Welcome everyone, and thank you for joining Nelly Group's presentation of the third quarter results. My name is Helena Karlinder-Östlundh, I'm the CEO of Nelly Group, and with me today is Josefin Dalum, our CFO here at Nelly Group.

Let me start today's call by giving you just a brief overview of what we will cover in the call. We will start with a short film that introduces Nelly, and then I will give my comments on the third quarter.

Josefin will then take you through the financial summary, and we will then round off with some learnings from the year to date. After that, as usual, we will open for questions from you.

Some of you have already sent in your questions, thank you very much for that. If you have questions and you haven't yet sent them to us, you are very welcome to send them to us at any time during the presentation.

However, we appreciate if you send them as early as possible, of course, so that we can plan for the time we have today in the best possible way. Without further ado, let's start with a short video introducing the Nelly business.

Nelly is a staple in Nordic fashion and has been so for over 20 years now. It was founded in 2004 as a pioneer in online fashion for young women.

Menswear was added in 2008, and since 2020 we've offered our own menswear designs under the brand [unclear]. Nelly is an e-commerce business with flagship stores in Stockholm, Copenhagen, and a third one opening in Gothenburg this autumn.

We want to help our customers look and feel their best every day. With 1 million active customers from the Nordics alone and 1.5 million followers on social media, Nelly receives 2 million orders placed yearly.

Let's move on to look at the third quarter in more detail. Let me start with the overall picture of the third quarter.

It was a mixed quarter that we handled with discipline and we made some very carefully considered tradeoffs. We delivered a well-executed end of season sale in July, and this supported growth and also drove sell-through importantly of the outgoing spring and summer assortment, but of course it impacted our margins in the period.

As we then transitioned into the autumn and winter season across August and September, the assortment did achieve a slightly higher conversion rate than we saw in the first half of the year, but it's important to note that the assortment still carried traces of some of the challenges that we saw in the first half. Importantly, we also continued our work to further develop Nelly's whole business model, but with a particular focus on both assortment and also our brand positioning.

The effects of this work are not yet fully evident in our results, but we did see some early positive effects during the quarter actually, and we will come back to those a little later in the presentation. Looking at some of the key numbers specifically, net revenue in the quarter increased by 10.3% to 313.1 million Swedish crowns, and this can be compared to the growth last year in the same quarter of 18.4%.

Operating profit amounted to 42.4 million Swedish crowns compared to 43.3 million last year, operating profit just below the previous year. This corresponded to an operating margin of 13.5% compared with 15.3% in the same quarter last year.

Overall, we achieved growth in the quarter and we generated a profit just below last year, despite significant pressures on margins. There are some further underlying dynamics underneath this results that are worth a closer look.

Let's move on to look at active customers. The number of active customers in the Nordics as we measured over the last 12 months was up both on last year and also on the second quarter.

Now the growth was driven mainly by returning customers rather than new customers though, and also by higher marketing intensity. This shows in the marketing costs, which rose to 10% of net revenue compared to 9.4% in the same quarter last year.

Although the number of active customers and orders increased, traffic in the Nordics fell during the period, and the decline was more pronounced in our organic channels. Based on this, looking ahead, it is absolutely critical for us to grow organic traffic again, and also to reignite new customer recruitment, and we know that this absolutely depends on having a highly sought-after assortment season after season, so that continues to be our absolute focus.

Also worth highlighting here when we look at active customers is that outside of the Nordics, customers in Germany continue to grow in the third quarter, which of course was pleasing to see. Moving on to gross margin, gross margin amounted to 56.5% in the third quarter compared with 56.8% last year.

It was slightly lower this year, which was mainly due to higher campaign activity in the period. A higher share of own brands, which we will also look more closely at shortly, contributed positively, and also currency effects were positive overall.

However, even taken together, these did not fully offset the increased campaign activity that we had to employ. The autumn and winter assortment converted slightly better than the assortment in the first half, as I mentioned before.

It did however, as I said, require deeper discounting to get there, which is what you see here in the margin developments. Next, let's look at own-brand share.

Now own brands accounted for 66.9% of sales in the third quarter, which can be compared to the same quarter last year where the own-brand share amounted to 62.2%, another increase year on year. Own brands continued to resonate with our customers, and this response was most notable in key categories like pants, jeans, and knitwear.

Pants grew as a category compared with last year, and this was driven both by a broader fashion trend that we see, but also by a strong product offering in the category this season. Nelly knitwear and jeans also contributed positively to the growth in own-brand share.

Now it is worth highlighting here, we have said this before, but it's worth highlighting here that the own-brand share is impacted by the category mix, and in the third quarter own-brand share was helped by the category mix. This, of course, the category mix varies between quarters, and so therefore the own-brand share also can fluctuate over time.

I also want to emphasize here that offering a carefully curated mix of our own brands and the very best external brands remains strategically important and core to our business model also going forward. While we're very pleased, of course, that the customer likes and appreciates our own brands, it is important that external brands also continue to be highly visible and a core part of our offering to our customers.

Next, let's look at the return rate. The return rate improved slightly in the third quarter to 25.6%, down slightly from 26.1% last year.

Like own-brand share, as we just said, the third quarter return rate was also helped by the category mix, which shifts between quarters. When it comes to the return rate, fashion trends also play a part, since certain silhouettes, for example, tend to carry a higher return rate, and hence the return rate can also fluctuate between quarters and seasons.

Nevertheless, that being said, preventing unnecessary returns remains an absolute top priority for us going forward as well, and this is something that we have and continue to drive cross-functionally across the whole business. We have improved the return rate significantly over the past years, as we can also see here in the graph, but it is important to understand that continuous work is required just to maintain this level going forward.

Return rate is something that we need to work with continuously, even just to maintain that level that we have achieved. Moving on, I will not comment on the operating margin in too much detail, as Josefin will come back to it shortly and go through it in more detail.

However, as you can see in the report, a higher gross profit in the quarter was offset by higher operating costs, which resulted in an operating margin of 13.5% compared with 15.3% last year. Marketing and distribution costs both rose as a share of net revenue, and the increase in operating costs also reflected some deliberate investments in new roles and also our Copenhagen flagship store, which opened in the fourth quarter of last year.

Next up, Josefin will now take you through the financial summary in more detail, and I will then come back afterwards to reflect on some learnings from the year so far.

Yes, thank you Helena for the introduction. Let me share a few more details on our Q3 financial performance.

Let's start with the net revenue, which for the quarter amounted to 313.1 million kronor compared with 283.7 million kronor in the same quarter last year. This corresponds to reported growth of 10.3%, and local currencies increase was 8.9%, meaning that currency movements had a positive impact on the reported figures.

The increase was concentrated in the Nordic markets and was mainly driven by campaign activities, reflecting softer demand and a focus on sell-through during the end of season sale in July. We also saw an increase in paid traffic, which correlates with higher spending on performance marketing in the quarter, and we experienced high activity in our markets and tough competition for customers, while the quarter was positively impacted by a favorable product mix, which varies from quarter to quarter.

Average order value in the Nordics increased by 1.2% to 774 kronor, and the number of orders in Nordics increased by 2.8%, although this growth was driven by marketing activities rather than organic traffic, which continues to decline, as Helena previously said. The return rate, which has been a key area of focus in recent years, decreased again year on year by 0.5 percentage points, ending at 25.6%.

This was also primarily driven by a more favorable product mix. Gross profit for the quarter amounted to 177 million kronor compared with 161.2 million kronor in the same quarter last year, which is an increase of 9.8%.

In margin terms, gross margin came in at 56.5%, down 0.3 percentage point compared with the same quarter last year. The higher own-brand share together with positive currency effects supported profitability, while increased campaign activity had a negative impact.

Moving on to operating expenses, these increased by 16.6 million kronor year on year. Fulfillment and distribution costs were 36.2 million kronor, up from 31.3 million.

As a share of net revenue, they rose slightly to 11.6%, mainly driven by the mix of delivery options chosen by customers, but also changes in the market mix. Marketing costs were 31.3 million kronor, up from 26.8 million last year, mainly due to higher paid advertising in our core market and continue investment in the German growth.

Paid advertising in Nordics carried a higher cost per order on a weaker demand. As a share of net revenue, marketing was 10%, up from 9.4% last year.

Administrative and other operating costs were 67.1 million kronor, up from 59.9 million, driven primarily by higher personnel costs and the Copenhagen flagship store, which opened in the fourth quarter of 2025. As Helena has pointed out earlier, these are investments in the company's continued development and growth.

Operating profit for the quarter amounted to 42.4 million kronor, 0.9 million kronor lower than last year, since higher gross profit was offset by higher cost base. The operating margin was 13.5%, down from 15.3% same quarter last year.

Turning to cash flow and the balance sheet, our financial position remains strong. Operating cash flow for the quarter was -30.1 million kronor, which is mainly due to changes in the working capital, where inventory buildup was the largest component.

Cash flow from investing activities was -8.7 million kronor, mainly related to the new office and store in Gothenburg, as well as some smaller IT and technology investments. Cash flow from financing activities was -40.7 million kronor, mainly relating to the share repurchase program and amortization of lease liabilities.

Inventory was 248.7 million kronor at the end of September, up from 227.8 million kronor a year ago, corresponding to 19.5% of rolling 12 months net revenue. The buildup mainly reflects autumn/winter season stock, and also reflects somewhat softer demand towards the end of the quarter.

As usual, the fourth quarter includes periods of high promotional activity across the market, and our focus will continue to be disciplined sell-through so that we enter 2027 with a healthy and saleable inventory position. Our cash balance was 221.4 million kronor at the end of September, down 2.3% from 226.7 million kronor a year ago, affected by the 30 million kronor share repurchase program.

This leaves us with a balance sheet that remains strong and an equity ratio of 44.6%, up from 35.7% last year. During the quarter, we initiated and completed a share repurchase program, and the purpose of the repurchase was to optimize the company's capital structure.

It started on 17th of August and ended on 25th of September. A total of 836,000 ordinary shares in the company were repurchased for 30 million Swedish crowns.

The board intends to propose that the repurchased shares will be cancelled through a reduction of Nelly's share capital at the next annual general meeting, and further information about the repurchase program, including press releases and a complete repurchase table, is available on Nelly Group's website. That concludes the financial highlights, and I will now hand back to Helena for some closing remarks.

Thank you, Josefin. Let me just briefly summarize what the year has shown us so far.

Q3 specifically was managed in a disciplined way, as we said, but the growth required higher marketing and discount intensity, as our assortment still carries some traces of the same challenges that we saw in the first half of the year. In Germany, the targeted investments we've made continue to yield a good response, which is encouraging.

However, if we look at the Nordic markets, which are still our core markets and where customers are more trend conscious, it is clear that the assortment appeal and the Nelly brand positioning still need further sharpening. The assortment is not yet sufficiently compelling on its own, and the brand positioning needs more precision.

These really are key learnings from the year so far that we take with us going forward. Now the intensified work that we initiated in the spring to strengthen Nelly continued during the third quarter, and the management team and the board worked closely and continue to work closely together through the committees that we established earlier this year.

Within the assortment committee specifically, more structured ways of working have been developed to systematically increase both precision and also importantly fashion relevance, and this affects both buying decisions and of course also our creative expression. New processes have also been established to identify trends even earlier than we have been doing so far, and also critically to translate them faster into the right assortment and the right stock depth.

Early in the autumn and winter season, for example, we saw some tangible results of this work as we were able to, this is one example, but we were able to add trend colors to some products that were already planned, and this was thanks to shorter lead times that we have already been able to achieve in our supply chain. Some small positive signs there, and this work needs to continue over the coming quarters as well, but critical that we also see effects of this gradually going forward as we continue this work.

This also brings me back to our strategy and our continued transformation agenda, both of which hold firm and have the full support of both the board and the entire Nelly management team. It continues, we've said this many times before, but it continues to be crystal clear for us that offering a highly sought-after assortment remains absolutely central to our ability to grow profitably.

The assortment, of course, is renewed ahead of every season, we need to buy consistently well with precision and a high degree of fashion relevance. A key next step in this work is also building a faster and more integrated supply chain, which allows us to respond faster to emerging fashion trends, both ahead of a season, but also importantly during a season.

In September this year, very recently, our head office also moved to new premises in Gothenburg, where we are reporting from right now, and at the same time office-based working was introduced as the new norm for us, and this too is part of our ongoing improvement efforts, with the aim to strengthen cross-functional collaboration even more and further reduce the time between decisions we make and implementing those and seeing results. We have now entered an important fourth quarter with ongoing development efforts, as I said, and they are focused particularly on the Nordic markets.

Nelly's brand positioning will continue to be refined, and this will be supported by the opening of our third flagship store in Gothenburg, and the targeted initiative in Germany will also continue, but as we said before, at the same deliberate and controlled pace as we have been doing so far. Of course, overall, profitable growth remains the North Star that guides everything we do.

Now before we move on to answer your questions, I would like to take a brief moment to just thank all of our customers, and of course also all of our Nelly colleagues, for their commitment and hard work. Our focus is now fully on delivering during this key trading period ahead, and of course on driving the ongoing transformation agenda as we have been for some time now.

With that, let's move on to answering your questions.

Yes, thank you Helena and Josefin for the presentation, and also thank you everyone for calling into our Q3 presentation this morning. We have received a few questions this morning, let's start answering those.

First, we have four questions from Johan Fridh at SEB. The first one is for you, Josefin.

It goes: "Own-brand share rose, but gross margin fell 0.3 percentage points. How big was the campaign drag and how big the FX tailwind?"

As we said, the focus was on sell-through of the spring and summer season in the beginning of the quarter, which impacted the discounting levels, but also a tough market climate during the quarter. We have had some positive effects, mainly from the Norwegian krone during the quarter, as we also pointed out in the report.

Yes. The next one also from Johan then, also to you Josefin, is: "What drove warehouse and distribution costs up to 11.6% of sales, shipping rates or market mix?"

It's primarily the market mix, but we also see a light shift in which shipping alternatives the customer actually chooses on the site, which can differ between quarters and seasons.

The third question from Johan is to you, Helena: "How much of Q3 growth was bought through marketing and discounting, given weaker Nordic traffic? What marketing-to-sales level should we expect going forward, after 10.0% in Q3?"

As we said during the presentation, we did definitely see higher levels of both discounting and marketing during this quarter, and that is the case when we also see that the assortment still has some challenges. We haven't really managed to establish the same level of these sort of viral products that we saw last year, which is of course a key focus for us, but when we don't have those, we see that we have a little bit less sort of organic demand, which means that we have to employ marketing and discounting to deal with the reality we see.

We've followed the principle very clearly that as long as we can do so profitably, we will employ those methods, and so we can't say exactly which percentage, but of course it is our absolute intention to start and create that organic demand again, which means that, especially on discounting, we have to employ less of that.

Thank you. The fourth question from Johan is to you, Josefin, and it goes: "What is the underlying admin cost run rate, and will the new Gothenburg office and flagship add costs in Q4?"

Yes, as we said before, we have invested in some new roles that will affect the admin cost also going forward. The new Gothenburg store will add cost in Q4 and coming quarters, of course, but just to be totally clear that cost discipline is still at top of our agenda going forward, and every added cost is picked and choosed very carefully.

Thank you. The next question is for you, Helena, from Fredrik: "What is your view on the autumn/winter 2026 assortment, after the difficulties you had with the assortment in spring/summer 2026?"

As we said in the presentation, we definitely saw that the assortment started to convert better in the autumn and winter season sort of collection compared to the first half of the year, but we did also definitely see some traces left of the same challenges we had. I think, as I was just mentioning, it is really critical to have these viral products as part of the offering, and I think given that we know that trends will continue to move fast going forward as well, it is critical that we strengthen our own ability to react quickly to those changes.

That is both in terms of our processes, our ways of working, and also critically, our supply chain and the ability for our supply chain to kind of translate what we see into real products on the shelf quickly. We will be continuing to work on all of those elements going forward to improve our ability to hit the exact right assortment.

That is absolutely key.

Super. The next question is from Daniel and is asked to Josefin: "You have quite a strong cash position and have finalized the share repurchase program.

Can you elaborate on your capital allocation strategy also going forward? Can we expect more programs or dividends going forward?"

Yes, the priority order is quite straightforward. First, we invest in profitable growth and maintaining a solid balance sheet, and then returning excess capital to the shareholders thereafter.

The purchase of the completed repurchase program during Q3 was to optimize the company's capital structures, as earlier stated. The board evaluates the best way forward on an ongoing basis, but we don't have any information at the moment going forward.

Thank you. Now we have a few questions to Helena.

One is from Jonas: "Can you comment on both CEO and CFO deciding to leave, and do you have any news on the recruitments?"

As we have communicated previously, both myself and Josefin will be leaving the business to take up other roles outside of the business. These decisions have been made completely independently of each other.

This happens sometimes that people move on to other roles. I think the absolutely important point here is that our strategy and all of the changes and improvements that we're working on are very deeply anchored both in the board, but also importantly in the management team, the whole management team, and the whole business.

I think while Josefin and I will move on to other things outside the business, the strategy very much holds and stands and is anchored with lots of other people. I think that's important to understand that there will be continuity.

Now in terms of the recruitments for these roles, of course, the CEO recruitment is handled by the board, I will have to defer questions to our chairwoman of the board. The both of the recruitments are ongoing, so as soon as we have more information there, we will of course share.

Another question for Helena from Arne: "Is there any scheduled opening date for the Gothenburg store?"

Yes, the Gothenburg store will actually open this coming Saturday, the 24th of October, which we are very excited about.

Thank you. Next one also for you, Helena, from Karl: "Did the warm September affect sales negatively and push some autumn sales to Q4?"

I wouldn't assume that as a major sort of part explanation. I think we all saw quite a warm winter last year, but it's important, I think, to understand and remember that the category mix that we see in different quarters is really affected by so many things.

It's affected by seasonality, but it's also affected by the weather, it's also affected by fashion trends. You can't really sort of very clearly say that the weather does this, this, or the other.

I think in this particular case, I wouldn't take this as a big explaining factor.

Thank you. We're now running out of time and we'll be wrapping up this call with the last question.

This one is from Philip for you, Helena: "You will open a store in Gothenburg on Saturday. Do you see any new stores on the horizon, any stores in Germany planned, for example?"

Since we have always sort of treated our stores as sort of a deliberate strategy to open flagships in triple-A locations in certain select cities, we were not like other physical retailers that open lots of stores at the same time. We do sort of one at a time.

At the moment, we've been very focused on Gothenburg, and we're very pleased with the location we've managed to secure in Gothenburg. Whether we will see further stores in the future, nothing has been decided at this point in time, but of course, as we've said before, we have been very pleased with the effect that the stores have had, not just sort of on their own, but also on the business as a whole.

I wouldn't rule it out, but no new stores have been decided on yet. Of course, with the positive customer response we've seen in Germany, that would definitely be something we would be looking at closely in the future.

Yes. Great.

I think that were all the questions we had time for today, thank you very much for listening and for sending us your questions, and yes, this concludes today's presentation. Thank you.