Rusta AB (publ)

Good morning and warm welcome to Rustas first quarterly report as a listed company and also of course a very special welcome to all of you new shareholders big and small that have now invested in this company and of course all other interested parties. Today, we will present the second quarter in our fiscal year that runs from May until April. So that means that it's the August to October numbers that we will be presenting. And my name is Göran Westerberg. I am the CEO of Rusta and I've been with the company since 2011 and the CEO since 2012. And I will present the numbers together with Sofie Malmunger, our CFO, who's been with the company since 2014. All right. The agenda today will be first a business update that will also include a little bit of the background of the company, just since we're new at the market and we want to reiterate a little bit how we're functioning. Then we will have a deep dive into the financial performance, which Sofie will take us through. And then we will have a very short summary and then open up for the Q&A. So jumping into the business update. First of all, Rusta is a non-food Nordic discount champion. The vision is to make Rusta the leading and most trusted low price retailer in Europe. So there's a clear growth ambition. We do believe that this concept has a place in Europe. So there's really a growth is really at the core of the company. To our help to achieve this, we have an integrated and really efficient value chain. So we don't produce anything, but all the way from sourcing all the way out to our stores, we control the value chain. We have no franchisees since we don't have any strategic depth. We have no covenants. We're basically free and strong to implement whatever strategy that we see fit. We have a very well invested platform. We have a state of the art distribution central. We have really well invested stores. We have a single concept that we rolled out in our different markets because we believe simplicity and conformity in that way is the way to profitability, to really do it simple and do it the same way. By the end of second quarter, we had 205 stores across our four markets, Sweden, Norway, Finland and Germany. But we still believe there's significant white space to grow. On the right hand side of the slide, you can see that we have about 150 identified locations, which we deem to be tier one locations, things that we have as priority one locations in those current markets where we would like to open stores. We expect the store rollout to continue at approximately the same pace that we've had in the past years. So somewhere around 40 to 60 stores for the coming three years. By the end of last quarter, we had 22 signed approved stores that are to be opened during that time period, which is, I would say, quite normal. Three of those stores have already been open since the end of the quarter as well. So this is, I would say, a very normal mix. We have 110 stores in Sweden, 45 in Norway, and 50 in total in Finland and Germany. Taking, if we zoom out a little bit and look at the history of Rusta, which was incepted in 1986, we have enjoyed, I would say, a very, very long stretch of profitable growth. And as you can see, we have lived through all sorts of different challenges during these years. Here are some of them. But I'm, I would say, really, really happy about the concept, the way that we're working. It seems that even if the markets are very different from time to time, the low prices, the wide range, the single concept seems to be very strong almost no matter what happens in the market. The strategy to continue to grow with this profitability is, I would say, quite simple. Not easy to do, but it is a simple strategy and it contains basically, let's say, four important legs, if you like. One, of course, and that's the most important thing, to really maintain the low price position. And here we're not talking about perception, we're not talking about just general value for money. It's about actual price leadership, actually making the customer saving money on comparable items. That's super important for us and we really try to deliver that. That's the job that we do on the market to actually save money for the customers. And we do that with a very wide range. So we try to fulfill as many different functions for the customer as possible. And that is, of course, taking down the risk because there's always something that the customers need. So even if one product category is maybe having a little bit more of a headwind, we have strong development in other areas. This is very much also an organic case. This is not primarily about acquisitions, even though we don't rule that out. But the main strategy for us is to continue to open up our own stores under our own brand with the same concept, but more importantly, so drive traffic to our old stores. So like for like is really the key to retailing. That's where you build profitability. That's where you get the economy of scale. So that's really at the core of what we're trying to do. What we do with this is also we try to create this growth by volume growth, selling more items because this creates economy of scale and that's the thing that we try to use to further increase efficiency across the value chain. Buying more makes us basically stronger on the purchase market. We are more attractive as a buyer in the sourcing market, but it also improves the scale effect throughout our value chain. We also intend to continue our low risk network expansion. We're not aiming to inflate the number of stores without control, rather we're trying to open stores with quality where we know that there's a very high likelihood of getting to profitability quickly. So rather fewer with quality than many without control. That's how we have built the success so far and that's how we intend to continue. Now having said that, if we move into the quarterly numbers, I'm really happy of course to see that this strategy continues to provide us with the results we like to see and also sets the stage I think for continued success. In Q2 we had a total growth of 14.4% and I think one of the most important things that's maybe not visible immediately is that this growth is primarily volume driven. It means this is not primarily price effects which I've seen a lot of in the market. But like in Q1, in Q2 we also see that volume is a significant driver, actually so much so that the single biggest driver for growth is volume. We also have a very solid like-for-like number, plus 10.8%. We'll come back to the exact definition of like-for-like, but I would say that we have a very conservative way of measuring like-for-like. This does not include online, it doesn't include stores that haven't been open for at least one full financial year, and so on. But Sofie will take us through the details of that. We have an adjusted EBITDA that have been growing plus 119.1%. And so, yeah, in short, it means that we have more than doubled our EBITDA since last quarter. Now, taking all of this down to the first half of the year, we have a growth of 12.9%. A like for like of plus 8.5%, which I also think is a strong number, especially in this market. And a total EBITDA growth that is adjusted plus 62.1%. And the only adjustments is for IPO costs during the quarter. Right. Couple of things that I would like to highlight during the quarter. One is the continued store expansions to basically to connect back to our strategy. During the quarter we opened three stores, one in Sweden, one in Norway and one in Finland. And after the quarter, we have also opened three more stores, two of those in Norway and one in Germany, reaching a total of 10 stores now in Germany. And I think this is also quite normal. We usually have two windows during the year when we open up stores and not to disturb the peak sales during Christmas and summer. This tends to be during early spring and during autumn before Christmas sales. The like-for-like volume growth, again that volume was the major contributor to our sales growth in Q2 and also on a comparable level it was like-for-like growth that really drove that increase. I think that's significant because it basically provides the ground for continued profitable growth. That will give us the tools that we need on the purchase market, on the sourcing market, but also throughout our value chain to further improve efficiency and set the scene for continued profitability. Another thing that I would like to highlight is, I think as you've probably seen in the retail arena overall, that low price concepts have generally been winners, that people are moving into this segment and the whole segment is growing. We've seen that, we've seen that we have had more customers coming into our stores. And one very clear receipt, if we zoom out a bit and look at the bigger picture, is our loyalty program. We had at the end of quarter two, 5.3 million fully registered Club Rustam members. That's an increase of 700,000 new members in the loyalty program so that's a significant shift and I think that says something about the stickiness and it also provides I would say a good ground for continued growth that people are are entering the loyalty program it also provides the possibility for us to to further improve our marketing efficiency because we now have contact we have the you know the email addresses and we can reach them we get customer data and so on so that's also I think a very good sign for the future. And then of course the IPO during the last quarter that's something that you're very well aware of but my point is that I'm really happy about achieving such a good result that we've done during Q2 when so much energy has been spent on the IPO. That's not something that one should forget. You're all aware of the IPO, but you're also very well aware of how much energy that tends to take from a company. But I'm really proud of the company and all our co-workers that have achieved these results while we have spent so much energy on the IPO. All right. I will hand over to Sofie, who will tell us a little bit more about the financial performance of Rustam.

Yes. As Jaran has showed you, Rusta has a strong second quarter with increased sales and improved profit. We have a total sales growth of 14.4% and a like-for-like growth of 10.8%. And this is an effect of both more customers and a higher average receipt. The strong growth shows that customers are turning to the segment that we operate in and that Rusta has a good position. Regarding the like-for-like growth, just as Göran said, we would like to highlight that we have a conservative and quite strict way of measuring. It's only for our stores, so no online sales are included, and each store has to have been open a full financial year to be classified as like-for-like. In addition to the strong sales, we have a gross margin that has increased with 2.9 percentage points, which is then 211 million SEK higher compared to last year. We have also an adjusted EBITDA that is 2.7 percentage points stronger, and this is an increase with 119.1%. A short summary of the Q2 is that Rusta continues to do very well and for the half year we see an adjusted EBITDA of 468 million SEK compared to 289 million SEK last year. Rusta's operations are affected by seasonal variations, and since this is our first public report, we would like to guide you a bit on those. To start with, Rusta has a financial year that stretches from May till April, which then gives us a slightly different split when we talk about quarters. So Q1 and Q3, which is then May till July and November to January, are generally our strongest quarters in terms of sales and profit. And this is mainly driven by the summer and Christmas seasons. Q2 and Q4 are generally our smaller quarters. And today we are presenting Q2. We see a strong performance across all our markets, both in net sales growth and in profit. The numbers you see here for sales are excluding currency effects. So our largest market, Sweden, and second largest market, Norway, has a sales growth of 11.2 and 13.8%, and the like-for-like growth in Sweden of 10% and 8.6 in Norway. Our third segment are the markets that consist of Finland, Germany and online. These markets are still relatively new for Usta but it increases with 18.1% in sales and has a like-for-like growth of 7.7%. This is of course a very positive development and a sign that our efforts in these markets are going well. All segments are profitable with an increased EBITDA margin and I would like to extra highlight the 5.5 percentage points increase for other markets. Our profitability continues to increase, and looking at our adjusted EBITDA and breaking it down a bit for Q2, we can see some clear profit drivers during the quarter. It's a clear volume growth or volume increase, both in total and like-for-like sales, just as Göran has described. We have continued to optimize our prices, but the price optimization has been done carefully and in a way not to jeopardize our price position. The share of volume increase is higher than the share of price optimization. in the total sales increase. In the gross profit we also see positive effects of lower shipping costs. This was a positive effect already in Q1 and it has continued during the second quarter. We also see positive campaign effects where we continue to drive traffic to our stores but with a lower margin dilution effect compared to last year. So our gross margin, we can see that in our gross margin, we are on our way back to a normalised gross margin, which for Rusta historically has been somewhere between 44 and 45%. The operating expenses, OPEX, are decreasing as a share of net sales, which is made possible by the scalability in our business model, where increased sales does not generate the same amount of increased costs. So to summarize the EBITDA development, we can see that despite inflation and the cost for 12 new stores compared to last year, we have managed to increase the adjusted EBITDA margin with 2.7 percentage points, which is a great achievement. And then some comments on our balance sheet and cash flow. We have continued to work actively with the working capital. Our inventory has decreased with 11%, which is a mixed effect of lower value and less pieces. Lower shipping costs is one of the drivers, but it's also lower purchase prices. We see price improvements from Asia in particular, and this is further margin improvement to come and has not yet been realized in the margin. Thanks to the improved profit and positive change in working capital, we have a very limited use of our overdraft facility, and the net debt excluding IFRS 16 is 91% lower compared to last year. All this gives us a positive effect and a positive development in the cash flow, and the cash flow from operating activities increases with 99% compared to last year. Just as we have some seasonal variations in our sales and profit, we also see it in the balance sheet and in the cash flow. So the inventory buildup is generally somewhat larger in Q2, which together with the fact that sales are lower in the second quarter means that we use the overdraft facility to a greater extent during Q2. And this goes for the fourth quarter as well. But as you can see, this year in Q2, we have a very positive development compared to last year. And then regarding our financial targets, we are committed and feel confident to deliver on our financial targets, both when it comes to net sales growth, to profitability and to stick to our dividend policy. And with that, I hand back to Göran.

Right, so just to summarize then, another quarter of profitable growth, double digit sales growth and also an accelerating like for like growth, primarily volume driven, which I believe is a really good sign for the future. Also a good increase in profitability. And now on the first half year, we are at adjusted EBITDA of 468 million crowns, which I think is a good solid number going forward. So I think this is, I think it's been a good quarter. And as Sophie said, I think we feel comfortable with reaching our goals. So with that, I think we're opening up for Q&A.

If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Gustav Hagius from SEB. Please go ahead.

Thank you for taking my question. Congrats on a good start. I have a few questions, if I may. Starting on your comment on volume there, Joran, What I heard you say was that it was the single biggest driver to sales, but you didn't say it was the majority of sales, but you also said it was the main driver to like-for-like. Should we interpret this as this volume being slightly less than a 14.4% total growth, but it's more than half of the 10.8% like-for-like growth? Is that a logical conclusion from those comments?

I can say, if you go back to during Q1, we said that we had a balanced effect between volume and other drivers for growth. And the difference now during Q2 is that in total growth, volume is the main driver. So it's a significant share, and it's more than half on the total growth.

Is there a mixed component that is relevant as well, or are the main drivers to the lack for lack?

There is also some mixed components and that has to do with I would say a slightly more confident consumer that has started to buy higher ticket value items. So we also see that average ticket value has increased.

Thanks. And on the gross margin then, Is there a sense, to get a sense of, so gross margins are up obviously from price, but also lower procurement costs and freight costs, if I interpret you correctly. But I also interpret it as there's some more to go as the full effect of lower sort of market prices on those aspects has not fully been reflected in this quarter's sales, but to some extent it's reflected in your inventory then. If you did not have that latency, if the gross margin actually reflected current conditions, could you get a sense of how big that uplift would have been in that theoretical scenario?

I think that what we can comment on is, as we described, we can see in the inventory value that the value is lower and that is a mixed effect of lower shipping costs and price improvements. And of course, this is still in the balance sheet and has not come to the profit and loss yet. So that is a further improvement to come. And we see it in orders. We see it in the delivered goods. What's important to say is that these drivers are not, I mean, we are not dependent on further price optimization. It's other areas that are improving our gross profit or gross margin.

The gross margin was 43.6. I think in the IPO you referenced 44 to 45 percent as a target or a level that you would feel comfortable with long term. Would you say that that sort of level where you're trending at the moment, given current market conditions, but it will take some time or are you above that?

Yeah, I would say we're not there yet, but we are on our way to the 44, 45 percent.

And I would also like to add to that, also be aware that that can differ a little bit during different quarters. So it's a little bit dangerous to talk about one quarter and then compare that to the full year gross margin. So I think you need a little bit of a longer time span to relate to the 44 to 45. But as we said, we're comfortable with reaching the targets. Gross margin is a very important component in this. in reaching those targets, and we do see a positive trend here.

It's a positive memento in the first half year.

Two quick follow-ups. Firstly, the membership growth then, 16%, 700,000 new members, quite impressive. But it does follow a general trend where loyalty programmes have come more into vogue, I guess, on a broad scale. Do you have any sense or view internally how big of a share of these 700,000 new members are actually new or rather new customers and to what extent is it sort of converting existing customer base into that loyalty program?

That's of course not possible to answer because they're not into the system until they have applied so we can't compare that but I think it's a bit of both and I think it's both on the back of people getting more loyal. Maybe you have dipped your toes as a customer to Rusta. Maybe you come once or twice a year. But over this period that you've seen that, no, this is a place for me to go. But also combined with newcomers. For example, when we opened up a new store in a new area. So I think that this is a mix. But the overall trend is quite clear that the loyalty program really continues to attract significant numbers. And we also know that on average, a loyalty program member is much more profitable and tends to come much more often and also tends to buy more each time. So recruiting them into the loyalty program, I think, bodes well for the future.

Okay, and final for me, a note so that in the other markets, you swing from negative 24 to plus 32. EBIT A excluding IFRS is this are you are you now sort of firmly in the black there or is there a is this a strong season for for other markets and if you could give some granularity on sort of what's driving it is it less costs returning to the turnaround in Finland online price makes like for like that'd be helpful thanks so maybe if I start a little bit here you can say that

We have chosen to report now in three segments and one of those are combined with online Germany and Finland because they're not mature markets, it's still very much developing. One of the things that you can say regarding that segment is that a good result in that segment is not possible without a good result in Finland. I think that's safe to say since Finland is quite dominant in that segment. Also, again, this is one of the quarters. It's not one of our bigger, more important quarters. So I think to conclude on where that segment is heading, I think we need to have a little bit of a longer time span. But again, I think in broader terms, in general direction, I think we like what we see during Q2. And I think we again see that as one of the important parts primarily long-term to reach our financial goals.

Yeah, I could just add regarding if there's a difference between the segments. The sentiment and the sales pattern that we see are very similar in all segments.

Okay, thanks. Sofia, thank you so much for taking my questions. Thank you very much.

The next question comes from Nicholas Ekman from Carnegie. Please go ahead.

Thank you. A couple of questions from my end as well here. Firstly, can you say anything about current trading? You mentioned here in the written results, you talk about a very strong end to Q2 and a strong start of Christmas sales. And given that we are more than halfway through Q3 now, Can you give any granularity? Are you seeing any similar momentum to what you've seen here in the strong Q2? Or any flavor here would be appreciated. Thanks.

Well, we could, but we won't, Niklas. I'm sorry. But I think what I can say is that Christmas is one of our most important seasons. And the early start of the Christmas season is towards the end of Q2, towards the end of October. That's when we're rolling out all of the... Christmas items and so on but also in other areas in the store. I mean it's everything from home furnishing and so on. All areas within the store are affected by Christmas sales. And historically, we can say that the strong start of any season, whether it's summer or Christmas, is usually a very good signal for how the rest of the season will continue. A strong start takes down the risk that you will have things that you have to sell out with really deep campaigns towards the end of the season. it means that you usually get better mix in the basket, that you get sold more at the prices that you actually intended from the beginning. So I think what we can see in Q2 is a positive signal for the season as a whole.

That's very clear. Thank you. And also turning to other here, and we talked about this here before, but Can you give any indication here on the difference between Germany and Finland? Is there a material difference in sales per store and profitability between those two markets?

Well, what we can say is that Finland, we have come further in Finland. That much we can say. Of course, we have a higher penetration of the market. We have more stores. It's a bigger momentum. So we're a little bit ahead of the curve there, both because of the way that it was started, where we acquired a chain over there with experience and so on. So we got really a running start. And that, of course, has continued that momentum. Whereas in... In Germany, we're smaller, first of all, compared to the other markets because we only have 10 stores there, but it's also compared to a much larger market. So I think they have, you know, maybe, how should I say, they're different parameters, but we like what we see, that much I can say, that they have... Different timelines, they have different challenges. We are attacking that in, I would say, the adapted way for the market conditions in those markets. But we like what we see. We think that Germany is progressing as per what we have expected and also Finland as well.

Very good. Thank you. And on a similar topic there, when you talk about expansion, the contract that you've signed seems to be very much due towards Sweden and Norway and less so in Finland and Germany. Is that a deliberate move here? Are you pacing yourself a little bit in those two markets and waiting for momentum to pick up on a like-for-like basis? Or can you just talk a little bit about the strategy there? Yeah, so

First of all, the biggest strategy has always been to go a little bit slower, a little bit more carefully in Germany. We knew that it's a big challenge. It's something that you really have to have respect for. So already at the outset of that project, we said that we're going to go slow. We're going to learn. We're going to adapt. and so on and that's what we're continuing to do so I don't see any massive number of stores being an open there but more you know very systematically step by step implementing new learnings into the new stores in terms of locations neighbors flow, pricing, marketing, all of those things, so that we continue to learn in that. We will see, I would say, a majority of store openings outside of Sweden. So that means that I think Norway and Finland will continue to be drivers in potential. But having said that, there is still potential in Sweden. What happens though is that it's always easier to find the right locations if it's like the first 10 or 20. But when you already have, like in Sweden, 110 stores to find another 20 or 30, you can find locations where you would like to be. But for those stores to open up or those locations to open up, that happens when it happens. So I think it's more you know a statistical thing so to say that they happen when they happen and it's less likely that you will find a big cluster of new stores at the same time in Sweden. Sweden will continue to feed into the pool of new stores but at a slightly lower pace and which is, I think, entirely natural. Most of the growth when it comes to new stores will take place outside of Sweden going forward. However, we will continue to be careful in Germany.

Very clear. Thank you so much. And just a final question. If you can talk a little bit about the path towards your 8% margin target. I mean, you've taken a massive step now, both in Q1 and then even more so here in Q2. But what What do you see driving the margin further from here? What would be the main driver? Would it be price input cost gap closing further or rather efficiency and economies of scale? How do you see that mix in terms of getting to this target?

Yes, I think we'll both have our take on this from different directions. But I can say overall, I mean, we've been through strange times now with heavy inflation and so on, which has impacted, I think, the whole retail industry and, of course, much larger parts of society than that. And I think for many it's been possible to raise prices and customers have still come. I don't think that's a good idea in the long run, especially not for a low price chain. So that's not something that we're relying on. And that's also why I'm so happy about that. We're back to, I would say, old fashioned retail handicraft, which is really about campaigning in an efficient way, making sure that customers are visiting your stores, but not giving away too much margin. It's about having a significant like for like growth. And it's having that built up by more customers and more volume of items, which in turn gives economy of scales, sets the scene for better negotiation power with suppliers and so on. So I think the latter part of that is really at the core of our strategy going forward. What things will look like after Christmas I think is very open. I mean, we usually talk about January, at least in this part of the world, being the poorest month of the year. And I think what's different this year is that it's probably the poorest month of the decade, if not longer. So I think it's very much an open case here of where pricing and so on will continue. We do see that inflation is continuing up. That means prices are continuing up. but how the market pressure will will will pan out we don't know so therefore uh we rely more on i would say old-fashioned retailing really being uh you know active with campaigns with marketing with mix and with purchasing and efficiency that's where that's that's what we rely on

Yeah, I think you covered it all, but of course, there's always a short-term perspective and a long-term perspective. And what Göran mentioned is it goes for both, but what we can see in the short term is, I mean, it's the shipping costs that I mentioned, it's the price reduction from Asia in particular. Of course, there's a negative effect in cost due to inflation, but that has been taken into account in our business planning. And then you have the forex, which is to be seen what happens. So what we can foresee in the close future is an increased margin based on these things.

Super, that's very clear. Thank you so much for taking my question.

next question comes from simon aas from dnb markets please go ahead good morning guys and congratulations on a very strong quarter so i'll just follow up on the pricing side um so could you just elaborate or tell us a bit about how the market is moving do they still raise prices and do you believe that you still have a The lower prices compared to your competitors, you previously talked about somewhere between 20 and 25%. Do you think you still have this edge or have you closed that gap in some ways? That's my first question.

Right. So I think first of all, if you look in the rear view mirror and looking at what's happening on the market, I do believe that there has been continued to be price increases on the market. I think that's quite clear. I also think that the inflation numbers that have come out, even though they are on a lower level compared to the peak, they're still at a very high level. And that, of course, indicates and I think is evidence that prices are going up. So I think over the year, we, like many others, have had to adjust our pricing to our customer to some extent. We've been very careful about that, but we have done it. So we, of course, eaten probably some of that space, but also at the same time, it has been refilled because of the continued price increases. Exactly where we are right now in a comparative way, We don't have a new study on that and I think that has to be done on a full year. But of course, internally, this is really something that we work systematically with and we've done for quite some time. Where we see there is that on the things that customers are comparing, which are important, which are high volume and so on, we maintain a significant distance. And that's really important. That's really at the core of our customer promise. So that's, I would say, it's still there. Where we'll go tomorrow, that's going back to the question that Niklas has. That's a little bit unclear. We're not counting on that being, I would say, a big source for margining strengthening. But that's more back to, I would say, old-fashioned, real hard retail work.

Okay, that's very clear. And then to touch about a bit on Germany again. So in the report, you said that this is an increasingly important market and it was a part where investors were a bit skeptical about how you should reach and when you should reach profitability here. Can you just update us on how many stores in this market is profitable now? And do you have any timeline on when do you expect to be breakeven here?

So we have a total of 10 stores. The last one was, you know, just recently opened. And in terms of like for like, the first six like for like stores are profitable. That means that they're contributing to our profitability, net profitability overall. And there nothing has changed because we haven't got any more like for like stores into the master. That will then probably change next year. And as I said, I think this has been a long-term plan. We have, I think, estimated before that we think that a total timeline for that is around 10 years, and we've been there since 2017. So I think, you know, if you do the math, That's somewhere where we believe that it's possible for us to have a breakeven on a country level, right? And also on top of that, we can say that to do that, we need a critical mass in terms of number of stores. And 10 stores, I would say, is a tad too few stores to also reach that. So we need to add on a couple of more stores.

I can just add that if you compare to Norway, we became profitable the fourth financial year, but we then had 16 stores. And I mean, Germany is obviously a larger market. And that's why we say it will take a bit longer and probably a few more stores than in Norway before breakeven.

Yeah, okay. And then one final for me. So Europe has recently won the case on its option to acquire Erbe. It's not decided whether they will exercise that option, but given that Erbe have been very weak in the Swedish market over the past couple of years, do you believe this will change the competitive landscape in Sweden, given that Europe has been so successful in Norway, if they were to implement, you know, their strategy in the Erbe concept in Sweden?

Well, I don't, first of all, not immediately. I think that whatever, I mean, it depends, first of all, what they depend, depends on what they intend to do with OBE, which I think is, you know, unclear at this point. At least I don't have any information about it. But I would say that we haven't had any problem meeting EOB in Sweden. And I think we've also enjoyed significant growth and also had fantastic development in Norway meeting Europe is there on that local market. So I don't see any immediate shifts in strategy and so on for us. We'll have to wait and watch and see what's going to happen. going to happen but otherwise I would say again if I zoom out a little bit and I look a little bit around us in especially in the Nordics I think we have a different idea on how we are crossing borders and how we're expanding our retail business compared to our peers. We believe very much in having a single concept, one brand, one range, really efficient and to export that same Rusta concept across borders. And from what I've seen from other retailers, it's different channels, it's different brands, it's different concepts and it's different management and so on. So I think there are two very different strategies meeting here. Having said that, I think we're right now in the Nordics in a place where the whole low price sector is actually growing. So it's entirely possible for many concepts to be successful where we are right now. We're only three to four percent market share as low price in the Nordic sector. as compared to, you know, 9% in Germany and in the US. So I think we're still in the beginning of a long runway. I think there's still, you know, place. I think it's entirely possible for many, as I say, retail chains in the low price sector to continue to grow. It's not a zero sum game, but we have different strategies. So I think in the long run, we might see some differences of what is successful or not.

Okay. Thank you for that, Göran and Sofie. That's very clear. And I wish you a Merry Christmas when that time comes. And I'll speak to you soon.

Thank you. Same to you.

Thank you. You too.

The next question comes from Artu Heikura from Indias. Please go ahead.

Hello, it's Arttu Heikura from Inderes. Thank you for your presentation and congrats on a great result. There is still some uncertainty among the Nordic consumers, so how do you see the current state of a typical rust customer?

Well, I think we have a slightly different perception, knowing that we live in one of the ends of the retail spectrum that seems to fare comparatively well in this market. We do see that we have a consumer that is more attracted, for example, to campaigns and sellouts and low prices compared to before. We also see that the mix in the consumer basket is more tuned towards the lower end of the price spectrum and so on. That has been true, I think, for quite some time now. However, I see a growing self-confidence among our customers We have an average ticket value that has gone up. We saw it already during the summer and it has continued during the autumn. A consumer that kind of slowly climbs in the price ladder. They're buying slightly more expensive items at a higher margin. I think we have also been better in adjusting campaigns for the climate right now, knowing exactly what people are looking for and how to make that efficient. So I think I would say a growing confidence from what we see in our numbers and also a continued inflow of customers because of a general interest and perhaps also an acceptance of low price destinations such as Rusta as a place to go also for people that have generally not been a target customer meaning that we have people far up in the middle class now entering the stores and starting to become frequent customers.

Before you mentioned that ACM purchase prices have declined somewhat. Then you mentioned also that there is some price pressure on the end prices. I'm just wondering if there is some decline in the ACM prices. Have you been able to lower some Asian product prices for your end customers?

So if I perceive your question correctly, I would say On the purchase market and on the sourcing market over in Asia, yes, prices have been coming down and they have been coming down for quite some time. But there's also a delay in that because that doesn't show up on our gross margin until we bought it, it's entered our stores and we've sold it. So therefore, there's usually a stretch from six to 12 months before you really start to see it in our bottom line. I think when it comes to pricing, I think what we are focusing on is the relative price position as compared to our competitors and the rest of the market. It's not so that we always have a set gross margin that we apply in our products. We always make sure that on important comparable items, which we know are important to many customers, that we have a price leadership on those. So, it's not automatic that we have, so to say, reduced prices on Asian sourced items, even though we might have on some items, but then we have done it because of market conditions. Okay, thank you.

Go ahead. Okay. Then finally, could you elaborate on the factors that you measure and ways how do you approach a selection of a new store location? Do you see that you do something differently compared to your peers or something like that?

I think there's a couple of things that stands out perhaps in the way that we're attacking new store locations. One is that we try to be as similar as possible. We don't have many different store concepts, like super big and small and so on. We try to stay as close as possible. to the store size, about 2,000 square meters, that we have the same range offer, the same pricing in all of our stores, you know, depending on country then, of course, but also that we don't have any franchisees and so on. So I think it's kind of, you know, a very standardized format for how we operate our stores, and we try to be as same as possible, because that is giving us the economy of scale. That's one thing. The second thing is that over time we have learned a lot since we have that single concept that has enabled us to learn very much in which locations, which neighbors, what kind of marketing, how the traffic is moving and so on. We have a quite elaborate financial model which we utilize when we're evaluating stores. So we've never had to close any store in the history of Rusta because of that reason. In Sweden and Norway, which are our most mature markets, 100% of our comparable stores are profitable. Usually a new store turns to profitability in around one year. So I think it's proof that we have I would say quite an advanced and solid model for how to evaluate new stores. And that's also perhaps one of the reasons why the number of stores might not be that impressive, but the stores that we open, we open them with quality and with a high likeliness of profitability.

Okay, that's all from me. Thank you.

Thank you very much. Thank you.

There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Thank you very much for listening and once again welcome to all new shareholders at Rusta. It's been a pleasure to present the results and also to take your questions. I also already now welcome you to the next quarterly report which will take place the 14th of March next year which will present of course the very important Christmas sales. And until then, I wish you a very Merry Christmas and a Happy New Year. Thank you very much from our side.

Thank you.