Clas Ohlson AB (publ)

Good morning and welcome to the Klaus Olsson Q2 report presentation. My name is Kristoffer Tornström and I'm CEO and I'm here with Pernilla Walfridsson, CFO. So we'll today cover a business update, financial development for the quarter and then move into events after the reporting period. Then we'll summarize and then move into Q&A. So starting with highlighting the second quarter. Overall, we continue to moving forward with fast pace and have seen strong both profit and sales growth in the quarter. So the second quarter came in at 3 billion SEK, which was organic growth of 9%. And the operating profit for the quarter came in at 410 million, which then translates into an operating margin of 13.6%. And in absolute terms is up a bit more than 30% versus last year. When it comes to our online sales on the B2C side with the continued strong sales growth in the quarter, and I'll come back to that in a second. Also from a financial position point of view, we do have a solid financial position and also a cash flow that is up in the first half versus a year ago. Earnings per share amounted to 4.85 kronas versus 3.63 last year. We've also reported the sales numbers for November today and we'll come back to those in a second. But overall, we continued to see organic growth and it amounted to 6% during this month. Then moving into the business update, our strategic framework remains the same and we are very much continuing to strengthen our competitive advantages and investing in our assortment brand and the customer meetings. and doing everything to leverage this. We do have a differentiation strategy where we focus on our five distinct product niches where we want to be very strong. We also continue to do everything to become competitive across all parts of the organization and ensure that we do have the cost and efficiency that is in line also with discount competitors. And our ambition is to generate a strong free cash flow that we can then reinvest into our ABC. Then looking at the strategy execution for the second quarter. And at the top, we have the three growth drivers that we're focusing on. And at the bottom, we have the enablers. So starting with the first growth driver, which is assortment related. And here, our ambition is to have a relevant assortment all year round via the prioritized niches. We have kept up a very high pace. in terms of assortment renewal, and we have launched a lot of new products during the quarter. And we continue to see strong performance across all the five niches. On the profitable and growing online business, the strong development continues. Looking purely at Claes Olsson.com e-com, we grew actually 20% during the quarter, so continued high growth there. I'll also come back to the acquisitions that we have done in the events after the reporting period. But we are obviously increasing our online footprint via those two recent acquisitions. Looking at the store network, we continue to build out but also operate the store network that we have. And it's encouraging to see continued strong like-for-like development in the quarter. And also in terms of store openings, we opened three new stores during the quarter. And the high customer satisfaction remains. And I'll also come back to that. When it comes to customer communication, Club Class is an important priority for us. And during the quarter, we reached 6 million members. And we also continue to invest in digital marketing and performance marketing to fuel growth. And we'll come back to that as well. When it comes to the competitive cost base, here we continue to work relentlessly on making the organization competitive across all parts of the business. And we also announced after the quarter ended a long-term investment in our logistics. And I'll also come back to that at the end. When it comes to sustainability and organization, also here the acquisition of Reservadela Online is a clear statement that we're also moving forward when it comes to the more circular business model of also being a spare part of this donation. And we'll talk a bit more about that later on as well. Looking at the key things that when we track our ABC, we continuously follow the product reviews that we get from our customers. And as always, we have a very high amount of reviews coming in. And we are consistently at high levels when it comes to the customer's satisfaction with our products. This is an important priority. When it comes to the affordability, Also here we are very competitive and our customers really view Klass Olsson as an affordable choice with the right products at the right price. Customer satisfaction remains at high level and our net promoter score during the quarter came in at 57. Then looking at the five niches, this is an important priority for us. We do focus on those five niches and we want to become best across each five. And looking at the quarter, we have seen growth across all five niches, actually. And at the bottom, you also see the priority on spare parts, which we continue to also focus on. So with that, I'll hand over to Pernilla to take us through the financial development.

Thank you, Hisoffer. And good morning, everyone. It has been an eventful autumn, and I'm pleased to guide you through the strong financials of the second quarter. Looking at sales in the second quarter, total sales were up 7%, and organic sales were up 9%. 7% of the increase relates to like-for-like growth, and 2% relates to expansion of our store network. Online sales grew by 8% in total, but as previously mentioned, business-to-consumer sales grew significantly more, at the same time as business-to-business online sales still is heavily impacted by the weak US dollar. For the six-month period, the growth figures are similar through the quarter, with organic growth of 9% and total sales growth of 7%. Sales per market follow a similar pattern as in the last quarter, with extraordinary organic growth in Norway, continued strong sales in Sweden and positive development in Finland, despite a relatively tough market. Also, when it comes to macro trends, impacting our business, we see a similar development as in the past quarter. Transportation costs remain at reasonable levels, Purchasing price and production capacity are favorable at the moment. The weak sales currency NOC continue to have an immediate negative impact. The US dollar remains more favorable than the average for the last couple of years. As I mentioned, input cost are favorable right now and together with positive mix effect relating to price and products we see a big improvement in gross margin by 2.6% to 48.7%. Please also note that as per the last quarter, the gross margin reflects on new reporting methods, so the nature of expense method. The income statement shows a strong increase in operating profit at 410 million second, an EBIT margin of 13.6%. The increase in personal expenses relates to higher volume in our logistical chain, wage increases and new stores. The other external expenses also increased in the quarter, mainly due to increased investment in marketing. The RPS for the quarter was 4.85 SEK, an increase from 3.63 SEK in last year's Q2. As for the inventory, we see the usual build up for the third quarter sales period, which includes the Christmas sales. Compared to last year, we are on the same level despite new stores and more products, thanks to higher efficiency, lower purchasing currencies and higher sales. Cash flow for the first half of the year. Improved versus last year, cash flow from operating activities took the 552 million SEK, an improvement from 530 million SEK last year. Free cash flow for the first six months amounted to 202 million SEK compared with 176 million SEK last year, which is explained by higher operating result and change in working capital relating to accounts payable. Net debt, EBITDA, excluding IFRS 16, was minus 0.7. So we maintained a net cash position. And with that, I hand back the presentation to Christopher.

Thank you, Pernilla. So now we will move into the events after the reporting period. And I'll start by talking a little bit about the acquisitions that we have announced and also the logistics investment and then moving into the sales numbers for November. So starting with the two acquisitions, we do this to, we announced this a couple of weeks ago, and we do this to further strengthen our presence across our prioritized niches. Specifically, when it comes to the acquisition of PhoneLife and Teknikmagasinet, it's a way for us to further strengthen within the Connect and Enjoy Your Home niche, both via bigger assortment and a stronger online presence. And the acquisition of Reservdelen online is a way for us to further strengthen our presence across spare parts. So looking a little bit more into the details of those two companies, both companies are strong online retailers that have grown profitably for many years. And the first one, Phone Life Teknik Magasinet, has been around over the last 12 years and has been built with a very big focus on accessories to mobile phones. We do see this category as growing. Consumers buy less and less new mobile devices, but the accessories market is growing significantly and we've seen that on the Claes Olsson side as well. PhoneLife two years ago acquired the brand Teknikmagasinet and since then have seen the growth pick up further. They offer 26,000 products in tech and tech accessories across the Nordics and also some additional European markets. The second company, Reserved Dealer Online, has also been built specifically as an online retailer since 2017. And they are very focused on the niche, spare part niche across garden machinery, etc., And today they carry more than 8,000 spare parts in their own distribution center, but they also have access to more than 100,000 spare parts across the range. So strong brands partner with Reserved Data Online, and it's a good addition to the focus that Claes Olsson has both across garden machinery, but also when it comes to complementing with very relevant spare parts. And then I'll hand over to Pernilla to talk a little bit about the transaction overviews for both of those acquisitions.