This article first appeared on GuruFocus .
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Net Revenue:SEK346.3 million, down from SEK361.7 million in the same quarter last year.
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Operating Margin:9.3%, compared to 15.3% in the same quarter last year.
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Operating Profit:SEK32.3 million, down from SEK55.4 million in Q2 last year.
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Gross Margin:53.2%, down from 54.5% in the same quarter last year.
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Own-Brand Share:64.1%, up from 54.8% last year.
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Return Rate:Improved to 27.7% from 28.4% in the same quarter last year.
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Operating Cash Flow:SEK99 million, compared with SEK104.1 million last year.
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Cash Balance:SEK300.6 million at the end of June, up 15.8% from SEK259.6 million a year ago.
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Inventory:SEK217.6 million at the end of June, up from SEK172 million a year ago.
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Equity Ratio:42.7%, up from 32.6% last year.
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Release Date: July 15, 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 ) maintained profitability in the first half of 2026 despite softer sales, indicating a stronger foundation than in the past.
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The company's own-brand share increased significantly to 64.1% in Q2, up from 54.8% last year, contributing positively to the gross margin.
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Return rates improved to 27.7% in Q2 from 28.4% in the same quarter last year, driven by a favorable product mix.
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The customer base in Germany showed growth, indicating early traction in the market.
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Nelly Group AB ( FRA:CD20 ) has a strong cash position, with a cash balance of SEK300.6 million at the end of June, up 15.8% from the previous year.
Negative Points
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Net revenue decreased by 4.3% in Q2, with a decline in the Nordic markets due to assortment precision issues, particularly in tops and dresses.
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Operating margin fell to 9.3% from 15.3% in the same quarter last year, impacted by deeper discounting to drive sell-through of spring and summer assortments.
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Average order value in the Nordics decreased by 5.2%, and the number of orders fell by 3.8%.
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The company faced challenges with assortment planning and buying, leading to insufficient stock depths on best-selling products.
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Higher operating expenses, including increased marketing costs and personnel costs for the Copenhagen store, weighed on profitability.
Q & A Highlights
Q: Despite a higher share of own brands, a lower return rate, and positive effects from currency in the quarter, the gross profit margin is below the previous year. Can you comment on that and what we could expect going forward? A: Helena Karlinder-Ostlundh, CEO: The margin was impacted by deeper discounting required to ensure a healthy sell-through of the spring and summer season assortments. This was necessary due to some misses in our assortment planning, which affected the margin despite positive factors like a higher own-brand share.
Q: Inventory level has increased compared to last year. Is this level to be expected going forward? And could you comment on the stock composition in regards to current versus old stock going into Q3? A: Josefin Dalum, CFO: The increase is mainly in fresh, current autumn-winter season stock, with older stock remaining broadly flat year on year. The buildup is deliberate, aimed at planned growth and securing proven sellers. We manage inventory levels tightly and expect them to reflect our ongoing growth journey.
Q: When can we expect a physical store in Germany? A: Helena Karlinder-Ostlundh, CEO: We have not made a decision regarding a physical store in Germany yet. We are approaching the market in a measured and long-term way, and while a store might be a possibility in the future, it is not currently planned.
Q: Given the acknowledged buying errors in part of your assortment, how much of H2 2026 is already locked into prior orders? And when should we expect the corrective buying to be reflected in revenue and sell-through? A: Helena Karlinder-Ostlundh, CEO: The cycles in our business are long, so while some corrective actions can be taken closer to the season, many decisions are made well in advance. Positive trends from the first half, like strong performance in jeans and pants, may help in H2, but some first-half misses will still impact us.
Q: Admin costs stepped up to SEK72 million in Q2, driven by the Copenhagen store and higher personnel costs. Is this the new quarterly run rate, and are there any planned efficiency measures elsewhere in the cost base to offset the step-up? A: Josefin Dalum, CFO: The admin cost increase is mainly due to investments in the Copenhagen store and team strengthening. We continuously review the cost base to ensure investments build the business while maintaining discipline and finding efficiencies elsewhere.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
