Bildkälla: Stockfoto

Nelly Group: Edging back to growth, raising our estimates - SEB

Nelly Group’s refocus on its core Nordic home markets underpinned a good local currency sales growth of 5.5% in Q1. The partnership programme with Zalando in Europe yields a lower, but positive, margin and without inventory risk. Along with the return to normal, occasional wear (a top-category in its core 15-25 year women target group) should grow its private label sales back to historical levels. We reckon this will drive gross margins further.

We reiterate our midpoint DCF equity value of SEK 55 per share in Nelly Group. We base our valuation on a WACC of 7.5% and a steady-state EBIT margin of about 4%. At SEK 55 per share, this implies a prospective EV/Sales valuation of 0.55x next year’s EV/Sales and still at a large discount to it European online retail peers. The company’s balance sheet remains strong with SEK 184m in net cash.
Börsvärldens nyhetsbrev
ANNONSER