We really took a hit this time! Fenix Outdoor’s earnings release yesterday was a complete catastrophe!
Fenix Outdoor Q2 2024.pdf (3.2 MB)
Many people’s faith in the company is currently more than tested. The Fjällräven brand is still carrying the company, but even its ability to defend the company’s performance is now under strain. EBITDA collapsed by almost half, and difficulties in the US intensified. According to the Chairman, Q2 is the most sensitive quarter, but now that H1 is wrapped up, the result stands at -€0.05, whereas a year ago, when it was already difficult, we were at least €0.83 in the black. Sure, there have been some organizational changes regarding distribution channels, but in the big picture, the situation looks particularly bad, even though excessively high inventory levels should gradually be cleared. The strength of B2C sales was positive, but unfortunately, it wasn’t enough to compensate for the rest of the operations. A surprisingly small drop in the share price, only 18% from yesterday to the time of writing, likely due to low trading volume. The €585 million market cap seems unjustified based on my own calculations, which is why I put my own shares on the sell side.
There needs to be a clear change in Fenix’s story soon; otherwise, we are inevitably on the same path as Rapala.
Of course, it must be admitted that the market is not easy and sales are solidly higher than the pre-COVID era, when there was plenty of front-loaded purchasing by consumers—after all, even our quality company Harvia hasn’t found a path to organic growth in Finland since those times. Also, Fenix products last for years, and you don’t need to update a good backpack very often.