CEO’s review

The business environment continued to be challenging. We continued to invest in enabling greater convenience through our omni and pure play online initiatives, opened six new stores to extend direct reach and focused price and campaign activities, all of which have aided customer satisfaction, although affected sales mix, growth and profitability.

Group net sales increased by 0.7% to EUR 104.0 (EUR 103.3) million. The growth was delivered by a growth in our online offering 7.4% to EUR 26.1 (24.3) million and offset by relatively flat development -1.6% in store sales to EUR 75.3 (76.6) million including -2.6% store like-for-like growth (partly impacted by inflation). Positively, vendor price inflation has moved back to long term averages after 18 months of significant price rises. Online sales accounted for 25.1% (23.5%) of total net sales. We opened six directly operated stores and are actively looking for new opportunities outside our current operating environment.

Gross margin decreased to 43.3% (45.7%) due to targeted investment in price and campaign activities. The share of employee benefits and other operating expenses as percentage of sales was 33.2% (30.1%) driven mainly by the increased number of stores. The overall share of operating expense as percentage of sales will rebalance as new stores ramp. As a consequence of all the above, Group adjusted EBITA decreased by 59.4% to EUR 3.9 (9.5) million. The decrease was mainly due to the pressure in gross margin resulting from a weak consumer climate. Adjusted EBITA margin was 3.7% (9.2%). Profit before taxes amounted to EUR -0.5 (9.5) million.

The long-term market trend of Pet Parenting has globally experienced a year of stabilization with temporarily soft demand, affected by the macro consumer climate including a short-term decrease in households bringing a new puppy or kitten into them as we return to long term new puppy and kitten growth post an inflated COVID period. Our expectation, based on recent data, is that the market is rebounding to the long-term trend.  Our fundamentals and competitive advantage remain strong, the customer base is growing year on year in all countries, as is spend per customer. Norway, where we have most headroom for growth, is showing the strongest trends.

As we move into Q4, our focus remains on executing on our long-term Nordic strategy and seeking further opportunities to expand the Musti business, focusing on the components within our control in the temporarily softer market environment. Musti is the leader in the structurally growing Nordic market and with our concept we are well positioned for the improving economic outlook and the improving consumer climate.

To our team members – on behalf of our shareholders, our Board, our Group management team and myself, thank you for the year so far, I hope you have a great summer and will be back rested for the exciting path we have in front of us.  

David Rönnberg,   

CEO