Earnings call transcript: Boozt Q1 2025 sees stock drop amid revised guidance

Boozt AB’s Q1 2025 earnings call revealed a mixed financial performance, with the company reporting modest revenue growth but revising its future guidance downward. Despite an increase in revenue and an improved EBIT margin, Boozt’s stock price fell sharply by 15.07% following the announcement, reflecting investor concerns over the revised outlook and challenging market conditions. According to InvestingPro data, the company maintains strong fundamentals with a perfect Piotroski Score of 9, suggesting robust financial health despite market headwinds. The company’s current P/E ratio of 15.9 appears attractive relative to its growth prospects.

Key Takeaways

• Boozt’s revenue increased by 2%, with a notable improvement in adjusted EBIT margin.
• The company revised its revenue growth guidance to 0-6%, down from 4-9%.
• Boozt’s stock price fell by 15.07% post-announcement, indicating negative investor sentiment.
• The active customer base grew by 7%, reaching 3.8 million.
• The company completed share buybacks worth €134 million.

Company Performance

Boozt demonstrated resilience in Q1 2025 with a 2% increase in revenue, or 3% when adjusted for local currency. The company’s adjusted EBIT margin improved from 1.2% to 2.3%, highlighting operational efficiencies despite a challenging market environment. However, Boozt faces headwinds due to declining Nordic consumer confidence and geopolitical uncertainties impacting consumer spending.

Financial Highlights

• Revenue: Increased by 2% year-over-year.
• Adjusted EBIT Margin: Improved to 2.3% from 1.2% last year.
• Gross Margin: Declined by 0.9 percentage points to 38%.
• Active Customers: Grew by 7% to 3.8 million.

Earnings vs. Forecast

Boozt’s earnings call did not provide specific EPS figures, but the company revised its revenue growth guidance downward to 0-6%, compared to previous expectations of 4-9%. The revised guidance reflects anticipated challenges in the market, which have also been acknowledged by the management.

Market Reaction

The stock price of Boozt dropped significantly by 15.07% following the earnings announcement, closing at 83.4, down from its previous close of 98.2. This decline places the stock closer to its 52-week low of 80.1, indicating a strong negative reaction from investors. InvestingPro analysis suggests the stock is currently undervalued, with additional insights available through the comprehensive Pro Research Report. The stock’s beta of 2.27 indicates higher volatility compared to the market, while maintaining strong financial metrics with a current ratio of 1.74. The sharp decrease reflects concerns over the revised guidance and challenging market conditions outlined by the company.

Outlook & Guidance

Boozt revised its revenue growth guidance for the upcoming quarters to 0-6%, down from 4-9%, and adjusted its EBIT margin guidance to 4.5-5.5%, from 5.8-6.5%. The company anticipates continued market challenges through the first half of 2025 and expects currency movements to negatively impact revenue by approximately 3%.

Executive Commentary

CEO Hermann emphasized the company’s proactive approach to potential market downturns, stating, "We are working with the assumption that we’re going into a recession. We are quite well prepared." He also highlighted Boozt’s strategic discounting to manage inventory effectively, noting, "Our experience is that it’s probably cheaper to have a discount now than have a sellout in June."

Risks and Challenges

• Declining consumer confidence in Nordic countries could further impact sales.
• Geopolitical uncertainties may continue to affect consumer spending habits.
• The fashion sector remains vulnerable to economic fluctuations.
• Currency movements pose a risk to revenue growth.
• Potential recessionary conditions could strain consumer budgets.

Q&A

During the earnings call, analysts questioned Boozt’s strategies to navigate the uncertain market conditions. Management discussed their approach to inventory management and the potential for over-clearing stock to avoid future problems. They also addressed the flexibility in their fulfillment center expansion plans, reflecting a cautious yet adaptive strategy in response to market dynamics. With revenue growth of 6.31% in the last twelve months and an overall "GOOD" financial health score from InvestingPro, the company appears well-positioned to weather market challenges. Subscribers can access 8 additional ProTips and detailed financial metrics through the platform’s comprehensive analysis tools.

Full transcript - Boozt AB (BOOZT) Q1 2025:

Conference Operator: Please go ahead.

Hermann, CEO, Boozt: Thank you, and good morning to all, and welcome to the presentation of our Q1 results. Let’s turn to the first slide. The operating environment remained challenging in the quarter with consumer confidence in The Nordics declining even further, most likely fueled by the increasingly uncertain geopolitical situation. In terms of top line, we increased revenue with 2% in the quarter or 3% in local currency. Growth was primarily driven by booster.com, which saw a strong 18% increase.

As we did during the second half of last year, we have used boostleft.com to clear inventory in the quarter. Our price initiatives on Boost. Let help keeping our inventory fresh while contributing to building Boost. Let’s value brand franchise. Revenue from boost.com declined slightly in the quarter by 1%, but remained flat in local currency.

This, we believe, reflects both the current cautious consumer environment as well as the fact that we deliberately are less aggressive on pricing on booth.com. While this impacts short term sales, do this to preserve booth.com’s more premium brand value, a strategy that is supported by Boost. Less ability to clear old inventory. Our customer base continued to expand in the quarter, reaching 3,800,000 active customers across both platforms and growing 7%. Furthermore, 52% of booth.com’s customers now purchase from more than one product category, illustrating the continued success of our department store strategy.

In the quarter, we maintained our higher levels of customer satisfaction. Our Trustpilot score was 4.2 and our Net Promoter Score was 74, indicating strong continued strong customer loyalty. In terms of profitability, our adjusted EBIT margin improved to 2.3% compared to 1.2% in the first quarter last year. The positive development was last driven by the efficiency gains in fulfillment and distribution as well as the exemption from customs in Norway. Our cash position remains solid even after buying back shares worth 134,000,000 this past quarter, finalizing our SEK 200,000,000,000 buyback program for the year.

With the current program finalized, our Board now intends to launch a new program likely at a level comparable with the previous program. Finally, this quarter, we took a significant step to strengthen our position for the future. In February, as previously announced, we streamlined our organization, reflecting the growing impact of technology and the wider adoption of AI driven tools across our value chain. This included a 10% reduction in our total workforce or about 20% of our white collar staff. Turning to outlook.

We have revised our guidance to reflect the increased market uncertainty and the unfavorable currency movements observed since our previous report. We now anticipate revenue growth in the range of 0% to 6%, adjusted

Daniel Schmidt, Analyst, Danske: from

Hermann, CEO, Boozt: the prior expectations of 4% to 9%. Our EBIT margin is now projected to be between 4.55.5% compared to the initial guidance of 5.8% to 6.5%. I will elaborate on the updated guidance in more detail later in the presentation. So now let’s turn to the next slide. Despite the difficult environment, we successfully attracted a significant number of new buying customers to our platforms in the quarter.

Our active customer base on boost.com grew by 2% at the same time as boosted saw a strong 22 increase in the quarter. This means that a total of around 270,000 new customers shopped in the two shops during the quarter. While our focus remains on increasing the category awareness, expanding our active customer base is a continued priority. In a market with muted consumer sentiment attracting nearly 300,000 new customers, I believe is a testament to our underlying strength. The increase was broad based across both platforms and regions.

Active customers in our main region, The Nordics, grew by around 6%, primarily driven by growth in Boostlet supported by the current price initiatives as well as price sensitive consumers, which is benefiting our outlets at boost.com. Active customers in The Baltics continued to increase significantly and we were up about around 28% on boost.com and 84% on boost. Compared with last year. This continues to be from low levels, but with a continued high average order value on par with the group, we see decent profitability as well as a strong growth opportunities in The Baltics. Finally, active customers increased by around 10% in the rest of Europe, driven by a positive development in both Boost and Boosted.

But also, please bear in mind that for this metric, we are looking at the last twelve months. Look at let’s go to the next slide. In the quarter, we continued to see an increase in the number of customers shopping across multiple product categories on boost.com. Driving multi category purchases remains a key strategic goal of our department store model with a direct impact on our financial performance. In the current macro environment where consumers are cautious and holding back on renew renew in the wardrobe, the ability to offer other categories helps us absorb the negative effects of the lower fashion demand.

Over the past twelve months, as shown on the slide, we observed an increase of between 28% across all customer groups shopping from two to six categories on booth.com. This means that 52% of our booth.com customers now purchase from more than one category. While this is a modest increase from 51% last year, it’s important to consider that this metric is consistently influenced by the fact that new customers typically begin by shopping within a single category. And with around 170,000 new customers joining boost.com this quarter, the result is quite encouraging. Despite our focus on encouraging multi categories purchases, growing our overall customer base remains a key objective as we have strong track record of both retaining customers and successfully introducing them to new categories.

Looking at total active customers over the last twelve months, we are now above 2,700,000 on boost.com corresponding to an increase of 2% versus last year. We would have liked to see our customer base increase faster, but growing the base has been challenging given the current market environment. If you turn to the next slide, turning to multi category buyers on Boostlet, which we have not shown before, we also see a gradual increase. 42% of Boost. Led customers shop for more than one category in the last twelve months compared to 41% the previous year.

This was supported by around 80,000 new customers making multiple category purchases in q one. Like it is with boost.com, this year over year comparison is influenced by the substantial number of new customers acquired for Boostlet over the last twelve months. We are gradually expanding Boostlet’s product assortment beyond its traditional focus on fashion, and it is quite encouraging for us to see customers buying into the new categories. This diversification also mitigates the potential stock risk within kids, sports, beauty and home, as boosted now provides a clearing channel for all categories. So with this, I will hand it over to you, Sandra.

Sandra, CFO, Boozt: Thank you, Hermann. So please turn to the next slide. Revenue increased 2% in the quarter, as Hermann mentioned, or 3% in local currency, with growth being relatively stable throughout the quarter. Once again, growth was mainly driven by a continued good development in Sweden as well as Norway, where we saw revenue growth around 10% for the quarter. Our performance in Denmark continued to be soft, impacted by the continuous decline in consumer confidence.

Revenue in Denmark declined 3% in the quarter. Looking outside of The Nordics, revenue was down slightly by 1%. While The Baltics are still performing well for us, Germany and The Netherlands saw a decline. This is mainly because we’re holding back on marketing here as we remain focused on being profitable on every order in these countries. Additionally, Q1 last year was a very strong quarter for Germany and The Netherlands.

Looking at categories, the non fashion categories continued to show good progress, while revenue from men’s and women’s fashion declined in the quarter. However, while women are holding back on fashion, they are increasing their spend, particularly in the kids category, which together with the home category were the best performing categories in the quarter. The gross margin was 38% in the quarter and down 0.9 percentage points compared to last year. This was mainly driven by a lower gross margin on Boostlet, where we are clearing inventory at higher discounts. Additionally, the gross margin was impacted by timing effects related to other revenue.

However, these timing effects will revert in the second quarter. The adjusted EBIT margin was 2.3, up from 1.2%. This was driven by good progress in fulfillment costs as well as the administrative costs, which I will come back to in a minute. So let’s change to the next slide. So if we look at the two platforms, boost.com saw a slight revenue decline of 1% for the quarter, which translates to flat growth in local currency.

The performance was significantly affected by the overall market sentiment. In terms of shoppers, we continue to see an increase in active customers. Around 170,000 new customers bought on boost.com during the quarter. However, as consumers remain very hesitant to spend, we also see that they on average buy less frequently. Number of active customers in the last twelve months increased by 2%.

The average order value declined 1% to DKK $9.57, which was to a large degree driven by currency. In The Nordics, revenue on boost.com was flat. However, Norway outperformed with more than 10% growth. Sweden also did relatively well, growing 2% in the quarter. This is supported by a strengthening market fueled by lower mortgage rates and tax cuts.

Revenue from Denmark was however down 5% in the quarter. Consumer confidence in Denmark continues to decline, which has a significant impact on the fashion demand in the country. Sales outside of The Nordics declined 6%. As mentioned earlier, this was impacted by lower sales mainly in Germany and The Netherlands. The adjusted EBIT margin for boost.com increased two percentage points to 3%.

The margin improvement was mainly driven by increased efficiency in fulfillment and distribution, supported by the transfer sales introduced in 2024. Furthermore, margins were positively impacted by Boost no longer being subject to customs payments in Norway as well as a slightly higher product margin due to the lower markdowns on boost.com. But if we look at Boostlet, we see a revenue increase of 18%, which was supported by the price initiative that we introduced last year. In the quarter, we successfully continued to clear out older products from prior seasons to keep our inventory fresh. This has been well received by customers, in particular in Sweden, where sales increased almost 40%.

Active customers during the last twelve months were just over 1,000,000, which corresponds to an increase of 22% versus the same period last year. The average order value was slightly up compared to last year at DKK $9.82 despite the lower prices offered on Boostlet. This was due to a slight increase in number of items per order. The adjusted EBIT margin for the quarter was a negative 0.2% compared to a positive 2.6% last year. The decline was mainly due to the temporarily lower prices on the site.

If we move to the next page, here we see the development of the cost ratios in the quarter. And if we start with the fulfillment cost, we saw good improvement in this quarter, down to 10.8% from 11.6% last year. So now part of this is thanks to better deals that we negotiated with our distribution partners. But importantly, we’re also starting to see the real benefit of the transfer cells that we installed at the fulfillment center last year. They are now fully up and running in Engenholme, and they’re making a significant difference in how efficiently and how quickly we can process orders.

On the marketing costs, our costs stayed relatively the same at 10.1% compared to 10% last year. We’re still seeing the benefit of having more returning customers and a growing number of Club Boost members, which naturally reduces how much we need to spend on marketing. However, as planned, we increased our spending on off line marketing this quarter. This is a deliberate effort to increase awareness in The Nordics for our non fashion categories, which includes sports, kids, beauty and home. Looking at our adjusted admin and other costs, the ratio decreased by 1.1 percentage points to 10.7%.

The main reason for the improvement is that we’re no longer paying customs in Norway. The non adjusted ratio improved a bit less to 12.7% from 13.3% last year, and that is due to the severance costs of €7,000,000 related to the reorganization, which was booked in this quarter. The depreciation cost ratio for the quarter was 4.1% and unchanged compared to last year. So my final slide here is the cash development. And we ended the quarter with a working capital of DKK 1,400,000.0 corresponding to 16.9% of revenue.

This is to be compared to 12.7% at the end of Q1 last year. The increase was due to higher inventory position due to a lower sell through than expected coming into the autumnwinter season. While this has an impact on inventory, we still believe our inventory is in good shape and up to date, supported by our ability to clear older stock through boost.com. CapEx was down to €42,000,000 in the quarter versus €97,000,000 last year. Last year, we were starting to invest in the transfer sales that we mentioned earlier, which explains most of the decline.

Free cash flow in the quarter was a negative €619,000,000 compared to a negative €685,000,000 last year. This improved cash flow was mainly due to the lower CapEx. It is worth noting that the cash flow in Q1 is typically low, largely due to the relatively high inventory at the end of the quarter in preparation for the springsummer season. Our net cash position was EUR 8,000,000 at the end of the quarter, down EUR $228,000,000 compared to last year. Our cash position continues to be impacted by our share buyback program.

In the last twelve months, we have repurchased our own shares for €134,000,000 Finally, I would like to mention that we have now, as expected, received a cash payment of approximately €100,000,000 from the Norwegian tax authorities regarding the wrongfully paid customs in Norway, providing a further boost to our cash position. This will, however, impact the cash flow statement in the second quarter. This ends the financial overview. And back to you, Herman.

Hermann, CEO, Boozt: Thank you, Sandra. And before we move to guidance, I would like to take a moment to address our position in the current market environment. As previously mentioned, the operating conditions have remained quite challenging throughout the quarter. After a couple of years of muted consumer sentiment following the COVID pandemic, we had expected consumers to start being more optimistic. And what we have seen is actually the opposite.

Consumer confidence has declined across The Nordics driven by increasing geopolitical uncertainty, basically a growing uncertainty about where the world is heading. As a result, we have observed more cautious consumer spending, particularly in the fashion sector. That said, we are constantly managing the business to navigate these challenges effectively, ensuring that we stay well prepared with what lies ahead. As part of this, we streamlined the organization during the quarter with a key focus on leveraging AI and technology to enhance efficiency. This process included a 10% reduction in the workforce, and we expect these efforts to deliver a net improvement of around 0.3 percentage points to our adjusted EBIT margin in 2025.

With these actions alongside the steps we’ve already taken, we are reinforcing our foundation and further strengthening the resilience of our organization. For one, we maintain tight control of our costs and our cash position remains solid. Secondly, the growing diversification of our product portfolio is helping reduce our reliance on the more volatile fashion sector. And third, our efficient and adaptable supply chain ensures that we’re well equipped to handle the ongoing market challenges. So while we acknowledge the challenging environment, we are confident in the steps that we’ve taken and the strength of our business.

We believe that we are well prepared to navigate these rough waters and we are positioned to capitalize on improvements when market conditions become more favorable. So now let’s move to the next page and our guidance. As mentioned earlier, we’ve updated our financial outlook to reflect the increased market uncertainty we’ve seen since our Q4 report. Specifically, we now anticipate net revenue growth to be in the range of 0% to 6% compared to our previous expectations of 4% to 9%. And our adjusted EBIT margin is now expected to land between 4.55.5% compared with the 5.8% to 6.5% we have stated before.

The revision of our guidance is primarily driven by two key factors. First and most important, our initial outlook assumed a continued challenging but also stable market. However, the Nordic retail environment has become increasingly uncertain, mainly driven by the geopolitical unrest we’re currently seeing. This volatility is evident in our performance so far in April, which has been extremely volatile following the increased trade tensions. While we hope for stabilization, we anticipate that any substantial improvements is unlikely before the second half of the year.

Adding to this, the Swedish krona has strengthened since February when we gave the guidance. Assuming exchange rates remain at current levels for the remainder of 2025, this strengthening is expected to negatively impact our net revenue by approximately three percentage points. In addition, given that the majority of our costs are denominated in Swedish kronas, we’re also projecting a negative impact on our adjusted EBIT margin of around one percentage point, assuming no change in this currency range. Finally, regarding our capital expenditure, the CapEx forecast for 2025 is now expected to be in the range of SEK 150,000,000 to 170,000,000, a decrease from our previous range of SEK 170,000,000 to SEK 200,000,000. As we announced last year, our plans to invest approximately SEK 500,000,000 in capacity expansion between 2025 and 2027 remains in place.

Of this total, approximately SEK 500,000,000 65,000,000 is now planned for investment in 2025, which is reduction from the previously communicated figure of around SEK 75,000,000. The remaining difference is primarily due to slightly lower expected CapEx related to IT development. This concludes our presentation. So operator, we’ll please open up for questions.

Conference Operator: The next question comes from Benjamin Walstet from ABGSC. Please go ahead.

Benjamin Walstet, Analyst, ABGSC: Good morning, guys. As far as I understand it, the lower guidance is primarily a reflection of adverse FX movements. And while I see your point mathematically, it seems you’ve applied sort of the FX sensitivity assumptions from the annual report, where the implicit assumption is that your actions during the past year are unchanged, basically. And I would like to ask you this. I’ve spoken to some of your suppliers.

I’ve spoken to your customers, and I’ve spoken to competitors of yours. They are all of the impression that products sold on Boost are very attractively priced. This should mean, I think, that you should be able to offset some of this negative FX impact through pricing. What are we missing? Or what am I missing when I’m making this assumption, please?

Hermann, CEO, Boozt: I think, in general, we’re not assuming it’s FX affects all of it. It’s a combination of it’s mainly the lower demand and the pricing pressure that we are expecting. FX, of course, plays a role. It has been done so basically throughout our lifetime, but and we’ve always been able to navigate it, but just acknowledge that it has an effect. Of course, long term, that will be mitigated, but it has some short term effects.

But our guidance is a reflection of mainly the uncertain consumer or trading environment and then also partly the FX. So I think it’s difficult to do an exact mathematical explanation because, of course, when we do our our forecast forward, you know, different FX scenarios are always included in the forecast. So I think you cannot directly say that it’s only FX effects that is influencing the organs.

Benjamin Walstet, Analyst, ABGSC: All right. Thank you. And then speaking of these, heavy fluctuations in in demand, is this, the same across all markets you’re operating in? That’s the first question. And then second, are there any product categories that are impacted more than others?

Or is it less broad based, please?

Hermann, CEO, Boozt: As you will see, Sweden is it has been performing quite well in the quarter. Norway has also been performing well, partly due to the fact that we’re able to invest a bit more in Norway since we’re not paying customs. Denmark has been hardly his. And as someone who is living in Denmark and and experiencing the the rhetoric about crisis we’re in, that’s not surprise. So and Finland has also been quite affected.

If you look at the categories, it’s mainly fashion that is heavily affected by this. The other categories are probably more muted than we would have liked them to be, but they don’t seem to be as affected as fashion.

Benjamin Walstet, Analyst, ABGSC: Right. Thank you. Final one from me then. Winter never really arrived in Stockholm, and I would assume the same for Copenhagen. I know your inventories are quite a bit higher in q one than in q four.

I realize that parts of this buildup is preparation for spring. But I would like to ask about your view of the quality of the current stock. Should we expect more sort of discounting of autumnwinter products in in q two? Or or or what’s your view on the current inventory?

Hermann, CEO, Boozt: You should definitely expect more discounting on inventory in in in q two because, as you see, the inventory levels were elevated compared to what we’ve liked them to be. And again, this also you can see directly by how much we are using Boostlet to clear inventory because we think it’s better to do a kind of a gradual write down than taking one a big write off. So that’s why, you know, you are we are actually using Boosted to clear. Uselit is is is actually not profitable in the quarter because we want to keep the Boosted comp side clean as a a premium side and using to using booster to avoid having any overstock. So so and and and in general, not only auto winter, but I also believe that the SS 25 stock in the market in general will be quite elevated.

So I think you will expect that consumers will be able to do very good bargains in over the next months.

Benjamin Walstet, Analyst, ABGSC: Alright. Thank you very much. That’s all for me for now.

Hermann, CEO, Boozt: Yeah.

Conference Operator: The next question comes from Nicholas Eckman from Carnegie. Please go ahead.

Nicholas Eckman, Analyst, Carnegie: Thank you. Yes. Can I ask, when you talk about a very challenging market, I mean, we’ve had a challenging market for quite a few years now? And I’m thinking in particular of 2023 when you delivered tremendous growth despite a weak market. Can you tell us what is different now besides that you obviously have tougher comparisons to some of your peers?

But is there anything materially different in the consumer behavior now compared to the past two, three years?

Hermann, CEO, Boozt: Well, you have a a new president in The US who is who is relatively aggressive in his his trade agreements, and and and you have have talks about increasing war, increasing military spending, war taxes across the region. So consumers are being told that they should stash for make preps for for in the basement. They have cash in hand. So there’s not a lot of talk about kind of a positive outlook for for both world economy or or personal commerce. So I think I think it’s kind of obvious when you look at developing consumer sentiment that that that the consumers are not getting happier than they were before.

So so and and I think it’s kind of you’re you’re fooling yourself if you believe that it’s happy days ahead. It’s not. We we we are working with the assumption that we’re going into a recession. We are quite well well prepared. And and even though we are lowering our our EBIT guidance, we are still the most profitable e commerce company in in Europe.

So so so we’re just saying that there would be a bit more headwind than before. So but definitely, the world has not improved since ’23, and and and personally, I believe it’s actually probably at a slightly worse state than it was in 2023.

Nicholas Eckman, Analyst, Carnegie: Yeah. That’s that’s very clear. Thank you. Can I ask for the margins as well? And in this new margin guidance, I’m I’m a little puzzled why the margin was so strong in Q1 and still you’re so cautious on the full year.

And I realized that you had the absence of the Norwegian taxes, but the import duties. But I think even adjusting for that, your underlying margins were up some 40 basis points in Q1. Is that correct?

Hermann, CEO, Boozt: Yes. But it’s actually a very good question, Nicolas, because our margin in Q1 was strong. And I think it reflects the investments we’ve made. It reflects that we are becoming much more efficient. What we saw is that the market actually got worse during the quarter.

And and and it is just, I think, that kind of a reality check for ourselves saying that that there will be headwinds and and the gross margin will go down because, it’s obvious that that there is overstock in the market. And and as you know, we are allergic to having too much stock, and and we act quite fast. So when we see that there’s a potential overstock issue, we we use price to to mitigate it, and we use boosters. So so it’s just that being prudent and and not fooling ourselves that we can save stock for later. So so our experience is that it’s probably cheaper to to to have a discount now than than have a sellout in in June.

So so this is just because I’m you’re right. You know, q one was actually quite strong. Profit was strong, and all our investments in technology and efficiencies actually kind of proved to be in place. But we’re just cautious and and and mindful that it’s it’s probably going to be quite challenging over the next three to six months.

Nicholas Eckman, Analyst, Carnegie: Great. And can I follow-up on that? When you say that Q1 here was that it was becoming increasingly challenging during the quarter, was that mainly because I think you faced very tough comparisons in the April or sorry, in in the start of twenty twenty four because of the strong sellout in late twenty three that the comps then made sales basically slow Or do you think that there’s an underlying trend towards deterioration? And has that also given the renewed guidance here or the lower guidance, has that trend also continued in April?

Hermann, CEO, Boozt: I think there was there’s no doubt that there was an underlying trend in the revenue during the quarter. And March was worse than we expected. We even had Easter in March, which you didn’t have. We had Easter in March year, which didn’t have this year. So so I think that kind of the underlying trend was bad.

And you’ve you’ve seen that, know, with the consumer confidence in general that that that, you know, as as, yeah, the the conflict in Ukraine has not been solved and as trade tensions increased, the consumers are getting more nervous. And and and and literally, when when the the tariff were announced in The US with with what they call the liberation day, we could see that on sales immediately. So that’s why, you know, consumers are nervous and and, especially within fashion, and especially within mid to premium fashion, you’re probably quite cautious and and wear your dress or your coat a bit more than than if you were optimistic and and willing to spend.

Nicholas Eckman, Analyst, Carnegie: Very clear. And can I also just follow-up on what you said about the expansion plans for your fulfillment center? Given that your growth rate now has been a lot lower in ’24 and that’s slowing further in ’25 based on your guidance, Have you considered delaying the expansion of your fulfillment center? Will you still be needing that to be fully in place by 2627?

Hermann, CEO, Boozt: It’s a good question. And and the answer is probably that it will be delayed because it’s not only the slowing sales, but it’s also that we are actually getting much better output from the from the current warehouse. And and we’ve talked about it before, but but the our, you know, our our DC in in the home is increasing increasingly becoming a kind of an output hub so that that kind of the the needed automation infrastructure per per per corona is actually going going down. So so so we are we are so we haven’t kind of we haven’t updated the the the CapEx plans for the for the expansion, but but kind of we can see that the need to expand and and our ability to utilize the concept further is actually, you know, less need and more output. So so that’s why kind of CapEx will continue to be delayed and then the low end.

And it’s also why we expect quite a strong cash conversion this year.

Conference Operator: The next question comes from Daniel Schmidt from Danske. Please go ahead.

Daniel Schmidt, Analyst, Danske: Yes. Good morning, guys. A couple of questions for me, Herman. Maybe just starting with the guidance. It is quite drastic change to the outlook.

And you started referring to April, that’s only been three point five weeks. But I guess you include what happened in March as well when I listen to you. But do you still think that it’s a fairly short evaluation period to be taking quite big sort of change in outlook?

Hermann, CEO, Boozt: That’s a very difficult question, Daniel. Yes and no. As I said, you know, we saw the weakness starting already in March. You know, in January, February, we’re we’re quite good. At March, it was weak.

And and and and February actually, we know and I it’s important for you say that we don’t talk about you know, we don’t provide current trading, but but I will do a slight exception this time. You know? April started quite strong, but then, you know, with with the with the trade wars kind of breaking out, it was literally kind of stalled. And and and I’m not the right one to to tell you when the conflict in Ukraine ends or when when if you would go back to normal trading conditions, but but I think it’s kind of for us, You know, our biggest risk is stock. And if we fool ourselves in believing that it will better into the two weeks, four weeks, six weeks, and delay taking actions on our stock, then we will have a much bigger problems in in six months.

So we might overreact, and we might kind of overclear stock, but I’d rather do that than having a stock problem in in six months. And all as I said again, if we have sold out too much stock now, there’s no doubt that there would be a lot of campaign stock to buy next month or in two months’ time. So so I think it’s better to be prudent. And and and, yes, I know that the the it’s lot it sounds dramatic with the with the margin, but we’re talking about going from 6.2% to 5% EBIT margin in a market that is very volatile. You know?

And I think it’s kind of I think it’s more prudent for, I must say, to be be mindful and careful.

Daniel Schmidt, Analyst, Danske: Yeah. I think it’s just sort of the combination of you doing a lot of stuff on the cost side and still this quite big shift in terms of outlook. And it does sound like it is a bit company specific or maybe industry specific when it comes to the stock levels in the market and your stock level that plays into how you view the outlook that you now give. Because when you listen to others that have reported in the last few days or today, they’re not really saying the same thing when it comes to the shift in consumer sentiment, at least not what I’ve heard yet. But do you think it’s specific for fashion?

Or sort of what’s your view on that?

Hermann, CEO, Boozt: Yes. I know it’s within fashion that there is a very elevated stock level in the market. And the best indicator is that we are getting calls regarding campaign buyers already. There’s no doubt that there is a very elevated stock levels in the market in fashion.

Daniel Schmidt, Analyst, Danske: Okay. And just a detailed question on FX. I do understand that you get negative translation effects and all that. But when it comes to transaction, you do buy your goods in euro and dollar, right?

Hermann, CEO, Boozt: No. We mainly buy in SEK. We try to hedge kind of. So it’s reflecting sales. But, of course, we have a substantial amount in in Swedish krona.

Sandra, CFO, Boozt: Yeah. Around half is is in Swedish krona, around half is

Daniel Schmidt, Analyst, Danske: But they those suppliers we’re not doing most of dollars.

Hermann, CEO, Boozt: We’re not buying in dollars. It’s either it’s it’s SEK or or euros or DKK.

Daniel Schmidt, Analyst, Danske: I’m just saying that those suppliers are themselves buying in euro and dollar, and then you’re buying from them. And so indirectly, I guess, you’re exposed to the movements in the dollar and the euro.

Hermann, CEO, Boozt: Yeah. But the price has been fixed six months in advance. So so or even longer. So that’s so short term is not affecting the the price that we are paying the the supplies.

Daniel Schmidt, Analyst, Danske: About six months out, it is.

Hermann, CEO, Boozt: Yes.

Daniel Schmidt, Analyst, Danske: So that’s why I’m not really sort of understanding why the impact is so big on FX. I completely understand that Danish and Norwegian kroner and sort of the Finnish euro is weaker. But on the purchase side, I don’t really get it. Understand what you’re saying now, but a couple of months out, it will be different.

Sandra, CFO, Boozt: Well, if we look at the calculation we made with expecting like one percentage point effect on the EBIT, around half of that is related to the inventory buys, but then the half is on the other cost structure as the due to the cost structure in OpEx and others. We can give you a detailed tour at some other time.

Eric Sandstedt, Analyst, Kepler Cheuvreux: Thank you.

Hermann, CEO, Boozt: Welcome.

Conference Operator: The next question comes from Eric Sandstedt from Kepler Cheuvreux. Please go ahead.

Eric Sandstedt, Analyst, Kepler Cheuvreux: Thanks. Just a few follow ups here. I mean, I guess you were alluding to the fact performance here in the quarter primarily relates to the challenging market, right, and the hesitant consumers. But have you also seen any changes in the competitive landscape?

Hermann, CEO, Boozt: Yes. It’s mainly the market that we’re seeing. We actually don’t see any real changes in the competitive landscape. It’s not that we see more investments in in marketing or anything like so. So kind of the competitive side is is relatively stable and and so so so nothing if anything, the Chinese seem to be backing a bit off and but but we’re not seeing kind of increased or decreased competition in the market.

Eric Sandstedt, Analyst, Kepler Cheuvreux: Is that team you’re referring to? Yeah.

Hermann, CEO, Boozt: Yeah.

Eric Sandstedt, Analyst, Kepler Cheuvreux: Yeah. Yeah. But but it also seems you you’re doing much better in Sweden than in Denmark. And is that primarily then relating to different consumer confidence levels? So I’m a bit curious if you have seen sort of more competition in the Danish market.

Hermann, CEO, Boozt: Firstly, Currency effects didn’t apply for it very much in the first quarter, so that was not the fact. We believe it’s the consumer sentiment because we haven’t seen any increased competition on the Danish market within our categories. So our view is that it is the, it is the consumer sentiment. What we are seeing is that the cohorts, they are spending less. So so meaning that we can see that they are still coming back, but they seem to be coming back bit less than they have normally done.

So and this I think this is a indicator that that that we have still we still have the customers, but they’re more kind of they are more mindful of how much they’re spending.

Eric Sandstedt, Analyst, Kepler Cheuvreux: But do you I mean, more of a general question. Do you think they are spending their money elsewhere, or are they not spending it at all?

Hermann, CEO, Boozt: I have no idea. I know my own household. I I know in my own household, I’m telling my kids to save money, but it’s like, I I I wouldn’t know if I believe that the spending saving rate in Denmark is is very high at the moment, but I I would know if they’re spending it on on travel or or lipsticks.

Eric Sandstedt, Analyst, Kepler Cheuvreux: Yes. Yeah. Then just wanna come back also to the inventory position. I I know you’ve spoken about it already here, but but it obviously remains pretty big despite the clearance sales that you’ve done at Boost left in the quarter. So just comment again, please, on how do you feel about the inventory level of position and also how we should think a little bit about it going forward?

Hermann, CEO, Boozt: Yes. The inventory position is on the high end, and this is also why we have provided an adjusted EBIT bottom at 4.5% because we know that if you have too much stock, the only thing you can do about that is to to to use price to clear that and to use boosters. So so so we are actively looking at inventory. It’s still fresh. It’s not more concerned than it’s normally, but we’re very mindful of that, that we need to keep an eye on it and we need to clear inventory.

But fortunately now, with boosted having 1,000,000 customers and growing, we can use that without compromising the boost.com brand franchise.

Eric Sandstedt, Analyst, Kepler Cheuvreux: Okay. Thanks. That that’s all I had.

Hermann, CEO, Boozt: Welcome.

Conference Operator: More questions at this time. So I hand the conference back to the speakers for any closing comments.

Hermann, CEO, Boozt: Okay. Thank you for, listening and for some very good questions. I yeah. I This concludes the call, and I wish you all a good day. Thank you.

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