Q2 2026 New Wave Group AB (publ) Earnings Call
Speaker #1: Yeah. Very, very welcome to the presentation of Q2 and the first half a year. I'm pretty happy with Q2, actually. Where we show a growth in both sales and earnings.
Speaker #1: And it's also feels a little bit for the first time in a many years, actually. That the markets started to be a bit more positive.
Speaker #1: It's only one point I'm not happy with in this report, and that's is the organic growth. Where I was hoping for more than 4 or 5%.
Speaker #1: And I think we pretty soon will be there. We should also remember that we have several things that is happening this fall. For example, Dallas will start selling from, or distribution from 1st of October.
Speaker #1: I think the costs on Dallas is around 10 million. For the first 6 months, and it will continue to cost money. In the coming quarter, and then hopefully and what I believe is that and that is one of our biggest investments in many, many years.
Speaker #1: Many years, actually, that the markets start to be a bit more positive. It's only one point I'm not happy with in this report, and that is the organic growth.
Speaker #1: It will start contributing sales-wise, of course, from October, and profit-wise, I think it will be 3 to 6 months, and we will be up running at least break-even there.
Speaker #1: So it's a lot of interesting thing in front of us. Today, 2,877 employees, 28 countries. And 3 different segments, as you know. And maybe there I should say also that Sweden is now down to 20% of the sales.
Speaker #1: And it will continue to decrease due to the investments we are doing and the acquisition of Cotton Classic that are not there. Yet. Yeah, here's not much to comment.
Speaker #1: We had, and I think based on questions I've had early. We have maybe a small misunderstanding regarding the tariffs. Because back to the result, it's only the tariffs on sold goods.
Speaker #1: The rest. Deduction of the stock value. That will strengthen the margins coming quarters instead. And if you look at the figures for half of the year, it's not any big effect of it.
Speaker #1: The result in Q1 should have been better. Than it was. And the result in Q2 is slightly lower. So you know that. And one big investment we also have done that we have not talked so much about is Toppoint, our company that producing pens water bottles and so on.
Speaker #1: That moved into a new fantastic facility in which was opened up in May. In May. Also pretty big investment. I don't have the numbers in my head, but yeah.
Speaker #1: So it's another 250 million second investment there. The quarter, net sales plus 14.6%. 12.3% are coming from Cotton Classic and the integration there is going pretty well.
Speaker #1: That's include also what they sell of our own brands today. That's also increasing all the time. And 2.2% from organic growth. And again, that there I'm not really happy at.
Speaker #1: We should be higher on the organic growth. Especially due to all investments we have done and all the products we have launched last years and so on.
Speaker #1: If we look at the different countries, you can say it's I'm actually happy with all countries right now, excluding UK. That has been very, very tough, and it's continue to be very, very tough.
Speaker #1: And we also know that our competitors there have decreased their volumes. Actually. So yeah, most of them or than we. But it's not a good development there.
Speaker #1: Operating profit 295 million. And there I must say, due to all this investments we are doing with Dallas, with Toppoints and so on, I'm very, very happy.
Speaker #1: And the underlaying profitability is very, very good, I would say. And we should also remember here that the second quarter and the first half a year, we didn't had Cotton Classic.
Speaker #1: Last year. So when we compare we have taken in acquisitions on roughly 1 billion in a year turnover with an operating margin on 6, 7% approx.
Speaker #1: So if we look at, so to say, the old group, excluding investment, I think those result are very, very good and could have been much, much worse actually.
Speaker #1: And what's holding it up is also, of course, a very strong gross margin. And I think I've said that for a few years now and it has been tough times that we will keep our gross margin.
Speaker #1: We will not use the price to deduct margin to increase sales. And that, of course, sometimes it can be tempting to do that. To blow up the growth.
Speaker #1: But I also know based on those 30 years that it's very, very difficult to raise again. If you once have start cutting. April June, yeah, 13.5%.
Speaker #1: So 2.6 billion. And currency was negative with only 1% this report. When it was its worst, we discussed that before. For example, in January this year, US was contributing minus 19% in currency.
Speaker #1: Then it's a bit hard to show growth actually. Promo 17.5. And the reason the main reason of that that they are going very strong is, of course, the Cotton Classic.
Speaker #1: The acquisition that are in that channel. Also retail sales up 5%, which I think is pretty good. I'm a little bit afraid actually on the backlash I made in South Europe.
Speaker #1: In the third quarter, due to that has been very, very warm. I don't have any figures to base that on, but when I'm talk with the retailers there, it has been quite empty in the shops.
Speaker #1: When it has been those really warm conditions. Cut and back continue to grow. Well, and I think that that growth will really increase. We also launched Tenson in US through cut and back right now.
Speaker #1: And when Dallas opened up, it gives us a very, very good chance to serve that part of US. As an example, you can say, if I think a simple example, all the sales before Thanksgiving, for example, that we have on the net, we have to quit 3 days earlier or cut order taking 3 days earlier.
Speaker #1: In South US today, than we do in North US. Because we can't deliver before. So that will means a lot, and I think they will actually continue to increase and they have a very good growth.
Speaker #1: And in retail, it was in this quarter mainly craft. But also click. We were a bit lucky there. We were not involved in any way, you can say, with in the world championships of football.
Speaker #1: We had no, unfortunately, yet no national teams playing in craft either. But what we did and what really shows the strength again about stock is that Sweden was qualifying so late.
Speaker #1: So the chains couldn't preorder or they didn't dare to preorder since in time. And we could supply from stocks. Actually, we sold into Swedish merchandise, you can say, to Intersport, Orleans, Tim Sportia, yeah, everybody excluding stadium.
Speaker #1: So that was very, very good. And it's nice to don't pay the sponsoring fee and then get the merchandise. Yeah, here you also see the different segments.
Speaker #1: In one way, I'm also pretty happy there that all three is growing. Even if it was very little, 2.7%. On gifts and home furnishing, it's at least a growth.
Speaker #1: Yeah, sales pair geographic area. North America. Increased. And Sweden was a very nice increase, I must say, because if you look at the market shares we already have, and continue grow, it's very strong development.
Speaker #1: And Benelux slightly up. Nordic, up. And there are Norway going quite strong. Now we finally see the effect of all the national teams we have in Norway.
Speaker #1: It took longer time than we thought, but now it's paying off. And rest of Europe heavily up. And that's mainly due to Cotton Classic.
Speaker #1: Acquisition. And others quite heavily down. And that's only trading. And as we have said, every report trading is extremely volatile up and down. So you can have two weeks coming in with a weekly sales plus 100% and then you have one week minus 70 and so on.
Speaker #1: And that's how that business is. It's still very profitable for us and it's a very good cash flow. So we want to continue this.
Speaker #1: But there you have to get used to that it can come a very good quarter and next quarter can instead be looking bad and then a good again.
Speaker #1: So it will continue that way. And the reason is, of course, that it's quite few number of clients compared with other channels. And it's very big orders.
Speaker #1: So here it's more or less if you are unlucky to or lucky to deliver in the right quarter if you look at the short term.
Speaker #1: Yeah, as the margin we have talked about, and there we should also remember that the majority, I think 65 million a sec. If I remember correctly, is right down on the stocks.
Speaker #1: Due to the tariffs. Which give us a good chance to hold a strong margin in the US market the coming quarters. And we will continue the same way.
Speaker #1: We will not use discounts and so on. Very good gross margin. The coming quarters. That we have in front of us. And we should also remember that, again, Cotton Classic came in.
Speaker #1: The figures you compare with, with more than 1 billion in sales, with a gross margin on what is it now? It has increased a little bit, but 27.
Speaker #1: And it was 25. So if you take away acquisition, I think actually it's the strongest gross margin we ever have had. External and personal costs continue to increase.
Speaker #1: And they will continue to increase. But I think also that we will see a more normal cost increase. And especially investments that are taking as cost from latest third quarter, maybe next year.
Speaker #1: It's a little bit hard to say. But then I talk more about existing business. If we do a more acquisitions during that time, and so on, or we decide to establish one more new big warehouse, which I don't think we will do within one year, but if we do, it can of course affect.
Speaker #1: But if you look at the normal business, it will come down. And there we maybe should point out once again, because there are some questions on that too, that the different now when we in the past, when you change ERP systems, you put it into the balance sheet.
Speaker #1: And then you write it off on five years. Now it's in the cloud and you have to take a big part of it as cost day one.
Speaker #1: So if you look for the coming years, we will have quite much lower depreciations at that. And I think those changes in the bookkeeping, it's really not good because it's very difficult sometimes for analysts and investors to compare I think with the old do you dare to guess if it was working the same way as in the past?
Speaker #1: So you took it as an investment in the balance sheet. The results so far this year would improve?
Speaker #2: I don't dare to say, but it's a big difference because we have only started to deal with system in two entities. And we have a majority of the cost for the entire template.
Speaker #2: So it's a huge difference. It's more than.
Speaker #1: So and therefore again, I say I'm if we can hold an operating margin on this level due to all this investment at the same time, I take it as a proof that 20% is absolutely reachable.
Speaker #1: Again, excluding acquisitions. You know that we love to buy companies for one sec. And one sec companies is not very profitable when you buy them.
Speaker #1: And we will continue and we want to continue the same type of acquisitions if we can. And if we find them. And you can say that all those kind of acquisitions has been quite successful over time, excluding our first Costa Buda.
Speaker #1: So we are continue to look at companies that are in a problem. It's of course not easy. To buy them and especially not to find them.
Speaker #1: But excluding that, I think that the margins are very, very good. Yeah, 11.3 in operating and you can say you see on corporate since Cotton Classic is 100% into the corporate sector.
Speaker #1: It's lower there. Sport and Leicester increased quite good. And there also the majority of the minor the majority of the minority of the money we came back from tariffs is in sports and leisure.
Speaker #1: That's also one reason. And gets a home. At least finally a positive margin. And not negative. And there I think that in that area we will never reach any 20%.
Speaker #1: But we should manage 20 never reach anyhow. But I'm very happy if we can actually come up to at least 10%. So we can quit consider it as a problem.
Speaker #1: Cash flow is also quite okay I think due to the again to the investment we are doing. I think it's even strong. And in the cash flow the effects is not yet seen by the tariffs either.
Speaker #1: So I'm quite positive to that.
Speaker #2: Yes. And also in addition, partner mentioned the ERP investments. They are not shown in investing activities in cash flow. But the cash flow from operating activities.
Speaker #2: That's why that's
Speaker #1: Financiers continue to be I would say very strong. Which are we are very happy for. We still have room for more acquisitions. And later on more establishments.
Speaker #1: Which I think is also very, very important to have a strong balance sheet. Dallas, 10 million units. We can store there. And it's the most advanced in automatization and technology in the whole group.
Speaker #1: Including how to store in broader direct to government decoration and so on. And the main reason is of course that we have a lot of actually also existing clients that we don't serve in a good way today.
Speaker #1: In that part of US. So I think it will go quite quick to come up to break even. And if we can reach break even six months or something on that fulfillment center, I think it's very good.
Speaker #1: And it will really means a lot for the future growth in the US market. I got a question earlier today how big we can be in US.
Speaker #1: Or what is the level we can take. And we should remember that we are still extremely small in US. I haven't counted the market shares because I don't have enough zeros in my calculator.
Speaker #1: So if we really succeed there, it can should be nothing is easy. But theoretically we can at least do 10 times what was it doing today within six, seven, eight years.
Speaker #1: So it's a very interesting market. And it's also interesting because I was misjudging US as I said in the earlier report. Because I thought that US should be our most difficult market due to all things with everything from tariffs to Trump's different decision to the war in Iran and so on.
Speaker #1: But I repeat that it seems that the American serve some kind of gene in the body. That we don't have in Europe. That they just continue buying whatever happen.
Speaker #1: That's actually a feeling. So US I think would have ever been one of the strongest markets also in general. The last years. So it will be a very interesting and I'm quite excited to this.
Speaker #1: And I go to US on Saturday morning and we'll meet the people responsible on Monday. Top point, we have not talked so much about before.
Speaker #1: But it's a company we have doing hardware. Located from the beginning a Dutch company. But located with a production nowadays in Poland. Since quite many years.
Speaker #1: But there we start up 35,000 square meter big production facility. Started in May. It's also cost a lot of money. Also in actually decreased sales for a short while.
Speaker #1: It's very modern. 25 different printing techniques. That we are quite alone about. Many products available. In 24 hours. We do that we are at the same level or better than the competition after this.
Speaker #1: So this is also very, very interesting to see what we can do there. And you can say we had still two areas on the corporate.
Speaker #1: There we are in a European perspective are quite small. And top point and hardware is one of them. And the other one is workwear.
Speaker #1: So it would be theoretically easier for us to continue taking market shares in this area. Than it is on corporate in most European countries.
Speaker #1: Yeah, this I mentioned. Without stock we have lost all the sales just so you know. And this is again a proof that especially on merchandise and happenings and those things.
Speaker #1: It's speed to market. That are absolute most important thing. So now we hope that in more of our big countries in the future. The countries qualify but very late.
Speaker #1: Too early is not good. For the first time also we have a champion playing in craft. It was Aarhus. That won Danska Superliga. Which we are very happy for.
Speaker #1: And craft is really moving forward on the teams. Another nice example was that you had the first game. I think the second game is still left to play between JFK Gothenburg and KAA Gent.
Speaker #1: I think it was the first time it was two teams playing in craft. In a European cup. So it's really moving. And here we can also see sometimes it's very, very difficult for us to also give forecast on some things.
Speaker #1: Because if Aarhus wouldn't win. Then we probably have sold merchandise for 20 million lower. So this is also quite important. So I have nothing against Sirius.
Speaker #1: But now I hope that Hammarby is pausing. And it would be very nice to have both Danish and Swedish champions as well. This is one of the biggest events we ever have supplied.
Speaker #1: Royal run in Denmark. 112,000 runners. I think it was in six cities. Or eight cities maybe even. And all of them those 112,000 run in craft t-shirt.
Speaker #1: It's fantastic also not only fantastic for the sales. It's also fantastic for the exposure of the brand. So it's happened quite a lot in those areas.
Speaker #1: Half a year it's not very much to say there in one way. Because it's more or less falling Q2. And you don't have any big effect of tariffs.
Speaker #1: If you look at the half a year figures. As I said before Q1 would be a bit better. Q2 a little bit. Worse half a year is quite correct.
Speaker #1: Yeah, four point nine billion. I mean million. Not billion yet. 10.2% up in sales. And corporate 14.4. And retail 2.0. And again the big difference there is also that cotton classic of course was not in first or half year last year.
Speaker #1: Yeah. Not so much to say here. Geographically you have pretty much the same picture. North America minus 2% is due to currency. And the currency effect there for first half year I don't have in my head.
Speaker #1: But do you have that or not? Soon. Okay. Sweden plus 6%. There I must say that if I'm a little bit negative surprised in for example Great Britain.
Speaker #1: I'm positively surprised in Sweden. Because to have that grow rate with a big market shares we have here is very good. And especially when you don't use discounts and so on.
Speaker #1: You really grow. On full margins.
Speaker #2: Minus 8.6.
Speaker #1: So on half a year the local currency US is plus 6%. Benelux plus 5. And there we now start see positive effect. Of the automatizations.
Speaker #1: We did in New Wave Netherlands. Last year. We have been operating there since May last year. And for a while we lost sales due to bad service when we had all the movement and so on.
Speaker #1: Now we start increasing again. So that's good. And the Nordics 5%. And the rest of Europe plus 43. And the reason for plus 43 the main reason I should say not the only reason but the main reason is again cotton classic.
Speaker #1: And others minus 23. And that's one single reason. And that's the trading came in low in Q2. Yeah, corporate minus 33 million. Sports and leisure plus 57.
Speaker #1: And gifts and furnishing and improvement on 17 million. Cash flow also pretty happy with that. Also if you look at half a year. And that's of course also one of the reasons we continue to have strong balance sheet.
Speaker #1: Which will keep strong even if we do acquisitions. So that's more or less that. I think we open up for questions instead. Yes. Yes, you should.
Speaker #3: Thank you Andreas Lundberg with SCB. If I start on the Outlook comments. It seemed that you turned somewhat more positive versus previous quarters. What are you seeing?
Speaker #3: Where do you see it? And where do you don't see it? Thank you.
Speaker #1: We see more positive clients. Most positive comments. We see better figures. But again I'm a little bit scared with out having figures. How it was in mid Europe during this summer.
Speaker #1: But otherwise sports retail for example has the index there. Have improved. The clients are more positive. When I talk with them. And it feels also more stable than I should maybe add.
Speaker #1: That it can still be surprises. Because I go to bed in the evening and I don't know what Trump doing during the night. When I wake up.
Speaker #1: So it can I think it can still be a little bit up and down. But it feels much better than six months ago. And the first also the first time we really will see if I'm right is pretty soon.
Speaker #1: Because we start doing the pre-sales. In sports retail in yeah right now. And do it for six eight weeks. In forward. And then we will see if the chains really also act as they say.
Speaker #1: That they are more positive and increase the pre-ordering. Because if you look for example in a if the sports index is good in Q2.
Speaker #1: We will notice that in Q3 when they place pre-order. And we will get into our P&L in Q1 Q2 when we deliver the pre-orders.
Speaker #1: But also corporate market feels a little bit more not a little bit. It feels more stable. And people are also there talking more positive.
Speaker #1: Then you can say sometimes it's difficult to judge. If it's that they are more positive because we have launched new products. And do all this investment.
Speaker #1: Or they are if they are more positive in average. In average in general. But we feel I feel more confident than six months ago.
Speaker #3: And different topic you mentioned a few things about the Dallas factory. Can you more broadly talk about the what it will mean for your distribution or logistics in the US.
Speaker #3: And how will the other facilities be affected? Thank you.
Speaker #1: I don't think it will be affected so much. And I should also say now we will not invest in a new big warehouse in US.
Speaker #1: At least for coming three four years. But if the outcome is what we think on the Dallas warehouse. We need another two facilities in US.
Speaker #1: But to really cover the country. But that will be earliest in three four three four years. But we don't think it will hurt so much.
Speaker #1: Because we really give a poor service in that part of US. We are covering down to I shouldn't say south US. Because we are pretty fast down to California.
Speaker #1: But if you come to south east or south mid. We are very very slow. And we have several competitors there with the warehouses in that area.
Speaker #1: And they are today much better than we are. And they will not be better than we are three months from now.
Speaker #3: And if I may last one. And I will let someone else in. About speaking about the US and the team we're set up. There are a team where can you give us an update on teamware or club in the North American business?
Speaker #3: Thank you.
Speaker #1: It's moving forward. I could say that it's a little bit less than I expected. Takes a little bit longer time. And it's also some differences we really learned to need to learn.
Speaker #1: For example I think you all know that most of the team was businesses running in through schools. And not through teams and so on.
Speaker #1: You have that in several sports. The whole league is blocked. Because they sell the league. They don't sell the teams. And so on. So it's but it's a positive development.
Speaker #1: And I still believe in it. On the same level as I did from the beginning. And it's working due to service and so on.
Speaker #1: That's really have been one of our weapons in Europe. The competitors is not better in US than they are in Europe. So yeah. And before you ask I can also comment that the shoes also continue to increase.
Speaker #1: But a bit slower there too.
Speaker #3: I'll take the chance to jump in. Call you on one of the DMV Carnegie. You mentioned that you would have expected four or five percent organic growth in the quarter.
Speaker #3: And still craft looks good. And a couple of other things looks good. Where do you see the shortfall compared to your expectations?
Speaker #1: Mainly you can say it's actually trading. And it's also if you look at your geographically Great Britain. There I thought we should be have a better effect also on the launches.
Speaker #1: So the merge of our two companies there. So it's I don't know. The organic growth if trading had delivered the same. Have you checked that?
Speaker #2: 3.8.
Speaker #3: And look in UK. Is that BTC that is not really working at up until compared to expectations?
Speaker #1: Yes yes. You can say that cotton classic is actually doing at least what we thought. And maybe even better. So it's going quicker. BTC are going slower.
Speaker #1: So you are correct.
Speaker #3: Looking at the custom duties refunds. You mentioned most of it's coming through in sports and leisure as I understand it.
Speaker #1: Yeah. I should be clear there. As a segment. But this is very tricky. Because if you look at channels. I mean Catalan back that have received most is in the segment sport and retail.
Speaker #1: But the main their main sales is a channel corporate. So it's a difference between those. And this it's this bloody IFRS.
Speaker #3: We can agree on that I think overall. But the table has an approach. And looking at both the inventory impact and the cost of goods sold impact.
Speaker #3: When would you see the similar kind of effect on cash flow? Because I guess there is delay there compared to what you see in the P&L.
Speaker #3: And when you look now at the inventory levels at the end of the quarter. So you had it continued inventory build up in Q2.
Speaker #3: What kind of growth rates do you see that being able to sustain if the market is there in the second half?
Speaker #1: Organic we can at least go up to 10 percent. If we can sell so much. But the warehouses or the stock is not a problem.
Speaker #3: Excellent. Thank you.
Speaker #1: But don't take that as we will have 10 percent organic. Just say we could. Due to the stock.
Speaker #3: Emanuel Jansson Danske Bank. Jumping on moving forward to the organic then. I mean given that you are in this heavy investment phase. Is it fair to assume that you need to grow by double digits organic in order to sustain higher EBIT margin at moments?
Speaker #1: Yeah. To say fall through in the P&L. So we don't need to go up to 10. But if we really should be able to deliver a high operating margin with 8 percent organic.
Speaker #1: But we should also remember that sorry to say tell us all the time. But we can take top point also. When you open up something.
Speaker #1: I mean tell us we take the cost every day. And we are not start sending out one single garments there. Start would be October.
Speaker #1: Top point decreased sales for the first time in many years during the period when they had all the moving and everything. So I think we can be there.
Speaker #1: And we also have now launching Tencent in US. It will not be any big effect this fall. But hopefully next fall. And we also have some lines new products and lines we will launch in January and corporate.
Speaker #1: Craft is coming with indoor shoes. Which we think is an actually in one way an easier market than expensive running shoes. So we have a lot also in pipeline there.
Speaker #1: We have taking a lot of costs in the P&L that we have no income at all on yet. But that's how we have done in many many many many years.
Speaker #3: And did I understand you correctly that that will continue until the third quarter as of next year?
Speaker #1: Some of them will of course always continue. I mean we need to develop new products all the time. It's just that we have done it more than normal.
Speaker #1: The last two years we don't take movement and all those things. But we can have a stop that. Because then we will probably have a negative growth for years later.
Speaker #1: But some of the costs for example automatization of warehouses. A lot of warehouses is done. Then it's another story if we for example make an acquisition and say that we need to automatize that warehouse.
Speaker #1: We are a bit keen on the coming two years maybe. Establish a warehouse in Germany that are automatized for cotton classic. But most of them die.
Speaker #1: Can it be can it be another 75 80 percent of the warehouses is now done. There we actually need automatization. So it's much less investments in future in that perspective than it has been the last years.
Speaker #3: So you're happy if you're able to defend the EBIT margin from this level until next year?
Speaker #1: Yes. I think we can start and really see an improvement again. Again excluding acquisitions. We will see an improvement from second half next year in operating margin as well.
Speaker #1: And if we can hold it until then through those investments. Period. I think it's very good. Because if you then look at the underlying profitability.
Speaker #1: It's really nice.
Speaker #3: Perfect. Thanks. That's very clear. And just curious. We have seen several other retail names reporting Q2 numbers describing the weak German market. Revolution Race, Phoenix Outdoor, H&M.
Speaker #3: And also I think Klarna was mentioned. The weak consumer sentiment. You don't experience that or what would be?
Speaker #1: Yeah. We do. But not so bad as we write it in the report. But Germany I think as a country is under a lot of pressure.
Speaker #1: And the consumers there are in one perspective weak. I can take one example. We had the formal CEO in Intersport with us on a trip to I met them in Germany.
Speaker #1: Me and Joram was down to Poland afterwards. And there you have I think that I was a little bit surprised over. You can see how fast things are changing.
Speaker #1: Because the German Intersport dealers on the border to Poland. Just a few years ago had a problem that consumers in Germany was buying in Poland instead.
Speaker #1: Because it was cheaper. Now the shops in the border in Germany is going very well. Because it's Polish people coming over and buy in Germany.
Speaker #1: So it's really fast changes. And I think with everything with car industry and so on. In Germany it will be a tough market. And we should also remember it's a market that everybody wants to be.
Speaker #1: Because it's so big. So the competition there are much I would say much tougher than in many other countries.
Speaker #3: Perfect. And final question. You mentioned Craft. And is it fair to assume that both the teamware and running business doing well. But also the retail business within Craft?
Speaker #1: Retail business in Craft has not done well for some years. And it's not like we are losing shares to other. But as you know the sports retail has been terrible in several countries for the last I think it's three years.
Speaker #3: And it's still not doing well in this
Speaker #1: And that.
Speaker #3: Okay.
Speaker #1: But again before you see it in our figures. Just everybody knows that if for example Q2 comes out strong for the retailer. They will increase the buying the pre-orders they place to us in Q3.
Speaker #1: Which we will deliver Q1 and Q2 the year after. You always have this lead time. So we need before we really will see a positive effect in general from better retail sales.
Speaker #1: It will take six to nine months. And then of course sometimes we can have a small effect that they need to buy in season if they are doing very very well.
Speaker #1: But so good is it not yet.
Speaker #3: Well I guess the cold weather in Q1 and also the sport index data was quite good in Q2 as well. The inventory level should be quite good.
Speaker #1: It's lower than before. It's what we expect. And we expect higher pre-orders.
Speaker #3: Yeah.
Speaker #1: But you never know. And now I hope that in one way I hope that they don't place too much for the winter I would say is most sensitive.
Speaker #1: Because in the past it has been many many times that they do a big winter. Or a good winter. Then they think that next winter will be even better.
Speaker #1: And then they place two big orders. And then that winter is not so good. And then you have a bad effect the year after again.
Speaker #1: So yeah.
Speaker #3: Thank you.
Speaker #4: Hi. Alice Beer from EPG here. Just a few questions. First on cotton classics. What's the gross margin like for Q2 compared to last year for it?
Speaker #4: How is that earnings development going inside of cotton classics?
Speaker #1: I don't have actually.
Speaker #4: I have. But we don't release that.
Speaker #1: Okay.
Speaker #4: On that. But it's improved a little bit. Yeah. And just.
Speaker #1: What we actually measure all the time is how many percent is. But we don't publish that data. But how many percentage of cotton classics total sales is turning into new wave brands.
Speaker #4: Creative brands.
Speaker #1: So so.
Speaker #4: Yeah. And I was just about to ask. But has that increased in the pace that you expected? Or how much would you say that's now?
Speaker #1: I would say at least in the same. As we have expected. Maybe even faster on especially on some brands. But that's also product groups that they that don't have any competition with external brands.
Speaker #1: So for example Craft is doing very good in cotton classic. But they didn't have any sportswear before. And the competitors don't have any sportswear either.
Speaker #1: So the teamware for example is doing very very good in cotton classic.
Speaker #4: Okay. Great. And then a more general question. There are a lot of moving parts affecting both sales and EBITs. And some things you can't control.
Speaker #4: Some things you can't. Short term looking at maybe H2. What are your priorities for increasing or stabilizing margins? Or increasing organic growth out of the things you actually can't control?
Speaker #1: I think goal number one to do that is to keep the gross margin on a high level. Because if we yeah. You can calculate yourself.
Speaker #1: If we would have discounted more and be down on 46 47 it wouldn't have been looking so good. So we will really do everything we can to keep the gross margins up.
Speaker #1: And then I don't think we can do so much more than we already are doing. To increase organic growth actually. Of course it will help with the launches we're doing in US and Tencent and so on.
Speaker #1: But again it takes six to twelve months at least before we see any effect in it. So but hopefully also we have done a lot this first six months.
Speaker #1: That hopefully will pay off better. Lost hopefully.
Speaker #4: Okay. Perfect. That was it for me.
Speaker #3: Niklas Skogman Nordea. Did you raise prices in the US to offset the impact from tariffs? And my. So do you then expect.
Speaker #1: But it's so much depending on in the total I don't have any good picture. Because it depends so much on what products they have hit.
Speaker #1: You know if the tariffs hit the one color t-shirt. It's extremely difficult. To take a price increase on that. Because the competition is extremely extremely hard.
Speaker #1: If it's hitting a craft jacket the consumers really don't know if the price should be 90 or 99 dollar. So and how would that have spread out on average.
Speaker #1: I can't answer.
Speaker #3: All right. So you don't expect sort of price is going down in the US market then.
Speaker #1: No.
Speaker #3: No.
Speaker #1: No.
Speaker #3: Okay. And then going back to the corporate segment. So if you strip out trading. It was minus 3.8 organic growth. Right?
Speaker #4: Yes.
Speaker #3: Yeah.
Speaker #1: No. And what you were saying Niklas. I put plus 3.8. Not minus.
Speaker #4: And trading is down.
Speaker #1: Yes.
Speaker #3: Yeah. So if you strip out the trading impact.
Speaker #4: Organic growth is like what I excluded trading.
Speaker #3: Okay. All right. Then I miscalculated that one.
Speaker #1: Or we.
Speaker #3: Yeah. I'll. I want a correction if you're wrong. Okay. So in the first half. So underlying cost increases are around 12% for external and personal costs.
Speaker #3: Stripping out acquisitions and FX. So is that sort of do you expect that level also in the second half? External and personal.
Speaker #4: This first half year. Then I really do H2. Since in 2025 we didn't even have the web very little costs in external expenses referring to the ERP.
Speaker #4: But as from Q3 it's saying 2025 we had started taking costs. Well the ERP and so likely when you compare now in Q3 2026 to Q3 2025 it would be more comparable.
Speaker #3: Okay. That's it for me. Stefan Granholm Handelsbanken. A question on the gift and home furniture. Segment. You said you long term you can reach 10% margin.
Speaker #1: I hope.
Speaker #3: Yeah. Apart from recovered market. What is needed? Is it time for another structural measures or.
Speaker #1: Probably also some more cut downs in our own production. Which we are working with.
Speaker #3: So there will be more outsourced.
Speaker #1: Yeah. If we really strengthen the gross margin it's need to be that. But at the same time it's no plans to close production because it still means a lot in the total.
Speaker #1: But we have two big production capacity. Today that we gain two low margins on. But it's also certain product different in different products. If you look at art glass.
Speaker #1: We have fantastic gross margin. But if you look at the hand blown wine glass made in Sweden it's very bad. Excluding actually the new line that Björn Franzén is behind.
Speaker #1: Is there you can hold a pretty good margin even if it's produced in Sweden.
Speaker #3: Cool. Andreas at SEB again. Some confusion maybe from my side on the cost of the temporary costs. That you partly will normalize next year.
Speaker #3: But if you look at the last twelve months. And look twelve months forward. How will that figure change? In absolute terms. Thank you.
Speaker #1: I don't think it will change so much. The coming twelve months. I think we calculate now I wrote that it will start to go down the second half of the year next year.
Speaker #1: If I remember correctly. From my head.
Speaker #4: So when the ERP and we have also like Tosse mentioned. On Dallas now we have third party warehouses that we will keep having till we have moved the stock completely into Dallas.
Speaker #4: And some other additional costs.
Speaker #1: But it also depends a little bit how you mean because according to sales and turnover it will hopefully be down. Because again to repeat Dallas.
Speaker #1: We spend a lot of money there both in investment and cost. We're not one single extra income in sales. So if you look at yeah in percentage of sales it will hopefully start going down earlier than second half next year.
Speaker #3: Right. Meaning that your organic growth and your gross margin will be the drivers of your operating margin in the next.
Speaker #1: Yes.
Speaker #3: Quarters. Thank you. Yes. We got some questions from the web. And first. Kosta Körpmanshus. Which new wave co-owns with Lessebo Münze Municipality. Has been valued either for potential sale.
Speaker #3: Are you interested in increasing your ownership stake in the property?
Speaker #1: No.
Speaker #3: Thank you. Yes. Computer software in your intangible fixed assets. Continue to increase in 2025. Should we interpret your statement about transition to cloud computing.
Speaker #3: As that this figure in the balance sheet should start declining in 2026 and onwards.
Speaker #1: That only do on audio run.
Speaker #3: Yeah. I can repeat. Computer software in your tangible fixed assets. Continue to increase in 2025. Should we interpret your statement about the transition to cloud computing.
Speaker #3: As that this figure in the balance sheet should start declining in 2026 and onwards.
Speaker #4: We don't the thing about the cloud solution is that we don't get it as an intangible. We don't get it as an intangible asset.
Speaker #4: So it is the small part that is put in the balance sheet is put there as a prepayment. And dissolved over the license period.
Speaker #4: And the rest is going directly in the P&L. It's expense. Even though on day one even though we consider it as an investment it's something that we do that we made use of for 10 at least 10 years.
Speaker #4: But the cost is upfront. Even though we're not even using the system yet.
Speaker #1: And the answer is yes. On the question.
Speaker #3: Yes.
Speaker #1: But maybe it's you will not see any big effect 2026 I can't say. But the result again when you take a lot of the ERP system as costs instead of putting into the balance sheet is that we will have in one perspective lower depreciations in future than we would have with the old bookkeeping system.
Speaker #4: Yes. We won't even get any depreciation. All will be in the external expenses instead. So it's a shift in that perspective as well between the time.
Speaker #3: Yes. Perfect. That was all of the questions.
Speaker #1: Okay. Any more? Questions around the table? Good. Thank you very very much.
Speaker #3: Thank you.
