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Introduction & Market Context
Kjell Group AB (STO:KJELL) shares plummeted 24.32% on July 18, 2025, following the release of its second-quarter results that showed declining sales and negative earnings. The stock closed at 9.46, down from the previous close of 12.50, as investors reacted to deteriorating performance metrics and cash flow challenges.
The Swedish consumer electronics retailer, which operates across Scandinavia, reported significant headwinds across its markets, with particularly challenging conditions in Denmark. The presentation, delivered by CEO Andreas Rylander and CFO Thomas Pehrsson, outlined both the immediate challenges and the company’s strategic response.
Quarterly Performance Highlights
Kjell Group reported a substantial 10.9% decrease in net sales to MSEK 529.7 for Q2 2025, compared to MSEK 594.4 in the same period last year. While gross profit declined 7.7% to MSEK 223.7, the company managed to improve its gross margin by 1.5 percentage points to 42.2%, suggesting some success in its pricing and product mix strategies despite lower volumes.
The most concerning metric was the adjusted EBITA, which turned negative at MSEK -9.2 compared to a positive MSEK 0.3 in Q2 2024. Net profit for the quarter deteriorated to MSEK -20.9 from MSEK -18.4 in the prior year.
As shown in the following quarterly sales development chart, the company has experienced a consistent downward trend in recent quarters:
Year-to-date figures reflected similar challenges, with net sales for the first half of 2025 decreasing 8.0% to MSEK 1,091.0 and adjusted EBITA declining to MSEK -11.5 from MSEK -5.3 in the comparable period. The company’s adjusted EBITA margin turned negative at -1.7% compared to 0.1% in Q2 2024, as illustrated in this chart:
Detailed Financial Analysis
The presentation revealed significant regional disparities in performance. Sweden, which accounts for 75% of net sales, and Denmark (8% of sales) both experienced sales declines, while Norway (17% of sales) showed more resilience with positive sales growth but decreased gross margins.
The segment breakdown provides a clear picture of these regional differences:
Cash flow emerged as a particular concern, with operating activities generating MSEK -136 compared to a positive MSEK 13 in the same quarter last year. The company identified three key short-term cash flow challenges: increased inventory levels due to lower-than-expected sales, seasonally unfavorable credit terms, and investments in a new automated central warehouse.
Core working capital increased by MSEK 128 compared to the same quarter last year, while financial net debt rose by MSEK 34, as shown in these financial liquidity charts:
Strategic Initiatives
In response to these challenges, Kjell Group has implemented an expanded action program. Key initiatives include the appointment of a new CEO, investment in a new integrated and automated central warehouse, renegotiation of purchasing and lease agreements, and a strategic review of the Danish operations.
The company reported some early positive results from these efforts, noting that improvements in operational efficiency contributed to the strengthened gross margin during the quarter. Restructuring efforts have decreased operating expenses by 10.5% during Q2 and 7.4% over the first half of the year.
The presentation highlighted market-specific challenges that the company is addressing. In Denmark, the company is struggling to convert traffic to sales and faces pressure from international competitors. The AV-CABLES business is experiencing challenging integration and pressure from low-cost retailers. Norway shows more stability with higher average order values, while Sweden exhibits a negative trend in store visits but positive trends in average order value.
Forward-Looking Statements
Despite the challenging quarter, the CEO expressed optimism about the company’s future, emphasizing the continued importance of consumer guidance in electronics purchasing decisions. The company expects the negative effects on working capital to reverse in the third quarter and anticipates further positive development in operating expenses throughout the year.
The presentation acknowledged the need to address short-term challenges while maintaining focus on assortment optimization and consumer needs. The CEO also expressed confidence in the leadership of Sandra Gadd, presumably referring to the incoming CEO.
The significant stock price decline following this presentation suggests investors remain concerned about the company’s ability to reverse the negative sales trend and return to profitability in the near term. With the stock trading near its 52-week low of 7.00, well below its 52-week high of 20.90, market sentiment appears cautious despite management’s operational improvement initiatives.
Full presentation:
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