The warm and volatile weather in Europe and the macroeconomic and political situation did not support this first quarter of 2025. January started OK as well as February, but in March a dip in business occurred. Not only for us but also for other players I/we have spoken to. Q1 therefore ended short on last year’s sales 157.7 MEUR vs 163.8 MEUR, a decrease of 3.7%. The majority, 4.7 MEUR, was related to Frilufts. Our other direct to consumer channels were also affected, mainly in March as Frilufts. The operating result ended 5.2 MEUR vs 12.8 MEUR last year (10.5 MEUR excluding for capital gains made last year). The contributor to the lower result was the lower Gross profit of 4.9 MEUR. The costs are in control and were equal to last year, even though we will not see the full saving effects from our new logistic structure in Europe and new ERP system until fall 2025/early 2026. As it looks, we do currently not foresee any major direct effects from the potential higher tariffs (to USA) in 2025. The potential indirect effects regarding lower consumer confidence and 2026 tariff effects are still difficult to judge. Not being too pessimistic I repeat my statement from the Q4 report “In terms of orderbooks for 2025 we do see an improvement for both fall and winter”. I also feel a positive momentum just leaving the spring/summer 26 kick off, showing a broader and very strong assortment from all our brands. This kick off was also the first one were our new brand, Devold joined. A premium wool brand complementing our portfolio very well.
Brands and Global sales
In total Brands and Global external sales were relative stable, down 1.6%. OPEX was on same level as last year.
Brands
Our Brands segment showed external sales of 59.6 MEUR (45.2 MEUR). The operating profit was 14.1 MEUR (12,9 MEUR). Most markets were stable in sales vs same period last year. The increase is coming from the transfer of Fjällräven wholesale operations in USA and Canada from Global sales to Brands. The wholesale activities of Fjällräven and Hanwag in the German, Dutch and Swedish markets and the direct-toconsumer Brand operations were already before in Brands.
The preorders were delivered according to plan, but the weather and political climate made that the direct orders weaker than expected. We also suffered from low inventory, due to higher-than-expected demand for winter garments during January in the Nordic countries. The sell through of our internal brands in Frilufts outperformed where Hanwag went against the stream with a double digit sell trough increase. Also, Royal Robbins showed growth, whereas a better performing travel and a warmer weather had a positive effect on their sales. In terms of countries, we also saw comparatively better performance in Canada.
Global Sales
Global Sales reached external net sales of 34.7 MEUR (47.6 MEUR). The operating profit ended 5.8 MEUR (7.8 MEUR). The JV in China outperformed almost every other market and had a very good quarter. The positive consolidated effect in operating profit (equity method), shown in result from associated companies, was limited by a weaker Chinese currency.
Frilufts
Q1 is, by history, a very weak quarter for Frilufts, but several negative factors contributed to the lower sales and operating result. A lack of winter weather in parts of Europe, calendar effects, lower overall demand including cautious consumer spending and remaining overstock in the market pushed out in sales campaigns by competitors. Sales were 66.4 MEUR down from 71.1, -6.6%. One interesting fact was that brick and mortar only showed a small decline, whereas the major decline came from online sales, being very volatile. The online business was very discount driven and discussions with other retailers confirms the same trend. We believe the markets still showed signs of over inventory and as we cleaned out a lot of the inventory last year, we saw a better gross margin on our sales in the online segment.
Digital/Direct to Consumer
The total direct-to-consumer sales was 87.6 MEUR (94.0) MEUR. The decrease in sales was larger for the online sales, -8,6%. The physical shops lost 5.9% in sales, but on like for like basis not that bad in all markets.
The shops in USA are still showing a small increase on like for like basis.
Going forward
I normally have a view of what is going to happen. Now I must refrain from it, as the current situation is extremely unpredictable. I am however convinced that we are well equipped for the future given the strength of our brands as well as the strength of our general organization and structure. All this makes us well equipped to capitalize when the market turns less nervous again. On the positive side I must also mention our European productions facilities. The production of Hanwag shoes in Europe, the Devold factory in Lithuania and the Maloja production partnership in Bulgaria, which will make us slightly more flexible for different tariffs and logistic challenges coming up.
All the best
Martin Nordin
Chairman of the Board
