Axfood AB (publ)

Welcome to the Axfood Q3 2023 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing star 5 on their telephone keypad. Now, I will hand the conference over to speakers CEO Klaas Balco and CFO Anders Lexman. Please go ahead.

Well, good morning, everyone, and thank you for joining today's call. As you heard, together with our CFO Anders Lexman, it is time for us to present to you Axfood's interim reports for the third quarter 2023. As always, in the investor section of our website, you will find the presentation material for today's call, and the recording will also be made available after the presentation. And with that, please turn now to page number two and we'll get started. Here you'll find today's agenda. First, I would like to give you a brief market review and then a review of our third quarter performance. After that, Anders will take you through the financials. And following on this part, I will talk about the progress we are making with our new logistical platform and also the outlook for the year before we open up for questions. We are now on page number three, and let's go straight to page number four and take a look at the development during the quarter, first for the market and then for Axfood. Market growth amounted to just over 6% during the third quarter. The annual inflation rate continued to come down significantly on a sequential basis and amounted to 9.1%. If you compare that to 14.5% during the second quarter and 20.1% during the first quarter this year. While market growth has continued to be lower than the overall food price inflation, the gap has narrowed a lot over the past couple of months, which implies that the volume mix component is not as negative as before, although it is still weak and even more so if you look back two years instead of just one. With that, consumers are still very much under pressure financially as the cost of living has gone up dramatically over the past year. And as before, the third quarter was characterized by an ongoing strong focus on value for money and a high level of activity in the market. Let's go to the next slide, please. Number five. If you then look at Axford, we are continuing to perform very well. Our growth rate was 13% in the third quarter, which was double the rate of the market. Increased customer traffic resulted in higher volumes, and this represents a larger part of the overall growth compared to previously. But pricing was, of course, also a highly significant contributor to our growth. But with our house of brand strategy and strong market presence, we have a favorable position in this market where value for money is more important than ever for our consumers. If you look at the e-commerce, our sales increase slightly more than 8%. We are clearly winning also here and obviously growing a lot faster than the market where growth is basically flat. Overall, the performance of the e-commerce channel on the market is weak, and the penetration level was only 3.6% of total grocery retail sales in the third quarter. Please go to the next page, number six. Looking at our net sales, our consolidated net sales for Axfood grew by almost 9% during the third quarter. This increase is attributable to high food price inflation, but also an increase in new customers. While growth was mainly driven by villas, all our segments reported high single-digit or even double-digit sales growth in the quarter. Let's go to the next page, page number seven. And if you look at our profit, in total, group operating profits amounted to slightly more than one billion SEK, and the operating margin was 5.1%. The reported operating profit includes items affecting comparability of minus 60 million SEK related to the restructuring of our logistical operations and more specifically the transition to the new logistic center in Bålstan. The adjusted operating profit which excludes items affecting comparability increased approximately 8%. The increase was mainly the result of strong growth and effective cost control. Overall this compensated for lower gross margin in the segments Also, negative currency effects as well as costs associated with higher rental levels and salary increases also had a negative impact on profit. The negative effect from the discontinuation of reduced payroll taxes for young people amounted to minus 49 million SEG. And if you look at the adjusted operating margin, it's unchanged compared to prior year at 5.4%. But let's now dig into our various segments and turn into page number eight. We look into Willys. Willys once again reported exceptional growth, reaching an impressive 16% this quarter. Like for like retail sales increased by slightly more than 12%. And the favorable development was attributable to volume growth from higher customer traffic as well as pricing. I'm also pleased to see that our cross-border trade grocery chain Eurocash noted a healthy sales increase. Our operating profit increased 8% and amounted to 652 million SEK, corresponding to an operating margin of 6%. The very strong growth in like-for-like sales and effective cost control compensated for a lower gross margin. With the high activity level in the market, we have not fully passed through supplier price increases to the consumers. But also costs associated with high rental levels and salary increases negatively impacted the profit. Move now to next page, page number nine. And let's talk a little bit more about Willys. Willys momentum is indeed very strong. The number of new customers is continuing to grow at a rapid rate. And new and existing customers alike are becoming increasingly loyal and shopping more at the chain. On this slide, you see a chart that we have showed before with the number of new members in Willys Plus, which is Willys' loyalty program. And the number here is growth by rate. In 2021, the average monthly growth rate was approximately 25,000 in terms of new members. That figure went up quite a lot last year to just over 35,000 new members per month on average. This year, the average is almost 42,000, so even higher. And although the monthly growth rate has come down somewhat, if you compare with the last winter, it is still significantly higher than what we saw prior to 2022. And August actually represented the highest growth rate since March. And the total number of members in Viljus Plus is now more than 3.5 million. But turn now to page 10. And quite recently, we commissioned a broad survey to dig deeper into the changed shopping behaviors among consumers over the past year. Among other things, the survey covered where consumers usually do their grocery shopping and also if they had changed recently. And 18% of respondents replied that they have changed their behavior and started to shop for grocery in a different store than in the past. Of course, of the consumers that have started to shop at Willys, which represent quite a decent chunk of the 18%, a full 81% stated that they were satisfied with their experience. And I should add that only a small percentage stated that they were not satisfied. The rest applied that they were not sure or uncertain. And lastly, When asked about intended loyalty, a very high percentage of full 78% of new Willys customers stated that they would continue to shop at Willys also when the food price inflation pressure eases. So to sum up, many have discovered Willys last year, and in general, they are very happy with experience and intend to continue to shopping there in the future. This is, of course, a survey, so results should be viewed cautiously. However, with that said, all these figures are a very positive sign for us. Let's now move on to Hemshep, and we are now on page number 11, and we'll dig into the Hemshep segment. Net sales growth for Hemshep was strong at 11%. Retail sales growth was 8%, which was higher than the market. sales on a like-for-like basis increased six percent and overall growth for the stores in the hemship chain was better than the growth for the tempo chain the operating profit for hemship amounted to 78 million sec and the operating margin was 4.4 percent and similar to the situation for villis positive effects from growth and effective cost control were offset by negative effects from a lower gross margin as well as higher rental levels and standards Well, let's go to page number 12, and I'll talk a little bit more about Hempshire. Hempshire is also performing very well. And this is actually the fourth consecutive quarter in which they are outperforming the market growth. Adding on to that, when looking at Hempshire's performance, you really should be comparing it to the growth in the segment Hempshire is in, which is the traditional grocery. And in terms of that comparison, the outperformance is even more significant. And to us, there are multiple reasons behind Hemshöp's strong growth. First, they maintain a high pace in store refurbishment, which yields modern and attractive stores. And second, they continue to work on their price value proposition, mainly is Altibra pris offering, which especially competitive prices on a large selection of products in the stores. Hemshöp is also strengthening its assortment in many ways, including meal kits and ready-made food. And lastly, Hemship is solidifying its sustainability position by offering a wide assortment of sustainable and healthy products, as well as providing guidance and incentives to responsible consumption. With that, let's move to Snabgås, moving to page number 13. At the same time, we are seeing a certain slowdown in the cafe and restaurant markets from previously high levels. Obviously, now this has an impact to Snabgross to some extent. However, Snabgross' affordable and flexible offering have resulted in good growth, and it's clear that they are taking market shares in this environment. Sales increased 9% in total and 7% on a like-for-like basis. And developments in the newly established stores and sales to consumers through the member-based Snabgo's club store concept contributed also to this growth. Operating profit in the quarter was lower compared to prior year and amounted to 86 million SEK, corresponding to an operating margin of 6%. Growth in like-for-like sales was offset by negative effects from costs related to new stores and high costs related to rental levels and salaries. Let's now go to the last segment, Dagab, on page number 14. Net sales for Dagab increased 9% in the quarter, mainly attributable to sales to food retail stores. Sales to convenience stores also increased, however, at a slower rate. And in general, right now, the food retail market is stronger than the convenience trade, which is reflected here. Throughout this year, Logad's profit is impacted by cost affecting comparability related to the new logistical platform. In total, reported operating profit amounted to 280 million SEK. Excluding cost affecting comparability, the adjusted operating profit amounted to 340 million SEK, and the adjusted operating margin was 1.8%. The higher profit was primarily driven by the strong growth. A negative currency effect contributed negatively, while synergies from Bergendals acquisition had a positive effect on profit. And now it's time for Anders to talk you through the financial development in the quarter. So please go to next page, page number 16. Anders, please go ahead.

Thank you, Claes. During the first nine months, net sales for the group increased with 12% to 16 billion SEK. Door sales increased by 16%, which was clearly higher than the full retail market in total, where growth amounted to 8%. The operating profit excluding items affecting comparability of minus 179 million SEK increased by 292 million SEK to 2.8 billion. The increase is mainly explained by the strong growth and effective cost control, partly offset by lower gross margins in the segment, and increased costs related to rent and salaries. The operating margin excluding items affecting comparability was unchanged at 4.6%. Items affecting comparability pertained entirely to parallel warehouse operation during the transition to the new logistics center in Bålsta. Last year, items affecting comparability included a capital gain of 221 million SEK for the divestment of mat.se. left hand turn page to page number 17. and let me then continue with the cash flow compared with last year the operating cash flow was 64 million sec lower this quarter in spite of strong growth and a stronger underlying operating cash flow this is mainly explained by negative working capital development and higher interest costs The cash flow from investment activities of 307 million SEK was in line with the CapEx Q3 last year. At the end of the third quarter, we utilized approximately 1.5 billion SEK of our credit facilities, approximately 0.6 billion SEK more than in Q2. Let's turn to page number 18. Coming over to the financial position. The net debt increased compared to last year due to higher leasehold debts connected to the new logistics center in Bålsta. Compared to Q2 this year, interest bearing loans have increased due to higher utilization of the credit facilities, although the net debt ratio was unchanged at 0.3. The equity ratio has been fairly stable over the last couple of years. The equity ratio at 22.7% was in line with prior year's Q3 trend, except last year's level, which was elevated due to the rights issue. Total investment, excluding leasehold for the first half year, was 292 billion lower compared to last year. Now we see a lower pace in investment related to logistics and However, the investment in the REIT operation was higher. We have a high ambition of new store establishment this year, and we have already established nine group-owned stores here to date. We expect the capex for the full year in the upper range of our guidance of 1.8 to 1.9 billion SEK. And let's then turn to page number 19. As I mentioned before, the cash flow for the first nine months was negatively affected by the development of the change in working capital, which also had an impact on the net working capital as a percentage of group sales. The ratio is now minus 3.2%. Reversal of this effect is expected gradually in the coming quarters as the warehouse transition progresses. The capital employed has increased over the last years mainly due to the recognition of leasehold debt which have had a diluting effect on the return on capital employed however the return of capital employed is quite stable looking back at the recent quarters and by that class i hand over to you again

Thank you, Anders. We are now on page 20. We're going to look into our strategic agenda and outlook and sum up, but I'm not going to go through our fully broad agenda. As you are well aware, we have a broad agenda for future development of Axfood. But let's turn to page 21. I would like to focus today on the progress on our new logistical platform and how this is proceeding. First, our new highly automated logistics center in Bolsta outside Stockholm is a large-scale project that represents a completely new way of running our warehouses and logistical operations. The transition to Bolsta progressed during the third quarter with focus on continuing to scale up and stabilize the operations. A growing number of stores and larger volumes were connected to the flow of the dry range during the quarter, and the first deliveries of refrigerated items from Bålsta to stores were recently made. In addition to scaling up the center in Bålsta, we also continue our efforts to strengthen other parts of our new logistical platform. Planning for the new High Bay warehouse in Backa, Gothenburg, is underway, and at the new fruit and vegetable warehouse in Landskrona, Testing of IT solutions and control system is underway now that when we have the automation solution that has been fully installed. And as a quick reminder, the investments in BOLST are expected to result in 2 to 300 million SEC in annual efficiency improvements beginning in the second half of 2024, which will then increase to 3 to 400 million SEC at full capacity. Turn now to page number 22. While we are focusing on delivering affordable, good and sustainable food here and now, and developing our operations to enable greater efficiency going forward, we must not lose sight of the longer term challenges. We recently presented a new version of Food 2030, which is Axfood's proposal for a sustainable food strategy, filled with 125 recommendations that can make a real difference in accelerating the green transition. We see it as a leading player in the food retail industry. We want to take the lead in promoting a sustainable food in Sweden and Food 2030 is an important part of our work to influence decision makers and drive industry solutions forward. Let's get now go further and we're now on page 23. Our outlook for the year is unchanged and it covers investments, items affecting comparability and new store establishments. In terms of capital expenditures, just to reiterate what Anders said, we expect to be in the upper range of our guidance. And for new store establishments, we maintain a high pace compared to previous years, as we see more room for us to strengthen our presence in the market. So far this year, we have opened up nine new stores, a historically high number, five new Willys, two Willys Hemma, and one Hemmsköp, and one new Snabgross. Please now turn to page 24. If I should try to sum up, in the light of the uncertain world around us, I must say I'm humbled to summarize a strong third quarter for Axfood. In our market, which is highly characterized by focus on price value as consumers grapple with ongoing cost of living pressures, we have a very strong position. Consequently, we continue to deliver very high growth in the third quarter. Growth that was double the rate of the market, which is in line with the overall trend during the past couple of quarters. It is clear that more and more consumers appreciate our offerings. We continue to see a large inflow of new customers in the third quarter and volume increased. We have a strong financial position and a solid strategic agenda. And together, we'll maintain a high pace in our efforts to strengthen the group for the future, not least with investments in the new logistical platform, which will bring us efficiencies and reduce costs. Up turn to page number 25. And before we go into the Q&A session, just a reminder that our Capital Market Day this year will be held on November 24th. The event will be held at our new highly automated logistical center in Båstad outside Stockholm. And it will start at 9 a.m. and is estimated to end at 1 p.m. followed by lunch. At this event, we will cover many areas that are of importance for our group, including but not limited to our new logistical platform. And more details around the event is available on our website. And with that, please turn to page number 26. And I would like to hand over to the operator to open up the line for questions. Thank you.

If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star 5 again on your telephone keypad. The next question comes from Gustav Hagius from SEB. Please go ahead.

Thank you for taking my questions. I have a few, if I may. Firstly, thanks for the chart on page 9. I think it was really useful to see the cohorts. Just to get some more clarity on that, should we interpret that as you have basically gotten 400,000 new customers last year and roughly 400,000 new customers this year to Willys. And if you could enlighten us roughly how big of a share of sales does those two cohorts represent?

Hi Gustav. Well, even if we're not sharing the exact number of representing the sales, it is clear that the new customer that comes in are We view them as very positive customers. They are shopping broadly as families in Tuvilis. It is a clear shift of the healthy customers, if I may say so, that now join Tuvilis. The trend, as we have reported, is a new customer that comes in and the increase in new customers has clearly lifted up over the couple of years now, which of course is positive signs. And as we tried to comment here, even if it's just a survey, of course, it's important for us to understand how they view Willys when they come in as new customers and how they see our performance and what they like and what they potentially don't like about Willys. And I think the number there states for itself that we got a very positive response from customers that come in to Willys. So you're right that we have lifted up the number of members now to more than three and a half million. members in our loyalty program for Willys.

And on that survey I guess I mean it's really optimistic obviously that 7-8% say that they will stick with Willys when inflation eases but that would also I guess suggest that 22% will not unless

No, I think that's what I commented on, that they said they are very positive, but there's also a high percentage that says certain, that we'll see. And there's just a few percentage, I think 5% or so, that they will probably go back. So again, a survey, but it's almost four out of five are very positive to say, and some of them is uncertain.

Sure. I'm just curious, because we haven't seen any inflation since February, really. Have you started to see any gross churn in that customer intake? Can you see that already in your data?

You mean churn that they are leaving, or what do you mean?

Yeah, or decreasing their share of wallet, perhaps, in any sense.

Not any significant changes versus what we've seen before. I think, as you're saying, inflation is not, you know, food prices are fairly stable. But year on year effect, the inflation rate is going down.

Sure. Okay. And then just an integrity, the electricity support of 60 million, is that a part of your non-recurring items in this report or is that just over the revenue line?

No, it's included in the EBIT.

so not adjusted for in the adjusted even now no okay thanks that's helpful thank you guys thanks thanks the next question comes from frederick evasin from abg sundal collier please go ahead thanks so much morning close and honest um

First, maybe a general question. You mentioned in the report that the price increases by suppliers weren't fully sort of offset by consumer inflation. So when I look at the macro statistics on a market level, of course, the CPI, PPI delta has been positive for a few months, as you know. So how should we sort of read this macro statistics versus your

statement here and and when do you think that this sort of pattern might revert no of course that macro you're looking at is in a broad scale and uh it's not that it's been a dramatic change but as we we have reported when we got this high uh inflow uh of price increases that was not fully reflected in the consumer prices i would say overall in general in the market and uh We still have not reached that level, but as we pointed out, we have not seen many price increases recently in this quarter. So that has not changed, but you have not lifted up. The gap is not that narrow, hasn't narrowed yet. And obviously there is tend to be a time lag in this.

Yeah, of course, somewhere to go, I suppose. Good. And second one, you say positive mix supported in Willis. Can you give some color to this statement? Because it was somewhat, I guess, surprising to me, given that there's still, I assume, some down trading in the market. So it would be interesting to hear what you thought.

Yeah, but it's more related to what we've seen. You had a higher... you know negative effects where you got even you know further increase versus if you look at year on year so it's just a minor uh lift up on that versus but it's still it was a versus year on year uh so you're rightly so that you know you still have uh you know people is is buying a campaigns but there is a minor change in terms of could be seen as more of a more of a going back to a little bit more normal shopping behaviors but it's early to say

Okay good thanks and last the detailed question on the negative FX impact in DAGov if it's any chance to give us like a ballpark figure on that impact.

We haven't outlined that, but as you are well aware, and if you look at it, it is significant negative FX effects at this stage. We're still not around that part. Even if we're not giving out the number, we are commenting on it because, of course, it's a big hit.

I appreciate it. Thanks, Lars. That's all. Thanks.

The next question comes from Daniel Schmidt from Danske Bank. Please go ahead.

Good morning, Claes and Anders. A couple of questions from me. We talked about the consumer behavior, and you mentioned it a few times, and also the inflation being sort of flatlining since February 2020. Is that sort of just a coincidence that also private label share of your sales is also coming down since the start of the year? Is that a sort of a function of what you mentioned in terms of normalization of behavior?

I'm not sure I would like to say it's coming down. We have seen, you know, and I think... Yeah, no, it's up year to year, of course.

I'm just saying sequentially.

yeah but it's uh the trend is there and uh i think for us it's uh we see a very positive uh you know overall trend of our of our private label that it's a steady growth and of course you have some seasonal effects around that uh but you have to look at it uh overall of the long-term trend and i still think that is uh you know gradually uh improving in terms of growth rate for us or share of sales. And obviously this is an impact for us where we want to launch more relative products that the consumer like to see and like to have. I think Garant is doing a really nice job now adding also more sustainable products into the assortment and we are driving that agenda. No, I think the development there is in the right direction. You cannot see it as a change from what you started to say.

It's more seasonality then, basically. Okay, that's cool. Then maybe jumping on to Willis. I think you also mentioned that Eurocash performed well in the quarter. Was that a similar growth to what Willis had, basically?

not well i will not say it's a full village level but it is a healthy growth and as you know it's been a discussion around that where we see how is the uh you know the trading on the cross border trading and and as we know it's been slightly you know the traffic over the cross border has been slightly lower uh but we are on a healthy base here uh particularly where we were before the pandemic and all of that so so uh I think they are doing a good performance and they are showing a good growth. So now Willys is exceptional, but Eurocash is doing a good growth.

Okay, cool. And then maybe on sort of the new store target that you always have for each year, and you have 10 to 15 this year, and I think you were at nine year-to-date leaving Q3. I assume you know where it's going to end up. Do you know what the number will be leaving 2023 behind?

Yeah, we will be good in the range, if I say so. We will be good in the range.

And on that topic, you also had, I think at the last CMD, you gave out a target for village stores, 25 new stores from 2020 to 2024, and I think you're at 20 now. Is that sort of well within reach to get to 25 a year from now?

If it's five more to go, you mean?

Yeah, exactly.

Well, I think we'll give you the guidance now when we report the fourth quarter. We'll give you guidance on that in terms of number of stores. But I want to point out that we see still obviously a lot of opportunities for expanding our store network then it's uh you know it's connected with many things in terms of where we can find locations where we can get the authority to approve a food retailer and also as you may i mean i'm sure you're aware of of course there are a lot of things that are going on in the building market where some project is being delayed and some is moving forward. But we'll give you a more specific number when we come a few months from now.

Yeah, sure. And then finally, you also mentioned, Klaas, that the food retail market is doing a lot better than the convenience market. And of course, it makes sense. But also sort of looking at external sales for Dagab, which I think were down 3%. Is that also including Citygross, and how is Citygross' performance in relation to what we just talked about?

External sales includes also Citygross. We have several players in the external part. Some of the larger ones, of course, are Citygross and Maten. a lot of other actors in that. So you're right that our internal part is moving better forward at this stage. But the external one is a little bit lower. It's lacking a bit.

And City Girls doesn't stick out when it comes to that particular part of your sort of sales exposure. They're somewhere in between what we just talked about or

Well, I don't want to, you know, in terms of Citigroup's specific performance on Citigroup or any of our external customers, I leave that to them to comment on their performance.

Sure. All right. Thank you, guys. That's all for me. Thanks. Thanks.

The next question comes from Simon Ayers from DNB Markets. Please go ahead.

Good morning, guys. So I have two questions for you. So firstly, can you say something about the competitive environment right now? And now that we see that volumes are improving in the industry, do you believe that gross margin pressure should ease going forward and into next year? That's my first.

morning uh it's a relevant question of course but i mean what we see is uh it's still a very competitive and high activity level in the market i can only reflect on that the overall market growth as as you've seen is like six percent and obviously that is still uh some volume pressure in the overall market uh even if it's better now if the gap is is improving the volume is going up uh which of course uh it's more positive both that we are getting more consumers back to the overall shopping but also in general terms so how this will develop uh well um i cannot comment on on uh how the other actors will will act out this okay and then lastly can you say something about the synergies from bergendals how much is taken out and how much is left on that one Well, I think we are in good line with what we said that we're about to do. And then, of course, we are now trimming and working with details on that. But we are moving in line with the target that we had for this year.

Okay. Okay. That's all from me. So thank you so much, guys.

Thank you.

The next question comes from Anna Schumacher. from BNP Paribas Exane. Please go ahead.

Hi, Dean. Thank you for taking my questions. I have a couple, if that's OK. So just another question on the competitive environment. Your main competitors, Ica and Coop, have been open about the price investments they are making. How has this impacted your pricing strategy?

Morning, Anna. Can you reiterate the question? I'm not sure I understood it. It was kind of low quality on the voice there. So take it again, please.

Hi, sorry. Just another question on the competitive environment. Your main competitors, Eco and Coop, have been open about the price investments they are making. How has this impacted your pricing strategy?

I think I understand. Thank you. And well, I think that the whole market has been, you know, acting in terms of the as we point out in this report is that the price increase that we have received from our suppliers is not fully reflected out in the consumer price. So that is an effect. You can call it an investment or you can call it an effect of the competitive landscape. So, we are still not seeing the full price reflection of what we see from the suppliers yet. We see that in the report as well. So, that is the consequence.

Okay, great. And then you commented that you added new stores to the distribution of bolster and added refrigerated food. How has this gone so far?

No, it's going well. I think in this fall we've added more stores in the dry range. We have one big move step to do that journey and the chilled refrigerated progress is also doing well. So it is a big project. We're taking it step by step to make sure that we keep quality deliveries to our stores. It is, you know, it's a fully automated, high technical warehouse. And obviously, we are learning every day, but we're also taking good progress, having very good progress and taking good steps in this transition.

Okay, that's great. Thank you.

Thank you.

The next question comes from Magnus Rahman from Kepler. Please go ahead.

Hello there. Congratulations on strong results. Firstly, I have two questions here. Firstly, on Bålsta, these savings targets that you set for Bålsta, I guess you were set them already a few years back. And since then, we've seen Willis perform, particularly Willis perform very strongly. Could that possibly mean that volumes have grown faster than what you sort of budgeted or expected at that point when you set the target and thereby that capacity utilization and savings symbols that could prove to be either larger or come earlier than what you have expected?

Good morning, Magnus. It's a good relevant question, obviously, as we have guided a bit on the starting phase and then also at full capacity. And obviously continuing to see good growth and we will reach a fuller capacity earlier, but we are not there yet. And it's a lot of trimming and it's a lot of learning in that. So I think that the guidance that we have, we stick to that, but obviously you're pointing out that continue this trend that we see, we will reach sooner the full capacity and the full savings earlier, if that's the case.

Excellent, that's really clear. Then I have another one, maybe that's for Anders, I'm not sure, but it also relates in one way to Bård. You mentioned in the report rent levels as one of the expression points. How might this be changing when the old warehouses will be discontinued, I guess in H2 or something next year?

I wouldn't say that we have any big effect on that, Magnus, actually. But of course, we are in the middle of double rents now. So you can expect that the rent levels, everything else equal will drop somewhat going forward. Thank you.

That's all from me. Thanks.

Thank you.

The next question comes from Gustav Hagius from SEB. Please go ahead.

Just a follow-up relating to, there was a bit of a news in the local trade press this morning on the three Hemshop stores that were converted into ICA. Can you just remind us, is this sort of happening from time to time or is this a unique situation and if there's anything that is behind their decision to move from

No, we see from time to time that some franchisors are moving from one concept to another concept. That has happened historically. This is another example of that. We're sad to see them leave, particularly now when Hemship is doing such a good performance in the market. That's their choice and we wish them the best. But to answer your question, that has happened historically and I'm sure it will continue to happen as well where we see some of the retail is changing.

Okay, thanks.

Thanks.

As a reminder, if you wish to ask a question, please dial star 5 on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Thank you and I just would like to end up with saying thank you for dialing in and thanks for the questions and I would like to wish you a good day. Thank you very much.