Rusta AB (publ)

Good morning and welcome to the presentation of Rusta's third quarter results. Today presenting will be myself, Göran Westerberg, CEO of Rusta, and I'm here together with Sofie Malmunger, our CFO. As usual, we will run through the business update and explain what has happened. We will take a deeper dive together with Sofie on the financial performance, and then we will end up with both the summary and an outlook of where we think we are heading and then open up at the end for questions and answers. All right. First, starting with the business update. As usual, we'll start by looking at the store network. After all, that's the most important part of our operations. We have today 232 store locations and during the quarter we opened one new store in Finland. But there's a couple of things that have happened here that I would like to underline. One is that we once again are at an all time high when it comes to store pipeline. So we're now up to 50 signed stores that we have clear in the pipeline. So this will go a long way to support our growth targets. And because of that, we're also taking the opportunity to upgrade our guidance for store openings in the coming three years. And as you know, we've had a number of 50 to 80 stores in the coming three years rolling. And now we're upgrading for the coming three years. We're extending it basically for the coming three years from 65 to 80 new stores. And we feel very comfortable with that guidance. I would also like to underline that one of the new stores that have been signed during the latest period is one new store in Germany and I will circle back to that store location in Germany towards the end of the presentation. Looking at the results for the third quarter, which is one of our most important quarters containing, of course, Christmas, I'm really happy to share that we had good growth, 10.5% in total sales development and 6.5% like-for-like growth in our old existing stores, that is. Both of these numbers are excluding currency effects, and I think building this growth up, you could say that what it was was both more customers, more tickets, but also people buying things higher up in the price ladder, basically picking more of the high ticket items. And that also resulted in an average basket that was even higher than last Christmas. So I think this is really what you want, more people coming more often and buying more each time. So this goes, I think, again towards supporting the idea that it seems like our customers are now having a slightly better economy and they start to dare acting on that reality. And we have been really successful both when it comes to pricing and in campaigning and in the way that we have developed our range to get our customers to pick the higher ticket items. We've also seen a good gross margin development up again right now to 44.1% GM, which also went a long way to support an increased EBITDA margin of 12.5%. Mainly this was due to a better mix, better campaigning. I would say a lot of our own initiatives when it came to our range development. But in line with our earlier guidance, we've also seen during the quarter that we have a positive net effect of currencies. This is something that we've been waiting for for some time. It's the positive effect mostly for the US dollar compared to the Swedish crown. and that materialized during this quarter and we expect that to continue and increase having a successful christmas sale and black week with a number of records has also resulted in strong growth in cash flow so we had 865 million crowns in positive cash flow which is an increase of 618 million and that's of course Really good. It also results in a strong balance sheet right now. And on top of that, I also want to say that we have our inventory in balance. So we're in a good place now for the spring season. So this could mean that we sold out everything that we wanted to sell out during the Christmas season. And we're now in a good position to place the orders that we want for the coming Christmas. Looking at the accumulated numbers, we're up to 8.7% net sales growth, of which 4.5% is comparable growth, both in local currencies. We have a gross margin accumulated on 43.8% and an EBITDA margin of 9.6%. So accelerated sales, volume growth, it's not only money, this is also items. This is really important for our business model that we are increasing the number of products that we buy and sell. All growth initiatives performs well. So everything that we've done with the concept and range rollouts and so on helps to support the total growth. In total, as we've already mentioned, strong cash flow. We're now up to almost 1.5 billion Swedish crowns, which is an increase of 637 million crowns after the first nine months of the year. That means that we are net cash positive of 300 million crowns, which is an increase of 354 million compared to this similar quarter last year. Good position. And I think considering the world that we're living in today, it feels really good that we don't have any strategic depth and that we have this strong balance sheet and a net cash positive situation. It gives us confidence that we can continue to support the growth targets that we have, but also that we have the financial stability to meet the insecurity that is now, I would say, in many places around the world. Some of the key events that I would like to underline during the quarter was, of course, the Christmas sales and Black Week. We executed the Christmas, as I've already said, in a very good way, not having to sell out a lot of items towards the end. We actually had a front heavy sale and that means that a lot of the things were actually executed right according to our campaign plans. We also had a record black week. We in fact had a record black month, black week and black Friday. So part of this is of course supported the really good results. Looking at the numbers that we see, both the projections for growth in retail in general, but also the market data that is now available from other sector colleagues around the Nordics especially, our view is that we are taking market share, which is also one of our strategic goals. goals here that we really try to recruit as many new customers as possible and that we have a bigger share of wallet from each customer and i think this is exactly what is happening and we're really happy to see that We also see that the customers are trading up. That has been true now for a number of quarters and so again during this quarter. Both the number of tickets, the number of customers passing through our stores and actually buying something is increasing. But also the average ticket, when they come, they spend more money. And that in itself is driven to a large extent of people picking more expensive alternatives or things that are higher up in our price ladder. It's not only must-have items, for example, in consumables. These are also things, especially from home decorations or our seasonal offers. In line with our guidance, the positive currency effect continued to develop in a positive direction. And during Q3, this turned into a positive net effect. This is having, of course, a positive impact on our COGS, on the purchase prices, where a lot of the items that we're buying in the Far East is priced in US dollar. but also on the transport cost which is also priced in US dollar. This all supports of course our gross margin. I also want to mention that we launched online in Norway during the quarter and in general we say we had a very strong quarter when it comes to online development. A high profitability, actually a higher profitability in online as compared to our physical stores. And even if this is from a low level, you could say that it also continued to grow. So really, really good development in online. Another thing that we have highlighted for a number of quarters now is also that we seem to continue to recruit new customers into Rusta and into our low price concept. That is still true. We're now up to 6.9 million fully registered members. We are a bit surprised that this is actually continuing as we are moving up the consumer confidence curve. but it looks good and it continues to grow. And to put all of this in context, to better explain what we believe is going on in the market, I'm going to use this wave pattern that you have probably seen me use in the past. It represents a strong economy turning into a recession and then turning back into a stronger economy again. and what we expect to see and we know this from experience and history is that when we go from a stronger economy into recession being a low price concept we are also quite defensive meaning that each customer might not have as much money to spend when they come to our stores but that is largely more than offset by more customers coming into our stores and starting to shop, basically trying to save money. And that's exactly what we have seen during this recession. That's one of the reasons we believe that Club Rust has increased the number of members. That's also one of the reasons why the number of tickets have increased. But during the recession, we saw a slightly weaker average ticket. That is now changing. And that's also what we expect to see when we're climbing the curve. And our projections about one year back was that Sweden was going to be first and we hoped that Norway would follow. That's exactly what is happening now. So Sweden and Norway seems to slowly but steadily climb the curve into a stronger economy. And the behavior reflects very well what we expect to see. Basically that they are buying more, the average ticket increases. So I think that's part of what you see in the numbers here. Sweden and Norway continuing to climb the ladder towards a stronger consumer confidence. Finland and Germany has trailed behind. We can say that it's mostly we are unsecure of where Germany is when it comes to where they are in the recession. We are quite happy that we started to see some positive signs in Finland. I would be very careful in interpreting this because we know that this is a sensitive market from history. But during quarter three, we started to see some positive signs in Finland, mainly being that also those customers started to buy things higher up in the price ladder. What we did going into the important Christmas quarter, knowing this, knowing that the Finnish and German customer were more price sensitive, was that we invested some of our positive effects from efficiency and currency into those markets, basically strengthening our campaigns and lowering some of the most important prices on those markets. And what we wanted to achieve was to drive growth and to get more customers into our store and to take more market share. And we seem to have achieved exactly that. So this, I think, is part of our strategy. I think that this is what we will continue to watch very closely. So in general you could say Sweden and Norway representing slightly more than 80% of our total sales. We're quite happy with our position. We believe the customer likes what they see when they come to the Rusta store. We think we have a good price position over there. And then the less than 20% of our sales that is in Finland and Germany. Here we do think that we have some more job to do. We will continue to invest and not only defend, but actually grow our market share in those countries and in that segment. Right, I think I will hand over the word now to Sofie and then I will be back after financial performance with more insights on what is happening.

Thank you. Okay, so as Göran has showed you, Rusta had another strong quarter with increased sales and improved profit. We have a total net sales growth of 9%, currency effects had a negative impact of minus 1.5% during the quarter, so net sales growth excluding currency effects increased by 10.5%. The like-for-like growth excluding currency effects was 6.5%. And this is an effect of more customers, a higher average receipt and a movement towards higher priced segments. This confirms the strength of Rustas product range and generally improved customer purchasing power. in addition to the strong sales we have a gross margin that has increased with 0.6 percentage points which is an increase of 10.4 percent and in line with earlier guidance we now see a positive currency effect in the gross margin due to a stronger swedish crown we also have positive effects from the product mix and from lower sea freight costs than last year Our EBITDA margin is 1.6 percentage points stronger than the same quarter last year, which is an increase in EBITDA by 24.4%. The increase is due to increased sales, strength and gross margin and a lower share of operating costs. We see a strong performance in sales across all our segments, both in total and like-for-like. The numbers you see here for the sales exclude the currency effects. Similar to previous quarters, the trend remained positive in Sweden, with a strong readiness to buy among our customers, who in combination with our more powerful commercial offerings, are increasingly choosing products in higher price ranges. We see a continued year-on-year increase for the number of customers and for the average ticket value. Sales of Christmas and seasonal products performed strongly. The sales growth for Sweden was 11.5% and like for like 6.5% and the profitability increased with 1.8 percentage points to 22.3%. We also have a positive trend for Rusta in Norway and the strong growth in sales and number of customers continued. Readiness to buy is rising and customers are increasingly choosing products in higher price ranges. Sales of home decoration grew in the quarter and had driven many customers to our stores. The sales growth for Norway was 10.4% and like for like 9.2%. The profitability increased with one percentage point to 16.8%. Our third segment, other markets, consists of Finland, Germany and online. And our online sales are now available in Sweden, Finland and Norway. Sales of home decoration and DIY reported a very positive performance in this segment compared to the previous year. Net sales growth excluding currency effects was 7.2%, of which like-for-like growth excluding currency effects was 2.8%. The profitability was slightly weaker than last year due to the price investment in a market environment that remains challenging. But the price investment has yielded a clear positive sales trend. The profitability decreased with 0.3% to 3.3%. The positive profitability development in the quarter is due to an overall positive performance. As you can see, we have increased our sales compared to last year, which is primarily due to the positive sales mix, a strong price position and successful campaigns. We see more customers, increased average tickets and an overall movement towards higher price points. The gross margin is affected by lower sea freight costs, positive inventory development and finally the currency effects is now positive and growing. The operating costs as a share of sales are lower than last year with 0.8 percentage points and the lower share goes for all our segments. This is the positive outcome of the scalability in our business model together with good cost control. So to summarize, we have increased EBITDA with 1.6 percentage points in our third quarter due to an overall strong performance. And then some comments on our balance sheet and cash flow. The increase in working capital is a planned inventory build-up due to more stores. We have a healthy inventory dimension for future growth. Cash flow from operating activities increased with 618 million SEK, that is the 250% you see here in the presentation, and amounted to 865 compared to 247 million SEK last year for the quarter. The improvement was due to stronger operating profit and positive working capital compared to previous year because of lower increase in operating liabilities. Cash flow from investing activities in the quarter was higher than in the previous year mainly due to increased strategic investments. Net debt excluding IFRS 16 is negative, which means that we are cash positive with 300 million SEK compared to a net debt last year of 54 million SEK. So despite heavy investment in our warehouse and in new stores, we have a very positive cash development. All in all, we continue to have a very solid balance sheet and a stable financial position, which will support our future growth. With only one quarter left of the year, I believe it's fair to say that we are on track to deliver on our mid-term financial targets, both in sales and in profitability. And with that, I hand over to Göran.

Thank you, Sofie. Right. Then a couple of updates that I think is relevant for Rusta. One, we've had the concept rollout, as I've communicated earlier. Between week 32 and 37 last year, we rolled out a new concept, a more updated concept, where we utilized more of the space in our stores, basically put out more products in the same space. strengthen our ability to communicate and also took the opportunity to roll out some new product offers that has delivered well and according to our guidance we have talked about one and a half to two percent additional like-for-like growth of what we would otherwise have had and looking at the results so far and of course this is reflected in in q3 numbers i think this is very much in line with what we're seeing I'm happy to say that we're now moving into phase two of this project, which is scheduled now for week 14 to 16 and later on after the summer in week 36, which is going to address an additional 20% of the store area. So in more of our rooms, we will basically try to achieve the same thing, getting more goods in, present it better, communicate stronger and basically have a stronger commercial impact on our customers with those product offers. The final phase addressing the last parts of the store is planned for 2027 and we will have to return to that at a later date. But this is progressing well, it's delivering what we hoped for and we're therefore also continuing with this project. Then I promise to come back to Germany and as I mentioned the first store signed as per the updated location strategy is now done. It's going to open up in the first half of calendar year 2027. And this is now, I would say, well in line with the conclusions that we did in our analysis. We're going to continue to look for more similar store locations like this, but this is now the first one. We're also going to do some market adaptations when it comes to the store format that is going to be tested here, both in the new stores and probably in some of the existing. And not to divulge too much due to competitive reasons, we can say that it's more of products that are selling really well and a little bit less of things that are selling less well. And also to try to work with slightly more condensed store formats. We're also launching online in Germany by the end of quarter four this year. So I think that that's also one more step now, both in our online strategy, but also in our Germany strategy. So there are things happening over here and things that we're now moving forward with. Then coming back to expansion, I want to reiterate, of course, that we have updated guidance 65 to 80 stores from fiscal year 26, 27 until 28, 29. That's a three year period. To give you some more flavor on what that means, you can say that as per our earlier press releases, 13 of those stores will open during this spring. so that will happen both in the end towards the end of this fiscal year as well as the beginning of next we have the fiscal year starting from 1st of may so it will kind of be across the border of that fiscal year more than half of the pipeline of 50 stores will open between now and 1st of may 27. So that means that we're quite front heavy, front loaded in, if you will, with store openings. So we're really moving in to, I would say, record high speed when it comes to store openings. And I also want to underline that the quality of this pipeline is actually very good. If we look at the average sale when these stores mature, it is well in line and actually slightly above our current like for like stores. So these are good stores and about 40% of the stores are either in capital regions or in or around major cities. So here in Stockholm, this is in places like Lidingö and Farsta, but we also have similar locations around Oslo, Gothenburg, Helsinki and so on. So a really good quality pipeline. And how is this possible? One of the things is that we for a long time has been quite conservative when it comes to opening stores. So if we look at our peers in different markets, we generally have much fewer stores in each market compared to our peers. So part of that is of course making it possible with more addressable white space in the market. Secondly, because of generally a weak real estate market right now, it has made it possible for us to access locations that has long been on our list, but also on commercial terms that are beneficial to us. So all in all, this is the reason why we've been able to speed this up. And of course, we're also in a strong financial situation, which makes it possible for us to really invest in our own growth. Turning our eyes into the future a bit, I want to say that one of the things that has been, I think, important to us and also to you following Rusta has been the positive currency effect or the net positive effect when it will actually turn. We have guided towards the second half of this fiscal year. That has very much happened. We started to see a positive contribution during quarter three. And I'm happy to say that we are continuing to see that development during February. That is after Q3 and the beginning of Q4. And this is according to our guidance. So we feel very comfortable with what we have guided towards here. We also continued to grow in February. Sales continued to expand. Having said that, I also want to underline that February is the smallest month over the year. And in this coming quarter of February to April, April is the most important month, both in terms of sales, but also in terms of profitability. We have two really important sales periods during the year. One is around Christmas and one is of course during summer. So you could say that the last month of this quarter is the beginning of the very important summer sales for us. So far so good, but margin development and sales development right direction. Then the Iran war, Middle East crisis in general. This is early days, we don't know how this will develop or for how long we will have this situation. But so far, no direct impact on our deliveries or on our costs. Spring and summer season supply is under control. Either we already have it on stock or it's on the water and we feel confident that it will actually reach our warehouses and our stores. I also want to say that you know we are of course monitoring this very very closely and rusta has a long track record of mitigating risks and sudden events whether it has been the inflation shock or the pandemic or our it crash that we had one one and a half year back we've been very very good with agility and speed to address those things and to mitigate that and rest assured that's our ambition even here as well but let's see how this develops it's too early to tell but so far no negative impact And of course, this being my last quarterly report, we have a new CEO coming in. Katrin Wigsell will take over as CEO from 1st of June 26. And I can also say very clearly that we have a very solid plan both for induction and handover. So this is ongoing and we feel confident that we will have done a good quality handover before 1st of June. I also want to underline, and this is something that I have also got a clear message from the board of Rusta, is that the current strategy and the direction will be maintained. That means that we are continuing to be an expansive company, we want to continue to grow and invest in our own future, and we will continue to work forward in Germany. So I hope that clarifies a little bit our outlook and how we are viewing the future. And with that, I would like to open up for Q&A.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Nicholas Ekman from DNB Carnegie. Please go ahead.

Thank you very much and congratulations on very strong results this morning. Can I start with your current trading comments discussing this continued strength and particularly your comments about currency tailwinds in the start of Q4. And the reason for asking is that last year Q4 had the strongest sales growth and margin improvement. So I'm just wondering how confident you are given the strong momentum you see now in Q2 and Q3 that that can continue despite the much tougher comparisons from the year before.

Right. So, yeah, of course, it's an important but also difficult question. As I said, we're quite back-end heavy, if you will, in this quarter. Q4 is roughly 40% of our total sales and an even bigger share of the profitability during the quarter. I would say when it comes to profitability, as you say, with margin and so on of the things, I would say that it's likely that we will continue the positive development here. We've had continued growth in February. That's of course positive. And I think considering that we're meeting tougher comps, we're happy with what we've seen so far. But the game is really what is happening in April. And part of that is, of course, also weather. We are quite weather dependent in the Nordics. This is about summer items. So it's hard to with confidence say that we're going to reach exactly the same level of growth that we have seen now during Q2 and Q3. But I would say so far, so good. And at least if I look at some of the things that we have noted during Q3 and that we know about the future, one, we have the stock in place. And that's, of course, very important because otherwise it's very difficult to reach our positive sales. And two, it seems now that for at least four or five quarters we've had a development with the customers in Sweden and Norway, which constitutes slightly more than 80% of our sales, that it continues to be resilient, slowly but surely moving up the ladder. So is it possible? Yes. Are we completely secure about that? No. So I think that this is I think it's a relevant question, but it's but it's really very difficult to answer at this point.

Fair enough and a good answer. Thanks. On the topic here, you've seen good momentum in Sweden and Norway. Finland is still lagging behind. I noticed that in your store pipeline, you now have 14 stores planned for Finland. A year ago, you only had two contracts. So I'm curious, how confident are you of success for these new stores? Is there a risk that the profitability of these stores could be significantly lower? And can you also say something about the typical contracts Are the store contracts here for at least 10, 15 years? Or do you take shorter contracts for Finland and Germany?

So, there were multiple questions. But if we put it this way, that first of all, yes, absolutely. We know that we have been, you know, we've had too few stores both in Norway and in Finland. And part of that is we're trying to address that. We're increasing our footprint. We see that we're recruiting customers. We also see that now we see both in Norway and Finland that we have a similar behavior that people are expanding their purchases into other categories than just must have consumables. That's positive. I think you have a relevant point when it comes to Finland. Now we have taken a big chunk of stores in Finland. So we can say that you can assume that we will not continue at that same pace when it comes to signing new contracts in Finland in particular. So slightly lower inflow there, and that's not because we see fewer opportunities there in terms of free locations. It's more that we want to make sure that we can kind of consolidate the development in those stores and drive profitability. So that's really our thinking on that. And did you have another question in?

On average, store contracts, how many years? Are you locked in for at least three years?

Right, right, right. So you can say that in Germany, we're operating on slightly shorter contracts for that reason. I don't think we have 15 years. No, we don't have any of those there. And in Finland, I think it's similar. Yeah, yeah.

Here, online launches in Norway and upcoming in Germany as well. Can you give an update on roughly the online share of sales for the group? I know it's a low number, but any update here if anything has happened since the IPO?

Right. So you could say it's been low single digit for some time. It's been between 1% and 2%. Right now in the shorter term, of course, having added Norway, now adding Germany and so on, we see a higher growth in those. So it will probably grow as part of the total sales. However, the physical stores are also growing as a share. So I think it will continue to be lower single digits for the coming probably two to three years. But it is growing. It's going to be really interesting to see now what happens when we have online on all our markets. That, of course, is going to be a step change. Norway was a step change, and hopefully Germany will after a while also be some sort of a smaller step, but some sort of a step change as well. So run rate might take us above 2%. Let's see.

And also important to add is that the profitability for our online sales are higher than in our stores. So it's contributing very positive to the overall profitability.

Very clear. Thank you so much. And thank you, Göran, for all your years at Terusta. Congratulations for ending on a high note here.

Thank you, Niklas.

The next question comes from Daniel Schmidt from Danske Bank. Please go ahead.

Yes, good morning, Göran and Sofie. A couple of questions from me. Göran, or maybe Sofie, could you break down a little bit the gross margin difference year over year? That was 60 basis points up, and you have been very clear that FX impacted positively. And you also talk about well executed campaigns and then you had transportation costs being lower, but at the same time you did have investments in price in Finland and the German market. Do you have any details on that to start with?

Yeah, sure. You could say that when it comes to pricing, the overall effect is about zero. It's neutral. But just as we have described, we have price invested in some of the markets, but on a total level, it's neutral. The mix effect is very positive. We're selling items that are higher up in the price ladder. We have a positive sea freight cost compared to last year. Purchase prices are slightly higher compared to last year. We do have a positive effect from the Asia purchases, but the European goods are still slightly higher than last year in our Q3, where we sell quite a high share of consumables, chocolates and so on. And then the currency effects, just as we have said, it's positive with 0.2 percentage points in the total gross margin for the quarter. So I would say that those are the main steps in the increase of 0.6 percentage points.

Yeah, okay, good. And you also talk about sort of that you're not completely done with investments in price when it comes to Finland and Germany for maybe the coming one or two, three quarters. But if you just look at the coming quarter, would you still think that price will be neutral for you as a group, even if you would do these investments in these two markets again?

If I understand, if you look at the net positive effect from currencies compared to the price investments that we plan to do, that's your question then?

Yeah, I was coming to that. Looking at the sort of coming quarters, maybe you're going to be price neutral even if you do those investments in Finland and Germany, but at the same time, you've seen the Norwegian krona kick back up again quite a bit in the past five weeks. I would say maybe that combined would make the situation even better than it was in Q3.

Right. So I can answer part at least of it. And I think that our ambition certainly, and that's also why I wanted to share how we view the different markets. You know, 80% or just over 80% Sweden, Norway, quite happy with where we are. We don't think that we will have any major investment shifts over there. Always some tactical issues, of course, but, you know, quite minor. Finland, Germany, another story. We think we keep an open mind too that it might be necessary to support sales there with investments. However, that is not something that will rock the overall development that the net effect won't cover of the currencies. So we plan for continued margin expansion. But we will utilize part of that, of course, to recruit customers and to drive volume, which is always the name of the game in low price and certainly at Rusta.

And of course, depending on, I guess we're depending quite a lot in the very short term on April, of course, as you mentioned, and we don't know anything about that yet. But given what you said now, which makes sense to me at least, especially given that you also said that you feel that you can reach your immediate targets this year. Yes, there are two months left to be had, which one of them is quite important, so we'll see. But to me, that sounds like you need to accelerate the gross margin expansion a bit, or maybe get even more efficient on the OPEC side. Am I getting anything wrong here in your sort of if we combine your statements?

No, I think it's a good analysis. I mean, what we said that we are on the path towards our financial targets where we have sales total sales that should be around 8% like for like above three and profitability around eight. So that's what we're aiming for.

Yeah. Okay, cool, good. Then maybe just a nitty-gritty question on Germany. You said you will open up online. I understood it was going to be quite soon before we reach the end of Q4. Are you planning to serve that market online-wise, also from Norrköping, or do you have other plans? How would you view that in terms of profitability, given that it's quite far away?

Yes, to begin with, we will do that. I think that's only natural in the first step to start by doing that. Longer term, of course, we have to look at alternatives. But for now, everything that we do is centered around Norrköping when it comes to physical stores, but also with online distribution.

And then you also, coming back to those investments that you've done in terms of price, and I think you mentioned in the report that you are fairly happy with the outcome of those investments. Does that mostly relate to the Finnish market, or is that also true for the German market? And what is it you've seen that makes you sort of optimistic when it comes to these investments?

Well, if you're referring to, for example, the conceptual investments that we're doing, I think that's part of what is generating the results that you have seen during Q3. I mean, we had the full effect of that during Q3 and partly also during Q2. So I think that goes some way to explain the development that we've had, and that's why we also have appetite for more. Other investments that we're doing is, of course, the things that we're doing in Norrköping in automation and so on as well. And I think on the back of the growth that we're having, I mean, whenever you do automation, volume and growth is key. And since we now enjoy a higher level of growth and we also have a record high pipeline of new stores. Again, I think that goes some way to support our assumptions for automation in Norrköping. So I think that has been, how should I say, visible in other cases, how important volume growth is. And since we have now a higher growth rate, a bigger pipeline that we even expected or hoped for, I think that that supports our assumptions and our guidance for the investments in Norrköping. So I think all in all the things that we're doing, I think it looks good from our horizon.

Yeah, but I agree. But finally, maybe coming back to the balance sheet, and it's been quite strong for a long time, but now it's even a little bit stronger. and you have a dividend policy of 30 to 50 percent, then you have a lot to do still when it comes to building your franchise in the Nordics and in Germany long term. So clearly it's good to have a strong balance sheet, but do you think it's necessary to have a net cash position?

No, not necessarily. Of course, I think the important thing is to have a strong balance sheet and to have, let's say, financial freedom. I think history has taught us that that is much better if you're in an insecure world. Then it's, of course, debatable if you need it at this level. I think this is something that we are going to discuss internally. But right now, if we ask ourselves the questions, can we afford to do all the things that we want to do? Yes, absolutely. And I think that feels really, really good. And we also have, as you can see, and which is obvious, some margin to do that as well. How we're going to use this I think is ultimately a question also for both the board and of course the annual meeting later on.

That was good, I just wanted your opinion on it. Thanks and like Niklas said also it's been great working with you and I wish you all luck in the future and Yeah, I think I stopped there. It's been a good journey.

Thank you, Daniel.

The next question comes from Andreas Lundberg from SEB. Please go ahead.

Thank you so much and good morning. If I start with cat specs, given the store expansion agenda here coming three years, what are the cat specs we look for in the next three years? That's my first question.

Well, we are usually somewhere around 2% in capex. Now it will slightly increase, of course, due to both the optimization that we are finalizing in the warehouse, but also opening of all the new stores. However, the capex is quite limited when we are opening a new store. It's an average of 5 million sec per store. And as you can see with our strong balance sheet, we can open many stores. So it will increase and probably somewhere closer to 3%. But that will also differ between the quarter and the financial year, depending on exactly when we are opening the stores.

On the 2% usual figure, how much of that is maintain tenants capex?

That's very, very low.

It's less than one, perhaps. yes yeah at the lower end of uh of one percent okay cool and then switching to working capital uh inventory imbalance how do you see that over the coming years and the reason to believe it should change materially or more you're going along with sales or what do you think

I think, just as we said, we have a very healthy inventory at the moment. We sold out most of the Christmas items, so we're very free to buy new for the next seasons. But we are well stocked for the coming openings and in general have a healthy inventory. I see if you if you compare to last year, you can see that it's a slight increase compared to last year, but I would say that we're more dimension now for what we're going to do in store openings going forward.

But in relation to your business or in essays, do you think you are at a good level now from a percentage point of view?

I'm not sure I understood the question.

So you think about stock turnover and so on or efficiency? Yeah. So I think we are. I mean, roughly. We're usually somewhere between 2.5 to 3. But it's very different depending on what part of the range we're talking about. Of course, we have a much higher stock turnover when it comes to consumables, which is natural. The suppliers are closer, it's faster moving goods and so on. But then in the other end of the spectrum, we have seasonal items that we buy far away and we only sell once per year. And that, of course, is considerably driving down the stock turnover. So I think all of that considered, I would say, You know, three or just under three, judging on, I would say, history and experience, I would say it's pretty much where we're quite healthy. You know, much higher frequency than that, I think, increases the risk quite a lot to kind of miss sales. And too low than that, it will be too inefficient. So somewhere around that, with the very wide range with very big part of seasonality in that business. I think that's a pretty good place to be.

Cool. And finally, on Club Rusta, close to 7 million members, big loyalty program versus peers. I guess you have great first-party data then. And the question is, how are you using this data to drive your business? I mean, be it a sort competition, you know, campaigns personalized and so forth. Can you help me understand?

I think, you know, we're not doing something that is considerably different than anybody else. Of course, one of the big reasons to have a loyalty program, I mean, this is a campaign driven business. And traditionally that has been distributing flyers to millions of households, which is slow, which is you know expensive and insecure and also more and more difficult when people don't want mail in you know mail junk mail in their in their in their in their mailbox and also we don't get any kind of data so i think the reason why we are driving our loyalty program is basically efficiency It's faster, it's cheaper, we get data, and we can also individually steer our messages. And I would say the last thing here is one of the parts where we're using the data that we have, the 600 million or so transactions that we have in our systems, where we of course can utilize, like we have learned that other people are doing there as well. you know if you buy such a thing that means that you know probably also interested of another and so on and so forth so i think that it's all of those so to say usual methods and tools that we're utilizing here okay cool thank you so much that concludes my question right thank you very much there are no questions at this time so i hand the conference back to the speakers for any closing comments Right, so good. Thank you very much. The next report will be for quarter four and for the full year report will be on June 9th later this year. And that will be with our new CEO. So I would like to thank all of you for these years. It's been really fantastic. And I'm sure that Rusta will continue to grow under new leadership. So really happy about that. So thank you very much and see you elsewhere.

Thank you.