Good day, ladies and gentlemen, and welcome to Maisons du Monde 2021 annual results conference call. At this time, all participants are in a listen-only mode. We will conduct a question and answer session at the end of management's presentation. Just to remind you all that 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 statements based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the future results expressed, forecast, or implied by such forward-looking statements. All listeners are reminded to read the forward-looking disclaimer on slide two.
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 call over to Clémence Mignot-Dupeyrot, Head of Investor Relations. Please go ahead, madam.
Good morning to all of you, and welcome to Maisons du Monde full year 2021 results 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 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 a very warm welcome to Maisons du Monde. We are happy to have you with us. I'd like to take this opportunity also to thank Christopher Welton for his contribution over the past couple of years and to wish him well in his future projects as he prepares to leave us. Our agenda for today is on slide three. I will begin with an overview of the key business and strategic highlights for 2021. Then Régis will take you through our numbers, and I will return to discuss our priorities and outlook before opening the floor to your questions. Let's begin on slide five with the year's highlights. Well, in short, 2021 was an excellent year for Maisons du Monde, despite the challenging context. We operated in a complex environment with persistent headwinds from the COVID crisis.
On one hand, lockdown and restrictive measures continued in several markets. In Germany, for instance, our stores were closed for a total of five months out of twelve. Supply chain also continued to be materially disrupted. That said, thanks to our strong model and the focus and commitment of all our teams, we made major advances on our strategy and business priorities. On strategy, let me mention three highlights. First, we formalized our company purpose or raison d'être that captures Maisons du Monde history, its culture, and also its inspiration. It is inspiring everyone to open up to the world so that we create together unique, heartfelt, and sustainable places to live. To us, this purpose means far more than mere words. All the company's roadmaps have been aligned around this meaningful project. Investments have been committed, and bold choices have been made, all with a long-term view.
Indeed, we firmly believe that combining performance and sustainability is the way to go to best operate in the world of tomorrow. Also, we held last November our Capital Markets Day, during which we reaffirmed our unique, inspirational, yet affordable positioning powered by our distinctive omni-channel model. We also shared our vision to become the most desirable and sustainable home and living brand in Europe, as well as our ambition to create sustainable value for all our stakeholders through a focused and return-oriented approach. We presented our medium-term financial targets and also our ESG goals, which we will remind you of later in the presentation. In addition, we announced the divestment of Modani in the U.S., reducing our stake to 15% from 70% by selling a controlling stake to Optimal Investment Group.
This decision is fully in line with the strategic review that we launched last March and reflects our decision to focus our attention on Maisons du Monde's existing positions in Europe, where we see better value creation opportunities. With our remaining 15% stake, we will be able to continue to observe evolutions in the U.S. market and also benefit from future value creation as Modani continues its growth. Concerning operations, I will mention four key highlights that we'll not dwell on as I will develop them in the coming slides. They are improved brand awareness, strong customer dynamics, increased digitization, and international expansion. In terms of financials, again, I will not steal Régis' thunder as he will be presenting our financials shortly.
The key message here is that our strong top line growth and rebound in profitability translate into record high earnings per share and a proposed dividend that would also be the highest ever paid out by Maisons du Monde if approved by our shareholders at the upcoming general assembly. On slide six, we look at some operational highlights that demonstrate the progress we made on some of the key strategic pillars that we presented at our CMD. We presented our ambition of strengthening our direct-to-consumer love brands, and we are clearly making headway. The 2021 BVA survey showed that we were among the top five home and living brands in terms of unaided awareness in three out of four largest markets. Also, our number of active customers was up 22% in 2021 to more than 7.5 million.
We said we would develop an omnichannel model, and that's happening as well. Digitally enabled sales accounted for more than half of our total sales, with 33% coming from online and 20% from click and store. Our marketplace kept ramping up and GMV reached EUR 61 million in 2021, or 23% of total online GMV in France. As we grow, we are also accelerating our pan-European development, with international sales up 19% in the year and 18 gross store openings in a total of 21 made outside France. I will return to all these aspects later in the presentation. Slide seven focuses in greater detail on how this translated in terms of financial performance. As you can see, our 2021 metrics were at the top end of our upgraded guidance for the year, or even beyond.
Concerning top line, we guided growth in the low teens, and we delivered 15%, excluding Modani. On EBIT margin, our guidance was between 9%-9.5%, and we delivered the top end of the range, that is 9.5%. On free cash flow, we said we would deliver materially above 2020 level, and we did more than that with cash flow up 69% to EUR 90 million. This translated into record high earnings per share of EUR 1.52, excluding Modani sales, representing a 58% increase compared to 2020. On the back of this strong performance, we will propose to our shareholders at our AGM in June to approve a record dividend of EUR 0.55 per share.
Well, all in all, it is a year of clear rebound for Maisons du Monde, and this set of financials illustrates the strength of our omnichannel growth model and the capabilities of our teams to navigate in the complex and moving context. Now let's zoom in on some operational highlights, beginning with our brand on slide eight. Our direct-to-consumer brand is a key asset, and in 2021, we made further strides in strengthening what already is a loved brand, one that is part of consumers' everyday lives and one that is differentiated in the home and living space by its creativity, inspiration and engagement. Concerning creativity, we are in our second year of our capsule collections in collaboration with inspiring designers, and this slide mentions two.
For our 25th anniversary, we teamed up with the Renée Recycle duo to present a capsule collection of one-of-a-kind upcycled products, whose profits were entirely donated to the Fondation des Femmes that combats violence against women. Next in line, coming next spring, is Lisa Gachet, the founder of the Make My Lemonade fashion brand, who has designed a collection of desirable and sustainable objects such as lamps, vases, dishes, and textiles. They will be available as of May on our website and in select stores. All the profit of this capsule collection will go to On Avance Tous, an NGO that fights for gender equality. We are also working at developing new innovative and responsible fabrics, as we did last year with recycled PET for our outdoor collection. Inspiration was nurtured by our interior design services.
Rénove achieved another year of strong growth with a customer base up by 50% year-on-year to reach 30,000 customers, and sales were up 60% to reach EUR 4.5 million in services sold. Engagement came from our stronger bonds with our communities and our reinforced CSR profile. On social media first, our number of followers on Instagram rose another 17% to reach more than 5 million across Europe, and over 280,000 stories were shared. That is nearly 800 every day. As for CSR, Maisons du Monde was featured among the top 10 preferred brands in France across all categories in the first of OC&C's CSR-oriented ranking. The key pillar of our distinctive business model is our omnichannel strategy, and on slide 9, we focus on how we leveraged our digital performance.
We continued to grow our online sales in 2021 with another year of double-digit growth at +16%. Over two years, our online sales are up 46%. If you look at online GMV, well, it grew by 20% in 2021. In terms of products sold, we saw strong sales of outdoor, sofas, and furniture. Online performance was very different between H1 and H2, largely due to the comparable base. H1 benefited from easier comps as the pandemic-related ramp up of digital was only just starting, and online sales were up 45% in H1. H2 had a much higher comparable base, so sales were down 16% year-on-year as online traffic normalized and sales were more balanced between stores and online. What's important is the continued growth in the year on an already high base, demonstrating that our omnichannel model keeps getting traction.
This strong omnichannel model strategy does show results on customer side as well. Our active customer base grew by another 22% to reach more than 7.5 million, and the number of new customers grew by 30%. Also illustrating the ramp-up of our approach, click and store GMV was up 13% and click and collect GMV has almost doubled over the year. Finally, we have launched new delivery options to meet customer needs, including forty-eight hour and 24-hour home deliveries for our click and collect, and also pickup points for large items. Another key part of our online offer is our current marketplace, and on slide 10, we show that it's rapidly ramping up and rising in popularity in the home decoration space. GMV in 2021 reached EUR 61 million, representing 24% of French online GMV.
GMV in December 2021 was up 42% compared to December 2020, the marketplace's first full month of activity. Being an important part of this omnichannel strategy, we have started to roll out our marketplace in stores, where customers can access it through dedicated tablets. At year-end, this was possible in 85 of our French stores. The development of our marketplace is underpinned by its ever-growing catalog. An important addition last year were our kids categories. Overall, we more than doubled the offering. We added 140 vendors, bringing the total to over 300. At the end of the year, the marketplace offered over 760 brands and nearly 100,000 products from 63,400 one year ago. The marketplace is fully integrated to the Maisons du Monde ecosystem and offers customers a seamless experience.
As a result, customer satisfaction remains consistently high with a rate of 4 out of 5. We pay close attention to maintaining this rate at a level comparable to Maisons du Monde, as it is key for our brand image, as well as customer experience and loyalty. All this turns into higher sales. Indeed, we show that the Maisons du Monde customer who buys on the marketplace spends on average more than 50% more than a Maisons du Monde only customer, whether that is on Maisons du Monde or on marketplace products. The vendor retention rate is also extremely high at 98%, and our partners clearly see the benefits of our being under Maisons du Monde brand. For our top 20 vendors, 25% of their sales already comes from our marketplace after only one year of operation.
The other brick in our omnichannel strategy is of course our stores, and you can see on slide 11 that we ended the year with 357 stores in Europe, 5 more than one year earlier. Our fourth quarter was particularly active as we opened eight new stores, two each in Italy, Portugal and Spain, and one each in Belgium and Switzerland. During the same period, the group closed one store in France. Taking a full year view, openings in 2021 were again concentrated on markets outside France. On a net basis, Maisons du Monde closed nine stores in France and opened 14 in the rest of Europe. To go into more detail by geography, in France, our footprint optimization strategy led us to close 12 stores and to open three. In the rest of Europe, we opened 18 stores and closed only four.
Our openings included our first store in Austria, bringing the number of markets in which we operate as an omnichannel player to 9 countries. Our total store network commercial area reached 433,000 sq m at the end of the year, up 13,000 sq m or 3% compared to the year before. Slide 12 focuses on our pan-European expansion. The pie chart on the left show that France still contributes to more than half of our sales, but the share of international is growing consistently from 43% in 2019 to 46% in 2021. Nearly half of this growth on international markets came from online. We are seeing a strong performance in mature markets, with Spain, Italy and Belgium growing at around 20% year-on-year. At the same time, new markets are ramping up at a fast pace.
In Germany, we had solid sales growth despite the fact that stores were closed for nearly half the year, as digital more than offset the lost store sales. Compared to 2019, growth in Germany exceeded 20%. In Portugal, sales almost doubled, with two new stores opened in Q4. I'll wrap up my opening section on slide 13 with a look at the further progress we made on ESG in 2021. On the environmental front, our sustainable product offering is developing rapidly, and products made from sustainable woods were up 21%, while those made from sustainable textiles were up by an even stronger 36%. We continue to advance on energy efficiency as 97% of our stores are now powered by renewable energy. All our French stores got ISO 50001 certified.
We're also making major headway on waste reduction and green logistics. At our repair center, the number of repaired or reconditioned products was up 85%. In total, more than 50,000 products were put back in sellable condition as part of our circular economy approach. As you know, we are committed to reducing our greenhouse emissions, not just in our own operations, but at our partners as well. What is known as Scope three. In that spirit, we did take part in the FRET21 initiative that aims at reducing carrier emissions. We're also one of the first 15 e-merchants in France to sign last summer the French e-commerce federation, FEVAD's Responsible E-commerce Charter that commits us to greener logistics. On the social front, our first responsibility is towards our employees.
In order to reward them for their exceptional commitment and also support their purchasing power in the current inflationary context, we have decided to grant an exceptional EUR 500 bonus to all group employees in Europe, whether they have been working full-time or part-time with us. We have also included our apprentices in this initiative. The idea is to be particularly supportive of our small wage colleagues, again, in line with our company purpose. We also launched important diversity and inclusion initiatives. We are signatories of Les Entreprises pour la Cité Diversity Charter that aims at fighting discrimination, and we also launched a mentoring program for our leadership group to help young people coming from underprivileged backgrounds to access the workforce.
All our efforts have been recognized by a number of key players in the sustainability world, including MSCI, which ranks us number one in home retail, Sustainalytics and Vigeo Eiris, both of which rank us in the top 5% or better. With that, let me hand over to Régis for the financial review.
Merci. Thank you, Julie. Good morning, everyone. Happy to be with you again this morning. I will start on slide 15. We have with our classic 2021 sales, which posted strong double-digit growth despite the disruptive environment that Julie has just described. This slide shows the building blocks of the growth. With the disposal of Modani, we are restating our 2020 sales from the EUR 50 million contribution from Modani to create a comparable base. The starting point is 2020 full year sales of EUR 1,135 million. Like-for-like growth was up in double digits at more than 13%, adding EUR 148 million in sales. Development added another EUR 23 million, split roughly evenly between the contribution of stores opened in 2020 for EUR 11 million and stores opened in 2021 for EUR 12 million.
As we have already announced at the end of January, this bring us to our full year sales of a little more than EUR 1.3 billion, and the 15% reported growth was thus above our guidance of growth in the teens. Let's go into detail. Slide 16. On this slide, we break down our sales by quarter over two-year period. Sorry. Slight difference with what you have seen before, as the figures shown here have been restated for Modani. Sales were up in every quarter of 2021 compared to the same quarter of 2019, with double-digit growth in the first three quarters and slower growth in Q4, which faced a more challenging comparable base.
Overall, we are up in double digits over the pre-pandemic period, with our 2021 full year sales up 11% versus 2019, of which 6% like for like. If you look at our sales performance in greater detail, you will see that growth was actually uneven over the year. 2021 was really a tale of two halves. As you recall, in the first half, we posted sales of EUR 634 million with very strong growth of 35% versus H1 2020, as we of course were cycling over a low base due to the pandemic. In the second half of 2021, our sales of EUR 672 million were broadly stable versus the same period in the previous year, as we faced headwinds from low product availability, notably in furniture.
During this period, store sales grew 8% and benefited from a favorable comparable base in the fourth quarter, as French stores were closed in November 2020. Online sales, on the other hand, declined 16% to EUR 170 million and represented, at the end, 25% of our total second half sales. This reflects an exceptionally high comparable base and a return to more normalized development of online traffic. Despite this web traffic slowdown, we pursued a positive Christmas season, proving us right in the choices we had to make earlier in the year regarding supply. We will come back to this later. Slide 17. We take a closer look at our sales performance by categories, channels, and geographies, and you see that we can be very satisfied with our performance as it shows double-digit growth across the board. Let's start with category.
Furniture sales were up 11%, reflecting the strength of our collections and strong sales of products held in inventory, notably outdoor and sofas. However, the category was penalized in the second half by limited availability and longer delivery times. Compared to 2019, furniture sales were up 4%. Let's keep in mind, supply was already challenging in 2020, and we had to prioritize shipments in the second half, which we did in favor of decoration to secure our Q4, limiting already growth potential for furniture. For decoration, sales which carry higher margin were up by an even higher 18%. Demand was strong in this category, and Maisons du Monde performed well, thanks to rigorous and agile management of sourcing throughout the year. This notably enabled us to secure the Christmas season, which is, as I just said, a strong season for decoration items.
On a two-year stack, sales were up 16%, with a CAGR over the period of 8%. By channel, store sales were up 16%. This growth, of course, reflects the fact that stores were open more in 2021 than in 2020, 85% of the time versus 75% in 2020. Compared to '19, stores achieved broadly flat sales despite several weeks of closure of our like-for-like stores this year in 2021, and also smaller sales contribution from non like-for-like as we had a net opening of only 1 store over the period 2020-2021 compared to a net opening of 43 over 2018 and 2019. This shows the increasing relevance of our store model. Online sales showed a healthy growth of 13%. The growth rate slowed in 2021 as we saw a rebalancing towards more in-store activity.
Over two years, online sales are up by very strong 46%, and they are stabilizing at far higher levels than pre-pandemic. 33% of total sales compare to 25 in 2019. Over two years, online sales posted a strong 21% CAGR. On channels, I think it's worth remembering that we estimate that COVID-19 related restrictive measures in the year reduced total sales by EUR 45 million, with store sales down 60%, partly offset by a EUR 15 million gain in online sales. All of this took place in the first half. Finally, by geography, you see that sales in France were up 12% versus 2019 while international sales were up 19% in both periods.
As Julie mentioned, this reflects the Pan-European expansion as we focused our growth mostly on markets outside of France, while actively managing our store network in our home market to relocate to fewer but better locations. To put it in numbers, the number of stores was reduced by 14 in France between 2019 and 2021, while the number of stores in the rest of Europe increased by 15. On slide 18, let's take a closer look at the category mix ratio. This graph shows the evolution of the furniture share of sales. We can observe the low level of 2021 at 41% and the one-off low H2 at 35. Taking a longer term view, we see that until 2019, furniture was gaining in the product mix every year, notably as a result of online penetration.
This structural trend reversed in 2020 and again in 2021 due to COVID-related disruptions on supply chain. 2021 number illustrates two realities. First, our furniture has been penalized by the manufacturing and supply chain constraints. Second, the fact that we are not yet at year-end at our target level of inventory for this category. This reality has been amplified by our agile and pragmatic approach to support decoration supply at year-end to support the Christmas season. As we enter 2022, we are determined to keep rebuilding our inventories, especially on furniture. Realistically, this will take a few more quarters. I take this opportunity to pause and give some highlights on the freight situation that has been particularly tense and difficult since the end of 2020. Against that backdrop, we have decided to take specific actions, reviewing the overall strategy with our forwarders.
We have developed a new approach, mixing one-year and longer-term contracts and developing new routes. Negotiations for 2022 are now over and pricing for 2022 secured. However, capacity is still not back to normal, and we expect disruptions to continue throughout 2022. Let's move to EBIT on slide 19, which progressed strongly to reach a record high of nearly EUR 124 million, up 39% to EUR 35 million in 2021. It's an equivalent expansion of 160 basis points to 9.5%, returning to a high level of profitability. The bridge on the slide shows you the different building blocks of this improvement. Let's start with gross margin.
Gross margin was stable thanks to good management of supplier contracts in a context of strong inflation, a low level of promotion, a favorable effect, sorry, driven by decoration with a higher mix on margin and a positive effect of the marketplace. Overall, as just mentioned, freight inflation had no significant impact on 2021, as its effects really began towards the end of the year and will impact gross margin in 2022. On logistics, we gain roughly 240 basis points thanks to strong operational efficiencies in transport and cost optimization plans. In 2021, we benefited also from an obvious scale effect as our better sales performance allowed us to dilute fixed costs.
Finally, 2020, as you remember, had been impacted not only by lockdowns, but also by strikes with some material one-off costs that did not repeat in 2021, creating a favorable year-on-year variance. On SG&A, store operating and central costs were up 90% year-on-year, reflecting 21 gross store openings versus 9 in 2020, and the absence of governmental COVID-related subsidies unlike 2020. To that extent, 2020 we know was not a normal year for SG&A as partial unemployment schemes and discounts on rental artificially improved the base. Another important point in this bridge is advertising. As explained during our recent Capital Markets Day, we strongly believe in the necessity to invest to develop web, but brand equity and new initiatives as well. Advertising costs increased by EUR 15 million to support those initiatives around the brand, the marketplace ramp-up, and overall sales growth.
Compared to 2019, advertising zone sales ratio increased by an average 40-50 basis points every year, which is very good development to support our future growth. Regarding D&A, the favorable effect is mainly a leverage effect, considering a stable level of rent expense in parallel of top line growth of 15%. This result on EBIT is very positive. In a context of significant inflation, notably on freight, it shows that we are monitoring very cautiously our bottom line with the right discipline and an efficient resource allocation approach. On slide 20, we turn to our strong free cash flow generation, one of the major successes of the year. Free cash flow came in at EUR 90 million compared to EUR 53 million in 2020, which is an equivalent of precisely 69% increase. The bridge on the slide shows you the different moving parts.
Without any surprise, this increase is mainly the result of the EBITDA improvement, illustrating the strength of our profitable growth model that I just described before. Working cap requirement decreased by EUR 8 million due to higher level of inventory compared to 2020, partly offset by lower accounts receivable and changes in payables. Working cap to net sales ratio improved to 1.1% from the 2.1% ratio in 2020. As commented before, the level of inventory is, however, not yet optimal and remains a key business priority. To that extent, we consider 2022 inventory replenishment that will affect free cash flow generation. CapEx, finally, was up EUR 2 million due to higher store development investment, while the CapEx to net sales ratios stood at 3.9%, down from 4.1% one year earlier.
As mentioned during the Capital Markets Day, CapEx will follow a different trend and will represent a peak in 2022 in our CapEx journey, as we will open the first phase of our new logistic platform. This project per se will represent an extra EUR 15 million CapEx. A word to finish on debt and leverage. Thanks to our strong liquidity, in 2021, the group reimbursed EUR 50 million term loan associated to its senior credit facility, as well as you remember, as a EUR 150 million French state-guaranteed loan. Taking into account its cash and cash equivalent position of EUR 163 million, Maisons du Monde net debt position was EUR 60 million at December 2021. This translates into a leverage ratio decreasing to 0.36 times. Slide 21, I will end this part of the presentation with EPS and the dividend.
As Julie mentioned, our EPS reached a record high level in 2021, supported by our strong activity. Excluding Modani, it stood at EUR 1.52, i.e., +58% versus 2020, and a 15% increase versus 2019. On a reported basis, it reached EUR 1.72 as a divestment of Modani adds EUR 0.21 to our EPS. You can observe a slightly positive effect on the financial results, mainly due to interest charges effect as we decrease our debt. Regarding tax, our ETR lands at around 28% and benefits from the small reversal of a tax provision recorded in 2020. The sharp EPS evolution, +58% versus 2020 and 15% versus 2019, shows the conversion of a profitable growth agenda.
As a result of this strong performance, we will be submitting our dividend to our annual general meeting on May 31st for an amount of EUR 0.50, representing 45% increase compared to 2020, and translating to a payout ratio of 36% of EPS excluding Modani. It is for us another evidence of our commitment to return value to our shareholders. With that, let me hand back to Julie.
Thank you, Régis. Let's now look at our priorities and outlook for the year. This on slide 23, I would say that our business priorities are largely the continuation of what we focused on in 2021, with a couple of additional points. In terms of commercial activity, we intend to keep strengthening our brand, building on the strong attributes and the achievement of 2021, while also continuing to improve customer experience. For example, we will develop new capsule collections with designers and further develop our communication with our consumer communities. We will also continue to strengthen the omni-channel model through both levers, continued extensions of stores in Europe with 0-5 net openings all outside France, and the further development of our digital footprint, notably through the deployment of the marketplace in all of our stores and also the launch of another European country online.
In terms of supply, we will work at replenishing inventories gradually in a complex price and raw material sourcing environment. We target a normalized level of inventory by year-end. We'll give you updates on this point as visibility improves. Furthermore, we will open our new logistics center in northern France, starting with the first step, manual configuration, before launching the automation phase. Regarding our ESG agenda, we will deploy our Good is Beautiful label while also improving product traceability and further enhancing supply governance. I will have the opportunity to present Good is Beautiful in greater detail later in the year. In a nutshell, it is a brand movement aimed at embedding sustainable development in our strategy and making this commitment more visible with the ambition that our customers and partners, including marketplace sellers, will join in.
Before giving you our outlook for the year, let me update on our current trading on slide 24. 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. Moreover, even if we are seeing signs of easing in Europe, which is good news, we are not over the pandemic yet, and we are closely monitoring the health situation, in particular in Asia. Furthermore, as you know, we are operating in a more inflationary environment globally, which may impact consumption in general and home and living in particular after a period of heavy household equipment at the peak of the pandemic. Well, it goes without saying that the war in Ukraine adds geopolitical uncertainty to the macroeconomic challenges and may create further disruptions and inflationary pressure with a possible impact on demand.
All that being said, there are also positive objective factors that will support supply and growth in 2022, improved product availability and easier comps in H2, for example. To that point, let me shed some light on how the year may look like. Well, again, 2022 will be a year of two halves. As expected, we see a slow commercial start to 2022 for the external conditions described above, and also a record high comparable base, notably for online, which had grown by 77% in Q1 last year and another 25% in Q2. All of this will translate into a slightly negative Q1 and a broadly flat H1. H2 will benefit from easier comps and from a progressive inventory replenishment, which will both lead to sales acceleration.
To date, considering the current war in Ukraine and is yet to be determined impact on demand in our operating countries, it is hard to say to what extent sales will accelerate, but they certainly will. Also, on the positive side, we do not foresee at this stage substantial impact of this conflict on product supply, as we have limited exposure to East European sourcing. This leads me to our full year 2022 guidance on slide 25. Taking into account the factors that adjust the sales, we expect for 2022 positive revenue growth, the extent of which will be made more specific as visibility improves. EBIT margin around 9% through a strict management of our cost and resource allocation as we've been doing over the last couple of years.
Finally, free cash flow of EUR 65-75 million in the light of our inventory replenishment objective and also the investment 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, 2022 will be a landmark year for MdM ESG journey as we will reach carbon neutrality on Scopes one and two. Despite current uncertainty, we do stay fully confident in our ability to meet the medium-term guidance that we presented at our Capital Markets Day last November, and which you can see again on slide 26.
We confirm all of our 2025 objectives, namely revenues of between EUR 1.8 million and EUR 1.9 million and an EBIT margin of around 11%, cumulative free cash flow of more than EUR 350 million during the 2022-2025 period, the 30%-40% payout ratio, and finally, carbon neutrality for Scope one and two, and a 25% reduction in carbon intensity at Scope 3 level, together with a doubling of our responsible products from 20% to 40% of our total offering. To conclude on this presentation, let me just say that our 2021 performance was another illustration of our unique value proposition, which we presented at Capital Markets Day.
That is a direct consumer love brand, a distinctive business model that delivers high-end sustainable growth and a robust financial model that drives increasing shareholder results. Thank you very much for your attention, and Régis and I are now happy to take your questions.
Thank you. We will now begin the question and answer session. If you wish to ask a question, please press star one on your telephone. To withdraw your request, please press the pound or hash key. Once again, please press star one if you wish to ask a question. Please wait one moment. We are compiling the Q&A queue.
On the portal, we have a first question from Florentine. A question on H2 profitability. Can you give us more explanation regarding the quite low level of EBIT margin versus what you were used to? Meaning EBIT margin above 13% in H2 in the past. It seems that your marketing expenses increased by 50% in H2, but we did not see any impact in the sales with flat sales in H2. Do we have to understand that in the coming years you will have to spend more marketing expenses just to stabilize the sales?
I can take that one. Thank you for the question. I think it's important to bear in mind the overall story in 2021 vis-à-vis EBIT margin, EBIT level. First, it's really management of the gross margin, and I think it's important to flag this in the context I described and you all know vis-à-vis inflation. I'm sure we may discuss later about 2022 gross margin evolution, but 2021 gross margin is really a key factor of the year. To what extent H2 can be explained at this level by the fact that you flagged below usual? I think indeed there is an acceleration of marketing. You associate directly marketing investment phasing with the trend evolution of sales.
Marketing has not been about only web support during the year, but it was really as well about marketplace launch that you may not factor precisely, but will. That has been a couple of million already in 2021. In this marketplace investment on marketing does not translate into sales, as you know, because we just take only the contribution vis-à-vis the commission. It's marketplace evolution that has been a factor of marketing investment. Another element I think in this question of the trajectory of the margin is related a bit to a certain extent to the freight. I mentioned that freight started being a bit of an impact at year-end with limited factor, but it was really H2.
We mentioned that already when commenting the record high level of margin in H1, that we were expecting this inflation to start at the back end of the year. In a nutshell, margin was a bit impacted by freight at the end of the year. Second, marketing costs did indeed increase, one of the element being the marketplace support.
First question on the phone comes from the line of Clément Genelot from Bryan Garnier & Co. Please go ahead.
Yeah, good morning. I have three questions from my side, if I may. The first one is on Ukraine. What could be the actual impact from the war on this supply side? Because if I'm right, your production sites are rather in Vietnam and China, and the wood comes from Asia as well. My second question is on the gross margin in 2022. What level of gross margin do you expect in 2022, given that now you have maybe a better view on the price increases magnitude and timing, and also on the freight costs? My third question is on the OpEx and most especially on the wages. What is the extent of wage increases? What more would we expect in 2022?
Recently, Carrefour indicated a 3%-4% wage increase in its French in-store employees' wage. Is it a magnitude that we could extrapolate at? Thanks.
Thank you, Clément. I will take your first question and Régis will answer the other two. Regarding the conflict in Ukraine, you're perfectly right. We have very limited exposure to European sourcing overall and close to zero to Eastern European sourcing. The only manufacturing we have in Europe is around our sofas, and they are not in Ukraine nor the neighboring countries. If there is an impact, that would be more on demand given the fact that this conflict may trigger different economic sanctions that might increase the inflationary pressure, which in turn might impact consumption and consumer behavior. You're right on the supply side. The impact should be very limited. Really the uncertainty for us is more around potential demand contraction due to overall price inflation.
Thank you, Julie. Thank you, Clément. Bonjour. On gross margin, first to your question, what is the expectation for the year? It will be a couple of big moving parts, I would say. Indeed, we mentioned that earlier, raw material inflation and freight cost increase will have the impact now in gross margin in 2022. As I said, our contracts are confirmed now with the freight forwarder. So we do estimate that gross margin all in all should decrease by 150 basis points versus 2021, which is to say roughly to be around the 65% line. How does it move inside? I would mention four elements.
Indeed, raw material and freights will have a major effect, probably 400-500 basis points. One element as we replenish inventory will be a negative mix, which is a positive news for us in terms of trajectory of business. To the reverse of the effect of 2021
Replenishing inventory and furniture will drive probably a negative mix effect around 50 basis points. On the other side, we have some positive in lead pricing because we started pricing let's say at the back end of the year 2021, and it will have a sequential progressive effect at the time of each launch of the new collection. Overall, over the years, it should be pricing effect around 300 basis points. I say 300 because the price per se could be higher, but we do envisage to increase the level of promotion probably versus a low level we had in 2021. Another positive will come from many initiatives that we have in terms of efficiencies in purchasing, in logistics, warehousing activities that should drive some positive.
Those parts should give you a better view on the trajectory from gross margin, which is again, in this context, I think a good development because we are monitoring the pricing so to protect the level of demand to the extent that we can in the overall global inflation context, and at the same time managing this inflation, which is just massive, notably on price. To say as well, and to be precise, that this gross margin will have a two-tier approach, probably, a lower level in H1 and a higher level in H2, considering that the pricing effect will much more come in the second part of the year. Your next question was about wages.
In our zone where we operate, we do see 2%-3% in our current discussion with our internal partners. It's fully embedded in the guidance that we give this morning, with the margin around 9%. It's fully embedded, and we are confident to control this to this level.
Understood. Thanks a lot.
Next question we have online is from Marlène Faur from HSBC. Could you tell us how is the current trading at the beginning of the year? And also to help us estimate the phasing, would you say that H1 2022 should be between H1 2019 and H1 2021? Second question is, what was the impact of Modani divestment on your cash flow statement? Another question is, in terms of M&A, given your very sound financial position, do you expect to look at potential targets and in what field countries? Last question is, how many stores do you project to open in 2022 and where?
Thank you, Marlène Faur . I will take your questions one, three, and four, and Régis Massuyeau will answer the second one. On the current trading, well, as we said, consumption is soft at the moment with which again comes from different reasons. Overall, a global inflationary context. Our latest estimates that we've been seeing forecast a 6% in the Eurozone for the year, and the recent geopolitical context doesn't help as we said. More specifically in our category, we had an explosive start to the year last year. We did mention the 7% growth online, but we also had a 20% growth in store level. All of that indeed turns into soft consumption.
If I take the Google searches, the Google search volume for home living works, while those were down 20% year-over-year, and that is across our main countries. That's not just a France situation. Now, if I take a channel view to maybe give more specifics on the current trending, well, in terms of retail, what we see is positive traffic, and we see that throughout Europe, but this is mainly due to base effect. If we recall 2021 again, we had a lot of closures in Germany and Switzerland in January and February last year. In Italy, we were closed all weekends last year. In France, we were closed in all shopping malls in February.
Finally in Spain, we were closed in all of Catalonia. All of this means that the higher opening ratio this year makes the traffic positive. Now, in terms of spend to visit, what we see is a smaller conversion rate, but a higher basket. Basically those who come, when they buy, they buy for more. We see the same trends in terms of conversion rate in AOV online. We have less people converting, but when they convert, they buy for more. In terms of traffic, the picture is a bit different online. We did say that it was positive traffic in retail throughout Europe. Online, the traffic is negative out of France, again, to the base effect.
What is really good news is that it is still positive in France. Here we see the marketplace dynamics, which again keeps having a very good trend. Actually, compared to the global context, it's overperforming. We're really seeing good results coming from the marketplace, which keeps gaining share in total of French online GMV. For us, that's a very positive development, and this is why we've been accelerating our marketplace strategy with the finalization of the rollout in stores, but also the opening of another online country this year. Just to really leverage what is currently happening.
Now to elaborate on the sequence of the guidance, well, first, let me underline the confidence we see in the model and on our ability to keep growing after a 15% growth last year. The current context is particularly volatile in European economies around inflation and impact on demand. Which makes specific forecasts challenging at this time. Obviously, as visibility improves, we will be able to give more specifics. Where we can be specific is around H1, because as I said, we do not see any specific impact on supply of the European situation. The broadly flat H1 is something that we can forecast on. Again, that is on the back of very high comps as H1 2021 is a +35%, versus 2020.
It is for us over a two-year period still a very good performance. As I said, sales are expected to grow in H2. Maybe Régis do the second question.
Which was on Modani, right, Clémence Mignot-Dupeyrot?
Yeah.
So thanks, Marlene, for the question. The free cash flow I presented is without discontinued activities. So you cannot read directly the proceeds of Modani on this bridge because, as per IFRS 5, we are communicating everything this morning without the effect of Modani. The transaction per se generated an extra cash to our model, which is around EUR 12 million. You had a question on M&A, I guess. It's whether it is part of the agenda. Everything we have today in our plate is organic, and I think there is no different message versus what we said in the use of cash versus what we mentioned in the CMD. I think there was a last question on store opening.
Store openings, which I'll take.
Yeah.
Thank you, Régis. For this year, Marlene, what we plan is a net opening of zero-five stores, and that will be skewed to international. What we see, country or geography-wise is a negative net in France up to -5, and a positive net outside France between zero and 10. That would be the plan for the year. That is also the opportunity for me to link that to the strategic plan. As we said, we would be in a five-15 net opening range over the course of the plan. To give you a perspective and maybe a longer term view, in our strategic plan, both 2021 and 2022 are years of limited net openings.
I remind you that it was +5 last year and zero-five this year. Why? Because the number of closures is fairly high in those two years, in the mid-teens. Indeed, in our capital allocation optimization policy, we want to make sure that we rationalize our space adequately. Now, in the subsequent years, that is starting in 2023, the number of growth openings should stay high or at comparable levels. Then the number of closures will go down substantially, particularly in France, where the portfolio should be stabilized at this stage. As a result, net openings from this year on will go up. This explains the midterm perspective, just to give you this longer view.
Thank you, Marlene.
Thank you. Next question from the phones comes from the line of Steven Penam from BNP Paribas. Please go ahead.
Hi, good morning, everyone. I got two questions, please. The first one is about the working cap. Your aim for 2022 is to replenish the inventories. Can you please give us more color on what level of working cap as percentage of sales should we expect in 2022? My second question is about the CapEx. I assume that there will be extra CapEx in terms of dedicated to the warehouse. Can you please give us an idea of what could be the level of CapEx in 2022? Thank you.
Thank you, Steven. Working cap trajectory and CapEx evolution. I will start answering your question with perhaps trying to size what inventory replenishment could mean. Because to be fair, in terms of working cap, we are managing receivables and payables in a quite good manner in terms of year-on-year evolution. Considering that we have good relations with our suppliers, notably in the way we manage this. Working cap evolution will be drastically related to the evolution of inventory that we consider to be around EUR 20-25 million. I think that's probably the magnitude of what inventory replenishment could mean towards this, the way we qualify it, optimal kind of normal level of inventory. If.
I mean, it will be in terms of working cap probably 1 to 1.5. It will depend a lot about the evolution of sales that we do not specify it specifically this morning. Regarding CapEx should be around EUR 90 million probably, which is EUR 30 million more than in 2021. The key driver of that is what we mentioned this morning already vis-à-vis the new second warehouse, which is probably an extra EUR 15 million CapEx related to this project. But we have other elements, store opening with new stores plus renovation, which is still something we factor in our CapEx equation, probably around extra EUR 5 million.
We have some IS/IT development that I did mention already during the Capital Markets Day in terms of systems for finance, for HR, different initiatives to support the web evolution as well, which is probably circa EUR 10 million. 2022 in terms of CapEx is a bit of a peak in the journey due to this, and its main element on logistics. You should compute that kind of level of CapEx in your model.
Thanks very much.
We have an online question from Fabien Carmout at Kepler. What cost inflation do you expect in your OpEx in 2022? Can you quantify your energy cost in SG&A? Should we expect rental charge increase or rent link to inflation?
Thanks for those three questions in reality. Inflation, in general, well, I mean, we do factor today in our EBIT margin guidance in an overall inflation, as I mentioned for wages, which is 2%-3% in general. We may question whether it is enough or not yet, but at this moment, that's what we have factored. I think in different elements of our P&L, I think it's relevant to consider this assumption. On energy specifically, I think there are probably three elements. Energy for freight, energy from transport, and the, let's say, classic energy we use perhaps in terms of electricity in our stores. For freight, I think it's embarked in our contracts. We have some indexation, and I think we are confident today within the magnitude of the impact.
I did comment on gross margin to say we are on track. Same for transportation, the way to deliver either consumers or shoppers directly or stores. We are confident managing this overall envelope with many other efficiency programs that I did mention already in terms of not gross margin, but to a certain extent, distribution, logistics, net margin contribution. This level of inflation is, as of today, not preventing from any other evolution of factors, but I think it's embedded in our EBIT margin. For stores, we have transformed totally our setup in stores, transforming in our ESG commitment to decrease our carbon footprint.
We have transformed electricity system in our stores, I think roughly everywhere to LED, which help us a lot decreasing the consumption, and obviously it will help us compensating the inflation we could have on that one. It should not be a factor of major cost evolution in our model.
Thank you. As a reminder, if you wish to ask a question on the phones, please press star one on your telephone keypad. The next question comes from the line of Jack McNicol from Redburn. Please go ahead.
Hi all. Jack McNicol from Redburn here. Thank you for the presentation. I'm just wondering if you could speak more to pricing this year, please. Could you give some more color on how your like-for-like sales growth has been affected by the full price versus discount mix, and how much by outright price increases? Thanks.
For 2021 or your question is on 2022? Sorry.
2021 please. Yeah, and a bit of outlook for 2022 would be much appreciated as well.
Thank you, Jack, for your question. The price increases we had very limited impact on the end of 2021, because basically we started them at the very end of the year with really following the sequence of the release of our new products to our store. Really this effect is starting in 2022. Really the pricing effect will be essentially in 2022. Which indeed is a good way to you know combat the inflationary pressure, and compared to other players, we have very good assets indeed to face this inflationary pressure. Well, first our in-house design that we have keeps this pricing power for us.
Second, we do have a wide price scale, which allows us to adapt to evolving customer needs. For example, we are currently analyzing the elasticity of demand of the very recent price raises we've been doing, just to see whether we need to adjust to go maybe to the lower end of our pyramid compared to the mid to high end. This is a very good observation field for us. Also we have a high product renewal rate. That is, really important because we do release product throughout the year. That allows us to pass on pricing over time, with the rhythm of new collection and to keep adapting as inflationary context moves on.
Finally, I just say that we are an agile and especially a digital and database company, so we can react fast. To that end, the marketplace that we have is also a key asset because it allows us to monitor consumer dynamics based on 100,000 SKUs. Basically in this context, precisely now in this period of high inflation, we are regarding how consumer habits are evolving based on the marketplace traffic itself. Also, that will probably drive us to onboard new types of vendors, maybe to go to more low to mid price levels, just to make sure that we adapt very quickly to the situation.
Pricing is indeed a very good lever that we have in this current context on top of the fact that our branded model gives us this pricing power and this big customer loyalty. We are well equipped to address the context.
Cool. Thanks, Julie.
Well, it looks like there is no more questions, so thanks a lot to you all for your attendance. The whole IR team remains available if you have extra questions. Thank you all. Have a nice day. Thank you.
Yep. Thank you.
Have a good day.
Have a good day. Bye-bye.
Thank you. That does conclude our conference for today. Thank you for participating. You may all disconnect.