Nucor earnings beat by $0.08, revenue fell short of estimates
Introduction & Market Context
RVRC Holding AB (STO:RVRC) shares plunged 11.94% on May 6, 2025, after the outdoor apparel company presented its Q3 2024/25 results showing modest growth but declining margins. The company, which operates primarily through a direct-to-consumer digital model, reported continued expansion in a challenging international market environment, with particular strength in Nordic countries offsetting weaker performance in other regions.
The Swedish-based outdoor brand, which was launched in 2014 and listed on Nasdaq Stockholm in 2021, currently sells into 40 countries through 18 unique webshops. Despite the challenging market conditions, RVRC maintained its position as a digitally-focused outdoor brand with a strong customer community.
As shown in the following overview of the company’s business model and key metrics:
Quarterly Performance Highlights
RVRC reported net sales of SEK 486 million for Q3 2024/25, representing a modest 2% increase compared to the same period last year. This growth rate suggests a significant slowdown compared to the company’s historical performance, which has seen more substantial year-over-year increases in previous periods.
The following chart illustrates both the quarterly and annual net sales development:
While the company maintained strong profitability metrics, there were signs of margin pressure. Gross profit decreased by 1% year-over-year to SEK 337 million, with gross margin declining to 69.4% from 71.5% in the same quarter last year. This margin compression appears to be a key factor in the negative market reaction to the results.
The gross profit and margin trends can be seen in this chart:
EBIT for the quarter came in at SEK 80 million, representing a 16.4% margin, down significantly from 21.0% in the same period last year. Adjusted EBIT, which excludes items affecting comparability, was SEK 101 million with a 20.8% margin, compared to 21.0% last year. The company noted that items affecting comparability in Q3 amounted to SEK -21 million, primarily attributed to stay-on bonuses in an incentive program.
The EBIT and adjusted EBIT development is illustrated here:
Regional Performance Analysis
RVRC’s performance varied significantly by region, highlighting the uneven nature of the current market environment. The Nordic region showed strong growth of 9% year-over-year (10% in local currencies), while the DACH region (Germany, Austria, and Switzerland) remained flat with 0% growth (1% in local currencies). The Rest of World segment declined by 3% compared to the same period last year.
Despite these mixed results, the company noted that 78% of net sales are now generated outside the Nordics, underscoring its international presence. The DACH region remains the largest market, accounting for 57% of total net sales in the quarter.
The regional breakdown of sales is shown in the following chart:
Strategic Initiatives
In a notable strategic development, RVRC announced the launch of its first outlet store in Stockholm, signaling a potential shift in its distribution strategy. The company has historically operated primarily through its direct-to-consumer digital channels, but management indicated they see "exciting potential to expand our retail footprint" and are "evaluating opportunities for further physical locations as a complement to our e-commerce business."
This move into physical retail comes as the company’s online growth appears to be moderating, suggesting a multi-channel approach may be necessary to sustain expansion in the current market environment.
RVRC continues to emphasize its strong customer community as a competitive advantage, highlighting over 720,000 product reviews with an average rating of 4.6/5.0 and more than 2 million social media followers. This engagement supports the company’s vision to become "the world’s most recommended outdoor brand."
Financial Position & Capital Allocation
Despite the challenging market conditions, RVRC maintained a solid financial position with a cash balance of SEK 280 million and a net cash position of SEK 147 million as of March 31, 2025. The company has an undrawn credit facility of approximately SEK 600 million available.
Inventory levels increased by SEK 82 million compared to Q3 last year but decreased by SEK 49 million compared to the previous quarter. Management described the inventory as "well balanced" and expected it to "gradually decrease in the coming year," suggesting a focus on inventory optimization.
The inventory development is illustrated in this chart:
RVRC continued its share repurchase program, buying back 576,100 shares for a total of SEK 27 million during the third quarter. Year-to-date, the company has repurchased shares amounting to SEK 154 million. The company currently holds 2.0 million shares out of a total of 109.6 million shares outstanding.
The company’s dividend policy remains unchanged, with an intention to distribute 40-60% of profits to shareholders after considering long-term financial stability, growth opportunities, and strategic initiatives.
Forward-Looking Statements
Looking ahead, RVRC management expressed cautious optimism, noting that "sales during the first weeks of the fourth quarter show growth in local currencies compared to the same weeks last year." However, the company acknowledged the ongoing challenges in the market environment.
The significant stock price decline following the presentation suggests investors may be concerned about the slowing growth rate, margin pressure, and challenges in international markets outside the Nordic region. While RVRC continues to deliver growth and strong profitability metrics relative to many industry peers, the market reaction indicates heightened expectations and sensitivity to any signs of deceleration or margin compression.
As RVRC navigates this challenging landscape, its expansion into physical retail, strong customer engagement, and solid financial position may provide some resilience, but investors will likely focus on whether the company can reverse the margin decline and accelerate growth in its key international markets in the coming quarters.
Full presentation:
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