Europris Asa · OSL:EPR
Europris Asa — Q2 2024 Earnings Presentation
43 slides from Europris Asa's earnings presentation, Jul 11, 2024
Slide 1: Q2 2024 presentation
Q2 2024 presentation 11 July 2024 CEO Espen Eldal CFO Stina C Byre VP Strategic Projects André Sjåsæt
Slide 2: Disclaimer
Disclaimer This presentation has been produced by Europris ASA (the "Company") exclusively for information purposes. This Presentation has not been approved, reviewed or registered with any public authority or stock exchange. Further to the aforementioned, this presentation is the result of an effor
Slide 3: The Europris group
The Europris group A Nordic retail champion in the making… …with strong concepts across 378 stores Annual sales Annual EBIT ~13.5 ~1,150 NOK billion NOK billion 94 Customer club Annual footfall 284 3.8 57 million members million transactions 3 Figures are based on approximate and pro-forma figures l
Slide 4: Our growth story
Acquired remaining Our growth story Acquired 33% of Lekekassen Acquired 67% of Strikkemekka Acquired remaining 80% of ÖoB Sales of NOK ~10.5bn* 67% of Lekekassen Opened Shanghai Listing on sourcing Oslo Børs office (JV with Acquired Tokmanni) by Nordic Capital Acquired by IK Investment Partners Foun
Slide 5: Second quarter 2024 in brief
Second quarter 2024 in brief • Finalised acquisition of Runsvengruppen (ÖoB) on 2 May 2024 • Important strategic milestone on the pathway to creating a Nordic champion in discount variety retail • Combined turnover last twelve months of NOK ~13.5bn • Final purchase price of NOK 200.5m for the remain
Slide 6: Relevant concept in tough times for many consumers
Relevant concept in tough times for many consumers • A tougher economic climate creates more prices conscious consumers • Higher sales growth for campaigns and consumables • Consumers still holding back on investment purchases - lower sales of high-ticket items such as garden furniture • Increase
Slide 7: Our climate efforts are being recognised
Our climate efforts are being recognised • Europris has been included in the fourth edition of Financial Times’ and Statista’s ‘Europe’s Climate Leaders’ • The list covers some 600 European companies that contribute to the green transition • The ranking is based on several factors, and Europris is o
Slide 8: Financials
Financials CFO Stina C Byre Europris
Slide 9: Group financials - second quarter
Group financials - second quarter Highlights group Key figures group, second quarter 2024 • Group sales up 34.6%, with organic growth of 3% Sales Organic sales growth • Gross margin down 2.6%-p, with organic increase of NOK 3.1bn +3% 0.2%-p or up 0.4%-p excluding unrealised currency +34.6% • Opex-to
Slide 10: Group financials - first half
Group financials - first half Highlights group Key figures group, first half 2024 • Group sales up 21%, with organic growth of 3.9% Sales Organic sales growth • Gross margin down 1.6%-p, with organic gross margin NOK 5.1bn +3.9% roughly on a par with last year +21% • Opex-to-sales ratio increased by
Slide 11: Solid financial position
Solid financial position Q2 Q2 YTD YTD FY • Cash from operating activities of NOK 208m, on a Cash flow, NOK million 2024 2023 2024 2023 2023 par with last year Cash from operating activities 488 574 208 208 1,769 - of which change in net working capital 94 195 (297) (267) 281 • Negative net change i
Slide 12: Segment Norway – second quarter
Segment Norway – second quarter 2023 Highlights Norway Key figures Norway, second quarter 2024 • Sales up 3%, with LFL growth of 1.1% for the chain 2,3 2,4 • Negative impact from timing of Easter offset two extra sales days • Seasonal items sold well, with the exeption of higher-ticket 362 354 items
Slide 13: Segment Sweden – consolidated May and June
Segment Sweden – consolidated May and June 2023 Highlights Sweden Key figures Sweden, May and June 2024 • Combined sales for May and June of NOK 0.7bn, 0,7 with gross margin at 32.4% • LFL sales declined by 3.5% for the ÖoB chain for the full second quarter, reflecting lower sales for non-food categ
Slide 14: Soft first half for Sweden, in addition to one-offs
Soft first half for Sweden, in addition to one-offs • One-off effects to align accounting principles booked before Europris ownership period commenced, with a total negative EBIT impact of SEK ~50m • Gross profit impacted by SEK -23m • Opex and write-downs of SEK -26m • Key figures ÖoB first half 20
Slide 15: Sweden (ÖoB)
Sweden (ÖoB) CEO Espen Eldal VP Strategic Projects André Sjåsæt 15
Slide 16: Creating a Nordic champion in discount variety retail
Creating a Nordic champion in discount variety retail #1 Leading brands and similar concepts with potential to establish a strong Nordic position #2 Shared values and similar business cultures Combined sales: NOK 13.5 bn Operational synergies across concepts NOK #3 → sharing “best practice” NOK 4 bn
Slide 17: ÖoB strengths
ÖoB strengths Profound expertise in wholesale and retail, coupled with a long and rich history A leading concept in discount variety retail, recognised by customers for low prices and broad assortment Store network with 94 stores across all of Sweden 2 million members in the “Lågprisklubben” custome
Slide 18: ÖoB challenges
ÖoB challenges • No revenue increase since 2015 in contrast to Revenue ÖoB and EBIT-margin - revenue and margin development other players in Swedish variety retail with double-digit top line growth 4,2 • Declining footfall, especially post-Covid 4,0 4,0 3,9 4,1 4,1 • Increasing share of sales from c
Slide 19: Our ambition is to grow ÖoB revenues by SEK 1bn by 2028
Our ambition is to grow ÖoB revenues by SEK 1bn by 2028 Category harmonisation and joint sourcing +1bn Improve customer experience SEK Strengthen execution across the value chain 19
Slide 20: Develop non-food categories and harmonise assortment across the chains
Develop non-food categories and harmonise assortment across the chains • Category harmonisation • Develop the non-food categories and and joint sourcing sharpen positioning towards the main seasons • Harmonise assortment across market segments and extract purchasing • Improve customer experience syn
Slide 21: Developing the non-food categories will enable higher margins
Developing the non-food categories will enable higher margins Europris - Well-diversified across the retail segments ÖoB – More tilted towards consumables Speciality retail 16% of revenue Speciality retail 27% of revenue General merchandise Consumables 14% of revenue Consumables 53% of revenue 70% o
Slide 22: Increasing gross margins by harmonising the private label portfolio
Increasing gross margins will also be possible by harmonising the private label portfolio ~45% <25% share of share of Private Label Private Label 22
Slide 23: Boost customer satisfaction and modernise the stores
Boost customer satisfaction and modernise the stores • Category harmonisation • Implement proven category shop-in- shops from Europris in ÖoB stores and joint sourcing • Upgrade and modernise stores and concept • Strengthen brand position amongst target customer segments to attract new • Improve cus
Slide 24: Improving in-store customer experiences
Improving in-store customer experiences Home Q1 21 Storage Q2 21 Textiles Q2 21 Choc & snacks Q3 21 Pet Foods Q1 22 DIY Q3 22 Toys Q4 22 Cleaning Q1 23 Personal Care Q3 23 Kitchen 2.0 Q1 24 Europris has implemented substantial concept and category upgrades last 4 years • Target: Continue to develop
Slide 25: New kitchen concept rolled out towards the end of Q1 2024
Example New kitchen concept rolled out towards the end of Q1 2024 After implementation of the new concept in week 11, the kitchen category grew by ~16% compared ~16% to an average of ~2% in the same period in 2021 to 2023 ~2% W11-26 W11-26 2021-2023 2024 25
Slide 26: Improve operational execution and governance
Improve operational execution and governance • Category harmonisation • Strengthen campaign setup and and joint sourcing execution across all touchpoints in the value chain • Standardise and harmonise commercial toolbox across the concepts • Strengthen operational sales • Improve customer experience
Slide 27: Strengthening campaigns and seasons
Strengthening campaigns and seasons Sharpening the focus on campaigns and seasons to be relevant, attract customers and drive traffic and sales Campaign driven Unbeatable campaign offers + Champion of the seasons Low-price Broad range 27
Slide 28: Putting all the pieces together
Retail management Campaigns Category and marketing management is about putting Retail all the pieces culture together Cost leadership 28
Slide 29: The transformation is well initiated and will continue over the coming years
The transformation is well initiated and will continue over the coming years 2024 2025 2026 - 2028 • Many activities are already mobilised and Category Harmonise assortment and Private Label initiated. Given buying cycles, harmonisation seasonality and complexity many Develop non-food categories and
Slide 30: Our ambition is to grow ÖoB revenues by SEK 1bn by 2028
Our ambition is to grow ÖoB revenues by SEK 1bn by 2028 Category harmonisation and joint sourcing +1bn Improve customer experience SEK Strengthen execution across the value chain 30
Slide 31: The ÖoB opportunity
The ÖoB opportunity Designing a five-year plan to revive ÖoB - Revenue and margin development and ambition growth and restore profitability in ÖoB 5bn • Add sales of SEK 1 billion 4bn 5% • Strengthen gross margins • Maintain cost efficiency • Turnaround designed to generate ÖoB EBIT- margin of 5% by
Slide 32: Further long-term upside in adding more stores
Further long-term upside in adding more stores • First priority is to create like-for-like growth and improve profitability in the existing store network • Current store network in Sweden is smaller than for the most relevant competitors • Long-term opportunity to expand store network by 30-50 store
Slide 33: The Europris group
The Europris group A Nordic retail champion in the making… …with strong concepts across 378 stores Annual sales Annual EBIT ~13.5 ~1,150 NOK billion NOK billion 94 Customer club Annual footfall 284 3.8 57 million members million transactions 33 Figures are based on approximate and pro-forma figures
Slide 34: Outlook
Outlook Europris
Slide 35: Becoming a champion in the Nordic discount variety retail market
Becoming a champion in the Nordic discount variety retail market • Current market offers opportunities for concepts like Europris and ÖoB • Taking measures to mitigate negative effects of shipping capacity constraints and higher war surcharges • Building on a solid brand and price position in the up
Slide 36: Q&A
Q&A Next event: Q3 presentation 31 October 2024
Slide 37: Appendix
Appendix
Slide 38: Content
Content Long-term financial and operational ambitions Sales days and store projects Analytical information Alternative Performance Measures (APM’s) 38
Slide 39: Long-term financial and operational ambitions - segment Norway
Long-term financial and operational ambitions - segment Norway Growth Continue to deliver like-for-like growth above the market over time Target to open a net average of five new stores per year, depending on availability of locations which Number of new stores meet strict return requirements, and t
Slide 40: Sales days and store projects – segment Norway
Sales days and store projects – segment Norway Number of sales days Year Q1 Q2 Q3 Q4 Total 2023 77 71 79 79 306 2024 75 73 79 80 307 2025 76 71 79 81 307 Number of store projects (franchise projects in brackets) • 2023 Q1 Q2 Q3 Q4 Total New stores 2 2 1 2 7 Store closures - - 1 - 1 Relocations / 3 2
Slide 41: Sales days – segment Sweden
Sales days – segment Sweden Number of sales days Year Q1 Q2 Q3 Q4 Total 2023 89 91 92 91 363 2024 90 91 92 91 364 2025 89 91 92 91 363 41
Slide 42: Analytical information – segment Norway
Analytical information1 – segment Norway Seasonality • As a rule-of-thumb, the Easter impact is approximately NOK 65-80 million in revenue and NOK 13-16 million in EBITDA • Europris stores: as a rule-of-thumb, Opex in quarter one year earlier + inflation + NOK 1.6-1.7 million Quarterly Opex per extr
Slide 43: Alternative performance measures (APMs)
Alternative performance measures (APMs) APMs are used by Europris for annual and periodic financial reporting in order to provide a better understanding of the group’s financial performance. APMs are considered as well- know and frequently used by users of the financial statements and are also used