Interim report for 1 January – 30 September 2017
SIGNIFICANTLY IMPROVED OPERATING INCOME
- Net sales increased by 5.5 per cent to SEK 868.1 (822.6) million
- The gross margin increased by 5.6 percentage points to 23.6 (18.0) per cent
- Operating income before depreciation, amortization and impairment was SEK 22.0 (-1.3) million
- Operating income totaled SEK 3.4 (-30.9) million
- Basic and diluted earnings per share including discontinued operations improved to SEK -0.01 (-0.31)
- Cash and cash equivalents amounted to SEK 433.8 (180.9) million at the end of the quarter
FIRST NINE MONTHS
- Net sales increased by 3.9 per cent to SEK 2,765.7 (2,662.0) million
- The gross margin increased by 5.1 percentage points to 22.7 (17.6) per cent
- Operating income before depreciation, amortization and impairment was SEK 69.3 (-5.2) million
- Operating income totaled SEK 13.0 (-61.3) million
- Basic and diluted earnings per share including discontinued operations improved to SEK -0.20 (-1.38)
|Gross margin (%)||23.6%||18.0%||22.7%||17.6%|
|Operating income before depreciation and amortization||22.0||-1.3||69.3||-5.2|
|Operating margin before depreciation and amortization (%)||2.5%||-0.2%||2.5%||-0.2%|
|Operating margin (%)||0.4%||-3.8%||0.5%||-2.3%|
|Cash flow from operations||-33.7||-119.7||-121.6||-215.7|
Tretti AB was divested in the third quarter of 2016 and Lekmer AB in the second quarter of 2017. These companies are recognized as discontinued operations in the Group. Comparative figures in the income statements and cash flow statements present continuing operations. Continuing operations are recognized in the report unless otherwise stated. In addition, interest expenses in Qliro Financial Services have been included in cost of sales and services in the consolidated financial statements since 2017 and have been adjusted for the comparative periods.
No items affecting comparability are recognized for the first nine months of 2017. In this report, historical comparisons have not been adjusted for items affecting comparability as previously done.
SIGNIFICANTLY IMPROVED OPERATING INCOME
Qliro Group has further strengthened its position in digital commerce in the Nordic region during the quarter. We have made progress in line with the strategic priorities communicated at the beginning of the year. Our e-commerce operations have increased sales, gross margin and operating margin. Qliro Financial Services leverages these volumes and expands its business and offering. Adding financial services broadens our position in the value chain and further improves our prospects for profitable growth.
Growth and strengthened gross margin
Consolidated net sales increased by 6 per cent (4 per cent adjusted for exchange rate fluctuations), while the gross margin was strengthened by 5.6 percentage points to 23.6 per cent in the quarter. The increase was driven by CDON Marketplace’s growth, Nelly’s growth and profitability, and Qliro Financial Services’ expansion. We are also pleased with the cash flow generated in Health and Sports Nutrition Group.
Growth in CDON Marketplace creates economies of scale
CDON Marketplace’s gross merchandise value increased by 8 per cent in the quarter, despite the negative impact of a new tax on sales of home electronics in Sweden. We continue to invest in building the leading digital marketplace in the Nordic region. We are confident that this is the right way to go in the long-term even if it involves increased costs for technology and marketing. Growth for CDON Marketplace drives volume and economies of scale for the entire Group, including Qliro Financial Services.
Nelly correctly positioned for profitable growth
Nelly’s sales increased by 10 per cent to SEK 278 million, and operating income before depreciation, amortization and impairment increased by SEK 17 million to SEK 24 million in the quarter. This was partly driven by a high share of own brands in relation to total sales as well as by customer loyalty. Like CDON Marketplace, Nelly’s growth drives volume for Qliro Financial Services.
Qliro Financial Services launched new services
Qliro Financial Services increased its operating income by 28 per cent to SEK 56 million and operating profit before depreciation, amortization and impairment increased to SEK 11 million in the quarter. We continue to launch new services, and private loans were gradually introduced in Sweden during the quarter.
Increased cash flow in Health and Sports Nutrition Group
Net sales for Health and Sports Nutrition Group decreased by 5 per cent to SEK 183 million during the quarter. Bodystore (health food) and Fitness Market Nordic (wholesale) are growing, but sales decreased for Gymgrossisten in Sweden. We continue to focus on cash flow, which increased to SEK 53 million for the first nine months. As previously announced, we are looking for potential partnerships and evaluating strategic alternatives to create additional shareholder value.
Leading platform for digital commerce
Qliro Group’s goal is to be the leading Nordic platform for digital commerce with complementary financial services. The focus is on CDON Marketplace, Nelly and Qliro Financial Services.
The strategy for Qliro Financial Services is to create a finance company with a strong offer of payment and financial services that simplifies the everyday lives of consumers. The focus is on launching attractive, customer-friendly and innovative financial services. We take additional advantage of the relationships and business volume generated through the Group’s e-commerce resulting in low customer acquisition costs. At the same time we ensure that our e-tailers offer simple and efficient payment methods with good conversion rates. Qliro Financial Services extends the relationship with consumers after their online purchases. This increases customer loyalty and provides an opportunity to offer new services.
The e-commerce market is changing quickly. During the year, our confidence has been boosted in our strategic focus on expanding the marketplace, strengthening our own fashion brands, more efficient logistics, taking advantage of data-driven customer relationships and expanding our role in the value chain with financial services. We continue to implement our strategy with continuous improvements and investments.
Stockholm, October 2017
Marcus Lindqvist, President and CEO
LONG-TERM FINANCIAL TARGETS
Qliro Group’s long-term financial targets are:
- Reach a level of organic growth in gross merchandise value of an average of 10 per cent per year.
- Generate operating profit before depreciation, amortization and impairment of 1-2 per cent of gross merchandise value.
Fashion (Nelly and NLYMan)
- Reach a level of organic growth of an average of 8 per cent per year.
- Generate operating margin before depreciation, amortization and impairment of at least 6 per cent.
Qliro Financial Services
- Reach an operating profit before depreciation, amortization and impairment of at least SEK 150 million by 2019.
The priority for Health and Sports Nutrition Group (former Gymgrossisten segment) is continuous improvement of operating earnings and cash flows along with development of the brand.
SIGNIFICANT EVENTS DURING AND AFTER THE THIRD QUARTER 2017
Patrik Illerstig left Qliro Financial Services
On August 10, Qliro Group announced that Patrik Illerstig, Head of Qliro Financial Services, tendered his resignation from Qliro Group and the company initiated the recruitment process for a successor.
Qliro launched private loans in Sweden
On 4 September, Qliro Group’s subsidiary Qliro AB initiated the gradual launch of private lending in Sweden. Private loans will complement Qliro AB’s core services such as payments, part payments and invoices. The service is completely digital. Initially, individuals can borrow between SEK 20,000 and SEK 350,000 without collateral.
Analysts, investors and the media are invited to a conference call today at 10 a.m. To participate in the conference call, please dial:
Sweden: +46 8 5065 3942
UK: +44 330 336 9411
US: +1 719 325 2202
The pin code to access this call is 8742446.
The presentation material and webcast will be published at https://www.qlirogroup.com/en/investors/presentations/
For additional information, please visit www.qlirogroup.com or contact:
Marcus Lindqvist, President and Chief Executive Officer
Mathias Pedersen, Chief Financial Officer
Telephone: +46 10 703 20 00
Erik Löfgren, Head of Communications
Telephone: +46 700 80 75 06
About Qliro Group
Qliro Group is a leading Nordic e-commerce group in consumer goods, lifestyle products and related financial services. Qliro Group operates CDON.COM (the leading Nordic marketplace), Nelly.com and NLYman.com (fashion), Gymgrossisten and Bodystore.com (health and training), and Qliro Financial Services. The Group had sales of SEK 4 billion in 2016. Qliro Group’s shares are listed on the Nasdaq Stockholm MidCap segment under the ticker symbol QLRO.
This information is information that Qliro Group AB is required to disclose under the EU Market Abuse Regulation. This information was released for publication through the agency of the above-mentioned contacts at 8:00 a.m. CET on 18 October 2017.