ESTABLISHMENT OF THREE INDEPENDENT AND LISTABLE COMPANIES
FULL YEAR 2018
|Gross margin, %||23.0||21.8||23.3||22.5|
|Operating income before depreciation and amortization||35.1||52.4||19.0||90.0|
|Operating margin before depreciation and amortization , %||3.4||4.4||0.6||2.7|
|Operating margin, %||1.6||3.0||-1.6||0.6|
 Lekmer and HSNG are recognized as discontinued operations in the consolidated accounts.
ESTABLISHMENT OF THREE INDEPENDENT COMPANIES
Since June 2018, Qliro Group’s strategy is to operate Qliro Financial Services, CDON Marketplace and Nelly as three completely independent companies. This will create the best prospects for the companies and thereby increased shareholder value. The process is progressing as planned and we took several steps with this work in the quarter.
As part of the process, we have renewed management in the three companies and strengthened the corporate governance at Nelly and CDON. Thus, now all the companies have separate boards with representatives from the Group’s board and management along with external members for Qliro Financial Services and Nelly. This means that the companies are run independently of each other and that Group management focuses on making the companies independent and ready to be listed, while also evaluating potential transactions. Work is underway to separate the companies’ IT and accounting systems, and all three companies are expected to be operationally and structurally independent in the first half of 2019. In addition, we believe that all our companies will be listable in the second half of 2019.
Qliro Financial Services – fast loan book expansion
Qliro Financial Services provides financial services to consumers and e-merchants. During the coming year, focus lies on attracting more merchants and further strengthening the Nordic offering. The company has over 30 merchants and half of the volume comes from e-merchants outside the Group.
The loan book grew by 45 percent in the quarter to more than SEK 1.5 billion with the fastest growth in personal loans. Total operating income increased by 26 percent even though transaction volumes were adversely affected CDON Marketplace’s phase-out of sales from its own inventory.
Total operating expenses increased 31 percent, driven by increased commercial initiatives and recruitment of people working to attract new merchants. In addition, the company has further strengthened the management team and key functions as part of the work to become an independent company.
CDON Marketplace benefits from transition
CDON Marketplace successfully continues its transition as the leading Nordic marketplace. During the quarter, sales by external merchants increased by 20 percent, which proves the potential of the marketplace. At the same time, operating profit before depreciation doubled to SEK 20 million and the corresponding margin increased from 1.3 percent to 3.5 percent. This was driven by a 27 percent increase in commission revenues and a 20 percent decrease in personnel costs, as the company was benefitting from its IT-platform and automation.
The rationale for investments in the marketplace model and dropshipment (sales directly from the suppliers’ warehouses) is to generate growth while using less capital and thereby stronger cash flows over time. At the end of the year, inventory levels were 31 percent lower than last year.
We have now laid the foundation for continued growth and increased efficiency, which provides the opportunity for further reduced personnel costs in 2019. Scalability and continued growth of the marketplace are the key to building an independent and profitable company. As previously communicated, operating profit before depreciation and amortization is expected to be positive for 2019.
Nelly attracts more customers
Nelly is one of the most well-known fashion brands online in the Nordics among women aged 18 to 29. At its core is its own brands, complemented by a well-curated portfolio of approximately 200 external brands.
The general fashion market in Sweden was characterized by weaker demand, which led to a generally high amount of campaign activity in the quarter. Nelly’s growth initiatives led to an 11 percent increase in the number of customers and a 10 percent increase in average shopping basket for the quarter. The successful customer acquisition is important given the company’s strong customer loyalty over time. Order intake increased by 6 percent, while the sales increase was limited to 1 percent due to increased return rates. Sales increased in Norway, Denmark and Finland, but declined in Sweden. In the Swedish market, the company had a strong Singles’ Day but a less effective sales strategy for Black Week. This led the company to focus on selling seasonal clothes during the after-Christmas sale to ensure that the inventory is appropriate heading into the new season.
Qliro Group has a strong financial position with a cash position of SEK 692 million, whereof the net cash of the e-commerce business was SEK 420 million (excluding the bond). Considering this, we will redeem the outstanding SEK 250 million bond loan. Our debt will decrease and the bond loan’s restrictions on special listings and dividends will be removed. Our companies have strong positions and are driving forces in Nordic e-commerce.
President and CEO
Stockholm, February 5, 2019
SIGNIFICANT EVENTS DURING AND AFTER THE FOURTH QUARTER
Carolina Brandtman takes over as CEO of Qliro AB
Carolina Brandtman took over as CEO of Qliro Financial Services (Qliro AB) at the end of November 2018. This recruitment was announced on December 15, 2017.
New financial targets
The Board of Qliro Group resolved on October 18 to establish new financial targets for the subsidiaries, see above.
Nelly’s board is strengthened
On November 13, it was announced that NLY Scandinavia’s (Nelly’s) board will be strengthened by Maj-La Pizzeli and Louise Nylén who have extensive experience in fashion and digital marketing.
Qliro Group called for early redemption of bonds
On February 4, it was announced that Qliro Group will redeem all its outstanding 2017/2020 bonds.
Analysts, investors and the media are invited to a conference call today at 10 a.m. To participate in the conference call, please dial:
Sweden: 08 5033 6574
UK: +44 330 336 9105
US: +1 929 477 0324
The pin code to the call is 8254074. The presentation and webcast will be published at www.qlirogroup.com.
For additional information, please visit www.qlirogroup.com or contact:
Marcus Lindqvist, President and Chief Executive Officer
Niclas Lilja, Investor Relations
Phone: +46 (0)736511363
About Qliro Group
Qliro Group is a leading Nordic e-commerce group in consumer goods and related financial services. Qliro Group operates CDON.COM, the leading Nordic online marketplace, the fashion brand Nelly and Qliro Financial Services, offering financial services to merchants and consumers. In 2018 the Group had sales of SEK 3.2 billion. Qliro Group’s shares are listed on the Nasdaq Stockholm MidCap segment under the ticker symbol QLRO.
This information is information that Qliro Group AB is required to disclose under the EU Market Abuse Regulation. The information was released for publication through the agency of the above-mentioned contacts at 8:00 a.m. on Tuesday, February 5, 2019.