Good day, ladies and gentlemen, and welcome to the Matas Q3 report 2017/18 results. For your information, today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Gregers Wedell-Wedellsborg, company CEO. Please go ahead, sir.
Good morning, everybody. Welcome to our presentation covering the third quarter of the 2017/18 financial year. With me here today, I have our CFO, Anders Skole-Sørensen, and Elisabeth Klintholm, Head of IR and Corporate Affairs. I would like to start out by offering a few comments on Matas. Afterwards, Anders will take you through the presentation of our Q3 numbers and take the outlook for the remaining part of 2017/18. I will finish off by making some comments on the strategic work that we have initiated and on some quite exciting new initiatives that we have announced today. We will, as always, end with a Q&A session, and we look forward to taking your questions. Please turn to slide three.
This has been my first quarter with Matas, and besides all the work with the short-term performance measures, I've spent a lot of time getting to know the business. I've talked to a number of customers, a number of suppliers, and investors as well. Spent a good deal of time visiting stores around the country, and obviously talk to my colleagues in the stores. My overall impression, I've met a lot of very enthusiastic people who are incredibly passionate about their jobs and incredibly passionate about the Matas brand. I think that gives, at least to me, gives me a lot of confidence. Before turning to the financials, which Anders will take you through in a minute, I'll just make a few comments on what's happened during the quarter. On October 1st, we took over the associate store in Give.
With that, we actually concluded the era of Matas as a voluntary chain in Denmark, as the five remaining associated stores left Matas on February 1st this year. As of now, we own and operate all of our stores except for one in Greenland, I have to say. During the quarter, we have opened two new stores in Vanløse and Viborg. Both of them replaced smaller stores, a definite upgrade in both locations. From February 1st, the store in Viborg also hosts pharmacy as a shop in shop. This is our second pharmacy collaboration, and as with the first one, we're seeing very good customer response to those kinds of collaborations, and a very successful opening. Also we have continued to introduce new brands to the stores, MAC, NYX, a Danish brand called Miild in a total of five stores.
Perhaps more significantly, we have engaged with suppliers to make sure that we have their support to increase our visibility in the market and to lift our innovation rate and also secure support for the pricing initiatives that we are taking. Finally, we ended the quarter with 1.8 million members of Club Matas, and we reached the milestone of 600,000 app users for our Club Matas app. In addition to that, as we mentioned in our last call, we have worked on a range of measures to enhance our performance in the short term, and we have initiated a process to do a strategic update and review. I'll come back to these two points in more detail after Anders has taken us through the results for the quarter. Over to you, Anders.
Thank you, Gregers. Let me begin by giving you some headlines on the financials in the third quarter of our financial year. In Q3, we saw a total flat sales year-over-year. We saw solid growth in high-end beauty and in the Vital area, while our mass market beauty continued to decline as did our Material segment. Small MediCare segment saw a marginal rise in sales. We continued to see a reduction in customer traffic while the average basket grew by 7.2% year-over-year in the quarter. The development in the gross margin was almost flat with a marginal drop of 0.2 percentage points compared to the same quarter last year. Gross margin stood at 45.6% in the third quarter.
If we exclude the non-recurring cost of about DKK 5.5 million that we incurred in the quarter in connection with the decision to close down StyleBox and four Matas stores, total costs in the third quarter rose very marginally by DKK 1.5 million compared to the same quarter of last year. EBITDA margin was realized at 19.5%, which was 0.7 percentage points lower than in the same quarter last year. EBITDA for the quarter was DKK 208 million, while adjusted net profit came in at DKK 155 million. Cash from operating activities amounted to DKK 261 million in the quarter, a drop of DKK 70 million compared to Q3 last year, primarily due to a less positive development in working capital. If you please turn to slide five. As I mentioned before, total sales were almost flat in Q3 compared to the same quarter last year.
Underlying like for like sales were down by 0.8% in the quarter. We continued to see the rise in the average basket size, but also a drop in the number of transactions. When we look at our segments, sales in the beauty continued to show growth with high-end growing more than 7%, while mass market beauty fell by 5.9%. High-end beauty was supported by a trend towards moving up-market for some customers, particularly within skincare, but also by our customers reacting positively to a number of attractive campaigns offered during the quarter. The fall in the sale of mass market beauty products was caused by increased competition, not least from the supermarkets, plus the effect of some customers trading up, as mentioned.
The Vital business focusing on dietary supplements, sales rose by more than 13%, a strong performance on the back of some very strong campaign offers, for example, get three for the price of two campaign. In Material business, Q3 sales fell 6% due to increased competition on a number of core products and disappointing sales of some seasonal products. Please turn to slide six. As mentioned, the gross margin stood at 45.6% in the third quarter, which was down from 45.8% in the same quarter last year. Total gross profit in the quarter amounted to DKK 484 million, which is near DKK 3 million lower than the same quarter last year. You know our gross margin may fluctuate from quarter to quarter depending on the competitive situation, fact timing and effect of products and campaign, and on several other factors such as swings in the sale of seasonal products.
In the quarter, we did continue to see competitive pressure, particularly in mass market beauty. Of course we also saw some pressure in both high-end and the Vital segment. We responded by sharper offers and by increasing the number of products and campaigns. The result was a continuation of the trend we've seen for a while now, with the proportion of sales and campaign rising and a marginally lower gross margin. Generally, we concern ourselves mostly with the last 12 months trailing gross margin, and here we saw only a modest decline from 45.7% at the end of Q2, where I admit it did drop significantly to 45.6% at the end of Q3. Please turn to slide number seven. The EBITDA margin came in at 19.5%. That was a decline, as mentioned, of 0.7 percentage points when compared to the same quarter last year.
Please note that by definition, EBITDA excludes the non-recurring costs incurred in the third quarter. EBITDA for the third quarter was a total of DKK 208 million, which is down from DKK 215 million in the same quarter last year. The drop in the EBITDA margin was caused in part by the reduction in gross margin and in part by rising costs and some amortization and depreciation charges. If you look at staff costs and excluding the one-off costs, they were realized at DKK 172 million and only marginally above the cost in the same quarter of last year. Underlying staff costs stood at 16.2% of sales in the third quarter, which is marginally up from 16.1% in Q3 of last year. Other costs rose by DKK 4 million compared to the same quarter last year, with a part of this being of a one-off nature. Please turn to slide eight.
You can see our net financial costs fell to DKK 5.2 million in the third quarter from DKK 7.9 million in the year earlier period. This, however, does not include the mark to market of the interest rate swap we have in place. The effective tax rate was 22% in the quarter and thus marginally up from the same quarter last year. Profit for the period after tax was DKK 134 million compared to DKK 147 million in Q3 of last year. Adjusted profit after tax in the quarter was DKK 155 million, which is down DKK 7 million from the third quarter of last year. With that, please turn to slide number nine. In this slide, you can see that inventories increased in the third quarter by DKK 17 million, and that was DKK 13 million more than in the same quarter last year.
Inventory stood at 23.0% of last 12 months sales at the end of the quarter, compared to 21.5% at the end of the same quarter last year. Please turn to slide 10. In the third quarter, we saw a strong development in working capital, as is usually the case in Q3. Working capital fell by DKK 170 million as both trade payables and debt rose in connection with Christmas sales. The inflow from a lower net working capital was, however, somewhat lower than what we saw in the same quarter of last year. Please turn to slide 11. Cash flow from operating activities in the third quarter stood at DKK 261 million, down from DKK 331 million in the third quarter of last year, with both the lower EBITDA and the less favorable development in net working capital causing the deficit.
With overall CapEx, including acquisitions, dropping by DKK 80 million compared to Q3 of last year, the free cash flow was realized at DKK 237 million, some DKK 62 million below the same quarter in the last financial year. This year we used all of that free cash flow to repay debt in the quarter. With that, please go to slide 12. On this slide, you can see that gross debt stood at DKK 1.51 billion at the end of December this year, thus marginally below our target range for gross debt of DKK 1.6 billion-DKK 1.8 billion. Please bear in mind that our cash position is at its peak at the end of our financial third quarter. Net interest-bearing debt stood at 2.5 times last 12 months EBITDA, which is exactly the same point as it stood at the same time last year.
There is no change to our capital structure. As stated previously, we still intend to pay out at least 60% of adjusted net profit as a dividend to our shareholders. As also mentioned earlier on, no share buyback will be undertaken this financial year. With that, please turn to slide 13. Slide 13, we look at guidance for 2017-2018, and our narrowed or revised guidance, as you may call it, for this remaining year, for this financial year, is a decline in the underlying like-for-like revenue of 1%-2% after taking the effect from fewer trading days into account, and that is a revision from previously 0%-2%. We expect EBITDA before exceptional items, as is the case, of course, to come in at between DKK 445 million and DKK 460 million, and previously we stated that it would be between DKK 440 million and DKK 470 million.
Investments, we still expect to land in the region of DKK 90 million-DKK 100 million, excluding store acquisitions, which is, as I said, unchanged. Please note that EBITDA, by definition, is stated before exceptional items. Accordingly, exceptional items related to the measures announced last quarter to improve the product performance are not included in the EBITDA guidance for 2017-2018. The non-recurring costs of DKK 12.7 million incurred in connection with the change of the Matas CEO are included in the EBITDA guidance. With that, I have concluded the run-through of the financial figures, and I'll hand you over to Gregers for comments on the announced measures to enhance our short-term performance and our strategy updates.
Thank you, Anders. I'm now 100 days into my new role and as you know, with Q2, we announced that we have initiated a strategic review. It's quite clear that Matas needs to change to prevail in the ongoing retail transformation and to meet the new competitive landscape. We believe that in order to make that change sustainable, that can happen only if we engage and involve our stakeholders, be that customers and colleagues and partners, in defining that strategy. Therefore, we have designed an update process that involves our stakeholders in finding solutions to the top issues that we're facing. That method might be a little bit more time-consuming right now, but we are very firm in our belief that we will get both a speed and a commitment payback once we shift to execution mode.
We're very pleased with how the progress of the strategy update is going. We have not, as of this point, set a date for the strategy announcement. However, in the digital space it's quite clear that even corporates need to move with the speed of entrepreneurs and therefore we have decided to fast-track the digital part of our strategy update. In the digital space, I think the job to do for us is quite clear, and we need to move swiftly. I'm pleased to announce today a quite broad strategic framework to guide our efforts in the digital space. Please turn to slide 15. We call our new strategic framework Matas 4D because we want to move faster on four dimensions to take not only the e-commerce part of the company but the entire company to a much higher digital level.
Our aim overall is to deliver an absolute second-to-none customer experience in health and beauty, whether it be on the online platforms or in stores. The four dimensions or areas of our strategic frameworks are the digital channels, Matas.dk today, where we aim to accelerate our growth rate over the next period. Second, our digital in-store experience. It's all about making it easier for the customer to shop in our stores, particularly when she's in a rush. Number three is we will invest in educating our staff on digital. That will help them to operate the stores more effectively. It will also help them to serve the customer better. That includes both tools to help shop floor staff, but it also includes a lot of tools to make more data-driven decisions at headquarters. Finally, number four, digital communications.
We accelerate our efforts to increase our reach, our engagement, and our one-to-one or personal communications on digital media platforms. What we've done within each of these four dimensions, we have charted out where we need to up our game to be on par with the market, and we have pointed out where we can stand out and take a lead. At this point in time, we have a roadmap in place for phase one of this Matas 4D digital strategy, which focuses particularly on strengthening our digital sales channels and on building our presence in social media. I will touch further on these efforts as we turn to the measures. Please turn to slide 16.
Our starting point is a combination of a very solid business with a good cash flow, but at the same time, as you know, a business facing increasing competition from both physical and online retailers. We still see no significant tailwinds from consumption growth. We do experience declining footfall, and we're looking into a market where campaigns are run more frequently and discounts are deepening as we and other retailers seek to secure our top line. Our short-term response to the pressures on revenue and margins has been to launch a range of measures to deliver a more attractive value proposition to our customers, particularly in the mass beauty category. We also shift resources from low growth, even loss-making areas and cost-consuming activities to more promising areas which can lead to growth. These short-term measures include both customer-centric measures and some cost reductions. Let's take a closer look.
If you will, please turn to Slide 17. With our Q2 report, we announced three specific actions to exit low growth or cost-consuming activities in order to free up both the focus and the funds, and the people for more customer-facing initiatives. During Q3, we have delivered on these three actions. For one, StyleBox has been announced that we will be closing down, and we're in the process of closing down StyleBox as an independent chain with the last store closing end of March. Three of the stores are being converted into a Matas format and one location, our shop in shop in Rødovre will stay open. Having a shop in shop will allow us to continue to market the most popular parts of the selected haircare and nail care range on StyleBox online. Secondly, we have reviewed our store network.
We have decided to close four smaller Matas stores who have been underperforming and where we see no prospects for turning them profitable. We have also announced a few openings, one of which opened just last week. Finally, we have completed our Q2 cost-cutting program centered on the back office functions and on the non-customer-oriented activities. Overall, the combination of these things are expected to reduce revenue by around DKK 50 million in the financial year 2018 and 2019. At the same time, costs in the form of exceptional items will amount to some DKK 25 million to DKK 30 million this financial year. The positive effect on EVA next year is expected to be between DKK 30 million and DKK 40 million, in the financial year 2018-2019. As we mentioned on the last call, the major part of this gain will be reinvested in initiatives to boost growth and our competitiveness.
Please turn to Slide 18. We strive to be first choice for customers seeking a broad range of exclusive brands and second to none in-store service. Therefore, we are investing in areas where we can enhance performance. We've identified three areas that we will improve further. The first is digital, as I already mentioned, second pricing, and the third education. Let's take a closer look. Please turn to Slide 19. In phase one of our Matas 4D roadmap, we focus on improving our digital sales channels. Our goal is to make it easier and faster to shop online. One example is that before long, we can actually offer next-day delivery to all our stores on products ordered on matas.dk. That will allow even our smallest stores around the country to order from a range of up to 24,000 items and have delivered to the customer on the next day.
I think that's a quite significant improvement to the customer. Also in phase 1, we'll take, I think, a quite exciting new step to build our presence on social media. As you know, we have highly knowledgeable staff, well-trained staff. More than 85% of our colleagues go through training, and they are also very passionate about their products. We've set in motion a program to help our colleagues in the local stores create professional profiles on, for example, Facebook and Instagram to share their expertise and connect with customers online and bring their expertise outside the four walls of the stores. This is actually quite a departure for a conventional retailer. I think that most will stop at having social media teams at headquarters. Now we actually do something that's very hard to copy. We're trialing in 18 stores. Results are so far encouraging.
If we do crack the code of having our good employees engage with the customers online, I think we've built something that is very hard for any of our competitors to copy. Please turn to Slide 20. As for pricing, we are growing above the market rate in high-end beauty, and we're growing in Vital. As you can see, we are challenged in mass beauty, and that has all to do with the price competition in that particular category. Overall, I want to be quite clear, the Matas concept should continue to remain clearly differentiated, and we should not try to beat discounters on their own turf. This is a very delicate balance because the Matas formula has always been to deliver better quality at fair prices. We will, however, and we do see a need to be competitive on the mass beauty.
During Q3, we have reduced prices on a number of key brands and our private label, Striber, and there is more to come. We do this because we have a commitment to stay competitive in the mass beauty segment. We will communicate this continually to customers with signage in stores on a number of additional products within the mass market beauty segment. Please turn to Slide 20. If there's one thing that I've learned that goes throughout my first few months, our customers, they come to us for the products, but they also, to a very large degree, come to us because of our people. Our staff and the relation to our staff is actually key to a big part of our customers. I think education is key to our staff.
Therefore, even though we pursue costs relentlessly, we have decided to invest in staff training aimed at building an even wider, even deeper product knowledge. This is something that we do in partnership with our suppliers and something that they are very happy about seeing. We will also, as I mentioned, invest in building digital competence with our store staff to allow them to be on social media and that initiative will be supported by training and even certification. Please turn to Slide 21. Finally, to sum up, there is no change in the sense that we are operating in a truly challenging competitive environment. We need to rethink the future of Matas, and we are doing that at high speed.
As I hope you gather from our presentation today, we strive to keep our short-term momentum high and stay focused on acting in the market from day to day. With that, we have concluded the presentation. We are ready to take your questions. I will hand over to you, operator.
Thank you. If you would like to ask an audio question, please press the star or asterisk key, followed by the digit 1 on your telephone. Please ensure the mute function on your telephone is switched off to allow your signal to reach our equipment. If you find your question has already been answered, you may remove yourself from the queue by pressing star 2. Once again, that is star 1 to signal for an audio question. We will take an opening question from Poul Jessen of Danske Bank. Please go ahead. Your line is open.
Yes. Thank you. A few questions. 1 is the slight lowering to the low end of the guidance. If you could add a little more, then I assume that it is because that Coop and others has been out announcing price reductions and that you also now reducing the prices. That is 1 part of it. The 2nd question is, now that you have lowered prices already in the autumn, have you seen any impact of that on the traffic? Because we cannot see that. Are you just joining a negative spiral of then you lower prices, then the others lower prices, and in the middle of that, you sit with a NORMAL, which more or less keep their prices and then try to squeeze these guys out? How do you look at the dynamics here?
Then on the store numbers, now you close some stores, how should we look into 2018, 2019? Will we see further closures, or were these the closures that you aimed for? Yeah. That is for now.
Okay. With respect to the question on guidance, I say we look at this, of course, based on what we saw in the sales development in the third quarter and what we've seen overall in the year until now. That is the reason why we have narrowed the guidance somewhat. As you might say, we've narrowed it in the bottom part of the range, based on what we've seen in the market until now, and that's sort of how I can express it. We are basing it on what we are seeing in the stores, and we are basing it on what we've seen for the first three quarters.
As for the impact of the prices that we have lowered, we don't consider the price lowering as something that will turn around footfall in the stores. We do see it as something that's needed to make sure that our customers feel safe shopping with us. We do see an impact on volume. We've seen the volume that have been declining on mass beauty products. We do see that turning around in the quarter that we have just left. As for store closures, we have no additional plans to close stores at this point. Yeah.
Okay. Another question that's on the IFRS 16. Now that you are also reducing debt because of cash flow and the EBITDA coming down, when you get into IFRS 16, you will have to add on a lot of the interest-bearing debt on the balance sheet. Will that change your financial view on the leverage, or has these changes been included in what you have right now?
We're still discussing with our auditors exactly what the impact of our IFRS 16 will be. As such, the guidance numbers we have at the moment and everything that we've communicated with regard to financial numbers is based on existing IFRS rules and not the ones going forward. Obviously, there is definitely a point to the fact that there's going to be some changes based on that. That will have to revise our sort of numbers with regards to just looking at financial debt. We might want to look at two types of debt then, saying some is related to leases and some is related to bank debt.
Okay. Thank you.
As a reminder, if you would like to signal for an audio question, please press star one on your telephone keypad. Our next question comes from Klaus Alma of Nordea. Please go ahead. Your line is open.
Thank you. I have also a few questions. The first goes to the gross margin. The gross margin year-over-year in Q3 was almost flattish, despite the campaign pressure. Can you give some more flavor on how you managed to do that? That will be the first one.
Yeah. I think there is three points here. First of all, if you look at what we did around the Black Friday, which believe it or not, actually does make a difference because it is so big these days. We had somewhat less aggressive pricing around Black Friday, and that actually made a difference. Secondly, if you look at the sort of delta on the level of campaigns in the third quarter, the delta was not as significant as the one we saw in the second quarter. I.e., there was an increase in the number of campaigns, the increase was much less so than we saw in the second quarter. Finally, we have also had a marginally positive impact from support coming from our suppliers, although I would stress that this is definitely something where there is a lot of work to be done.
If you add all of those three things up, that's how you reach the fact that the drop in margin was less pronounced than perhaps some of you guys had anticipated.
Okay. Now you're comparing with Q2, but year-over-year, so you're just saying there were also less campaigns in Q3 compared to Q3 last year?
No, I'm saying that the delta of campaigns, so the fact that there were more campaigns, but the delta of campaigns was less pronounced than it was in Q2. I'm sure you remember in Q2, we saw a fairly marked reduction in gross margin, and we saw much less of a reduction in Q3.
Okay. Trying to do the math on your full-year guidance. Q4 gross margin, should that also stay flattish year-over-year, or should we see a drop?
We are, as I say, we're not, of course, indirectly, we're looking at Q4. If you look at Q4, it is correct that the overall estimate is below what we saw last year, and that goes also for the gross margin. I think it's fair to say that if you look at how we've described what's going on in the business, we do see an issue where we are doing fairly relatively better on big occasions like the holidays, but where we're having more of a struggle on the sort of everyday sales performance. As you also notice, if you look in the accounts, you'll see that traffic, the development with declining traffic is something that we've also seen in this quarter that we've gone into. Finally, again, the delta on campaigns is probably going to be a little bigger than it was in Q3.
Okay. Just so I can understand. In Q4, should we look at that quarter, it will be more the normalized new norm for campaigns and prices, and that's why gross margin will take a dip year-over-year. Is that the way to look at the numbers?
Yeah. If you look at the overall numbers, obviously in order to make the math work, you will have to look at a bigger drop in margin than the one you saw in Q3. That's correct.
Okay, then just my next question. With the negative revenue you have in associated stores, can you try to explain what happened there?
This is actually a bit of an issue that will be solved going forward. The fact is that the Club Matas points that we're issuing in connection with purchases, they are counted as a kind of rebate and for technical reasons, they are at the moment done on a separate line. As that dropped away, that number becomes apparent. Going forward, that will be changed in connection with some of the IFRS rules, so it'll be crossed off in the numbers as such. Right now you can basically see it as just a way of accounting for the issuance of points to our members.
Yeah. I guess you have overstate the numbers in the past. Now you're reversing. What is the impact on the gross-
No, no. We haven't done any Sorry, Klaus. We haven't done any changes right now. Those are the numbers are the same numbers. You haven't seen that negative number because there was a positive number for sales to the associated stores. Going forward from 2018-2019, there will be a change in the way we account for it. You'll be seeing it up in the sales numbers, but you will also be given historical data to reflect this.
Yeah. I guess when it's negative in this quarter, it means that the discount has been larger or more points has been used. That's why you make-
No. Again, Klaus. No, no, Klaus, that's not the case. The case is that the sales to the associated stores has been much lower than it was in previous quarters, and thus you can see this number coming up where you couldn't see it before. Not because we're giving out more points than we have historically.
Right. Okay. Let's take it offline, don't understand it. Thanks.
Yeah, bye.
We will take our next question from [François of Jyske Bank. Please go ahead. Your line is open.
Thanks very much. We have three factors affecting the gross margin deltas going forward, i.e., the always low prices or whatever they're called nowadays, the increased campaigning that is necessary, and the support from suppliers where you have a lot more work to do, as you mentioned. How do you see these three? What should we expect? Will you be able to avoid a gross margin erosion? Let's say, I don't know by how long into the future you might be able to have talked to your suppliers about support, but we need to get a bit of a picture of the evolution of the gross margin here, if you have something you can share with us.
I think you have the factors right. I don't think it would be right of us to guide beyond what we have already done and guide beyond the year. I don't think we can comment further on the balance of those three.
Okay. A lot more work to do with suppliers. How should we judge that?
It's like the proof is going to be in the pudding.
Yeah.
You'll have to look at what we actually do going forward. What we can say is that we think there's a lot of work to be done with suppliers, but the precise targets and how far we're going to make it is going to be up to the discussions we're having with them right now. Some of them are going well, and others are saying, "Look, guys, we don't think we're going to give you more money." That's always a debate you have with suppliers. That is, going forward, going to be one of the areas we have to work with.
Okay. Secondly, on working on the OpEx side and the controlling the costs, including at the store level, can you discuss that? How much do you think you can do on that front? You've done relatively well in the past quarter, but it sounds to me like there is more to do.
There's always more to do. Again, we have to say that given things that are going to stretch into the new financial year, we will come back with a guidance on that particular financial year, taking all of these things into consideration, both what happens on the sales side and also what happens on the cost side. However, we just wanted to stress that what we've also made clear is that some of those savings that we've put in place will affect from the new financial year, that those savings will be reinvested in the business and in some of the initiatives that Gregers has mentioned.
Yeah. I.e., that's both on the cost side and also on the pricing side, is it?
Absolutely, yes.
Okay. Finally, a question on the IFRS 16 and, are there likely to be any consequences of that change as far as lenders is concerned and their criteria for your debt?
Yeah. That's a very valid question. The present terms agreement that we have in place with the lenders are all based on existing IFRS rules, i.e., we use IFRS rules for the contract. Changes in IFRS rules will not affect, for instance, covenants of the like.
Okay, thanks.
We will take a follow-on question from Klaus Alma of Nordea. Please go ahead. Your line is open.
Thank you. Yeah, just a follow-up on your new Matas 4D strategy plan. It is said that it is a growth strategy plan. How should we put that into numbers? That would be my first question.
That's a fair and valid question, Klaus. We don't give out numbers beyond the guidance that we have right now. I think you should interpret it this way, that we have freed up some resources. We want to put them into digital because that's where the growth is. We have work to do in that particular area. We haven't set specific targets to the growth on the digital part. I know it's hard to put into the spreadsheet beyond the guidance that we have given overall.
Okay, then maybe to try to ask in a different way. Do you see the main part of this strategy is closing the gap to your online competitors, or do you see it more as increasing the gap to the online, and so you're really being in the front of the competitors?
There are some areas where we need to catch up. Not a lot of areas, actually, and there are some areas where we think we can stand out. We have growth ambitions and ambition to outgrow the market online.
Okay. There was not any numbers into investments and the likes. What does it take to carry out this new strategy?
I think it's fair to say that, of course, we are not, again, guiding for the next financial year and as such, we will come back with the CapEx guidance on that as well. Just remind you that the DKK 30 million-DKK 40 million that we were talking about from the previous [re- structuring] and savings was put in place, and most of that will be reinvested in the course. Part of that reinvestment will be particularly in the digital area.
Okay, thanks.
For phase one, the phase one that we have set in motion, that we've set in place a strategic framework for digital. We have taken action on a phase one. That phase one will not entail any additional CapEx above and beyond the frame that you already know.
Okay, thanks.
To put it another way, we have room to grow within the facilities that we have now.
We will take our next question from Alexander Borreskov of Carnegie. Please go ahead. Your line is open.
Thank you. My question revolves around your revised EBITDA guidance for the full year. Based on the midpoint of this full year guidance, it seems as though you're expecting a significant margin decline in Q4. Is this correctly understood, or how should I look at this?
You're right in saying that there is definitely in the Q4 guidance or in the total year guidance, and then implicit in the Q4 guidance, we are looking at a lower number than we had in the same quarter last year. As I said, there's several reasons. The fact that we definitely see them on the everyday sales performance is somewhat less attractive than the one we're seeing in holidays. We're still seeing the traffic going down. As I also said, we do see a situation where we have to put more things on campaign, and that continues into Q4. You're right in saying that this is a lower number than the one we saw in Q4 last year. That's also what I'm saying.
All right. Thank you.
As a final reminder, that's star one to signal for an audio question. As we appear to have no further audio questions, I would like to turn the call back to the speakers for any additional or closing remarks.
All right.
Well, thank you so much for taking the time. Anders and myself will be on the investor relations phone. We'll see some of you tomorrow for the breakfast, for the analyst breakfast. Yeah, just send an email if you have anything additional. Have a nice day. Bye.
Thank you. That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.