Good morning, ladies and gentlemen, and thank you for standing by, and welcome to the Maisons du Monde third quarter 2021 results conference call. At this time, all participants are in listen only mode. There will be a presentation followed by a question and answer session, at which time, if you are connected on the phone lines, you can press star followed by one on your telephone. If you are connected on the web, you may submit your questions at all times using the Q&A box on your web, on your plat-web platform.
I must advise you that your conference call is being recorded today, Tuesday the 26th of October, 2021. I would now like to hand over to your first speaker for today, Mr. Christopher Welton. Please go ahead.
Thank you, operator. Good morning, and thank you very much for joining this call to present Maisons du Monde's third quarter and nine months 2021 sales. Hosting today's call is our CEO, Julie Walbaum. She is joined by our CFO, Régis Massuyeau. Julie and Régis will be making today's presentation, and then we will open up the call for your questions.
You have certainly seen the press release we issued this morning. The conference call slides can be downloaded and viewed from our website, maisonsdumonde.com. This call is also being audio 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. Julie?
Thank you, Chris. Good morning to everyone, and thank you for being with us this morning. I will start with an overview of the nine months performance. Regis will then detail our financials, and I will come back to share two important strategic announcements that we made this morning, and also to present our updated 2021 guidance. Let me start on slide five with the key highlights of our performance.
The first important highlight is that we have achieved solid sales growth in the first nine months of the year. With sales of EUR 980 million, we are 21% above the same period last year, with comparable lockdown related store closures over the period. We are also significantly above pre-pandemic levels. We are 16% above the first nine months of 2019.
This dynamic shows again the appeal of our brand and offering, as well as the strength of our omni-channel and pan-European model. The second important highlight is that on the back of this strong performance, we are raising our full year guidance. We now expect sales to grow in the low teens and EBIT margin to land somewhere between 9% and 9.5%.
Free cash flow should now be materially above last year's level. This significant upgrade confirms our ability to navigate a complex environment in an agile, yet disciplined manner, including supply and freight forwarder management, product mix optimization, smart revenue management, and tight cost monitoring. Third highlight, we are announcing today that we have reached an agreement with Optimal Investment Group that will reduce our stake in Modani to 15% from 70% currently, following the strategic review we announced last March.
We are confident this new setup will deliver the highest return for our shareholders. Modani will be accompanied by a local private equity fund to pursue its growth trajectory, while we, Maisons du Monde, will fully focus on our development in Europe.
Finally, we are launching a EUR 50 million ESG impact share buyback program, reflecting both our solid free cash flow generation and our commitment to sustainability. Considering the upgrade of the guidance that confirms our very good business development and the future proceeds to come from the Modani transaction, buying our shares in the current environment is a very good investment. We consider it is a good time to launch this first share buyback program with a high payout ratio that underpins our permanent focus on returning value to our stakeholders. Let's now look into this in greater detail.
On slide six, you see that over the first nine months of the year, Maisons du Monde turned in a very strong and broad-based sales performance. Store sales were up nearly 17%, and online sales increased by nearly 29% in the first nine months. Our selective marketplace continued to gain momentum and made a significant contribution to the acceleration of our digital sales, accounting for 21% of French online GMV over the nine months. As a result, online gained further share in total sales mix from 34% over the first nine months of the year in 2020 to 36% this year. This performance clearly attests to our ability to execute our growth agenda while navigating through the volatile environment we're facing.
Remember, we explained at the end of H1 that pandemic-related lockdown in the first half of the year reduced our total sales by an estimated EUR 45 million, as a EUR 15 million gain in online sales could not fully offset a EUR 60 million drop in store sales. Another source of satisfaction is our strong brand and customer dynamics. Our active customer base, that is customers who bought with us over the last 12 months, has increased by 23% year-on-year in the nine month period.
Within that, customer growth was balanced. Number of new customers increased by 22%, while number of returning customers increased by 23%. Also, number of omni-channel customers in the period, that is who bought online and offline over the nine months, increased by 37%. Furthermore, we continue to see active engagement by our customers across social media channels.
For instance, our Instagram community rose by 23% to reach 5.2 million followers at the end of September. On slide seven, we present our traditional look at sales by geography, channel and category. As you can see, we posted high double-digit growth across the board. By geography, both France and international were up strongly, respectively by nearly 18% and 25%, demonstrating that activity has picked up across all of our markets.
As you can see, our growth is not only above last year's, but also above the first nine months of 2019, with France up 8% and international up 24%. In the third quarter, sales in France were down 3.3% as we cycled above a quarter last year that was marked by strong post-lockdown consumption, while international sales were up 1%.
As a reminder, all our stores were open this year in Q3, following a Q2 2021, where international stores were more open than last year's, while France was broadly even. The complementarity of our channels is once again demonstrated by the 17% growth of in-store activity and the even stronger 29% in online as consumers shifted from one channel to another to adapt to restrictions in different markets since the start of the year.
On a two-year basis, store activity is broadly stable, reflecting the impact of lockdown in H1 this year, while online is up by an extremely strong 61%, validating our strategic decision to build a digital-led omni-channel model and to launch a curated marketplace. In Q3, as expected, store sales were more or less stable, while online sales were slightly down 2% against a high comparable base.
By category, year-on-year growth was also strong with a 19% increase in furniture and nearly 23% in decoration. This is true also on a two-year stack, with furniture up 12% and higher margin decoration up 19%. In Q3, both were slightly down, furniture by 2.4% and decoration by 0.4% due to high comps and limited product availability, particularly for furniture.
On slide eight, we look at the key operational milestones over the first nine months. We launched our fall winter collections, which include 5,700 SKUs and were designed around six different themes. In line with our DNA, we offered our customers the experience of traveling around the world with a particular focus on rough and natural fabrics such as linen, hemp, sandstone, and wood.
This responds to our customers' desire to have more of nature in their everyday lives. Our color block and golden collections were also particularly successful as vivid colors and exotic themes convey some return to the buoyancy of life for our customers after so many months of restriction. That's what they tell us. In terms of product categories, we saw continued good dynamics around home office and also around decoration and greenery, plants, dried flower arrangements, candles, mirrors, wall decor and so on.
To celebrate our 25th anniversary, we partnered with a design duo, Marine and Marine of Renée Recycle, to launch a colorful capsule collections of small furniture made from Maisons du Monde products returned by our customers. This upcycling capsule was sold out in a couple of weeks, and all profits were donated to the Fondation des Femmes, an NGO that defends women's rights.
To continue to expand our customers choices, we launched the kids categories on our marketplace with again, a very curated selection of brands renowned for their style and good quality price ratio. We introduced 100 brands and 7,000 products, which means we multiplied by six our kids offering and started to offer new categories such as bedding or bath linen for childcare.
In terms of brand recognition, Maisons du Monde was designated by Reech, a social media listening agency, as the second most mentioned brand by home and living influencers in France on an organic basis. This illustrates once again how much Maisons du Monde is a natural reference for experts and fans in furniture and decoration. Finally, we kept enhancing our omnichannel proposition.
We launched our 24-hour home delivery service for online decoration orders, and even more notably, we launched a bit ahead of time our in-store marketplace solution on vendor tablets in first 40 stores across the French network. It is still early days, but qualitative feedback from sales associates is very promising.
On slide nine, we focus more specifically on our curated marketplace with extensive, yet highly selective offering, complements our own product range and with success helps drive our online growth. We saw a very good level of activity over the first nine months with gross merchandise volume, or GMV, reaching EUR 46 million. That is 21% of our total French online GMV, well ahead of our expectations. We continue to see an increase in the number of vendors, nearly doubling the number of vendors since the beginning of the year, adding over 30 in Q3 alone.
The number of brands on the marketplace now exceeds 700, which represent over 85,000 products. We realized over 280,000 transactions already, and customer satisfaction is excellent, with a score of four out of five for all marketplace orders. Best selling categories on the marketplace include sofas and armchairs, but also outdoor furniture, as well as bedding and bed linen. Those latest categories, bedding and bed linen, benefited from material catalog extensions, especially here, where MDM offering is fairly limited.
On the following slide 10, you can see the evolution of our store network over the first nine months of the year. The current environment, as well as the underlying trend towards more digital, do lead us to slow expansion in terms of number of openings. It does not, however, change our strategy, which is to dynamically manage our store network and to selectively open new stores in high potential areas. Stores help build proximity with our customers, showcases our brand, and is a key enabler of our omni-channel strategy.
At the end of September, we operated 367 stores, two fewer versus December of last year. In Q3 specifically, we opened two new stores, one in France and one in Switzerland, and we closed four, three in France and one in Italy. Over the nine-month period, we opened 13 stores in total, all but three outside of France, and we closed 15, 11 in France and four in Europe. As a result, we have a net reduction of eight stores in France and a net addition of six stores in the rest of Europe. As you will see later on, we expect the total number of stores to be slightly higher at the end of 2021 compared to the end of 2020.
On slide 11, we look at the continuing progress we are making on our CSR commitments, a key pillar of our strategy. We described most of these measures at our first half presentation, so let me just highlight the extra step we took in the third quarter. We were one of the first 10 French e-merchants to sign the French e-commerce Federation's logistics charter for sustainable e-commerce.
This charter notably commits us to reduce the volume of product packaging and to use environmentally friendly eco-logistics such as electric vehicle companies. These efforts are all parts of our long-standing commitment to become an even more sustainable company. With this, let me now hand over to Régis.
Thank you, Julie, and hello to everyone. Let me start on slide 13 with our Q3 sales bridge. As you can see from the bridge, our sales in Q3 stood at EUR 317 million, not far off last year's record high third quarter sales. Like-for-like sales dropped by EUR 12 million, or 3%. As mentioned earlier, this comes on the back of challenging comps. In Q3 last year, like-for-like growth was around +13, taking full benefit of the end of the lockdown in 2020. This was partly offset by sales from new stores opening, which added another EUR 6 million in sales, fairly split between stores opened last year and those opened this year.
Finally, Modani and Rhinov added another EUR 2 million in sales over the quarter. On slide 14, we set the backdrop against which we operated in the third quarter. The environment continued to be tricky, notably in terms of supplies, which continues to feel the aftershocks of the pandemic. I will go into more detail in a minute. In this context, our new channel model delivered a resilient performance against a very high comparable base as trends normalize after the atypical pandemic period.
Overall, we can sum up the quarter as being driven by online in France and by the rest of Europe at store level. Let's drill down on stores. Our sales of EUR 229 million were broadly stable versus the third quarter last year, which as you recall, benefited from strong pent-up demand as stores reopened post-lockdown.
We saw here a contrasting performance between France, where store sales were down 6%, and international, where they were up 5%, an obvious consequence of more store openings outside of France this year versus last year.
In addition, it's important to observe this performance against pre-pandemic 2019. Over a two-year period, we posted healthy growth of 8% in store sales, driven by international at 14%, benefiting notably from the net opening of nine stores, while France increased by 4% despite a net decrease of seven stores. Turning to online, sales performed quite well in the face of a high comparable base. Q3 sales were slightly down only 2% year-on-year at EUR 89 million on the back of a strong 24% growth in Q3 of last year.
In terms of mix, online represented this quarter 28% of total sales, a stable ratio year-on-year and a two-point increase over a two-year period. Here, it's France that led the way with 4% growth against Q3 of last year. International was down 7% as more stores were opened this year and customers resorted less to online. Overall, on a two-year stack, online sales are up by a robust 22% confirming that it is a strong growth engine for Maisons du Monde everywhere we operate.
Finally, the Q3 context was obviously marked by continued tensions on maritime transport and the supply chain. We saw heightened pricing pressure on maritime freight. In this context, we were able to secure most of our 2021 shipping allocation and avoided so far, thanks to our 2021 contracts, incurring measured short-term cost inflation. The result is that we expect a lower impact on our profitability this year. In parallel to this inflationary environment, the tension is linked to container availability, with an increase in blank sailings, meaning shipments get regularly canceled.
Both elements put significant pressure on our inventory, which continues to run at a suboptimal level as our suppliers in India and Vietnam operating below capacity. Indeed, while manufacturing in India has been progressively ramping up, capabilities in Vietnam have been severely hit by the pandemic. In particular, our factory in Vietnam had to close for six weeks through the end of September, and its activity is only progressively resuming this month. This continues to impact inventory resupply, notably in furniture.
Focusing on best sellers and monitoring our suppliers and freight forwarders extremely closely to minimize shortages have been a success this quarter, and is the reason why we are confident in raising our full-year forecast. While uncertainty and volatility remain, we consider we are well equipped to limit the effects for the rest of the year.
Turning to slide 15, we look at the components of our nine-month sales growth. As you can see on the bridge, our sales in the period reached EUR 980 million, adding EUR 169 million since Q3 2020. That translates into a robust 21% growth. That growth was largely driven by like-for-like sales, which added $143 million, attesting to the strength of our omnichannel model.
New store sales added another EUR 15 million, of which EUR 9 million come from stores opened in 2020 and EUR 6 million from stores opened this year. Modani and Rhinov contributed an additional EUR 12 million in sales. Over nine months, Modani sales are up by a solid 34%, demonstrating both good category dynamics and tight management of operations.
Slide 16 looks at our performance by channel over nine months, showing our omni-channel model is well adapted to the environment in which we operated. As previously mentioned by Julie, store sales have clearly rebounded versus nine months of last year, growing by 17% in the period. Growth was particularly strong in international, at 26% year-on-year and 9% versus nine months of 2019.
While France saw a recovery versus the third quarter of last year, rising by 9%, but is down 8% compared to Q3 two years ago, due notably to COVID and seven fewer stores. Online sales were up 29% versus nine months of 2020, driven mainly by France, which is up very strong 37%. Over two years, growth is 61% and is roughly the same in France and international market, respectively 62% and 60%, showing the relevance of the model in every country where we operate.
Finally, supply chain condition in which we operated are not that different from what I described for Q3, as most of the elements started in Q2. As mentioned above, this resulted in our inventory rebuilding longer than what we expected. We expect these challenges will have an impact in Q4 and very likely in the first part of 2022. Julie will say more about this shortly.
Switching to slide 17, let's have a look at the evolution of our sales mix. By geo, international is gaining momentum, growing from 38% in the first nine months to 49% this year. By channel, online is increasing its contribution, reaching 36% in the nine months of this year, versus 34% in the same period last year. We know that in the last 18 months, performance in online has been boosted by the COVID context, but we have also materially strengthened our online platform, notably via the launch of our marketplace. As a result, we sustainably crossed the 30% line. By category, decoration is penetrating more on e-commerce and enhancing the repurchase rate.
Deco is increasing its share to 52%. This is as well due, for the time being, to the short-term tension on furniture supply. On slide 18, and before handing over to Julie, I will end on this slide where we zoom in on our performance by quarter since 2019. Basically, to remind that our activity in each of the first three quarters of this year shows double-digit growth against the same quarters of 2019. Really important to always take that base as a reference.
Looking over this two-year period and correcting by 2021 for the COVID effect, it's interesting to point out that Maisons du Monde has been posting a very positive high single digit CAGR in sales growth. Concluding this session with that reference to 2019, let me hand back to Julie.
Thank you, Régis. I would now like to share with you two important decisions that we've made. First, on slide 20, we're announcing today that we are reducing our stake in Modani to 15% from 70% by selling 55% of the company to Optimal Investment Group, a U.S.-based private investment group specialized in mid-sized companies.
This decision is in line with the strategic review that we launched in March and reflects our decision to focus our attention and allocate our capital to further developing Maisons du Monde's existing positions in Europe, where we see better value creation opportunities for our stakeholders over the next few years. Modani's activity is well rounded, as demonstrated by 34% sales growth over the first nine months. We believe that Optimal Investment Group is the right partner to accompany them in the next phase of their development.
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. We expect the transaction to close in the coming days. Our second strategic decision on slide 21 is the launch of EUR 50 million ESG impact share buyback program.
The group intends to repurchase shares over a period that begins on October 27 and runs through the end of May 2022. The ESG component consists of an allocation of the outperformance in purchasing the shares over the program's execution to two nonprofit organizations, namely the Maisons du Monde Foundation, to promote actions in favor of forests and trees, and another soon to be selected not-for-profit organization dedicated to promoting diversity and inclusion in the workforce.
This buyback is done pursuant to the authorization granted by our shareholders at our June 4 annual general meeting. This initiative reflects our solid cash generation and demonstrates our commitment to create long-term sustainable value for all our stakeholders.
On slide 22, we turn to our commercial and development priorities for the fourth quarter. Our first priority, as you can imagine in today's context, is to manage constraints in maritime freight capacity and cost increases to protect future profitability while ensuring supply, with a continued emphasis on best-selling items. Our teams are fully mobilized to strike the right balance between product availability and cost management, supported by a series of tools and processes that we implemented last year and we enhanced throughout 2021. We will also complete by year-end our 2022 freight forwarder negotiations. Second, we will reinforce our customer proximity through the launch of new services.
Specifically, we will introduce our four-hour click-and-collect service so that customers can pick up their online orders four hours later at the Maisons du Monde store near their home. We will deploy our pickup point service for large items throughout France. Third, we will continue to enrich our omni channel proposition with two main initiatives. First, we will roll out our new online mobile platform in Italy, and we will continue deploying our marketplace in the 40 French stores where it was just launched.
As always, we will keep sustaining our CSR efforts. On slide 23, let me share with you a bit of color on how we see Q4 activity. While the comparable base for Q4 is once again unusual, given the partial lockdown in November and the exceptional rebound in December last year, dynamics are expected to be different across channels.
On the one hand, web performance in Q4 will be down for three reasons. One, comparable base, two, product availability, and three, profit protection. Let me detail each. First, comp. The comparable base for web is very high, plus 31% growth last year versus 2019. In 2020 indeed, online benefited from the combined effect of high demand for home finishes, acceleration of digitalization, store closures in November, and in France, the November launch of our marketplace.
Second, product availability. As already stated by Régis, product availability is under pressure, especially furniture, which accounts for 70% of online sales. As we enter the quarter, furniture inventory is lower than at the same time last year. As in a context of heavy shipping constraints, we have deliberately chosen to favor shipment of decoration items to safeguard the Christmas season in our stores.
I remind you that Q4 is for Maisons du Monde very much of a decoration and store-based quarter. Marketplace offering will help mitigate this effect in France. However, suppliers are running low in inventory across the sector, and it will not fully compensate.
Third reason, profit protection. Despite the promotional pressure we are currently observing online across the market, we choose not to overspend on rebates or marketing, as our agenda is to drive profitable growth at all times, and especially this quarter, where product supply remains a challenge. On the other hand, store sales are expected higher than last year. Traffic should be up as we don't anticipate any lockdown this quarter. However, traffic to sales conversion will be impacted as well by limited product availability, at least in furniture. As a result, we currently expect our top line growth rate in Q4 to be slightly negative.
Now, after all-year low point in September regarding shipping capacity, we have been able to raise our weekly shipments since the start of October, and we expect to close the year at a better inventory level compared to the end of 2020.
Let me conclude on slide 24 with our full-year guidance, which factors in all the headwinds I just mentioned. Visibility has improved, even if some uncertainty remains linked to ongoing supply chain challenges. On the back of our strong nine-month performance and assuming that store activity is not materially disrupted for the rest of the year, I'm pleased to say that we are in a position today to raise our full-year targets. We now target top-line year-on-year growth in the low teens versus high single digits previously.
EBIT margin of between 9% and 9.5% versus margin up by up to 60 basis points previously. As a reminder, our 2020 EBIT margin was 7.3%, so this new guidance represents a gain of between 170 and 220 basis points. Free cash flow should be materially above its 2020 level, while our previous guidance was simply above. We expect a slightly higher store count at year-end versus stable growth. Let me also remind you that we will hold a Capital Markets Day on Monday, November 8 to present our strategic roadmap, and we look forward to seeing you there. Before getting into Q&A, let me reiterate our two key messages of the day.
First one is that navigating through COVID disruptions over the last 18 months now, our performance shows the strength of our brands and the resilience of our omnichannel model. Second is that announcing today the disposal of the majority of our stake in Modani and the launch of a share buyback program shows our permanent focus on returning sustainable value to all our stakeholders. Thank you for your attention. Régis and Alain will now take your questions.
Thank you. As a reminder, if you wish to ask a question on the phone line, please press star one on your telephone and wait for your name to be announced. If you are connected on the web, you may submit your questions using the Q&A box. Once again, it's star one if you have any questions or comments on the phone lines. Thank you. We have the first question coming from the line of Marie Fort from Société Générale. Please ask your question.
Yes, good morning. Could you give us more insight about your disposal, your Modani's disposal? Will it impact your P&L in terms of cash? And will it happen before the end of the year? My second question is regarding your pretty confidence about the end of the year. Do you have a difference in terms of inventories between furniture and decorations? And as decorations account for more in Q4 in terms of sales, is it the reason why you are pretty confident for the end of the year?
Also, in terms of number of stores, you are going to open more stores at the end of the year. Could you specify where and give us an idea of numbers? Last question is about inflation cost for 2022. It's a bit in advance, but could you give us some idea of how do you see the 2022 inflation cost? Many thanks.
Thank you, Marie. Régis will answer your first question around Modani. I will take questions two and three, and Régis will answer the last question from Marie.
Thank you. On Modani, first of all, vis-a-vis the closing, we expect the closing of the transaction to happen in the coming days, as we do not see any complexity to proceed it to complete onwards. Second, you had a question vis-a-vis the economics. We decided not to disclose all of them, but two elements I can share already is that, A, it will have a slightly moderate positive effect on EPS for the year. Second, obviously we get proceeds, which is one of the reasons this morning we as well combine the announcement of Modani to the share buyback program.
Okay.
I can take the fourth question vis-à-vis inflation cost for 2022. It's a bit early, you know, to be conclusive on this. Obviously, as mentioned by Julie in one of the slides, we are at the moment negotiating our contracts for 2022 on freight forwarders. What we can already say, and we'll come back in due course with more detail, but this inflation will impact 2022 quite significantly. You all know the context on freight. Against that backdrop, we have been able to put in place a selective price increase that will offset most of this effect.
We will come back very soon with more detail vis-à-vis all other elements of inflation, but I think the question would probably have been around the specific element of context that we have highlighted. This is what I can say today, in parallel of managing all those suppliers in terms of mix management as well.
On your question about year-round and the mix between furniture and decoration, you're absolutely right. The Q4 is more store geared and decoration geared. That's absolutely the case out of a seasonal effect. This is why we have deliberately chosen to favor shipments of decoration over furniture, because for us it was really important to safeguard the Christmas season, which is store and decoration based and holds a lot of our growth margin of the year. In terms of striking the right balance between availability and margin protection, we did decide to favor decoration shipments over furniture.
This is why indeed we expect store performance to be positive and that explains the raising of our guidance for the full year indeed. Regarding the third questions around the number and location of new stores, we are saying slightly higher, so we could count around zero to five net addition of stores, and they will be mostly, if not all, outside of France.
Many thanks.
Once again, ladies and gentlemen, if you are connected on the webcast, you may submit your questions via the Q&A box, and if you are connected on the phone lines, you may submit your questions by pressing star one on your telephone. We have the next questions coming from the phone lines from the line of Clément Genelot from Bryan, Garnier & Co. Please ask your question.
Good morning, everyone. I will have three questions from my side, if I may. Our first one is on guidance. I mean, can you help us understand what lever or what metric is driving EBIT margin guidance upgrade? I mean, is it that you have some bullish view on the gross margin, or maybe a strong OpEx cost marketing?
My second question is on the Modani regarding valuation. Do we have to, let's say, expect a higher valuation versus 2018, when Maisons du Monde bought Modani? And if I'm right, at that time, the valuation was at 1.2 x sales. My third question is on the buybacks. Do we have to expect regular use of buybacks in the future, or may it be a one-off this time just because the share is quite low? Thanks.
Thanks, Clément. I will start for you with your two first question, if I may. First one, if I understood well, is about the margin, a bit upgrade of the guidance. To help you understanding, I think it's four different elements. Without any surprise, increasing prospects vis-a-vis sales is obviously an enabler of improving the margin over the year, and it's because it does create a better leverage. I think on this part, you could consider that it's probably one quarter of the total increase of the margin projections.
The second one is vis-a-vis the way we manage the mix over the semester. We mention the supply constraint and our key focus on making sure notably that for the end of the year, we can secure decoration for store activity.
We have a better mix on higher margin decoration over in H2 versus what we were expected. In parallel of this, a lower level of promotion. We are running below the level of last year. The context of availability of the product is one thing, and the management of profitability is a second element to drive this. Promo is probably around two points below what it used to be last year, which is the second element overall of our mix, which is one key element of increasing the margin projection.
The third one, you mentioned it, is about efficiencies and strict management of our SG&A. Efficiencies in logistics, in warehousing. Warehousing with leverage, but as well some productivity, which is notable in H2 and since the beginning of the year. Logistics in the way we operate transport to the customer directly or to stores. I think all of these initiatives probably account for EUR 10 million ballpark versus what we were expecting at the beginning of the year, and notably versus our expectation when we were earlier this semester.
Finally, it's an important element, I think. We have less of an effect of freight cost inflation than we were expecting in July. There is inflation on freight maritime. Our contract 2021 did protect us versus the huge level of inflation, and we had to pay to ensure delivery some extra cost. But at the end, we have less extra cost than expected earlier in the summer.
That's the four reasons that really are supporting the upgrade of EBIT, and I do not come back on this rate towards 2022, because I answered this point in the first question. I hope it does clarify about the equation. Vis-à-vis Modani, we will not disclose more precisely elements, as I said, vis-à-vis the valuation, and the metrics of the transaction, unless to reemphasize that it will be a positive effect on EPS and that the proceeds will obviously occur this year on a cash perspective. I hand over to Julie for your question vis-à-vis share buyback.
Thank you. So our first priority, just to make it super clear for everyone, is to create and fuel sustainable growth. This is our main primary objective. This is how we create value for shareholders. This means that we invest every year, and will continue to do so, a significant share of our cash generated into further investments, whether it is for tech or all capabilities or marketing.
Now, dividend is our main vehicle to return part of this value to shareholders, and this is really our sort of normative model. Now, on an opportunistic basis, we may decide if we see fit to additional initiatives to return value to shareholders. This is the case now with particularly strong cash generation and proceeds from the Modani divestment.
You should see that as an opportunistic way to return extra value to shareholders on top of our normative dividend payment policy, which is, as you know, good as we have one of the highest payout ratio of the category.
Thank you.
Understood. Thanks.
Thank you. We have a question from the webcast audience. Thank you. This comes from Christian Devineau from CIC, and the question is as follows: Hello, three quick questions on the cost of sea freight. One, what can you say about the increase in cost you have incurred in 2021? Two, what can you say about the increase you will support in 2022? And three, do you think you can offset rising costs in 2022 with price increases and savings elsewhere?
Thanks, Christian and Chris for reading the question. Three different elements there. 2021 inflation, as I said, we have been able to ring-fence our position considering the contracts we had in place. As I said, we were not immune to inflation. We had to pay extra costs on some of the lanes just to guarantee shipment allocation and making sure that we were able to source as much as possible our stores and customers.
Indeed, the inflation is not at all at the level you can observe on the market if you compare spot market price, not at all. For 2022, yes, it will be much higher than 2021. As I said, we, and Julie mentioned it, we are at the moment completing the negotiations. I will not give you specific figures, but the increase is very material. Again, not to the extent of spot rates you can observe on some of the lanes, which are above $10,000 per container. We are not at that, but however, it will be materially up versus 2021.
In this context, we will limit the inflation via the supplier negotiation I was mentioning, and indeed a reasonable selective end-price increase that we are currently putting in place at the rhythm of our collection and subcategory, subfamily by subfamily, to make sure that we can protect our competitive advantage and have a reasonable price increase. At the end, we consider it will be sufficient to offset most of the effects of the freight.
I think at the moment that's what you can consider in your projection, and we will come back probably later to you with further details.
Operator, do we have any more calls?
We have no further questions at this time. Please continue.
Well, thank you very much.
Sorry to interrupt. We just have a follow-up question that just come through from the line of Marie Fort from Société Générale. Please ask your question.
Yes. Sorry. I've got another one, if I may. It's just in terms of 2022 order book, given the bottlenecks you've got on inventories, do you have already a visibility for the furniture that you won't be able to deliver at the end of the year that could be confirmed to the beginning of the next year?
Thank you, Marie. It's true that we allow customers to place orders when the merchandise gets shipped from Asia. You know, on average right now, the lead time between Asia and Marseille is about six weeks' time. In December, we'll start indeed having orders placed for merchandise that will be delivered in Marseille, maybe early January and then will convert into sales in Q1 next year. You know, that data will materialize only in December.
Okay. Very clear. Many thanks.
Thank you.
We have another question coming from the line of Jill Crystal. Please ask your question.
Yes. Good morning. Thank you, and congratulations on the great quarter. I had one.
Okay.
I don't know if you'd like to give us some color on the rhythm of new openings that you're considering for 2022, or is that something you would like to save for the market day?
Indeed, I think it will be clearer as we explain the full omni-channel strategy on the Capital Markets Day. If you may, you would have to wait another 10 days for that, and you'll have more details then.
Thank you very much. I can understand it's right.
Thank you.
We have another question from the webcast audience. This comes from AJ Nandal from Citi. The question is: What is your thought process around the online offering? Pure play digital home furnishers are targeting more than 20% sales CAGR over the medium term. Do you have similar targets for the online channel?
Well, I would then say the same thing as for the previous question. At the CMD, we intend indeed to give you more color on our overall online strategy, embedded in our omni-channel strategy. One sure thing is that we do intend to expand our offering via third party. If you look at the presentation, you could see that the marketplace offering already is 85,000 products. That makes a total offering of 100,000 products. So already our Maisons du Monde offering is only a small share of our total online offering. It is true that the marketplace drove the online growth over Q3 will continue to do so in Q4, as we're using the mass effect, you know, in the context of limited availability.
As we have more vendors, it does help fulfilling the need of our customers, even though we don't have the products ourselves. It's interesting to note, by the way, that over the Q3, 90% of the customers of the marketplace were 90% Maisons du Monde returning customers. The marketplace right now is really playing a role of increasing the share of wallet for our own customers. It's really interesting. It does play this role of long tail of product offering that will indeed fuel future growth. Again, more details to follow at the Capital Markets Day.
There is no more questions. Régis and I thank you for listening today, and we hope to hear or see as many of you at the Capital Markets Day that will take place on the 8th of November. Thank you very much and have a nice day, everyone.
Chris and myself are obviously available today for any follow-up question or calls. Thank you very much.
Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may now disconnect your line. Thank you.