New Wave Group AB, the parent of Craft and Cutter & Buck, reported profits dipped 2.0 percent in the second quarter ended June 30 on a 14 percent sales gain. The second quarter performance represented a more moderate result after posting 45 percent profit growth and 20 percent sales growth in the first quarter ended March 31.
Based in Kungälv, Sweden, New Wave Group owns several apparel brands, including Craft, Cutter & Buck, Ahead, Orrefors, and Kosta Boda. It recently acquired the Swedish outdoor and lifestyle company Tenson AB (read SGB Media‘s coverage here).
Net sales were SEK 2.30 billion in the second quarter, up 14 percent from SEK 2.02 billion in Q2 2022. Currency fluctuations reportedly affected net sales positively by 5 percent and acquired businesses by 9 percent.
- USA region sales dipped 2 percent year-over-year (YoY) to SEK 516.5 million in Q2;
- Sweden sales declined 3 percent YoY to SEK 463.7 million;
- Central Europe sales jumped 62 percent YoY to SEK 519.0 million;
- Nordic Countries sales were down 1 percent YoY to SEK 271.5 million;
- Southern Europe sales increased 10 percent YoY to SEK 321.1 million; and
- Sales from Other Countries grew 63 percent YoY to SEK 212.7 million.
Promo sales channel increased 26 percent YoY in the quarter while the Retail channel declined 5 percent for the period.
Operating profit amounted to SEK 363.9 million, or 15.8 percent of sales, compared to SEK 351.0 million, or 17.4 percent of sales, in the year-ago period. While the operating margin was below the year-ago period, the company pointed out it was still above the company target of 15.0 percent.
Net profit for the quarter was SEK 259.6, or SEK 3.35 per share, compared to SEK 265.0 million, or SEK 2.00 per share in Q2 last year.
Torsten Jansson, founder and CEO of New Wave Group AB, said, “Despite the fact that the market was weaker in the second quarter than we assessed in the first quarter, both in promo and in the retail trade, we still reached a new all-time high in sales.” He said the company continues to gain market share in a weaker market.
“Our balance sheet is still very strong with an equity ratio of 54.9 percent,” Jansson shared. “We started in the first quarter to focus on improving our cash flow, which is already paying off.”
Cash flow from operating activities amounted to SEK 230.1 million, compared to SEK 68.1 million in Q2 2022. He said this focus will also have continued benefits during the second half of the year and the first quarter of 2024.
Jansson said the profit increase for the quarter is due to “good cost control, even though during the quarter we increased investments in both market, products and personnel and invested more time and costs analyzing various potential acquisitions.”
He said it is the ninth quarter in a row that the company has increased net sales and the 10th quarter in a row that it has increased operating profits.
Looking ahead, Jansson said the future looks “very bright.”
“In the short term, we will face a challenging market, which we will monitor closely,” he offered. “Our brands, our organization, our finances, our balance sheet, etc. provide great opportunities to emerge from the current weaker market stronger than ever.”
He went on to say the market will be challenging for the next two to three quarters but also shared the company could overcome that by gaining market share.
“Difficult times offer great opportunities, especially considering our capital, organization and strong balance sheet for acquisitions,” he explained. “In nine months we have acquired both B.T.C. Activewear Ltd and Tenson AB. BTC gives us a very strong base in the UK and with Tenson I am optimistic that we can create the same success as we have with Craft over time.”
The company has made two acquisitions in nine months, which Jansson compared to no acquisitions at all from 2012 to 2022 when it deemed that the market had too high valuations and low-interest rates.
“It has been a fun and exciting journey and it is only beginning,” he closed in his presentation.
Photo courtesy Cutter & Buck
