New Wave Group (NWG), the Swedish-based owner of Ahead, Auclair, Craft, Cutter & Buck, and Tenson AB, reported that net sales increased 4.6 percent (+1 percent currency-neutral) to SEK 2,337.0 million from SEK 2,234.4 million in Q3 last year, an increase that company CEO Torsten Jansson said came “despite a very challenging market with price reductions on a number of basic goods.”
Both sales channels reportedly increased net sales, Promo by 7 percent and Retail by 1 percent. The improvements were related to the acquired units, excluding acquisitions; sales in both channels decreased by 2 percent.
The exchange rate effects had a SEK 94.6 million positive impact on sales or 4 percent. Acquired units affected sales by 6.6 percent, or SEK 147.7 million. Organic sales declined 6.3 percent.
The Corporate and Sports & Leisure segments increased their sales related to acquired units. Excluding the acquisitions, the segments’ net sales decreased slightly compared to the previous year. The Gifts & Home Furnishings segment had a net turnover on par with last year.
U.S. net sales were down 11 percent from the prior-year quarter. The reduction occurred in all segments.
Sweden was “on par with last year,” which was said to be attributable to the acquisition of the Swedish outdoor gear company Tenson AB in the Sports & Leisure segment. Sales were lower in other segments.
Central Europe region revenues increased by 38 percent in the quarter, which was said to be mainly related to last year’s acquisitions in the Corporate segment, but Sports & Leisure also increased.
The Nordic region, excluding Sweden, decreased 5 percent compared to the previous year, mainly related to Sports & Leisure.
Southern Europe increased net sales by 13 percent. The increase was attributable to Corporate and Sports & Leisure.
Other countries decreased by 3 percent, attributable to China in the Corporate segment.
Sports & Leisure Segment
Sports & Leisure segment net sales, which includes the active lifestyle brands owned by NWG, were up slightly year-over-year to SEK 1,016.4 million in Q3 2023, compared to SEK 1,007.3 million in Q3 2022.
The acquired operation of Tenson AB impacted SEK 33.8 million or 3 percent on the sales growth. The segment had higher net sales in Sweden (due to the acquisition), Central Europe, Southern Europe and the Other countries region. The net sales of both sales channels were on par with the previous year.
Consolidated operating income “decreased slightly” to SEK 381.1 million in Q3 from SEK 397.8 million in the year-ago period but was said to be “still at a very good level.”
Jansson said in an investor letter that the operating margin was 16.3 percent of sales, the second highest for a third quarter.
The Sports & Leisure segment’s operating profit was SEK 180.3 million in Q3, compared to SEK 199.5 million in Q3 last year. The lower result was mainly related to higher costs, including more marketing activities.
Acquired operation contributed SEK 0.8 million. In addition, a positive profit effect was reported with the acquisition of Tenson AB with SEK 6.5 million.
Consolidated net income amounted to SEK 270.9 million, or SEK 2.04 per share, in Q3, compared to SEK 304.0 million, or SEK 2.29 per share, in Q3 last year.
“Considering the challenging market, especially in retail, I am very satisfied, proud and happy with the result and can state that we continue to gain market share. I think the quarter’s results show the strength we have even under more challenging conditions, which we have also shown many times before,” Jansson shared.
Cash flow from operating activities amounted to SEK 173.3 million, an improvement of SEK 373.7 million from her negative SEK 200.4 cash flow last year.
“We have continued to have a very strong balance sheet with an equity ratio of 55.8 percent,” Jansson added.
Looking ahead, Jansson said the company is well-equipped in terms of organization, brands, products, etc. “I am firmly convinced that we will continue to gain market share, which will mean good growth again when the market levels off or reverses,” he expressed.
“Although it would be presumptuous to wish for a downturn in the economy, such an occurrence would provide opportunities for growth through acquisitions,” he continued. “We have now completed two acquisitions, and we have both the financial and organizational resources to carry out more if the right opportunities arise.
Jansson said that with a strong economy and balance sheet, NWG can maintain large stocks and full service on the stock range, which will allow NWG to continue gaining market share.
“Above all, the sports industry has been and continues to be tough,” he said. “This is due to declining sales,and also to the fact that our customers in sports had large stocks. This is gradually correcting itself, which within 1-2 quarters could benefit us given our ability to deliver from stock.”
He continued to say that it is difficult to assess the market, but they should still be able to take market share. “Not in the least Craft, where we have very large growth opportunities in teamwear throughout Europe,” he suggested. “The same applies to Craft’s shoes, which should be able to grow for many, many years. I feel that we should be able to do even better going forward than we have performed in the past. If you look ahead for more than one quarter, I feel confident that we will be able to deliver continued good growth.”
Photo courtesy Craft