Ceconomy Ag Ord

Welcome to the Seconomy MediaMarkt full year results webcast. We are live from our headquarters in Dusseldorf in an hybrid setup with participants both on-site and online. I'm joined by our CEO, Dr. Kai-Ulrich Deissner, and our CFO, Remco Reinders. They will present the highlight of the year followed by a Q&A session. Today, we meet in a new setup, one joint call for both press and analysts. We are pleased to welcome journalists online from our 11 countries. The presentation will be held in English with live translation. You can switch the language in the live stream. Before we begin, please note that today's discussions will include forward-looking statements. For more information, please refer to our disclaimer. The full presentation is available on our website. With that, I'm delighted to hand over to Dr. Deissner, who will guide you through the highlights of the year.

Thank you, Fabienne. Good morning, everyone. Thank you for joining us here today. I'm really happy to have you here with us today. Now, whether you're joining us here at our economy headquarter in Düsseldorf, all participating virtually, as Fabienne said, from 11 countries of our footprint. Today, Remco Reinders, my trusted CFO, and I will take you through the details of our financial year 24 and 25. Now, we'd already shared some preliminary numbers with you back in October, but I'm sure you will see some very strong performance across the board today. Because we've been on a strategic transformation for some three years now, from a classical retailer into what we call an omnichannel service platform. And last year's results show very well how that strategic transformation is gaining momentum. It's only the tip of the iceberg, but let me remind you from the very beginning 11 quarters of EBIT growth. That's a very strong track record. Now, there's two levels to this. First, for our business model, we are enhancing our retail core business model with what we call growth businesses. These are by now substantial in size and they continue to grow. But secondly, and actually much more fundamentally, This transformation is about the customers, about customers that think and feel and go shopping differently now than they did in the past. And all of our teams in the stores, in our logistics centers, in the offices throughout our 11 countries, they do want to put those customers first front and center to give them what we call Experience electronics. Our goal is to create a unique shopping experience that is tailored to their needs. Do we get that right every day? Of course not. Not yet. But we're moving in that direction and into the right directions. As you will see, today's results underline that. We've set over the past three years a solid foundation for future growth and we're proud of that. Ladies and gentlemen, we're on the right path and we will see this consistency pay off in the new financial year again. That's why we will publish a positive outlook for the current financial year 25 and 26. I will get to that later. Now let's first have a look into the details of those results of last year. Let me start with an overview and you will see that we delivered strong results across all our key metrics. First, sales reached 23.1 billion euros. That's a growth of 5.7% and that's more than the moderate growth that we initially guided. And we grew EBIT by 24% to 378 million euros. That means profitability is growing steadily, just as a reminder, for 11 quarters in a row now. And finally, a very hard measure. We increased free cash flow by 180%, now reaching 337 million euros. And as I said initially, fundamentally, our customer satisfaction reached a new record. Our net promoter score improved to 61. That's up three points from the previous year. So our focus on customer experience is indeed paying off. Now, we want to accelerate even more based on this momentum. We know that we still have a way to go in terms of our transformation. But we're ready for that next step. And we believe we have a really good partner to take this on with, JD.com. This partnership will help us accelerate even faster. JD.com brings significant experience, especially in logistics and technology. And teaming up with them, we want to create not just experience electronics, but the future of European retail. Just so that you know where we stand with this partnership. As you all know, we've signed our investor agreement back in July this year. At the end of November, JD.com had secured a total shareholding of 85.2% in Sycomine. And now we're working on and waiting for the outstanding regulatory approvals to finally close this transaction. We expect that closing still for the first half of the next calendar year. And I'm more convinced than ever that this partnership will make us stronger, even stronger, and will take us to that next level. But independent of that partnership in the future, let's look at the progress we made in our business, and that's on slide four. The performance of our growth area shows we are on the right track with diversifying our business model. Each of our strategic business segments contributes to our success. This diversified growth gives us the ability to adapt to changing market conditions even in the future. And we're adapting to our customer needs. Our all-time high of the Net Promoter Score isn't just a number of 61. It reflects fundamental improvements in how we serve everyone that shops with us across all touch points and every day. In this context, we've made significant progress with what we call personalized service, a specific program to let you design your visit to the store. We've completed that rollout in four countries already, and we're currently expanding to five additional countries. This, by the way, demonstrates that we scale successful concepts internationally, but of course we do adapt locally to reflect the different expectations that may exist in different countries. And we also invest in our backbone, our logistics and infrastructure, especially for those omni-channel capabilities. Here's an example. We've rolled out 16 regional fulfillment centers, that's across Europe, Germany, Spain, and Turkey. These centers then help us reduce delivery times and improve reliability of delivery for our customers. On the technology or IT front, we're leveraging data and AI to improve our customer experience. For example, with personalization to help our customers discover products that truly meet their specific needs. and to help us with conversion rates and customer satisfaction. Additionally, we're driving our sustainability measures, one of the key pillars of our strategy. Our refurbished sales nearly tripled this year. This also reflects changing consumer behavior. More and more often, customers choose high-quality refurbished products. Does it make sense for them economically And at the same time, it is an active contribution to putting less pressure on the environment. You probably recognize the next slide, number five. We do present it each quarter to give you transparency about the development of the nine KPIs which we introduced at our Capital Markets Day back in 2023. Because these nine KPIs represent the essence of our strategic focus. And once a year, we provide you with an update that includes precise figures. That's today. And I'm very proud to show to you that we've reached three of those nice strategic KPIs ahead of time. We achieved 53 million loyalty members. We increased our income share of services and solutions. And we grew our retail media income significantly. all before the official deadline, September 26. This shows we have made huge strides in becoming more than a retailer. Our growth businesses are now a significant contributor to our business, and they still continue to grow steadily. This will become clear on slide 62. Our growth businesses now represent a total of 36% of our gross profit. That's up from 33% last year, and it's a substantial increase from the 31% in financial year 2022-23. So we believe we're well on track to reach our target mix for financial year 2025-26, when we expect our growth businesses to contribute even more significantly to our overall profitability. Now, for the next few pages, let me walk you through some of the key operational developments last year, first for Retail Core, but then also for those growth businesses that I keep talking about. Let's start with Retail Core. It continues to be our strong foundation. And we're making some progress across all key areas in retail core. Let's look at loyalty first. As I said, we already surpassed our mid-term target of 50 million loyalty customers, and it's now 53. Why is that? We successfully integrated our Media Markt and MySaturn programs in Germany for a more customer-centric approach. And our loyalty program is now available in nearly all countries. Why is that important? These 53 million customers come to our stores and to our app and to our website far more frequently than unregistered customers. And we're approaching them with more targeted offers that convince them and they do drive our revenues. As you can see, we also improved another key metric and that's inventory management further. It's now down to 8.8 weeks of stock reach. And, of course, online. Our online sales were driven by strong growth both in visits and in conversion rate. And also our omni-channel approach is paying off. We're successfully linking for customers store visits and online journeys. It's finally reflected in our pickup rate, the rate of customers that chooses to go into a store although they ordered online. And that's now 37%. That's a great example of what omnichannel means. Not to forget the app. The percentage of online sales generated through the app has grown to almost 30%. That's very strong growth, and it's mainly driven by Turkey, Spain, the Netherlands, and Austria. Final element, store modernization. It remains fully on track. We've promised a target of 90% and we're on track to achieve that. Last year, we opened in particular smaller store formats. 29 new express stores and 8 new really small smart stores. That brings our innovative formats closer to our customers. Looking ahead into next year, we are preparing for the future through even more small format stores and at the same time a few more large lighthouses. As in the past, this differentiation, which is untypical for us historically, comes together with a cost focus and better logistics. So it serves our customers better and it is more efficient. All of this together shows our retail core is the strong foundation, and it is making steady progress to get even better. Now, based on that foundation, next to our growth fields, and let's start with service and solutions. Now, we did grow all product categories in service and solutions, but what stood out last year were insurances and products. installations and configuration services when customers buy new devices. It's what we internally call power services. Turkey and Spain were the two highlight countries for that part of the service business. For this year, we have two major objectives. We want to make it easier for customers to buy services online or in the app, Because, frankly speaking, this is still not as convenient as in our stores, and our attach rate still here has some potential. And we want to focus secondly on growth in the telco segment. We believe that there is still a lot of growth for us, potentially even with MVNOs, like our own mobile brand, Let's Go Mobile, which we launched in the Netherlands only this year. Second element of retail core is what we call space as a service, and it also expanded successfully. We're now offering what we call experience zones and entrance statements in over 700 of our 1,000 stores, and we're working with around 25 very special partners. We call them internally non-endemic partners. Well, that means it's partners that are not our classical industry partners, but where actually we establish a new relationship and thus also new business potential. Let's move on to private label, our own brands. Now, to be fair, the progress in private label has been slower than progress in other areas. But last year, our private label business benefited significantly from our audio line with Peak, and there especially by the Robbie Williams Company. Strongest product category is still accessories. And why is that? Because we tailor our accessory offers to highlight products. Take the Nintendo Switch 2 launch as an example. When we launched it, cases and many other accessories, cables, were also in high demand. And so we used that momentum and posted strong numbers around private label, around the Switch launch. Finally, we are improving the usability of our products. We've just recently introduced an AI chatbot that's been really well deceived by customers, especially with the use of smart manuals. Then, after private label, let us look at retail media business. This grew especially strong in Benelux, Spain, and Turkey. And we extended our offer again. We've introduced our first off-site programs. In case you're not familiar, with that solution, advertisers can reach MediaMarkt certain shoppers not just on our website or app, but elsewhere. With this, we open new potential for our partners in addition to our own platforms. And that is also very much in focus for this financial year. Secondly, we want to onboard here as well non-endemic partners and thus build new relationships, very similar to what I've just said about space as a service. Then, marketplace on slide 10. With Turkey now active, we're operating our marketplace in eight countries now. The GMV, the gross merchandise value, reached 527 million euros. That's another 90% year-on-year growth. Importantly, our EBIT generation more than doubled in that period. So we've also made strong improvements in our profitability as we scale this business. And we're not done yet. We're preparing to roll out Marketplace Next in Hungary and Switzerland for 2026. At the same time as we roll this out, we will enhance our assortment and add what we call verticals. I would call them topic areas. This is important because these verticals or topics have been very successful in the past. And you will see that they are different than our core assortment. For example, energy, fitness. E-mobility or even gardening. These verticals expand our assortment and they make us even more attractive for our customers. And as you know, and as I said, sustainability is a core part of our strategy. And again, we doubled down on this last year, as you can see on slide 11. There's three aspects. Let me start with better way. We reached our Better Way targets ahead of plan. Let me remind you what Better Way is. Better Way products are products in our assortment that are more sustainable, for example, by being more energy efficient. These Better Way sales now account for 25%, so a quarter of our total sales. That's already now a lot more than the 20% target which we have given ourselves for the financial year 2025-2026. Second, the number of trade-in products. So when a customer returns a used device, this increased by 11%. At the same time, the average trade-in value also increased, and that helped us make this a very profitable business for us. Finally, refurbished products. So used products refurbished to be as good as new. This showed exceptional growth. and increased by 191%. That's a very clear sign that we really are offering what customers nowadays are looking for. So, although we do feel encouraged to stay on this path, we will expand our trade-in offers, we will sell even more refurbished devices, and we will continue to focus on reducing the emissions footprint of our products. Now all of this that I've just so proudly presented to you, all of this would not be possible without our great team. I strongly believe that for us as an omnichannel platform, people and the human touch make all the difference. So we consistently invest in our people because we want, as MediaMarkt Saturn, to be the best place for them to work. And so we asked them, we asked them twice a year, would you recommend us as an employer? The results, we call that the net promoter people. And in our last survey, it was at an all-time high of 42. That's up four points year on year, or 10%. And of course, we also invest in their development. We now use AI actually as a core tool to empower and to train our employees. And at the same time, strengthening those AI skills across all levels in our organization is a key priority for us in this next phase. We also made progress looking at diversity. Our female share in the top leadership increased by 250 basis points year on year, and now stands at 16.3%. Come to think of it, perhaps even more importantly, we have so many different cultures on board in our team. And that's a very important aspect also to me personally of diversity that shapes our company culture. Across Europe, people from over 130 nations work with us. Yeah, that's right. More than 130 nationalities at MediaMarkt, etc. I want to take this opportunity not to speak to press and analysts, but to thank all those amazing people, to thank you guys that you work with us. All of this wouldn't have been possible without you. So thank you. From the bottom of my heart, thank you. Before I now hand over to Remco for the financial results, I want to highlight the three points that I want you to remember after our presentation today. Number one. The customer is always in the center of everything we do. Not always perfect, but better every day. We are convinced that our omni-channel model is the right way to go and it delivers on their expectations. So we will build on that in the future. Second, we have proven once again that our strategic direction, which has been stable for three years, is the right path. We continue to diversify our business and we do become more than a pure retailer. Our growth businesses are no longer small, they are a key pillar of our success and they continue to deliver consistent growth. And thirdly, as I started, we performed strongly despite an arguably challenging economic climate. Our sales grew more than moderate and our profitability improved for the 11th quarter in a row. Let me now hand over to Remco for a closer look at those amazing financials. So Remco, please join me.

Thank you. And also a big thanks from my side as well and a warm welcome once again. As Kai already highlighted, we achieved a strong result this year and delivered slightly ahead of our updated guidance, with both a strong sales growth of 5.7% and adjusted EBIT of 378 million, slightly above our updated guidance of around 375 million. This represents a 24% increase year on year, or 72 million compared to the previous year. In my opinion, these results are our visible and measurable success. They are proof that we are making good progress in our transformation, which began just under three years ago, as you can see on slide 16. Our efforts have translated directly into financial strength. We have significantly improved our profitability, with our adjusted EBIT growing by an average of 22% year-on-year. That's a performance that speaks for itself, and we are certainly very proud of it. These results come from robust sales growth in our core retail business, the increased contribution from our successful growth business, and our strict cost discipline. I will go into more detail on all three areas shortly. Let me now take a closer look at the full year result. We reported solid sales performance in all our four quarters and released very strong 6.9% like for like in Q4. Our profitability increase was driven again by our growth business. While we remain focused on cost, For Q4, our gross margin increase of 40 basis points was the main driver behind our profitability improvement. And now per region. The region DAG performed strongly over the year, and Germany reported the highest improvement in the region. This is a strong achievement, continued in a muted market, and we are pleased to report that we held our market share. In Western and Southern Europe, their Spain was the strongest contributor both in sales and in EBIT growth. Note that the Netherlands had a strong EBIT growth too. Finally, for Eastern Europe, Turkey continued to perform strongly. While we are still restructuring mode in Poland, as we said before, it will take a bit more time. Let's now take a look at our sales from Service and Solution. As a reminder, this includes insurance and warranties, telco and digital products, installation and repair, consumer financing and sustainability services. Overall, sales from service and solution increased by 12.5% for the full year. Regarding the individual service categories, extended warranty and consumer financing achieved strong research for the full year. These figures show once again that our efforts to improve our service offerings are paying off. We have successfully convinced our customers that we are not just product providers, but above all, solution providers. Let's move on to our online business. Over a 12-month period, online sales increased by 13.3% to €5.7 billion. This corresponds to an online share of 26%, including our marketplace, and this is 240 basis points more than the previous year. Please keep in mind here that our marketplace is currently active in eight countries, with the recent opening in Turkey. We expect the final two countries, Switzerland and Hungary, to go live in 2026. We still see great deal of potential here as the marketplaces to continue to ramp up. Let me now return to EBIT development. Our cross margin increased by a strong 30 basis points for the full year. This is essentially due to the positive impact of our growth areas. If we look at our operating expenses, you can see that our adjusted OPEX ratio has decreased again, although only slightly by 10 basis points to 17.3% of group sales for the full year. We have improved our location cost, as well as the efficiency of our marketing spend. We also place strong emphasis on managing our indirect spend. In simple terms, We are working hard to control all our internal costs that don't directly relate to customer facing side of our business. Let me walk through from adjusted EBIT to net profit. As explained before, we increased our adjusted EBIT by 72 million euros this year, which is a strong operating performance. Below the line, our net profit came in at minus 34 million, mainly impacted by non-recurring items like impairment we made in Poland for 34 million. Remember that we are in restructuring mode over there, as I mentioned before. Second, we recorded a 32 million transaction cost for our coming partnership with JD and clearly see this as an investment for our future. So it's fair to say that excluding those we would have reported a positive net profit. Let me finish with cash. Indeed, cash is king, particularly now in retail. While profit is an important measure, cash is the true livelihood of the company. A strong free cash flow demonstrates that our business model is working efficiently. In this case, that gives us the strategic freedom to fund growth, reduce debt and ensure we are resilient and agile in any economical climate. In essence, it's the engine that powers our long-term success. We generated 280 million more cash than last year, which is a fantastic performance in my view. On this positive note, let me now hand back to Kai.

Thank you, Emco. You see, we are having what I call positive momentum. And this, we want to carry it into this year. So now in conclusion, ladies and gentlemen, I'd like to share our outlook for the financial year 2025 and 2026. We are confident that we will continue to improve. We very formally expect a moderate increase in currency and portfolio adjusted total sales, with all our regions contributing to that sales growth. Secondly, and arguably more importantly, we anticipate an adjusted EBIT of around 1%. 500 million euros. This is also the target for the financial year 25 and 26 that we have communicated our capital markets day back in 2023 and ever since. This improvement will be driven by the DACH region in Western and Southern Europe. And we already started into this new financial year strongly, as you will see on the next slide. As you know, Black November and Christmas are very important times in the year for us. They set the tone for our Q1 performance, and our Q1 is usually our strongest quarter, so it's important. And I'm very proud to tell you, we had a successful Black season. Many of our countries delivered strong numbers. Especially requested this year, in case you're interested, floor care, robots, computer hardware, and small domestic appliances like kitchen devices, usually smart kitchen devices. At the same time, our attachment rate for service and solutions, one of those growth areas, also was very strong. All of this performance was, of course, made possible by working on the engine, by excellent product availability, and by our marketing campaigns. Here, you may remember, we turned November into Yovember. Because we want to say yes or yo to offering our customers whatever they need. Be it the best product, the best service, or the best possible price. I'm very happy to look into more detail here together with you in February when we present our Q1 results. So in wrapping up, what have we presented to you today? First, we delivered strong performance in a challenging market environment. Again. Second, our experience electronics strategy translates directly into greater customer satisfaction. Our record NPS underlines this. Third, our growth businesses are no longer small. They are an integral part of our business and they continue to accelerate. Fourth, our focus remains unwavering on cost management, liquidity and profitability. First, we are ready. We are ready to accelerate our development with our new strategic partner, JD.com. And finally, we maintain... unlike others, a positive outlook as we enter the new financial year. Ladies and gentlemen, as we conclude our presentation, I want to emphasize this positive momentum that the economy has demonstrated throughout the past financial year. We still are not transformed fully, and we have a way to go, but that positive development shows We are on the right way. We're not just developing consumer electronics and experience electronics. We are paving the road to become the experience champion in consumer electronics in Europe. Our dedicated team of almost 50,000 employees from more than 130 nations is working very hard on this vision. We will continue to stay close to our customers until we become a truly customer-centric omnichannel service platform. Thank you for your attention. We're now ready for your questions. Thank you.

So we will now open the Q&A session. So in the room, please raise your hand and wait for the microphone. Online, you have received a QR code with your registration. Otherwise, you can scan the QR code that may appear on screen to submit your questions. Your question will appear here and I will read it for everyone. And please ask your question in English. So we've got the first question online from xyz.pl, so from our Polish journalist. The first question is, are you still ready for major capital injection into MediaMarkt Poland? Second, do you plan to keep fighting for market share to become number one in Poland? And third, how big will the change be after the GD.com transaction?

Yeah, Matthijs, thanks for the question. Schemko will take the first two questions and I'll round it off with the third.

Yeah, let me, Matthijs, thank you for the question indeed. And let me highlight a bit how we see Poland at the moment. Poland is extremely important for our portfolio of countries. It's an important market and it's a growing market. And of course, as we look at the result right now, we are investing in the team. We opened our marketplace in Poland that is now paying off. So we treat Poland as a very important country and a country that is very important also for our growth in Europe and also in a Europe that is at the moment consolidating. So that's foremost. Secondly, basically how you keep on plan fighting in Poland. We have mentioned it a couple of times and it goes for all our country portfolio. For us, it's extremely important to be indeed number one or number two in any country. And that's our ambition that we have together. And that's what we want to achieve in Poland, where we go to that direction. But as mentioned already, this will take time in Poland. Poland is a very competitive market, and we are looking at the options as we speak. And let me now hand over to Kai.

Yeah, let's talk about JD. Actually, it's no different for Poland than for any of our other markets. What are the likely first changes that we see from our partnership with JD? And we've talked about it. We're in particular looking to their expertise in logistics, in particular in delivery towards customers, and in technology. And those are the two areas that will all materialize most likely in all countries, but most certainly also in Poland to help us, as Remco said, to fight back for that important market position which we're committed to get.

Good. So we will show the QR code again for people who didn't have time to register to do so.

Can you give an answer to that? I'll speak.

So the next question is from Javier Garcia Ropero from Spain. It's from Cinco Dias. The newspaper is asking Spain showed a significant sales growth last year. What do you expect in the market in terms of sales growth and new store for next year?

So, Xavier, thanks for the question and let me take this one. The Spanish market in 2025 was a very positive market. First of all, from a market perspective overall, but in that market we were able also to gain significantly market share, both offline and online. without opening stores. So basically what we are looking into for next year is still that the Spanish market is going to grow and in that market we have still enough potential to grow more than our competitive environment gaining more market share. So we are very positive about the Spanish market but we are even more positive about our performance in that market both on and offline.

Good. The next question, we cannot see really from where it comes from, is a question regarding if we plan to cut jobs at Economy Media Market.

So I'll make sure that everybody heard that. So the question was whether we plan to cut jobs. And the answer is no, we do not plan to cut jobs. Very clearly, we do not plan to cut jobs. Let me explain that a bit. The business we're in means we constantly review our performance. As any normal retailer would. We're looking at that store and see whether it's still performing. We're looking at that area and see whether it's still performing or at that area. So there will be changes. And yes, we will, of course, like in regular business, sometimes close one store here to reopen it there. And that may also mean that there is one or two or three jobs lost in the process. But that's very different from planning to cut jobs at large scale as a company strategy. That's not our strategy. We invest in people. We expect more stores. We expect to grow. So the answer is no, but of course in day-to-day business this may appear.

Thank you, Kai. The next question is from Matthias Inverady from Reuters. Can you outline in detail how logistics will be improved by your partnership with GD.com?

Let me try to take that, and I'm sure Remco is eager to add some details, but I want to place it first. Without wanting to be too defensive here, no, we cannot outline this in detail yet. Please respect that we're still in a phase where regulatory approvals are outstanding, when there's no detailed discussions between the two companies, so we cannot give you a detailed answer. What I can tell you is what our mission is and what we believe JD.com is strong in. And I think I hinted at that already. They're very strong in very efficient delivery to customers. More than 90% of the deliveries in China reach their customer the same day or the next day. And just let that sink in. We're talking about China and not just the cities. I mean all of China. So as JD is rolling out these delivery expertise to Europe, it is our expectation, actually our agreement, that we will be able to participate in this. This is what I can say in general. But detail is probably difficult to share at this stage.

Yeah, it's difficult. We acknowledge that logistics is a very, very important part in an omni-channel strategy that we as the economy in Mediamarkt have. And we have made... very good progress. Automization in Germany, MPS of delivery is going up. But yes, as Kai said, one of the reasons to look into synergy effects to thinking directions is of course this enormous strength on that last mile logistics which accelerate basically our strategy that we have defined together. So I'm very much looking forward to that cooperation. But of course, logistics is going to be a customer-facing logistics topic for all of us. So, yes.

Thank you, Remco. The next question is from Alexander Sinkjovis from MWB Research. Congratulations on the results. You have your focus on the finish line, but could you provide us some glimpse beyond 25-26? And secondly, with your free cash flow improving significantly, could you elaborate on capital allocation?

Yeah. Thank you, Alexander, and good to hear from you again. Let me... give you a perspective where we stand and then Emko will say something about the numbers. First of all, where we stand. The number one, number two, and number three priority is making sure that we deliver our promises for the end of the current financial year. So the infamous 500 million EBIT and the 200 million steady cash flow. That is and remains our priority. Now we realize, of course, they were confident to achieve that. So we are already thinking about the phase after that. And what I can anticipate that we expect to invite all of you towards the middle of next year, calendar year, to a strategy update where we will share the outlook on the next phase of our journey, so beyond the 30th of September 2026. Expect that to appear in your diaries eventually for some time in the middle of next calendar year. And on the financials, Remco, do you want to dare to give an outlook already or be careful?

No, I'm always careful but very confident, of course. So first of all, thanks for the congratulations, Alexander, and good morning. So, yes, we are very proud as well, as you mentioned, and I mentioned already, cash is king on our achievement on free cash flow. Of course, as I mentioned already in the presentation, is that that gives us a bit flexibility also to invest in our future and our future strategy. As Kai already mentioned, we will come back towards our next step. However, 2026 has been clearly defined above 200 million, 500 million, and also how we want to get there with growth areas. So, yes, there will be significant investment also in logistics, but especially also in our growth areas, because as you have seen, this is paying off. But the detailed capital, let's say, allocation, of course, we will come back on that topic later. But it's supporting our current strategy. That's for sure.

Thank you, Remco. The next question comes from Javier Meza at El Economista in Spain. What stage in the process of modernization media marks are you, and will the smart format arrive in Spain in the coming months?

Yeah, Javier, thanks for the question. I'll be slightly evasive about this, but I ask your understanding. Let me be very clear. Each of our store formats, so that's the core format, the classical media mark, the smart and the Express and the Lighthouse. Each of those formats is designed for each and every country. This is not country specific. We expect to have these formats in each and every country. But I'm not able and frankly also not willing at this particular moment to share details of the rollout plan in a particular country. I would have given the same answer about Turkey or Italy or so, but yes, you can expect all of our store formats to be available in all of our countries in the future. Good.

Thank you, Kai. The next question comes from Carlos Torres, Alimarket Spain. You have pointed out how important Spain is for the group. Could you specify the company sales for Spain and what are your forecasts for next year?

yeah so let me take that question carlos thank you very much as you we are very proud of our spain as a country it's a growing country as i mentioned we are doing better in the market in spain and that's due to really the team working for us in spain and basically using all sales channels b2b online offline and of course marketplace so from that perspective we are happy we see the market growing we see us also growing in that market We are preparing, also the Spanish team are preparing really some nice new propositions also from a customer perspective. So we are very much looking forward. Do I want to pinpoint a number specifically on the country today? I will not. But we are very positive about Spain and the performance and also about the future for Spain next year or this year actually.

We love Spain. Spain is good. We love Spain.

So at this point in time I see no further questions.

My personal experience is we'll wait for a moment or so. Sometimes people need a moment to warm up. I'm afraid we haven't got anything planned to bridge the time now, so we'll just have to bear with us for a moment.

We made a nice Christmas movie, so maybe.

Okay, I'm checking with our back office team here. No questions or more questions? No, there's one more. One more coming. Okay.

So, the questions as well from Frank Messing is asking how many stores are we going to modernize next year in Germany?

Frank, thank you for the question. I will give you the answer because I think the answer has already been given. We have a target of modernizing or having modernized 90% of our core format, let me just be clear what that is, that's your classical media mark, right? Of 90% at the end of next financial year. And so that's also the answer for Germany. Now as to the numbers, that's roughly 400 stores. I'll give you the round number now, 400 stores in Germany. So 90% of that is 360 stores that we will plan to have modernized by the end of next year.

The next question comes from Philippe Brandlein from Lebensmittel Zeitung. Good morning. First, is there any further changes planned on Saturn in 2026? Will the brand continue to exist in Germany, on or offline? And second, you adjusted a bit improved but not reported a bit. Could you give a guidance for reported a bit?

Yeah, Philipp, thank you on the Saturn question. I want to be very clear about this because there are so many rumors and often also so many questions around this. Look, we have two brands. Actually, if you're really picky, we have three. Media Markt, Media World in Italy, and Saturn here in Germany. And we are proud of every element of that brand architecture. Now, there's people out there who tend to buy more with Mediamarkt, and there's people who tend to buy more with Saturn. And we take that very seriously. That's why whenever we do modernize a store, as we've just talked about, we look at that store in a lot of detail and really come up with a decision that is specific to that store. And in Germany, we have two options. It's Mediamarkt and it's Saturn. And it stays like that. What I would want to emphasize is the value of our brands, of our joint brands, MediaMarkt and Saturn. And we've just recently, from brand finance, received confirmation that our brand equity increased significantly, including Saturn, by 500 million euros year-over-year increase to 2.5 billion now. So that's a strong argument for that double strategy of our brand. And for the second part of the question, I'll give it to Remco.

Yeah, thank you much. Thank you very much, Guy, and thank you very much, Philip. Let me repeat the second part of the question, maybe. Your adjusted EBIT improved, but not your EBIT. Can you give a guidance on EBIT? And let me come back to what I said before. So, adjusted EBIT indeed improved to a staggering amount of 378 million. What is causing the EBIT to be negative is the investment that we did in our future in the JD Corporation that accounts for 32 million from non-recurring items. It had a big impact and also the Poland restructuring to build for the future, but we already mentioned where we want to be with Poland. So that had the biggest impact. What is our future outlook? Our future outlook is a positive outlook on EBIT and of course the around 500 million adjusted EBIT.

Thank you. The next question is from Jerome from the Telegraph. So we are moving to the Netherlands. Question on data. You have leveraged consumer data successfully with the off-site program. We're talking here retail media. Do you expect regulatory scrutiny of this program also with GD.com, with the Chinese context?

Thanks for the question. We are right in the middle of a regulatory approval process, and perhaps let me outline just where this stands in a bit more detail. There is merger control, there is foreign direct invest, and there is subsidy control by the European Union. Now, I'm very happy to say that merger control has already been improved in each and every country where this becomes relevant for us. On foreign direct invest, the process is ongoing. We're happy to already have received an approval by the Italian authorities. All other processes are ongoing. And I do imagine that, of course, questions of data are always part of that, but none that are particular to these off-site campaigns, as you mentioned. Furthermore, I cannot and it would not be adequate to comment at this particular stage. I would want to close and emphasize again, we remain very confident and expect to close in the first half of 2026.

Thank you, Kai. The next questions come from Ulrike Dauer, Dow Jones. First question. At the 2023 capital market day, beyond the adjusted EBIT target for 2025-2026, you gave out other targets for adjusted free cash flow and adjusted EBIT margin, which seems a bit outdated now. Can you update those targets at this point in time?

And I'll take that perhaps together with the second question for a dividend because it's also from Ulrike. Now let me say here that we will not comment on numbers in any detail. If we are really picky, we gave an EBIT, adjusted EBIT target for the end of next year. That's 500 million. We gave that number in our capital markets day and we have repeated that number precisely to the last decimal since. We have, at the Capital Markets Day in 2023, said that we expect a stable cash flow of 200 million per year, and we're also not changing that number. As for the dividend, we have a standing policy as a company, and that policy, I think we revealed it here last year, exactly a year ago, if I remember correctly. Let me just reiterate that, because that policy is still in place. And it is... that between 15 and 25% of the net profit or EPS per year can be distributed as a dividend. That has not changed. We've reviewed it here a year ago and it is still stable. That policy has not changed and will also be relevant in the future.

Thank you. We have an additional question from Alexander Tinkovich from MWB Research. We tell media trends to grow because marketing budgets are tight as branch shifts stand towards more performance-driven channels. To what extent is your growth benefiting from this dynamic?

Yeah, so Alexander, thanks for that question, because first of all, as mentioned, we are already extremely proud of our growth when it comes to retail media. That being said, we are just at the beginning also when we look at our competitive field. There is a huge possibility to make that even a bigger part of our growth area, our growth business. It's true that basically the SEO, the whole world is changing their AI comes into play. So yes, there is huge opportunity already in the retail media area where we are today because we are just at the beginning. Yes, we are already better performing than we expected for 2025 fiscal year and we expect a growth there as well. That being said, it will not be only on page. We are also working very, very hard on the organic traffic in our organization. It's about brand awareness, so that also plays a role in this partner marketing in retail media. But you're right, it will play a significant part in combination to paid search and organic growth of our company, which helps the non-endemic or our suppliers of media marks return as well.

Thank you Remco. I see no further questions at this point.

Still cannot give it 30 seconds. Last time I was successful in tickling out a few more questions. Okay. Look, thank you all for your time and for your questions and all the energy today. I trust that you've seen that Remco and I and Fabienne and the whole team actually that 50,000 people here at Media Markt in Saturn work very hard to bring what we call experience electronics to life. And we will continue that journey. And we will continue it also in a partnership with JD.com after that transaction closes in the first half of 2026. We will, of course, keep you posted about this process. And in the meantime, if you would like to engage with us in any of our regular channels, we are very happy to continue those conversations. Please also mark February 11th already in your diaries. That's when we will present our Q1 results and, of course, share much more details about the Christmas and Black Peace. Until then, erenko. Fabienne and I and everyone here at Media Markets Latourne wishes you a very merry Christmas and a wonderful holiday season. Enjoy your times with your loved ones. And if you don't have all the presents yet, come to our stores or order online, even on the last day before Christmas, because with a 90-minute delivery, we'll make sure that you've got something to put underneath the Christmas tree. Thank you very much for today. We are very much looking forward to speaking to you next year. Thank you very much everyone.