Pierce; Interim report January - June 2024
Continued improvement
April – June 2024
- Net revenue increased by 3%, totalling SEK 456 (441) million.
- Operating profit (EBIT) amounted to SEK 17 (2) million, corresponding to an operating margin of 3.6% (0.6%). Adjusted operating profit (EBIT) was SEK 17 (6) million, and the adjusted operating margin was 3.7% (1.5%).
- Cash flow for the period was SEK 83 (64) million and the cash position at the end of the period was SEK 350 (179) million.
- Earnings per share before and after dilution was SEK 0.17 (0.33).
January – June 2024
- Net revenue increased by 3%, totalling SEK 812 (786) million.
- Operating profit (EBIT) was SEK 24 (-19) million, corresponding to an operating margin of 2.9% (-2.4%). Adjusted operating profit (EBIT) totalled SEK 24 (-15) million, and the adjusted operating margin was 2.9% (-1.9%).
- Cash flow for the period was SEK 140 (31) million.
- Earnings per share before and after dilution was SEK 0.49 (0.18).
| Apr-Jun | Jan-Jun | Jul 2023- | Jan-Dec | ||||
| SEKm (unless stated otherwise) | 2024 | 2023 | 2024 | 2023 | Jun 2024 | 2023 | |
| Net revenue | 456 | 441 | 812 | 786 | 1,563 | 1,537 | |
| Growth (%) | 3% | -2% | 3% | -10% | -1% | -8% | |
| Growth in local currencies (%) | 2% | -7% | 2% | -14% | -5% | -13% | |
| Gross profit | 201 | 186 | 364 | 323 | 648 | 607 | |
| Profit after variable costs | 104 | 88 | 186 | 142 | 300 | 256 | |
| Overhead costs | -69 | -67 | -128 | -129 | -266 | -267 | |
| EBITDA | 34 | 17 | 57 | 9 | 12 | -36 | |
| Operating profit (EBIT) | 17 | 2 | 24 | -19 | -68 | -111 | |
| Adjusted EBITDA | 35 | 21 | 58 | 13 | 34 | -11 | |
| Adjusted operating profit (EBIT) | 17 | 6 | 24 | -15 | -30 | -69 | |
| Items affecting comparability | 0 | -4 | 0 | -4 | -38 | -42 | |
| Profit/loss for the period | 14 | 26 | 39 | 15 | -72 | -96 | |
| Gross margin (%) | 44.1% | 42.1% | 44.8% | 41.1% | 41.4% | 39.5% | |
| Profit after variable costs (%) | 22.7% | 20.0% | 22.9% | 18.1% | 19.2% | 16.7% | |
| Adjusted EBITDA (%) | 7.6% | 4.7% | 7.1% | 1.7% | 2.1% | -0.7% | |
| Adjusted operating margin (EBIT) (%) | 3.7% | 1.5% | 2.9% | -1.9% | -1.9% | -4.5% | |
| Cash flow for the period | 83 | 64 | 140 | 31 | 200 | 91 | |
| Net debt (+) / Net cash (-) | -350 | -179 | -350 | -179 | -350 | -222 | |
| Earnings per share before dilution (SEK) | 0.17 | 0.33 | 0.49 | 0.18 | -0.91 | -1.21 | |
| Earnings per share after dilution (SEK) | 0.17 | 0.33 | 0.49 | 0.18 | -0.91 | -1.21 | |
Significant events during the reporting period
On 13 May 2024 the Board of Directors revised the medium to long-term financial targets regarding net revenue growth and the adjusted EBIT margin to reflect the prevailing market conditions in which Pierce operates. The capital structure target and the dividend policy remain unchanged.
On 17 May 2024 the Annual General Meeting approved each of the resolutions proposed by the board and/or nomination committee including:
- to introduce a long-term incentive program (“LTI 2024”) in the form of a performance share program for the Company’s senior executives and key employees. A maximum number of 1,025,000 ordinary shares can be issued in this program.
- to elect Kenneth Christensen and Niklas Jarl as new ordinary board members. Board member Mattias Feiff had declined re-election.
- to elect Grant Thornton Sweden AB as new auditor.
Significant events after the end of the reporting period
No significant events took place after the end of the reporting period.
CEO comments
Our ongoing transformation efforts combined with a continued more positive consumer sentiment, especially in the beginning of the quarter, have led to an improvement in our earnings for the second quarter. Our adjusted EBIT amounted to SEK 17 million, up from SEK 6 million last year. Net revenue increased year-over-year to SEK 456 million from SEK 441 million, representing a growth of 3 percent. We also saw an increase in our gross margin, rising to 44.1 percent from 42.1 percent.
Our overhead costs amounted to SEK 69 million up from SEK 67 million last year. The costs were negatively impacted, primarily by the underlying inflation and weakening Swedish currency, but also by costs related to our tech stack modernisation. However, we managed to mitigate most of these negative effects with the savings from the operational efficiency program, undertaken in the fourth quarter of 2023, which delivered in line with expectations.
Cash and cash equivalents at the end of the quarter stood at SEK 350 million, compared to SEK 179 million last year. The improvement is mainly attributable to the inventory, which decreased by as much as SEK 152 million. However, we expect somewhat increased stock levels going forward in support of seasonal fluctuations, the need to ensure product availability and to capture future growth opportunities.
Our vision is to become the unquestionable leading e-tailer of the European market of gear, accessories, and parts for motorcycle riding. To realise this vision, which we call Pierce 2.0, we have identified seven strategic pillars that guide our efforts.
- To achieve absolute leadership in the Offroad segment and profitable growth in the Onroad segment
- To have the highest customer loyalty in the industry
- To create a simple and powerful go-to-market approach
- To be the best in the industry in pricing and purchasing
- To have market-leading value-for-money own brands
- A modern and scalable tech stack
- A lean, fast and agile organisation
During the quarter we took significant steps to enhance our customer offering by expanding and optimising our product assortment, bringing more items, selections and choices to our customers. We also made substantial changes in our customer care approach and laid the groundwork for the launch of our first-ever loyalty program. Providing the best shopping experience is key to achieving our strategic pillar of having the highest customer loyalty in the industry.
Additionally, we have finalised the design and ordering of an important part of our 2025 own brand collection, which will be larger and more attractive than ever before. Developing a market-leading, value-for-money own brand offering is one of our strategic pillars and we will take an important step herein when we launch the new private label assortment in the season of 2025.
We are progressing fast in our work to build a composable, cloud-based technology stack, integrating best-in-class systems to enhance our operational capabilities. This will enable us to achieve our strategic objective of creating a simpler and more powerful go-to-market approach, and it will support the leaner, faster, and more agile organisation we established in the first quarter.
With the increasing geopolitical tensions in several parts of the world, an upcoming election in the US and general economic uncertainty as well as the volatile shipping markets, the outlook remains uncertain. We are however keeping full focus on our operations, taking active measures in relation to what we can control, and remain fully committed to our vision and strategic objectives.