Release Date: August 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kid ASA (FRA:97Q, Financial) reported its fourth consecutive quarter of double-digit growth, reaching an all-time high revenue of NOK797.8 million.
- The company experienced a revenue growth of 12.4% in the first half of 2024 compared to the previous year.
- EBITDA increased to NOK201.5 million, with a strong margin of 63.2%, and EPS strengthened to NOK1.19.
- The customer loyalty program saw positive results, with membership reaching 3.2 million, a 10.4% increase from last year.
- Kid ASA is expanding its market reach by launching a German language website and an English language site targeting European countries, indicating potential growth beyond the Nordic region.
Negative Points
- The second half of 2024 faces tougher comparable growth due to a strong performance in the second half of 2023.
- The strong dollar and higher freight costs due to unrest in the Red Sea negatively impacted costs, although price adjustments have so far compensated.
- Cash flow from operations was impacted by a planned inventory buildup, which could affect liquidity.
- The company faces challenges in securing larger store locations with favorable lease terms, impacting expansion plans.
- The competitive landscape in Germany poses challenges as Kid ASA enters this new market with its e-commerce strategy.
Q & A Highlights
Q: The European expansion is the most interesting news today. Can you talk about why you have chosen Germany for marketing investments and also the competitive landscape in Germany?
A: We are launching a German language website with targeted marketing investments in Germany. The Nordic style trend is attractive in Germany, and our product portfolio is expected to be commercial there. This is a low-risk investment as our e-commerce platform is tailored for new languages and geographic areas. We are excited but humble about entering new markets.
Q: Can you quantify the expected investments for the European expansion?
A: The investment will be limited. Over the next 12 months, we plan to invest less than SEK10 million, with approximately half of this amount being capitalized.
Q: If the pilot is successful, how should we think about further investments compared to the sustainability of dividends from 2026 and the coming years?
A: Time will show the potential in the German market. We are not planning extremely heavy marketing investments. We will invest in marketing to drive traffic to our website, and we will assess the results after the opening.
Q: Will you eventually launch stores in Germany?
A: We believe in the omnichannel concept, which has been successful in our existing markets. If the e-commerce strategy is highly successful, we may consider opening physical stores in Germany at a later stage.
Q: For your furniture sales, have you seen any changes in growth after opening larger extended stores?
A: We are very happy with the development of furniture sales. Adding more categories and new products has contributed to the sales of existing categories. We are positive about the results seen so far, especially in Hemtex, despite not having extended stores in the Swedish market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
