Nelly says it will prioritise profitability over growth as it looks to reset after a half-year of falling sales and, at the bottom line, a net loss.
The online fashion retailer, ranked Top50 in RXUK Top500 research, says that it saw a decline in total customer traffic and weak financial performance in the first half of the year. This, says Nelly acting chief executive Helena Karlinder-Östlundh, “clearly shows that we did not deliver what our customers want frequently enough in a manner that also generates stable long-term profitability.”
She adds: “As we enter the second half of 2022, we do so with a strong team, a clear plan and our customers and products firmly in focus. Nelly’s deep-rooted strengths lie in our skilled staff, our origin as a pioneer of ecommerce and, above all, in our brand’s broad follower base among young women in the Nordic region. We are resetting the company to achieve profitability before we once again prioritise growth.”
Her comments come as Nelly today reports sales of SEK 627.5m (£50.4m) in the six months to June 30. That’s 11.4% lower than a year earlier. At the bottom line it reported a net loss of SEK 47.9m (£3.8m).
In the second quarter alone, sales came in at SEK 339.4m (-14.5%/£27.3m) and at the bottom line, it posted a net loss of SEK 19.4m (£1.6m).
Simplifying the business
Now the retailer plans to focus on the customer journey and on simplifying “all areas” of the business. That includes new management – drawn largely from within the business – while new chief executive Ludvig Anderberg will rejoin Nelly in late August as chief executive.
The company is also rethinking the assortment that it offers, with a focus on a narrower and more easy-to-navigate range. High-margin own brands will be a focus, with a more selective approach to selling third-party brands – only where demand can be fulfilled profitably.
The retailer also plans to reduce costs and simplify the business. It will rationalise and optimise its IT systems, while continuing to improve its logistics efficiency. Its automated warehouse delivered its lowest ever cost per item in June.
Nordics-based Nelly sells online to markets around the world and has 1.1m customers.