Nelly's relaunch, including focusing on its core Nordic home markets, bolstered Q1 sales growth and LBIT which were lower than we expected (no consensus). Despite the ongoing pandemic and the impact on occasional wear, local currency sales growth was 5.5% and margins benefited from a 7.6pp y/y reduction in return rates. Inventory-to-sales reduced from 19.5% to 14.6% (-4.9pp) and net cash was SEK 180m. Based on unchanged earnings, our mid-point DCF is SEK 55.

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