Fenix Outdoor International AG, the parent of Fjällräven, Royal Robbins, Hanwag, and Fenix Outdoor brands, reported that the 2024 fourth quarter started promising, but a delay in winter weather meant it slowed down before improving again towards the latter part of the quarter.

“We did run into a shortage of some winter merchandise due to more conservative purchasing because of the large inventory last year,” said Martin Nordin, chairman of the Board at Fenix Outdoor International AG, in a letter to investors. “We then did not anticipate the decrease of winter goods in inventory during Q1 2024, due to the cold weather and the higher-than-expected demand in the Nordics.”

Nordin said that the company was hit by some credit problems with customers in North America and South America, prompting a delay in deliveries.

“Another trend globally was that the digital sales channels, in general, underperformed compared to brick-and-mortar,” Nordin continued. The brick-and-mortar business did see growth on a like-for-like or comp sales basis.

The North American owned-brand retail reportedly showed promise on a comp sales basis, where the company closed six locations in the U.S. The improved sales trend was also said to be driven by a digital billboard campaign in Times Square in New York City.

Fourth quarter sales declined 3.1 percent year-over-year, reaching €174.6 million in Q4 2024, compared to €180.2 million in Q4 2023. Excluding the effect of the shop closures, the sales on a comp sales basis were down 2.6 percent. Most of the drop in sales reportedly came from the company’s Wholesale business in Brands and Global Sales.

The fourth quarter operating result amounted to €2.5 million, compared to €0.4 million in the prior-year Q4 period.

“During the year we have implemented several saving measures,” shared Nordin. “We have seen positive effects of them. We have, however, also seen market-related increases as salary costs, but in total, this means that, for instance, Brands shows a better result for the quarter compared to last year.”

Brands Segment
The Brands segment had external sales of €45.7 million in Q4 2024, compared to €47.3 million in Q4 2023, a decrease of 3.3 percent.

“As this includes our Brands retail consumer sales, including USA where we run six less shops than last year, the sales on a like-for-like was basically flat compared to last year,” Nordin noted.

The South American holdback of deliveries due to credit risk also apparently affected sales.

The operating result was €5.0 million in Q4, up from negative €1.5 million in Q4 2023, which is said to reflect not only a more efficient operation but also a positive effect from the closure of the six shops.

Hanwag reportedly made a promising recovery during the quarter after being hit by a significant decrease after the pandemic.

Global Sales Segment
Global Sales posted external net sales of €31.9 million in the fourth quarter, compared to €34.4 million in Q4 2023.

The operating profit for the quarter amounted to €1.8 million, down sharply from €5.7 million in Q4 2023. The top and bottom lines were said to be negatively affected by both the held-back orders due to credit risk in North America and some challenges in the Korean market.

Lower sales to owned-brand retail also affected the operating result negatively. Nordin said the company’s joint venture in China outperformed almost every other market and had strong quarter.

Frilufts Group
Frilufts sales were almost flat year-over-year, while other Nordics, except Norway, were down. Brick-and-mortar sales grew in all markets, whereas Digital sales were down.

  • Germany continues to report losing money but is showing an operational improvement due to improved operational efficiency.
  • Norway showed increased sales but is still losing money.
  • The UK operation continues to face a volatile market.

The Frilufts Group generated €97.0 million in sales in Q4, a decrease of 1.5 percent year-over-year. EBIT ended at €1.8 million for the quarter.

For the full year, Frilufts sales where €347.5 million, a decrease of 1.3 percent year-over-year. The company reported its brick-and-mortar channel also performed better than its digital channels for the full year.

Digital/Direct-to-Consumer
Direct-to-Consumer (DTC) sales totaled €132.5 million in the fourth quarter, compared to €137.5 million in Q3 2023. Digital represented 45.2 percent of total DTC sales in Q4, compared to 49.4 percent in the prior-year comparative quarter.

  • Digital DTC sales were down 9.2 percent to €41.3 million, compared to €45.5 million in the prior year fourth quarter.
  • Brick-and-mortar sales dipped 0.8 percent to €91.3 million in Q4, compared to €92.0 million in Q4 2023.

For the full year, total DTC sales were €450.4 million, down 2.5 percent from €461.9 million in 2023. Digital represented 30.1 percent of total DTC sales for 2024, compared to 31.8 percent in 2023.

  • Digital DTC sales declined 7.6 percent year-over-year to €135.7 million.
  • Brick-and-mortar sales were essentially flat (-0.1 percent) at €314.7 million.

Look Ahead
Nordin said the company continue to face a challenging market in 2025.

“In terms of order books for 2025, we do see an improvement for both fall and winter,” he shared. “There are still signs of retailers being cautious of taking risks in inventory.”

Nordin said retailers are counting more on reorders from the brands, which means an increase in risk for the Fenix business. He said the supply chain, as well as the political environment, is also playing a part in the uncertainty.

“Due to how we see retail performing so far in 2025 and the order books, there seems to be room for improvement for Q1 2025, but a higher than usual dependence on reorders remains,” Nordin suggested.

“We have improved our inventory situations overall, even though we have not achieved the optimal level everywhere in the group,” he added. “We are now focusing more on optimizing the levels, which might mean increasing inventory in some parts to optimize sales.”

In closing, his letter that accompanied the Q4 and full-year report, Nordin said the company is still facing an expense challenge going forward, both internally as well as externally.

“Internally, we are facing extra costs from implementing the new ERP system while keeping old systems running, as well as higher than normal costs running our logistics until we have fully implemented our warehouse operation in Ludwigslust,” he explained. “We are also contemplating increasing our marketing spend for the next 18 months given the positive experience we had last fall with the two larger campaigns we did in Germany and the U.S. (New York).”

Externally, Nordin said they are facing a volatile supply chain, both in speed and cost, as well as political challenges from potential trade wars, while noting that the company has limited exposure to the U.S. versus China issues.

“So, with the risk of repeating myself, our focus this year again will be on sales and cost control,” Nordin concluded.

Image courtesy Fenix Outdoor International AG/Fjällräven