Ceconomy Ag Ord

Good morning and welcome to our Q1 results call. With me today are CEO Bernard Duttmann and our CFO Karen Sonnmoser. They will guide you through today's presentation. Before we start, let me briefly address the usual formalities. Firstly, please be aware that this call is being recorded. A replay will be available on our website later today. Secondly, please keep in mind that today's presentation and potentially also some answers to your questions during the Q&A sessions may contain forward-looking statements. For additional information in this context, please refer to the disclaimer. But now, let me hand over to our CEO, starting with the highlights of the first quarter. Please go ahead.

Good morning, everyone, and thank you for joining our call. We are looking back at a quarter which was again exceptional in many ways. Ladies and gentlemen, it was one of the best quarters in the company's recent history. It was also the quarter in which we reached a key milestone, namely the agreement with Convergenta on the acquisition of the minority stake in MediaMarkt.on. At the same time, we showed you our way forward and our ambition to become customers' first choice. Yet, it was also a quarter when the second wave of the pandemic struck and impacted our business again. I remember when we last met virtually at our CMD. Mid-December, we had just passed extremely successful weeks of our peak trading period. But then we started to face an uncertain Christmas business with the return of COVID-19-related restrictions in several countries. I'll give you some more details in a minute. Looking back at the entire quarter, I'm very pleased with the continued strong customer demand and high spending on consumer electronic products. In our view, it was a combination of several factors. Attractive offers on our side, but also the ongoing trend towards work from home and investments to home improvements coming from travel budget reallocations on the consumer side. Our commercial approach was to offer attractive marketing campaigns throughout the entire quarter. We deliberately pulled forward Black Friday and Christmas demand to mitigate the risks from lockdowns. In hindsight, this turned out to be the winning strategy as increasing restrictions and lockdowns were imposed in several countries as of December. All in all, we had an excellent start into the financial year and we demonstrated strong resilience in light of COVID-19 headwinds. Yet we are facing increased uncertainties and an ongoing changing situation in a large number of countries. Let's take a deeper look into our peak trading period approach this year. I am proud that we delivered a very successful peak season, which resulted in record sales growth. In this regard, keep in mind that we already had a very successful campaign last year. As I said before, by intent, we stretched out the key trading period by extending the campaigns into October and November to mitigate the risk of intensified COVID-19 restrictions in the stationary retail and potential logistical bottlenecks during the important Christmas business. We have run Black November campaigns throughout the entire month, complemented by additional campaigns such as Single Stay or Galaxy Week. This resulted in sales growth of 21% during the pre-Black Friday period. During the traditional Black Friday period, including Black Friday, the Black Week, and Cyber Monday, we were able to increase sales by 8% against a very strong basis from prior year. Finally, in the post-Black Friday period until mid-December, our sales growth accelerated to 30%. Our focus was much more geared towards online than ever before, which helped us to control store traffic more effectively. Looking at the countries, our peak season was particularly strong in Germany, but also Spain and the Netherlands performed very well. In Germany, among our best-selling products were in particular game consoles such as PlayStation 5, Xbox Series X, as well as blockbuster smartphones such as Samsung Galaxy S10 Plus, and iPhone 11. The successful execution of this period was paramount to achieve this excellent start into the financial year. Ladies and gentlemen, this quarter was also characterized again by increasing restrictions for brick-and-mortar business as valid by renewed temporary store closure. In our countries, the situation varied depending on national circumstances and requirements. In Italy, Poland, and Turkey, we faced restrictions regarding opening hours on weekends or opening of stores and shopping centers. In Austria, Benelux, and Germany, we had to close all our stores again on a temporary basis. As a result, on average in November, 11% of our stores were closed, while in December, it was already 31%. Unfortunately, the numbers rose even further with the prolonged or new lockdowns in Germany, Austria, the Netherlands, and Switzerland. Looking at the monthly average in January, even 63% of our stores were closed due to COVID. You can see that this lockdown lasts already longer than the first one last spring, and the prospect of improvement in the near-term future remains Similar to the first lockdown, we have demonstrated that we can react fast to fundamentally changing conditions. Our omnichannel model is a key asset in this respect. I am proud that we are the go-to destination for consumers despite all the COVID-19 related challenges. Our products are helping customers to manage their lives in the pandemics. Whether it's homeschooling or work from home, the need for digital solutions and corresponding advice has increased. Even though we had again to close most of all stores, we continue to provide the best possible service. Of course, in compliance with all safety and hygiene regulations. Besides the possibility to shop around the clock at our web shops, customers can still order and receive advice by phone or video chat. In addition, contactless pickup of online orders is still available in many cases. Overall, our online platforms manage the massive search and traffic very well without any disruptions. Shipment from store became again an important tool to access store inventories and play out our omnichannel advantage. In the final weeks of our key trading period, however, when the lockdowns intensified and the shift to the online channel accelerated further, outbound logistics were running at full capacity and faced some capacity constraints. Next to our product offering, customers can also still choose a range of services such as smartphone or tablet repairs, yet admittedly, these services are currently less requested. in light of the local lockdowns and other distancing measures in several countries. All in all, thanks to the tireless efforts of our teams, our omnichannel approach proved itself once again during the second coronavirus. Let's take a quick look at the headline figures. Ladies and gentlemen, in this exceptional period, I'm pleased to say that we showed an excellent business performance. Sales adjusted for currency and portfolio change grew by 11.4% year on year. And adjusted EBIT increased by 56 million to 346 million euros. Both figures, you can't believe me, would have been even better if we were not forced to temporarily close most of our stores again during the Christmas business. Still, it turned out to be one of the best quarters in the company's recent history. Even though the short-term outlook is highly uncertain, the strong performance in the first quarter, especially until the lockdowns, makes us confident that we are on the right path and well-positioned to emerge even stronger from this pandemic. So much from my side for now. Karin will now guide you through the quarterly financials and our outlook for the full year. Karin, over to you.

Thank you, Bernard, and good morning to everyone on the call. Let me guide you through the quarterly numbers in detail. Let me start by looking at the sales development on slide 11. As Bernard just mentioned, currency and portfolio adjusted sales increased by 11.4% year-on-year. This excellent sales performance is the result of our successful approach to this year's peak trading period, which led to a very strong start during the first two months of the quarter. During this period, we continued to see strong consumer demand for our products and services across all countries. As Bernard already referred to, in order to mitigate the risks of potential store closures and supply chain disruptions during the crucial peak trading period, We deliberately stretched out this period and executed successful pre-Black Friday campaigns, such as Single Day and Black November. Thanks to exciting Cyber Week and Christmas promotions, the strong double-digit sales development also continued in December, until the nationwide lockdowns in Germany and the Netherlands took effect from mid-December. It is remarkable that despite the increasing COVID-19-related restrictions and temporary store closures during the quarter, all countries reported a positive sales performance in local currency. Now let's take a closer look at the sales performance of the individual segments. The DAG region recorded an increase of currency-adjusted sales of 9.1%. The main contributor to this performance was the sale increase in Germany. The continued favorable customer demand was further supported by successful campaigns such as VIT campaigns at MediaMarkt in October and the campaign days surrounding Black Friday. The general VIT reduction that was valid until the 31st of December also had a positive impact on sales in Germany. Together, this more than compensated for the sales losses caused by the hard lockdown in Germany from mid-December. Despite the lockdowns in November and again after Christmas, Austria reported a slight increase in sales driven by successful campaigns and a strong shift to the online channel. In Western and Southern Europe, currency and portfolio adjusted sales grew by 13%. This positive sales development was significantly driven by a good performance of Italy and Spain. Both countries enjoyed sustained strong customer demand, which was further supported by various successful executed marketing activities. This more than compensated the negative sales impact from temporary store closures on weekends as of October for most stores in Italy. The Netherlands were impacted first by stricter social distancing guidelines, and from mid-December also by temporary store closures. Thanks to a major shift to the online channel, sales in the Netherlands came in even slightly above prior year's level. In Eastern Europe, currency-adjusted sales increased by 25.5%. Turkey recorded high double-digit cross rates and made a major contribution to the sales performance of the segment, despite the closure of all stores during weekends since December. Poland reported a slightly positive sales performance in local currency, despite temporary store closures in shopping centers in November and again from the end of December. The segment other posted a sales uplift of 10.7%, which is entirely driven by the encouraging sales development in Sweden, which was not affected by COVID-19 related temporary store closures. With the return of lockdowns in many countries, customers continue to equip their homes with office equipment and in particular computer hardware. but also TVs were amongst the most bought products in the quarter. Both categories were key drivers for our sales growth. Looking at our secondary business, we were satisfied with an improving footfall trend in October, but unfortunately, with increasing restriction in many countries, this trend reversed and frequencies significantly declined in November, in particular in December. On the other hand, we recorded better conversion rates and significantly higher baskets during all three months. This helped to compensate the lower footfall to some degree. Let's look at our online business. Our online business more than doubled in the first quarter and accounted for 30% of total sales. The dynamics in the online business even intensified against the backdrop of the increasing number of temporary store closures and brick-and-mortar restrictions since the beginning of November. In December, we even recorded an online sales share of 35%. We saw a strong increase of online visits, but also lifted conversion rates and average bonds. Particularly noteworthy is also the number of newly registered online customers, which reached around 3 million in the first quarter. This is almost twice as high as in the comparable prior year period. The pickup rate stood at 32% and was thus significantly lower than in the prior year. While the total number of pickup orders increased, the lower pickup rate is the result of a stronger increase in pure online order. This development was amplified by the fact that the local government imposed stricter social distancing guidelines and even a ban to pick up online orders in the stores during the lockdown, like in the Netherlands or in some regions in Germany. The service and solution sales declined by 8.6% year-on-year, corresponding to a sales share of 4.6%. If you exclude the technical effect and adjust for portfolio changes, services and solutions declined by 2.6%. In October, we started off with an encouraging performance and recorded a positive sales trend, All the thanks to our relentless efforts in this field. In the reminder of the quarter, however, it should not come as a surprise that the store closures and declining customer footfall had a negative impact on the service and solution business. In general, the sales of service and solution is still largely related to purchases in stationary retail, and many services are offered at our smart bars in the store. Without access to the stores, customers were not able to use our popular in-store services in many instances. Declining brick-and-mortar traffic with lower contract attachments also explain the decline of our GSM and financing contract business. In particular, the sale of financing contracts generally benefits from guided in-person advice in our stores. The extended warranty category, on the other hand, continues to perform very well. To make progress towards our service and solution target of 30% incremental sale, we have set three priorities. First, we want to scale our services and solution offering. Second, we want to drive online services and solution attachments. for example, through improved services attachment layers in our web and mobile shops. And finally, we want to expand recurring revenue models. Let us now move on slide 14 for a few on the cross-margin development. Against the backdrop of the COVID-19 restrictions and store closure, our adjusted cross-margin declined by 140 basis points to 17%. The cross-margin in the quarter was again strongly impacted by COVID-19-related effects, such as channel and product mix effects, coupled with a higher delivery cost resulting from the strong growth in the online business. These effects accounted for most of the total cross-margin decline, In addition, lower services and solutions income had an adverse effect on the cross-margin. We managed to overcompensate the lower cross-margin by a significantly improved OPEX ratio in the first quarter, thanks to our strict cost discipline and the continuous work on the cost base. This becomes evident on slide 15. Our OPEX ratio declined to 13.2% in the first quarter. The improvements on the cost side are related to declining personal and location costs, considering a generally increased cost discipline and FTE reduction. On top of that, first savings in connection with the introduction of the new operating model took effect. The countries affected by temporary stock closures, we received government support in the form of fixed-cost subsidies, short-time working allowances, as well as rent compensation, which supported the result. On the other hand, variable cost components, such as payment transaction costs, naturally increased with a higher sales level. So all in all, we effectively reduced costs by around 18 million euros in the first quarter. Thanks to the excellent sales performance and the cost measures, we were able to overcompensate the COVID-19 induced decline in the cross margin. We still reached an adjusted EBIT well above prior year's level. Adjusted EBIT rose by 56 million euros year on year. This needs to be seen against the backdrop of an already strong Q1 in the prior year and in the context of the significant COVID-19 related disruptions for the business. Frankly speaking, after the first two months of the quarter, the EBIT increase was even slightly higher. Looking at the earnings development per segment, the DACH region increased adjusted EBIT by €12 million year-on-year. This result is largely due to a significant EBIT increase in Austria, which recorded higher margins and COVID-19-related government support in light of the temporary stock closures in November and December. Germany, on the other hand, reported a significant decline in earnings due to a negative sales and margin development in December because of the renewed temporary store closures coupled with a strong channel shift. Western and Southern Europe saw adjusted EBIT increase by 24 million euros. The dynamic sales development in Spain and Italy was clearly instrumental for this result. In the Netherlands, earnings were slightly lower as the channel shift related negative margin development was partially offset by COVID-19 related cost savings. In Eastern Europe, the EBIT improved of 8 million euros is exclusively related to Turkey. This was mainly the result of strong sales growth and cost savings. In Poland, on the other hand, earnings declined slightly. Thanks to a higher cost efficiency, the country was able to largely compensate the negative margin development, which was induced by the renewed store closures. In the other segment, adjusted EBIT rose by 12 million euros year-on-year. This positive development is the result of two factors. First, earnings in Sweden improved, supported by the positive sales performance and cost savings. holding costs at the economy AG declined compared to the prior year. So as you see, we are very happy that all segments contributed to the group's adjusted EBIT improvement of €56 million. On a reported basis, EBIT increased by €21 million year-on-year. In the prior year, we benefited from a restructuring-related gain of €30 million, mainly related to the Greek transaction. This year's result, on the other hand, includes transaction costs of €6 million related to the transaction with Converganta, which are excluded from our guidance relevant adjusted EBIT. Expenses in relation to the introduction of the new operating model, as well as COVID-19-related permanent stock losses, were not material in the first quarter. The full focus was on successfully steering the Christmas business, but we have certainly not lost track of implementing these initiatives. In the coming quarters, we expect to book the remainder of the anticipated restructuring-related expenses which should add up to around 110 million euros in this financial year. In addition, we expect to book around 5 million euros more related to the Converganta transaction. Let's now have a look at the bridge from EBIT to EPS on slide 17. The net financial result declined by 19 million euros year-on-year. This is mainly due to interest as well as loan and commitment fees relating to our syndicated loans and a lower dividend from MVDO. The tax rate stood at 38.1% in the first quarter. The increase compared to the prior year is largely driven by the expected restructuring expenses related to the new operating model, which are partly non-tax deductible. Adjusted for these restructuring effects, the tax rate would be 34.1%, which is in line with our mid-term ambition. Please keep in mind that the benefits related to the acquisition of a Mediamarkt Saturn minority stake are not yet considered when calculating the tax rate. As you know, the closing of the transaction is still conditional on the AGM approval next week. Due to the lower financial result and higher taxes, earnings per share came in slightly below prior year's level. Moving from the earnings to cash flow on slide 18. The least adjusted free cash flow in the first quarter amounted to 1.2 billion euros. It declined by 76 million euros year on year, which is essentially the result of a lower change in net working capital. The €262 million lower net working capital inflow is almost exclusively due to the change in trade liabilities. It reflects both the COVID-19 related temporary stock closures from the second half of December onwards, as well as a comparatively high starting point as of the 30th September 2020, due to the dynamic sales development which we have seen in Q4. On the other hand, the other operating cash flow and capital gain tax refunds in the reporting period had a positive effect on the free cash flow. Investments into expansion and modernization declined slightly compared to the same period last year, and those also had a positive impact. With this, we have covered the financial performance of the first quarter and can move on to the outlook. Ladies and gentlemen, in an exceptional pandemic context marked by lockdown and other social distancing measures, the economy demonstrated strong resilience in the first quarter. This allowed us to post a strong increase in sales and earnings. This was an essential step towards our full year targets. Yet, despite this strong start, we are again facing significant uncertainties, especially in the light of the unpredictable duration of the pandemic and the related measures. Let me be clear. When we communicated our guidance for this financial year, longer-lasting, widespread closures of a significant part of the stationary business, as has now occurred in Germany, Austria, the Netherlands and Switzerland, were not taken into account at that time. Especially the German lockdown hits us hard. Naturally, we want to be there for all of our customers in the Strother gang as quickly as possible, of course, with all the hygiene and safety standards that are required. We will continuously reassess the impact of the COVID-19 pandemic on the business and the maintenance of our targets for this financial year and adjust the guidance if necessary. Under the current circumstances, we see significantly increased uncertainties regarding our outlook of a slight increase in Forex and portfolio adjusted shares and an adjusted EBIT of 320 to 370 million euros. We will especially have a close eye on government decisions regarding potential further lockdowns and extensions, but also the sales trend and the potential building of pent-up demand. With this, ladies and gentlemen, I would like to conclude my part of the presentation and give back to Bernhard for some closing remarks.

Thank you, Karin. Ladies and gentlemen, let me briefly wrap up today's call. There are three important aspects I would like you to take away from this call. Firstly, we delivered a very successful peak season and demonstrated strong resilience against increasing COVID-19 headwinds. I'm very proud of our employees who made this success possible in such challenging times. To say it again, we put a strong basis in this Q1. Second, We remain cautious with regard to the near-term future considering the uncertain environment. We see a dynamically changing lockdown situation in many countries, which results in challenging operating conditions for our business. And lastly, coming from our CMD, the bottom line for us is clear. We will continuously to relentlessly focus on the execution of our updated strategy. We are working hard on the initiatives presented to you in December, and we are better prepared for the future than ever before. With this, I would like to conclude our presentation. Thank you everyone for your attention. I will now turn the call over to the operator for your questions.

Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you are using speaker equipment today, please lift the handset before making your selection. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. The first question comes from the line of Batian Karen with Kepler Shriver. Please go ahead.

Hi, good morning, everyone. Three questions from my side. The first one, at the CMD, you gave us a list of new KPIs that you wanted to disclose. I don't see it in this presentation, so I was just wondering what the timeframe is. Is it once a year that you want to release this new KPI? The second question is regarding the outlook. I suspect it's fair to say that Germany has the biggest impact. As you've seen as well, there's a lot of speculation today in the German press that the lockdown will at least last until the end of February. Can you give us a feeling of how long can you still cope with stock closures in Germany without having to cut your guidance, please? And the last question would be on your gross margin decline of 140 basis points. Can you quantify the big blocks? Carving gave us a feeling of what the blocks were. but would be really appreciated if you can put some numbers behind. Thank you.

Good morning, Fabienne. I will start with your first question regarding the KPIs, which we have shown you during the Capital Markets Day. I also mentioned during the Capital Markets Day that we will report these KPIs at least on an annual basis, and some of them we will report in a half-year period. But please be aware that we still have already some KPIs included in our presentation, such as, for example, the pickup rate. But we will be on track on that and report them as we have some news regarding the development. Regarding your third question related to the cross-margin and the big blocks of declining, I can tell you that the big block is the channel and product mix, as well as the higher delivery cost together. These three topics together account for about 80% of the total cross-margin decline of about 1.4 percentage points. Regarding the outlook, Gernot?

Yeah, Fabian, outlook is a good question. Let me go back a little bit to December and beginning of January because as you may know, for men, Christmas is always a surprise that it comes on the 24th of December. For women, they planned it well ahead. But for the men, this year was extremely difficult to make their Christmas purchases because we had the lockdown in Germany. So that means And that's the reason why we have a peak period, a peak sales period in the last December days until Christmas. And for that reason, it was incredibly difficult to supply the requested demand. And we had sometimes to say, no, we can't deliver. We don't have the goods because we had logistical issues on the inbound traffic to our warehouse and in the outbound to our customers. And that's not only – it was not only us. It was the whole non-food industry in Germany who suffered from the same restrictions because logistics capacity were just – were maxed out, let's say it that way. And that – we also, in beginning of January, have a strong month. Then from mid-January onwards, it's easing. The volume is easing. It makes it much easier for us. to deliver the volumes and to get back into the rhythm of supply and demand. And that's something we learned now, and that is we are able better to cope with the current situation. Yes, as I said, we had a strong start with the first quarter, very strong results. And the question for you is how long can you endure? a lockdown in Germany. And I think that depends a little bit also on the situation, what happens after the lockdown. Because looking back at last year's numbers, we have seen after the reopening, a strong demand lasting for a long time, even far longer than we had anticipated. And I said before, it was partly also from reallocation of travel budgets to the purchase of consumer electronics. So for that reason, we are with our first strong quarter. We feel confident that we are on the right track. But as we said, we have some uncertainties. And that's something where we had left it at the time being, because we really don't, we don't have the glass bowl to really look into what it means in the future. One thing I can tell you, even after four months, we are still in a positive sales development.

Okay. Thanks very much.

All right. The next question comes from Afoka Bossa with Baader Bank. Please go ahead.

Congratulations on the strong start into the fiscal year 2021 and thanks for all the provided information. I also would like to come back to the guidance. Isn't it possible to give a kind of rule of thumb how much sales and average you are losing per month the stores are completely locked down as of today? Or isn't it possible to provide a kind of flexible guidance which includes various closure scenarios. I mean, at end of December or at mid of December when you released the guidance, you expected stores to be closed until end of January. Therefore, you came up with a 320 to 370 million EBIT guidance. But how would that be affected if the store closure goes until end of February or even until end of March. I mean, it's clear that you have not the crystal ball, but to give an idea how much the shift of the initial guidance could be depending on the scenarios which might come up. Yeah, it's just an open question. Second or third one would be on the gross margins, minus 140 bps here in Q1. Karin, could you give us a kind of feeling what to expect for the full year. Is it also depending on scenarios or how do you look on gross margins? And last but not least, I mean, we are six weeks in the second quarter already, perhaps a kind of trading update to set expectations. I just see that after four months, you are still sales positive. Does it mean sales after four months four months is up year on year on a life for life X currency basis. Is it right how I understood your message? Thanks.

Volker, I will start with your first question in terms of guidance. I know it's... Sorry to come back on that. No, that's fine. I mean, I understand you quite well because you have the same issue here. Because wherever we look, we have distorted numbers, completely distorted numbers. So distorted numbers are now in December and January and reaching into February now. And in March, we have distorted numbers of previous year. And then April will be distorted numbers of previous year. So again, so wherever we look, the numbers are currently distorted and it's very difficult to really get a clear message out of the numbers. The only thing what we know, what we can, what we have, done so far where we have been successful and looking into the measures. And there we get some feeling. And that is based where we are, where we currently are. But we cannot really rule out in every situation what is the plus or the minus on every aspect as basically all the basis in this year or in last year were distorted. That's the main issue we have. I mean, Karen gives some flavor on the trading update that maybe can also give some help.

Good morning, Fargo. So let me give you or let me try to give you a favor on the current trading and maybe that could answer your question regarding the impact of the stock closures in a month. Well, actually, I mean, in the countries in which we have seen a nationwide lockdown in January, so for example, in Germany, Austria, and the Netherlands, the sales were definitely significantly impacted in January. But on the other hand, we were able to compensate the lockdown also through a higher online sales share of almost 60% of sales. Therefore, we were able to recover almost 75% of last year's sales in January. With this, we still see positive sales growth for the group on a four-month basis, as Bernhard already mentioned before. So I think that maybe that can give you some flavor how the sales are developing in a lockdown situation. Regarding your questions of the forecast for the cross-margin, I mean, as you know, in the financial year 1923, The closure of our staff and our business weighed significantly on our cross-margin, and actually with the recent lockdowns, we see that the negative drivers such as channel shift and lower services income from last year continues. We expect that the COVID-related cost measures can compensate the negative cross-margin trend to some extent. But please be aware that as well as in this case, in order to forecast the cross margin for the financial year, the visibility on sales development and channel shift is quite low at the moment. And as such, the cross margin is rather difficult to forecast for us at the moment. Volker, I hope that answered your question.

Just for clarification, a four-month sales on a group basis is positive on a like-for-like X currency. Yes, that's absolutely right. This means January has been down by 30% or 2030?

Well, yeah, by around 29%. 25%, right.

So I'm not too bad with this. Okay, perfect.

Thank you very much. All the best.

You're welcome.

The next question comes from with Brian Garnier. Please go ahead.

Yeah. Good morning to all of you. Three questions from my side, if I may. The first one on rent. Will you try to negotiate the rent of with a landlord in Germany? Because it may become a little bit tougher than during the first lockdown. Obviously, because of the good first trend, other specialized retailers said that our negotiations are becoming a little bit harder. And the second question on the margin evolution, how should we see the path of margin from 2020 to, let's say, 2023? Is 2021 just a bump on the other world? And my first question is another shift from store model. How is it developing right now with lockdowns in Germany?

Thank you.

Brian, yes, yeah, let me come to your first question. We have in each country, we have a legal framework and it is different in each country. And as a rule, we have withheld rent between 50 and 75% for the respective duration of the lockdown. And that will be then negotiated with the landlords as we did it also in the first lockdown. So basically, we have some experience from the first lockdown and followed this year in a similar way. And as we had in the first lockdown, many agreements with landlords, we are also striving for having again these kind of agreements, but we are also trying Sometimes when rulings are different or legal opinions are also different, we might also, we are prepared to go to court if that's really needed. You also had a question from how do we using ship from store. As I said, we had also inbound restrictions in terms of logistics in December. So immediately, if that happens, we make use of ship from store to make use of all the inventory we have available in our stores, because that's a big benefit we have. And by that, we can fulfill customer demand quite easily by using this kind of inventory.

Good morning, Clément. You asked if the lockdowns are just a bump on the road for 2021. Yes, we see that in this way. So that means that the midterm targets, which we just announced at the capital market stay in mid-December, are not affected by the current situation. I hope that these answers, or that we answered your questions so far, Clément.

Yeah. Thank you.

You're welcome.

At this time, there are no further questions. I hum back to Stephanie Ritchell, Vice President of Investor Relations, for closing comments.

Ladies and gentlemen, this concludes today's results call. Apologies for the poor sound quality today. Thank you for your time and questions. As usual, if you have any follow-ups, please feel free to contact us at Investor Relations. We look forward to talking to you, as always. Take care, stay healthy, and bye-bye.