Interim report for 1 January – 31 March 2021

2021-04-21 08:00:00

Relaunch of Nelly Progresses Well

Q1 2021 Financial Highlights
- Net revenue of SEK 311.8 (302.6) million, corresponding to a net revenue growth of 3.0% (0.8%)
- Gross profit of SEK 136.3 (123.6) million, corresponding a gross margin of 43.7% (40.9%)
- Operating profit of SEK -15.1 (-42.5) million, corresponding to an operating margin of -4.8% (-14.1%)
- Net income from continuing operations of SEK -17.5 (-46.8) million, corresponding to earnings per share of SEK -0.97 (-3.12)

Q1 2021 Nelly Group Highlights
- Net revenue growth
- Significantly improved operating result, inventory turnover and return rate
- Warehouse relocation and automation project progressing well
- Relocation of Stockholm based administration on track
- Management team strengthened with seasoned Chief Operations Officer

Q1 2021 KPI Highligts
- Return rate 30.4% (37.2%)
- Inventory share of sales LTM 14.6% (19.5%)
- Conversion rate Nordics 2.3% (2.3%)
- Own brand share of sales 35.9% (44.2%)

Shaping the Future Nelly Group
The first quarter on our own provided positive signs from the relaunch of Nelly. The operating result improved SEK 27 million compared to last year. The improved profit is one of the effects from our key strategic initiatives, including the start of the relaunch of the Nelly brand, our organisation and efficiency improvement programs. The new journey has just begun.

The Nelly Brand
Our Nelly brand relaunch, clearly focusing on our core 15-25 year old target group in the Nordics, with the offering of feeling ”fab” every day with a head to toe look, creates a higher relevance for more occasions and in more categories than Nelly previously did. Categories such as everyday, beauty and underwear grew strongly during the quarter. Party dresses, our largest pre-pandemic category, significantly decreased its share of sales as a consequence of lockdowns and cancelled events and parties. We further developed our community during the quarter, with the renewed Bianca Ingrosso partnership being its highlight. Step by step, through improvements in our data driven sales and marketing platform, we are building a stronger customer community.

Steps Towards Sustainable Profitability
Our efficiency programs running along the entire value chain yielded results in the quarter, both through an improved gross margin, as well as SEK 12 million admin and other operating cost improvement. Fulfilment and distribution costs were SEK 9 million lower. Net, operating costs were SEK 15 million lower, due to a SEK 6 million increase in marketing spend. In addition to the improved cost base, the opportunity to work faster, more data driven, and customer focused arises from basing the entire team in Borås – the e-commerce and fashion heart of Sweden.
A key highlight from the quarter was our increased focus on assortment management. Stock levels were down 28 percent and we had a high inventory turnover. With a fresh stock, we can look ahead rather than focusing on managing old inventory. I am also happy to see growth in near-shore supplier volumes. Our inventory management focus also contains initiatives around returns, which have decreased by 7 percentage points, mainly as a consequence of changed assortment mix and country mix, as well as process improvements and blocking of customers with unsustainable product return behaviour.

The Relaunch Continues
During Q2 we are finally gathering all operations in our new facilities in Borås. We are welcoming many new team members in data driven sales and marketing, as well as a full logistics team to our new automated warehouse. We are gladly welcoming some 30 current Falkenberg employees to Borås. The building of a new operational platform based on our new high-capacity automated warehouse progresses according to plan, and by the end of Q2 we expect to press the start button. Over time, we expect to realize decreased fulfilment and distribution costs, shorter delivery times and an improved environmental footprint. We are on a relaunch journey, where initiatives and a true passion for the young woman lead our way forward. It is not about the party; it is a matter of realizing that life is a party and making the best of it. Always celebrate the fab you!

Kristina Lukes, CEO Nelly Group AB

Nelly Group AB (publ)
Box 690
501 13, Borås
Org.nr 556035-6940
Registered office: Stockholm
Visiting address: Lundbygatan 1, Borås

Q1 2021 Webcast
Analysts, investors, and the media are invited to a Q1 presentation webcast on 21 April 2021 at 10 AM CET. The presentation will be delivered in English by Kristina Lukes, CEO, and John Afzelius, CFO. The webcast will be made available at the Nelly Group website.

https://financialhearings.com/event/13661
Telekonferens:
Sverige: +46850558350
UK: +443333009031
US: +18335268383

For further information, please contact:
John Afzelius, CFO
ir@nelly.com
+46 703 510 987
www.nellygroup.com/en

MFN