Nelly : Half-year report 2021 for 1 January to 30 June 20212021-07-16 - Regulatory press release

Improved operating result and new automated warehouse successfully up and running

Q2 2021 Financial highlights

• Net revenue of SEK 396.7 (391.4) million, corresponding to growth of 1.4% (-7.5%)
• Gross profit of SEK 182.3 (175.9) million, corresponding to a gross margin of 46.0% (44.9%)
• Operating profit of SEK 7.0 (-2.8) million, corresponding to an operating margin of 1.8% (-0.7%)
• Net income from continuing operations of SEK 7.5 (-12.1) million, corresponding to earnings per share of SEK 0.4 (-0.8)

Q2 2021 Nelly Group highlights

• Net revenue growth of 2.8 % in the Nordics
• Operating profit improved despite warehouse project costs of SEK 3.4 million
• Continued good inventory turnover rate
• Warehouse and automation project on track and new warehouse now open
• Relocation of Stockholm-based administration completed
• Sales & marketing team established in Borås

H1 2021 Financial highlights

• Net revenue of SEK 708.5 (694.0) million, corresponding to growth of 2.1% (-4.0%)
• Gross profit of SEK 318.7 (299.5) million, corresponding to a gross margin of 45.0% (43.2%)
• Operating profit of SEK -8.0 (-45.4) million, corresponding to an operating margin of -1.1% (-6.5%)
• Net income from continuing operations of SEK -10.0 (-58.9) million, corresponding to earnings per share of SEK -0.6 (-3.9)

Significant events after end of period

• Nelly opened its new automated warehouse on 1 July and began shipping to customers from there

Building a profitable and sustainable Nelly Group for future growth
We close the first half of the year with 3.8% growth in the Nordics, solid growth in new occasional wear categories not directly related to the party occasion and an improvement in operating profit of SEK 37.3 million. We are in the middle of relaunching Nelly with three focus areas. Firstly, we are building pre-requisites for future growth through a new operational platform. Secondly, we are establishing a new, cost-efficient, data- and customer centred organisation based in Borås. The third focus area is an updated brand positioning towards a more defined and focused target group in the Nordics. We continue to see positive signals from several key initiatives. We saw net revenue growth for H1 in the Nordics driven by sales in categories not directly related to the party occasion. A focus on outgoing inventory and inventory turnover makes our assortment and offering more up to date and relevant for our customers, delivering improved margins. The gross margin increased by 1.8 percentage points in H1. Our improvement initiatives throughout the business with focus on warehouse operations as well as our organisational change provide an overall lower cost base.

New automated warehouse up-and-running
We are now in the middle of the change of Nelly's operational platform; we are closing our current operations in Falkenberg and are going live with our new automated warehouse in Borås. As of today, we have moved 500 thousand articles, filled the automation robot with 80 thousand bins, driven 32 full trucks from Falkenberg to Borås and conducted 64 project meetings with clear-cut goals in sight. I am proud to say that as of now we can call the Borås warehouse our main warehouse and thus we have passed the project's most critical phase. Annual assessed cost savings remain at SEK 35 million and we estimate that our project-related costs should land in the lower part of our budget range of SEK 35-45 million. We are now focusing on ensuring operational efficiency and realising the project's goals during the autumn. There are also plans to initiate several sustainable and customer-efficient logistics solutions with new and improved conditions in place for leading-edge e-commerce.

The relaunch continues
Our initiatives are not fully completed yet, even though we are well on our way to create a stable and profitable core business. A new efficient automated warehouse in Borås is up-and-running. Our logistics operations will be led by Stefan Svensson, our new Chief Operating Officer, who has many years of experience in e-commerce and logistics. Our organisation is restructured, and during the quarter, our sales and marketing team was relocated to Borås along with new roles and competences in data analysis, computer architecture and controlling. We are working on new methods of data-driven target and profit management, including assessing methods for improving our results, where the new team in place also keeps an eye on what the future entails. We are focusing on a more defined target audience that we want to be engaged in our community even more often than today, a group that loves us even more and joins us on our next journey towards growth. The relationship with our customers will be the starting point of our future growth initiatives.
The pandemic has affected our everyday lives for a long time, and for our customers, both daily life and of course special occasions have not been the same. We will continue to prioritise and choose from the opportunities and challenges that present themselves while focusing on the 1.3 million customers who visit our platforms week after week. We look forward to special occasions and parties this autumn, not just the happenings on a Friday or Saturday, but every day, as well as Halloween, Christmas or Thursday happy hour. Celebrate the Fab you!

Kristina Lukes, CEO Nelly Group AB
Borås, Sweden 16 July 2021

Nelly Group AB (publ)
Box 690
501 13 Borås, Sweden
Corp. ID 556035-6940
Registered office: Borås
Visiting address: Lundbygatan 1, Borås

Webcast on the H1 report
Analysts, investors, and the media are invited to a webcast presentation of H1 on 16 July 2021 at 10 a.m. The presentation will be delivered in English by CEO Kristina Lukes and CFO John Afzelius. The webcast will be made available on the Nelly Group website.

Webcast:
https://financialhearings.com/event/13892
Dial-in number
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