Axfood AB (publ)

welcome to the axfood q3 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 head of investor relations alexander bergendorf please go ahead

Thank you.

This is the Axfood third quarter 2024 telephone conference. With me today are Simon Margulis, president and CEO, and Anders Leksman, CFO. In the investor section of our Axfood.com website, you will find the presentation material for today's presentation. We encourage you to have that presentation at hand as you listen to the prepared commentary for this call. After the prepared commentary, we will be taking questions. A recording of this call will be made available on our website also. So with that, I will now hand over the words to Simone. So please go to page two and please go ahead, Simone.

Thank you, Alex. I'm so happy that you're attending our call since I know this is a busy day for you all. But of course, this will be today's highlight. This is my first interim report as President and CEO of Axfood, after having assumed the role on August 15, thereby leaving my previous role as Managing Director of Hemköps kedjan. These two first months have been great and I have so much passion for what lies ahead. It is also great to be here today and I hope that I will get the chance to meet with you going forward. On this page you have today's agenda. After a brief market overview, I will give you a review of our quarterly performance. Following that, Anders will take you through the financials. And following Anders' part, I will talk about the progress in our strategic initiatives and investments for the future, including transformations in logistics, IT, as well as sustainability, and of course also with respect to our city growth. Lastly, just a brief summary to conclude the presentation before we ask for questions. Turning to page 3, but let's go straight to page 4 and take a look at the developments during the quarter. Market growth amounted to 3.6% in the third quarter, and this was a higher level than in the second quarter. But to remind you, we had a negative calendar effect in the second quarter growth. Taking the calendar effect into account and also inflation, growth in the third quarter was in line with the second quarter and amounted to 2.2%. In other words, volumes in the food retail market are continuing to gradually recover at a quite steady pace. In recent years, households' purchasing power has weakened considerably in the high inflationary environment. Now inflation is low and at the more normal levels, and with that consumers in general are slightly more optimistic about the future. However this optimism is not really reflected in the current consumer behaviors. We meet millions of consumers every week in our stores and in general we see very cautious shopping behaviors. We also know from surveys that price value is extremely important and just over the last few years these factors have really become top of mind for most people when deciding in which shop to do the grocery shopping. Price value has even surpassed location as the single most important factor, which is a historic shift. In addition to high price awareness among consumers, it is also clear that competition in food retail has intensified this year. In addition, high cost inflation continues to put pressure on food retail players. We are now on page 5. In these market dynamics, all of our businesses have a strong focus on optimizing their competitiveness by strengthening price positions and ensuring attractive consumer offerings. And we are truly reinforcing our market positions and creating a solid platform to continue to challenge and grow. In the light of a very high comparison figures, Axford's growth for the third quarter was in line with the market. We see volume increases and a positive trend in consumer traffic, contributing to a 3.5% increase in retail sales. In the third quarter last year, Axwood outperformed the market, growing in a double pace compared to the market growth. And over a two-year period, growth amounted to 17%, which is clearly higher than the rate of the market, which was 10%. Turning to page 6. In e-commerce, we have a strong presence and more than our fair share in this channel. E-commerce sales increased 10.2%, which again was higher than the market. And over two years period, growth was more than double the market growth. In the quarter, our share of consumer sales from e-commerce was approximately 4.8%. And that's roughly one percentage point higher than the penetration of the market.

We are now on page 7.

Growth in consolidated net sales for the group amounted to 3% during the third quarter. We saw good growth in all operating segments, where Willis posted a solid development and the growth of Hemskjöp and Snabgrås was strong. In addition, Dagab's sales trend clearly improved compared to the second quarter.

Please go to the next page, number 8.

Although the group's sales growth was solid, operating profit declined. In total, group report and adjusted operating profit amounted to approximately 1 million SEK, and the margin was 4.8%. While the sales development in all the retail chains was positive, with like-for-like growth, Willis had a negative profit development, which impacted total profit for the group. In addition, Dargav's earnings were soft. And as a reminder, last year we disclosed cost affecting comparability relating to the transition of the new logistics 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, we still have had costs related to the transition and in the quarter they amounted to approximately 20 million SEK. Lastly, with regards to the group operating profit in the quarter, we also incurred 11 million SEK in the cost for closing down our meal kit company, Middagsfrid. Let's go through each segment and turning to page 9, first up is Willys. Regardless of the economic situation, the discount segment has been the fastest growing segment of the food retail market for many years. Wheelis is the leading discount retailer and has attracted significantly more customers in recent years and gaining market share at a historical high rate. Now in the third quarter, Wheelis' growth of 3.8% was in line with the market and even a touch above. This is obviously a strong performance given the very high comparison figures. Compared with the same period two years ago, Wheelis had grown twice as much as the market. However, as I just mentioned, Willis saw a negative profit development during the quarter, and operating profit decreased to 556 million SEK, corresponding to an operating margin of 4.9%. While increased volumes had a positive impact on earnings, price investments combined with high cost inflation led to profits declining compared to the prior year. Turning to page 10. The price investment that Willis implemented is a clear move to strengthen the chain's competitiveness and profile with Sweden's cheapest bag of groceries. And they have clearly contributed to stable market share development with a continued high level of customer traffic and loyalty. The amount of new members coming into the loyalty program, Willis Plus, every month is still on a clearly higher level than before the inflation took off. In addition to attracting many new customers, we see strong and stable loyalty when we measure brand perception of Willys. In the chart to the right here, you can see the development of consumers openness to shop and also preference. While openness to shop is obviously important, preference tells us how many consumers have Willys as their first hand choice. to notice that preference is still very much higher than Willys' current market share. This difference is unique to Willys in comparison to its competitors on the market and really highlights the importance of Willys continuing to establish more presence with stores across Sweden to be able to serve all potential customers that would like to shop at Willys but perhaps cannot due to not having access to a Willys store nearby. Turning to the Hemship segment, and we are now on page 11. As evident by the strong growth of 4.5% in like-for-like sales, Hemship continued to successfully navigate the market and the traditional grocery segment in the third quarter. Total retail sales growth was 2.8%, and as a reminder, three large stores left the chain on February 1st, which mainly explains the difference in the total and the like-for-like growth. Total net sales for HempShep increased 4.7%. Tempo delivered the performance in line with the market and operating profits in the segment increased strongly to 94 million SEK and the operating margin was significantly higher at 5.1%. The increased profitability was primarily derived from the strong growth in like-for-like sales and effective cost control. Now turning to page 12. Hampshire is further strengthening its position on the market, following its efforts in recent years to, among other things, develop product range and focus on price value. However, the chain also developed a new store concept and accelerated its pace of store modernizations. On this page, you have a year-to-date growth for a sample of stores that have been upgraded through refurbishment in recent years, compared to the total like-for-like growth for Hampshire, including Temple. Having modern and attractive stores is crucial to success on the market, and it is safe to say that for Hemshack, this work and these investments have really paid off and contributed strongly to the current performance and like-for-like growth. Moving on to page 13. Restraint and caution among customers also dominates the dynamics of the café and restaurant markets. Our restaurant wholesaler Snabgross takes further steps and is strengthening its market position. Snabgross saw strong growth in the quarter that amounted to 5.6% with higher volumes and growing number of customers. Sales were up 4.9% on a like-for-like basis. In addition, the trend in consumer sales through Snabgross Club remained strong. Operating profit was basically in line with the prior year and amounted to 85 million SEK, corresponding to an operating margin of 5.6%. The profit development was positively impacted by growth in the like-for-like sales, however offset by increased costs primarily related to wages. We are now on page 14 on Dagab. Dagab's net sales increased by 3.5%. and this was a clear improvement to the trend seen in the second quarter when growth amounted to only 0.8%. Sales to Axel's own concepts drove the increase in the quarter. Reported and adjusted operating profit amounted to 312 million SEK and the operating margin both on a reported and on an adjusted basis was 1.6%. The profit development was primarily derived from the growth in sales, but was negatively affected by the cost related to the transformation of logistics, and also cost inflation higher than inflation on the revenue side. And then there were also the closing down costs associated with middagsfrid, as I mentioned earlier. Now we are on page 15, and it's time for Anders to take you through the financials. So please go to the next page, number 16, and Anders, please go ahead.

Thank you, Simon. During the first nine months, net sales for the group increased by 3.1% to little more than 62 billion SEK. Retail sales increased by 4.3%, which was slightly higher than the food retail market in total, where growth amounted to 4%. Operating profit, excluding items affecting comparability, decreased 4.5% to 2.3%. 7 billion SEK. Like for light growth, an effective cost control in the retail change was offset by higher costs associated with the restructuring of logistics, as well as price investments and increased costs related to personnel and higher rents. Operating margin excluding items affecting comparability decreased from 4.6% to 4.3%. And then turn page to page number 17. During the third quarter, the cash flow was minus 358 million SEK compared with 208 million last year. The negative development was mainly due to a negative cash flow from the networking capital. The positive boost from midsummer and calendar effects in Q2 this year was reversed in the third quarter. The cash flow from investment activities of 355 million SEK for the quarter was somewhat higher than last year, mainly due to more store establishments. Investment in joint group functions was in line with last year. During the first nine months, our cash flow decreased mainly as a result of a negative cash flow from lower usage of credit facilities, partly offset by lower investments. At the end of the third quarter, we utilized approximately 1.1 billion SEK of our credit facilities, 0.3 billion less than the third quarter last year. And then turn to page number 18. Compared to the second quarter, we saw a slight increase in the net debt due to a negative calendar effect in the net working capital. The net debt ratio excluding IFRS 16 amounted to 0.3, which was unchanged compared to a year ago. The equity ratio at the end of the third quarter amounted to 23.7%, one percentage point higher than the third quarter level last year. Total investment, including leasehold, for the first nine months amounted to 1,058 million SEK, 359 million lower compared to last year, And again, we now see a lower pace in investments related to the logistics center in Bålsta. Investments in the retail operation, IT and other joint operations was in line with last year. Investments in relation to net sales are coming down and amounted to 1.7% in the first nine months. Investments in automation amounted to 147 million SEK. Please turn page to page number 19. Despite the negative networking capital effect in the third quarter, we have a positive development in the rolling 12-month networking capital, both in absolute and relative terms. At the end of the quarter, 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 trade payables as well as in trade receivables. The capital employed has increased mainly as an effect of increased leasehold debt and networking capital impacting the return on capital employed in a slightly negative way. To summarize, we continue to have a strong financial position when we enter the fourth quarter and thereby, Simon, I hand over to you again.

Thank you, Anders. We are now on page 20, but let's turn to page number 21. And now I would like to give you an update on our strategic initiatives and investments for the future. The establishment of the Groove's domestic structure continued during the quarter, and work is underway to optimize and adjust product flows. And this is ongoing at the same time as Daggep is supplying thousands of stores around the country with goods. Towards the end of the quarter, the last volumes of frozen food were transferred to the new logistics facility in Bålsta, which means that the volume wrap-up of stores is now complete on site. We can now gradually focus on balancing our operations to increase productivity and efficiency. And tests are now also carried out for the roll-out of e-commerce. In addition to Bålsta, the expansion of the existing High Bay warehouse in Backa, Gothenburg, continued, and in the fruit and vegetable warehouse in Anskrona we continued the work to implement efficiencies with the installed automation solution. Our investments in logistics are largely focused on quality, efficiency and more automated processes, but they are also intended to ensure that the group has the capacity to continue to grow in the future. We have experienced a strong volume growth in the recent year, which together with the acquisition of the wholesale business Bajendals Food has resulted in a need to rebalance our volumes between our various warehouse facilities. Establishing a new logistics structure is an extensive project, one that continued to give rise to additional costs in the third quarter. This is, however, an important shift that in the long term will result in cost savings and greater competitiveness, as well as an even more efficient and sustainable product supply. Increasing efficiency in logistics is a big focus area for us, but we are also working to increase efficiency in store operations. Right now, we are rolling out a new and modern IT platform for stores to improve how stores operate and receive information about prices, campaigns and inventory balance. In Axfood we have a lot going on in many areas and this is just one another example of how we are strengthening our position for the future. Now moving on to page 22. We are delighted to have recently received approval from the Swedish Competition Authority for our acquisition of Citygross. We now look forward to take over as Citygross new owner on 1st of November welcoming new colleagues to the Axford family. We are energized by starting the work to invest in strengthening the chain's competitiveness and challenging the leading players in the hypermarket segment. As previously communicated, Citigrass will be reported as a separate operating segment in our financial reporting. In conjunction with the closing of the transaction, DAGAP sales to Citigrass will be eliminated as internal sales in the consolidated net sales financial reporting. However, our retail sales and market share increases with the city growth share. At closing, Axel's current minority stake will be revalued in accordance with the valuation carried out in the connection with acquisition, which will have a negative profit effect of 120 to 160 million SEK in the fourth quarter and be reported as an item affecting comparability. Next page, number 23. We really see a lot of potential with Sittegross and opportunities for us to create both business and customer value. And not least, this gives us full presence in the hypermarket segment, which is a very attractive segment. First, it's a large segment and we estimate that it comprises approximately 27% of Swedish food retail. There are two dominant players in the segment with almost 90% share. Second, It's a segment that is displaying healthy growth. The discount segment has obviously been outperforming the Swedish food retail both over the long and the short term. But the hypermarket segment have actually been outperforming the traditional grocery segments consistently throughout the years. Both in recent years during the pandemic and period with high inflation and before that. And growth for hypermarkets also been slightly faster or at least in line with the market these years. Citygross is a compelling acquisition that is attractive to Axfood, Citygross and to the Swedish consumers. With this deal we will expand our presence and reach and Citygross competitiveness will improve. It will enable us to continue to drive growth and further strengthens our ability to deliver sustainable strong shareholder return over long term. Turning to page 24. When it comes to sustainability, we have an ambitious agenda, working systematically and taking conscious steps in many areas. Climate change is central and I would like to highlight our effort to accelerate the transition to renewable fuels in transport. Accordingly, we have reduced the carbon footprint from our own transport by just over 40% since last year. and by nearly 60% over a three years period. This comes at a cost for us as renewable fuels are generally more expensive than traditional fossil fuels. But this is a crucial move that we have to do to reduce our emissions. And we hope that many more will follow and will be inspired by our ambitious work. In our climate work, we also are preparing to reapply to set science-based targets in line with the Paris Agreement through the science-based targets initiatives. In addition, we're adapting our 2024 annual sustainability report to the requirements of the corporate sustainability reporting directives. We are now on page 25. Our outlook for the year is unchanged and it covers investment and new store establishments. For new establishments, we opened up three new group-owned stores in the quarter of which one will is Hemma and two Hemsjöt. After the quarter we have continued to establish stores and we are well on track to be within the guidance range for the year. Please now turn to page 26. To summarize, in the third quarter we reinforced our market positions despite high comparison figures and intense competition. We took new steps in our investments in the future to strengthen our long-term competitiveness. And since taking over as a president and CEO, I have focused on learning the business from my new point of view and perspective and time out in the organization. And meeting dedicated employees and witnessing our strong culture is incredibly valuable and makes me confident that we have what it takes to write the next chapter for our journey together. And Axwood will continue to challenge. We have a plan in place and a development agenda to ensure our continued competitiveness and to increase our market share. And this is something that my colleagues and I truly feel passionate about. And with those final remarks, I conclude today's presentation and I now hand over to the operator to open up the line for questions. Thank you.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Frederick Evarsan from ABG. Please go ahead.

Thank you. Good morning. Two questions. First, on the margin contraction in Billis, how much of that would you say is due to the price investments and how much is due to general cost inflation? That's my first question. And then second, it would be interesting to get some sort of understanding about the timing of these price measures that Billis took in the quarter. Why now and not in Q1, for instance, when ICA announced those investments they did of 1 billion SEK? Did Willis lose momentum during the end of Q2? Why did this come now, so to speak?

Thank you, Fredrik, for your questions. To start with Willis. And the profitability was majorly affected by the price investments that also gave good volume increases and also drove a brand loyalty for Willys during the quarter. And regarding the timing question, Willys always have the customer promise to be Sweden's cheapest bag of groceries. and that they do continually. So it was not a matter of timing, it's a continuous work for Willit.

Okay, thank you. The next question comes from Magnus Rahman from Kepler.

Please go ahead.

Thank you very much. The first one relates to your parallel warehouses and being gradually phased out as you mentioned here in 2024. Could you give us maybe an update on how many of the old ones are still open and how many do you plan to close?

As I said, we are rebalancing our volumes. We had a lot of volume increase since we made the design. So we are gradually closing, we have closed down the warehouses that we showed them, but we also relocated the service trade.

And that's why we continue to have Örebro open.

right so but but could you elaborate on whether have you closed any of those i believe it was six uh uh old warehouses yet or or and and yeah so one has been closed then and are you looking still to close the majority of the remaining ones or or are you is that under sort of review of how many you will be closing in total

No, we will be closing down according to the plan we made, except from Örebro that we are keeping. No, not Örebro, sorry.

Right, but okay, I understand, the service, the Jordbro to support service trade. So then that means that you will be closing five fulfillment centers and you have only closed one yet, is that correct?

Sorry, I didn't hear the question.

Could you repeat the question?

Yes, sure. So does it mean that out of the initial six old fulfillment centers, you look to keep one, you look to close five, and you have, as of date, closed one so far? Is that correct?

Yeah, okay, okay. The plan was not to close all the five. So we are ramping up, and the ramp-up in both states is completed, and now we are in the phase of balancing was that to get get all the efficiencies we kept orebro that was not in plan since we have increased the volume so much so we said to get the most out of the bolster site we kept the service trade out and also the frozen in jordbro is still kept for the service trade so the plan was not to close all the five other ones now i understand sorry

All right, so then you're saying that you're keeping Örebro and Jordbro, and you have closed Borlänge. Does that mean that you will look to close the three remaining ones, or is that still under review?

No, I think we are actually, according to our plan, to ramp up Bålstanau and keep the other sites. And we're not keeping the entire jordbru, to be clear. It's the frozen part to be kept for the service trade.

All right. So we have closed down the main facility in jordbru, Magnus. It's only the freezer that is still working there.

Right. So maybe to rephrase it, to simplify a bit, so do you stick to the original target of annual savings expectations of around 300 to 400 million.

Yes, we do. The plan is just a little bit delayed, as you've noticed this year, but the plan and the efficiencies are still in plan to receive.

Right. Great. Then just wanted to ask also on the, you mentioned the cost pressure on rents and salaries. I guess rent cost pressure should be much lower if you think about indexation looking into 25 and then I guess you will be annualizing this loss of the employer tax of young people from Q1 or something like that. But can you mention anything about how you see your procurement or your purchasing costs in relation to the sort of global food commodity price decline? Do you see any opportunity here for negotiations on your procurement or what's the cost pressure on that side?

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

I don't know what happened. I think Magnus you can probably go on. For some reason, the operator included me now.

Yeah, okay. So to answer the question before, sorry then. As you said, on the cost side, we have like a delay, as you said, for rent and also wages that we are also, as you said, they are regarding the inflation concerning next year. So we look more hopeful on that side. Regarding our purchasing, it's... Gradual work that we do every every day to negotiate with our suppliers to be as efficient in our pricing as possible So that's a that's an ongoing work both on our On all suppliers active both the private label and the latest ones at the ground So now I turn over to you, please

Is it Daniel now?

Do you hear me?

Yes. Hello, Daniel.

Hi. I don't know what happened with the operator. Anyway, sorry, Magnus. So just maybe continuing on with that, you say that we know since before that the cost savings from the Ball Star exercise is delayed. Is it further delayed compared to what you thought in the second quarter? You mentioned that you will have cost savings in the long term in your prepared remarks.

No, so no changes in this last quarter. We had increased cost about 30 million last quarter and this quarter it's about 20 million. And we think in next quarter we will have a little bit less. But the plan that we communicated last quarter is still the one.

So does that mean that coming into 25, you won't have any extra costs and you can start to realize these 200 to 300 million in savings? Is that the correct interpretation? Yes. Okay. Okay. Then just jumping on to the price investments, which is, I guess, the topic of today. How do you feel about sort of... price investments going into the last quarter of this year are they going to be for Willys sake at the same level as you saw in Q3 or was that a gradual ramp up in Q3 when it comes to price investment?

Willys has its price position to be the cheapest bag of groceries in Sweden so it's something that we will continue to secure.

But you can't say anything about the pace of investments that you've done or do right now, or sort of the competitiveness in the market, if you want to put it that way. Is that more intense now than it was in Q3, or than it was in Q2, for that matter?

Yeah, the competition in the market has increased during the year, and that is also the reason for Willis to... secure its position and even strengthen its position. And that has also come with increased volumes and increased loyalty and increased number of customers into Willys.

Okay, good. And then maybe a question for Anders. You write regarding city grass that you will take a write-down of between 120 to 160 million in Q4 relating to the latest valuation of city grass, given that you bought these 10% of city grass for 300 million three years ago. And now you bought the 90% recently for 2 billion. But if I do the math... it would entail a write-down of 80 million if you want to have the right sort of revaluation of those 300. Why are you writing 120 to 160?

Well, I don't have your calculation in front of me, Daniel, but the one I do, I come to this conclusion. But you have to remember how... how the company is geared also affects the share price, obviously. So that's where I have to take it.

But has that dramatically doubled since you made the initial investment?

That's an estimate that we do right now, Daniel. So we have to see when we... do the closing next Friday. We have to come back to that. But that's the best assumption that we can do now.

Okay. And could you say anything about the operational development of Citigrass? I know you referred to LTM April and you've done so. Can you say anything about the development in the past six months? And what should we sort of expect when it's consolidated and all that?

We will take over from the 1st of November and until that you have to give that question to Citigroup.

Okay, but are you going to come back before the Q4, put it that way, when you have consolidated, when you own it, to give some more guidance on how to think in terms of the quarter lease and all that?

We will continuously give you an update on the progress in Citigrass from when we take over. So let us get back to when we were taking over to be very, very transparent. And we will also, as we said, report it as a separate segment. So you will be able to continuously follow the progress actually in Citigrass.

Okay. Just the last question then. Group costs were very low in the quarter. Any specifics?

know that as you know Daniel it can vary from quarter to quarter and in this quarter we have as you as you mentioned and but no no no dramatic change so to speak in in in in joint no result provisions or anything because i think it's the lowest ever no or in modern history on the project side in in q3 compared to to a normal quarter

Okay, is that temporary or is that sort of something that's structurally changing?

No, not structurally.

Okay, thank you. That's all for me. Thank you. The next question comes from Gustav Haggis from SEB.

Please go ahead.

Thank you and thanks for taking my questions. Congratulations on your new job again, Simon. I'm sure you're going to do great. Thank you so much. I have a few questions. Starting on slide 10 with Willy's membership intake and so forth, I note that this is a gross number in terms of members taken in, but could you please shed some light on what has happened to the 2022-23 cohorts looking at active customers are they still coming into the store to the same extent given that willie's grows now a little bit less than the market i would assume that the net customer acquisition is no longer positive depending on how you calculate when they sort of fall out of your membership base but uh or is this more of a basket size story or how to make sense of these numbers that'd be helpful thanks

You're correct. This is, as you said, the number of new customers coming in. But we also follow the numbers of active customers and the share. And that's actually increasing even more than the new customer acquisition. So we have a very positive trend also in the active customer base. And also when we look upon, as you see, the brand loyalty to Willis, who is actually still also the most recommended chain in Sweden.

So no net churn given that you're not growing in line with the market and there's still some inflation. Is this a less loyal customer base that you've taken in?

Actually, Willys is growing a little bit stronger than the market still. So they were growing 3.8% compared to the market of 3.6%. And also growing a lot of market share. The last three years, Willys grew more than 2%. 2.5% market share on a normally very stable market, which is a performance to be able to even grow stronger in the market this quarter.

Yeah, no, I was referencing like for like, but sure. Thanks for those answers. And at the CMD that you hosted previously, you mentioned that you saw a trend that your customers were more willing to sort of travel further distances to shop. So the geographical reach for each Willy store had expanded. And I see you still have an ambitious rollout target here for the year and so forth. But do you see with Fresh Ice any risk of saturation for Willy? Is it 244 stores now? It's more I think Ecomax and Quantum has some 220 stores combined and with Citigrass, obviously, I know that you're referencing as a new segment of yours, but the overlap must still be there. Do you see still white spots for Willy's net?

I think the best measure for that is to see, as in the picture on page 10, that the preference is on 22%. compared to the market share on 15%, which means there's a gap between here. So I would say it's still a great potential to establish more wheelie stores, since there are more people want to buy shop at wheelies than we have stores to shop in.

Okay, great. And then following up on Daniel's question on Citigrass, I appreciate you cannot comment on or you don't want to comment on the performance, but I'm sure you've spent quite some time thinking about the stores and so forth and I assume some of the stores are doing well and others are not and so forth. Have you already identified the stores that you're considering right-sizing, changing concept over or closing down or do you think that the store count of Citigrass will remain a year from now?

When we take over from the 1st of November, we will start together with Citygross to do a plan on how to strengthen it. We will strengthen both the brand and develop a strong store concept and also implement an effective, operative model for Citygross to be able to make the chain profitable by 2026.

And will that analysis include sort of proximity to Willy stores or will they be operated in a vacuum from each other?

That will be a plan taking in consideration both concept, optimizing, custom offering, of course, and also operating models. And also, of course, the store network.

Thank you. Those were all my questions. Thank you so much.

As a reminder, if you wish to ask a question, please dial pound key five 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.

So I would thank you so much for you joining us. um sorry i i hope to see you in in january when we have our next report uh so thank you for joining