Welcome to the conference call and webcast on Matas financial results for the year 2019/2020. Today, we will also be covering our trading update for the first part of the new financial year, and particularly the corona impact on Matas. We will also dig into our strategy and give you the latest news on updates we have made to our strategy. With me today, I have Anders Skole-Sørensen, who is the CFO of Matas, and my name is Gregers Wedell-Wedellsborg. I am the CEO. Please turn to the next slide. I will start out by giving a few comments on the overall situation as we see it right now. We will then dig deep into the corona impact on our financials, both for the last year and the trading update for the beginning of this financial year.
We will disclose much more than we usually do and aim to be very transparent about what is going on in the business right now. We will go to the review of the financial results for the last year. That's Anders covering that part. I will return on the strategy update, and in particular, focus on the areas where we have news. We will close off by reiterating our financial ambitions for the year and our capital allocation principles. Overall, this is the story. If we start before corona, we were on track with our results for the financial year. We had a very good start to the year, continuing the trend that we saw from our stellar Christmas quarter, and we were pretty much on track, actually very well on track, to fulfilling the increased guidance that we gave before corona.
As you know, Corona hit, and it hit hard. We saw for the year a top-line growth of 4.2%, and had Corona not come, it would have been above 5.5% for the year. We saw underlying growth for the year of 0.7%. Had Corona not come, again, we are confident that we would have reached a 2% like-for-like growth for the year. Our EBITDA margin reached 14%, better than our best-case scenario in our suspension of the guidance, and had Corona not come, we would have ended well above 14%. Overall, looking back, we were well on track for heading into Corona. As for the impact of Corona, it was a true stress test for our business model, and I will spend time on what we have learned from that. We saw a temporary drop in sales.
We saw a temporary decrease of our liquidity situation, but we also saw a very rapid recovery starting in the third week of the lockdown. We have seen online sales booming, and we have seen that supply chain volatility, an imbalance between demand, which changed quite dramatically in the first few weeks of the corona crisis, and what we had on our shelves, and we would get back to that as well. As for our strategy, clearly we were on track, and we are on track. We have made solid progress in the first two years that we have been working, and I think, in particular, our digital progress is notable. As we look ahead, the key point that I have today is we're not changing our strategy.
We are staying the course, COVID, corona, the implication of that is that we are accelerating the transformation that we had already set in motion. As for the financial targets, we don't give any guidance for the year 2021. We still believe that it's premature. There is too much uncertainty in the market and relating to the longer-term effects of corona. We do give, as I mentioned, increased transparency instead. We maintain our longer-term financials ambitions, but we note that there is obviously increased macro risk. Finally, the board recommends to the general assembly that we suspend our dividend for the year 2019/2020 to make sure that we have the financial position to withstand whatever is ahead. First, let's look into the COVID-19 effects on last year, the last quarter of last year.
Denmark closed down on March 11th, the aggregate impact on Matas is that we saw in the quarter around DKK 50 million drop in sales. We saw an increase in cost because suddenly there were a number of things we had to do quite rapidly to prepare for the new situation. We saw an EBITDA impact negative of around DKK 20 million. We saw an increase in the working capital of DKK 60 million, and we saw a market decrease in cash flow of DKK 75 million, and Anders will get back to that. What's even more interesting, I think, is that as we look into Q1, we have seen those impacts improving on all counts. First of all, in the period from April 1st to May 17th, we have seen a 7% growth year-on-year in that period.
We do see that there is some operating cost increases as we operate under the guise of corona and the pandemic. We also note in the report that there will be some limited margin pressure resulting from the new situation, the channel shift, and the added cost to run the business, some of which will be one-offs. Notably, we see a positive development of the net working capital situation, and we see cash flows getting back to normal levels and normal dynamics already in the first few weeks of the new quarter. This is a detailed review of our daily sales on a moving seven-day average from the close down of Denmark. As we went into the situation, we saw an index in our total sales, including Firtal, of around 105 from the New Year's until March 10th.
That's our run rate, and we even took out the leap day, which was an extra trading day. This will give you an impression of where we were as the crisis hit. We saw this dramatic impact of around DKK 50 million in lost sales, stretching over around two, three weeks. Matas was one of the retailers allowed to keep all our stores open, even in shopping centers, because we were considered an essential retailer, but we had a number of locations where there was simply no one around, no customers, so it made no sense to keep the stores open. In that period, we closed around 30 stores and another five as we went into the month of April. This happened. Quite surprisingly, we saw a very rapid recovery of sales already in the beginning of April, stemming from two different sources.
One is, obviously, that we were one of the few retailers who were allowed to stay open across the country and were a retailer that people were really needing in a time of crisis. I will get back to that. Also because we made a very conscious decision to keep our operations running, to keep communicating and marketing running, and a very conscious decision to ramp up our digital sales dramatically already from the day one when we saw Denmark lockdown. We have seen a normalization of the sales compared to last year as the stores start opening, as Denmark and retail starts opening again, and that will give you the overall number of 7% growth compared to the same period last year. As of today, we have all stores back in operation and all employees back to work.
This is what happened related to our channels. In the first period of the year before COVID-19, 17% of our sales came from online. As usual, around half of the orders that were made online were picked up in store. That's the pink line that goes across. 83% coming from physical stores. This is the dynamic as the crisis evolves. As you can tell, in week 15, we had a business composition that 33% of our sales, and you remember from the slide before, this was actually one of our big sales weeks, came from online. This is a testament to the fact that we can adapt this business very, very rapidly to a situation where customers shift almost overnight to online. This was like going into a time machine and looking at maybe what's the future for Matas going to look like.
I think the good news here is that we actually managed to operate the business and even with very high customer satisfaction. There's another point I want to make with this slide that I think is even more comforting than that. That is, as stores are reopening, customers use the stores again. It's not a case that, oh, suddenly people have realized that there is an online channel that's much easier, I don't need the store anymore. As stores are opening and as Denmark is opening, people are returning to the stores and people are opting again to pick up the orders made on matas.dk in our physical stores. As you can see also, we are still at a record high level of online sales as a share of total sales. That's one week, so we should draw limited conclusions from that.
A shift, but key message here is that the stores are regaining share as we go along. This is just a deep dive down into the matas.dk situation. We saw days where we had index 1,000 order volume and delivery volumes from our operation in Humlebæk, and days where we saw index 500. As you can imagine, the logistics dynamics of handling that, it could easily have led to very long delays in delivery times and so on. Thanks to our facility in Humlebæk, we actually were able to cope with that kind of growth, and we also saw that customer satisfaction with matas.dk rose to the highest level ever in that period.
This will give you an indication that we actually have a very, very scalable setup. As for the categories, it will come as no surprise that our health and wellbeing category is outperforming under COVID-19. This is our little brother category or little sister category, if you will, in normal circumstances, but really it was the saving grace of the business in this particular period, and in particular in March, where we saw hefty increases in hand sanitizers, over-the-counter all kinds of hygiene products and so on and so forth. We saw an immediate drop in high-end beauty spending, and we saw a drop in mass beauty as well in March. What's interesting is that the growth in health and wellbeing is continuing into April, but high-end beauty and mass beauty are coming back quite rapidly. This has not skewed our business in any way.
It's actually a return to some kind of normal just within the scope of three or four weeks. Again, this will tell you something about the internal hedge that we have in Matas, that because we had different categories and shoppers use us for different purposes, we are actually quite resilient as a business. Before handing over to Anders, I will reiterate that for this particular quarter, for this trading update, we do see some limited margin pressure. We have added costs to run the business. Just one example, in Humlebæk, where we have our online warehouse, we need all kinds of safety procedures to keep social distancing and working in sales and so on and so forth. There is some impact of that, and there's also some dilutive effect on gross margin from online, but I will talk more about that later on.
Anders, on to you for the financial results.
Thank you. Thanks, Gregers. If you turn to the next page, we are looking at the overall key financials for the whole of the financial year. As Gregers already mentioned, growth was 4.2% with 0.7% like-for-like. As we also said, we believe that would've been around 5.5% if it hadn't been for COVID-19, with a like-for-like above 2%, actually. If you look at gross margin, we've seen the picture that we've seen for a number of years, it's fairly stable. It's a small drop-off in gross margin in 2019/2020 compared to 2018/2019, with the main reason being the ongoing channel shift that we've talked about and which has been accelerated at the end of the year. We are able to partially mitigate that by negotiating with our suppliers and also by working very consciously to raise gross margin in the online. There is still some negative impact.
As to the cost side, there has been an overall increase in cost, that actually covers an underlying decrease in our cost, some extra costs coming from new activities and so forth. We will dive into that in more detail a little later. EBITDA, obviously with the development in gross margin and cost, a drop-off in EBITDA, going down from around DKK 550 million ex one-off to around DKK 518 million ex one-offs in 2019/2020. Adjusted net profit also dropping off from DKK 343 million to DKK 297 million. That is explained partially by the fall in EBITDA, also by an increase in our depreciations due to a higher asset base as we invest into the business, partially mitigated by lower taxes. Free cash flow, a very dramatic shift, as you can see, from over DKK 230+ million in 2018/2019 to a minus of DKK 71 million in this year.
We will dive a lot more into this, but just for now let me mention that we believe around DKK 75 million of that is purely due to the effects of COVID-19. The two last graphs on this page are Matas only, and I just want to mention that because it actually makes the numbers a little worse than they are if we had looked for the Matas Group in total. The reason why they are only Matas at this point is that we don't have numbers from Firtal back in 2018/2019, so we don't have the right numbers yet. We will have it from this year on. What we see here is a continuation of the longer-term trends that we've seen.
There is a fall in traffic, especially in the high street. That does reflect in lower overall footfall, lower overall transactions, which is being mitigated by an increase in the basket size. We are actually able to sell more to the customers that we meet in the shop. With that, let's go on to the next page. On the next page, we're trying to look at the more longer-term trends because in reality, that's how we view the business. We see what is going on, what's going on longer term. In this year, we've particularly wanted to mention that, of course, with the special circumstances, the hopefully one-off circumstances of the COVID-19 crisis, we've tried to take that into reflection in these numbers and just to show you what the underlying trend is.
If we start with the revenue, I think we can now safely say that we have really turned the corner with regards to like-for-like revenue growth in Matas. We've actually seen a positive development in that long-term underlying trend. That's the dotted line on the graph. That we've seen all the way back from the first quarter of 2018/2019. Just ignoring for this purpose the effects of COVID-19, we are really very much on a positive trend. With regards to gross margin, still very much a stable long-term trend. Some of you have noticed, I know that you've asked about it was a fourth quarter with 45.8% of gross margin against 45.6% last year. That's very positive, it seems to be very positive to the rest of the year. Let me just be clear here.
There are a number of year-end effects that are taken in the fourth quarter. We have to look for how many of our gift cards have not been used. We are looking for shrinkage and truing up shrinkage numbers. Thus, fourth quarter has some variations, and this year these variations were quite positive. There is no guarantee that that's going to happen in every quarter, obviously there's a bit of stochastic numbers there. I wouldn't put too much emphasis on that growth, but just pointing out that it seems to be just reaffirming the stability of the gross margin. With regards to the EBITDA margin, we are still seeing, even if we discount for COVID-19, we are still seeing the EBITDA margin on a slightly negative trend, this is pretty much in line with what we have in our overall strategy.
We know that it's going to take a while for us to stabilize the EBITDA margin. On the very positive side, this is the last graph showing revenue and EBITDA in Danish krone million. We think it's quite important to see that if you look at the dotted red line, you can really see how we've managed to turn around Matas and turning Matas back into a growth business because we've actually been growing the revenue quite substantially over the last many, many quarters. With regards to the EBITDA in Danish krone, because you don't live off percentage, as we all know, you live off Danish krone. We are not quite there yet, but we're very close to actually having stabilized our earnings, our EBITDA, in Danish krone. With that, let's turn to the next slide.
I told you I would come back to the cost, and that's what we're doing right here. If we look at cost and just look at the headline number, we see overall costs, operating costs, that is other external costs and staff costs, going up by DKK 93 million from 2018/2019 to 2019/2020. It is very important to look at the elements here. First of all, we acquired Kosmolet at the beginning of this year, and we had acquired Firtal sort of in the middle of last year. All of the Kosmolet costs are differences compared to last year, and a lot of the costs in Firtal are also differences to last year. They're not really because costs are growing, they're just because costs are included in the numbers now, they were not included in the numbers last year. That adds about DKK 68 million of costs alone.
I think it's a very positive story we are telling you about what goes on in our online business. There are also costs associated with this very high growth level. Our numbers show that the extra growth that we have at our online business, matas.dk, adds about DKK 40 million of costs. When you add up those two numbers, you actually get that cost should have, not should have, but could have gone up by DKK 109 million. Actually, in reality, they only went up by DKK 93. We were actually able to reduce the cost base in the rest of the business by around DKK 16 million, showing that we are working very hard with efficiency, both in the stores but also increasingly at the headquarters and making sure that the costs stay in line. The next part is the cash flow.
When you saw the cash flow, you could clearly see that there was a very dramatic downward shift in cash flow, and that's what's shown in the table, the free cash flow changing year-on-year by DKK 300 million. The big changes, as I would say, is on the inventories. I'll come back to that a little later. There's always also been quite a big drop in trade payables, and that was due to two things. They were unusually high at the end of 2018/2019. You can take a look at our historical numbers and see that that is the case. Then there were some timing differences around the payments just around year-end. We also paid some of our suppliers perhaps a little earlier than we would have done otherwise.
That meant that there was a drop-off by DKK 50 million compared to the end of last year. However, very important to stress, this is not a question of us accepting worse payment terms. The payment terms that we work with are the same, so it is more of a technical nature. CapEx, very much a substantial part here. We have been investing heavily in the business. We've talked about this also throughout the quarters. When you look at the overall numbers, it's about DKK 64 million more of investments in CapEx this year compared to last year. Primarily, of course, due to the investments in Matas Life and also in the online activities, including the new webshop up in Humlebæk, but also some new investments in our headquarters. We're actually standing right now in some of the renovated areas of the headquarters.
That, of course, also make a difference. Finally, acquisitions were higher this year than they were last year by about DKK 30 million because this year we added both Kosmolet and Firtal bought DFS and some webshops, where last year it was just the acquisition of Firtal. Now, we'd like to just dive a little more into specifically the development in inventories, as that was the most important part of the working capital development. When you look at the headline number on inventories, obviously a jump up by DKK 177 million from DKK 786 million to DKK 963 million is a big jump, and that's why you need to dive into the individual parts of that just to understand what goes on.
Firstly, we willingly accepted an increase in inventories, especially in the third quarter, because we wanted to make sure that the shops were well-stocked, and we were also awarded with a stellar Christmas quarter. We really think that was the right decision, but it did cost something on working capital. Obviously, when we moved our web shop from Allerød, from our headquarters, up to our new premises in Humlebæk, we needed to add extra inventory because obviously we couldn't have the same inventory in two places. We have to have an inventory there and an inventory here. We estimate that has had a net effect of about DKK 30 million, which we think is very positive because it has enabled us to grow as fast as we could, as Greg ers already told you. We added Kosmolet. They have some inventory.
It's not a big number, but it all counts. On top of that, Firtal is a very fast-growing business as well. That means that they have to tie up a little more in inventories. Those two parts together is almost DKK 60 million. Now, the surprise, negative surprise, obviously comes from the effects of COVID-19. Greg ers very briefly touched upon it, but the problem was that basically overnight, we were met with a situation where our customers, they shifted their consumption. They shifted both their consumption in where they wanted to consume. They didn't want to consume in the shops anymore for obvious reasons. They wanted to consume online. It's all good and well to have goods in the stores. Now they wanted goods online, so we had to add goods online.
Secondly, they shifted, as Greg ers already showed you, they shifted their consumption away from the beauty area towards health and wellbeing, which was also quite a dramatic shift and made it necessary for us to be out there and scrambling to get new goods into the warehouses. Obviously, when they add all of that up, that actually meant that when the dust settled on the March 31st, which was, by the way, in the middle of the crisis, we actually had an inventory level which is about DKK 75 million higher than we would estimate it to have had otherwise. Unfortunately, that came on top of other expenses and made the whole of our inventories go up by as much as DKK 177 million.
I think it is fair to say that obviously this is not something that we look upon and say, "Wow, we are so happy that we have increased our inventories by this much," and we are going to work very hard bringing them down. You can say some of the initiatives that we talked to you about back at the end of Q3 have been postponed by the COVID-19 crisis. That doesn't mean that we're not going to do them. It just means that they're being pushed a little ahead in time. Okay. With that, I think it is time to go back to the strategy, and you, Gregers.
Thank you, Anders. I just want to round off by saying had we not made those investments in Humlebæk and in adding inventory to Firtal, the first graphs I showed you about how we weathered the COVID crisis had looked very, very different in a negative direction. As Anders also mentioned, this is going to be a focus area looking forward. Our strategy. I will do a brief review on what we have achieved, and I will spend most time on where there's something new to tell. We have five strategic tracks in our strategy related to renewing our brand and living our purpose, winning online, getting the stores back to growth, and finding new growth, and finally, changing how we work. On this slide, which you can consult later, if you will, we have listed sort of highlight results from the initiatives that we have already made.
These are actual results from the last two years of executing on the strategy. We are very pleased with the execution speed and how it's turning out with the execution of the strategy, and I will get back to each of those. First, how has COVID-19 changed the outlook for the business? How do we need to adapt our strategy to what is perhaps a new normal? First, there are the obvious risks, and I think you see these everywhere you turn these days. An obvious risk of recession, an obvious risk that a lot of other players have looked to online and seen that this is where the growth is, and obviously the ever-present threat of international online competition coming into Denmark.
Finally, a second wave of pandemic, which might not hit Matas particularly hard, as you've seen, but it will hit the overall economy hard, reinforcing recession, of course. Those of you who have followed us for years will know that we're not a recession-proof business, but we do have a lot of hedges by being both high-end mass beauty and health and wellbeing that actually allows us to weather recessions quite well. I'm sure we can all agree that this recession that we're looking into will probably look like no historical precedent. I think what's being missed a little bit in the conversation about what's going on is some of the opportunities that manifest themselves on the back end, hopefully, when the COVID crisis is over.
First of all, we have seen a clear shift in shopping patterns, people shopping locally, people staying at home, not traveling out of the country. We actually do think there is some upside to domestic consumption. We also think that there is upside, obviously, to digital, that the growth that we have seen will accelerate, and we are well-positioned to meet that change. Finally, health and personal care are categories when people become conscious of protecting themselves, then obviously they gravitate towards those kinds of products that we have on our shelves, and we've seen that very clearly. There are some opportunities that we are able to grab hold of as well. What does that mean? That means that for the next part of our strategy period, the next three-year period as we see it right now, we are going to stay the course.
This is not an occasion where we need to change our strategy. We are on the right track. We saw that before the crisis, through the crisis, and as we are coming, hopefully, out of the crisis. There are at least three areas where we will make changes. The first one, online. We will increase investments to increase our lead in the market and also extend our reach online. We will take a new approach to how we address our store network with more focus on consolidation of the store network and a different approach to how we refresh and update the stores.
Finally, we will continue to aim for new growth, but finally change how we work and specifically that we need to change our business model over the next coming years to both enable the overall transformation in Matas, but also fund the transformation to make sure that we hit those financial ambitions at the end of the strategy period. I will go briefly into these areas. First of all, our brand, our purpose, how we meet the customer. If you follow us closely or talk to someone who does, you will have noticed that we have gotten more than just a fresh face. We have really renewed the business across all customer touch points, whether the stores, the products, our own label, iconic products, what you can get in the stores, the assortment, and how we meet customers online.
We track the success of that initiative by looking at customer surveys, brand scores. I won't go through all of these, but just tell you every single customer satisfaction survey, market research study shows us that the Matas brand is very, very strong. It has always been, but it has not lost strength, and it increases in vitality, and it increases in vitality among the young demographic. We actually just got one survey saying that under the lockdown of Denmark, Matas grew to be the second strongest brand overall of all brands in Denmark, the highest position we have ever reached. Win online, this is the area where most change has been taking place and where most change will be taking place.
It has been a total revamp of the company from having four employees working dedicated with online to having a full floor here at headquarters and the engagement of all our staff in the physical stores. We have invested in improving every single aspect of the online shopping experience, how you find us on Google, social media, what happens when you get into the site, how do we present the product. I could go on and on. Every single aspect of the shopping experience we have invested in and improved. We have also been quite clear that the customer should expect very fast delivery from matas.dk. We do same-day delivery in greater Copenhagen, next-day delivery to the rest of the country, and we have made great strides in that area.
Also we have become much more skilled at using our Club Matas customer base to do targeted personal digital marketing and media propositions. Finally, as you know, we have added Firtal, which will give us the benefit of having a low-cost operating model, able to compete purely on price against the online competitors. We usually bring this slide. We do again because this will tell you that at the end of the fourth quarter, 19% of Matas's revenues came from online, 19%. You can see the split between Firtal and matas.dk, with matas.dk growing the fastest. It got a little push from COVID, we would have been increasing even without COVID.
This one, if you follow us closely, we've showed it before, but we like it so much because it tells you one thing that this is not just a success in our own space, beauty and wellbeing, it is an overall digital transformation success story in Denmark. In 2017, we were the 20th most used web shop in Denmark. Now in 2019, we are number five across all web shops, across all categories for customers in Denmark. You can see some prominent names on that list just to give you an idea that this has been a quite spectacular journey in just two years. This is new, and this I'm sure will interest all of you. This is the first time we disclose our online profitability for the year. We don't give you every single line.
We still think this is really sensitive information to our competitors. We do give you two headline numbers, namely our revenue, you know that, our EBITDA margin before special items. I need to point out that our business model is to be channel agnostic. We don't care if this customer wants to shop online or in the stores. We really care that we are first choice and that we get the bigger share of wallet when the customer wants to shop beauty and wellbeing. This does tell you that the economics of the online channel are pretty good, 10% EBITDA margin. It tells you something else, that we have seen clear evidence over the last few years that profitability is scaling, and we have actually, under COVID, seen a quite impressive scaling of some of the cost ratios in our online business.
We do believe that when we look to 2022, 2023, that we will see continued growth due to the channel shift continuing and market share gains, which we aim to achieve. We also have seen clear evidence that as online becomes bigger, the gross margin improves for the simple reason that when it becomes habit to shop online, sometimes you will buy on campaign, sometimes you will buy full price, and there is a mix change as well. There are a number of other factors that have shown us already that the gross margin from online is getting pushed up as the business grows. We have seen another thing over the year, that there are positive, in fact, positive scale effects on all the major cost ratios.
As we grow, we don't need to expand our organization as dramatically as we have done over the years. The marginal increase in organization, it's not like a physical store that you need to add a new physical store. There is positive scale effects on wages. Very clear positive scale effects on marketing. Our logistic learning curve just gets better and better with scale. That's pointing in the right direction as well. We are actually, I would say even more comfortable saying now than we were a year ago, that we are going in the right direction, and it seems like a fair ambition that we can in fact be channel agnostic at the end of the strategy period.
As all of you know, there is a trade-off between how much you invest in marketing and how much growth you're getting and how much bottom line. That's discretionary. We think underlying as a business, we are able to get there. As for Firtal, our acquisition, I'm pleased to say that that has actually, in many cases, exceeded our expectations, in particular in relation to growth. We have also been able to harvest synergies in line with expectations, and we have seen that Firtal Group is actually able to buy a new web shop and integrate it within just a few months on the technical side and maybe a quarter on the logistical side. Quite good growth, 52%, the majority of which is organic growth, some of which is the acquisition of DFS. As we look ahead, this just feeds our appetite to invest in digital.
We have the clear ambition that we want to be the undisputed market leader in beauty and wellbeing, and we measure our success by whether we outgrow the competition every single quarter. Also, of course, we are aware that for now, competition is mainly local, and in the future, we should be ready to meet international competition, and we have done a number of things to be prepared for an eventual entry of international competitors. We feel like we are in a much, much, much better place than we have ever been. As I've mentioned throughout, the focus on profitability of the online channel, both operationally and commercially, is much higher at this point than it was. The final point is that we are starting now to look ahead at our logistics setup overall.
We will initiate now a long-term logistics review to look at how should Matas logistics be set up for the future on the other side of the strategy period. As for the stores, really two important ones and two that are less important. Historically, Matas has not worked a lot with the store network. It was what it was, and it was working really well. We have, over the last few years, worked with network adaptation and consolidation. We are now down to 268 physical stores, 10 fewer than last year. I want to highlight again, for those who don't follow us closely, we have less than 12 months average notice period, so it's very cheap for us to exit a store. We have also invested in the Matas Life concept.
Just note that by now, we have 66 stores that have been upgraded within the last five years, and they are our important stores from a sales perspective, and 33% of all sales from the stores now come from upgraded stores. I should mention that every year we work to offset wage inflation. We've actually taken out 4% operating cost improvement in the stores, more than offsetting the wage inflation. We have continued to drive omni-channel features to get the synergy between the stores and online. Matas Life, our new concept, I hope you have had a chance to visit or bring someone you like to visit with you to get the full experience. I will pick out four case studies that will highlight what we have said earlier about the effect of investing in a store.
Case number one, mid-sized town, merger of two stores into a new high street location. Two smaller stores into a bigger one. What did we see? A index on that particular store compared to the two stores before of 114. From a sales perspective, a wonderful case, and of course, from an EBITDA perspective, given that you only have one set of cost, one set of inventories as well, actually, this is a very, very attractive case, and those are the kinds of cases that we are obviously chasing and that we see some opportunity, quite a few opportunities, and maybe even more after COVID-19, to do some of these cases. Another one, because you might conclude from this particular example that it's a good idea to just go ahead and merge stores. I can tell you it is an art, not a science.
The next example is a merger of two city stores that were 250 meters apart, literally on the same street. We merged those two into a bigger store, same total sales area as the two stores before. We saw a 13% drop of sales, but we did see a positive EBITDA effect on consolidating those two stores. Dropping 13% of sales in an area, we don't think that that's the right way to go. There is still areas where it makes sense to have lots of smaller stores because that's how the consumer wants to shop. Two one-to-one examples. One, a full upgrade, and by full upgrade, I mean the expensive version where we do pretty much everything. We strip out the store and fill it up again with new fittings and everything.
What we have seen, this is kind of an average case, 103 index on the new store compared to the same store the year before, a positive effect on EBITDA as well. A decent case, you should always compare this to how the rest of the stores are going, an index of 103 is a decent upgrade case. Not a stellar one, a decent one. As always, you need to remember that retailers must invest just to sustain the sales. They must invest in the stores. However, the really interesting thing is that we have also experimented with doing light upgrades where we don't refit everything but do decorations and a few modular changes to the stores.
We have actually seen, we've only done a few of those, but just based on the few that we have made, at significantly lower CapEx, about 25% of what a full version costs, we can still stimulate growth relative to peer stores in those particular stores, and we see a positive effect on EBITDA. What does that mean for our overall strategy? COVID and these cases brought together the point that we are accelerating digital will mean that we will upgrade our stores. We will continue to invest in our stores, but it will be at a lower rate than what we've done last year for sure, and it will be at a lower CapEx per unit.
We will continue to gradually consolidate our network, but I can tell you we have looked at many times whether it would make sense to close 25 stores, and get a better business out of that, and it is not a good case. It is a very good case to just follow the market, and once a store goes toward red numbers, we can exit it rapidly and at low cost. That is the best way of consolidating our network. We will invest in stores, as I've said, but it will be modular improvements in more stores and fewer full upgrades, and only spend the real money on the full upgrades if we get just the right location, just the right place in just the right town. Also we will continue with the running efficiencies programs for our stores and, of course, driving the omni-channel synergies.
As for new growth, when we announced our strategy in May 2018, we said that we would grow in the green market, and for sure we have. We have seen over or around 20% annual growth from that green segment. A lot of it is driven by Firtal, but we have also, in the existing Matas business, seen a green wave and increased demands from customers and a very good response to our green categories. We have talked about Firtal, but I can also mention here that our new house brand, Nilens Jord, the Kosmolet acquisition, which is the number one Danish makeup brand, is running according to our plans. We have a very smooth cooperation with Nilens Jord, and we are seeing what we hoped from that particular acquisition, was a super low-risk acquisition. It's a brand we've known really well. We're very happy with that acquisition, too.
We don't announce new growth initiatives of the same kind. I can tell you that one of the areas that we will strive to strengthen over the next few years is our role as a health destination. Just to give you one fact on that, it's only about 50% of the Danes and our target group who consider Matas to be a destination if they have health issues. Actually, if you look at our offering today, we have a lot to offer, and it takes very little to build awareness and to actually improve that offering to the consumer, whether it be women's health, skin conditions, allergy issues, epidemics, obviously very much in demand, or joints, bones, and pain, as we call it.
Some of those customer needs we are able to serve within the existing Matas concept, and we will build awareness to that particular role of our stores that we have seen play out through COVID very, very clearly. Finally, change how we work. We have actually been working a lot in the engine room of Matas. We have taken out DKK 60 million of cost from one side of the business, the non-growth part, and reinvested in growth. We have actually radically changed the culture and the competencies of the organization to be a digital organization and an organization with a much higher change of pace. Obviously, the management team overall has been significantly renewed as well. I have mentioned the logistics center for e-com a number of times. In the next phase, working capital will be higher on our list of priorities.
We have accepted the inventories that you have seen Anders show to sustain and drive the growth. We know we have work to do, and serious work to do on inventories looking ahead. Second, we will look at how should a next generation retailer headquarter look like in 2023? We are already setting that in motion this year to set up the organization, the tech, the processes to be a fully next generation retailer. Finally, as I've mentioned, logistics. There is a lot we can do to optimize on the e-commerce. Still a way to go on the learning curve. We have set in motion the long-term review. With that, I conclude the update on our strategy. As the last point, we will turn to our financial targets and ambitions. Overall, our strategic direction is unchanged but accelerated.
Our ambitions toward 2022, 2023 are unchanged. Obviously there is higher macro risk because of what we have all been through these last few months and what the world has been through. We're on track with our strategy. Our capital allocation policy is unchanged. You should note that due to the effects of IFRS 16, there is actually a de facto lowering of our gearing target. It's still between two and a half and three turns. It is actually a lowering of our gearing target. Also, as you know, the board has recommended to the general assembly that we suspend the dividend for this year to brace ourselves for maybe a tough year up ahead. In our capital allocation policy, we stick with the same story that it is the gearing, the investments in the business, and surplus capital allocated to the shareholders.
No change in that. We have not given any guidance for this financial year 2021. We think it is premature. Instead, we have given you the transparency that we have today. As I mentioned, the long-term ambitions after IFRS 16, and they're modified to reflect the new IFRS 16 EBITDA margin and the lower gearing. With that, I thank you for listening in, and we will open for questions.
Thank you. If you would like to ask a question, please press zero one on your telephone keypad. If you wish to withdraw a question, you may do so by pressing zero two to cancel. That is zero one if you would like to ask a question. Our first question is from Magnus Jensen from SEB. Please go ahead, your line is open.
Hi, guys. Thank you for a thorough presentation. First of all, on the development that you've seen in the first five months of the year. You see a dramatic shift from end March to beginning of April. Could you put any words to how that is the case? Living in Denmark, I didn't see too much change in how people behaved from mid-March to early April, given that the lockdown was still in place. Secondly, could you say anything in terms of, have you seen any change in trend following the openings of department stores, Magasin and ILLUM and the likes here in the last few weeks of May? I know it's early days, have you seen a shift in the trend? Now people can buy your kind of products at their place.
As for the first, I think you will find any retailer will tell you that the period between March 11th and more specifically March 18th until the beginning of April was very dramatic. This was when our Prime Minister closed down the country and our queen told Denmark to basically stay at home and even shop online. People really did. They stayed at home. Of course, from March 18th, the shopping centers, which are a big part of our business, big part of retail, were almost completely vacated. A very dramatic shift on our business and on other businesses. As for the second part of your question, that's a question that relates to the period after our trading update. I don't think it would be reasonable to comment on that. As I have said.
Fair enough.
We definitely benefited in the first part of April and May from not having a lot of offline competition, that's for sure.
Okay. Still, I think early April, you see a significant improvement. The country's still in total lockdown. Is there any explanation to why you see that shift?
It's driven by online. If you look at the channel split slide I showed you right up front, the fact that when the country locks down, people start shifting online, we increase our capacity, more people start shifting online, it is actually peak in early April. We see the combination of people daring to go out to the open stores, the high street stores, we see an explosion in online sales. As I mentioned, you can tell from the graph that we showed you, that we had days of index 1,000 on matas.dk in that particular period.
Thanks. In terms of just one short one on the online. Have you lost any sales due to out of stock given the very high activity on your online store? Any significant amount?
I didn't get the question.
Yeah. No, of course, given that there were certain specific times where the demand for hygiene products was through the roof, of course, there were times where we were sold out. Everyone was sold out. That is obviously the case. It's fiendishly difficult to know exactly how much you have of lost sales in that way. Yes, some lost sales could not be avoided.
At some point, you could almost buy hand sanitizer at the price of Dior, which I think is not very reasonable. Not in Matas, I should say, but we saw that in the more gray market areas. There was definitely a shortage of that.
Thanks. Two more questions for my time. First of all, thank you, by the way, for sharing the online margin for this year. Could you say anything about the levels for 2018/2019 and what kind of increase you've seen over the last 12 months?
No, I can say we won't comment on the specific numbers, but we can say that we have seen, as the business scales, we have seen a crawl, upwards crawl of the margin. In those periods, as I mentioned, during COVID, where a lot of people shifted their normal shopping behavior from offline to online, we actually saw a quite dramatic increase in the margin online.
Okay. One last question from me, then. You've closed 10 stores this year or this financial year. You say it's both due to stores from red numbers, but also consolidating stores for better network. Can you say how many were closed due to red numbers?
Just a few.
Yeah. No.
Not a lot.
very, very few of them.
Yeah.
As you can see, there were only quite a low number of standalone closures, and not even all of those had red numbers, but there were some that had, how should I say? They were getting redder at least. We thought that we would rather move slightly ahead of them becoming red.
Just one interesting point of not making too many decisions based on historical numbers. During COVID-19, we have seen stores that we thought we would eventually have to close, have been booming. First, if people don't go to shopping centers, they go for the high street store. Second, as people start to shopping local, going to the summer house for the lockdown, obviously, we have seen some stores having sales records for the period, and that is obviously an anomaly, but it will just tell you that you should be really careful about just judging that things are going in one direction, and that actually the flexibility of the network, the combination of big and small stores, urban and rural stores, shopping center and high street stores, is actually a strength of the Matas business model.
Thank you very much. That's all for me.
Our next question is from André Thormann from ABG. Please go ahead. Your line is open.
Thanks a lot for taking my question. Just for start, in terms of online sales, it seems to continue to keep up quite well also in the more recent weeks. With physical sales also starting to improve, I am just thinking, what should really go wrong since you do not provide a guidance other than just the general economic effects? What do you see here?
I think it's fair to say that with every week or at least 14 days going by, our assessment of the situation changed and has changed over the last few months. We really think that right now the crystal ball is broken, and we think that it would be premature given that it's only a couple of weeks ago that the rest of Denmark really opened up, and maybe what we're seeing is kind of a victory boom, that suddenly people go out and they really have this spending urge, but at some point, reality kicks in and there will be job losses and recession as we spoke about.
We think the different ways this could go are so unclear that it's better for us to give you transparency as we do today than try to guide, because the guidance would be a range that you could use for nothing if we did it.
Okay. Very clear. In terms of margins for the start of Q1, thanks a lot for providing the EBITDA margin for online, by the way. It seems that how much pressure should we think about here with the limited pressure? I understand you say limited, right? With the big increase in online and the scaling effects of online, is that what saves you from increased campaign activity, or can you give some more flavor on that?
I think that all the flavor I can give is in the annual report, that it is a combination of a continued high promotional activity. The fact that online is still gross margin dilutive to the rest of the business, even though it's improving, and the fact that there are added costs at this point to run the business, keeping up safety regulations at our logistics facilities, but also in the stores we have added cost of operations. Some of which, by the way, are of a one-off-ish nature, and we will find ways to mitigate those. There are definitely in the quarter extra costs to run the business.
Okay. In terms of wage compensation, which you sent back again, when should this financial impact you? Are we talking Q1 or Q2, or how should we think about that?
Yeah.
Yeah. The fact that we didn't take the wage compensation, in reality, it had no effect on the fourth quarter. That very small effect it has already been taken care of. Obviously, the benefit would have accrued in the first quarter of the financial year, so in April and May, and thus will not accrue in April and May. That's basically how you could put it.
Okay. Then in terms of other governmental packages or actions or what to call it, is there any cash flow effects we should be aware of things getting pushed in terms of VAT or whatever?
Yeah. There is, and we will definitely make use of that because it's the general rule, wouldn't make sense not to do so. There will be a positive impact on working capital in the first quarter from the mitigations with regarding to VAT payments and with payment of payroll taxes. The exact amount. There is some effect. It's not huge, but it's there. There's a positive effect in the first quarter. That is correct.
Okay. On rent, I understand that you have been asked to postpone rent for a few of your landlords. Can you give any more clarification on how many of the buildings have had postponed rent and how big is the effect?
Again, I don't think we should delve into that level of detail, but there's no doubt that it's not an insignificant part of our rents. It is only a postponement. Some of the postponements have only been one month, so you won't really able to see it in the quarter numbers. Some of them have been for a quarter. To be honest, the net effect of that is rather small compared to other moving parts in the balance sheet.
Okay. The last one from me. In terms of inventory, can you elaborate a bit more on how you will clean up the inventory? Are we talking big rebates or what other measures are you taking?
There are a number of things that we're doing. One of which, the most important one is that demand is actually re-normalizing, if you will. The structure of demand is back to what it was and matches sort of what we have in stock much better. Then second, and I think we've told you earlier on, we were actually in the middle of implementing a new system, managing our whole buying procedure and forecasting. Obviously that particular project, the effect of that has been postponed by, I think, at least a quarter, maybe even two. Apart from that, we think that there are more things we can do to improve inventories, and I think that will be a topic for conversations with you going forward.
Okay. Thanks a lot. That's all for me.
Just as a reminder, if you do wish to ask a question, please press zero one on your telephone keypad. Our next question is from Aleksander Edemann from Nordea. Please go ahead. Your line is open.
Yes. Thank you for taking my questions. I have three questions, and I'll take them one by one. The first question is regarding that you saw a strong comeback here from the April 1st with 7% top-line growth, but that you see moderate pressure on your margins. Firstly, can you maybe quantify what you mean by moderate? This is compared to last year, same quarter as compared to this quarter. I guess it's going to be more than you saw here in Q4 where you specified that you lost DKK 40 million in revenue and DKK 10 million in earnings since now online is going to be a larger part in Q1. That'll be my first question.
You asked what Because we gave the answer to the question just before, but your question is what should you compare against?
Yeah. As compared to last year.
No, I wouldn't use Q4 2019-2020 as a comparison for anything because it's wildly skewed by the last three weeks trading disruption. I think the indication that we're giving you is that it is as much as we can give you at this point, because obviously we're in the middle of it. We haven't even finished the accounts for the month of May. I think we can't be any more specific than what we've already done.
Okay. Thank you. It's just the thing, that moderate pressure, I guess that's a bit fluffy. I'll take it for now.
It's better than a big question.
Yeah. Revenue is down here in Q4 compared to the same quarter last year, but your costs are still up and your external expenses before IFRS 16 is up 14%. Is this primarily due to online only, or what is driving this increase?
I wouldn't look a lot to Q4 for indications as to where the business, and if you do, you should really separate out as much as you can what's going on up until March 10th from what's going on after March 10th, as we've shown you in the graphs, because it's two completely different stories. First part of the year, continuation of the trend we saw over Christmas. Strong sales, strong online growth. Stores actually performing quite well. We were really on track to living up to our guidance, and actually had cause to be optimistic about our sales end of February, mid-March. I think that's as much as I can say. If you do comparisons with Q4, but really for your modeling purposes, I would not look a lot into that.
Okay. My last question is regarding this online everyday margin of 10%. Can you maybe give some color to how you're going to go from 10% to 14% in the 2023?
Yeah.
What is driving it?
Yeah. There's the gross margin. I think we've touched on that a number of times today, that normal sales increase in the way we display the merchandise, increase or differences in how we build the basket because the basket size is a big driver of online profitability. There are lots of things that we can do on the inside, having become a true digital business by now with a full set of competencies. We can actually start working on all those little items, all those little bits that add up to a gross margin improvement. Second, as I mentioned, the cost ratios on wages are scaling because you have basically one headquarter operation. You don't need to add the next 10 people if you want the next million in sales. We are pretty much a fully fitted organization from a headquarter point of view.
We see the scaling effects on the warehouse as well, that we go down the learning curve on running our Humlebæk facility, cost per order, picking and packing goes down. There are also things we can do on shipping to the stores. We think there are a number of levers that will allow us to continue this positive trend on the online earnings.
All right. Thank you. I guess, can you maybe share, because in the report you wrote that the online costs are primarily driven by these increased freight costs when you deliver an order. Can you maybe put some color on how much is variable cost and how much is fixed cost in these online costs?
I think that's where the transparency ends. I think online is probably the most heavily competed market at all right now. I think by giving you what we have, we have gone as far as we can without hampering our business and letting too much out. This is as far as we can go online for now.
Okay. Thank you. The last one is, maybe, I guess online margin is primarily also driven by your basket size. Do you think that has increased during this quarter compared to normally and should be expected to decrease in the rest of the year?
Again, this quarter.
I mean.
The Q4 and the COVID-19 period, it's such exceptional quarters that we can learn something about the dynamics of the business. For example, that our online profitability actually scales despite the fact that we have extra costs. We can't tell you exactly if that's what's going to happen on the other side of the summer, because just within these last six weeks, you see that online share went from 43% at peak to 22% at the end of that period. There are so many things going on right now, so we don't want to draw too many conclusions apart from the fact, and I think that is really the key message today, we are quite resilient to a crisis like this, both in terms of the channels and the goods that we stock and our ability to adapt the business rapidly.
All right. Thank you for taking my questions. I go back in the queue.
Yes.
Our next question is from Poul Jessen from Danske Bank. Please go ahead. Your line is open.
Yes. Thank you. It is Poul Jessen from Danske here. I have three questions. One question is coming back to the online. I was just wondering on the margin, the 10% margin, is that more or less the same if you do the post IFRS 16 or is there a major impact there? I would assume it is less than in the offline stores. It is just to get an impression of the improvement of 4%, how we should now see that in the reported numbers going forward when we move to the new IFRS.
It's a good question. It is correct that the level of impact of IFRS 16 is probably slightly lower online than it is offline, but I couldn't actually give you just offhand the right answer right now. I think we'll have to come back to that when we look at the first quarter numbers, because that will all be post-IFRS 16.
Yeah. The point is, if you increase from 10 to 14, then the 14 is in line with the old ambition for the group.
Yeah. We are aware of that.
It's pre-numbers, both of them.
Those are both pre-numbers. You're right in saying.
It's pre and pre.
Yeah. You're right in saying we are moving the overall target from 14 to 18, and that is correct, that there could be some effects there. It is probably less than what you think, to be honest.
Yeah, it doesn't mean that in the new calculation, then you look for an improvement to 18 on the online as well?
What we're saying is that we are looking for an improvement to 18% in the overall Matas business. That includes the online. It's the group that we're talking about, as always has been the case.
Okay. Second question is on the inventory improvement. Of course, you can or should be able to take out the DKK 75 million from the COVID-19. Looking six, nine months ahead, should we expect to take out more on the inventory side than that number?
All we can tell you is that it is a key priority for us to do something about the inventories. We won't guide specifically.
Okay. The final one is on selective distribution. Now that the DFS apparently has convinced the larger brands that they don't need to have a flagship store in Copenhagen to be able to sell those brands online as they move the store to Malmö, which I assume is much cheaper. Do you believe that or do you fear that that kind of change could have an impact on the general situation with selective distribution?
We think we are quite comfortable because of our discussions with the brands, that they are extremely aware of the advantages of the selective distribution model. They are at a very high level among the brand owners, very alert to the fact that as consumption shifts online, should they find a way to do selective distribution online. We see them being much more protective of their brands and who they partner with online. I'm sure as we have had in the physical world, we will have a number of competitors who are also authorized selective distributors online. We don't think it's going towards a free-for-all.
Okay. Thank you. That's all for me.
Our next question is from André Thormann from ABG. Please go ahead. Your line is open.
Thanks a lot. Just had one more question. In terms of your long-term ambitions, just to understand here, do you have any thoughts about whether you now post-COVID-19 are planning to close more physical stores than you were pre-COVID-19, or is that wrongly understood?
No, I think what we've said is that we will upgrade stores at a lower rate, and we will put less CapEx into each upgraded store. Frankly, the principle for closing stores is the same as it has been for the last three years. If we see stores that are no longer in favor with the local customer, if we see them going into the red, then we will close the stores. There is no case for us, it would be detrimental to both our cash flow and our earnings if we were to close on the back end of COVID-19, if we were to close 20 or 10 stores just to make a point of it. It would be bad business. Much better business to follow the market, see where it's going, and then make decision based on data and on local market conditions.
We will continue that policy.
Okay, thanks.
Just as a final reminder, if you do wish to ask a question, please press zero one on your telephone keypad now. Our next question is from Claus Almer from Nordea. Please go ahead. Your line is open.
Thank you. Yeah, also a few questions from my side. The first goes to the positive impact from the COVID-19-linked products, both in Q4, but I guess also in Q1, at least for the period where you provided some data. Can you try to quantify how much this has helped? That would be the first question.
I think you can gauge some of the number from the data that we have given you and given especially your historical knowledge of our business. I think you will be able to make sensible estimates. I think the key point here is that we don't think that this is a one-off demand bump. We think demand for stuff like hand sanitizers, anything to do with personal hygiene, that is one lasting result of the COVID-19, at least a medium-term effect. We think demand for that particular category is going up. That is why we're strengthening our own proposition going forward.
Okay. That makes sense. You're providing the numbers for the first until May 17th. Why the cutoff of May 17th? I guess you should also have data at least for one week extra.
It was not to manipulate. It was just when we started preparing the material for today. As you know, when we do our Christmas update, we just need a few days of slack to get everything in order. That's why. You can't read anything into the fact that we chose exactly May 17th.
May, including that week, is still in the positive?
You cannot make that inference either. I know you're smart, Claus, but this was just when we made the cutoff. It was pretty random. It was when we started to prepare the material for you.
Yeah.
Okay, fair enough.
Yeah.
Your 10% online EBITDA margin, how is that actually defined? Is that before or after headquarter cost allocation and so on?
Yeah. It is as always when you do things like that and you're cutting out an integral part of the business, there is a number of estimates involved. We have tried to the best of our ability to look at our online business as if it was a standalone business, i.e., it carries costs that are associated with the business also including support costs from the headquarters. The fact that they have to pay a rent in Humlebæk, and also actually pay a rent at the headquarters and so forth and so on.
Obviously, if you were to look at all these numbers, you may be able to come up with a slightly different number from us because you'd say, "Well, I would judge this to be slightly different." It is a best estimate on an attempt to look at it in such a way so as you can be able to compare it to a pure onliner as far as we can do.
Sure. Would it be fair to assume that the tools you're using is a percentage of total revenue or is even more detailed than that?
Oh, it is more detailed than that. We are not just looking at percentages of total revenue. For instance, look, I can give you a concrete example. Customer support, for instance. Okay. Customer support, even though online is, let's say 15% of the business or whatever, they do take up more than 15% of the resources in customer support. We are well aware of that. We are actually charging them with a substantially higher part of the customer support cost than just their 15% or whatever share they have of the overall turnover.
I would think it would be fair to say that when we can, it's activity-based costing.
Yeah.
Obviously, we haven't fudged the numbers. We could make it look wonderful if we wanted.
Yeah
with everything. This is as close as we think it's possible to get, and we will be consistent about that way of reporting, by the way, to comparing to a standalone online retailer. You should note.
Okay.
This is actually quite important to understanding our business model. matas.dk will have lasting cost advantages to pure-play onliners. Really important because that is the crux of our business. For example, their cost to acquire a new customer compared to a pure-play onliner is vastly lower. There are a number of other cost items where they're just structurally operating on the margin of, or in collaboration with another business. That is actually a competitive advantage against pure-play onliners and one of the mitigating factors if we do get international competition online.
Sure. That makes sense. Just the final question, which is going back to your other external cost and staff cost. I know there's volatility over the quarters, and you also mentioned, Gregers, that we shouldn't look too much into the Q4 level. As I read your slides, COVID-19 only had a DKK 5 million extra cost impact in Q4. Is that correct? We just should.
Yeah
correct to this DKK 5 million, then this is a new level?
It's one of those things. Yes, you could probably say, of course, there is a higher level. We do know that we are going out of the year with a higher level because as we also point out, a lot more activity and on the online business that drives some costs on the cost picture as well. Just to strip out five and then say that's the way the world goes from there on in, I think is slightly
Yeah.
You can do that, and you will do the model. We can't do the model for you, but obviously, I think that perhaps is slightly crude. It's all I can say.
Right. Okay. Maybe to ask in another way then. You're saying your online added around, I think it was DKK 41 million?
Yeah
for the growth of the full year. Let's just assume again growth would be more or less the same this year. Is that the way we should think about the cost increase?
No.
No. No, that would not be the case.
You would not get the scale effects.
Yeah
that we've been talking about throughout.
Exactly.
Some costs develop quite linearly with growth. For example, shipping costs. Not a lot of scale in shipping costs, but other costs, and that's warehouse costing, a lot of the headquarter costing, marketing, there are actually positive scale effects. Cost ratios go down as the online business scales.
And please note that we were-
Okay. Fair enough.
We were running in the Humlebæk setup in the autumn. When you run in a new setup, it's not optimally operated. That also counts.
Okay. Thank you so much.
You're welcome.
After are no further questions, I will hand it right back to the speakers for any final comments.
Thank you so much for joining. We know it was a long session, but we hope you gained something from what we have chosen to disclose today. Thank you so much for joining and we will see you. Bye-bye.