Our own brand investments continue to flourish, as evidenced by our high-margin own brand portfolio now accounting for 7.7 percent of total sales on a rolling 12-month basis and 9.5 percent in the quarter. However, a slight dip in gross margins is evident, reflecting similar consumer behaviours as earlier this year, influenced by promotions and overall market price pressure.
     
In the Nordics, our underlying business remains strong, with continued growth and EBIT margin expansion despite tough year-over-year comparisons.
 
In Europe, we are successfully adopting a more profit-oriented approach, all while maintaining our focus on improving our localized customer offering. Brand access is gradually improving, with key brands launched during the quarter, and we are reviewing the paths towards an optimized future in Europe.

SUCCESSFUL LAUNCHES CREATE CALENDAR EFFECT
Our advent calendars exceeded expectations yet again, with independent experts ranking them among the best in the market. To manage the anticipated high demand however, we staggered the release, with the largest release (contrary to last year) taking place in late September – resulting in some orders being carried over into October, hence impacting the quarter’s financial performance as variable marketing costs were booked, but revenue recognition was deferred.
 
OPERATIONAL ADVANCEMENTS
The expansion of our warehouse automation is on track and we are confident to be fully up and running by this time next year. We maintain historically low inventory levels relative to net sales, supporting cash flow generation. We therefore continuously optimize our inventory to ensure a smooth transition into the upcoming peak season.

A BEAUTY POWER HOUSE
We experience growing interest from suppliers who recognize our expertise in product launches and brand building collaborations. In September, we were one of the few beauty retailers to introduce the highly popular E.L.F. Cosmetics brand to the Nordic market. Additionally, our in-store events, averaging over 40 per month, further cement our leadership in customer engagement, with a growing waitlist of suppliers eager to collaborate with us.
Looking ahead, during the autumn (reading) break, we will launch our second co-lab, this time with the incredibly popular book characters, Musse & Helium, in the form of shampoos, conditioners, and a bath foam – all co-branded Musse & Helium x Lyko.

We are delighted to see that customers love what we do, and among women aged 16-60, we are the leading beauty retailer in Sweden and the fastest growing operator in Norway and Finland (according to Nepa, brand tracking, September).

RETAIL AWARDED FOR CUSTOMER EXPERIENCE
The Best In-Store Experience of the Year Award at the IM EXPO AWARD 2024 is a fantastic testament that our customers appreciate the experience in our stores, delivered by our concept and dedicated staff. All our stores performed strongly in the quarter, and it is particularly gratifying that our flagship stores have truly proven themselves as summer destinations. Next week, we are opening our fourth store in Bergen, Norway – a market that continues to be particularly strong and where we see many opportunities to further grow our business. 

With the most anticipated beauty shopping season around the corner, we are fully prepared – with the organization ready and excited to deliver exceptional experiences to our customers!

Rickard Lyko, CEO October 18th 2024