Axfood AB (publ)

Welcome to the Axfood Q2 2024 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 hash 5 on their telephone keypad. Now, I will hand the conference over to speakers CEO Klaas Balko and CFO Anders Lexman. Please go ahead.

Thank you and good morning, everyone. And thank you also from our side to join today's call. As you heard, Anders Lexman is with me here today to present the interim report for the second quarter of 2024. And in the investor section of our website, you will find the presentation material for today's call and a recording will also be made available afterwards. So with that, I would like to get started and please turn to page number two. Today's agenda is as follows. First, we'll have a brief market overview, and then I will give you a review of our quarterly performance. And after that, Anders will take us through our financials. And following Anders' part, I will talk about our progress we are making with some of our strategic initiatives and investments for the future. And of course, this will also include logistics, but also our announced acquisition of the hypermarket concept Titegross. And finally, we'll have a brief summary to conclude the presentation before we open up for questions. So with that, we are now on page number three. But let's go directly to page number four and take a look at the development during the quarter. Market growth amounted to approximately 2.2% in the second quarter, which is a lower level than we've seen before. The calendar effect was, however, negative at minus 1.2%. basically a reversal from the positive Easter effect that supported market growth in the first quarter. Inflation was low during the quarter and amounted to approximately 1.1%, according to Statistics Sweden. A strong focus on price value continues to dominate the market dynamics. The fact that households now have a slightly more optimistic outlook following the sharp drop in inflation has not had any major impact on consumption patterns. And clearly, it's still a very intense competitive environment out there. With that said, volumes in the food retail market are continuing to recover. This is evident when taking the price and calendar effect into account, which results in a volume growth of 2.3%. With that, go to page number five. Now, going into this year, we were mindful that we would be operating in an environment with low inflation, cost pressure and intense competition. And against this backdrop, we knew that relevant offerings and price positions are more important than ever, hence our dedication to these areas in the last six months. And despite exceptionally high comparison figures, we once again outgrew the market in this quarter. Retail sales grew by 2.6%, driven by continued volume growth with a strong inflow of customers. Over A two-year period, growth amounted to almost 20%, significantly higher than the rate of the market, which was around 11%. It is clear that our concepts are strengthening their market positions, which have been significantly improved in recent years, and that customers appreciate what we are offering. Now, with that, turn to page number six. At e-commerce, our sales increased 7.4%, which again was higher than the market. And our share of consumer sales from e-commerce was approximately 5.2%, roughly 1% higher than the penetration of the market. So we are clearly overrepresented on online, capturing more than our fair share of this channel. So we're now moving on to page number seven. So let's look into some of our key ratios. And consolidated net sales for Axfood grew 1.2% during the quarter. Willys posted solid growth and Hemship's like-for-like development was strong. However, the development for Dagab held back total growth, largely due to softer sales to external customers, but also due to a negative calendar effect also in Dagab of 1.1%. That will be reversed in the third quarter. With that, go to page number eight. Now, looking at our profit. In total, Group reported an adjusted operating profit amounted to 836 million SEK, and the margin was 4.0%. As a reminder, last year we disclosed cost-affecting comparability related to the transition to the new logistic structure. Although the transition is still ongoing, related costs are no longer deemed as affecting comparability, as parallel warehouse operations are being phased out gradually. However, our transition costs have been somewhat higher than we initially anticipated. While the quarterly development in the retail chains was solid with positive like-for-like growth, the decline in profit was mainly due to a negative development of AgA due to softer sales, transition costs and costs related to operational disruptions of around 40 million SEK. In the quarter, we also incurred acquisition related costs of 26 million SEK for city growth acquisition. And in addition, in May, we were affected by the temporary operational disruptions in the store's payment system. And this is estimated to have an impact profit negatively by 20 million SEK. perhaps it's needless to say we are not pleased with the profit development in dagab for the quarter but we had a lot of costs and headwinds as you've heard and the extraordinary items partly explains it and i'll talk more about the moving parts here later on in the presentation but let's now move on to our segments and turn into page number nine and we're going to villis Willys' growth of 2.6% was higher than the market's, which is very strong performance given the exceptionally high comparison figures. Compared with the same period two years ago, Willys has grown more than twice as much as the market. An operating profit in the segment increased slightly to 509 million SEC, corresponding to an operating margin of 4.5%. The profit development was primarily attributable to growth in like-for-like sales and effective cost control. but was negatively impacted by higher staff costs and increased rental levels. We are now on slide number 10. I want to emphasize Ville's ambition to offer Sweden's cheapest bag of groceries is key, and during the quarter Ville secured its price position. Ville's growth compared to the market shows that its strategy is working. This is also confirmed by customer surveys, high levels of customer satisfaction. And we also see a strong loyalty among existing customers. As an example, for quite some time now, Willys has been Sweden's most recommended food retail chain. And the gap to its main competitors is significant. And if you look at customer willingness to recommend, what we call a net promoter score, is obviously a way of measuring customer satisfaction. However, we also measure customer satisfaction index, And our service show a high level for Willis in line with the main competitor, despite very different offerings and significantly higher than its second main competitor. With that, let's turn page. And we are now on page number 11, and we'll go into Hemship. And Hemship once again posted strong growth in like-for-like sales of 4.6% during the quarter, driven by clearly higher volumes. Total retail sales growth was 2%. And as a reminder, three large stores left the chain on February 1st, which mainly explains the difference in total and like-for-like growth. And net sales increased by 5.2%. While the development for Hemship banner was strong, Tempo delivered softer performance as a result of the continued challenging market climate for smaller store formats. An operating profit amounted to 87 million SEC, and the operating margin was 4.4%. The significant increase in operating profit was primarily attributable to the strong like-for-like growth. The quarter was also characterized by improvements to the operational efficiencies and effective cost controls. And with that, turn to next page, page number 12. And also in Hemshep, it's continuing its work on its assortment, price value, and store modernizations. And customer surveys demonstrate the progress the chain has been making in the last couple of years in terms of appeal. Customer satisfaction has clearly improved. And when we analyze the development compared to its closest competitors, we see a clear effect. Hempshire is the only one with a positive trend. This has resulted in a narrowed gap compared to two of its closest competitors and a widened gap in relation to the third. And obviously, Hemship continues its journey to strengthening the profile. And this work has paid off, which is why the chain has been so well in the market for a long time now. And let's move on to page number 13, and we'll go into Snabgross. The café and restaurant market is facing a softer market, as many consumers are prioritizing other types of spending than eating out. This, of course, has had an impact on Snabgo's development. Sales during the quarter increased 1.9% in total and 1.5% on a like-for-like basis. And positively, the number of customers continued to increase. And in addition, the trend in consumer sales through Snabgo's club continued also to be strong. Operating profit amounted to 84 million SEK, corresponding to an operating margin of 5.5%. The profit development was mainly impacted by growth in like-for-like sales and increased costs primarily related to staff and higher rental levels. And with that, let's go to page number 14 and we'll look into Dagab. And as I mentioned, the decline in profit for the group was mainly explained by a weak development in Dagab in this quarter. Dagab's net sales increased by 0.8%. on the back of low inflation, a negative calendar effect, and softer sales to external customers, including the smaller store formats. The sales development was clearly not enough to offset the general cost inflation. But in addition, the muted sales growth, Dagab experienced higher costs related to the ramp up of our new logistical structure. And also Dagab incurred costs of 40 million SEK related to operational disruptions. And I will talk more about this when we come down to the strategy review. But now let's turn to page number 15, and it's time for Anders to walk us through our financial development. So please go to the next page, and we'll have now page number 16. Anders, please go ahead.

Thank you, Claes. During the first half of the year, net sales for the group increased by 3.1% to approximately 41 billion SEK. Retail sales increased by 4.7%, which was higher than the food retail market in total, where growth amounted to 4.2%. Operating profit excluding items affecting comparability decreased with 2.3% to just over 1.6 billion SEK. Like for light growth and effective cost control in the retail chains was offset by higher costs associated with the restructuring of logistics, as well as increased costs related to personnel and higher rents. The operating margin, including items effect and comparability, was slightly lower and amounted to 4.0%. Let's turn to page number 17. During the second quarter, cash flow was minus 174 million SEK and compared with last year, 165 million lower, mainly due to negative cash flow from networking capital. The positive calendar effect in Q1 from Easter was reversed in Q2, and furthermore, we also had a negative calendar effect in Q2 related to the number of payment days. The negative cash flow from investments activities of 427 million SEK was significantly lower than last year, as we now have a lower pace in automation investments. Investment in our retail operation was, however, higher in Q2 compared to last year due to more store establishments. And the investment in joint group functions was in line with last year. During the first six months, we strengthened our cash flow from both due to a stronger operating cash flow and the lower investments. At the end of the second quarter, we utilized approximately 0.7 billion SEK of our credit facilities, 0.4 billion SEK less than the second quarter last year. Then turn to page number 18. We also in the second quarter stayed in our financial position compared to last year, but compared to Q1, we saw a slight increase in net debt due to a lower cash position. The net debt ratio excluding IFRS 16 amounted to 0.1, which was 0.2 lower than a year ago. The equity ratio at the end of the second quarter amounted to 21.1%, 1.2% higher than the second quarter last year. And total investments excluding leasehold for the first half year amounted to 740 million SEK, 394 million lower compared to last year. And again, we now see a lower pace in investment related to the logistics center in Bålstam. Investments in relation to net sales continue to come down and amounted to 1.7% in the first half year. And then please go to page number 19. Despite the negative networking capital effect in the second quarter, we have a positive development of rolling 12-month networking capital, both in absolute and relative terms. At the end of the quarter, the networking capital compared to sales was minus 3.5%, a decrease with 0.3 percentage points compared to year-end 2023. We saw improvements in trades payable as well as in trade receivables. The positive development in current liabilities contributes to a lower level of capital employed, which, in combination with an increase in profit, improves the return on capital employed. So, to summarize, we leave the second quarter with a strong financial position, and thereby, Claes, I hand over to you again.

Thank you Anders, and we're now on page 20, but let's turn now to page number 21, as I would like to give you some more color on our progress with the new logistical structure. Let me start by saying our ongoing efforts to establish a new logistical structure are extensive. We continue to make significant and are confident that with this transition to a new logistic platform, we will significantly improve our productivity and competitiveness in the market. And in the last months, we have gradually scaled up our frozen food volumes at the new logistic center in Bålsta. This means that we now have operations up and running in all temperature zones, as dry refrigerated volumes have been fully transferred. We have come a long way in the ramp up of the facility, and in addition, we are now also running early tests with the e-comm deliveries. While Båstad is obviously the largest investment in our new logistical structure, we're also strengthening our operations in the southern part of Sweden. And notably, the expansion of a new automated high bay warehouse in Backa, Gothenburg, intensified during the quarter. These investments will significantly improve warehouse capacity and efficiencies to meet the significant volume growth we have seen in recent years. And lastly, in our fruit and vegetable warehouse in Landskrona, work is ongoing to start to realize the efficiencies after the automation solution was installed in the first quarter this year. This initiative will also contribute to our new logistical structure being highly efficient. Let's now go to page number 22. But while we have made progress with the logistics transition in the quarter, we also faced some certain headwinds. First, although we have come a long way, we are a couple of months behind in the transition. This means that we are not operating as efficiently as we want to, as we still to some extent are running double warehouse operations. As communicated last fall, we knew we would be delayed and have some additional costs. And secondly, given our volume in recent years, we have during the transition identified a need to rebalance volumes between warehouses to optimize logistical flows. A month ago or so, we communicated that we decided to keep our existing warehouse in Örebro to handle convenience trade volumes there instead in Bålsta. In addition, during the quarter, we have moved Snabgross volumes to Hässleholm from Backa. which is a warehouse that is better suited to handle snub growth type of assortment, as well as to free up capacity in the back of warehouse. Work on optimizing logistical flows is always ongoing, but these two initiatives are quite large in scale. And while in the transition itself, an initiative to balance logistical flows drives extra cost due to inefficiencies, we also in the quarter had higher costs associated with operational disruptions. More specifically, we experienced problems while ramping up our frozen food volumes in Båstad. But I'm now glad to be able to say that these disruptions, we noted in May and partly April, is now solved. And during the last few weeks, we are back on track. And overall, the destruction of logistical drives higher cost in the short term, both from higher than usual levels of staffing, but also clearly from extra transports. We do this. priority to maintain service levels because we cannot optimize, as you know, and compromise on the customer meetings in the stores. And all this said, our expectations remain unchanged regarding the long term upside with a new logistical structure in terms of annual efficiency improvements, cost savings and improved competitiveness. And we are now in a better position to be on track with the restructuring and to accelerate our efforts with gradual adjustments in the second half of the year. With that now, let's turn to page number 23. And on June 11, we signed an agreement to acquire the Citigroup's hypermarket chain, in which we already have joint control through minority stake. We are delighted to have reached this agreement and now await the review of the Swedish competitive authority, as well as the Commission. We believe strongly in this acquisition and we believe strongly in Citigos. The hypermarket segment is growing and is attractive to the Swedish consumers. As two players have almost 90% share in this segment, we are confident that there is a demand for a relevant and strong third concept. As owners, we will invest in developing the concept, streamlining its operations and improve customer offerings to create a long-term profitable growth. This is something we have both experience and knowledge of, thanks to the extensive work and development we have carried out over the years in both Billis and Hemsjö. And we look forward to working to strengthen the chain's position and more clearly challenge the major players in the growing hypermarket segment. And moving now to page number 24. Last quarter, we talked about our efforts to accelerate the use of renewable fuel. As you may know, our ambition here entails that we are over a two-year period with transition to using renewable fuel or electricity in our own and procured transports, which will be five years ahead of plan. Following up on the clear progress we made in the first quarter, I can confirm that we are continuing to make progress also in the second quarter. Our CO2 emissions from our own transports amounted to 8.8 kilos per tonne of goods transported. This represents the sequential decline from the first quarter And if we put in and look back a couple of years to 2021, it represents a steep 48% decrease. In other words, emissions from our own transports have halved during the relatively short period. And I also want to inform that we, during the quarter, made a decision to reapply to set science-based targets in line with the Paris Agreement through the Science-Based Target Initiative. And we're now on page 25. Our outlook for the year is unchanged, and it covers investments and new store establishments. And for new establishments, we open up four new stores in the quarter, of which two Villis, one Villis Hemma and one Snabjors. Note that one of the new Villis stores was a re-establishment, which replaced an existing smaller stores in the same town. With that, go to page number 26. And let me summarize. We summarized the quarter in which we once again outgrew the market despite exceptionally high comparison figures and saw an increased volume from continued high inflow of customers. We made clear progress with our new logistical structure, however, faced some headwinds in the quarter which negatively impacted the profit development. We are confident in our many investments that will create a solid platform for improved competitiveness in the future. And we also announced an important acquisition, Citigroups, which gives us additional presence, growth opportunities and increased competition. And finally, this is my 30th and last earning call as president and CEO of Axfood. I must say that I'm really proud of the strong culture and broad expertise in the group, with employees who are really passionate about our journey to lead in affordable, good and sustainable food. To step down from leading this fantastic company is for sure with mixed things. But I also have to say I'm very pleased with the board of directors choice of my successor. And it's with pleasure that I, a month from now, will hand over the leadership to Simone Margolis, who will lead Axfood into the next chapter. With those final remarks, that concludes today's presentation. Please now turn to page 27 and I hand over to the operator to open up the line for questions.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Fredrik Ivasen from ABG. Please go ahead.

Thanks so much. Can I start with a question on general consumer behavior? Curious here if you've seen any changes in, for instance, basket mix during the last quarters. I guess I know that the private label in Viljus was flat versus last year and level of organics. also flattish in villas. But if you made any other observations that you can share with us, that would be helpful.

Good morning, Fredrik. Overall, no. It's generally, as we noted, we see the light of that, you know, the market volume is coming back from a very soft 2023 in the market. there is obviously some more positive signals in terms of the economy and the interest and so forth, but we haven't seen any difference in the behaviors in the stores in terms of consumers' patterns and price value focus, etc.

Okay, interesting. Second one, a question on Dargab, maybe, and how we should think about the second half of this year to start. I mean, you've been previously quite optimistic in terms of reaping efficiency gains already from Q3 and onwards. And now it seems like you have to sort of operate, I guess, with higher cost levels than you wished for. So what's the net effect on the efficiency gains on the one hand side and the temporary higher cost level on the other in Q3, Q4?

yeah and i uh and then i think as we try and have to explain and how we look at it three three areas basically we we as as you've seen we've had a very soft sales in daga and obviously that has impacted but then we have the disruptions is that we have pointed out and uh to you how much that has impacted obviously we We don't forecast and we don't hope for any more disruptions like that. We are also now with the frozen assortment, we are in a much better place. We have a couple of more steps versus 10 steps. So we are basically 80% there in terms of frozen, but we still need to work on that. So that is still there. We are a couple of months later than we initially thought and we talked last time. But we're also equally confident that the efficiency improvements and all of that will come in and will start in the second half. So even if we are a couple of months later, we're still Looking forward now in the fall to start to improve the efficiencies and start to drive this fantastic warehouse to its capacity. But yes, we had some higher costs also related to not only the disruptions, but we are still in this transition. As we talked about in Q1, we had higher costs related to that. We knew that when we went into this year. It is still some cost in Q2. It will be a significant lower cost, but we'll sure have some also costs as we are not there yet. We are a few months later.

And on those costs, just to get a sense of the level, I think you talked about around 20 million or so in Q1. It sounds like it's a bit higher in Q2.

Yeah, if you have the remaining part of, if we are down 100, you are 40 million disruptions at 60 left. It's a half split between sales, soft sales, and also the delay. So you're around 25, 30 in the transition. That will go down is our estimate now for Q3.

Okay. Okay, that's very helpful. Thanks. And last question from my side before I jump back into the queue. On the hiccup with the payment systems you had in May, I'm curious to hear what sits in that 20 million one-off that you estimated. Is it only lost sales or is it only or also significant amounts of sort of, I guess, costs to handle the whole thing in that number?

Well, of course... You just staff up and relate it. When these things happen, which doesn't happen that often, but it was a major hiccup, which was part of the new transformed payment system. And of course, we have We had to focus on the staffing up to inform the consumers and the customers in that perspective. But relatively, it's also, of course, that sales dropped as the consumers that could not pay with a normal payment system during that period. So it's a mix of these things.

Right. And what's a good estimate on the sales effect rather than the... Once again, sorry.

Fredrik, what do you say?

Do you have a good estimate on the sales impact?

Yeah, it was an estimate on the sales impact that was clearly in May, but I can't say it's significant for the quarter, but it was clearly in May.

Okay, fair. And the split on those 20 million, is it mainly in village, I assume? Yeah, correct. Good. Okay, thanks. That's all from my side. Thanks a lot, Klaus. Enjoy retirement.

Well, we'll see. Thank you.

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

Thank you. Hello, everybody. I think I just delve a bit more on the extraordinary cost for a bit here. If we think about the acquisition cost here, the 26 million in Q2, do you see that as most costs have been taken in this quarter or any more costs to expect in Q3?

From an acquisition point of view, that's the cost has been taken.

Great. And then on the logistical transition here, you mentioned already a few months behind and you gave some leads on those double transportation efforts here of roughly 25 or 30 million cost for that. Will you continue with this With this exercise throughout the Q3 quarter or have you already?

No, you're right. And I think and I hope I was clear on that, that we had extra cost as we knew in Q1. We also talked about that will continue in Q2. It became somewhat higher than we thought because we are later. So it ended up in this 30, 25, 30. Now we are in the end of it, so our expectation it will be lower than this in Q3 in the transition plan.

So lower than these numbers that continued cost also in Q3?

Lower than in Q2, yes.

Maybe if we take it a different way, I mean, you've previously been talking about some six old sort of existing warehouses down to be closed. Now you've taken the decision to keep one or two, I believe, open more long-term. Can you give any sort of just lead here of how many, if any, warehouses have been fully closed to date and how many, if any, Do you expect to close over the second half of 2024 or beyond?

We'll go out with that as we are. But as we are now transforming, which is more, I think, more important, that we don't see any change out of these moves that we are doing. We're not seeing any change in efficiency improvements when we look at the Daga performance when we are making this transformation. Why have we done this? Clearly, the bigger one in this, the other one is more or less working in with our timings, but why have we done the Örebro part with service trade? I need to emphasize that it's service trade, which is because it's a different type of logistics. It's a different type of send-out to the stores with that. We learned during the exercise when we have made this transformation that it's better suited to run that separately outside of Bålsta That will create better efficiencies in Bolsta over time, since we are focusing on the normal... Help me here. And so that will support that part. Since we have had significant volume growth, And in that part, we will continue to drive that. It will suit us better to separate, and it will also suit service trade better to keep that in Örebro. So it doesn't change the economics, but it will change the structure. That's why we have worked on how we are now. When we're learning about how they work and how we optimize Bålsta, we also learned that we need to rebalance some of the volumes to better suit the structure. So it won't change the efficiency gains, but it will change how we operate and we think it's even a smarter way.

Can I link it just there? Is it possible to say how many warehouses or warehouses have been closed to date and how many you expect to close?

it is possible but we are we are working on that and we are for example you have one up north that we are looking at and we work that together with the employees here when what timing so that will do so well that will happen so so uh that will come in due time all right then uh you mentioned the service trade and and uh mentioned soft sales to external customers as a key reason behind the dog of weakness is this

Can you delve on this a bit, this weakness? Do you see that as a more sort of permanent shift or something extraordinary happening in the quarter here?

No, I mean, of course, we have a large part of external customers in Dagab and you can clearly see the impact for Dagab. Dagab is reporting 0.8% sales growth. uh obviously uh that is on when you are uh touching on that with the the normal cost inflation we have of course that that is the challenge so we of course expect to see a higher growth we are now uh in uh as we have and also shared we have external customers we have in in hemship as we've seen we have dropped a few uh stores that is an impact they are also part of the external part we have uh some Some of the smaller formats that is in this environment that we've seen have had tougher comp figures and is having a softer development. We, of course, want to support and do all that we can to support these customers as well. But they've had a more challenging time. That has an impact when the inflation is so low and when the volume is softer. So in all, obviously, to drive Daga as a total, one key component going forward is, of course, that we have a healthy sales development. That will also drive our ability to drive both efficiencies, but also profit development in Daga.

Thank you. Finally, I also want to congratulate you for the very strong development during those seven or eight years, even including today's numbers.

Thank you, Magnus. I appreciate that. Thank you.

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

Good morning, guys. Sorry to bother you about Dagab again, but I just have a follow-up on this. You previously talked about at the CMD that you expect sort of 200 to 300 million initially to start in the second half of 2024. Is this sort of now pushed to 25 or should we expect some of it to already be there in maybe Q4 and if Q3 is having some issues?

Yeah, the target is still the same. We still see that coming in. But as I comment, we are a couple of months later, so it will more gradually come in during the fall. So correctly, it's a bit later, but there is no changes in our expectations in that area.

Okay, that's clear. And then maybe on another topic then, now with volumes obviously returning here in the first half of 2024 for the market, and you have obviously been growing volumes nonetheless, but could you just give us some color on the gross margin in Willis and Henshep? Have you seen any improvements here or any signs of easing competition now that sort of your main competitors also are growing volumes?

Well, and I think it more relates to the initial question in terms of how the market dynamic is at this stage. Even if we are seeing some positive signs, we still see kind of the same consumption patterns. And it's obviously also a very competitive market still out there. So there are no significant changes in that area yet.

Okay. So you don't expect sort of profit cross margins maybe. Is that still ahead or do you think we should expect improvements now going forward?

What we expect going forward, that of course depends a lot on then how we can have different, you know, or that of course depends on how the market development continues and move forward, of course. But what I can comment on over the first, you know, the first half year now this year, It is a competitive market out there. Consumer patterns have not significantly changed in that aspect, so we are seeing the same. Now, how it will move forward, of course, there are many different things that can influence that, obviously, over time. But as we pointed out, for us, it's very important to secure that we meet the customers and we are getting that growth.

that will over time strengthen us i'm super confident about that okay okay that's that's clear one final one for me so the gap obviously between you and the market has narrowed and you barely beat them in eq2 but how should we think about that going forward do you think that you still will be able to beat the market going forward or should we expect sort of the hard comps to catch up with you in a way

No, I think if you look at the comps that we had during the period was, of course, extremely high when we had this boom of inflation. Now, if you look at before that period, we have gained market shares and we have grown faster than market over time. And of course, we have a clear ambition and a clear vision and a clear target to continue to outgrow the market. We want to continue to, if you look at the position Willis has, as I pointed out in this report, it has continued to strengthen its brand, it's continued to strengthen its consumer appeal. The measures and the ratios indicate all of that. Hemsjöp, I think, is worth noting out, has done a fantastic journey, but they are still on that journey. They will continue to drive to drive the positive impact of what Hemsjö has. And then, of course, we have also other growth opportunities. The acquisition is one. There are more areas as well that we think that will lead us to continue to outperform the market. That is a clear ambition for us.

Okay, that's clear, Klaus. And then just finally for me just to congratulate you on a very nice journey in Axel and good luck going forward. and thanks for taking my questions.

I appreciate that. Thanks a lot.

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

Morning, Claes and Anders. I think that I will start in the reverse order. thank you class for a very good collaboration and leadership over the past seven years i think it's been really impressive performance especially in the past four years uh you've been standing tall in a very very strange market when it comes to covid and hyperinflation and all that so um i wish you best of luck uh going forward and i hope we'll see you again um i'm sure we will i'm sure we will thank you daniel appreciate that yeah just moving on then to the regular agenda. And you mentioned soft sales, of course, when you talked about dog, and you also mentioned the negative calendar fact, which should swing back. I think you mentioned in Q3. Yeah. Do you think that's that alone? Is that making up a decent part of, if you split that 60 that you mentioned into 30 being transition and 30 being softer sales and, Is half of that 30 basically ether effect?

I mean, the calendar effect now, of course, is negative for DAGAB and that will bounce back. But of course, there are some parts of the 30 that you're referring to, of course, related to effect. But I don't think we need to... lift up the perspective in that perspective. We have somewhat softer sales. We want to see that coming back, but it's clearly impacted. But also then we had a transition and then we have the disruptions. I think we've been trying to be as clear as we can now to divide these areas, what has impacted. Of course, calendar effect is one, but we want to see a higher growth going forward as well for Dagab.

Okay, cool. And just maybe on that topic you mentioned, I think I have not seen that before, that you're moving sort of snub draws from Bacca to Hässleholm. Is that temporary or is it because you want to sort of, you mentioned that you want to accelerate the optimization when it comes to automation and so on and also expand Bacca. Is that going to move back then when you're done with those volumes? Yes.

That's a good question. I think that what we've seen right now is to, and I think I said it, we always look at how we should optimize in the best way and so forth. And obviously, it's a bit different assortment that works nicely as well in Hässleholm for snabb girls. And we're looking at geographically as well. So if we're going to reverse back, we'll see. But right now, it's been very much focused on since we have to say we've had a fantastic volume growth. uh over the years and uh we've eased up that for for for the northern part with bolsta uh we need to have that increased capacity with the new high bay and and that will come in uh in the spring 2025 so of course up to then we need to work on volume capacity uh how that will move then later on i i will leave that to my successor uh

clearly it's been more of a step now to secure improvements in back and secure capacity in back until we have opened up the the new high bay warehouse okay okay cool so spring 25 and then we'll know and then just a very short one on these 26 million they fall under good costs yeah yeah

okay that's all for me and uh again thank you daniel and hope to see you we will i'm sure thanks a lot as a reminder if you wish to ask a question please dial pound key 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.

Well, that just concludes today and I appreciate all the questions and thank you for calling in. And lastly, thank you so much. It's been a fantastic journey. Thank you.