Softer across the board
The Q2 report was softer than we had expected with regard to all key line items, as sales and EBIT were respectively 5% and ~80% below our expectations. The organic growth rate was adversely impacted by the ongoing change in the distribution model and distribution agreement terminations. While we are not necessarily surprised by the discontinuation of certain contracts, we are nevertheless surprised by the timing and magnitude of them. During the conference call, however, the new CEO mentioned a pragmatic approach with respect to the company's licence brand collaborations; while some of the collaborations will be challenged and discontinued, others may be entered into if they are sufficiently profitable. We believe that this is a constructive approach, and one that has not necessarily been framed this way previously.
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