Good day, welcome to the Matas H1 2018-19 reports conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Gregers Wedell-Wedellsborg. Please go ahead, sir.
Thank you very much, good morning, everyone, welcome to our presentation covering the second quarter of the 2018-19 financial year. Please turn to slide three. With me on the call today are our CFO, Anders Skole-Sørensen and Elisabeth Klintholm, Head of IR and Corporate Affairs. I would like to start out by offering some high-level comments on the quarter, after which Anders will take us through the presentation of the Q2 numbers. Finally, I will talk a bit about the strategic progress and the initiatives that we have launched this quarter. As usual, we will end with comments on the outlook for 2018-19, finally, with a Q&A session, we look forward to your questions. Please turn to slide four.
We saw falling headline sales, we came out with an upwards revision of our EBITDA margin guidance for the year. Let's have a closer look at the numbers. Revenue for the quarter came in at DKK 777.2 million, equivalent to a drop of 1.6% compared to last year. This translate into a drop in a like-for-like growth of 1.9%. This decline in like-for-like can be explained by three very specific factors. First, the quarter had one less trading day, which we estimate accounts for about a third of the like-for-like decline. Secondly, we have reshuffled part of our campaigning and moved one important campaign into the third quarter. Finally, we had an unusual summer, this has led to a quite unusual footfall pattern over the quarter as well.
Because these factors are very specific and we can nail them down to very specific changes in the quarter and are not trend-driven, we maintain our like-for-like guidance for the year unchanged. On the very positive side, our online channel has delivered record high growth of 61% in Q2 compared with the same period last year. This is the highest growth rate in the history of matas.dk, we are quite satisfied with the continued progress of our digital efforts. Summing up, we earned a tad more this quarter than we did in Q2 last year with an EBITDA before special items of DKK 108.6 million, up 1% from last year. The EBITDA margin before special items increased from 13.6% last year to 14% this quarter.
This half year and this quarter has led us to revise our financial targets for the year, and increase our EBITDA margin before special items from above 14.5% to above 15% for the year. With that overall introduction to the quarter, I will ask you to turn to slide five and hand over to you, Anders, for a deeper look into the numbers.
Thank you, Gregers. Let me begin by giving you a bit more detail on the revenue development. Revenues declined from DKK 789.9 million to DKK 777.2 million, driven by a number of different factors. Sales of high-end beauty products grew 1.5% year-on-year in the second quarter, driven by increased sales of skincare, while mass beauty declined 2.6% due to the continued competitive pressure, specifically on colored cosmetics. In total, beauty sales declined 0.6% year-on-year in the quarter. Vital sales declined by 0.8%, primarily due to the campaign reshuffling that Gregers mentioned earlier, whereas sales in the material section increased 4.5%, driven by strong sales of seasonal goods such as sandals, foot care, and shaving products. Finally, the small MediCare business dropped 2.7%, primarily driven by lower sales of nicotine gum and painkillers due to intensified competition from supermarkets and discounters.
The gross margin increased to 44.9% in the second quarter from 43.6% last year. The gross margin benefited from a more effective campaign structure in the quarter compared to the same period last year, and from good support from suppliers on many of our campaign offers. Cost before special items in the Q2 rose 1.6% compared to the same quarter last year. Overall cost development was satisfactory. I will get back to the details a bit later. As a result of the higher gross margin and the well-controlled cost development, EBITDA before special items was realized at DKK 108.6 million against DKK 107.5 million in Q2 of 2017-2018. The EBITDA margin before special items stood at 14% in the quarter, which is up from 13.6% last year. Adjusted net profit was DKK 61 million in the quarter, a small decline from the DKK 65.3 million we realized in the same quarter last year.
This was due to an increase in the level of depreciations and a small goodwill write-down on the two stores we closed in the quarter. Our free cash flow was just shy of DKK 6 million, a marked drop from the DKK 25 million generated in the second quarter of last year. Free cash flow was affected by an increase in our investments activity in the quarter compared to the same quarter last year, and a slightly lower cash flow from operating activities. The unusual footfall pattern resulted in a 2.3% decline in the number of transactions in our stores and online in the second quarter, compared to the same period last year. On the other hand, we continue to see growth in the average basket, which is up 2.8% or DKK 4.1. With that, please turn to slide number six.
On page six, you can see the longer-term development in revenue growth, gross margin, EBITDA margin, and the level of inventories. As Gregers already mentioned, the quarter had a negative underlying like-for-like growth, and the 12-month trailing like-for-like growth remains in the negative territory, although the decline is tapering off, and as such is explained by special factors in the quarter. If we look at gross margin, the picture is more positive with a sideways move in the 12-month trailing gross margin and a level close to 45% in three out of the last four quarters. Long-term trend for the EBITDA margin before non-recurring items remains negative. For inventories, the growth we've seen over the last year has been linked to an increase in the number of SKUs we stock as we develop our assortment by introducing more brands.
In the last quarter, the rate of increase has decreased significantly, and we are looking to reverse the trend in the coming quarters. With that, please turn to slide number seven. As we have already covered the first few lines, let's take a closer look at cost. Staff costs, including one-off costs, were realized at DKK 165.3 million. Excluding one-offs, staff costs declined DKK 3.6 million from the second quarter last year, where staff costs were inflated by DKK 12 million in connection with the CEO change. Adjusted for exceptional items, staff costs stood at 21.3% of sales in the quarter, which was down from 21.4% in the second quarter of last year, attesting to the fact that we have staff cost inflation well under control. Other external costs rose by DKK 16.1 million compared to the same quarter last year.
Of that, DKK 9.5 million were special items of a one-off nature, primarily in relation to the acquisition of Firtal Group. In addition, costs rose due to the higher online sales activity and because of higher consultancy fees in relation to the strategy implementation. Finally, marketing expenses were increased as a result of the More Beautiful Together campaign we ran in the quarter. The effective tax rate was 28.1% in the quarter, which is up from 22% last year. The tax rate was inflated by transaction costs incurred in connection with the acquisition of Firtal Group, which by definition are non-deductible for tax reasons. Tax rate is expected to revert to 22% over the coming quarters. Profit for the period after tax came in at DKK 37 million compared to DKK 40 million in the second quarter of last year. With that, please turn to slide number eight.
Slide eight looks at cash flow development. Cash generated from operations amounted to an inflow of DKK 47 million, a small decline from the level last year. CapEx stood at DKK 36 million, an increase of DKK 18 million from the second quarter of last year due to investments in our online business, in our physical stores, and in our headquarter. There were no completed acquisitions in this quarter. Finally, our free cash flow was DKK 6 million, a drop from last year's level of DKK 25 million. The reason behind the drop was significantly higher investment activity, as already mentioned, in combination with the slightly lower cash flow generated from operations. With that, please turn to slide number nine, and I'll hand it back to Gregers for a look at our strategic progress.
Thank you, Anders. Let's look at the strategic development for each of the five tracks in our strategy. We have made significant and important progress on all accounts in this quarter. Number one, live our purpose. The primary activity has been the new brand marketing campaign led by a Danish spokesperson called More Beautiful Together that gained a lot of good reception. In online, which really has been a lead priority for us since the beginning of the year, we note that we have delivered record high organic growth with matas.dk. We entered into agreement to acquire Firtal Group, which has received approval from the Danish competition authorities on November 5. As for reignite store growth, we are progressing as planned with the development of our future store concepts.
We have the full team in place to roll out the new concept and test and roll out the new concept. As for new growth paths, we said that we would enter the green market, we certainly have in this quarter strengthened our position in the green market with the launch of Matas Natur, Matas Natur, across all channels, including two concept stores in Copenhagen and Aarhus. The acquisition of Firtal, the main activity in Firtal being Helsebixen, one of the leading health and supplements online players in Denmark. As for the inside of Matas and the strategic track called Change How We Work, we now have the full management team in place with the addition of our commercial director on October 1st. As Anders mentioned, we have staff costs in control and more than utilized actually our staff costs in stores.
We have freed up a number of resources in the beginning of the year to finance the new initiatives that we're working on. We will continue to measure our progress on all accounts, and also track our ability to lift both customer engagement, revenue growth, and to secure earnings in line with our overall strategy. Please turn to slide number 10. I would just like to dig one step deeper into the online growth. I think 61% this quarter. We are very happy with that development, and I would like to note that it's healthy growth. You can achieve growth by just buying growth, but it's coming from a clearly improved customer experience as well as commercial and operational improvements in the way we run our online business. Let me just highlight three important drivers.
We have become better at running campaigns, data-driven, using, among other things, the data from Club Matas. We have also seen that we are capable of improving conversion and sales of items that are not on campaign, which is a great sign of health. As we've mentioned earlier, our initiative of delivering more rapidly, day-to-day delivery to the store and same-day delivery in the greater Copenhagen area has been well received. We will continue to work on improving matas.dk and pursue our ambition of winning online in our category. Please turn to slide 11. Finally, let's have a look at our financial targets for 2018-'19. Three of the targets are unchanged from the new guidance that we gave when we announced the acquisition of Firtal Group.
At the same time, we have increased our guidance for the EBITDA margin before special items from more than 14.5% to more than 15% for the year. This means that the full year guidance is as follows. An unchanged level for underlying revenue this financial year compared to last year, and this translates into a range for like-for-like growth between -1% and +1%. An EBITDA margin before special items above 15%. We know that the second half of the year historically is higher than the first half and feel comfortable with this guidance. Of course, as you know, the Christmas quarter is critical to us and a lot depends on the performance in Q3. CapEx guidance is unchanged. We expect CapEx in the range between DKK 110 million and DKK 130 million.
Total investments, including the purchase price for Firtal Group, is expected to land between DKK 240 million and DKK 260 million. Finally, we reiterate that we still expect to be able to pay a dividend for this financial year. When you update your estimates for the year, please note that we will include Firtal in our accounts from the closing date, which is expected to be mid-November. Please turn to slide number 12. Our financial ambitions towards 2022, 2023 were also changed when we announced the acquisition of Firtal. Our expectations for revenue in 2022 to 2023 have been increased to around DKK 4 billion, with an EBITDA margin above 14%. We're currently working on a solid measure for customer engagement and expect to be able to communicate the base level for customer engagement with the annual report for 2018-2019. Please turn to slide 13.
With that, we have concluded the presentation and we are ready to take your questions. I will hand over to you, operator.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. Again, press star one for questions. It appears there are no further questions at this time. I would like to turn the conference back to the speaker.
Well, thank you so much for taking the time to listen to the call today. For those of you who didn't manage to listen to all of the call, there will be a replay on the website. Other than that, please feel free to give us a ring and we can take any questions over the phone later today. Have a nice day. Thank you. Bye.
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This concludes today's call. Thank you for your participation. You may now disconnect.