Rusta AB (publ)

Good morning, and thank you for joining us today. My name is Katrin Wigsell, and I'm the new CEO of Rusta. And it's great to be here together with our CFO, Sofie Malmunger, for the presentation of Rusta's year-end report 2526. I've just joined the organization and it's full speed ahead from the start. And I can already say that this is truly a fantastic company and organization. And I look forward to continue driving Rustas expansion in the low price market. Today, however, we are here to present the fourth quarter and the full financial year 25-26. I'm going to start with an update on the business and highlights from the fourth quarter and the financial year. Sophie will then take you through the financial performance in more detail and we will conclude with some reflections on the outlook ahead before we open up for questions. All right, starting with the business update. Rusta delivered a solid fourth quarter with sales growth across all segments and improved profitability. We saw increased customer traffic and higher average tickets in all segments, despite tough comparables with strong summer sales in April last year. We continued the rollout of our updated store concept, which improves efficiency and drive sales, supporting our like-for-like growth. We opened up eight stores in total during the quarter, which is the highest quarterly pace ever. And we now have 41 stores in the pipeline. And I'm going to come back to this a bit later in the presentation. We managed to reach break-even in the fourth quarter. This means that all four quarters in the financial year were profitable for the first time since Rusta was founded. And finally, the board proposes a higher dividend of 1.8 SEK per share up from 1.45 SEK last year, which corresponds to 50% of net profit for the year and is at the upper range of our dividend policy. Going into more detail on the fourth quarter, we continue to see solid sales growth of 5.8% and a like for like growth of 2.1%. Both figures are year on year and excluding currency effects. Norway saw the strongest performance in the quarter, and Sofie, you will come back to this later in the presentation. We welcomed more customers to our stores and the average ticket increased in all segments. We did a soft launch of Rusta online in Germany in the end of the fourth quarter, testing systems, order flows and logistics. And this now means that we offer Rusta's e-commerce in all of our markets. If we turn to our margins, we managed to increase our gross margin by 1.4 percentage points to 42.3%. This was supported by a positive mix effect and also FX tailwind, which I know that Sofie has guided before in these presentations. Again, it's worth noting that we managed to avoid a loss on EBITDA level for the first time in Rusta's history. Turning to the full year, 25-26, as you can see in the figures to the right, last year was a solid year. We met tough comparables, but we are growing sales both in total and like for like, and our EBITDA margin reached 7.6%. We added in total 14 new stores during the year, and we've also added an additional four stores since the financial year ended. During the year, we also opened our bonded warehouse, which increases efficiency in the value chain and also strengthens our gross margin. We improved our cash flow from operating activities with an increase of 540 million SEK, reaching approximately 1.7 billion for the full year. Earnings per share increased by 15.5% to 3.6 SEK. Coming back to the store network expansion during the quarter, our big pipeline is now starting to materialize. We've been working in record pace with several exciting openings in line with our strategic priorities. During the spring, we opened a new store in Lidingö and I had the opportunity to attend this store opening personally, and it was a great and really reassuring experience with a lot of happy customers. Lidingö is located near the inner city in Stockholm and it represents a new type of location, Forusta, close to the city location. And this type of close to the city location remains untapped Forusta to a large extent. And we see a lot of potential with these types of location in our future expansion. The picture in the middle is from the opening of our first ever inner city location in Helsinki, Finland. We are so excited to be reaching the inner city customers in Helsinki and it also represents a very important step to further strengthen brand awareness of rusta in the Finnish market. And lastly, our store opening on Åland. We've had interest from Åland locally to establish a store there for quite some time now, and we've been warmly welcomed since the opening in April. So if we take a closer look at the store network and our expansion plans, as I just mentioned, we're expanding in record pace and we now have 243 stores in total. The pipeline of signed and approved locations is at 41 as of today. And we are confident with our guidance of 65 to 80 stores in the coming three year period. We have high expansion pace right now, as you know, and we see that our expansion potential grows as our brand strength and recognition increases in our markets. This makes it possible to open up stores in smaller cities than before and the pace is supported by a softer real estate market which makes it possible for us to access new locations on beneficial commercial terms. Our strong financial position also enables us to act strategically but as always our bar of entry remains high. I'd also like to mention the quality of the pipeline, which is very good and well in line with the average quality of our current like-for-like stores. A large share of the stores are either in capital regions or in or around major cities, including Stockholm, Oslo, Gothenburg and Helsinki. So the pipeline is strong. A milestone that we have reached, highlighted also before, is the 7 million members in Klub Ruste, which was reached in the fourth quarter. This demonstrates a strong underlying trend where we continue to recruit new customers into Ruste and into the low-price segment. Clubrusta members shop more frequently and they also spend more per purchase than customers who are not members of the loyalty program. And Clubrusta also provides us with insights and help us to understand our customers even better with several hundred million transactions to date. Great. I'm now going to hand over the word to Sofie to go through our financial performance in more detail.

Thank you, Catherine. As Catherine has just showed you, Rusta delivered a solid fourth quarter with profitable growth across all segments, despite tough comparables and a later seasonal start. We have a total net sales growth of 4.9%. Excluding currency effects, sales increased by 5.8%. And like for like growth, excluding currency effects was 2.1%. The growth is driven by more customers and a higher average ticket across all segments. This is achieved despite strong comparables from last year and a later start of the spring season due to colder weather in April this year. Gross profit increased with 8.7% and the gross margin improved by 1.4 percentage points to 42.3%. This was driven by a favorable product mix, positive FX effects and efficiencies in our supply chain compared to last year, including efficiencies from the bonded warehouse implementation. As a reminder, the fourth quarter is seasonally our smallest quarter, but this year EBITDA improved to a break-even. As Catherine mentioned earlier, this means that all quarters for Rusta last year were profitable for the first time ever, a clear proof point of the scalability and resilience of our business model. If we move to the full year, we can summarize a strong performance with both growth and improved profitability. Net sales increased with 768 million SEK to 12.6 billion SEK, corresponding to a growth of 6.5% or 8% excluding currency effects. Like for light growth, excluding currency effects was 5%, showing continued strong development in our existing stores. Gross profit increased by 7.5% and gross margin strengthened to 43.5%. EBITDA increased by 11.7% to 953 million SEK corresponding to an EBITDA margin of 7.6%. This means that we have increased our EBITDA with 100 million SEK compared to last year. So overall, we have delivered a year with accelerated growth, improved profitability, and with the growth and profitability in line with our mid-term financial targets. Looking at the segments for the quarter, we see continued growth across all segments, although with different dynamics. Starting with Sweden, net sales increased by 4.2% and like-for-like growth of 0.9%. Despite strong comparables, we see a stable development with increasing customer traffic and improved conversion, and profitability strengthened with an EBITDA margin of 15.8%, up from 13.7% last year. In Norway, we saw the strongest performance in the quarter. Net sales growth excluding currency effects was 9% and like-for-like growth was 7.8%. Profitability also improved with an EBITDA margin increasing to 3.9% compared to 3.6% last year. Customer sentiment remained positive during the quarter with customers increasingly purchasing higher ticket items. We also saw an earlier start of customers buying summer items in Norway compared to the other markets. In our segment other markets, we continue to see solid total growth driven by expansion and a growing online business, with net sales growth of 6.9%, excluding currency effects. Like for like was negative at minus 1.2%, reflecting a strong comparable last year when the summer season started earlier due to warm weather in April. In the fourth quarter last year, other markets grew 16.5% in total and 8.5% like-for-like, excluding currency effects. Profitability is below last year, with an EBIT margin decrease of 2.1 percentage points in Q4. This is a direct result of our strategy to invest in price and in market position in markets where we are still building scale. It's also impacted by a weaker euro. Overall, we continue to drive growth and expansion in other markets, prioritizing long-term market share and scale over short-term profitability. Across the group, we continue to deliver growth despite very strong comparables, with strong and improving profitability in our core markets, while progressively building scale and market position in other markets. For the full year, we see a consistent picture across our segments. In Sweden, net sales increased by 8.8% and like-for-like growth was 4.3%. Profitability strengthened further with an EBITDA margin of 19.1%, up from 18% last year. We continue to see strong customer demand in Sweden, which is our largest segment. In Norway, net sales growth excluding currency effects was 9.7% and like-for-like growth was 6.8%. The EBITDA margin increased to 11.3% compared to 11.1% last year. We are pleased that Rusta continues to grow strongly in the Norwegian market with an increased profitability despite currency headwinds throughout the year. In other markets, net sales growth excluding currency effects was 4%, while like-for-like growth was minus 0.6%. The difference is explained by continued expansion, particularly in Finland, as well as a growing online business. For the full year, we are impacted by both a strong comparable with an early summer season last year and a later start this year. We also see negative currency effects from a weaker euro. Profitability decreased to an EBITDA margin of 0.1% compared to 1.2% last year. This reflects continued investment in store expansions, price positioning and market development in these markets, as well as some one-off effects from new store openings. At the same time, our KPIs clearly indicate that we are strengthening our position and continue to take market share. Overall, we continue to build scale and strengthen our long-term profitability potential in other markets. Across the group, we see strong and profitable growth in our two largest segments, while continuing to build scale and long-term profitability in our newer markets. If we look at the profitability drivers, they are very consistent with what we have communicated before. In the quarter, the improvement is driven by a favorable sales mix with a higher share of home decoration, Positive cost effects in the supply chain where our bonded warehouse is a good example of how we have improved the cost efficiency. An FX tailwind supporting the gross margin. The positive effect of a lower dollar is now affecting our gross margin in line with our previous guidance. For the full year, profitability is supported by higher sales volumes, strong price position and successful campaigns, and continued scalability in our business model. At the same time, the currency had a total negative impact for the full year, mainly due to weaker sales currencies in NOC and Euro, but we still managed to increase both the gross and the EBITDA margin for the full year. Overall, this clearly illustrates the strength of our business model, where growth translates into improved profit and profitability. Turning to cash flow and balance sheet, cash flow from operating activities increased to approximately 1.7 billion SEK for the full year, driven by stronger operating profits and a disciplined working capital management despite continued expansion. This is an increase with 540 million SEK compared to last year. Networking capital is in line with last year, despite our record high expansion with new store openings. The small increase is due to a planned inventory build-up to support our growth. At the same time, we maintain a very strong financial position. Net debt excluding IFRS 16 is negative, meaning that we have a cash position of 160 million SEK when we end our financial year. So despite continued investments in new store and in supply chain, we have strengthened both the cash flow and the balance sheet and continue to have a strong financial position. Looking at our financial targets, we can conclude that we deliver in line with our mid-term ambitions. We deliver around 8%, excluding currency effects. We have a like-for-like growth that is above 3%, and we have an EBITDA margin of 7.6%, moving towards the target of around 8%. And importantly, earnings per share continue to grow faster than both sales and EBITDA, which confirms the scalability of our business model. Finally, the board proposes a dividend of 1.80 SEK per share, up from 1.45 SEK last year. This corresponds to approximately 50% of net profit, which is at the upper end of our dividend policy. We consider this a message of strength. It reflects our strong financial position with a solid balance sheet and no long-term bank loans. And it shows our ability to both invest in future growth and return capital to our shareholders. And with that, I hand over to Catherine.

Thank you, Sophie. A few words on the outlook before we move over to the Q&A session. On a general level, I'd like to underline that Rustas strategy remains unchanged. As CEO, my focus will be on driving expansion, which means increasing sales in existing stores and online, as well as opening up new stores. And there is a lot of potential to reach even more customers through expansion and also to drive like-for-like growth through an even more attractive assortment and continuous concept improvements. We will continue to invest in the future, prioritize price leadership and keeping costs down through constant improvements of our value chain. When it comes to the situation in the Middle East from a Rusta perspective, we are seeing no direct impact in our income statement so far, and the summer season supply is under control. This is still a highly developing situation, but Rusta has a long track record of mitigating risks and sudden events. Finishing off by looking at current trading, we see a stable sales development with continued gross margin growth in Q1. And with that, I would like to open up for the Q&A session.