It was a challenging start to the year due to warm weather. It continued with challenges for our US operation due to the customs situation. In addition it was an increasing price pressures in the market, especially on the web. Red prices seem to be the prime traffic driver hurting the classical retailers including the Frilufts group. Still the Frilufts group improved their brick-and-mortar sales.
We also have had a few challenges with the implementation of the new ERP system starting in the second quarter, which was not surprising. We are in many ways implementing new ways of working to enable us to act on better information faster. Then the warm weather in late fall did not help the situation.
How ever we have had several victories. The acquisition of Devold has been successful so far and the contribution was, in many ways, positive in the year. We generally saw an improvement in our costs as well as the beginning of savings in our European logistical operation. We also had two markets outperforming, Canada which is a part of the North American operation as well as our joint venture in China showing records in sales and profit. This means that we saw a positive topline development during the two last quarters. This led to an improvement on the bottom line for the last quarters, despite a very warm fall in Europe.
2026 and forward – possibilities but also remained risks.
We still expect a challenging market in 2026, but the cold weather in Europe has already had a positive effect. Frilufts sales, during the first two months in the year, was up. Especially in the Nordics which give us hope. In terms of orderbooks for 2026 we do see them being on an OK level for 2026. The retailers are however still cautious of taking risks in inventory. They are counting more on reorders from the brands. This means that the increase of inventory risk in our business remains. We must take a larger risk to enable us to capitalize more on reorders. The supply chain is facing an increased risk due to the development in the middle east and the political environment is also a factor playing in.
We are continuing to integrate Devold in our Brand and distribution network. Our development of closer to market production will be further developed and used. This by facilitating the production at Viomoda as well as through the Devold production units in Latvia. Over time this will lower our risk in inventory as well as improving our ability to act quickly to consumer demand. We expect an improvement in gross margin during the year, especially during Q3 and Q4. We also expect and improvement in logistic costs during the year of up to 4 MEUR. Internally we are facing extra costs from implementing the new ERP system, while keeping old systems running. We are aware of the political volatility effecting the trade and consumer demand as well as how it may affect the USD and global tariffs. We are, as always, keeping our focus on sustainability and I am still convinced that sustainable success and commercial success are not opposing forces – they reinforce each other. A business that takes responsibility, invests in resilience, strengthens transparency and embraces circularity becomes stronger, more relevant and more competitive.
Thanks for all support
I finalize by repeating my message from the Q4 report and give a big Thanks to everybody having to carry overload of work with our ERP implementation as well our customers for their patience and loyalty in this changing world.
