Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Boozt AB (BOZTY, Financial) reported a revenue growth of 6% in Q3 2024, with an underlying growth of 9% when excluding currency effects.
- The company saw a significant increase in active customers, with a 12% rise over the last 12 months, driven by strong performance in Germany, the Netherlands, and the Baltics.
- Customer satisfaction remains high, with a Net Promoter Score (NPS) of 73 and a Trustpilot score of 4.4, both above industry averages.
- Boozt AB (BOZTY) successfully won a legal case in Norway, which will save the company approximately SEK50 million annually in import duties.
- The company's loyalty program, Club Boozt, has reached 1.7 million members, with club members showing higher shopping frequency and average order value compared to non-members.
Negative Points
- The adjusted EBIT margin decreased to 3.3% from 4.3% in the same quarter last year, impacted by currency fluctuations and increased fulfillment costs.
- Boozt AB (BOZTY) faced challenges with consumer demand, particularly in August due to warm weather, affecting sales of autumn and winter collections.
- The company had to implement additional markdowns on Booztlet to clear older inventory, which negatively impacted margins.
- Currency fluctuations had a negative impact on the gross margin, decreasing it by 1.2 percentage points compared to last year.
- Despite revenue growth, the company reported a negative free cash flow of SEK17 million for the quarter, although this was an improvement from the previous year.
Q & A Highlights
Q: Could you comment on the impact of the Norwegian High Court case and your plans for reinvestment in growth initiatives? Also, will this affect your pricing strategy in Norway?
A: Our prices in Norway have been competitive, and we have absorbed the customs costs, which amounted to around SEK50 million in 2023. We do not plan to reinvest this entire amount in Norway. Instead, a significant portion of the savings will improve our bottom line. We have been investing in Norway, anticipating either a change in customs policy or a favorable court ruling, which took longer than expected.
Q: Regarding the pricing environment, have you seen any competitor initiatives following your clearance sales in Booztlet? How might further markdowns impact your margin guidance?
A: Booztlet's margin decreased as we prioritized clearing old stock. We aim to avoid ending the year with excess inventory, which is why we have been aggressive with Booztlet pricing. If consumers hold back, we might need to increase markdowns, potentially affecting our margin guidance. However, we currently do not anticipate this scenario.
Q: When do you expect to see the full impact of the SEK50 million savings from the Norwegian import duties?
A: We aim to complete the registration process by early 2025, although the timeline depends on administrative procedures. We are working to expedite this process to realize the savings as soon as possible.
Q: Can you quantify the efficiency improvements from the warehouse transfer sales initiative?
A: While we anticipate significant productivity gains, particularly in reducing manual labor, we prefer to observe the actual efficiencies before assigning a specific number. The consolidation process should notably decrease manual hours.
Q: How confident are you in achieving your full-year margin guidance, given the current market conditions and competitive environment?
A: We are confident in reaching our revenue targets, which should provide operational leverage. However, the fourth quarter is crucial, and while nothing currently suggests we won't meet our midpoint numbers, we remain cautious due to potential market fluctuations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
