Lyko Group came into its Q3 2026 report with the stock at SEK116.2 after strong recent gains and a long-running reputation as a high-growth beauty retailer with thin but improving profitability. The fresh numbers show revenue of SEK1,032.6m and net income of SEK34.9m for the quarter, and together with a trailing twelve month net margin of 0.8% they put profitability under a sharper spotlight than usual.
That is the real story today. The share price move reflects emotion. The income statement highlights how tight the earnings engine still is.
Love Lyko Group’s growth story but concerned that a 0.8% net margin leaves very little room for error? Take a look at our screener of beauty and retail peers with sturdier profitability profiles through the list of solid balance sheet and fundamentals stocks (203 results).
Q3 2026 Earnings Summary
- Revenue (Q3 2026 vs. Q3 2025): SEK1,032.6m vs. SEK827.2m (up 24.8%)
- Net Income (Q3 2026 vs. Q3 2025): SEK34.9m vs. a loss of SEK18.5m (returned to profit)
- Basic EPS (Q3 2026 vs. Q3 2025): SEK2.28 vs. a loss of SEK1.21 per share (returned to positive earnings per share)
- Net Margin, trailing 12 months (2026 Q3 vs. prior year): 0.8% vs. 1.4% (pressure on profitability)
Ask Charlie what Lyko’s Q4 automation test really means.
Lyko margin story meets its first real test
Lyko Group bulls argue that higher capacity and format shifts will steadily lift earnings quality over time.
"The new automated warehouse setup is intended to provide about 150% more capacity than before. This can support higher order volumes, improve delivery times and potentially lift revenue and operating margins as fixed logistics costs are spread over more sales."
The latest quarter shows that claim starting to meet reality. Sales reached SEK1,024m, while EBIT margin hit 5.6% and operating expenses fell to 18% of revenue. Management also reported smoother automation, faster inventory turns and one of the company’s most profitable quarters ever, which all point to early operating leverage from the Vansbro build.
The price and this Narrative do not agree. → Uncover what this Narrative says Lyko Group is actually worth.
Lyko fixed cost fears meet mixed execution
Bearish investors have worried that Lyko Group’s expansion spree could harden its cost base just as growth normalises.
"The heavy warehouse automation and capacity expansion, financed with term loans and upcoming amortizations, could lock Lyko into an inflexible cost base just as beauty e-commerce growth normalizes."
The Q3 print cuts both ways. Automation issues are resolved and OpEx dropped to 18% of sales, which argues against an uncontrollable cost structure. Yet management still highlights competitive pressure, FX drag on gross margin and unquantified execution risk on the SEK100m savings plan. Milestones on flexibility are only partially met.
Hunt For Quiet Earnings Power
Lyko Group just showed how a strong operational story can still leave investors debating the earnings quality. The real opportunity is spotting stocks that could be undervalued before sentiment catches up.
- Company 1 - 22% below our estimate - uses full-capacity refining runs and expanding retail outlets to build an integrated marketing footprint.
- Company 2 - 35% below our estimate - converts new engine capacity and long-duration data center contracts into a broader power solutions footprint.
- Company 3 - 31% below our estimate - embeds custom silicon and infrastructure software at critical data bottlenecks to secure recurring performance-driven contracts.
Three companies from the same screener. Open all 191 potentially undervalued companies →
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com