At this time, I would like to welcome everyone to this Matas Interim Report for Q3 2024-25. Today's call is being recorded. If you have any questions, please do tell us at this time. All participants will be in a listen-only mode throughout the presentation, and afterwards, there will be a question-and-answer session. I would now like to introduce CEO Gregers Wedell-Wedellsborg and CFO Per Johannesen Madsen. Gregers, you may now begin.
Thank you, Operator. Welcome everyone to the call covering our biggest and most important quarter: the Christmas quarter, the Black Friday quarter. Before we get into the details, I just want to step back and say that when we joined forces with KICKS, the aspiration, the vision was to create a company that could do two things: one, to attract more customers, make customers more happy, be more competitive in the marketplace, and second, create a stronger business with higher growth rates and continuous improvement of our margins. And this quarter is proof that that's what we're doing. We consider this quarter a double victory: more customers, happier customers, and delivering growth and margin improvement at the same time. So the story today here has, I think, few surprises.
It is a story of steady execution, and it is a story of a strategy that is being put into action and that actually proves to work, but let's get into the details and the program for the day. I will make a few comments, digging a little bit deeper into what actually happened in the quarter, and then I'll hand over to Per to cover the numbers before we open for questions. Looking at the numbers, 7.7% growth, that's clearly market share gains. We see that we are part of a growing market, structurally growing market, but we also judge that we grow faster than the market, and this is across our four markets and across our channels. We also show today that we lift our margins by 0.6 percentage points compared to the pro forma of last year or compared to our performance of last year.
That means, of course, that EBITDA is growing faster than our top line. What's going on underneath? We are starting to see the effect of what we're doing towards the customer and towards the market. The first time together with KICKS, we spent time on internal businesses, on internal matters, making everything work on the inside. Now what we're doing is out towards the customer. We are delivering growth in all channels, in all markets. Again, I want to highlight the growth of KICKS Online. If we take out Skincity, a business that we're winding down, we see very healthy growth in KICKS Online. Also, of course, this is the main focus for today's call, our improved margins, which are composed of a lot of things, and Per will get into that in more detail. We are investing in prices.
We are investing in marketing and more visibility out there. We are integrating Skincity. We are looking at our in-house brands and resetting our in-house brands, and we are building capabilities in the business for future growth, and nevertheless, we managed to get our margins up thanks to the synergies that we are realizing and a number of other things that we will get back to. I think the one number that to me stands out is that we crossed the milestone of six million members across the Nordics. We recruited 150,000 members in the Christmas quarter alone, and I think that is the healthiest sign of growth that you can imagine for a business to attract more customers into the club, which is one of our competitive advantages, so today, no changes to our guidance for the year on revenues, on margin, or on CapEx.
It's going in line with our expectations. Digging into Matas and KICKS, healthy growth in both banners, almost 8% growth in Matas. And I think this, again, is a testament to the fact that our strategy of expanding the assortment, of making stores and online work together, that that's actually delivering steady growth faster than the market and a good uplift in profit margin, and we'll get back to that. KICKS as well, growing 7.3%. If you take out Skincity, 14.2%, very healthy growth in the KICKS business as well. And again, a gross profit margin improvement despite the investments in being more competitive on prices and offers in the market. So this is the strategy working. It's the strategy being executed. It's this idea that we can be more for the customers. We can offer more to the customers, a bigger assortment. That's happening in this quarter.
More in-house brands, I'll get back to that, attracting more members, driving growth in our online business and driving the experience of our online business, and at the same time, investing at moderate pace in our physical stores, opening stores, upgrading stores as well. And at the back end of the business and on the inside of the business, really integrating and getting all those economic and operational benefits from being one company. So that's all happening in a very busy quarter that is always about execution first. Even in a quarter that is about execution first, it is about being close to the consumer. We are making progress on our strategic agenda.
We signed and have, just in the new year, launched a brand that for sure our Swedish colleagues know very well, a very famous brand, household name that until now has only been distributed via pharmacies, and they have decided to go outside of pharmacies and launched first with us, the ACO brand. And again, this is a sign that we want to be relevant not only in the high end of the market, but also allow for this impulse buying, you know, no real consideration. I just need this from the get-go, incremental sales in the business. Building the fragrance part of the market, really interesting part of the market, niche fragrances, young men are stepping into this market at rapid pace.
And then in Matas, expanding the assortment gradually, figuring out and entering categories that are more at the margins of what we have been doing historically to test out what do customers actually like and want to shop with us. This is not a huge quarter for in-house brands. It is about the big brands. It's about gifting occasions. So what we have been doing in this quarter is really laying the foundation for growth in in-house brands over the coming years, working to reset our portfolio. We have closed down some brands that we don't consider to have a future, and we are distributing and getting our own brands out there in front of the consumer. But really, this has not been a huge quarter for in-house brands. It's about getting ready for the future. And then again, back to the club.
The club is what we consider to be possibly our greatest competitive advantage to have direct access to six million members to understand their dreams and desires and purchase behaviors and be able to communicate individually to every single one of those members. We passed the six million mark, 150,000 new members acquired, satisfaction going up, younger demographics coming in, members shopping across more categories. This is exactly what we want. This is our strategy in one slide. And then the big thing where we spend a lot of money this year is, of course, to finish our operation in Lynge, our fully automated AutoStore installation, to be able to cater for a bigger assortment, faster delivery, more efficient logistics for our e-com business in Denmark, and a lighter eco footprint as well. We've completed the building.
We have installed the automation, and we have cut the ribbon on our facility in Lynge. It's on budget. It's on scope. It's on time. And what's happening right now is that we are testing, trying out how the whole thing works. And we are now in a phase where we start to incur double cost. So there's cost in the new facility, and we still keep the old facility running. That will go on for some while. It's all in the guidance. And then as soon as we start to see satisfactory results, then we will shift over and operate from one facility. And then next year will be all about chasing efficiencies. Of course, you don't get all the efficiencies from something like this on the first day. It is something where there is a learning curve over the next year.
But we are very happy with what we're seeing so far and very happy to be able to deliver such a huge project on time, on scope, and on budget. And this is such an important platform for future growth. As for synergies, we are well on track, and we have confirmed, and we've done this before, the DKK 40 million that we saw in standalone improvements in the KICKS business, they are fully completed. They are in the numbers. No more to come from that. Check mark on that part. And for the group synergies, we have implemented the Nordic organization in this past year. We have been negotiating and making deals to secure good terms and good funding for growth with our partners out there. We are well on track.
And then we are sharing, scaling, figuring out all those places where we can either do things cheaper or do things smarter together. So we confirmed the ambition for our synergies, and part of that already in the numbers, some of that being invested, but really no change to the overall story. It's going according to plan. And with that, I would hand over to you, Per, to cover the numbers.
Yes. And as Gregers started out with, you know, these numbers really just as a reflection of the strategy, actually, you know, showing itself also in the numbers. So let me take you to the numbers. So from a revenue perspective, as already said, you know, a very strong growth for the quarter with almost 8% growth and growing both in KICKS and Matas. And when we look at the two channels, really seeing stores growing almost 6% and online growing 11%, and then adjusted, of course, for Skincity, it's a higher number. But overall, you know, when we look at the numbers, e-commerce, our playbook really from the Matas side is now showing also in the KICKS numbers. It was the same as we reported in the last quarter. And on Matas, you know, the assortment continuously driving our strong performance on e-com, delivering 17% this quarter.
In terms of stores, you know, the key measure that we follow, of course, and as you always look for, is do we get like-for-like growth in our stores? And we do that in our stores while we're also growing our basket size. In this quarter, just we have six more stores compared to the quarter last year. Last but not least, and we already talked about this, but you know, of course, some of the impact of Skincity is the negative elements in the performance. But even taking that into account, you know, growing the business overall almost 8%, we feel very reassured on that. Moving into the gross margin, and this is really, as Greg has alluded to, this is probably where some of the questions are coming today.
But let me just try and go through that, and let me take it by each of the banners. It's a little different. But in Matas, we're really seeing that the new assortment is driving improved margin compared to earlier. And this is about, you know, we've been going on the assortment expansion since 2021. So it's also starting to see, we see the impact of that in the numbers. We have in this quarter received more support from our suppliers in terms of growth initiatives and how to drive the business. And I'll come back to that because the flip side of that is, of course, we have also invested, joined it with our suppliers to create that more momentum in the market. Sourcing synergies is coming as planned as well, as Greg has already alluded to earlier.
In terms of KICKS, it's a little bit more mixed because we are also investing in the market. So when we go in with better prices to our customers, that is, of course, a negative. On the positive side, of course, we are also talking to our suppliers and are getting more funding for growth initiatives. Again, that comes with investments. The negative part again is, of course, a little bit on Skincity, which was a brand and a product with higher gross margin than the average, which has a little bit of a negative. That's also why you see that Sweden is improving, not to the same extent as in Denmark. We are investing more in Sweden in terms of pricing towards our customers.
And then in terms of cost, on the cost side, you'll basically see some of the same impact as we just saw in the gross profit. If we just start with people first, growing the online business, of course, means more people. So more people doing all the packaging. And of course, that also means that our staff cost is increasing. And as we just said, you know, bringing in the fully automated center in KICKS outside of Stockholm, of course, the learning curve is improving, and we will be seeing more as we move forward. This is still the first year. And of course, that is also taken into account in the numbers. We are continuously focusing on managing the overall salary inflation with the way we do work planning, especially in stores, but also on our online business, as just talked about.
And last but not least, some of the synergies we're getting. We are investing. We are investing in capabilities, in pricing capabilities, in assortment specialists, and not at least also in our e-commerce business, as that is a key driver also going forward. In terms of external cost, as we have in our external cost, is really some of the variable cost. And that is all the elements linked to our e-commerce business. So the number of orders, of course, faster deliveries, and also the execution of our assortment expansion has an impact on our cost base. And then to the marketing cost. And that was really what I was talking about when we talked about our gross margin for the quarter. We are investing. We want to have a bigger share of voice in the market. So we are investing more in that.
We are supporting, of course, the assortment expansion and then the last but not least, the discretionary part is really all about us investing in growth initiatives together with our suppliers, and that is part of the upside we have on the gross margin, and then that's also reflected in the increased cost and the increase in our marketing investments, and then, you know, overall, of course, we are starting to see some synergies and efficiencies coming out of the Nordic scale of our business, so that really concludes our performance for the Q3. Overall, strong growth online, like-for-like growth in our stores, gross margin improvement, as we just talked about, coming from all these good growth initiatives and the sourcing, although we are investing in the KICKS markets in terms of pricing. Costs, we are basically ensuring we have the capabilities in place to execute our Nordic strategy.
Of course, we are also managing, you know, the inflation and all the variable costs, you know, with the synergies we're taking out of the business. Overall, EBITDA growth of 11.5%, almost twice, not fully, but well ahead of our revenue growth and EBITDA margin of 17.6%. Really basically delivering as we were planning and executing in terms of our strategy. Moving on, inventories, and as you will see for this quarter, we are closing at 24.3%. What is really driving that is, of course, higher availability in our stores on our products, especially in the KICKS market, so Norway, Sweden, and Finland, which is also part of why you'll see good, strong growth rates in our stores in those markets. Really just reflecting, you know, more products available for our customers equals a higher sale.
In the quarter, though, we have taken down inventories around DKK 163 million, just reflecting that some of the learnings and experience that we are seeing coming out of Rosersberg will now allow us to have a better level of inventories. And as we move forward into the fourth quarter, it's the same trend you'll see. However, in fourth quarter, all depending on how far we get with our new logistics center for Matas, is really, you know, when do we do the ramp-up, or when do we actually end up having double products for a period of time? It could be around that time frame. It might be early in the next financial year, but it's really a little bit too early to say. But that could impact the inventories end of Q4.
Moving on to our cash flow, and really just, you know, cash flow this year really, you know, just reflecting, as we already talked about, we have a stronger cash flow from all our operations. We're delivering strong on the business, and we are reinvesting that basically in CapEx, and CapEx this year is really all about MLC, but it's also in our working capital, and the working capital here, of course, refers to our investments in high inventories, especially in KICKS with the whole supply chain transformation. Overall, cash flow for the first nine months is a positive of DKK 304 million, and that needs to be seen in context of, you know, incremental inventories and also high investments, especially in MLC. Which brings us to the leverage, and as you'll see in Q4, we went down to 2.7, coming from 3 in last quarter.
This is also a strong quarter in terms of cash flow coming in. We have, although, been a little, and you'll see that in some of the details, we have been paying, and there's a little bit of timing in this, but we have been paying a lot of suppliers prior to closing Q3, which is a little different compared to last year. And that is just really to reiterate that, you know, our guidance that we send out on January 7th is still where we're going to close the year in the range of 6.5%-7.5% on our overall growth, the EBITDA margin between 14.5%-15.5%, and keeping our CapEx to the guidance as well. And with that, I will hand over to the operator for questions.
Thank you. We will now start the Q&A session. If you do wish to ask a question, you will need to press a five-star on your telephone keypad. To withdraw it, you may do so by pressing five-star again. Our first question comes from the line of Sebastian Hougaard from Nordea. Sebastian, now be unmuted.
Hi, good morning, Per Madsen. Thank you for taking my questions. First question is on the gross margin. Coming back to that, so I appreciate the sort of the comments around the dynamics here. So as I heard you allude to that, among other things, you see an effect from matured assortment, and you see synergies coming in. And then you allude to this support from suppliers. So really, what I try to get my head around here is what is sort of the stickiness of this gross margin performance in the quarter? And is there sort of an element of timing with regard to this support from suppliers? That would be my first question.
Yes, there is an element of timing to this. Christmas is all about operational excellence and commercial planning. And the commercial planning for this year is about talking to suppliers and saying, "Okay, we will invest in higher availability in store. We are going to invest in marketing, as Per said, to be really visible in the marketplace. We are going to do a lot of things to stimulate growth and to give you higher growth than what the market perhaps allows." And then in return, we expect you to support that. And sometimes that support comes in the form of marketing support. Sometimes it's margin. So I would see, Sebastian, I would see the two as linked, that our gross margin performance and our OPEX performance are closely linked. And it's important to say that it is a discretionary. It is a planned decision.
It's not something that just happens. So if we don't get the support from suppliers, for example, we would not have been as aggressive on some of those bets to make it a strong commercial Christmas. So those two are linked. But there is some timing effect on both items.
Okay, okay. Okay, no, very clear. Thank you for that, Gregers. Then maybe coming back to sort of your comments around the MLC ramp-up here. So I don't know what you're able to say at this point, but how is that going to play out? And you also referred to your starting to incur double cost for now. Is that an SG&A thing, or how should we think of this sort of ramp-up over the next, yeah, coming quarters?
Yeah, so really big picture, no changes to the story you've heard so far, no changes to the expectations of what's going to come out of the investment in the MLC. So what's happening in this first half year of the calendar year 2025 is that we have two facilities. We have a manual facility in Humlebæk, and we have an automated facility in Lynge. And for some time, those two will run in parallel, with one being the master and the other one being the test site or backup site. And then at some point, when we see test results being the way we want and see sort of the performance of the new machinery running the way we want, we shift the weight from Humlebæk, and then we have Lynge as the master with Humlebæk as the backup. So this is a transition.
It's not a major cost impact. It's there. We won't treat it as special items because we think it is part of just running and changing the business. So that's the transition part of it. And the other part of it is how fast do we get the efficiencies? We've just had one year with the KLC, the Rosersberg facility, and we saw that we had some learning curve on how fast we get the efficiencies. It is a very different technology in Rosersberg. It's a much more complex operation. It's both serving stores, and it is serving online, and it was a complete reshape of the supply chain in KICKS. But we do see that, and of course, we visited a lot of AutoStore sites, you don't get the efficiencies day one, basically. You get them, but you don't get them day one.
Can we say, you know, the timing of this exactly? No, you just need to be aware of it. We will report closely on this. But as I started out by saying, we are, as of now, perfectly in control with what's happening. We have opened on time. We are on budget. The testing is going as planned. It's just a matter of now meeting the real world and figuring out how does it work in the real world, how fast can we shift, how fast can we wind down, how fast can we get the efficiencies.
Okay, no, thank you, Gregers. Again, that was very clear. And then just my last question here, and it's sort of, if you're looking at your implied guidance for Q4, so you're doing a 60 basis point margin expansion here in Q3. For Q4, if you are to reach a midpoint of your margin guidance, it sort of looks like it's implying a significant greater year-on-year margin expansion than the 60 basis point. At the same time, you allude to sort of you starting to incur double cost now, and that also some of these supplier subsidies are not as sort of evident here in Q4. So is it sort of a fairly soft comparison base we're looking at for Q4 last year? I'm just trying to sort of get my head around why we should see this very step up in margin performance year over year in Q4.
You got it right. If you look at the comms from last year, Q4 was the weakest quarter. If you remember from last year, that was when we introduced the Rosersberg facility and did that whole change, and we held back on marketing activities, campaigns, because it was a massive change in the whole KICKS setup. If you look even further back, I can say that the last quarter was not great compared to performance the year before. We feel like we don't have the toughest comps in the world when it comes to margins. As I said, as for the double cost, that's in the guidance. We feel comfortable and in control there, so no changes. As for margin support from suppliers and timing of that, as I said, margin support and marketing is very closely linked. It is discretionary.
So we feel comfortable with the guidance that we're giving today for this financial year.
No, that's perfectly clear. Thank you so much, Gregers.
Thank you, Sebastian. Our next question will be from Kristian Godiksen from SEB. Please go ahead. Kristian, now be unmuted.
Thank you. A couple of questions from my side as well. I'll start out following up on Sebastian's question on the margin guidance. It's a fairly wide range for the full year now. Only Q4 is remaining. Can you maybe help us provide some building blocks for, yeah, what are the building blocks for in the low end of the range versus the high end of the range? That would be my first question.
We don't think it was appropriate to narrow the range. I don't want to give any indication as to where in the range either, and I think as for the building blocks, the slides that Per provided, you can tell that there are a lot of things dragging in one direction, a lot of things dragging in the other direction, and when we balance those things out, we are comfortable with the guidance and the implied guidance for the Q4, so no more than that, I think I can give.
Okay, okay. Then secondly, very positively surprised about the acceleration in the KICKS like-for-like in the physical stores. Could you then maybe perhaps provide some of the key building blocks there? And is there anything in those numbers you need to adjust for in the comparison base or anything particular in this quarter?
Yeah, and again, I would think about that as quite an outlier quarter. Again, going back to the scale of change of the KICKS supply chain transformation last year and the impact that had on product availability, on how we operated the business. So this year, we really, and you remember this from our Q2 call, we really pulled forward a build-up of inventory, really staffed the stores to a large extent, and of course, supported with a lot of marketing as well. So I would not sort of extrapolate from this quarter's numbers and say, "This is where stores are going to be from now on in KICKS." It was an unusual quarter, and I have to say also an unusually well-executed quarter from just a people point of view. You know, people, our colleagues on the floor, serving customers, making customers happy.
You can't count on that being the case in every quarter. As you may know, this was a quarter where beauty was really a hit category for this quarter as well, and that fell into our lap. I think the numbers are extraordinary for the KICKS store growth for this quarter.
Okay, and that's a fair point, but could you maybe perhaps then comment on underlying, so the sequential improvement? I hear what you say, that that's the majority part of it, or it's based on some of the extraordinary items, but is there also an underlying improvement, or is the acceleration solely due to all these more or less extraordinary items?
That's very, very hard to piece out, Kristian, to say exactly how it works out. And again, one of the big dynamics in the quarter is about the timing of Black Friday that had an effect. It actually had a different effect in the different markets. We saw more Christmas sales pulled into November in Denmark than we did in the other markets. So there are so many things going on calendar-wise, operationally, commercially, what competitors are doing, whether the weather is helpful to shopping in stores or drives people online. So I would not draw too many conclusions other than it is an exceptionally strong performance driven by some extraordinary factors in the Christmas quarter.
Yeah, but you know, obviously you've seen also January is more pointing towards whether, you know, I think, personally, I had a personal hope for an underlying improvement in the KICKS based on all these, you say, retail toolbox initiatives that you have implemented in KICKS.
That is happening.
That is happening.
Yes, we are seeing an underlying improvement and good growth in our KICKS stores. Is that a result of the playbook coming in? Some of it, but frankly, I think it's mostly about commercial and operational execution in the quarter. We are beginning, of course, to see some new assortment in the stores, but it's not a complete delta. There might be something about how we run the club, how we run the campaigns, and how we're doing that more data-driven. So that might be, can you say, playbook results. But a lot of it is just, you know, commercial decisions, good execution in the quarter.
Okay, got it, then third question is maybe remind me what will happen to the old e-commerce facility in Lynge. You mentioned that it would act as a backup, but I guess long-term-wise, I guess that would be overkill to just have the facility standing there as a backup, so maybe remind me what will happen with the Lynge facility?
So that's going to expire at some point. When we no longer have a need for a backup that will shut down entirely, we will exit the site. And we've made that agreement as well. So we have leeway to do the transition in a controlled fashion, but we're out of Humlebæk once the facility in Lynge is up and running.
Okay, and when is that, sorry?
So we haven't put a time frame to that because we don't know exactly how fast it's going to go. It can be very fast if everything goes perfectly. And you know, we decide to shift fast and it can be slower. And of course, we have the rent. We know when that's going to expire. We don't disclose that, but that's not material, I would say, in the kind of numbers you're looking at.
Okay, so there's no material effect on the long-term target, margin target. That's not included in those numbers.
No, no. So the long-term margin targets absolutely still stand, and everything that we've talked about today are included in that guidance. And the whole transition is included in both this year's guidance and our long-term guidance. So no changes to sort of the effects that we're expecting to get from either KLC or the MLC facility. So this is about timing and how fast this is about the real world. We can make all kinds of plans, but how soon can we exit one side and run everything from the other side? How fast do we get the efficiencies?
Okay, got it. Then just last question. So I guess you expect an improvement in the inventories in the KICKS banner with the new warehouse setup, right? Maybe could you comment a bit on what is the underlying improvement? Because I guess you will save some inventory level from not having to supply all the stores from suppliers and having that buffer. But again, obviously, the offsetting impact is the assortment expansion. Maybe could you comment a bit on those blocks?
Yeah, I think, Kristian, we need to go back to when we started the whole supply chain transformation really in Q1 of last year, and during that transition, you really get into making sure that you have sufficient stock across all categories and also making sure that we have sufficient stock in the stores, so that process has been going on for the full year, and actually, as mentioned earlier also, you know, the level of availability we have in the stores has improved significantly compared to the previous supply chain, which is also helping our business and is helping our business to grow, and where we are right now after 12 months is really a strong performance in the very big, very important quarter of Christmas, and in that quarter, we actually saw our facilities delivering as expected.
Were we a little cautious in terms of the overall inventory levels? Of course. We wanted to make sure that we had sufficient to manage any uncertainties during that quarter, as that was the first time for a Christmas quarter. So what we're seeing right now and the plans going forward is really to take all the learnings we've had from the last 12 months and then apply those into becoming sharper in terms of what are the actual inventory levels we need to run with, both in stores but also at our facility. The good thing with the facility is really that it's one place. So once we do assortment expansion, it is only one place we need to have the assortment in addition to when it hits the stores. But if it's only e-com, it's not a big cost.
Of course, it is an element of increased inventories for a shorter period of time, but still, it's not a huge element. So I would look at the inventories we have right now to be at a, which I just presented, 24%. And I think we're going to improve on that going forward. Again, we need to leave room for the assortment expansion as well. And then, you know, and before we know it, you know, I'll be talking about all the learnings we're getting in the MLC and why we're running a little bit over capacity there on inventories to get all the learnings, et cetera, et cetera. So you'll see going into the next year, there will be some pluses and minuses on that as well.
It's all about making sure that we do the right thing and we do not impact negatively our customers so they don't get a bad experience, so there will be a lot of pluses and minuses as we move forward.
Perfect. Okay, thank you a lot.
Thank you, Kristian. Our next question comes from the analyst Poul Jessen from Danske Bank. Please go ahead, Poul. Your line will be unmuted.
Yes, thank you for taking the question. So I'll just start by the gross margin. You mentioned the timing impact potentially could be part of the reason of the markets going so poor. I was wondering, do you have any indication if you also get a larger share of the wallet of the vendors? Or is that more or less stable?
Did you say share of wallet of the vendors, of the suppliers?
Yeah, how much they spend. In general, are you getting more of what they spend in the Nordics given your size now?
Yeah, I can't say. I don't know their budgets. I don't know their allocations. I can say that we have found them to be very supportive. And I think that our suppliers also value the fact that we are able to drive this kind of growth across the markets. So I think from a collaboration point of view, this has been a successful quarter, a lot of proof that this is not just about squeezing each other. It is about jointly winning and growing in the market. So I think that's from a partner and supplier point of view, that's probably the most important proof point that this was winning together in the Christmas quarter. And that is the mindset with which we have been running the business for years and years, both in KICKS and Matas. So no real change, but it works.
Okay, and then one other question on the new brand launches. I just found that you've done 190 more or less in Matas this year and 60 in KICKS. Can you give an indication of how many you're terminating as well?
Yeah, we are terminating. I would say we have net been increasing as is in our strategy, but we are always assessing, you know, did some of those brands that we've had on the shelves for years online or offline, are they sort of entering the sunset phase and when is the right time to exit? And of course, some of the new stuff that we have brought in. And again, as Per said, you only bring it in in one location. You don't have tons of quantities. So of course, some of these things that we buy turn out to be not what the customer wants, and we delist and destock. So there is a net decrease. I can't give you the exact number on a brand level.
Okay, and then some bookkeeping Special Items is tending to zero this quarter. Does that mean that we should not expect much more to come?
It's correct, Poul, that in this quarter, we only had DKK 1 million in special items. This is actually also the quarter where all focus is focused on our business. It's about executing. And you know, we tend to take a lot of structural things, a lot of the things that we adjust and which impact the special items. We don't do that in Q3. So looking forward, you know, we set a target of around DKK 100 million. I think overall, once we complete it, we'll be in that range, around the DKK 100 million, which we set aside.
Okay, and what should, I don't know if you want to indicate, will there also be some next financial year?
That's too soon to say. That's too soon. It's in the nature of Special Items, I guess, to be special.
Then, also, bookkeeping depreciations on the MLC center. When should we expect those to start? Will that be in the next financial year, or now that it's completed but not operational?
Yeah, I think.
When do you consider depreciations coming?
Yeah, Poul, it's a good question. I would love to give you a very precise answer. The fact is that, you know, we are in the testing phase. You know, we're running the factory testing, adjusting, testing and readjusting, et cetera, et cetera. Once we move into real production, real shipment of orders, that's where we need to start the depreciations. So that's all about the testing period when we feel comfortable and when we basically start ramping up and putting all the goods into the factory in Lynge. It's going to happen, you know, during the next five months. Timing-wise, exactly, yeah, within the next five months, I would say.
But does that mean that you do full depreciation on the first day where you start commercial shipments, or is depreciation going up as you migrate volumes to the factory?
I think, you know, it actually, you start the depreciation once you start doing your normal business, when you start sending out orders, not because you send out five testing orders, but if you start doing real orders coming out of Lynge, you'll have to start your depreciation at that point of time, and to do that, of course, we need to have a lot of products in there, so once we've filled it up with sufficient products and we feel comfortable with all the testing, we start shipping. That's where we start the depreciation.
Okay, so when you say within fixed five months, then it's somewhere during calendar Q2?
Yeah, before the end of calendar Q2, yes. Unless something goes really wrong, which we don't expect.
Okay, thank you.
Thank you, Poul. As a reminder, press five stars to ask a question. The next question will be the line of Mads Skou from Carnegie. Please go ahead, y our line will be unmuted. Mads, can you hear us? And we'll move on from Mads since we can't hear him. The next question will be a follow-up from the line of Kristian from SEB. Please go ahead, Your line wil l be unmuted.
Thank you. Just one follow-up question. So I was just wondering, can you confirm whether the Skincity impact is that out of numbers in Q4? As I recall, that was in Q4 last year. You started to do the migration and some household cleaning. That will be my question.
There's still some Skincity revenues left in Q4 as well. And of course, there are some Skincity numbers in the total year base. But it is winding down quite rapidly.
Okay, perfect. Thanks a lot.
Thank you, Kristian. As no one else has lined up for questions, I'll now hand it back to the speakers.
Thank you very much, Operator. Thank you, everyone. I know it's a really busy day in the market, so thanks for taking the time to join the call, and we'll see you next time.