Clas Ohlson AB (publ)

Good morning and welcome to the Claes Ohlson Q1 report presentation. My name is Kristoffer Johnström and I'm CEO and I'm here together with Pernilla Walfridsson, CFO. Looking at today's agenda, we'll cover the general business update, move into financial development, go through events after the reporting period and then I'll summarize before we will move into a Q&A. So, first of all, highlighting the first quarter of 26-27. We have had a strong start to our new year. We continue to grow. We grow profitably and we also continue to create value. Looking at total sales organically, we were up 11% and our operating profit amounted to 339 million, resulting in an operating margin of 12%. and a profit increase of approximately a bit more than 40% versus last year. Operating cash flow came in at 663 and return on capital employed came in at 34.9. So all in all, this is resulting into a earnings per share of 475 versus 327 last year. Today we also reported August which is then the start to our second quarter and here we saw a 8% organic growth. Then moving into the business update and starting with our financial targets that we updated back in June when we had our capital markets day. The ambition is to, over the next three years, every year, to grow at 5% organically every year, deliver around 12% operating margin, and around 30% return on capital employed. And these targets, they define the level of performance that we believe Klas Ohlson should be able to sustain over time. They are not a forecast for a year or quarter, and it's certainly not a ceiling. And our ambition is not simply to reach the targets. It's really to prove that strong growth, profitability and efficiency can coexist over several years. Next area is just an overview of our competitive strengths. And I think the results coming out of the first quarter is really driven by those strengths and the combination. of first of all our assortment where we do have our multi niche assortment that we reinvent at a very high degree every year and in the first quarter we saw lots of new products being launched while we of course have really focused also on the core assortment. We have our integrated omnichannel with our store network at attractive and accessible locations combined with a strong growing and profitable ecom business. And those two in combination really drives customer convenience and also it drives profitable growth. And then the last area is when it comes to the customer meeting. Of course, the ambition is to always deliver qualified service across the board. And we could see in the quarter that we had an MPS of 56, which is really continued strong levels. And then as a foundation of everything, we have our strong brand where we do have a very broad appeal across multiple target audiences. And as one example of recent product launches and big bets that we have gone after now in the first quarter, I think the robotic lawn owners assortment is a good example. Here we have scaled up the business from five to 12 different brands and we have seen really strong sales growth. We also see a range ranging from very affordable private label products on robotic loom owners up to the most premium A brands. And I think that combination really gives customers the opportunity to find the right product according to their need and wallet. Also looking at the online business, the online sales growth organically was 18% in the quarter and our online sales now represents 22% of total sales. And again, I think it's a good example of the robotic loom owners. Most of that assortment has only been available online and obviously also then been a driver of the sales growth. Then moving into the some of the key indicators that we constantly track and look at when it comes to customer relevance and satisfaction, starting with product reviews. We do get a lot of reviews from our customers when it comes to their satisfaction with our products, quality, etc. And we can see also this quarter that we continue to deliver on very solid levels. Second, We also deliver when it comes to affordability. We're not pushing growth at the expense of the customer experience. However, we are able to deliver a strong affordability versus customer expectations. And then last but not least, when it comes to the service and the customer experience, again, net promoter score coming in at 56. So we're basically growing because customers continue to find relevant products. at great value and with best in class service. So last point from my end outlining also our consumer emissions. We did a few adjustments to these categories as we presented our future plan during the capital markets day in June. And as we can see on the slide, you have the five consumer missions, and they are all growing profitably now during the last quarter. So it's the breadth of that growth that is important. And then we have the adjacent product segments and spare parts contributing to both growth and profitability. So with that, I'll hand over to Pernilla to take us through the financial development.

Thanks, Kristoffer, and good morning, everyone. Just like Kristoffer mentioned, we have closed a strong Q1, and now let's take a closer look at the figures. The sales momentum continues and net sales were up 16% in the quarter, up with 11% related to organic sales increase, 3% related to recently acquired subsidiaries and currency effect 2%. Like-for-like growth accounted for 9% of growth in the quarter and 1% related to expansion of the store network. Online sales grew by 35% in total, of which acquisition stood for 15%. Compared to the end of Q1 last year, we have increased the store network by 9 stores. Looking at the home markets, we saw great performance throughout the quarter, with strong organic growth across the board. Sweden grew by 11%, Norway 10%, and Finland 9% organically. The macro environment is still volatile. We said during the Q4 report presentation that we expected freight costs to increase, and as we can see, sport prices for transportation from Asia to Europe has increased sharply in recent months. We see no impact from the increase in the first quarter, but there should be effects starting in Q3-Q4. Regarding currencies, we mentioned the negative effect of currency hedging in the report, and the background is visible here on the slide with the rapid and significant strengthen of the NOC versus the SEC. The flip side is obviously the positive impact on total sales as we have a large share of our sales in Norway. Regarding currency hedging, we have decided to discontinue currency hedging as from now. After thorough analysis, we assess that it does not create sufficient long-term value. Hedging has primarily shifted the timing of the impact rather than removing the underlying exposure. With more efficient pricing practice, a higher proportion of ecom sales and a strong financial position, we believe that short-term currency risk can be managed without forward hedging. The last forward hedging will mature in Q4 26-27. With regards to purchasing prices, the maintained relatively low level of US dollar versus SEC continues to help us during the quarter. The gross margin increased by 1.8 percentage points in the quarter up to 47.5%. Key explanations are the currency effect that I mentioned earlier, both the strong Enoch and the weaker USD, and also that we have been able to get more favourable purchasing prices from our suppliers. And then over to the income statement. Operating profit increased to 393 million SEK compared to 278 million SEK a year ago. Operating margin landed at 12%. The increase in personal expenses is just as in the last quarters related to higher volume in our logistic chain, wage increases, new stores and acquired businesses. Also other external expenses follow the same pattern as in Q4 with higher cost related to increased investment in marketing and due to the addition of the acquired businesses. The APS for the quarter was 4.75 sec. The inventory is slightly up compared with the same period last year. We are content with the stock in trade and the slightly increase should be seen in the light of new stores, increased assortment and adding acquired businesses since last year. Cash flow from operating activities totaled 663 million SEK compared to 468 million SEK last year. mainly thanks to improved profit and improved working capital. Free cash flow for the period amounted to 363 million SEK. Return on capital employed was at the end of Q1, 34.9%. And with that, I'm handing back the presentation to you, Kristoffer.

Thank you, Pernilla. Moving into the events after the reporting period. Today we also reported our sales for August. and saw an 8% organic growth totaling sales at 1.1 billion, a bit more than 1.1 billion. 3% comes from acquisitions, 3% from currency effects. So all in all, the total sales was up 13%. And again, we could see a fairly broad development with both Sweden and Norway growing at 8% organically and Finland at 7%. Also other markets grew at 9% organically. So net-net, fairly solid across the countries. And also as recent months, we saw a broad development across the five consumer missions. Look at store network in August this year versus last. We were up by nine stores. So we now have a store network of 250 stores. Then summarizing, looking ahead, we see a continued clear path to continued growth and value creation. We believe that we are well positioned in our large and growing product niches represented via the five consumer missions. The addressable market is 350 billion kronas, which means we're still fairly small in relation to that potential. We are focusing a lot on the niche driven assortment and with a very high degree of assortment renewal, which is a key driver of constant relevance, but also customer satisfaction. Then we have the central, our store locations and the store network, which is very available to our customers, combined with our full-scale e-comm and also effective marketing. So NetNet, I think we've seen over the last few years now a solid development and the ambition is of course now to continue to deliver on these levels also over the next few years. So looking at the plan ahead that we also talked a little bit more in detail about during the capital markets day. I think the key point is that we do have multiple levers to pull when it comes to continue driving this profitable sales growth moving forward. It's not that we have one silver bullet or one big bet that has to materialize. It's really about the constant hard work to work across our assortment of brand and our customer meeting then supported by a strong foundation of operational efficiency and then also selective M&A that can really help us evolve. So with that we will now open up for questions.