Rugvista Group AB (publ)

introduction and good morning everyone nice to see so many of you here for this call uh this is our quarter three call and also my first as ceo for uh ragvista my name is ebba jungerud and i have our cfo joachim turner with me here by my side so we will have three parts to this uh call today first a business update then we will go through the financials which you will do joachim And then last, but of course not least, we have a Q&A. So to kick it off, let's go straight into the business update. So the market climate. The consumer sentiment, we feel, has improved slightly during the quarter. Germany continues to be very tough, and as you know, that's a big market for us. But the Nordics especially look a little bit better. We don't necessarily see so much change in the purchasing structure or purchasing patterns yet, but we still see this as a positive sign for the future. But it also means that we need to be quite flexible in following the markets where they develop and where we invest in marketing spend, et cetera, to match the customer. So if we look here, you can see the customer confidence. It has improved slightly, especially in Sweden, which is the top one. And France is keeping at least stable a little bit up. But Germany, as you see, is still very, very low. So that's not a huge change from the last quarter. We also, as I said, we have price conscious consumers and we also see this because they tend to trade down. So basically what that means is when they come in on our site through an ad or through an email, we see a tendency to enter on one price point and then trade down slightly in what they decide to buy. Moving over to our net revenue in the quarter, it was quite affected by AOV, which means average order value. Our net revenue was almost 145 million, and that's compared to 160 million lost Q3. That's a 9.3% drop versus last year. And the organic net revenue was also negative on minus 7.1. The average order value went from almost 3,200 to 2,950. So that's an almost 7% drop from last year. So this is of course a very driving part in the drop in net revenue. As I wrote in the report, we're very aware that this is a drop that we need to stop. uh we have been really good at driving orders and we have also when we are very good at driving new customers but we can't fully make up for the drop in aov only through that so we need to work a bit more structurally on the aov going forward and that will definitely be a focus area for us um Then if we move over to the order count, the growth in 2023 was very high compared to 2022. So this year we actually dropped compared to last year, 5.3%. We totaled on 68,000 orders. But if you compare it to Q3 2022, it was actually up 36% this year. So it just proves that we have fairly tough comparables from the last quarter. And when we look at new customers, we had almost 50,000 new customers in Q3 this year, which is a drop of 8% versus last year. and then you have seen this slide before in the presentations this is the first chart to the left describes our assortment and you can see that there is a if you look at the very light gray bar in the bottom you see that there is a slight increase in the absolutely lowest cost segment but we are fairly stable if we look at the whole the whole offering so so the drop when we talk about the drop in net revenue comes more not so much from what we have offered but more from the drop in order and also the average order value and of course as i said we will focus a lot on average order value going forward which also means that we will look at the customer journeys on site and how we how we present our assortment Then if we move over to the EBIT, that was affected by one of costs. We have a very stable gross margin over time, and this is something that we balance. So it's on a good level to cover all our costs, but it's also not pushed too high to have a too expensive offering out to the customer. our marketing efficiency improved by two percent which is very good especially for this quarter and that really comes from from three factors the marketing percentage tend to fluctuate over time but we have seen a drop if you look at the rolling 12 for some time. First of all, we are working a little bit differently with our channel mix. If you look at the sessions for this quarter, you see that the sessions on site, so the numbers of sessions on the site have gone up quite a lot. That's partly because we have focused on pushing higher up in the funnel, basically means that we get more customers in. The conversion drops a little bit, but bottom line, it looks better. And we also, and this you've heard about before, but we have since we switched the site more than a year ago, we have worked very consistently with organic growth and SEO, and that continues to help us. And last but not least, we are working much more actively with our customer base today to communicate with everyone and give them great offers. And that also helps with the marketing percentage. Looking at the EBIT itself, it was 9 million compared to 18.6 last year, and this is 6.2%. There is a one-off cost in this, which has to do with Michael, our former CEO, leaving the company. So that has affected the result. And if we look forward, we do have a very strong balance sheet and that gives us opportunity to drive our strategic agenda. The first thing is, of course, that we are now in the middle of Q4, which is our peak season. So we did spend time and also, of course, money and investing in our inventory. So we have a great offering to the customers when they come onto site. And then you have heard about our office and warehouse move. This is progressing well. It's a very big project for us and it's a very important project for us. This is, of course, for us to enable future growth. It will require investments. So that's also why it's important that we have a strong balance sheet. And last but not least from this is, of course, that we continue to focus on our customers. We are, I would almost say, customer obsessed in Ragvista and having come in and now working every day and operationally in the company, it is so true. And I really like this about the company that people talk about the customer, we focus on the customer. And just to show you a little bit what that means in reality is we measure both NPS, which means Net Promoter Score, and we measure Trustpilot for every single customer who makes a purchase. And the Net Promoter Score goes from minus 100 to plus 100. We have consistently been over 60. 62 was the number for... for Q3, which is an excellent net promoter score, I must say. We're very, very proud of this. And Trustpilot, the same. Trustpilot goes from zero to five, and we were on 4.7 in Q3, and this is also very, very strong. So that, of course, doesn't mean that we relax. It means that we continue to work on our offer in terms of qualitative and beautiful rugs. And also that we continue to work on site and all the way from the first touch points in our marketing to make sure that we have good customer journeys and really funnel the customer to the exact rug that they are looking for. So with that, I hand over to you Joakim.

Thank you, Ebba. So like Eb earlier mentioned here, we had a very good quarter in the prior year with high comparables with plus 43% in order growth. And we got another plus 10% in net revenue due to the weak Swedish currency in a positive currency impact. And subtracting then the drop in average order, we had a 25% growth in net revenue in prior year. So I think we need to bear that in mind when we look at the sales performance for this quarter. Net revenue declined by 7.2% organically, that is excluding the currency impact, and 9.3% including the currency impact. Our largest segment, B2C, is down by 9.2%. B2B, though, is down by 17%, whereas we sold quite well to the trade partners, but we dropped in the smaller business segments, which more tend to follow the B2C. MPO, which is mainly Amazon and our smallest segment, is up by 38.4, driven by new campaign types. And in the table to the right, you can see the regional development in our B2C segments. DACH dropped by 18.3% with high comparables. Nordics continue to perform better with a slight growth of 0.3, especially Sweden standing out on the positive side. And the rest of the world, which is mainly then the rest of Europe, we decreased by 10.5 percentage points. So I move on to the next page and the gross margins.

Great.