Welcome to Nelly Group first quarter report 2026. Today, I am pleased to present CEO Helena Karlinder-Östlundh and CFO Josefin Dalum. After the presentation, there will be a question- and- answer session. Participants are able to ask questions in written form on the audiocast page. Now I will hand over to Helena Karlinder-Östlundh. Please go ahead. Thank you very much. Good morning, everyone, and welcome to the Q1 2026 investor presentation for Nelly Group. My name is Helena Karlinder-Östlundh, and I'm the CEO of Nelly Group, and I'm hosting today's call together with Josefin Dalum, our CFO here at Nelly Group. Now let me start by giving you a brief overview of what we will be covering in today's call. First off, we will start with a short video introducing you to the Nelly business. I will then provide some comments on the first quarter of 2026 before handing over to Josefin, who will provide us with a financial summary. As always, we will then be concluding by answering some of your questions, and I would like to take this opportunity to remind you that you're very welcome to send us questions throughout the presentation. Of course, we appreciate if you can send them through as early as possible so that we can also manage our time today in the best way possible. With that, let's start with a short video introducing you to the Nelly business. [Presentation] Let's now take a closer look at the first quarter of 2026. In summary, we saw a soft start to the year with pressure on both sales and margin. Net revenue decreased by 1.8% to SEK 243.3 million, and we saw that every transaction in this quarter was hard-won. Our operating margin was also down and landed on 3.3%, which was significantly below the same quarter last year when we achieved an operating margin of 8%. This translated to an operating profit of SEK 8 million for this past quarter, and this can be compared to an operating profit of SEK 19.9 million in the year prior. Looking back at this quarter, we can clearly conclude that this result came in well below our own expectations and that we are, of course, not satisfied with our performance during this period. Let me turn to, firstly, what we saw on the customer side of this quarter. What we see here in this graph is the active customer base in the Nordics for the last 12 months, and as you can see, it's held broadly flat from the previous quarter. A small decrease, but broadly flat. Now looking, if we look across all our markets, the total active customers over the last 12 months was actually up slightly year-on-year, but this growth was largely driven by our continued expansion in Germany. For our core markets in the Nordics, we saw a different development than we have in the previous quarters in the Nordic markets. If we look more closely underneath this development, we can nuance the picture even further. For this past quarter, returning customers were up slightly year-on-year, whereas the shortfall really came primarily from new customer recruitment. We simply did not pull in new customers at the rate that we needed to. The main reason for this, simply put, was that the assortment as a whole did not resonate strongly enough with our customers in this past quarter. Now, of course, there were positive pockets. We saw some categories like jeans, pants, and also swimwear grew well during the quarter. Overall, we have to conclude that the level of newness in the assortment was too low, and that some of the defining fashion trends of the season were not given enough space in our assortment. This was true overall, but in particular in some important categories like tops and knits. With a weaker assortment, we can see that despite increased marketing investment, online traffic in the Nordics declined 2.9%, conversion weakened to 1.8% from 1.9% in the year prior, and also the average basket decreased by 6% year-on-year. Once again, I think, we can see that this past quarter has been a stark reminder for us, that an attractive assortment is an absolute prerequisite for everything else. The assortment ultimately drives traffic, it drives conversion, and it drives basket size. We are definitely reminded that we can never take our customer for granted, and that we have to make sure that our products are relevant and sought after, and always in line with the most important trends for our customer. Now, moving on to gross margin. We delivered an improvement in the gross margin despite challenging market conditions in this quarter, as well. We talked about this in the quarter four presentation, as well, and we saw that we continued to see challenging market conditions during this quarter as well. Despite this, gross margin came in at 55.3%, which was up 3.7 percentage points from 51.6% a year ago. There are both positive and negative forces shaping this gross margin, which are worth highlighting. The positive driver was, of course, our own brand share, and we will come back to this point shortly. The main negative driver was a higher level of discounting. As we also highlighted in the fourth quarter, in a more challenging market, we needed to increase our promotional intensity to still support the top line, and this, of course, put pressure on the margin. We have talked about this before, but I think it's worth again being clear here how we view gross margin going forward. Of course, we need to continuously secure a strong margin, but our decisions are first and foremost always determined by our customers' preferences. This can, over time, result in margin variability. For example, for us to be able to offer certain external brands that are absolutely key to positioning Nelly as a whole, at the brand as a whole, this of course also impacts the margin. The gross margin is very important for us, but we need to be customer-led in our assortment decisions. Now, coming back to the brand mix, which I just briefly touched on, we saw that our own brand share continued to grow this quarter. Sales from our own brands increased to 62.7%, up 12.6 percentage points year-on-year from 50.1% in the year prior. In particular, we saw that our own brand growth aligned very well with the categories that performed well overall. In line with our strategy, these were core everyday categories like jeans and pants in particular, and also our Nelly brand swimwear range performed very well during the first quarter. However, as I mentioned, the assortment overall was underweighted on the seasonal trends that customers were really responding to. This was particularly true in strategically important categories such as tops and knits, as I mentioned. In these categories, the level of newness was simply too low, and we therefore did not manage to capture our customers' interest. Now I think it's worth mentioning here that our own menswear brand, Que Sera Sera, is also slowly building its fan base and contributed positively to the increase in own brand share this quarter, of course, though, from a low starting point. It's of course pleasing when our customers respond well to our Nelly assortment, but as we've said many times before, our core value proposition very much rests on us offering the right and perfect blend of our own brands and the best external brands. On the external brand side, we strengthened the portfolio in this past quarter with several well-known international names. Specifically, we launched Diesel, Nike, and a Spanish denim brand called Lois, which landed well with our customer. Again, to conclude, our assortment is at the heart of everything we do, and it is the carefully curated mix of our own brands alongside these well-known international brands that is positioning Nelly the way we want, which is to be the most sought-after fashion destination for our target audience. Looking ahead with this past quarter now behind us, this remains the most important element to get right. Turning now to the return rate. The return rate for the first quarter came in at 27.3%, which was an increase year-on-year from 24.8% last year. For context, it's important to understand that part of this increase was trend-driven. Certain categories and silhouettes inherently carry higher return rates, and over the past quarter, we saw a shift in the fashion trends towards some of these sort of trends that carry higher return rates in certain categories, such as jeans, for example, where we have over the past quarters seen a mostly fitted silhouette that is now moving to a looser silhouette, and this does inherently drive slightly higher return rates. It's also worth noting here that Germany, which is a market that is growing for us, in general, as a market, the market as a whole tends to have higher return rates than the Nordics. While we also see the same pattern in our own return rates, our return rates in Germany are slightly higher than in our other Nordic markets, we have seen that the return rate in Germany has come down significantly for us over the past two years. This is very important to note because it is also one of the factors that has enabled us to invest more in Germany. Growing profitably remains our absolute priority, and this is only possible if we can have acceptable levels of returns in every market. Now, similar to the pattern we talked about, with gross margin, here again, in the return rate, variability can and will inevitably occur, as a trade-off when our assortment decisions are customer-led. As I said, some on-trend products generate higher returns by their nature, even when everything about the product is actually right for the customer. This is what we see reflected in the return rate this past quarter. Nevertheless, this continues to be a key metric for us, so we continue to closely track and monitor our return rate, and we actively manage it throughout the business. Most importantly, we continue to work on the levers that we do control. The strength of our products, our assortment composition, and not least, the information we provide to our customers. We keep working on eliminating what we call unnecessary returns, so all returns that could have been prevented by us, doing a better job, for example, of providing information to the customer. This remains an absolute key cornerstone, of our work going forward as well. Now, let me also comment on the cost base and the operating margin for the quarter. The operating margin came down to 3.3% from 8% a year ago, and this is despite the gross margin improvement that I mentioned earlier. Now, a quarter of negative sales growth also, of course, naturally puts the spotlight on the cost base. Here I would again like to provide some context. The cost increases we see year-on-year reflect deliberate investments, and are not a departure from the discipline that we have built throughout the business. Cost control, disciplined cost control has been a cornerstone of our transformation, for the past years and continues to be so. In this quarter, in this first quarter in particular, we saw that marketing costs increased, and this was driven partly by a more challenging sales period that, as we said before, required higher intensity. It was also partly driven by our continued expansion in the German market, where we increased our spend on paid advertising, in the quarter, and where we do so as long as we can spend profitably. As I said before, in Germany in particular, both basket size and return rates are absolutely key here in our decision to continue to invest in paid advertising. Administrative and other operating expenses were also higher, and these reflect several additions that we have made in the business to strengthen us and prepare us for growth going forward. These additions were not present a year ago. To give you the key elements of this, one is the flagship store that we opened in Copenhagen in October of last year. Of course, as any store, this store is also still establishing itself, but is already generating very valuable insight for us into the Danish market and the Danish customer. In addition to this, we also added a number of new roles to the organization, and this is in particular in areas that we see are required to develop the company going forward. Now, we see these investments as necessary to enable growth going forward, but I want to be really clear that profitable growth remains our absolute North Star, and we evaluate every investment very carefully before we make it. I would like to close this part of the presentation by talking about the path forward. The first quarter of 2026, as you can see, has been challenging, and it has been a visceral reminder for us that winning in fashion requires us to constantly be on our toes and to take nothing for granted. However, I want to be clear that a challenging quarter does not change our strategy. The most important element of our strategy remains a carefully curated assortment where our own brands blend with well-known international brands. It is through our assortment that we ultimately position Nelly, and it is how we win with the customer every day all over again. This is the nature of retail. Our customer is very discerning, and we have to offer her exactly what she's looking for in order to win her over again and again. Therefore, customer demand continues to be our primary compass. Every assortment decision starts with what our customer wants, and we need to anticipate what she's looking for in order to keep her attention. As always, but even more so now, disciplined execution also remains an absolute requirement in a market that we expect will continue to be under pressure for some time going forward. Before I hand over to Josefin, let me say clearly again that we are not satisfied with our performance in the first quarter and that we take many learnings with us that will guide us going forward. We will continue to refine our processes and ways of working, and this is not only to become more accurate in the fashion bets we make. But also, and perhaps more importantly, we need to further build out our ability to be more flexible and able to respond to customer signals in season. With that, I will now hand over to Josefin to walk us through the financial summary. Thank you, Helena, for the introduction, and let me share a summary of the financials on our Q1 financial performance. As Helena said, net revenue declined by 1.8% in the first quarter, and the main drivers were lower sales in the Nordic markets and higher return levels. The return rate increased by 2.5 percentage points, primarily due to current trends and less favorable product mix. Despite the lower net revenue, gross profit increased, mainly because our own brand share was higher. On the other hand, campaign activity had a negative impact in the period. In margin terms, gross margin was up 3.7 percentage points compared to first quarter last year. Looking at the operating expenses, fulfillment and distribution costs were relatively flat year-over-year in absolute terms, and as a share of net revenue, costs increased due to lower net revenue, with parts of the cost base being fixed, combined with a higher return rate. Marketing costs amounted to SEK 27 million, compared with SEK 24 million last year, and the increase was mainly driven by higher paid advertising in our core markets, continued investments to support the launch in Germany, and brand-building initiatives. Combined with a somewhat lower net revenue, this resulted in a higher marketing cost to net revenue ratio. Admin and other operating costs amounted to SEK 69 million compared with SEK 53 million last year, and the increase was primarily driven by additions to strengthening the business that were not present in the prior year period, including the flagship store in Copenhagen. As Helena noted, these items should be viewed as investments and include some new roles required to support the company's continued development. Overall, operating profit for the quarter amounted to SEK 8 million, which was SEK 12 million lower than last year. This was because the slightly higher gross profit, which was up SEK 7 million, was more than offset by a higher cost base, resulting in lower operating profit for the period. Also note that Nelly's performance is seasonal across quarters, and Q1 is typically the weakest quarter, and as a result, operating leverage is at its highest in Q1. Turning to additional financial KPIs, we continue to report a healthy balance sheet. Operating cash flow in the first quarter was impacted by lower operating profit in comparison with the same quarter last year, resulting in net cash flow from operating activities of SEK -26 million compared with SEK -13 million last year. Cash flow from investing activities was mainly related to investments in IT infrastructure, and cash flow from financing activities consisted primarily of interest paid on lease agreements, which increased year-on-year due to store opening in Copenhagen in Q4 2025. We also saw that the inventory to net revenue ratio decreased by 2 percentage points in the year-over-year comparison. Concluding overall, we continue to have a healthy balance sheet with an equity ratio of 42.9% and a net cash position of SEK 215 million supporting continued investment capacity. That concludes the financial summary, and I will now hand back to Helena for some closing remarks. Thank you, Josefin. This concludes today's presentation, but before we move ahead to answer some of your questions, I would, of course, like to take a moment to thank all the customers who chose Nelly, not just in this past quarter, but ongoing. We definitely never take that for granted. I would also like to extend a really heartfelt thank you to the Nelly team. It has been a challenging quarter for the whole organization, but I think it's clear that everyone's dedication and commitment endures despite this, and we do take many learnings with us forward. A big thank you to the Nelly team. Now let's move on to the final part of today's call and answer some of the questions that you have sent us. Thank you, Helena, and thank you, Josefin, and thank you all for joining our quarter one presentation this morning. We received a lot of questions from you this morning, so we will get started right away with a few first ones from Fredrik Rönnerhäll at SEB. The first one is for you, Helena. In the CEO letter, investments in long-term development was mentioned. Can you talk more about what kind of investments you made and if you are planning to continue to make investments throughout the year? Yes, of course. I think as we mentioned, there are two primary parts to this. One was, of course, the store in Copenhagen, which we see very much not just as an investment in the Danish market and the Danish customer, but we've also, for example, seen that a lot of our external brands are really interested in doing joint activations with us in the Copenhagen store. That has been one key element of the cost increase. The other one, as we mentioned, is that we have added a kind of carefully evaluated number of new roles to the organization, and these fall particularly into two areas. One is on the assortment side. As we have communicated before, we really have sort of worked and continue to work by deepening our expertise, in particular in certain categories, and this does require some additional capacity in the assortment team. The other area where we've also added a few new roles is in the area of building our Nelly brand overall. This was something that, as those that have followed us for a long time know, in the beginning of the transformation, we sort of decreased our brand-building activity and have invested more in this more recently. Here we see that we need primarily some expertise that we haven't had before to come into the organization. Those are really the main elements. Of course, these will continue to be part of the cost base, going forward as well. Thank you, Helena. We will continue with another question from Fredrik. Despite increased marketing spend, both traffic and average basket size declined. What steps are you taking to mitigate this negative trend going forward? I think the simple answer here is that it is very difficult, even with increased spend, to drive traffic and basket size if the assortment isn't strong. As I said, our customer knows exactly what she wants. I think the sort of actions or the steps to mitigate this are to really, again, go back to the assortment and make sure that we get that absolutely right. Thank you, Helena. The next question is from Fredrik, and it's related to the return rate. Return rate ticked higher while own brands increased. Do you see higher return rate from your own brands as well? That is not a general pattern we see. No. In fact, generally, we see that the return rate tends to be lower in our own assortment. However, as I said, this is very much driven by certain categories and certain silhouettes and certain trends that will be bigger in some periods and smaller in some. Of course, that is reflected, those trends are reflected both in our own assortment and also our external brands. It's more that that it's impacting the return rate than necessarily the mix between own and external brand. Thank you. We have one last question from Fredrik. In your call after the Q4 report, you mentioned the consumer was very price sensitive and drawn to more value-priced items. Has this trend accelerated, or is the consumer feeling more confident, you think? I would say that the trend continues, so we definitely continue to see a very price-conscious consumer, and a consumer that, as I said in the Q4 report, is very sort of carefully evaluating her options. I think in this past quarter, as we've said, we don't feel our assortment was as strong as it has been, in the past, and some others in the markets did that really well. The consumer is still shopping, but she is price conscious, and she is discerning. Thank you. We also received a few questions regarding actions we are taking for creating shareholder value. Would you like to comment on that one, Helena? Of course, shareholder value for us is created by doing a good job and running a good business, and that's what we are focused on. We don't control the share price, so I think our job really is to continue to build a great business and an assortment that the customer wants. That will continue to be our focus going forward, and that over time should create shareholder value. Thank you. We are moving on with another question. This one is from Jan, and he's asking, "Number of orders has decreased year-over-year. I was wondering if you could give some color about the trends for this, and whether this is expected to last throughout 2026. Well, I think here again, it really everything for us as a fashion business, everything comes back to the assortment. Of course, orders are essentially driven by you know the traffic we get in and the number of visitors that we're able to convert, and with a strong assortment that is easier and with a weaker assortment that is harder. I think the number of orders decreased year-over-year. That's obviously not a development that we want to see, so we're gonna continue to work hard on yeah getting the customers into our store and then converting them with really strong products. Thank you. Next question is also for you, Helena, and it's from Magnus. Could you provide an update on your investment in Germany and whether it is progressing according to plan? Yep. As we have also talked about with Germany, we see Germany as a very interesting growth market, but one that, of course, can't be allowed to take our focus from the Nordics. We're doing our investment and expansion in Germany in a very careful and step-by-step way. I think we're very much sticking to that plan. We have made a number of changes to our site in Germany. We're investing a little bit more in paid advertising. From our perspective, it is progressing according to plan. Thank you, Helena. The next question is from Nicklas. You cited three distinct assortment failures in Q1, insufficient newness, underrepresentation of key trends, and too slow a response when products showed early potential. These are buying decisions made months in advance. Can you tell us specifically what proportion of the Q2 assortment was committed before you had full visibility of the Q1 problems versus what you were able to adjust? In other words, can we expect similar one-offs in regards to the assortment for Q2? Yep. It's true that we essentially make fashion bets on the seasonal assortment sometime before the customer actually sees it. We do also have the ability to adjust in season. For example, of course, we see what the customer responds well to in the beginning of the season, and we are able, particularly on the product categories where we produce short lead markets, we are able to sort of refill or not refill in season, which we of course only do when we see that the customer responds well. Also our external brands actually provide us with a very valuable ability to respond to customer signals in season. There will certainly be an element of this still in Q2. As I said, we do also have the ability to adjust along the way, and we are doing a lot of work at the moment to do so. Thank you. We are moving on with a question from Eshaan. The group's administrative and other operating expenses increased by SEK 15 million during Q1. How much of these are one-off nature, and will these costs remain at this elevated level or return to previous levels? As Helena earlier said that we see it as investments in future development of Nelly, and as you also cited that these will be roles going with us further. I don't see any of the costs really as one-offs, more that we didn't have it in the comparison period, so. Thank you, Josefin. We are running out of time, so we will wrap up this call with one last question. This one is from Jonas. It's for you, Helena. It's about our brand partnerships. Which new brands are you planning to take into the assortment? Yes. Our external brand portfolio is, as I said, a very important part of our business and our value proposition to customers. While I can't unfortunately talk about specific brands just yet, we are definitely in discussions with several very interesting brands. I think especially pleasing is that we also now see an increased activity in brands coming to us, proactively wanting to collaborate with us. This is definitely something that will continue to be important for us and I'm looking forward to hopefully being able to initiate partnerships with some of these brands that we're now talking to. Perfect. Thank you. Great. Well, that concludes today's presentation. Thank you very much for dialing in and listening and of course also sending us your questions. Thank you very much. Thank you.