Clas Ohlson AB (publ)

Good morning, everyone, and welcome to the Claes Olsson Q3 report presentation. My name is Christof Thornström and I'm CEO and here together with Pernilla Walfridsson, CFO. So the agenda for today is to review the business update, the financial development for the quarter, and then the events after the reporting period. Then we'll do a short summary and move into Q&A. So to highlight the highlights of the third quarter, really the key takeaway from this quarter is that we again show a combination of continued sales growth and improved margins. Looking at sales, we came in just above 4 billion Swedish kronas, which represented an organic growth of 8%. Our operating profit came in at 659 million SEK, which resulted in an operating margin of 16.2%. Our operating cash flow for the first three quarters amounted to 2,091,000,000, and that is also up versus last year. And we still have a solid financial position with a net EBITDA minus 1.3, which means we have a net cash position closing the quarter. EPS for the first three quarters came in at 16.22 kronas, also that up versus last year. Today we also reported our sales numbers for February. I'll come back to that, but we delivered 9% organic growth also in February. So moving into the business update and looking first at our strategic position. In general, we operate in several attractive everyday niches where we can be highly relevant to our customers. And I believe it's the combination of this relevance, but also our focus that allows us to build a business that is both scalable and capital efficient. We focus on our areas where we want to become stronger assortment brand customer meeting. And with the focus, we do everything to also develop a more scalable operating model that generates a strong free cash flow that can be reinvested. Moving into the strategy execution, This slide really shows how the strategy is being executed across the organization with tangible results. And we continue to see progress in several areas, assortment development, omni growth, store expansion, marketing efficiency and cost competitiveness. So to just mention a few things from the quarter, starting with assortment. We do see continued strong development across our five consumer missions, i.e. the five niches. We also saw that January came in strongly. And here we also saw a seasonal effect when the weather turned. We were able to also sell a lot of seasonal products that had slower growth in November, December. We've also kept the assortment renewal high. We renew approximately 30% of the assortment every year, which really helps us to drive relevance. On the profitable growing online business, we have seen continued strong development versus business to consumers. And the Claes Olsson standalone part is growing 15% in the quarter. And now online sales represents 21% of our total sales in the third quarter. On the robust store network, we continue to see strong like-for-like development, which is obviously crucial. Also high customer satisfaction. And as we're now soon closing the year, we will add eight new stores in 25-26. Slightly below the ambition of 10, but it's nothing dramatic. We have seven stores planned now over the next few months. And our target that we announced today for next year is also, again, approximately 10 new stores for fiscal year 26-27. When it comes to customer communication, I wanted to highlight a survey that came out in Norway during the quarter where Claes Olsson was awarded the strongest brand in retail in Norway. So the brand in the eyes of the consumers actually now is stronger than local brands like Norwegian, but also big other brands like IKEA. So we have a very solid position in Norway. On the competitive cost base, we announced last quarter that we're increasing capacity, but also efficiency in our logistics by investing more in our distribution center. And when it comes to sustainability, we have just signed a new agreement with PostNord, and here we will have more fossil free transports to all our Nordic logistic hubs. Going to the next point for us, customer relevance is really at the center of the business and everything that we do. And I believe that a strong customer position is really one of the clearest proof points that the model is working. And as you can see on the slide, we continue to see strong customer trust, improving affordability and also high customer satisfaction. The MPS is dropping a little bit in the third quarter, which it usually does, given the high amount of volumes. But across the store network and our e-com, MPS remains very high. So going to the next slide, we also know that and can confirm also for the third quarter that the growth is broad based. We do work with our five consumer missions to really win the five niches. And here in the quarter, all prioritized missions are contributing to growth. And this also confirms that our assortment strategy is working well. And we're less dependent on individual single product categories. And then my final point is also just a few words about the January sales development. So we continue to see that we are strengthening our relevance throughout the year. January used to be a month where we had around 600 million net sales for many years. And then over the last three years, we have really taken steps in the right direction. First 800 million, 900 million, and this fiscal year we came above 1 billion SEC in January. And again, I think that shows that a more balanced assortment means that the business actually becomes less dependent on seasonal peaks. and that we can be relevant to our customers also in a month following the big peak season. So with that, I'll hand over to Pernilla to take us through the financial development.

Good morning, everyone, and thank you, Christopher. I will guide you through the financials of the third quarter. To begin with, net sales were up 6% in the quarter, of which 8% relates to organic sales increase, 1% relates to our recent acquired subsidiaries, and minus 2% relates to currency effects. 6% of the increase relates to like-for-like growth, and 1% relates to expansion of the store network. Online sales grow by 17% in total, including the acquired phone life and reserved online businesses. All in all, our business-to-consumer online sales develop very good. At the same time, we still have challenges in the sparse business-to-business which is reflected in sales in other markets. For the nine-month period, total sales amounted to 9.9 billion SEK, and organic sales increase was 9%. Looking at our home markets, we had organic sales growth well above our long-term targets in all markets. In the third quarter, we are pleased with all markets, but would like to underline the development in Finland with 9% organic growth in the quarter. Also, when it comes to macro trends impacting our business, we have seen a weaker NOC and a weaker US dollar for quite some time now. The NOC has an immediate and negative impact, which is not fully compensated by more favorable purchasing in US dollar. Transportation costs remain at reasonable levels, which now is contributing to an improved gross margin, which we'll see on the next slide. Input costs are favourable right now and together with the previously mentioned transportation costs. These are the main explanations for the big improvement in gross margin by 2% to 46.8%. Currency impact was negative with weaker sales currencies partially offset by more favourable purchasing currencies. Please also note that the gross margin reflects our new reporting method, nature of expense method. which we have informed about before. When it comes to the income statement, we see a strong increase in operating profit at 659 million SEK and an EBIT margin of 16.2%, both of which we are all time high in the third quarter. The increase in personal expenses relate to higher volumes in our logistics chain, wage increases and new stores. Other external expenses also increased in the quarter, mainly due to increased investment in marketing and due to the addition of the acquired businesses. The APS for the quarter was 8.09 SEC and 16.22 SEC for the nine-month period. The inventory is slightly down compared to the same period last year. The main factors behind the well-balanced inventory were higher efficiencies, lower purchasing prices and currencies and higher sales. Cash flow for the nine-month period improved versus last year. Cash flow from operating activities totaled almost 2.1 billion SEK, an improvement from 1.9 billion SEK last year, mainly thanks to improved profits. Free cash flow for the period amounted to 1.5 billion SEK. Net debt, EBITDA, excluding RFS 16, was minus 1.3. So we maintained a strong net cash position. And with that, I'm handing back the presentation to you, Christoffer.

Thank you, Pernilla. So moving into the events after the reporting period and our February sales numbers that we also released today. So we see that the continued positive sales development continues. reporting 9% organic growth now in February. And the growth continues to be broad-based, with Norway having the highest organic growth at 11%, Sweden at 7%, and Finland at 5%. And we also see broad-based growth across our five consumer missions also in February. The store network is six stores higher in Feb versus last year. Then moving into the summary and looking at this slide that I do believe really shows the summarized Claes Olsson case. So, you know, we have a strong brand, relevant assortment, efficient omnimodel and disciplined capital allocation. Also from the trend, I think we can see that the business is structurally stronger today than it was a few years ago. And of course, we maintain the focus on being really well positioned in our product needs, thanks to the consumer missions, really focusing on the needs-driven assortment and continuously delivering high customer satisfaction, and then balancing the strength of the store network and also the profitable e-com growth. So that summarizes a little bit where we are now across the third quarter. So with that, we'll open up for Q&A.