Clas Ohlson AB (publ)

Thank you, good morning everyone and welcome to the Claes Olsson Q4 report presentation. My name is Kristoffer Thornström, I'm the President and CEO and with me today I have Pernilla Wahlfredsson, our CFO. So we will go through, I'll cover a short business update, Pernilla will take us through the financial development and then we will go through the events after the reporting period and update about the strategy and then summarize before we move into Q&A. so headlining the fourth quarter but also the year we can conclude that we're closing a strong quarter and also a strong year with q fails q4 sales amounting to 2.3 billion which is organic growth representing 10 and a online sales growth of plus 19 q4 operating profit came in at 109 and the margin at 4.6 So all in all, we're closing a year with a total sales of 11.6 billion and a profit of almost 1.2 billion, translating into a operating margin of 10.1. From a cash flow point of view, we closed at 1.8 billion, which is also up versus last year. And we can conclude that the solid financial position remains. Our earnings per share came in at 13.91 kronas, which is up from 8 kronas last year. And the board has recommended a dividend or proposed a dividend of 7 kronas. We also see a solid start to the new year. We reported our May numbers today and I'll come back to those in a second. But we can conclude that we delivered 8% organic growth also in May. so moving into the business update first of all we launched our updated strategy back in 2022 and we are executing on this overall we see three areas where we believe we do have a competitive advantage and we are investing in making those stronger and that's our assortment our brand and our customer meeting and looking ahead and also looking at how we operate we are leveraging this in terms of really focusing in on five distinct product niches where we want to be best we also do everything to make our platform more scalable and efficient and ensure that we are cost competitive and then the ambition is to always generate a strong free cash flow so we can reinvest into our abc We can also conclude that we're closing a year where we have delivered above our financial targets and both when it comes to sales and margin and also the board recommendation in terms of the dividend amounts to 50%. Looking then at the quarter and some events from the quarter, the overall we have had three growth drivers we've been focusing on this year. And also for the fourth quarter, we see that they are producing results. The first one is on the assortment side, where the ambition is to be relevant 12 months a year. And also in the fourth quarter, we can conclude that all the five product niches are growing and they have been growing across the year. Our ambition is that these five niches together represent what we call an all-weather portfolio. which gives us a lot of flexibility, a lot of relevance, not taking into account what's happening outside of the company. And also this year, we've had a high pace when it comes to launching new products. So for the full year, we have launched almost 5,000 new products, and that keeps driving relevance for the brand. The second area, our online business, we do have a profitable and growing online business and we have seen online sales growth in the quarter amounting to 19% and online now represents 21% of our total business. Last but not least, when it comes to the store network, we can also conclude a strong like for like development throughout the quarter, but also for the year. And in the fourth quarter, we also launched three new stores or opened three new stores and also did some reopenings of refurb stores. And the ambition as we are moving into year 25-26, the ambition is to continue the store expansion. And we estimate that it will be in line with the last two years. So approximately 10 stores looking ahead. As we're working on these growth drivers, it's crucial for us to ensure that we're always relevant when it comes to our customer communication. We do see in our data that our customers are more and more associating Claes Olsson with our five niches and that is across the markets. We are also disciplined in terms of ensuring a competitive cost base. We are a more efficient organization that keeps things extremely simple. And it's really a way for us to enable growth initiatives and also a continuously strong margin. On the sustainability agenda side, we came out as the industry winner of the Sustainable Brand Index for 2025. But we also see that our spare parts sales within Claes Olsson is growing 26% now in the last year, which is very much in line with our sustainable business model, where the ambition is to sell products that consumers really need, that they will use the products for a long time. And if something happens, we should also have a spare part. Looking down at customer relevance and satisfaction, this is a overview on how we're performing on our ABC. So starting on the assortment side, we do get a lot of product reviews from our customers and we are consistently above four on a one to five scale. So thousands of product reviews and the customers really appreciate the assortment. When it comes to affordability, we are affordable versus also low price benchmarks out there so we are delivering on our value for money promise which is extremely important and last but not least customer satisfaction remains at very high levels closing the quarter at 59 mps and we have been consistently between 55 and 60 which is a very high level Then the last point is that when it comes to our product niches, and I'll come back to this a bit as we look ahead, but all five are growing and we do believe it is a competitive advantage for us that we are broad based. We have many legs to stand on and it gives us an opportunity to be relevant no matter external circumstances. And it also gives us flexibility to focus in where the customers are most interested. So all in all, all five product niches are growing. So with that, I'll hand over to Pernilla to take us through the financial development.

Thank you, Stoffer. And good morning, everyone. As Kristoffer mentioned, we have closed a very strong quarter, a financial year. And I will run through the numbers more in detail. In the fourth quarter, total sales was up 8%, up with 10% was organic growth. Currency effects accounted for minus 2%. Like for like was up 7%. And new stores contributed with 4% to growth in the quarter. Online sales continued to perform very well. Online sales in the quarter was up 19%. And looking at the entire year, online now stands for almost a fifth of all sales in the group. For the full year, sales amounted to 11.6 billion SEK, which is of course all-time high with quite a margin. Looking at sales per market, Sweden managed to break 1 billion SEK, but organic growth was even higher in Norway. In Finland, we saw good indications from rebuilds and assortment adjustment with 3% organic growth in the quarter and 4% for the full year. Keep in mind that we did not open any new stores in Finland during the year, meaning that we had a really strong like-for-like performance. When looking at some macro, transport is not a big issue right now, and prices are coming down to historically more normal levels now. But as we know, things can change rapidly. The continued decline of the US dollar is positive as we are down from the very high levels we have seen in recent years. But when it comes to the weak NOC, it impacts us immediately due to a large share of sales in Norway. The gross margin increased slightly from last year up to 39.5%. Sourcing and transportation was biggest positive contributors and also product price mix helped increasing the margin. Currency effect was the major negative factor, including effects from hedging. The income statement shows an operating profit of 109 million SEK in the quarter. and almost 1.2 billion for the financial year. The operating margin was 10.1% for the full year. Profit for the year was 882 million SEK and EPS landed at 13.91 SEK. Also the development of the inventory is positive. New stores and more products have of course contributed to increase the inventory. But all in all, we are slightly below last year's level, thanks to efficiency in inventory management and higher sales. With a higher operating profit, cash flow was strong. Free cash flow in 2024-2025 was 1.1 billion SEK, and cash flow from operating activities totaled 1.8 billion SEK, compared with 1.5 billion last year. Net debt, EBITDA, excluding IFRS 16, was 0.8. So a strong net cash position and well in line with our financial targets. Turning to investment, I think we have been disciplined in how we have invested for the future and managed to come in at 157 million SEK for the year, which is below our initial forecast. For the year 2025-2026 we intend to continue investing in our store network, but also to do some investments in automation and other efficiency measures at our distribution center. In addition, we will continue to update our IT landscape. In total, we intend to invest approximately 250 million SEK in 2025-2026. Before handing back to Kristoffer, I would also like to talk about our decision to transition from the function of expense method to the nature of expense method in our external reporting as from fiscal year 2025-2026. The main reason for the change is that this way of reporting profit and loss is how we already work internally and thus how management reviews the operations. This means simpler way of working and more efficient processes, which is something we aim for in all part of the company. We also believe this will result in more transparent information on significant expense categories. I would also like to underline that this is a change that will have no impact on net sales and operating result, so no impact on our financial targets. What you will see from Q1 2025-2026 is an impact on reported gross margin due to reallocation of sourcing and supply costs. And why will gross margin look different after the change? This is because costs related to handling and distributing products up until now has been included in COGS. These are costs rising at our distribution center, in our stores and at our HQ. mainly our purchasing department. As for next quarter, these costs are allocated to personal expenses, other external expenses, and depreciation amortization of tangible and intangible assets. I could also mention that personal expenses is by far the expense category where most of the handling and distribution costs will be allocated. And when removing these expenses from product expenses, gross margin will appear higher. If you want to see the stated figures reflecting this change, you will, as from today, find them on our website. You will also find more information in the report. With that, I would like to hand over to Kristoffer for May sales, dividend and some closing remarks.

Thank you very much, Pernilla. So looking at the May sales development, so we announced the May numbers also today together with the report, and we can conclude that organic growth came in at 8%. and it was growth broad-based across the three countries, with Norway coming out the strongest. At the same time, we also see that this is coming on top of the last year's 13% organic growth, so 8% is a solid start to the new year. The store network increased nine stores compared to last year's May. Then moving into the dividend, the board has today proposed a dividend of seven kronas per share, and it will be distributed in two payments of 350 each in September and January. And this has been enabled by a strong EPS development. and it's also in line with the dividend policy so that all in all means that we will distribute 444 million to our shareholders based on the reporting day period so with that moving into just looking ahead a little bit uh first of all starting with the strategic position we are the strategy is working so we will continue to execute uh on this strategy We also see that the multi-niche strategy of focusing in across five different areas also is delivering strong results. So we're going to continue to work to execute on this also moving forward. and we have also done some work to conclude what the market opportunity is for class also taking into account these five niches from a market point of view also some of the adjacent product segments that we're playing in and the conclusion is that the overall addressable market for class also is 340 billion swedish kronas and it's expected to grow over the next few years So with our 11.6 billion second sales amounts to a 3.4% market share. So we do see continued growth opportunities in our core markets, Sweden, Norway and Finland, which these numbers are based on. Also, if you look at the business from a population slash membership point of view, we can also conclude that Club Clas is growing. We've added 500,000 new members over the last year and is closing in on 6 million members, which represents approximately a fourth of the population. So there's still a also big opportunity when it comes to attracting more and new customers into Clas Olsson. Then looking at the more concrete growth drivers then for the year ahead, we continue to focus on our assortment, continuously driving profitable growth online and also investing in building a stronger and more robust store network with a combination of investing in the network we have but also adding new stores. And obviously underlining the importance of keeping a competitive cost base, not adding overhead costs. Also continuously doing good work when it comes to efficient customer communication to attract new customers into Plus Olsson and also serving the customers that are very, very loyal. All in all, we're also continuously working on our sustainability agenda and it's very much built into the overall strategy for the company and it's part of our DNA. So summarizing and looking ahead, I think we can conclude that there is a clear path to continue growing and continue creating value. So first of all, we are well positioned in large and growing product niches. As I outlined, the addressable market is 340 billion SEK and we have a strong brand with almost 90% brand awareness. Second, we continue to focus on needs driven product assortment, and we are doing everything to maintain a very high customer satisfaction every day in our stores and online and in customer service. So all in all, we are renewing the assortment with approximately 30% every year, and we have done so over the last two years. our mps remains high but it's something you need to deserve every single day and today it's at 57. also when it comes to customer satisfaction with our products it also remains high and we're going to do everything to keep that high securing the right combination between high quality products that are built to last with a good attractive price point And the third area is that we do have central store locations and we have a full scale e-commerce that is growing and is profitable and we are effectively working with marketing. So this combination actually makes us fairly unique in the market. We do have 241 stores today and we expect that to continue to grow. Almost 20% of sales now online and we have seen a strong online development over the last few years with 16% CAGR and we expect online to continue to grow also in the years ahead. So all in all that summarizes the strategy and plan looking ahead. So with that we'll move into Q&A.