Synsam AB (publ)

Yes, the summer is nearing its end and I am here with Håkan Lundstedt, CEO of Synsam. How has the summer been?

The summer has been very good.

Yes, lovely to hear.

But now it's nice to be back.

Absolutely. And you are back with news, because you have released your quarterly report for Q2 this morning. And when we were here last time when you released your Q1 report, you had a result that you described as strong and stable. How has it gone during Q2?

Q2 has gone very, very well. It is very happy that we have improved all the marginals and that we have increased on all markets. It feels incredibly good to be able to be part of delivering such a quarter.

You even delivered a record result if you read the figures. The turnover increased by 10% and the EBITDA result by 26%. How did that come about now that you hear that the consumers are holding pretty tight in the stock market out there?

Of course, the market has not been strong. The joy is that we have been able to take market shares. We have continued to develop our customer service. The lifestyle subscription has continued to go well. We see that we are increasing both new customers and those who choose to remain in the model, which is exciting. We have also worked hard to improve the efficiency in our stores. So it's not just new stores that which is behind our success, but we work a lot with what we have. Move stores, make the stores more efficient, create an even better availability for consumers. And we have succeeded well with that during Q2.

You mentioned that you continue to open new stores. How will it be that you get profitability when you hear that others are rather pulling down on their number of stores? Yes, that's what it is. We open in smaller places.

Those places we have a very high brand awareness of before we open. Because they may have gone to another city or in some cases they have not had the opportunity to go to Synsam. So it makes it very, very easy to get full in our booking books. Which is very positive. At the same time, we have to work with capacity. To constantly increase capacity so that we can receive all customers. And at the same time, as I said, it is a beneficial situation that when we establish ourselves on smaller sites, the rental levels are on a completely different level than in the big cities. Yes, and even the customers there have been visible during the period, probably for many years, but have not had the opportunity to trade with us. So that's actually the reason why we get profitability very quickly in our new stores.

We're going to switch to English for this part. Sometimes it's a little hard for us Swedes to understand Danish. Hello Tina, can you hear us?

Yes, hello, I'm here.

Okay, nice to have you here. How has the second quarter been for Synsam in Denmark?

I think from an overall perspective we have seen a positive trend for Q2. We now see growth in Denmark again and we have been working very hard according to our plan and strategy and with a lot of dedication and concrete actions to secure these positive numbers. An example of that is, for example, our hardworking employees who has been working with the customer journey to create the right customer experience and secure the right and the best solution for each customer. So I'm so proud of our dedicated employees in Denmark.

There has been some challenges on the Danish market in the past. Can you perhaps give us a brief background to what has happened and what you've done?

Yeah, I think looking back, one of the biggest challenges has been the change into the credit law last year in July in Denmark. This change has forced us to make some changes in the market, and we have in that matter introduced, for example, the lifestyle cash agreement, which have all the same benefits for all of our customers.

So can you explain what that means, the cash part of it?

Yeah, that is the lifestyle agreement as we have today. But you can pay in cash upfront if you want, or you could pay on a monthly basis. But the change in the credit law forced us to secure that we also had other possibilities for our customers to pay for this agreement.

I understand. So you're giving the customers more option when it comes to the payments. Exactly. Yes. So finally then, what are you looking forward to now for the rest of the year?

We have a lot of exciting plans for second half. For example, we are upgrading our store network these days to larger stores and with a wider assortment, which will provide even more value to our customers. So a lot of different things on the table going forward.

Okay. Thank you, Tina.

Thank you.

Okay, I turn to you again, Håkan. Tina in Denmark sounded positive. Do you have any comments on what Tina said? The challenging time for you in Denmark seems to be over, if you listen to it.

I think we have a positive momentum now in Denmark, and I think that feels very good. We now have the opportunity to implement the strategy we have for the entire company, also in Denmark, as Tina has mentioned. Better assortment, slightly larger stores. It has been a bit of a structural problem. We don't have a problem with the number of stores in Denmark being too few. It's more about how they are structured. They are relatively smaller than the stores in the rest of the countries and we are correcting that now. Now we have a positive momentum in Denmark and we will just continue to work on that. Tina and her team are doing a very good job.

Because you mentioned that in the beginning, that now you show positive numbers in Denmark. You didn't do that a quarter before. Organic growth of about 2%.

Yes, and then also that we have a nice profit development also in Denmark. a good level in Denmark when it comes to profit margin. Not all Swedish retailers succeed in the way we do in Denmark. Now we also have a positive development there and we will continue to do so. Great!

Tina was also talking about the changes you have made in Denmark regarding your subscription model and that you have created more opportunities for customers to pay in different ways. Your subscription model, as she mentioned, is called Lifestyle and it has existed for approximately eight years. in focus for a number of writing companies in Sweden during the spring, and there have been reports that customers have experienced an uncertainty about the conditions for the service. Would you like to comment on that?

Absolutely, and we really want satisfied customers, so we improve all the parts that we have had a point of view on. That's how it is, and we develop the model all the time so that it fits more. We upgrade the model all the time. The communication around the subscription is also clarified. We really do everything to make the customers feel safe with it. I also want to point out that a lot of people are satisfied with their subscription and think it's fantastic that when the vision changes, a free glass change is included in the model. When you spend quite a lot of money for content, for the glass eye, it becomes a an unexpected cost, but in the subscription model, we are distributing the cost over a longer period of time. Even if you would lose your glasses, an insurance is included, so you get a few new ones. So there are many, many positive things in the subscription model that many, many customers also think is one of the reasons for being in this model. It is the whole safety package. And that may not have really come up. But when we do our customer surveys, there are several of these parts that come up. And that's important. But at the same time, we want to develop all the time and we can get better. And we will do that.

I thought it was interesting when we talked earlier that you mentioned that even those who choose to end their subscription still continue to be cash customers with you.

Yes, and it's important to point out that it's not that they leave it invisible, but they can pause the subscription model and they have been with it for a few years. But we also see customers who have been cash customers for one or two years who come back again to the subscription. that they automatically leave visible, but that you choose a different model. And that's how it should be. It should be flexible and it should be like in some situations in life, so maybe the subscription does not fit just their life situation.

And then you have to be flexible and offer other models.

Yes, and as Tina said, now we have a cash model also in Denmark that has succeeded well and has been implemented and so on. So it's about listening to the customer, because it's like all the time. develop the whole offer that makes the customers feel satisfied and no one should feel fooled when you are a customer and visible. It is extremely important for us. We work hard with that and we will get better and better at it.

800,000 you said you had quite a lot. What is the goal? How many do you want?

We have a part goal.

How many do you think you can reach?

We have a goal of one million, and we see that we will achieve that. But it is still the case that the majority of visible customers have chosen the cash model. So there are many, many years positive growth in the subscription model. We also see that the extensions are increasing. In relation to extensions and new sales, we see that the extensions are getting bigger and bigger. This is very important for us because it is the best measure of being satisfied with the model.

I see that you continue to market a lot as well. I've noticed that Foppa Forsberg is more and more visible in your commercials. How has that part gone? I understand that he also has an Evingen collection.

If we look at the overall development of our house brands, it is very positive. Peter's collection includes the total house brand offer. It has been received very positively. Especially in the male target group, we have seen that it has been a very positive contribution to our business.

Exciting. We're nearing the end of this interview. What are you most looking forward to now during the second half of the year? We heard from Tina, and now I'm curious about you, who has the whole picture.

I think we have a very, very clear and good strategy that we will continue with, and that is to work hard. We can be better in all aspects. We have a record result, but we know that there are things we can be much better at. We will develop our entire store offer. We will be even better on our digital platforms. We will make sure that we can come up with new innovations, new investments that have created even greater knowledge and even more customers who come to us. Improve availability so that you can actually go to an optician even on evenings and weekends. That is something you have historically not been able to do, but we are working hard to be able to do that so that the customer will be able to choose when they want to go to their optician.

And new services as well. You mentioned horse units last time. Is that something you continue to evaluate?

We evaluate that. We have 12 pilots now that we evaluate and work with. It's a new area for us and you should have respect for that. But we also see that we are getting better and better there. So we'll see. That day we decide to really push the button. But we'll have to come back to that.

Yes, exciting. So record results and much more exciting on the way. Sounds promising. Thank you very much, Håkan.

Thank you.