Swedish Furniture Group Pivots to B2B Amid Ukraine War Impact

NGLM Group, a Swedish furniture company founded in 2016, anticipated a strong performance in 2022 with projected sales of $180 million across its brands, including Nordiska Galleriet (NOGA), Länna Möbler, and Dusty Deco. The group had grown significantly since 2017, when it reported $5 million in sales, and had consolidated its acquired companies into a single entity by 2021.

However, the onset of the Ukraine war in early 2022 led to an immediate 30% drop in sales. This resulted in NOGA shifting from an annual profit of €6 million to an equivalent loss. Key challenges included 6-12 month delays in oak supplies, as Ukraine and Russia are major markets for the raw material. The broader economic downturn also diminished demand for luxury furniture, which became an "unnecessary luxury."

This period saw significant disruption across the European furniture sector, which experienced its worst year since the Second World War, with fashion giants like LVMH also reporting declining turnover. In Sweden's premium furniture segment, over half of NGLM Group's competitors either closed or filed for bankruptcy within four years, compounded by Swedish inflation rising over 20% between 2022 and 2024.

To navigate these challenges, the founder initiated a strategic pivot towards the business-to-business (B2B) market, focusing on commercial interiors for offices and hotels. In 2022, a new company named Yllw was established. Yllw developed a vertically integrated, full-service model offering furniture solutions for hotels, restaurants, and offices, including moving, project management, and procurement or rental.

Yllw, which built technology to enhance sales team efficiency, proved profitable in its inaugural year and played a crucial role in funding NOGA's continued operations. Four years after its inception, Yllw is projected to achieve a total turnover of €110 million and €10 million in profitability this year.

(Source: Fortune)