Adapting to meet the industry’s challenges and opportunities

January 1 – March 31, 2018

• Total operating revenue amounted to SEK 105.5 million (126.1), a decrease of 16 percent.
• The gross profit margin was 54.1 percent (54.0).
• The operating loss was SEK -6.7 million (7.5).
• The net loss amounted to SEK -6.7 million (4.7).
• Earnings per share before dilution amounted to SEK -1.17 (0.81).

Events during and after the quarter

• On February 5 it was announced that Anna Attemark had informed the Board of Directors that she wishes to leave her position as CEO of Odd Molly, and that Jennie Högstedt Björk, today Deputy CEO and Assortment Manager, has been named as her successor. The CEO shift will take place in August 2018, at the latest.
• On April 5 the Board of Directors announced that it had resolved on a share issue of approximately SEK 26.8 million and to seek authorization for an overallotment option of approximately SEK 10.5 million. Both decisions are subject to approval by the Annual General Meeting on May 4, 2018.
• An update of the preliminary result for the first quarter 2018, in line with today’s reported numbers, was made public via press release on April 19 2018.

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Comment from the CEO

Transformation continues to have an impact – weak start to the year

Odd Molly operates in an industry undergoing a major transformation, where e-commerce is growing, the market is becoming increasingly promotion-driven and the brick-and-mortar model is being challenged. Odd Molly’s total operating revenue in the first quarter of 2018 fell 16 percent compared with the same quarter a year earlier and the operating loss was SEK -6.7 million, against operating profit of SEK 7.5 million in the same period in 2017.

New consumption patterns are affecting the entire industry

Odd Molly was quick to adapt its operations to the shift to digital sales. In 2017 the company’s sales via digital channels, our own and other retailers’, amounted to about 40 percent. The corresponding figure for the first quarter of 2018 continued to rise. The company’s online sales grew well in the first quarter of 2018, while sales through physical stores, our own and other retailers’, declined.

In our view, the industry’s transformation is the big reason for the weak development in the wholesale business in the quarter. In our largest market, Sweden, a late, cold spring affected sales in our own channels. While it is costly to drive digital sales through marketing and distribution, the channel has good profitability. Sales growth in the web shop was not enough, however, to compensate for other areas of operations, and the result ended up well below the same period in 2017.

Aggressive measures require capital

Odd Molly has focused for several years on increasing control over distribution, both through our own sales force and increased sales in our own channels, and on increasing the proportion of the sales via digital channels. This has put us in a stronger position, since our own channels offer greater flexibility to steer sales.

Our focus now is to taking initiatives to further strengthen our position in e-commerce and expand internationally, including refocusing resources and optimization of our stores, organization and working methods.

We have to increase our marketing and IT investments to continue to drive sales with a focus on e-commerce. Increasing our own sales creates better conditions for profitability at the same time that it increases the need for working capital. Odd Molly’s distinctive lifestyle concept and brand position give us the potential to capitalize on the opportunities that exist, implement changes and create growth. This transformation entails initial costs and The Board of Directors therefore decided in April on a share issue with pre-emption rights for existing shareholders. The share issue is fully covered by subscription and guarantee commitments from the company’s four largest shareholders.

The industry is changing – and we at Odd Molly are fully focused on navigating smartly and making decisions that will lead us in the right long-term direction.

Anna Attemark, CEO

Please see the full report in the attached PDF file.