<a id="bm-comp-9493b3ac-18c2-4e26-aad1-114d248046c8" name="bm-comp-9493b3ac-18c2-4e26-aad1-114d248046c8" class="BMCustomAnchor"></a><table><tr><td bm-component-id="9493b3ac-18c2-4e26-aad1-114d248046c8" style="vertical-align: top; width:100.000000%;"><ul><li>Cole & Son management changes weigh on Q1 EBITA</li><li>We expect Cole & Son to move toward hospitality</li><li>We reiterate our fair value range of SEK 36-43</li></ul></td></tr></table><a id="bm-comp-87dc9540-c9c1-4760-a680-8c5364cc3f64" name="bm-comp-87dc9540-c9c1-4760-a680-8c5364cc3f64" class="BMCustomAnchor"></a><table><tr><td bm-component-id="87dc9540-c9c1-4760-a680-8c5364cc3f64" style="vertical-align: top; width:100.000000%;"><h3 class="bm-h3">Nordics performed better, DTC changes the P&L</h3><p>In Q1, Embellence Group accelerated to 3% organic growth vs. broadly flat growth in Q4. As in Q4, Nordic brands were accretive for growth, with Boråstapeter growing 5% organically while External manufacturing grew by 20%. Pappelina, which recently received a major online platform overhaul, took significant strides as well, which is a positive signal for the ongoing DTC transformation. Cole & Son, which was undergoing management changes, declined 19%. The DTC transformation is making a clear mark in Embellence Group's P&L structure: gross margins improved 1.3pp y-o-y, but the SG&A ratio also rose 2.7pp. The result was a ~2pp margin contraction for an EBITA margin of 13.9% and EBITA of SEK 28m.</p><h3 class="bm-h3">We expect near-term softness in Cole & Son</h3><p>Yelena Ford joined Cole & Son as Managing Director in April, succeeding the Group CEO, who had held the role on an interim basis. We expect the new management to have a greater focus on hospitality sales going forward, thereby joining Wall & Decò in this end-market. Cole & Son’s new DTC platform performed well, but near-term distribution optimisation is likely to weigh on sales and margins into Q2. Cole & Son margins were also impacted by management changes in Q1, though the magnitude is unclear.</p><h3 class="bm-h3">We reiterate our fair value range of SEK 36-43</h3><p>As we make only very minor estimate revisions, we reiterate our fair value range of SEK 36-43. The share is currently trading at 7.7-5.4x EV/EBITA '26e-'28e, which can be compared to a historical trading range of 7x-8x NTM and a Swedish peer group of home improvement companies at a median 10.8x-8.1x '26e-'28e. We estimate a 10-13% FCF yield '26e-'28e, and a dividend yield of 5-5.7% for the same years.</p></td></tr></table>