Nelly Group Q2 2025 slides reveal record operating profit, 15.1% revenue growth

Introduction & Market Context

Nelly Group AB (NELLY) shares surged over 26% following the company’s Q2 2025 investor presentation on July 15, 2025, as the fashion retailer reported accelerating revenue growth and record profitability despite challenging market conditions. The stock closed at 56.90 NOK, approaching its 52-week high of 59.40 NOK, reflecting strong investor confidence in the company’s performance and strategy.

CEO Helena Karlinder-Östlundh characterized the quarter as "another strong quarter in a challenging market," highlighting the company’s success in growing both its customer base and profitability simultaneously. The presentation revealed significant improvements across key performance metrics, particularly in operating profit and margin.

Quarterly Performance Highlights

Nelly Group reported net revenue of 361.7 MSEK for Q2 2025, representing a 15.1% year-over-year increase compared to 314.1 MSEK in Q2 2024. This accelerating growth rate outpaced the 8.8% growth seen in the previous year’s comparable quarter.

As shown in the following chart of quarterly revenue growth:

The company achieved a record operating profit of 55.4 MSEK, nearly doubling from 30.5 MSEK in Q2 2024. This resulted in an operating margin of 15.3%, a substantial improvement from 9.7% in the same period last year. The following chart illustrates this dramatic improvement in profitability:

This performance wasn’t a one-quarter anomaly but part of a sustained trend, as demonstrated by the last twelve months (LTM) data:

The comprehensive income statement further details the financial improvements:

Strategic Initiatives

Nelly’s strategic focus on growing its own brand share has been particularly successful. The company reported that own brand products now account for 54.8% of sales, up significantly from 43.8% in Q2 2024 and continuing a steady upward trend from 36% in Q1 2022.

As illustrated in the following chart of own brand share growth:

The company has also made significant progress in reducing return rates, a critical efficiency metric in online fashion retail. The return rate decreased to 28.4% in Q2 2025, down from 31.3% in the same period last year and showing consistent improvement from 41% in Q1 2022.

The following chart demonstrates this positive trend in return rates:

Despite maintaining "attractive pricing for customers despite cost pressures," Nelly Group sustained a solid gross margin of 54.5%, only marginally below the 54.7% achieved in Q2 2024. This stability in gross margin while growing sales volume demonstrates effective pricing and inventory management.

Financial Analysis

Nelly Group’s financial health continues to strengthen, with cash flow from operations reaching 104 MSEK in Q2 2025, up from 77 MSEK in Q2 2024 and representing a dramatic improvement from -5 MSEK in Q2 2023.

The following chart shows the positive cash flow trend:

The company has also optimized its marketing expenditure, reducing marketing costs to 10.0% of net revenue compared to 13.0% in the previous year while still achieving customer growth. Active customers in the Nordic region increased to 968,000 in Q2 2025, up from 928,000 in Q1 2025, marking the third consecutive quarter of customer growth.

As shown in the following chart of active customer growth:

Forward-Looking Statements

Looking ahead, Nelly Group outlined several strategic initiatives aimed at sustaining growth momentum. The company plans to strengthen its position in more product categories, launch new collaborations with well-known international brands, and expand its flagship store concept, with Copenhagen specifically mentioned as a target location.

CFO Niklas Lingblom emphasized the company’s focus on maintaining strong cost control while investing in growth opportunities. The management team expressed confidence in the potential of the Nelly business model, pointing to the continued improvement in key metrics as evidence of their strategy’s effectiveness.

The company’s ability to grow its customer base through both new customer acquisition and increased customer retention suggests a sustainable growth trajectory. With its improving operational efficiency, strengthening brand position, and solid financial performance, Nelly Group appears well-positioned to continue its positive momentum despite the challenging retail environment.

Full presentation:

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