It was a different story in the third quarter at Royal Robbins, Devold, Hanwag, and Fjällräven parent Fenix Outdoor, following a long string of negative results that had begun in the first quarter of 2023. Instead of starting his quarterly investor letter with words like “struggling” or “disappointing,” Martin Nordin, chairman of Fenix Outdoor International, started his 2025 third quarter note with the company seeing an “Improving Bottom Line at Last” and reported an improvement in sales and profitability to the same quarter last year. Granted, the positivity came mostly due to the integration of the Devold of Norway wool apparel business, but such acquisitions have not always provided a bump to a quarter.
Still, Nordin said the retail market continued to be driven by price pressure and a warm start to the winter season, which meant a slower start to winter sales in September. Among the company’s brands, a mixed picture was reported in terms of performance.
“Globetrotter, our German retailer, limited its use of discounts to drive digital sales, which meant substantially lower digital sales, but it had almost no negative effect on brick-and-mortar sales,” the chairman shared. “This led to an improved gross profit for the earlier quarter and a much better gross margin. We are also continuing to see improvements in our North American business, where Canada continues to stand out in performance.
Net sales for the quarter amounted to €206.4 million, up from €197.5 million in Q3 last year. The increase was reported to be driven by the “punctual delivery of preorders” and the acquisition of the Devold business. In terms of the split between DTC sales between Digital and Brick & Mortar (B&M), it has clearly shifted to the B&M side. The B&M business has reportedly outperformed Digital in almost all markets — and even more so in the third quarter, Nordin noted.
Brands
The Brands segment, excluding the effect of the North American wholesale business, reportedly posted a 17.0 percent increase for the quarter. The increase was reportedly driven by Fjällräven deliveries from a higher preorder book as well as the addition of Devold.
Hanwag reportedly delivered, preemptively, a portion of its preorders in Q2 to mitigate startup problems during Q3 due to its change in business system.
Royal Robbins showed increased sales, but from smaller numbers. The North American retail operation continued its improvement. The gross margin recovered compared to earlier quarters, due to a lower need to discount merchandise. The costs were kept under control, and savings were taking effect.
Global Sales
Overall, Global sales decreased to €34.0 million in Q3, compared to €52.8 million in Q3 last year. Nordin said most of the decrease was because the North American business is now accounted for in the Brands segment. On a like-for-like basis, European distribution was down 1 percent, driven by Hanwag orders getting pulled forward into Q2 and some IT-related delivery problems at Hanwag.
The Asia/Pacific markets continued to grow, rebounding from earlier quarters. Nordin said the non-consolidated China business continued to grow and is likely to show record sales and results for the year in local currency.
Frilufts
Sales in the Frilufts operation decreased by 3.1 percent year-over-year, from €97.4 million in Q3 2024 to €94.4 million in the most recent quarter. Nordin said this was driven by a general decrease in Digital sales and the “volatile warm situation” in September. Still, Globetrotter showed an improved result, due to less discounting, meaning “a higher profitability for Frilufts in the quarter.”
Direct-to-Consumer (DTC)
Total B&M sales were essentially flat at €86.5 million in Q3, compared to €86.7 million in Q3 2024. Digital sales decreased 13.7 percent to €32.2 million in Q3, compared to €37.4 million in the year-ago quarter.
Profitability and Expenses
The operating profit of the Group increased to €32.1 million in Q3 from €28,6 million last year. He said both the comparable business and Devold contributed to the increase.
The gross margin increase for the Group was attributed to increased DTC sales and reduced discounting in the quarter, as well as a higher gross margin in the Brands segment.
“We had around €1.3 million in one-off costs from some minor restructuring, “Nordin shared. “We also had higher-than-anticipated costs in the logistic operations, as we did not gain as much efficiency as anticipated.”
Fourth Quarter Outlook
Nordin said expectations for Q4 are dependent on the weather. “The colder the better,” he said. “The actual fallout remains to be seen, but we expect Devold to contribute to the total sales and the bottom line in Q4. However, due to the current situation in the market, both politically and economically, nobody knows.”
Looking Forward
Despite his upbeat start to the note, Nordin admitted, and perhaps stressed, that the market still faces challenges.
“The original core outdoor market is still not growing,” he expanded. “There is a growth in extended outdoor lifestyle, which is more volatile as it is more fashion and distributed through different sales channels. The general price pressure driven by the web retailers is a challenge.”
Nordin continued to say that the company was introducing a new channel strategy, which will be implemented next year.
“We are also entering a phase in our business system change,” he continued. “This will be important to our future success as we are changing a lot of our processes to both become more efficient as well as enable us to lower risk and serve the market, both dealers and consumers, better. The insecurity in the market also means that we must carry a larger risk, as dealers are returning to a smaller proportion of preorders. Therefore, we are working on creating a more flexible supply chain to better serve the market at a lower risk. In terms of our logistic operation, we see operative cost savings of around 4 million compared on an annual basis as we finish migrating the operation to Ludwigslust.”
However, Nordin did say they see a reasonable preorder book for the spring compared to last year for Brands and Global sales.
“We believe we will have a stronger contribution from Devold next year as the rollout in new markets through Fenix sales channels starts next Spring. In terms of investment, we will next year focus on increasing our market presence, e.g., marketing spending,” he concluded.
Image courtesy Royal Robbins Heritage/Fenix Outdoor Int’l AG
