the year? A: Yes, of course. We have made significant investments, particularly in our Copenhagen store, which has attracted interest from external brands for joint activations. Additionally, we've added new roles in the assortment team and brand-building areas to deepen expertise and support our Nelly brand. These investments will continue to be part of our cost base going forward. - Helena Karlinder Astlundh, CEO
Q: Despite increased marketing spend, both traffic and average basket size declined. What steps are you taking to mitigate this negative trend going forward? A: The key to mitigating this trend is strengthening our assortment. Our customer knows exactly what she wants, so we need to ensure our product offerings are compelling and aligned with customer preferences. - Helena Karlinder Astlundh, CEO
Q: Return rates tick higher while own brands increased. Do you see higher return rates from your own brands as well? A: Generally, we see lower return rates in our own assortment. The increase in return rates is more driven by certain categories and trends rather than the mix between own and external brands. - Helena Karlinder Astlundh, CEO
Q: Has the trend of consumers being price-sensitive and drawn to more value-priced items accelerated, or is the consumer feeling more confident? A: The trend of price-conscious consumers continues. Consumers are carefully evaluating their options, and while they are still shopping, they remain discerning and price-sensitive. - Helena Karlinder Astlundh, CEO
Q: Could you provide an update on your investment in Germany and whether it is progressing according to plan? A: Our investment in Germany is progressing according to plan. We are expanding carefully and step-by-step, making changes to our site and investing more in paid advertising while ensuring it doesn't detract from our focus on the Nordics. - Helena Karlinder Astlundh, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
