Cost action plan is having an effect – improved quarterly result compared with previous year

Odd Molly International AB (publ)
Stockholm, Sweden, October 25, 2019

July 1 – September 30, 2019

  • Total operating revenue decreased 23 percent to SEK 76.6 million (99.5).
  • The gross profit margin was 47.6 percent (51.0).
  • The operating loss was SEK -9.3 million (-19.3).
  • The net loss amounted to SEK -9.0 million (-15.7).
  • Earnings per share amounted to SEK -0.61 (-1.87).

January 1 – September 30, 2019

  • Total operating revenue decreased 20 percent to SEK 225.5 million (281.2).
  • The gross profit margin was 49.1 percent (54.0).
  • The operating loss was SEK -44.7 million (-38.0).
  • The net loss amounted to SEK -47.4 million (-32.8).
  • Earnings per share amounted to SEK -4.39 (-4.91).

Important events during the quarter

  • In September, the stores on Karl Johan in Oslo and in the Mall of Scandinavia in Stockholm were closed.
  • On September 30, the company announced that it had signed a licensing agreement with an option to purchase for distribution rights to the Hunkydory brand in all channels. Odd Molly is preparing to relaunch Hunkydory for the fall/winter 2020 collection with sales starting in the second half of 2020 through the web shop and selected retailers.

Comment from the CEO

Tough market – with glimmers of light in our business

The third quarter saw continued challenges for the industry, but also good news with respect to Odd Molly’s strategy. The sales trend remained weak in a very tough market, but also because of completed and planned store closures. The web generated solid growth. A larger share from end-of-season sales, together with clearance sales in connection with store closures, negatively affected the gross profit margin, however. Growth in online sales and the accelerating positive impact of the cost savings through our action plan still led to an improvement in the quarterly result compared with the previous year. At the end of September, we were also able to announce the licensing of Hunkydory – in line with the strategy to reach new customers both in our home market and internationally.

Hunkydory – strong complement to our platform

The licensing of the well-established Swedish brand Hunkydory is a step to strengthen our brand position. Hunkydory has for many years been a strong brand with a distinctive style and position in the market. Since we have freed up capacity in various areas through our extensive restructuring work, we feel that a relaunch of Hunkydory by fall 2020 is fully feasible without adding significant costs. We believe Hunkydory can be integrated in our business with economies of scale and synergies with the strong structure we have in place. The brand is licensed through 2023 with an option to then acquire it.

Increase efficiency and strengthen the brand

Odd Molly’s strategy for sustainable growth is to increase online sales and strengthen the international platform. The ongoing action plan is expected to reduce Odd Molly’s operating costs by around SEK 75 million on a full-year basis with a full impact in 2020. The pace of this work accelerated in the quarter and resulted in total cost savings of SEK 16 million for the quarter and SEK 28 million for the first nine months of the year, adjusted for restructuring costs that affected both the current and previous year.

We remain determined to strengthen Odd Molly’s position, including with support from well-known brand ambassadors. In the quarter, we launched new campaigns with Titiyo and Neneh Cherry as well as the model Caroline Winberg.

All in all, we continue to take step by step to build a more efficient business through strategic focus and implementation of our action plan, coupled with initiatives to strengthen the brand and reach new customers.

Jennie Högstedt Björk, CEO

Please see the full report in the attached PDF file.