In this equity research report, analysts Adam Orvegård and Vilmer Ahlborg analyze Kjell Group, a Swedish retailer of consumer electronics accessories. The Company is estimated to expand margins through recent investments in warehouse automation and a growing share of private-label products, supporting EBIT margin improvement from 0.4% in 2024A to 7.0% in 2027E. Through an equally weighted DCF and a peer valuation, a target price of SEK 18.0 is implied, indicating a potential upside of 69.8%.
Investment Thesis
● Given historically declining margins and a distressed financial position, low investor expect-ations may offer upside potential, with EBIT margin projected to increase to 7.0%
● Warehouse automation is estimated to reduce distribution costs by 30% by 2026E, cutting total OPEX as % of sales from 32.7% in 2024A to 27.0% in 2027E
● Kjell’s upcoming shop-in shops at EKO will operate in high-traffic environments, exclusively offer private-label products with a 68% gross margin, and follow a capital light, staff-free rollout model, contributing to SEK 260m in sales annually