Good morning, everyone, to this Lyko's First Quarter Presentation. My name is Tom Thörnblom, and I'm heading up Communications and Investor Relations here at Lyko. Today, we will have a short presentation from our CEO, Rickard Lyko, and then follow up with the presentation of the numbers for the quarter from Ylva Norlén, our CFO. After the presentation, we will have a Q&A, so be prepared for that one. We will let you in the call. The call will be recorded and available on the Quartr app and on our web page, where you also will find the presentation material. With that, I leave the floor to Rickard Lyko.
Thank you, Tom, and welcome, everyone. Thank you for joining in. As we always start on, we want to be the starting point of beauty. I will come in a little bit to what that means for us. We are operating in between where we have strong brands, and in the other end, we see that we have customers, and we want to add value in between. That is the sweet spot for us, because then we know we are having a purpose, and we are knowing we can scale and make that through technology. If you look into the total, what we are doing, we are operating in a lot more and a lot more platforms than just the e-commerce and the stores. This, I think, is a good example of that.
I will go a little bit further into the community and the steps we are taking there. If you look into the report in total, the growth was good, 11.5%, almost at the billion. We see the EBIT went up with 75%. That is that we are seeing that the platform is starting to scale and the organization is starting to scale, and we are keeping on doing what we are set out to do. That in combination, that we will still keep on building brands and also getting a lot of new customers, because we know in the new countries, we are also operating where we are not that known as we are up here in Nordics, where we need to acquire a lot of new customers.
We kept investing in brand building, and we have done that for quite some time now, and we're seeing that is making result. If we're looking if the customer, if we're asking a customer, when they think about beauty, which is the player they thought or thinking about. If we look into Sweden, Norway, and Finland, we're seeing that that is increasing. We are on a high level in Sweden, so that's taking time to keep on getting higher there, but we are seeing we are in line with that. What we're doing is that we are trying to adapt the new things and trying out the new things to also be relevant for a younger consumer.
We are the number one preference in Gen Z, and we are also knowing that that's where we need to be, because that is having a spillover effect to the rest of the target groups. We are also knowing that a lot of those brands that we are handling, they are really looking into how to reach the new customer or Gen Z, because that's the future. That is something we can do. That is thanks to everything we're doing in a different way and building the community, building everything around the beauty ecosystem that we are seeing that the customers really want to get a hold on.
If we're looking into that, we're seeing that the spillover effect is that we are the number one in all the other categories as well. We're knowing the hardest one to reach and the one we have been building for a long time is to be relevant for the young customers that are shifting really, really fast, and that we have kept on doing. Something we are doing that together with is the Lyko community that we have built now for nine years, but now it really started to take off. If you haven't done it yet, download the app, go into experience to understand what we are talking about. It's a lot about building a community where you're talking about beauty, because we don't believe in loyalty that the customer will come to us just because they like Lyko.
We need to have something unique, and that is we can do through the community together with the brands and the products that our customers love to talk about. In other words, you can say it's a space to interact with the brands and Lyko, because the brands can operate here by themselves. They have their own profile and so on, and they communicate with our customers. Also, we are creating a stickiness through those young customers that are having the conversation and the dialogue and the interaction together at the community. Also, we are increasing the fans, because these are the ones that really like Lyko. I mean, it's not always the one that's buying the most, but they are the one that's driving the business going forward. If you look a little bit how that looks, now we'll see. Here we go.
These are the things that are creating at our platform day in and day out. We are having about 315 of those posts every day in the community in the app. We are seeing just up to this point this year, I think it's over 33 million views on the platform just at the community. We are knowing that that is really driving the interaction. The best proof of that, I think, is if you try it out. I'm not an influencer. I'm not that good at the communication, and I don't know or understand Gen Z, but I can still try it out. I have tried it out. I have posted something on community.
If you look into the reach this, because you can see the reach and how many views do I get on my content, I think the first one is almost at 24,000 organic views just to relevant customers in our community. If you compare that, I do not want to hang out any brands in this presentation, but if you go into TikTok, go into those biggest brand accounts, go and look what do they have in organic views. Most of their posts is less than this. We can be delivering to the brands more organic views to their target group efficient than those really, really huge platforms. That is a unique position to have when we are talking with brands and talking with new brands, trending brands that want to reach a younger consumer. They can do that for free in our community at our app.
I think that is quite unique. Haven't you tried it out? Go in and look or search up me, and you can see how many views I have, because it works every time. I will not keep on continuously delivering a lot of content here, because that is others that can do that much, much better. I think it's a great example to show that it's so very easy to get that organic views. If you compare that, I mean, it doesn't mean that we're going to turn off TikTok or Instagram. We will keep on work with those as well. We're seeing, even though we have a lot of followers on those platforms, the organic views are lower than we get in our own platform. Here we can still buy a lot of views for sure, and we keep on doing that.
Our own brands are still very, very going; it's still very relevant, and we still keep on working a lot on that. We have a lot of deliverings. We have launched a lot of new products in the quarter, and we'll keep on doing that. We are on track, and it kept on growing together with the B2B, where we see we keep on rolling out to the professional haircare as well. The biggest project in the Lyko history is still the project at the warehouse in Vansbro and the software development and the hardware with all the robotics. It is in place. It is up and running, and we keep on testing it, and everything is in line where we should be. We are really looking forward to going into the new automation coming into the summer and be up and running in the autumn.
That was everything for me. Now, coming back to the questions, I hand over to Ylva.
Thank you. My name is Ylva Norlén. I'm the CFO here at Lyko, and it's my pleasure to go through the results and some highlights from that. The net sales for the quarter was SEK 918 million. We grew by 11.5% versus first quarter 2024. We had very high grounds from the year before with 21.2%. In the quarter, we also had a negative effect from FX on the selling, corresponding to around SEK 15 million. We have a strong momentum in the quarter, particularly during the campaign periods. We also see and are very proud that we are back on growth track in Europe, where we grew 28% in the quarter. We also want to highlight a couple of calendar effects. We had one less bank day in December, which impacted positively. Of course, the leap day from 2024 impacts negatively.
Rolling 12, we are now approaching SEK 3.7 billion in net sales. The gross margin for the quarter was 43% versus 43.5% the year before. It is a good curb to the trend that we had last year. The underlying reason that we are a little bit lower than last year is that we are campaigning a wider share of the assortment, and we are going deeper in the campaigns as well. We also have a small effect from channel mix, where online outperforms retail, and also in the market mix, where Europe grew faster than the Nordics. When it comes to cost, we have good cost control, and it remains strong, particularly the marketing costs for the quarter were below last year. We see that the overall development in OPEX and in personnel costs are stable.
When it comes to group functions and group functions being most of the functions here at the head office, we remain steady now for almost five or for five quarters in a row, meaning that we have built an organization and we are not growing it cost-wise. EBIT for the quarter was a real highlight, growing 75% against last year. This is our most profitable quarter one to date, which we're, of course, super pleased about. We also want to highlight that we had almost SEK 1 million in a negative effect from one-off costs. Segment-wise in the Nordics, we continued really strongly, had a growth of 10.7%. Really high grounds here as well, 24% in quarter one last year. We see that we have solid development actually in all Nordic markets, but we want to highlight that the growth rate in Norway and Finland remains really strong.
Looking at the profit development in the Nordics, this was even higher, 11.9%, and we see a strong contribution from both online and retail. When it comes to Europe, we are now back on growth. 28% growth against Q1 2024, and this is the biggest sales quarter to date in Europe. Profit-wise, we also delivered the best profit margin to date, and it has improved over many quarters in a row now. We see that both cost control is on a good level and that we are going in the right direction with the efforts that we've been at for almost a year now. Lastly, just to recap, the logistics investment in Vansbro is on track. I think many of you have seen this before, but it will give us 150% more capacity.
We are going live in July this year, so fast approaching. We are paying rent since the beginning of 2024, so nothing in the comparability there. Term loan is currently at SEK 234 million, and the investment frame of SEK 498 million still remains. We have flexible interest rates on the loan, and we have a plan to start amortizations in Q2 2026 with almost SEK 14 million per quarter. When it comes to the inventory, this is another point to really highlight. We have been very disciplined over the last year, and we now manage to deliver this quarter with a lower stock level compared to the quarter in 2024. We have a stock-to-sales ratio of 14.2% versus 16.4% the year before. This is something that is thanks to good supply planning and also, of course, that we have capacity constraints in Vansbro.
That was all for now, and I think we are going into the Q&A.
Please raise your hands if you want to ask a question. We leave the floor to Benjamin Wahlstedt from ABG . Please go ahead.
Thank you very much, guys. One question on Europe. Back to growth and strong growth at that. What happened here? Was any part of this due to one large event or campaign or anything like that, or should we expect your now better assortment to lead to stronger growth from here, basically?
Sorry, Benjamin. We had some technical issues here. Could you please repeat the question?
I will. Question on Europe. Back to growth and strong growth. Can you still hear me? Your screen turned black. We wait.
About the growth in Europe, I think we are on a new level there, and we're seeing that we are having customers coming back as well and at the same time acquiring new ones. I think we will keep on scaling from the platform. Right now, there has not been anything exceptional happening in this quarter.
All right. Thank you. You also talk about strong interest from suppliers in the report. Could you elaborate on this point and/or be more specific?
I think it is that we are increasing that going quarter after quarter. I mean, we talked about it last year when we were launching the Milk, but we're seeing them more and more interested in investing in the channel and keep on working together with us. It is just that we keep on doing that, and we have launched a lot of new products this quarter as well, like Drunk Elephant and Dolce & Gabbana and so on.
Perfect. Finally for me for now, have you done any similar brand awareness surveys in your European markets, or is it still way too early?
It's just way too early. You need to go on bigger formats to make an impact in the total. I mean, we're having brand awareness for the one we're reaching, but it's a small portion in those huge markets.
Yep, of course. Perfect. I'll leave the word to someone else. Daniel, maybe.
Cool. We go over to Daniel Schmidt from Danske Bank.
Thank you, guys, and good morning. Just maybe a more detailed question on the inventory. You've had this issue now for some time where you do see some constraint, even though you seem to be working more efficiently with the inventory. It's partly deliberate, I guess, but it's also partly a function of the fact that you're waiting for the capacity to be expanded, I assume. Rickard, do you feel that this is hindering your growth in Q1 and potentially in Q2?
No, not really. I think it's more about the assortment, the wide assortment that we are working on. The ones we have, we can operate and handle, but I think it's an opportunity when we're coming out of the summer to keep on expanding the assortment without building too much stock. Right now, we're holding that back. I would say we can handle the volumes we're seeing now, but we will not be able to handle the Q4 volume without automation. Fine for now, but we can handle what we have in front of us.
Okay. Given that, if I remember correctly, you did see some of this appearing in Q4 last year. Do you think that with the new capacity coming on stream gradually from July and onwards, that you will have significant opportunity to really excel in terms of top line as you get to the Q4?
Let's say the logistic will not be the constraint to grow the top line coming up to the Q4. It is more about seeing what's happening in the market and the competition and what kind of brands we are launching and the campaigns and so on. The logistic, I would say, it will not be a constraint for it. It will help if we're getting higher volume for sure, but it doesn't make an impact on that.
I'm just thinking that you will have a better opportunity to capitalize on your position as you get to Q4 compared to Q4 last year. Or do you feel that there wasn't such a big impact on the negative having constraints in Q4 last year?
No, I wouldn't say that the logistic affected that much. It is more about in the Q4, we can go full on where we were seeing last year that we need to really think it through to be able to handle the logistic. For the Q3 and so on, it was not really a constraint for us last year.
Okay. Okay. Thank you. That's all for me. Thank you.
Good. Thank you. We go over to Magnus Råman from Kepler Cheuvreux.
Thank you. Yeah, I'll start asking about the gross margins again here. You mentioned the campaign activities being wider and also deeper. Is it response somehow to the competitive situation in the market landscape, or could you just elaborate a little bit more on that one?
Yeah, you can say in some sense, I mean, the competition keeps on increasing, I would say. Yeah, we need to be even more aggressive on some campaigns, but we're also seeing that the customers are buying more under campaigns. Also, I think when we're having the surrounding on the economic side that they're affecting that, and we have seen that for quite some time now. I think it's a mix of that, yeah.
Do you envision any measures to counter this, or are you prepared and ready to see your gross margin dilute somewhat over time, provided the leverage you have on your cost?
Yeah, I mean, it's really mixed depending on what's happening in the market and what campaigns we are driving and so on. I mean, the position from our point keeps on being better, and we're seeing also that the brands are willing to support those kinds of activities more in our channels. I think it will help us, but you never know about the mix and so on.
Sure. I also like to ask about the actual OPEX leverage, because I think in the last quarterly call, you said, Rickard, that marketing costs should not be down relative to sales because you would like to invest in that line. It is actually a 50 basis points positive leverage also in Q1 here. Looking forward, does that statement still hold that we should not expect leverage on marketing, but rather on staff and other operating costs?
Yeah, I would say. It is always a timing effect when we are driving big awareness campaigns and so on. It can go from quarter- to- quarter, go up a little bit or down a little bit. In the long run, I would say that's not where we should scale, because if we see a possibility in that, we will invest more and grow faster instead.
Great. The final one for me, just maybe a quite detailed one, but this third Finnish store, do you have any more details around when in the spring you will open that and also the size of it if you compare to the two you already have in the market?
Yeah, it's in May.
It's on the 17th of May. Coming up shortly, and the store will be a little bit more than 400 sq meters, if I remember correctly.
Thank you very much.
We have a question from Peter Grave from Nordea.
Yeah, thank you so much, guys, and congrats on the strong results here. I have one question here. There's another Nordic retail company out this morning quoting heavy fluctuations in trading performance in April following the increased trade tensions. My question is simply, have you seen anything change in mix or consumer behavior whatsoever following the US Liberation Day from start April?
No, not really. It is shifting depending on campaigns and trending products and so on, but nothing that I can say this is because of that change. No.
Okay. That's very clear. Thank you.
Do we have any more questions from the audience? Thank you very much for listening to this morning call. We hope to see you, everyone, on Monday when we have our annual meeting or next time coming up in July for the second quarter. Thank you so much for today.
Thank you.
Thank you.
Thank you very much.