New Wave Group (NWG), the Swedish-based owner of Ahead, Auclair, Craft, Cutter & Buck, and Tenson, reported that first-quarter net sales decreased 7 percent to SEK 1.995 billion, compared to SEK 2.136 billion in the year-ago Q1 period. Net sales were negatively impacted due to Easter occurring in March instead of April this year.

Acquired businesses contributed one percent year-over-year, but there was no fluctuation in the FX rates, so all variances are reported in SEK terms. The company reports in the Swedish Krona (SEK) currency.

“We had a rather tough start to 2024 with slightly lower sales than the previous year,” shared company CEO Torsten Jansson in a letter to investors. “The first quarter is, and has always been, the smallest quarter of the year for us and is often uneven both in terms of sales and results depending on marketing efforts, sales activities, shifts between quarters, etc.”

Regionally, Central Europe, followed by the U.S., performed best in sales compared with the first quarter last year.

Net sales reportedly decreased in all segments and both sales channels. Jansson said the Promo sales channel decreased by 6 percent in the period and the Retail channel declined by 8 percent.

Promo increased in Sports & Leisure but decreased in Corporate and Gifts & Home Furnishings. Retail sales decreased mainly in Sport & Leisure.

“Within the Promo, the reduced net sales is partly due to Easter, which resulted in 2 to 3 fewer working days in March compared to 2023,” the CEO explained. “The reduction in Retail is mainly attributable to lower sales in the sports trade, where we also see a likely shift in sales into the second quarter.

“Despite the decrease in sales, we continue to take market shares with a significantly better outcome than many of our competitors, who, due to changes in the market, among other things, are losing more than us,” he added.

The Corporate segment decreased 7 percent, with all regions posting lower net sales versus last year’s Q1 period.

Sport & Leisure segment decreased by 6 percent, with Central Europe improving its net sales while other regions decreased in the quarter. Gifts & Home Furnishings segment had slightly lower net sales in all regions and decreased by 4 percent.

Gross profit margin amounted to 49.7 percent of net sales in the first quarter, down 100 basis points year-over-year, which was said to be mainly related to the Corporate segment.

“We saw during the first quarter that the price pressure within Promo increased somewhat. Despite this, we still managed to keep the margin at a high level at 49.7 percent,” Jansson noted.

Jansson said the company continues to have good cost control, and it has increased expenditures for marketing and sales as planned, which are expected to positively impact sales in the coming quarters.

Operating profit declined and amounted to SEK 185.5 million, compared to SEK 313.5 million in Q1 last year.

Net profit tallied at SEK 121.1 million, or SEK 0.91 per share, in the first quarter, compared to SEK 222.2 million, or SEK 1.67 per share, in the year-ago Q1 period. The SEK 101.1 million decline in net profit was said to reflect the lower net sales level and the increased costs for marketing and sales.

Cash flow from operating activities amounted to SEK 203.7 million versus SEK 193.1 million in negative cash flow in Q1 last year.

Inventories decreased by SEK 252.5 million and amounted to SEK 5.292 billion at quarter-end, compared to SEK 5.544 billion at first quarter-end last year. The exchange rate changes when converting to SEK, and acquisitions have increased inventory value by SEK 135.2 million.

“The inventory is at a strong level, and, despite the delays of sea freight due to the situation at the Red Sea, we have experienced few delays on incoming deliveries; this gives us better conditions in the market for the coming period compared to many of our competitors,” Jansson explained.

Jansson acknowledged that development in the short term is always difficult to assess, especially under the current economic conditions and the continued unrest in the surrounding world. “However, I know that we are very strong in all our areas of operation, and I am convinced that our ventures and investments will bring us success. We are well equipped for growth due to the ongoing investments we have made in product development, marketing and sales recently,” Jansson said.

  • The Sport & Leisure segment is said to have “exceptionally good growth opportunities” going forward with Craft’s investments in, among other things, shoes and teamwear, Cutter & Buck’s investments in e-commerce and product development and the restructuring and new distribution network of the latest acquisition, Tenson.
  • The Corporate segment is also said to be well-equipped for growth with good inventory, a high level of service and investments in products, marketing and sales organizations.
  • In the Gifts & Home Furnishings segment, Jansson said the company believes the slowdown has almost ended and that growth is on the horizon.

Image courtesy Cutter & Buck