Release Date: September 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Clas Ohlson AB (FRA:OHCB, Financial) reported a strong Q1 with a 10% organic growth rate.
- Operating profit significantly improved to SEK203 million from a loss last year.
- The company maintained a solid financial position with a net debt to EBITDA of minus 0.4.
- Online sales growth outpaced total organic sales growth, indicating a robust omni-channel strategy.
- Customer satisfaction remains high with a stable Net Promoter Score (NPS) of 58.
Negative Points
- Gross margin declined by 0.7 percentage points to 37.5%, impacted by currency fluctuations and higher transportation costs.
- The Swedish krona's weakness against the US dollar is affecting purchasing costs.
- The structurally lower gross margin for the acquired Spares Group negatively impacted overall gross margin.
- The competitive landscape remains fierce, particularly in the Swedish market with several discounters and online players like Amazon.
- The company faces external challenges such as volatility in transportation costs and currency effects, which could impact future margins.
Q & A Highlights
Q: Can you elaborate on the external factors affecting the gross margin in Q1 and their expected development in the coming quarters?
A: The Norwegian krona's weakness significantly impacted the gross margin. Transportation costs, influenced by the situation in the Red Sea, will affect Q3 and Q4. No changes in markdown levels were reported.
Q: Given the strong growth and current margins, is there any reason to assume margins won't continue higher than the 7%-9% target?
A: The target remains 7%-9% to ensure consistent long-term delivery. While current margins are at the upper end, external volatility necessitates caution.
Q: Can you clarify the seasonal patterns and growth in Spares Group sales?
A: Spares Group has lower seasonality compared to Clas Ohlson. The recent higher monthly sales are driven by growth, not seasonality.
Q: Are there plans to pause store expansion after the next three months?
A: No, the reported openings are signed and announced. The target is to add a net 10 new stores for the fiscal year, with potential for more openings into 2025.
Q: How do you view the competitive landscape in the Swedish market, especially with discounters and online players like Amazon?
A: The competition is fierce. Clas Ohlson focuses on a relevant assortment, competitive pricing, and strong customer service to maintain its position.
Q: With a strong net cash position, are there plans for market consolidation or significant organic investments?
A: The focus is on investing in the store network and IT infrastructure. While M&A is not assumed in current targets, opportunities will be considered if they arise.
Q: How has the new store in Stenersgata, Central Oslo performed?
A: The new store has performed in line with expectations and has not negatively impacted traffic to nearby stores.
Q: What is the focus in the Norwegian market right now?
A: The focus is on continuously renewing the assortment, building the brand, and delivering strong customer experiences.
Q: How has the consumable market weakness in the Nordics affected Clas Ohlson?
A: Despite market challenges, Clas Ohlson's strong need-based assortment and competitive pricing have driven growth against the market trend.
Q: What are the expectations for Finland's growth, given the recent positive sales in August?
A: The growth in Finland is driven by Clas Ohlson's actions rather than market improvement. The focus is on the assortment, online business, and brand.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
