Clas Ohlson AB Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Niklas Ekman - Carnegie Investment Bank AB - Analyst : Thank you. Yes, can I start with the question on the top line and this organic growth here of 12% in Q3, that's a one of the strongest organic growth figures you've ever reported. Can you tell us a little bit more just elaborate a bit more on what are the key growth drivers here. How much of this is driven by inflation? You mentioned prepping here, but you're kind of downplaying that effect you're talking about consumables and as a follow up, I guess to that also, how confident are you that you can reach more than 5% growth next year, considering that you're now facing very, very tough comparisons?

Question: Niklas Ekman - Carnegie Investment Bank AB - Analyst : Very good. Thanks. And a quick follow-up there. When you talk about 10 new stores for 24, 25, is that a net number or do you think there will be a one or two store closures on top of the hour that withdrawn from that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 06, 2024 / 8:00AM, CLASb.ST - Q3 2024 Clas Ohlson AB Earnings Call

Question: Niklas Ekman - Carnegie Investment Bank AB - Analyst : Very clear. Can ask about your margin target as well, your 7% to 9%, I think in the last 12 months here you are at 8.6%. You're at the very upper end of that range. Is this you think a conservative target that you have now or are you at exceptionally high levels at the moment? What's what's your view on?

Question: Niklas Ekman - Carnegie Investment Bank AB - Analyst : But do you see imminently any risk of that margin trending lower?

Question: Niklas Ekman - Carnegie Investment Bank AB - Analyst : Okay. Fair enough. And just a detail here as well on spares, correct me if I'm wrong, but I think they had annual sales of [SEK820 million]. If we look at the first four months of being consolidated now they've added less than [230]. That seems to be quite a bit below the run rate. Is there any significant seasonality here that we should be aware of or have you seen a decline in spares since that business was acquired?

Question: Niklas Ekman - Carnegie Investment Bank AB - Analyst : Okay. How big an impact was that approximately?

Question: Niklas Ekman - Carnegie Investment Bank AB - Analyst : Okay, Okay. Super clear. Thank you for taking my questions.

Question: Magnus Raman - Kepler Cheuvreux - Analyst : Thank you. I would like to come back to the sales of next year first, are you since you're guiding to this net store expansion, you will have a contribution from the store expansion in 24, 25 of four or 5%, then it comes down to with the tougher comparisons, if you think that you will not be able to

Question: Magnus Raman - Kepler Cheuvreux - Analyst : Great. And then on the gross margin, you showed that you usually do the drivers there in the waterfall chart. And I mean, in terms of how you have been impacted by adverse FX effects and those should and at some point annualized and possibly also be reversed in terms of the underlying actual FX rates. But the other factor here with the sales mix that you described, how our customers have changed their order, their sort of preferences to cheaper items in the recent period of weakness. But you have also had a sales mix change that sort of deliberately or more structurally implemented by ourself. So what I'm trying to get to here is if we would assume a normalization of sort of customer behavior, do you see that this negative effect on the gross margin from sales mix would reverse completely? Or will it be up sort of remaining negative structural negative effect from your permanent mix shift?

Question: Magnus Raman - Kepler Cheuvreux - Analyst : All right, thanks. And then also a follow-up on this then freight revenue recognition that you mentioned for spares, this SEK40 million book for what period, was that? And also where does this revenue show up where it accounted for in statement?

Question: Magnus Raman - Kepler Cheuvreux - Analyst : So it has a result a margin enhancing effect instead?

Question: Magnus Raman - Kepler Cheuvreux - Analyst : Right. Okay. And then just the final one for me as it relates more to the overall balance sheet of debt, the net cash position that you retained now and you mentioned here that it was partly an effect of the lower dividend, how do you think we should view? I mean, if you look forward, do you REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 06, 2024 / 8:00AM, CLASb.ST - Q3 2024 Clas Ohlson AB Earnings Call see any need for material Is strategic investments needs or opportunities or might actually be room for an extraordinary distribution to shareholders given the cut in dividend capacity?

Question: Magnus Raman - Kepler Cheuvreux - Analyst : Okay. Thank you very much.

Question: Andreas Lundberg - SEB - Analyst : Thank you and good morning. Most of my questions have been asked. What about OpEx on a comparable basis. If you strip out the spare parts, how has that developed during the third quarter? How do you view that outlook for the next fiscal year? Thank you.

Question: Andreas Lundberg - SEB - Analyst : So nothing changed there versus previous quarters, basically.

Question: Andreas Lundberg - SEB - Analyst : Thank you so much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 06, 2024 / 8:00AM, CLASb.ST - Q3 2024 Clas Ohlson AB Earnings Call

Question: Nicklas Skogman - Handelsbanken - Analyst : Yes, good morning, everyone. I have a couple of questions. I'll ask the OpEx question another way. How much of the OpEx increase was due to spares in million?

Question: Nicklas Skogman - Handelsbanken - Analyst : Right, good. So in Q2, you had a positive impact from product and price mix. I know you had a negative impact from sales mix. I guess you call it is the reason that you have these clearances of old product or has the consumer behavior and behavior change in Q3 compared to Q2?

Question: Nicklas Skogman - Handelsbanken - Analyst : Okay. And after February, do you still have a need to clear the older inventory to make room for new products or are you through with this?

Question: Nicklas Skogman - Handelsbanken - Analyst : Okay, good stuff. And if you would you please give us an outlook for the currency effect now here in Q4 in dollar and the knocked as it looks right now, what's the situation on the gross margin line. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 06, 2024 / 8:00AM, CLASb.ST - Q3 2024 Clas Ohlson AB Earnings Call

Question: Nicklas Skogman - Handelsbanken - Analyst : Okay, very good. And have you had the time now to look to expect OpEx?

Question: Nicklas Skogman - Handelsbanken - Analyst : That might need to get back to that one. All right. Thanks for answering the questions.