Nelly Group reported Q3 sales 2% below our forecast (down 9% y/y), reflecting weak trading in the period. This is further corroborated by gross margins that contracted 440bps y/y (SEBE: -170bps), reflecting markdown activities. Cost management surprised: SG&A-to-sales of 45.7% is 360bps below our forecast, implying a y/y improvement of 310 bps. In all, Q3 LBIT came in at SEK 12m (SEK 3m ahead of our estimates). We reiterate our SEK 27 mid-point value.
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