Good day, ladies and gentlemen, and welcome to Maisons du Monde first quarter 2022 sales conference call. At this time, all participants are in listen-only mode. We will conduct a question and answer session at the end of the management's presentation. Just to remind you, all of this conference is being recorded. We would like also to inform you that this event is also available live with synchronized slideshow. During this conference call, statements could be made that constitute forward-looking statement based on management's current expectation and belief and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the future results expressed, forecasted, or implied by such forward-looking statements. Our listeners are reminded to read forward-looking disclaimer on slide two for more.
For a more complete list and description of such risks and uncertainties, please refer to Maisons du Monde filings with the French Autorité des Marchés Financiers. I would like to hand the conference over to Clémence Mignot-Dupeyrot, Head of Investor Relations. Please go ahead, madame.
Good morning to all of you, and welcome to Maisons du Monde Q1 2022 sales call. I am Clémence Mignot-Dupeyrot, Head of Investor Relations, and I'm delighted to be with you today. I am with our CEO, Julie Walbaum, and our CFO, Régis Massuyeau, who will be making today's presentation. It will be followed by a Q&A session. You have no doubt seen the press release we issued this morning. The conference call slides are available on our website. This call is also being webcast, and a replay will be made available on our website later today. All listeners are reminded to read the forward-looking disclaimer on slide two. I will now turn the call over to Julie Walbaum.
Thank you, Clémence, and good morning to everyone. Thank you for being with us this morning. Before diving into the presentation of our Q1 results, I would like to commend the evolution of our governance that you have probably noticed in our press release this morning. Our board of directors has recommended the appointment of Teleios, represented by Adam Epstein, and of Gabriel Naouri of Majorelle Investments as new members of the board of directors. This proposal has come as both crossed the 20% threshold, and as such, are viewed as reference shareholders by the company. Since their entry into Maisons du Monde's capital, respectively in 2019 and 2020, both Teleios and Majorelle Investments have consistently shown their support to the company's model, its management, and its strategy.
Again now, they have expressed their long-term commitment to the company, as proven by the 24-month standstill by which they both commit not to exceed the 29.9% threshold, nor to launch a tender offer on the shares of Maisons du Monde. We collectively welcome Adam and Gabriel, with whom we have always had positive and constructive discussions along the years. Such appointments will be submitted to shareholders voting at the next annual meeting on May 31, 2022. Now, going back to our operational and financial results, you can see our agenda for today on slide three. I will begin with an overview of our key business and strategic highlights of the first quarter, then Régis will take you through the financial review, and I will return to discuss our outlook before opening the floor to your questions.
Let's begin on slide five, with the quarter's highlight. In short, Q1 2022 sales performance was in line with our expectations. As we had already started to intensify when we published our full year 2021 results, demand is soft since the beginning of the year. The global context is complex, with several elements impacting consumer sentiment and behavior. First, the global inflationary context, second, the war in Ukraine and its consequences, and third, a supply chain still under pressure, with freight capacity not back to normal yet, and more recently, slowdown in China due to COVID rebound.
In this context, we are proud to publish our Q1 sales at EUR 313 million, down only 1.3% versus the high comparable base of last year and up 15% if you look at the last sort of normal year we had, that is 2019. Navigating through these circumstances, we are also maintaining the pace of our strategic agenda with the opening of our Spanish online marketplace at the end of March, and also the launch of our sustainability label, Good is Beautiful, in February. These strong milestones are part of the foundation of the sustainable growth strategy we have described in our Capital Markets Day last November, and we pay close attention to maintaining our focus. This quarter also saw the launch of our spring and summer 2022 collections. A few visuals of which you can see on slide six.
2022 marks the strong comeback of color to convey an optimistic state of mind. Color plays a major role in this new collection with a joyful palette, intensified nature's colors for harmony and warmth, summery and fruity colors for joy and optimism, and crush on bright pastels. Our design teams have also done an impressive job at product level, further enhancing the quality and sophistication of our offering. This new collection offers a wide range of natural fabrics and raw materials, which provide warm atmosphere and an authentic feeling longed for by our consumers.
The purpose of this collection is a return to Maisons du Monde's roots of offering traditional and handcrafted products inspired by both nature and world cultures, which is what our consumers are after in a post-COVID world. Here on the slide, you can see three of our themes, Hyères, Madaba, and Anglaise, which illustrate Maisons du Monde's multi-style positioning, enabling us to satisfy the wide range of demand and needs across Europe. On slide seven, our recent focus is embedded into our Good is Beautiful movement, which we've been working on for the last 18 months, and we're happy to unveil in February. Let me explain to you how we're built. The starting point of this movement was the idea that we want our homes to be as happy as they are responsible, as stylish and trendy as they are sustainable.
To do so, we have decided to take part in each change and set five strong commitments. Commitment number one, offering the collections that is stylish and sustainable. To benefit both our customers and the planet, we are committed to offering products that meet at least one of these criteria. Products made with sustainable materials that is traceable, certified, or recycled, products made in Europe, or products that help preserve local handcrafting know-how. Thanks to our team's efforts, we have already reached 20% of our offering being labeled this year, and the target we have set for ourselves is to reach 40% of this offering under the Good is Beautiful label by 2025. Commitment number two, acting with grassroots associations to protect the environment and help those in need.
We firmly believe that companies have a role to play in society, and as such, we support grassroots associations in serving an environmental and society goal. Together, we work to protect forests and trees across the world and help provide those who need it most, especially with the welcoming and safe places to live. To do so, we aim at creating 100 Good is Beautiful places by 2025. Commitment number three. Promoting equal opportunities. We believe in people and the value to be found in our differences, as well as the idea that everyone deserves to have every opportunity to grow and develop. As such, we have adopted a more inclusive human resource management policy, which promotes equality, diversity, and brings out the best in people.
To reflect this pillar, we have reached 50% of women within the top 100 of the company and are committed to mentor 500 youngsters outside of the company, especially from underprivileged backgrounds, by 2025 to help them access the workforce. Commitment number four. Proposing a second life to our products. Our products do deserve to live several lives. As such, we have set up a service for repairing and refurbishing our products and intend to launch next year a secondhand product range. We'll repair at least 20,000 products every year. We also work with the social and solidarity economy to encourage product reuse. Commitment number five. Transforming our business lines to reduce our environmental footprint. Deep and lasting change requires us to transform our internal processes, so each and every day we work to reduce our environmental footprint by changing our practices.
From how we transport our products to our energy consumptions at point of sale and our waste management, all of our business lines work to help build a cleaner, better world every day. By 2025, we plan to have reduced our carbon intensity by 25% on Scope one, two, and three. Also, 100% of our stores will be powered with renewable energy. Slide eight, focuses in greater detail on how we performed this quarter. As you can see, our Q1 2022 metrics were strong at all levels. Although the context did not play in our favor. Our omni channel model continued to prove its relevance. Our active customer base continued to grow by 16% year-over-year, and so do our omni channel customers at 15% versus last year.
As we had anticipated, due to the exceptional comparable base we had last year, online sales are down 13% year-on-year. If you look at it as a longer period, they grew by 46% versus 2019, which represents a CAGR of more than 15% over the three years. The boost generated by the COVID pandemic and the store closures, with activity suddenly switching from store to online, is now in the process of normalization, which is, at the end of the day, good news because it means we can now fully benefit from the strength of our omni channel model. Store performance was also solid, especially on the international segment, boosted by base effects of store closures last year, but also illustrating the importance and the efficiency of our international development strategy.
All in all, this performance illustrates our ability to navigate in a complex and challenging context. Now let's zoom in on some of the key pillars of our strategy, beginning with our omni channel model on slide nine. As you can see on this slide, we continue to develop our marketplace with another quarter of strong double-digit growth at 43%, GMV reaching now EUR 20 million. Last quarter, we mentioned we have started to roll out our marketplace in stores where our sales teams can access it on their tablets. Well, we are proud to announce that our marketplace is now available in all French stores, ahead of the initial schedule by a few months, as store teams adopted it fairly immediately. Also, as planned, we launched our online marketplace in one new country this quarter, that is Spain.
Our online Spanish marketplace offers around 300 brands and nearly 50,000 products. We have adapted our offerings to match market demand as precisely as possible, and half of the brands offered on our Spanish marketplace are local brands. In France, we have also continued to grow our catalog and overall, we added 340 brands over the quarter and more than 40,000 SKUs. As you know, we pay close attention to maintaining the satisfaction rate of our marketplace customers at a level at least comparable to Maisons du Monde. That is key for brand image as well as for customer loyalty. Customer satisfaction does remain consistently high with a rate of four out of five. The vendor retention rate, which is the number of vendors who have sold out of the number of live vendors, also stays at extremely high levels, 98%.
Our partners clearly see the benefits of being under Maisons du Monde brand. For our top 20 vendors, one quarter of their sales already comes from our marketplace. Another break of our omni-channel strategy is, of course, our stores, and slide 10 focuses on our pan-European expansion. We ended the quarter with 350 stores in Europe, that is seven less than at the end of 2021, which is perfectly in line with our strategic plan. As is the case every year, due to the timing of our new collections that get deployed in March, the first quarter is traditionally focused on store closures following the January clearance sale and before new collections get dispatched. Whereas the second half of the year is traditionally more geared towards new openings.
The first quarters, logically, saw eight closures, of which five in France and one new opening in Spain. Our ambition of reaching zero-five net store openings over the year does remain valid. Let me now hand over to Régis, who will lead you through our financial review.
Thank you, Julie, and good morning, everyone. Let's go to slide 12. This slide shows you a summary of our sales performance on a long-term view. It's obvious if you look at this graph on the left that 2020- 2021 were abnormal years, and the dynamics of the business need to be looked at taking a different perspective than the usual yearly evolution. Let's remember the high comparable base of last year. In Q1, our sales were up 36% overall, with impressive growth rates across the board. 42% in France, 29% in international, 32% on furniture, 39% on decoration, 19% in stores, and 73% online. It is important to look at our Q1 2022 performance versus 2019. Our sales grew by 15%, which equals a 5% CAGR over the period.
This strong achievement is the illustration of our ability to navigate crisis while maintaining our strategic focus. I may repeat that our Q1 sales performance is resilient and in line with our projections shared in our last call. That said, it's fair to note that commercial performance has been slightly below plans over the end of the quarter, as March showed a material decline in consumer confidence, impacting demand across all retail verticals, including ours. Our efficient supply chain, on the other hand, allowed us to fulfill more customer orders than we initially expected, with a positive effect on net sales.
It may be obvious to all of us that we have delivered this level of sales in a context which, as we already mentioned, embeds inflation that reached record level recently with more than 7% in Germany, roughly 5% in France, no growth in France in March, a deep decrease of household confidence back to the level of first confinement in 2020, tension on supply chain and geopolitical uncertainty. It's not walk in the park, and it does demonstrate Maisons du Monde agility, pragmatism to navigate through an environment that may remain quite blurry over the coming months. On slide 13, let's review our classic sales bridge for Q1. Like-for-like sales decreased EUR 11 million, while 2021 development partly offset the decrease, adding EUR 8 million to the performance. Like-for-like decrease is essentially explained by the normalization of web performance, particularly in France and Germany.
As regards comparable stores, soft demand in France was more than offset by strong dynamics in Italy, Spain, Germany, on the back of a normal opening situation. This positive contribution from 2021 development illustrates the high comparable base, but also how fruitful our pan-European strategy is with a dynamic consumption trend in the international segment. This is a perfect illustration, again, of our profitable growth strategy and our capacity to export our model across Europe. Finally, on the 2022 development block, let's remind you that we closed indeed seven stores net this quarter, which explains this negative contribution. Slide 14. On this slide, we take a closer look at our sales performance across categories, channels, geographies, and you see that we can be very satisfied with our performance as it shows double-digit growth at all levels compared to the normalized 2019.
By category, first, furniture availability has improved over the period with replenishment program broadly in line with plan despite the complex environment. However, we are not yet back at our target levels. In Q1 2022, sales were therefore slightly down versus last year. Here again, the high comparable base of last year, which was at 32%, blurs the global picture. Comparing the performance versus 2019, furniture sales grew by 13%. Looking further into 2022, the group is monitoring product availability and shipping plans very closely in light of a moving situation in Asia to optimize sourcing and progressive inventory replenishment. For decorations, sales were stable this quarter.
From a very high comparable base, sorry, in 2021, which had grown by more than 30%, if you compare to 2019 again, growth reached 17%, demonstrating the continued success made by new collections. By channel, store sales were up 6%, also up 5% versus a pre-pandemic level of 2019. Store traffic was positive year-on-year due to the favorable comparable base when part of our stores were closed. Stores that were open during both periods, so traffic decreased, especially in March, as observed across the full panel. Regarding online sales decreased by 13% this quarter to reach EUR 104 million. As was the case for all retailers, online traffic and conversion rate were lower than last year and were partly offset by an increase in average basket size by 6% year-on-year.
This evolution is partly explained by the normalization of demands after the exceptional outperformance of first quarter of last year, which was up, as I did remind you, 73%. Compared to 2019- 2021 online sales were up a very strong 36%, led by countries such as Germany, Spain, Italy, with growth versus 2019 near 60%. Finally, by geo, you see that sales in France decreased 11% versus last year at EUR 162 million, but up 3% versus 2019, despite a net reduction of seven stores. Compared to 2019 in France, online sales are up 33%. At the same time, international sales were up 12% and a strong 32% versus 2019, with a net addition of 23 stores. This one, again, reflects the pan-European extension that you are now familiar with.
Before leaving the floor again to Julie for the full year outlook, let me update you on the current trading for Q2 and slide 15. From a global perspective, inflation in Europe is increasing, and the sanitary situation is not fully stabilized yet, notably in China. We continue to see disruption in our supply chain with production in Asia and freight remaining complex, and tensions made worse by substantial raw material scarcity. Although Maisons du Monde does not operate nor source in Ukraine, the geopolitical uncertainty adds to the macroeconomic challenges and is creating extra inflationary pressure with a possible impact on demand, with shoppers trading down or favoring some more essential categories. As we said, demand has been soft since the start of the year, and particularly so in March.
Given those recent developments, we now expect this trend not to improve to the very short term, and therefore currently anticipate our Q2 commercial performance to be low- to mid-single-digit negative. Despite this changing environment, however, we remain self-confident about our ability to deliver top-line growth in 2022. Indeed, H2 benefit from higher inventory levels and easier comps, which will both lead to sales acceleration. In this context, with a pragmatic view to balance growth and profitability properly, we have already deployed some initiatives to manage our value creation equation. We have launched plans to deliver operating efficiencies and have started to review the allocation of our resources to make sure we deliver our short-term commitments, as well as maintain our investments and strategic projects to support our midterm growth objectives. With that, let me hand back to Julie.
Thank you, Régis. Let's now look at our priorities and outlook. On slide 17. As you might remember from our full year 2021 results presentation, our business priorities for the year are largely the continuation of what we focused on in 2021 with a couple of additional points. In terms of commercial activity, we will keep strengthening our brands while also continuing to improve customer experience. A few examples of what we have developed over the quarter are a new partnership with Alma in France with the objective of launching a new financial solution on the web and in stores over this summer. A new functionality added to our website. Now customers can write reviews and rate products, ratings that other customers can see to help them in their choices. We want to promote these user reviews further as P2P advice is a powerful conversion tool.
Finally, development of self-care functionalities on our website so that customers become more autonomous in the management of product returns and refunds, therefore improving the post-purchase experience. We aim at working further on this post-purchase experience as we know this is a driver of repeat buying. We will also continue to strengthen our pan-European model through the continued expansion of stores in Europe with zero-five net openings all outside France. As we have already mentioned, these openings will take place in H2. In terms of supply, we work hard, as Régis said, at replenishing inventories gradually in a complex price and raw material sourcing environment. We still work towards a normalized level of inventory by year. This assumes reasonable operating conditions, especially in our hubs across China, India, and Vietnam. We will give you updates on this point as visibility improves, particularly on China.
Furthermore, we will open our new logistics center in the north of France next summer, starting with its first step, manual mode, before launching the automation phase by summer 2023. Regarding our ESG agenda, we intend to reach carbon neutrality on Scope one and two in 2022, and also to continue improving product traceability and further enhancing supply governance. This leads me to our full year 2022 guidance, which we confirm, assuming no further deterioration of macroeconomic and supply chain conditions in the coming months.
Taking into account the items we've just detailed, we continue to expect for 2022 positive revenue growth, the extent of which will be fine-tuned on our visibility improves and EBIT margin around 9% through a strict management of our cost and resource allocation, and free cash flow of EUR 75 million in the light of our inventory replenishment objective and the investments needed for our second warehouse that will start operating by the summer. As per our midterm commitment in returning value to shareholders, we also confirm our dividend payout ratio of 30%-40%. Finally, as we already mentioned, 2022 will be a landmark year for ESG as we will reach carbon neutrality on Scope one and two.
To conclude, let me reiterate that we stay confident in our ability to meet the medium-term guidance that we presented at our CMD last November, and which you can see again on slide 19. Our model has proven its agility and resilience over the recent years. Despite short-term turmoil, we are convinced that our differentiated model stays highly performing and particularly relevant in our new consumption pattern. This concludes our presentation. Thank you very much for your attention, and Régis and I are now happy to take your questions.
Ladies and gentlemen, we now begin the question and answer session. If you wish to ask a question, please press star and one on your telephone. We have the first question from Clément Jenot from Berenberg. Please go ahead.
Good morning. Two questions on my side. The first one is on the Q1. In your view, what explains the underperformance of France versus the rest of Europe in Q1, obviously beyond the outcomes? Is it because France is maybe more tuned to other niche or maybe easier to predict, we can see behavior? My second question is on the current environment. What is the behavior of your competitors right now on prices and promotions? Thank you.
Thank you, Clement. I will take both of your questions. Regarding Q1, and France versus international, well, you have a combination of effects. First, if you look at channels, their behavior is a bit different because if you look at traffic, which is sort of a proxy for demand, traffic was actually stable in France, and it was also boosted by the marketplace, which again confirms the relevance of the model. Actually, we are pretty happy with the first few weeks of the Spanish marketplace. Again and again, we are very happy of this evolution of the strategic model, and this did show in France, over Q1 for online.
Now, in stores, traffic was also positive on a global basis because of a different store opening ratio. It was indeed negative when you look at comparable basis so to say, if you look at stores that were open during both periods. This indeed translates sort of a soft consumption environment, which indeed can be attributed to different factors. The war in Ukraine does apply to all countries, but we were also in a pre-presidential election calendar. There were a lot of discussions as you know around purchasing power and inflation. We did see a difference then in terms of behavior between France and international.
Lastly, the store comparable base in terms of store opening ratio was more favorable to international over Q1 because last year France was open 85% of the time while international was open 55% of the time. The sort of base effect played in favor of international over Q1. Just for you to have that in mind, it will be the reverse in Q2 because last year French stores were closed half of the time while international stores were closed only 15% of the time over Q2.
As we say, there is a combination of factors, and this need to be looked at in the light of really all of these factors. Now to your questions around behavior on pricing and competition sort of policy. From what we understand from what we saw both from public releases and also sort of word of mouth, we can really assess that we were all sort of aligned in terms of price increases and the market was around 10%. We were between 5% and 10% on the higher range of that for furniture and on the lower range of that for decoration.
As we looked at in detail at each category over the last couple of months, because we could observe sort of the actual behavior of consumers and also competition pricing. We could see first that our price competitiveness has not eroded at all. We could not see any lag in price competitiveness. Also we've started to see because as you know, our price increases have been applied most of them from the beginning of this year. To date we have applied around two-thirds of our total price adjustments. Based on that, we could analyze price elasticity or demand elasticity to pricing to be more precise. We could see differences in categories.
Obviously, we take that into account to apply the last third of our price increases, which are expected to happen over the summer. Long story short, as good price competitiveness as before. A lot of data to make sure that we optimize our pricing for the rest of the year. When it comes to promotion, which was the last bit of your question, we do see some promotional pressure among the market. Our answer to that is really through our marketplace, because we see that especially online. As you know, our marketplace is a place which is a fantastic lab and we do operate some marketing campaigns with our marketplace vendors to attract traffic to our website based on specific promotional campaigns.
We use that to sell our non-promotional on-demand products and that works pretty well.
The next questions we have are online. From Marilyn Farr. First question is, in terms of outlook, listening to you, we understand that Q2 2022 may be, may show a lower momentum than Q1. Is this the right interpretation?
Thank you, Marilyn. Yes. I mean, as we said, the consumption level and the confidence level did decrease from March onwards, fairly logically, with the launch of the Ukraine war and all potential consequences. What we expect for Q2, if I sort of split it into the commercial drivers, so to say, traffic-wise, we expect a still negative traffic online as we end the category normalization phase. If you might remember, the category was still very booming online until the summer. We're in this last quarter of category normalization when it comes to online. Stores will still have positive traffic trends on the basis of a better store opening ratio, so to say.
We expect conversion rate to stay still negative year-over-year as furniture inventories only progressively improve. Really, the uptake in inventory levels will happen in H2. Average order value should stay positive for channels, notably through price increases. If you combine all of that, how does it translate? Online will be down indeed, sort of in the trenches. Stores will be up, sort of low teens. We do expect a Q2, which would be low to mid single digit down.
Second question from Marilyn Farr was, after Spain, do you plan to launch the marketplace in another country in 2022? Could you comment on the profitability ramp up?
Sure. Indeed we are. As I said, we're pretty happy with the first couple of weeks, so it's still very early days. We do see a very nice momentum in the Spanish marketplace. We actually accelerated a bit this planning because we were expecting initially to launch the Spanish marketplace more just before the summer. As we could achieve that earlier launch, we are working towards indeed opening a third country. It is too early days to say whether that will happen by the end of 2022 or very early in 2023. We're working towards this objective because again we do see the uplift in growth.
In terms of profitability, we do not add a lot of resources to launch the Spanish marketplace. As I said, half of their brands are local. That means a large part of it is also French, and that is handled by the current team. What we do have is marketing quite to the same extent as we did for the French launch. The profitability overall of the marketplace across both countries is marginally improving.
We had questions from Marilyn Farr still. Are you already penalized by some port closures in China? How do you get around the problem? And how has freight cost evolved over the last few months, and is it in line with your expectations?
Thanks, Clémence. Indeed, the situation in China is not an easy one, and we have been observing some congestions in the different harbors in the recent weeks. It has an impact in the way we manage our sourcing. Obviously, we are managing that very closely. I think getting the experience from last year, we have been very agile mitigating those new events. The zero COVID approach in China is obviously not an easy game for all of us in the industry to optimize sourcing. We are managing that. Obviously, we look forward to a fast, I would say return to normal in China because it will be an important element for us in the coming weeks again.
Yes, we have been agile in managing that, adapting the sourcing as much as we can, but it creates a bit of extra tension on the supply chain. Vis-a-vis your question on freight cost, sorry. I mentioned during the call of the full year that pricing vis-a-vis this element, important element in our equation, have been multiplied somewhere four times versus 2021. It means that today we are paying, depending on the sourcing point, $6,000-$10,000 a container, which is huge increase versus last year. Remember, this is one of the reasons that we have decided to go for pricing on the market. Just to say that we have secured contracts now. This level of inflation is embedded in our model.
When we guided vis-a-vis EBIT, we onboard that kind of options of assumption. We do not expect material changes in this pricing element vis-a-vis by the end of the year, but we have secured our contract with this level of inflation, which is a huge one indeed. We are managing it.
The last question from Marilyn Farr is about the shareholding structure. Could you give us an update? What is the timetable for the consolidation of the shares?
Vis-à-vis consolidation of the shares, plus the share buyback program, which indeed is fully completed, we envisage this consolidation around summer to be organized. The update on the shareholding structure is, we'll refer to what has been posted on the official website, with Teleios now holding slightly more than 21% and Majorelle having a position which is above 20% as Julie commented at the beginning of the call.
We will now take the question on the phone from Stéphane Amour from Exane, if I'm not mistaken.
Hello, do you hear me?
Yeah.
Hi. Thanks for the presentation. I have some questions. First, can you please tell us what's the inventory level end of March and what's your objective for the rest of the year? Second question, Régis partly replied to this question, but as regards to the inflationary environment, can you please elaborate on the extra pressure on the input cost? Do you plan to pass potential price increase onto customers to offset the extra cost? Third question, given the program intentions for the future business, do you still plan a normalization of the product mix or revenues will then skew toward the decoration sales in 2022? Last question, just a confirmation.
Can you please confirm what Julie said about the online sales down in Q2 and store sales top loading in Q2, which would lead to a low single digit top line, a contraction of low single digit trend in Q2 on the consolidated basis? Thank you.
Sure. Thank you, Stéphane. I will answer your questions one, three, and four around inventories, product mix, and the Q2 outlook. Régis will answer on the cost. On inventories, that's a good question, right? Because that's one of the main drivers of sales acceleration in H2. The question is like, where are we now and where are we supposed to end by year-end. Currently, we are around 70% of what we call immediate availability. That means product being in our warehouse. This is across categories, right? Furniture and decoration. On furniture especially, you add to that some what we call orderability, meaning that products are on containers and have left Asia.
You can add the shipping time, which is now around 6 weeks, between Asia and Marseille, but a customer can place an order and then get delivered. Obviously that adds to the immediate availability, especially on furniture, as you have all of the shipping, the volumes being shipped add to that. While, why am I mentioning that? Because it makes quite a big difference on furniture. When I'm saying 70% immediate availability, that is going down to 45% when it comes to furniture. When you add the orderability bit, then you go back to 75% again in furniture. Obviously we are able to provide choices. You know, three out of our four products currently can be ordered by our consumers.
Obviously we do see an impact of lead time to consumer conversion. The more we have immediate product, we have products being immediately available, the more we are equipped to sell to our consumers. Our focus in furniture is really to increase this immediate availability rate over the quarters. What do we expect? We expect this 45% to reach or slightly exceed 50% before summer. Why is that?
Because of the Q2, you know, we have the Chinese New Year shutdown, and then as we mentioned, there is currently some slowdowns in the Chinese harbors. For you to have a reference in mind, those Chinese harbors which are being impacted right now represent about 40% of our shipped volumes. For that reason, we do expect our furniture immediate availability only to progress by a few points over the second quarter. It will improve materially over H1, because we do expect towards sort of 10 points immediate availability by quarter. Then we expect furniture to reach sort of 70% immediate availability by the end of year. On that you will add the other availability rate.
This is why I'm saying we are still working towards normalized level of inventories by year-end with this sort of sequence. On decoration, this is, you know, more of a sort of normalized situation already, so we don't expect any material change over H2. On the second question, Régis, please.
Yes. Thanks, Stéphane, for your point vis-à-vis inflation and price increase. If you remember, I mentioned in March that we were contemplating a gross margin to decrease year-on-year by 150 basis points. A big chunk of that was indeed related to raw material inflation and freight, 400-500 basis points. At the moment, as I said to the question of Marilyn, I think the freight part is under control. The one vis-à-vis inflation on cost of goods is a bit tougher due to the scarcity of raw material, due to some tension on sourcing. We are managing that. It means that so far, indeed, what we are monitoring is really this element going forward. For the rest of the gross margin equation, it will depend on the mix change.
We will not be so much exposed to USD, which I think is an important element, a positive factor in our equation this year due to our hedging approach. I'm sure you observed the recent drop of euro to USD. It could have been a challenge. It will not be in 2022, as we have monitored that upfront quite positively. The pressure will come mainly from the sourcing element, but we are not changing gear vis-a-vis what we contemplate for the full year vis-a-vis gross margin at this stage. We will observe, as we say, the further development. Without any further deterioration on this perspective, there is no major negative factor at this stage. Indeed, we are pricing.
We are contemplating a third price increase over the summer. It will be a more limited increase of price on a, again, on a curated basis at the rhythm of the launch of the future collections. We are well equipped to analyze the market, I would say SKU by SKU. We are contemplating that over the summer. To finish on this question, just to remind perhaps that what I said on gross margin for the full year will have a higher effect on H1 due to the phasing of the different components of gross margin. If you remember, this effect on gross margin will be a bit more in H1 than it is on the full year basis.
Thank you, Régis. On your third question, Stéphane, around the product mix. You're right to say that product mix will be different across H1 and H2. Well, it traditionally is, right? Because if you look at H1, we are more around 45% of sales being made out of furniture. And on the second half is more between, you know, 35%-40%, because Q4 is very much geared towards decoration. We are still sort of anticipate this kind of mix for H1 this year. And we're aiming at having our furniture representing about 40% of our sales in H2. You know, a slight change in mix, but not very material. To go back to your fourth questions around Q2.
As I said, indeed, what we currently expect is online to be down in the 20s. Why is that? Well, especially, traffic is expected to be still down and double-digit down. If you look at web browser requests in our home category, they've been around 15% down year-on-year over Q1, and it's more around 20% in April. Again, I think this is a combination of both macro effects and a category normalization effect. This is sort of as expected. This will be, you know, the main driver of the equation. On top of that, we will have conversion rates still probably down year-on-year, because furniture inventory is not still being suboptimal and average order value positive.
The main driver of online will be traffic. When it comes to stores, they should be up. Low teens is our best estimate so far. This will be, again, mainly a function of traffic, which should be positive overall. As I said, half of our French stores were closed last year at the same period. We expect traffic overall to be positive. You know, combination of that would give a low to mid single digit down for the Q2.
We now have a-
Thank you so much.
Sorry, Stéphane. We now have a question from Jay Maynadel. What gives you the confidence that inventory levels will improve in H2 2022?
Well, I guess we answered that question. Is that correct, Jay, or would you have another question on that specific bet?
He's not on the line.
Oh, sorry.
His second question was, you alluded to reduced consumer confidence in March 2022. How has that trended in Q2 2022 so far? Has this impacted just the physical store performance or is it weighing on overall sales?
Well, indeed consumer confidence was still low in April. I think that we do have data specifically for France and the context again was particular, as I mentioned, with the pre-presidential election calendar. You know, a lot of sort of worrying debates on TV with inflation, purchasing power and so on. It is fair to say that consumer confidence was still low in April, actually even lower in April compared to March. We would look at sort of March 2020 to have similar consumer confidence level. It has, you know, it has gone down fairly in a fairly short period of time.
We do think that it will progressively you know progress again. You know I think that what we expect in the next few weeks is that this consumer confidence sort of stabilizes and hopefully starts to restore in the next few weeks. Has this impacted only physical store performance or overall sales? Well it has impacted overall traffic so overall demand so it has been observed across channels. This explains the different drivers I mentioned to Stéphane for Q2.
We now have questions from Florent Thytin. What is your view regarding the merger between But and Conforama? I know that you do not have the same positioning, but any risk of increase of price competition or any risk on the supply side?
Indeed, But and Conforama are operating in a different segment, which is more sort of functional and value-seeking customer segment. We do not see particularly extra risk, so to say, on price competition. As you know now, it's not, you know, in each different product category, we would be looking at a different set of competitors. You know, we're now looking category by category, so it's not one player. We really look at a set of players across categories. As I said, the analysis we've been making at a fairly deep level showed that we're not lost in price competitiveness. I would not be worried by this potential extra risk.
On the risk of supply side, But and Conforama are more European sourced, whether we are more like Asian sourced. We don't see any sort of conflict or tension on that, because we are operating on different sourcing areas.
Florent had questions around inventories, but I guess we already answered to this question.
Okay. Are there any other questions on the phone?
No, ma'am, there are no questions from the phone.
All right. Well, thank you very much for your time today. Régis Massuyeau and Clémence Mignot-Dupeyrot, as usual.
Yes, definitely. Thanks. Thank you, all of you.
Thanks a lot.
Okay. Thank you. Have a good day, everyone.
Bye-bye.
Bye.
This concludes the conference for today. Thank you for participating. You may all disconnect.