» Interim Condensed Consolidated Financial Statement Q2, 2025

Another struggling quarter.

The second quarter did not come in as expected and was full of challenges. The specialist outdoor retail market is still facing some challenges. The weather made the quarter volatile from a sales perspective, furthermore price pressure from web dealers offering discounts from day one on new products.

When talking to dealers, especially in Europe and analyzing the sales of Frilufts both support the hypothesis that Brick-and-Mortar shops performed better compared to the web versus last year. The warm weather was also supporting that dealers with a broader sports and lifestyle assortment performed better. In terms of our operation this had the consequence that sales were negatively impacted in several ways, slightly lower gross margin in the Frilufts, and lower direct orders in the Brands and Global sales segments. Global sales and Brands were also hit because Fjällräven, due to the unpredictability in the market, bought less goods for reorders, which created a lack of goods for delivering direct orders. This means that the market has changed. It seems that dealers are depending more on reorders than before due to the markets unpredictability and we must change accordingly and thereby slightly increase the inventory risk. We also had lower inventory of old goods this year, which meant we were not selling out through many of our channels compared to last year.

The US market showed a decrease in sales, but as in Europe mostly in the wholesale segment, whereas the lower direct-to-consumer sales was up on like for like basis, especially in some key areas. The bottom-line in North America line did improve somewhat due to the savings we implemented last year. The weaker USD also affected our sales presented in EUR.

Net sales for the quarter ended at 144.9 MEUR vs last year 149.6 MEUR, a decrease of 3.1% driven by the factors explained earlier. The operating result was -7.2 MEUR vs last year -6.5 MEUR. It was down primarily due to two factors: Devold was showing a seasonal loss not in the comparable numbers last year. They were however better than last year. The sales were also lower for Brand and Global sales in general.

Brands

The increase in external sales was related to the transfer of Fjällräven wholesale operations in USA and Canada from Global Sales to Brands during the last quarter, but also from the acquisition of Devold. The lower internal sales negatively affected the gross and operating profit. The strong sales to Frilufts in Q1, sold by Frilufts in Q2, resulted in a positive release of internal profit in stock accounted in common. The total lower sales of the Brands segment were also driven by the weaker US Dollar. The direct-to-consumer business showed a decrease especially on the web, however last year sales on the web included a boost due to clearance of goods which was not needed this year as our inventory is more accurate.

Global Sales

The European part of Global Sales showed decreased sales of 6.0% and was driven by the reorder situation. Asia was further hit by slowdowns in South Korea and Taiwan, both countries decreased in local currency as well as Euro. On the positive side the wholesale business to the rest of Asia was up as was our Chinese operation which showed growth both in sales and in profits in local currency but due to the RNBs connection to the USD and accounting rules on JVs it shows up as a loss in our accounting.

Frilufts

Sales in the Frilufts operation showed an increase of 1.5% from 82.1 MEUR to 83.5 MEUR. This was driven by increases predominantly in Norway, Finland and Sweden. These markets were less affected by the weather, but the market was volatile. In terms of result, this meant a positive impact on profitability mainly in Germany driven by the lower costs. The Norwegian business is showing reasonable improvement but still has a way to go.

Digital/Channel – Development from a Group perspective

Our brick-and-mortar sales decreased from 77.8 MEUR to 73.8 MEUR, -5.1%. Our digital sales decreased from 30.7 MEUR to 28.3 MEUR, -7.9%. If we consider the closure of six shops, the data shows that brick and mortar performed even better in the quarter than the digital sales. The challenges are that the primary driver of digital traffic/sales is discount/red prices, which we use restrictively. On the good side our brands outperformed many of the external brands in Frilufts. We therefore believe there is a good chance that our brands are doing better than the market in general.

Going forward

In terms of our expectations for Q3, it looks good. There is a more than solid order book in Brands and Global Sales this year. However, given what we just experienced during Q2 as well as last year, weather and the relative weak economy may jeopardize the situation. I therefore once again refrain from making any predictions.

There are also some challenges. We are facing an unpredictable situation in the US due to the trade and customs discussions. We are therefore still not able to finally set prices for summer 2026 and even though agreements are politically agreed upon for some of our supply markets, it is still not confirmed with instructions for the customs offices.

What are we doing? I have mentioned in earlier letters that we have been investing in a new warehouse operation in Ludwigslust, and we are almost finished and expect to see positive effects on the costs under Q3 and Q4. We are also launching a new ERP system for Brands and Global Sales during H2 2025, which will enable us to improve operational efficiency. Besides that, we are also expecting positive effects from facilitation of our part ownership in Viomoda for closer to home production in 2026. We are also implementing further savings and efficiency programs, and we have already seen improvements as we have started seeing effects in this quarter on a like for like basis.

All the best,

Martin Nordin, Chairman of the board

Interim Condensed Consolidated Financial Statement Q2, 2025

2025 Q2 Reports in Swedish and English