Nilörngruppen: A weak retail climate is difficult to avoid - ABG

Sales -23% vs. ABGSCe, EBIT -58% vs. ABGSCeOrganic growth of -15% below ABGSCe -2%We expect cons. to decrease EBIT est. by ~10-15%Q4'22 impressionsNilörngruppen reports Q4'22 sales of SEK 199m (-23% vs. ABGSCe 259m), gross profit SEK 88m (-23% vs. ABGSCe 114m), EBIT SEK 14m (-58% vs. ABGSCe 34m), net profit SEK 9m (-64% vs. ABGSCe 25m). Order bookings have decreased by 18% (13-15 ppt below ABGSCe neg. 3-5%), as the slowdown in retail demand has impacted the company much faster than we expected. Gross margins have held up well and operating expenses were in line with our expectations, implying that operating leverage is the driver on the downside in this quarter.Thoughts and outlookConsumer confidence is at a 25-year low and retail suppliers such as Nilörn are now being impacted quite rapidly by macro-driven circumstances. The company has stated that the underlying reasons for this drop is a more careful end consumer and high inventory levels among resellers. From a geographic point of view, Germany, France and Italy have all held up well whereas England and the Nordics have been softer. The company's clients appear to be optimistic for 2023 but Nilörn cautions that Q1'23e could still be tough while advancements made in the luxury segment in Italy and France are expected to contribute positively later during 2023.We expect neg. est. revisions by mid double digitsThe share is up 5% YTD and is trading at ~7x '23e EV/EBIT on our unrevised estimates. Mechanically, the estimated effect on isolated Q4 numbers would be ~5% on sales and ~15% on EBIT for '23e-'24e.Deviation tableSource: ABG Sundal Collier, Company data.Läs mer på ABG Sundal Collier