Clas Ohlson AB Q3 2025 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, a couple of questions from my end. Firstly, if I could start on February sales, realizing, of course, the leap year effect here, but still even adjusting for that, this is a bit slower growth than you've seen in previous months and particularly what we saw in Q3 with growth rates of 13%. Do you see any particular reason for this sequential slowdown? Is there less pent-up demand? Was there any weather effect, anything else or any other reason to assume that the growth rate might be a little bit lower in the coming quarters compared to the exceptionally strong growth you saw here in Q3?

Question: Niklas Ekman - Carnegie Investment Bank AB - Analyst : Very good, thank you. And can I also ask about gross margin here? Obviously, it was up quite a lot in this quarter despite higher freight costs. How do you see this over the coming quarters? And obviously, freight, dollar and everything has moved lower recently. But with the lag you're seeing, do you expect more headwinds in Q4 and possibly Q1 or was Q3 the quarter with the greatest headwinds from the previous sharp rise in freight costs?

Question: Niklas Ekman - Carnegie Investment Bank AB - Analyst : Okay. Clear. I'm also curious about your margin target, which you reiterate here, the 7% to 9% margin target. And on a rolling 12-month basis, you're now at 9.9%. So you are significantly above the upper end of that range. Is this still a relevant target or do you see risk that the margins you're reporting right now are exceptionally high and difficult to sustain or can you just elaborate on your thoughts here?

Question: Niklas Ekman - Carnegie Investment Bank AB - Analyst : Okay. Clear. Also on store openings. You mentioned here your ambition to continue to have a high store opening pace into the new year. But I see now you have three openings planned for the spring and one for the autumn. And that one autumn is the only you have for the next financial year. What do you think of your potential to continue to open at least 10 stores in '25, '26?

Question: Niklas Ekman - Carnegie Investment Bank AB - Analyst : Very clear. Thank you so much. I'll jump back into the queue.

Question: Magnus Raman - Kepler Cheuvreux - Analyst : Thank you very much. Maybe I can start with tying into the question on growth agenda. You mentioned here on the organic growth agenda that you have plenty of discussions ongoing for potential new sites. How about on the sort of possible acquired-driven growth agenda and also in the backdrop of your balance sheet, what type of -- how much of discussions ongoing do you see there? And do you have any view of sort of multiple for possible targets if they're potentially up or down as of the recent developments?

Question: Magnus Raman - Kepler Cheuvreux - Analyst : Right. I hear you. But then as it relates to your sort of capital structure, do you think that this argument having a preparedness for potential opportunities going forward would be sort of enough of argument for you to carry potentially too much of cash on the balance sheet over like a several year period?

Question: Magnus Raman - Kepler Cheuvreux - Analyst : All right. Great. And then also coming back to the current trading. I mean, if you look firstly in the Nordics specifically, we have witnessed a deterioration again of consumer confidence numbers as of recently? And also from a broader perspective, we have seen other retailers now quite recently reporting weaker current trading numbers, i.e., February sales numbers. So in the light of these, could you perhaps again comment on your February sales in terms of, I mean, the traffic numbers that you witnessed, for example, is there any change there? I mean, essentially, the slowdown, is that driven also by a reduction in traffic? Or are there any other factors that you would highlight rather? 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 12, 2025 / 8:00AM, CLASb.ST - Q3 2025 Clas Ohlson AB Earnings Call

Question: Magnus Raman - Kepler Cheuvreux - Analyst : Fair enough. Great. And then maybe just one also on timing short term here and calendar. If you could elaborate on how you view the effects from Easter this year relative next when we look into March and April sales?

Question: Magnus Raman - Kepler Cheuvreux - Analyst : All right. Great. Just a final one for me before getting back in the queue. The currency movements here with the big currency movements and you received questions on this already. But I mean, if we look at that overall sensitivity analysis for your results, is it fair to assume that the shift in or the weakening of the Norwegian kroner versus the SEK outweighs a potential stronger SEK versus euro and the dollar, if all these changes would be sort of the same percentage?

Question: Magnus Raman - Kepler Cheuvreux - Analyst : Yeah. That's helpful. So given the big improvements now and for us to to work on the modeling of margin progression near term. As I hear you, we would assume sort of a net negative effect in the near term and then the possible or the sort of the possible positive transactional effect if it doesn't go all the way to the end consumer would be seen at a later stage.

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

Question: Niklas Ekman - Carnegie Investment Bank AB - Analyst : Thanks. Yes, a follow-up here. I'm curious about Finland and what potential you're seeing in that market. And the reason for asking, of course, is you have seen an improvement in the Finnish market now after years of weakness, but it's still the growth rates are still much lower than what you're seeing in Sweden and Norway. And in all, sales per store in Finland seems to be at least 30% lower than what you're delivering in Sweden and Norway. Is this a key priority for you for the next few years to really get the Finnish market moving? Are there huge obstacles in that market that prevent you from ever getting to the same position in Sweden and Norway? Or just what is your view on Finland? Is that a major important market for you? Or is your main focus still on Sweden and Norway?

Question: Niklas Ekman - Carnegie Investment Bank AB - Analyst : Very clear. Thank you so much.

Question: Magnus Raman - Kepler Cheuvreux - Analyst : Thank you. Maybe I can just follow up one on Finland first here. Can you provide your remarks on the union negotiations and the sort of wage increases, where did it end up? And how do you view that in terms of sort of your operating costs going forward in Finland?

Question: Magnus Raman - Kepler Cheuvreux - Analyst : Great. And those 2.6% was the annual rate of a longer time period, right? So you will have some visibility on salary costs for two or three years out in time?

Question: Magnus Raman - Kepler Cheuvreux - Analyst : Great. And then just a final one on me from here, more a broader also margin connected question, again, about your improvements in the product/price mix that you have elaborated on as a driver to your margin as well as also improvements to the margin from your sourcing measures to sort of centralize and negotiate on your sourcing. How should we view where you are in this journey? I appreciate that it might be always an ongoing work, of course. But sort of in terms of the merits or the benefits that you have extracted from these measures in recent year or years. How much more of a potential would you like to sort of highlight that you see here? Or have you taken most of the sort of low-hanging fruits here? 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 12, 2025 / 8:00AM, CLASb.ST - Q3 2025 Clas Ohlson AB Earnings Call

Question: Magnus Raman - Kepler Cheuvreux - Analyst : Right. Yes, that's helpful. Maybe a mini sort of sub, but real question tied to that. You mentioned here your Husqvarna battery range initiative. Will that be also inventory across your store network tied to this initiative, or more an online offering? And then if it's sort of broad across the store network, will you sort of, because I guess it carries a lot of different items around such a range. Are you removing some other supplier here? Or is this just sort of a broadening overall?

Question: Magnus Raman - Kepler Cheuvreux - Analyst : That's super clear. Thank you very much.