Pierce; Interim report January - September 2024

Transformation continues

July - September 2024

• Net revenue decreased by 1%, totalling SEK 365 (369) million. In local currencies there was growth of 1%.
• Operating profit (EBIT) amounted to SEK 0 (-47) million, corresponding to an operating margin of -0.1% (-12.8%). Adjusted operating profit (EBIT) was SEK 0 (-47) million, and the adjusted operating margin was 0.0% (-12.7%).
• Cash flow for the period was SEK -105 (-1) million and the cash position at the end of the period was SEK 261 (171) million.
• Earnings per share before and after dilution was SEK -0.03 (-0.77).

January - September 2024

• Net revenue increased by 2%, totalling SEK 1,177 (1,154) million. In local currencies growth was also 2%.
• Operating profit (EBIT) was SEK 23 (-66) million, corresponding to an operating margin of 2.0% (-5.7%). Adjusted operating profit (EBIT) totalled SEK 24 (-61) million, and the adjusted operating margin was 2.0% (-5.3%).
• Cash flow for the period was SEK 35 (30) million.
• Earnings per share before and after dilution was SEK 0.46 (-0.59).

	Jul-Sep		Jan-Sep	Oct 2023-	Jan-Dec
SEKm (unless stated otherwise)	2024	2023		2024	2023	Sep 2024	2023
Net revenue	365	369		1,177	1,154	1,559	1,537
Growth (%)	-1%	-1%		2%	-7%	-1%	-8%
Growth in local currencies (%)	1%	-9%		2%	-12%	-3%	-13%
Gross profit	166	113		530	436	701	607
Profit after variable costs	82	34		268	176	348	256
Overhead costs	-65	-67		-194	-195	-265	-267
EBITDA	17	-33		74	-24	61	-36
Operating profit (EBIT)	0	-47		23	-66	-21	-111
Adjusted EBITDA	17	-32		74	-19	82	-11
Adjusted operating profit (EBIT)	0	-47		24	-61	17	-85
Items affecting comparability	0	-1		0	-5	-38	-26
Profit/loss for the period	-2	-61		37	-47	-13	-96
Gross margin (%)	45.5%	30.7%		45.0%	37.8%	44.9%	39.5%
Profit after variable costs (%)	22.5%	9.3%		22.8%	15.3%	22.3%	16.7%
Adjusted EBITDA (%)	4.6%	-8.7%		6.3%	-1.6%	5.3%	-0.7%
Adjusted operating margin (EBIT) (%)	-0.0%	-12.7%		2.0%	-5.3%	1.1%	-5.6%
Cash flow for the period	-105	-1		35	30	96	91
Net debt (+) / Net cash (-)	-261	-171		-261	-171	-261	-222
Earnings per share before dilution (SEK)	-0.03	-0.77		0.46	-0.59	-0.16	-1.21
Earnings per share after dilution (SEK)	-0.03	-0.77		0.46	-0.59	-0.16	-1.21

Significant events during the reporting period
No significant events took place during the reporting period.

Significant events after the end of the reporting period
No significant events took place after the end of the reporting period.

CEO comments

The consumer sentiment weakened in the end of the second quarter and remained on a weak level throughout the third quarter. Our EBIT improved slightly versus last year. We reached a break-even EBIT for the quarter to compare with last year's EBIT of SEK -3 million, excluding the extraordinary SEK 44 million increase in the provision for slow moving inventory last year. Revenues increased slightly in local currencies but declined in SEK to SEK 365 million, from SEK 369 million the previous year. Year to date growth remains positive at 2 percent.
Our gross margin improved to 45.5 percent, up from 42.8 percent, excluding the extraordinary increase in the provision for slow moving inventory last year. The improvement was supported by increased prices, lower in-freight costs and obsolescence.
We are satisfied that the efficiency program implemented during the fourth quarter of 2023 is delivering according to plan. Our overhead costs decreased to SEK 65 million, compared to SEK 67 million the previous year, despite the underlying inflation, and investments in the modernization of our IT infrastructure as part of our transformation journey.
At the end of the third quarter, our cash position stood at SEK 261 million, a significant increase from SEK 171 million the previous year. However, we anticipate that seasonal fluctuations, an expanded offering of our private label products, and initiatives to ensure product availability and delivery precision in line with our strategy will require higher inventory levels moving forward.
Our vision is to become the unquestionable leading e-tailer of the European market for gear, accessories, and parts for motorcycle riding. To realise this vision, which we call Pierce 2.0, we have identified seven strategic pillars that guide our efforts.

• Achieve uncontested leadership in the Offroad segment and drive profitable growth in the Onroad segment
• Attain the highest customer loyalty in the industry
• Develop a simple and effective go-to-market strategy
• Be the best in the industry in pricing and procurement
• Establish market-leading "value-for-money" own brands
• Build a modern and scalable IT platform
• A lean and agile organization

An outstanding shopping experience is fundamental to attain the highest customer loyalty in the industry. We are dedicated to improve every step of the customer journey. This includes offering the largest and most attractive product range with speedy and precise deliveries.
During the quarter we have made one of the largest improvements ever in our stocked assortment, where we have increased the number of stocked articles with close to 50%. This gives considerably better delivery precision and shorter delivery times to our customers. We now have the largest stocked range in Europe within our industry, and we plan to continue improving this to ensure the best possible shopping experience.
Another important milestone during the quarter was the launch of our first ever loyalty program, which was done in our 24MX store. Our focus is now on growing the membership base through onboarding activities such as member weekends with exclusive offers and the chance to win a new motocross.
The complete change of our tech stack is progressing. We are implementing state-of-the-art, modular, and cloud-based systems. These exhaustive changes take time, and we expect the project to continue throughout 2025.
The outlook remains highly uncertain. We maintain our full focus on our business, on what we can control, and we remain determined to realize our vision and achieve our strategic goals.

For further information, please contact:

Fredrik Ideström, CFO
Email: [email protected]
Tel +46 76-546 49 80

Göran Dahlin, CEO
Email: [email protected]
Tel: +46 727 303 111

This information is information that Pierce Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person[s] set out above, at 2024-11-15 08:00 CET.