zooplus SE (HAM:ZO1)

CMD 2020

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Nov 17, 2020

Good morning, and a very warm welcome to the Capital Markets Day that 2 plus is doing this year in a virtual format. We will see that the company is well prepared for the day. We are we've been rehearsing the situation as good as we could because we would like to interact with you. It's going to be more difficult than in Capital Markets Days as we had them earlier because you are only virtually present. There would be 2 Q and A sessions there would be 3 presenters. The owners we have with me Doctor. Micha Ritter, our COO and with the company already for now almost 9 years, 8 years and a couple of to be precise, in various functions, member of the board since 2018. I also have with me a known person for all of you. That's our CFO, Andreas Maurer, with the company also for numerous years. Andreas joined the company in 2010, so it's a full 10 years and had a key role that is probably the best preparing role for being the CFO. He is the Finance Director for many, many years and the CFO since December last year. And Andreas will take over, in particular, when presenting the results for the 1st 9 months. We will then look into the strategic situation the company is in. And then we will also, as part of that, look into the operations, which are at the core of what we give to our customers. So we'll see all of us in the course of the next 2 hours. We will have, as announced, plenty of time for Q and A. But let's get into the numbers. And now over to you, Andreas. Okay. So a short introduction also now from my side. My name is Andreas Maurer. As already said from Koneeris, I joined the company in 2010. Just to give you some background information, at that point of time, we generated revenues of roughly €180,000,000 And now after 10 years, we are close to the level of €1,800,000,000 so great performance. I'm really happy that I can stay here and to present to you as the CFO of that company. Micha, some words from your side. Okay. I introduce myself. Also, warm welcome from my side. My name is Michel Ritter. I'm with SUPLAUSE since 2012. Before SUPLAUSE, I gathered a PhD in risk management and started my career with HSBC in corporate banking, corporate finance. And after 4 years doing that, I shifted the industry a little bit. I went to consultancy. I went to Roland Berger, did the Corporate Performance, Corporate Restructuring for 4 years and joined SUPLUS in 2012. Joined us as Chief Development Officer. There, mainly the linking pin between the business departments and the IT. 2015, I took over the role of the COO. And like O'Neill said, from 2018, I'm a member of the management board. And now from the summer on also responsible for our own brands. I'm happy to present today. Thank you. Okay. Is it working? Sorry. Okay. Yes. Let's go directly into the Q3 figures and 9 months financials of 2020. You can see that we can show and disclose a strong momentum in recurring revenues combined with healthy new customer business. We have increased the revenues by roughly €200,000,000 to now a level of 1 point €3,000,000,000 compared to €1,100,000,000 in the previous year. We are doing much better in growing the company as we have grown this year with 18% and last year with only 13%. But not only the first and the second quarter have been very good. Also in the Q3, we have grown the company by 16% to now €436,000,000 So on the top line, we are doing very, very good. But let's have a look on the right side. Let's talk about the bottom line performance. And the good message and the clear message we want to give to you is that the growth is not coming on back on efficiency. It's quite the opposite. So we can announce and disclose today a record figure of the EBITDA of a number of €47,800,000 This is reflecting in an EBITDA ratio of 3.7%. And let's have a look back. In the last 2 years, we have been operating the business in a bandwidth of between 0 0 0.6%. So now we are 7x higher. So the clear message we want to give is that the recurring revenue of our business, combined with healthy new customer business, is the lasting figure for sustainable growth of our company. Let's go into the quarter by quarter development. You can we want to show here that we have proven over the last couple of years that Surplus is a growing company. Surplus is a fast growing company quarter by quarter. When we have a detailed look in the Q1 2020, we can see that there is a spike caused by COVID, no doubt, But the clear message is here that also after that spike, the growth journey did not stop. And this is due to the situation that all the measures and the initiatives we set at the beginning of this year and in the last quarter of last year are now paying off. We are doing better in onboarding new customers. We are doing better in activating early stage customers. We're showing the attractiveness of our loyalty tools to our customers, and this is the result here. And we should not forget that especially also within COVID and after the Q1 2020, the whole competitors have been running their operation without any disruption and although we have grown the business. So let's go into the business KPIs. There is a summary. Revenue retention is on a record level now with 97%, as we have shown, 91% only in the year 2019. So we are 6 percentage points higher than last year, great performance on that. When we have a look on the new customer second order sales, we are up by 17%. This shows and explains the strong quality of our new customer business, while we have down by -6% in the year 2019. And we are doing this with less spends on new customer acquisition. And this is important. So we decreased the CAC, but at the same time, we increased the quality, and this is reflected in the new customer second order sales. On brand share, we are consistently growing by 14%, 16% and now 18%. Gross margin, which we will explain later a little bit more in detail, we haven't only stabilized, we haven't even improved it to now a level of 30.5%. Basket size is on a record level with €57, and we are doing that with a high degree on efficiency. Okay. Let's have a look into the evidence of the recurring nature of our business model. The revenue retention, as I already said, is at the end of September on a record level of 97%. But today, we have also some additional information we want to share with you because at the end of October, it's not on the level of 97%, it's at a level of 98%, a new record what we made also at the end of October. And that means that we are only losing 2% of the revenues from customers we acquired 12 months ago or earlier. And you can clearly see, and this is what we want to show, that we had Adend in 2019, no doubt. But since the end of 2019, we have significantly grown the revenue retention to the level of 98% where it is now. The measures what we said, I already explained at the previous slide. Okay. What does it mean for the customer base? On the left side, you can see the active customer base. This is including all customers which have done at least one transaction within the last 12 months. And this number with €8,100,000 speaks for itself and confirms that we are by far the largest online retailer in our category. But as I said already, we want to focus on loyalty. We want to focus on recurring activity of our customers. And that is so important that we want you to look not only on the active customer base, we want you to look on the active repeat customer base. And this number is including all customers which have done at least 2 transactions within the last 12 months. And this number is significantly increasing from €4,200,000 to now €4,900,000 and confirms the strong quality, confirms the strong frequency in repurchasing of our customers. And the good message is here that we did not only increase that number, we also made it possible that we increased the sales per account from €364 to now €379 a great performance also on that. That means we increased the number of new customers and we increased the sales per account. Good message on that. Okay. Let's go a little bit more what are the drivers for the EBITDA growth for the EBITDA level, which we have shown after 9 months. Gross margin. As I already said, we have not only stabilized the gross margin, we have even increased the gross margin now to a level of 30.5%. The reason behind this that we are doing much better in actively steering our product sales mix. We move the customers to better products, to higher margin products. Another reason, we have centralized our pricing. We are doing much better in the yield management. The yield management is now centralized and is doing the pricing on a much more analytical way with different algorithms. And one result we would like to share is that we significantly reduced the share of loss making orders with the great performance of the yield management team. Owned Brands. We increased to a level of 18% now compared to the previous year. And what I would like to highlight as well that Owned Brands is not only a contributor for profitability, it is also a contributor for loyalty and is a differentiator, especially when it comes to Amazon or other competitors. We would also like to highlight that especially in that year, we have seen a surge in accessories demand, especially in the Q2, and we are also benefiting when it comes to the margin development by the high surge in demand of accessories. And last but not least, what I would like to highlight is that when it comes to the partnership with our suppliers, we as suppliers, we are the preferred partner for the branded goods suppliers because we are offering them a great customer base in Europe. We are offering them a customer base in 30 countries, and we are distributing their products in a very quick and easy way in each corner of Europe. But not only the gross margin is a driver for the EBITDA, the basket value is also a main driver for the logistic efficiency. And you can see that within 9 months 2020, the basket value is outperforming the year 2018 2019. We put a lot of effort and initiatives in upselling measures. And you can see here the result. We brought up the basket value by €2.4 Why is it so important? Because any additional euro we put into the basket, the average logistic cost for this euro dropped by onethree. And the focusing on loyal customers and long term customers is helping us in driving the basket value because we know the longer the customer stays with us, the more the customer spends. Okay. Let's have a look on the cost structure within the current 9 months compared to the previous 9 months. Overall, the cost ratio went down from 28.2% to now 27.1%. The main driver for this is that especially the ad and marketing spends went down from 3.3% to now 1.6%. We have already explained that especially in the last years in the last year, we tried a lot of things, but we know that we have not been successful with all of them. And that was the reason why we said, okay, we need to be more efficient when it comes to marketing spend. And as I said, we put a lot of effort into becoming the customer's loyalty. But when it comes to marketing spends, we want to share with you that it's not the sheer number of what we're looking for, it's the quality of the customers what we're looking for. And this is something what we have achieved by spending less marketing money in new customer acquisition. And from our point of view, the balance between 1 point 5% to 2.0% is the right balance between being efficient and bringing in a high qualified number of new customers. Logistic costs went down from 18.3% to now 18.1%. The main driver, as I already explained, is the basket value. And what is helping us as well is our high efficient European IT logistic infrastructure and the whole network behind that. When it comes to IT, admin and FX costs, we see a slight increase, especially the currencies in the eastern part of Europe has been really very weak due to the COVID situation, and this is resulting also in the IT and admin and FX costs. And nevertheless, although there was COVID or is COVID, we are investing into our company. We are not only a retailer, we are also a tech driven company. And that's why it is important for us that we are investing into IT infrastructure, that we're investing into cloud strategy and that we are investing into the digital product and the digital experience for our customers. When it comes to personnel expenses, we can disclose a one off cost related to the reorganization in the management. Everybody is aware of that the CCO left the company. And last but not least, the good performance is also triggering the remuneration of our great team, which is responsible for the great performance, and this is also reflected in the personnel expenses within the 9 months 2020. So when I can summarize now the development in the cost structure, this ratio, what we can disclose now, is the best defender versus our competitors. And I believe that we can call us now again the most efficient operator in the category. Let's have a look in the strong free cash flow development after 9 months 2020. We can show a record number in the operating cash flow and free cash flow. The operating cash flow stands at a level of €56,000,000 The free cash flow stands at a level of €53,000,000 So we are up by €43,000,000 compared to the previous year. So that means that free cash flow stands at a level of 110% of the EBITDA. So really a great and strong performance when it comes to free cash flow development. And what we can say here, what we want to highlight is that we are able to free cash now with our business model. Although we need to buy the products, we need to stock the products, we need to sell the products and we have to wait until the customer is paying the invoice. What is the main reason for this? So here we have summarized the working capital intensity. In the pillars on the left side, you see the working capital in relation to our sales. And when we go back in the year 2015, you can see that in 2015, where we have generated revenues of €711,000,000 we have done that with the working capital in the average of €74,000,000 And now, after 5 years in 2020, that ratio went down to 3.1%. So that means we are doing €1,000,000,000 more revenues with a reduction in the working capital by more than 20%. So I think this is really a great performance. And the main reason for this is we extended the payment days from our goods supplier from approximately 10 days in the year 2015 to now 25 days. And this again confirms the strong partnership Surplus has with its suppliers. So they are helping us to grow the company, and we are helping them to grow the category. So a win win situation for all of us. And with that phrase, I would like to close my presentation. I would summarize strong development in the top line, strong development in the bottom line, strong development in all business KPIs and strong development in the cash flow. And now I would like to hand over to our CEO, Cornelius. Yes. I would say the numbers speak for themselves in the presentation that Andreas has given speaks also for itself. So what remains to be done for the other 2 hours that we have, I think what we should jointly do is to try to dissect as good as possible what are the achievements of the year of 2020 has been driven by fundamental changes how we run the business and how much has been impacted by COVID. After having done that, we can also then offer, let's say, a perspective into the midterm future of the company once exactly it's clear how much of the, I would say, brilliant results of 2020 are, in fact, there to stay, Are they the ones that build the basis for future success? And how much of tailwind did the company have exactly in 2020 to the COVID situation? Let's start with this one. First of all, COVID did influence in some categories the consumption patterns of consumers. Let's stay close to consumer goods. Let's stay close to a category that is somewhat relating to tower category. Let's take human consumption exactly of food and also of beverages. You would see there shifting consumption patterns. What people previously were not, let's say, consuming at home, consuming in restaurants, what they were consuming at the workplace is now shifting demand towards supermarkets. That is an effect that is driving, in particular, the beverages industry, but is also influencing the normal food consumption to supermarkets. We don't see such pattern at Zupplus because dogs and cats usually, let's say, are fed not in restaurants, not fed logically also, not in canteens, not at the workplace. So we see unchanged consumption patterns. What we also see, and that's another, let's say, very important fact in order to, let's say, analyze and interpret the data for 2020 is that there was no channel shift, no forced channel shift due to taking competing channels out of the business. We know, for example, that in fashion, in various geographies of Europe, we've seen a closure, a temporary and sometimes quite extended period, temporary closure of shops. And that was pushing logically demand from offline to online. Our category, the feeding or the the procurement for cats and dogs and pets in general is seen as an essential business. So not only supermarkets stayed open, logically they did basically throughout the crisis all of Europe, but also pet specialist shops were kept open in most of the markets for most of the time. So this is important because we see some shift towards online, but that shift is not because of forced closure of the offline format or the standard format. So now let's look into what kind of influences we really see as one off in the year of 2020. We see a push into e commerce in certain geographies that have been a little bit slow to adopt exactly the e commerce as standard consumer behavior or consumer, let's say, channel preference. We see that most noticeably in Italy, which has been a market which was a little bit slower to develop in the last couple of years, but really made significant progress in the year of 2020. We also see that certain areas let's say, in U. K. Were particularly open now to first time usage of e commerce in our category. But we'll go into this one in detail later. What we also saw that 2020 opened up the opportunity to temporarily cut traffic acquisition spend significantly. That shows in the numbers, but it didn't show in the traffic that the websites were registering. We are up in traffic figures by roughly 20% over 1 year before. So we see a healthy momentum without having to spend exactly for paid for traffic acquisition. So these are the 2 one offs that we see. But more importantly for us, we see that the competition, the fair competition between online and offline was not distorted. And we also see that the consumption patterns are not spiking in a natural way in the year of 2020. So for that reason, we were able in the year of 2020 to update the guidance twice. We're starting into the year with a relatively conservative assumption of growing at least at the speed of 1 year before. We're able to update that guidance mid of the year, July 14, to be precise, to grow at least by €240,000,000 And now in October, we had the pleasure to say that even this one, this new guidance is not good enough in reflecting exactly the progress that the company is doing in 2020. But probably more importantly, for exactly the second guidance modification was also a significantly better earnings situation, as Andreas has been explaining in the past. The EBITDA, which was in the year of 2019 at a level of €12,000,000 went from €12,000,000 guidance to at least €40,000,000 But now we are aiming clearly, I'd say, again, much higher to €50,000,000 to €65,000,000 EBITDA for the full year. I would say, again, brilliant numbers. We're happy to take now your questions. We will cluster the questions into 2 segments because some of the questions which directly relate to the numbers for the 1st 9 months, we would like to answer straight now. Andreas is going to be with me exactly for these type of questions. There will be questions that relate to material that we represent later in the strategy part and when explaining the future outlook for the company. So we'd store these questions and then get back to these questions once we've done the main part of the presentation. So please go ahead and present to us what you would like us to comment. So that's the moment that lacks a little bit the dynamics that we usually have when you're around. So at one point in time, we will all see again, but now we do it exactly in that virtual format. So we would like Diana to read out the questions to us so that everybody can hear them, and then we're going to answer. Hi, everybody. This is Diana. I'm heading IR at 2 plus Thank you for joining us today. So as Cornelius mentioned, we will have a second Q and A session further down the event today. So we will focus on the questions on the 9 months and Q3 development. First question comes from Volker Bosse from Baader Bank around the gross margin improvements. And to be specific, how much do better sourcing conditions from supplier contribute to the gross margin? And a follow-up question on that, did we have a structural change in accessories? And maybe just talk a little bit about what happened there in the 1st 9 months of 2020? Yes, happy to do so. In fact, when it comes to sourcing conditions, we've seen that overall, the year of 2020 has seen general price increases for all market participants. And as far as we can see, we were able to, relative to our competition, improve our sourcing position. But overall, prices slightly went up in the year of 2020. We see moderate price pressure upwards also for the years to come. But overall, since we are the biggest operator in the category and since we're providing valuable growth to our industry partners, we see that relative margin improvements on the sourcing side will also be possible. The bigger driver, as we explained before, is a shift in the assortment structure that we sell. And as mentioned before, accessories have been strong or particularly strong in the year of 2020 in comparison to 2019. And that clearly is a margin record. We'll get back to this one also in the second part of the presentation. Thank you. So the next question comes from Christian Zales from Haugen Eufreusser. And specifically, can you describe how the cost of acquisition for customers developed in the Q3 of 2020? Yes. So I think that's overall already quite foreseeable. We'll end up at roughly €10 customer acquisition cost per account, but that is per account repurchasing or non repurchasing. Again, as explained before, it's very important for us to look into the number of repurchasing accounts. When we go to the classic indicator, Q3 has been below the €10 per account open benchmark in acquisition cost. Thank you. 3rd question comes from James Lettin from Berenberg. And specifically, what has price inflation of pet food and accessories been for Zuplus? Well, we see different movements in different markets. For example, the U. K. Sees quite a bit of price inflation exactly also for the pet food category, but that also has to do or is influenced by the external value of the pound sterling. Whereas we have other markets, we basically see next to no inflationary pressure. We see Poland, the Polish lot is sitting somewhere between the 2 poles, so to speak. We see, as mentioned before, moderate price inflation. And we also strongly recommend our suppliers to be, let's say, conservative when it comes to setting prices or to moving prices upwards in 2021. We're facing a consumer recession in our category. We're not that much exposed to any cyclical risks, yet we see it as, let's say, a relevant courtesy to our customers to try to not increase the prices for as long as possible. There's difficult years ahead for consumers, and we want to be with them. Next question comes from Klara Komenichik from MainFirst. Can you walk us through the reasons for the slight drop in gross margin in Q3 versus Q2? Is it product mix? And how do you expect the gross margin to progress over the next quarters relative to Q3? I have one more. Let me keep on talking about the margin topic. The thing is we'll explain the long term margin strategy in the second half of the presentation, seeing a margin differential between different quarters is something that is indicative for the future is over interpreting these little details. So in fact, don't really think too much about it. Look into the yearly development. We've seen the gross margin going from 28.5% to 30.5%. That's the long term trend, and that has been driven exactly by clever changes. At both ends, we're adding profitable new sales, And that's accessories, that's owned brands. And we've been, let's say, kind of careful not to carry too much of loss making business with us. Details on this one a little bit later. Working capital. So next question comes from Guillaume Ravi from Vayner. Can you get to negative working capital like your U. S. Peer, Chewy, as soon as 2021? Yes. As I already explained, I think we have shown a great performance in the working capital initiatives. So we continue doing better year by year, as I already explained. And as I said, we are the most important partner for our suppliers. There is definitely room for improvement. But as Cornelius also mentioned, we are guiding for revenues, we are guiding for EBITDA. So we do not set a target for, let's say, the working capital. But nevertheless, we try to continue and we will continue in the development of doing better in the working capital, for sure. Okay. Then we would probably give us another 15 seconds for more questions. But if there is anything arising now, we always have the opportunity to comment on this one after we go into the, let's say, main part of the presentation that gives you orientation on all relevant topics around surplus. So there is one more question that is popping up and probably looking into. Next question comes from Victoria Petrova from Credit Suisse. What is sustainable marketing spend as a percentage of sales, meaning what part of year on year improvement was COVID traffic supported? And what would have been ex COVID? Yes. We come from numbers that are in the range between 1.5% to 2% traffic acquisition as percentage of sales in the years of 2017, 2018 and also prior to that period. In 2019, we've seen a spike in cost of traffic acquisition. We almost doubled in percentage over the year before to 3.3%, and that clearly did not show the results that we were aiming for. So there is, for us, a clear takeaway of the year of 2019 that advertising money is, let's say, quite often not really returning, let's say, the extra yield, the extra results when it comes to acquiring a larger customer cohort. What we will see in the year of 2021 is how much of specific tailwind of 2020 we have to compensate for. The simple answer is we expect the cost of traffic acquisition in the year of 2021 to hover around 2% And we will see will we be slightly below that value, will we be minimally above it? We will only spend the marketing money, if it makes sense. So we have one more question from Volker Bosse from Baader Bank. And after that, I will suggest that we go forward with the presentation and save the questions for the 2nd Q and A session. So the question is around freight handlers announcing cost increases. Is this an issue for us? And how do we plan on mitigating this in future? Yes. So the management has been foreseeing that kind of development because there's obviously price pressure for the freight forwarders. There's price pressure for logistics and as a service in general. And as explained before, the basket size is a tremendous way to improve the logistics cost efficiency because the more value we put into the parcel, the better we leverage exactly the logistics resources, and that's in particular in distribution, but also in the fulfillment center operation as such. Micha is going to present details on how we run logistics, so that will be covered in detail later on. Okay. Then we would move on with a presentation that will dissect exactly the fundamental changes in how we run the business from the one off effects that we had due to COVID. So the slides will move forward. Yes. So here, again, for orientation purposes, we're now going to invest roughly 1 hour exactly going into the key elements of our business model. We structured the presentation slightly different to the standard structure. So we would not start with the market first, but we would like to start with what we see as the key element of the business model Luxor Plus and that revolves around recurring revenues. We go very much into detail on this one. It's going to be quite analytical. After this one, we explain why we are now in the year of 2020 and the years to come in a much better position to really exploit that particular nature of our business model with a high degree of recurring revenues. We simply build much deeper bonds with our customers. After having looked into the business model, into the customer perspective of our business, we look into the market. We look into Europe, but we will also look into the U. S. Market for comparison purposes. And we'll get, let's say, good insight which is not only logistics, but at the core of it is logistics. But also we see the operations that we run-in pricing, the operations that we run-in digital marketing as really, let's say, state of the art and best in class when it comes to excellency and efficiency. We'll finish off with a topic that seems to be highly relevant, not only for us but also for the for Capital Markets, what is the margin management strategy of ZO Plus for the future years, and that is clearly linked towards the product and brand portfolio that we're going to develop and sell in the years to come. So let's go through the topics 1 by 1, and let's start with the recurring revenue model of Z plus We've done all kind of presentations exactly of the cohort structure of the recurring revenues. And here, we offer one more view on how our business is structured when it comes to what part of the sales is generated from first transactions, What part of our sales is coming from consecutive transactions, but in the year of acquisition? And lastly, how much of our business is coming from customers acquired in previous years? This we refer to as revenue retention, a benchmark or a master KPI for the performance of ZEPLUS. So we would look, as you can see here, in the year of 2017 into total sales of SEK 1,111,000,000 and that is a combination of SEK 840,000,000 generated from customers acquired in previous years in all the years up to 2016. And then we have a new customer acquisition in that year of 2017 that is a total of €271, of which €131,000,000 is the first transaction and the slightly larger part, €140,000,000 are transactions, follow on transactions after that first transaction. One can also see that roughly 89% of all of our business was then follow on business and only 11%, give and take, is new business in one specific year. If we look then into the year after, we see that we lose some business of exactly all the customers acquired all the way till 2017. And we see that exactly with all the customers acquired till end of end 2017, we do the year after SEK1.048 billion in revenue. And that simply says that we are able to keep 94% of our revenue of the year before with exactly the same customer cohort. So put differently, we lose roughly 6% of previous year sales or as a total figure, we lose €63,000,000 Most businesses and most retail businesses hover at retention rates, which sits somewhere between 30% 80%. So 94% is already very strong and is something that is only possible because we have a natural recurring cycle in the consumption of pet food and accessories. Logically, if you sell, for example, dog bed, a scratch post, there is no direct follow on purchase exactly the year after. What happened between 2018 2019 is clearly visible. We've seen a significant drop exactly in that revenue retention. It fell from previous levels of 94%, which were close to the previous all time high of 95% to 91%. What looks like a very small change is, in fact, quite impactful for our business model because that means that out of the €1,300,000,000 in revenue of 2018, we lose a full €100,000,000. 20,000,000. SEK 120,000,000 compared to the SEK 1,340,000,000 still looks like, let's say, a decently small amount. But given the acquisition, which in our category is not that easy to scale at efficient cost, We saw that in 2019, the roughly €300,000,000 of new business was by more than onethree, 40% to be precise, absorbed by losses of exactly customers that didn't repurchase in the year of 2019. So what did we do in the year of 2020? We made sure we were putting absolute priority not to customer acquisition, and we were putting absolute priority to customer retention. And customer retention focus really paid off because instead of losing SEK 120,000,000, we are just losing and that's close to nothing. We're just losing roughly 2% of previous year's sales when looking into 2020 sales. So instead of, let's say, having done a new customer acquisition to compensate for CHF 120,000,000 of lost revenues. We only have to compensate for that thin margin of 2% lost sales. We have a revenue retention of 98%, which as already mentioned by Andreas is a new all time high for the company. That is not only the end of the good news, but also if you look into the customer acquisition, nominally, the numbers look quite similar because we have seen a new customer cohort growing or growth by €301,000,000 in the year of 2019. 2020, we expect to grow a new cohort of roughly €305,000,000 but the composition in it is much better because previous year, we had more one off sales than repeat sales, €155,000,000 over just €146,000,000 of repeat purchase. Now this year, we do less accounts, but we do much better quality, and that shows in exactly the SEK 170 1,000,000 of repurchasing new accounts, repurchasing in the year of acquisition. So we see here exactly a healthy momentum of 17% extra new business new recurring business, one should say. So overall, this allows us to boost the growth of the company to a level of €260,000,000 to €270,000,000 using the midrange or the midpoint of the guidance for the top line as issued in October. That translates exactly into the fastest growth the company has ever in its history and is also a clear bouncing back from a growth rate of 13% that we had in the year before to 17% that we see at least doable for the year of 2020. So that model as such shows how significant it is to really put a maximum of focus exactly on customer retention. Or put differently, we've seen a company being very sales focused and very successfully sales focused for the larger part of the years between 20102018, focusing on also conquering all corners of Europe. We will go into detail in this one also a little bit later. We then took a little bit of a detour trying to supplant the sales focus with the marketing focus. But now as of 2020, we run the company in a very customer centric mode. And customer centricity means exactly caring about not losing one single customer that you acquire. And we've made significant progress, I would say, in the year of 2020. It gets a little bit complicated if you look into the details of these cohorts. But we're asked by investors that are, let's say, with the company for years years to provide exactly detailed information on how the cohorts look like and how they perform. So if you now look into the year of 2017, you see again the same SEK 1.111 billion of revenue, but then you would also see that there is a SEK271 1,000,000 cohort of new business. And then you can follow exactly that one. I'll try to point that out. You can see this one here, let's say, moving along in the years to come. And what we see, we see a bit of a drop in the year after the acquisition to €250,000,000 We see another drop to €214,000,000 And then we see a stabilization. So basically, in the 3rd year of doing business with the customer, customer relationships are practically, let's say, indestructible. We can also see that when we go to, let's say, cohorts that come from different periods. If we look, for example, in the year of 2014, we also see here that after 3 years in doing business with them, we have a revenue retention of 94% and then stable above 95%. What is the hallmark now of the year of 2020 is that all categories or cohorts, one should say, are improving the revenue retention to levels of above 90%, and we see significant part of the business with revenue retentions of above 100%. That practically means we are losing next to no accounts, and we do more sales per account. And that's the reason why out of a given enclosed group of customers, you can even grow the business year over year. We've shown that one also for the, let's say, most mature cohort that we can offer to you, And that's exactly the cohort acquired in the year of 2000. So we're talking about customers that now have 20 years of doing business with us under the belt. On the same account, in many cases, even using the same e mail addresses, we had initially €2,200,000 of euro sales here. And now 20 years later, we can see we do still, let's say, closer to €1,000,000 of sales with that cohort. That's what we call loyalty, and that's what we are very appreciative of. We have customers that are as loyal to, let's say, Zooplus as their pet is to them. That's a wonderful business model that we built. And we simply felt like sharing exactly that cohort picture, As complicated as it is, you find lots of valuable information in there. We will also see that the revenue retention is something that you cannot only measure cohort by cohort or country by country, but you can also measure it as a time series. And we did that specifically for the reason to dissect how much of COVID impact do we have in our business and how much of the progress of 2020 is ongoing, let's say, upwards movement with all KPIs due to the customer centricity of the whole organization. What you can see here is that the revenue retention measured now 12 months trailing month by month went down for, let's say, the larger part of 2019. So we've seen a continuous drop in revenue retention from levels of around 95% between January 2019 till, say, Q3. At the end of Q3, we were able at least to stabilize the revenue retention at levels of 91%. But the true momentum and upward swing only came, and we'll explain that in detail, once we're putting all attention on, let's say, honoring loyalty with our customers. What you can see here, and that's again, I think, very important, you can see that COVID gives us a little bit of tailwind. It helps to give the revenue retention a boost of more than 2% in just 1 month. But that is leveling off exactly then in the month later. What you see between May and October is a consistent improvement exactly of the revenue retention. And that is a direct result of customer loyalty tools that we're putting to the fore when working with our customers. You can also see, and that's very helpful in understanding the COVID impact, You can see the same spike of demand exactly in March. So what you see there is that the sales per account measured 12 month trailing and updated on a weekly basis shows a significant spike. And that's because the same customers simply buy and stockpile and buy stuff that they will need in later months. So we've seen stockpiling in all kind of forms, exactly in the grocery format. We've seen the same in our business model. People or pet parents care about the cats and dogs, and they made sure they always have plenty of supplies. Logically then, and you see that in the month of March of April May, you see that there is a rebalancing of stockpiling. Or put differently, after some period of time, even that stockpile is absorbed or is consumed. And then we resume and that's visible as of May onwards, we resume to growing the sales per account. And that is, let's say, alongside with better retention of the accounts, the true reason why the revenue retention and sales into existing cohorts are so stable in that year of 2020 because we're continuously improving the sales per account now to levels of around €380, €379,000,000 to be precise and as one can see, still growing. So what's the implication of this? And the implication is that you can try to run our business model based on, let's say, the benchmark figure that we had in revenue retention in the year of 2019, and that will be 91%. But you can also say, well, let's now give it a shot and let's run the business at a revenue retention of 89%, the value that we've been climbing up to until October. If we would, as we are assuming in this calculation, have the same new cohort size of €300,000,000 each of the years to come, we would come up with, let's say, massively different scenarios. In that one case of a revenue retention of 91% and 9% churn year after year, you would see that it's going to be increasingly difficult to overall grow the business because you lose 9% of the business. And if you have a bigger business, 9% means also a larger absolute loss. And then larger parts and larger parts of your new cohort growth would be absorbed by filling the gaps that the revenue retention loss or the churn leaves. And that would then, in exactly that simulation or projection, take us to a growth of 55% over a period of 10 years. If you're able to reduce the churn from 9% to 2% boost revenue retention from 91% to 98%, you come up with a scenario where there with, let's say, no growth in the new business, you would still look at more than doubling. In fact, you will look at growing the business by 140% over the next 10 years to a size of €4,300,000,000 So this is why we were putting all focus and all attention on managing the retention rate the best possible way. We thought that this was worth going so much into detail. It absorbs a bit of time. We will make faster progress in other slides, but that really sits at the core of our business model. So please pay special attention when you find extra time to exactly that logic that we have. When we look into what is behind producing such good results in revenue retention, it's necessary not to focus that much on acquiring customers. Job number 1 for all people in sales and marketing and a near perfect product out there. A near perfect for us means, a near perfect product out there. A near perfect for us means all relevant brands, all relevant products using a channel that really has clear advantages when serving the customer because you don't want to drag home, let's say, very bulky items of accessories or very heavy cat litter and even a bag of dog food of 15 kilos is something that requires quite a bit of effort of dragging it home. So we have not only business model, but also channel that is really, let's say, poised to make the customer happy. But it doesn't stop here. It's necessary also exactly to engage with the customer the best possible way with the sales and marketing tools. Before we explain what we did there, let's look a little bit into the demographics of our customer base. And here you can see the 4,900,000 active repeat customers that we have all across Europe and they're quite uniform and that's in a very good way in their specifics. We cater for a category that is predominantly in the hands of female customers. The 77% female customer share in our customer base happens to be exactly the same over the last 15 years. We did the first analysis of this one exactly in the year 2006. And it turned out that even back then, we had 23% men and our customer is 77% women. What we also see is that we have, when it comes to age, a fairly broad distribution. We have them all, we would say, but of, let's say, the adult population that starts then also being able to technically do business by themselves with 18 years. We have a broad coverage. And also we're now, let's say, able to address, let's say, from, let's say, pre family stage to family stage, but also to empty nest situations, all kind of family structures and age groups. When it comes to the residential structure, we see a slight, say, focus on small town and suburban living situations, which usually, in particular in crammed Europe, make it easier to exactly be a good pet parent to have a dog or to have cats at home. We also see that cities in large towns play some role. We see that country site resilience structures are to be found in our customer structure. Nothing, let's say, suspicious on this side. We also see that cats and dogs make up for the main part of the pets at home, exactly with these 4,900,000 customers. The sum doesn't sum up to 100% because many of our customers have multiple pets or more pets at home than just one and also sometimes from various, let's say, tribes, so cats and dogs at home or dogs and then an aquarium alongside with it or as we can see now in detail, even a combination of 3 different of 4 pits of 3 different categories. So here we give a bit of a visualization of how we should think about our customer. We have lovely customers to serve. And here you can see a little bit what makes them so special. They are, let's say, 1st of all, caring. They're caring for their family. They're caring for their pets. They really, let's say, also love to be, and that's one of the things we would like to highlight here, to do what they do with a group orientation. That also makes clear that their, let's say, communication channels that they use, Facebook and Instagram, are, let's say, sitting high on their list of priorities. They use for Internet access and also for accessing the website of Zuplus, mostly by now the mobile phone. We also see that their purchasing behavior is driven by something that we value highly. It's driven by loyalty. If we give that specific customer a name and a specific age and a specific profile, this is because we are working internally at SUPLUS with 3 to 5, let's say, customer profiles that we constantly have in mind when doing marketing, when improving our product and when developing our website. And Anna is simply the representative for the strongest of our customer groups out there. Lots of available information that is, I would say, even technically a byproduct of the sales channel or the sales model that we operate. We know all our customers by name. We know all our customers with all their purchasing behavior. We have lots of valuable information available for honing the product and the direct marketing exactly towards them. So what we found out is that loyalty not only matters to us, it also matters to them. And this is why we have 3, we call it, flagship loyalty tools in order to exactly, let's say, award loyalty with, let's say, the recognition that a retailer should give to its best customers. So one of the tools that is very important to mention is what we call subscribe and save. So customers pay a one time fee, a one off payment and then get for every order that they play, beat the same order over and over again or orders with mixed content and also with the occasional accessory in there, a permanent discount, in this case here of 3%. We now have we'll get to the details later there, a significant share of our sales kind of protected exactly by that subscribe and save mechanism. We also offer to customers that regularly buy with us an automatic enrollment in our customer loyalty program, which is called bonus points. And the bonus points give you for each purchase, I would say, 1 bonus points in special situation also double and triple bonus points. In fact, the loyalty the screens are off now. The loyalty we have now a small technical difficulty. The screen is went dark. Can somebody fix it? Or I can also continue the presentation, but I would simply need a printed layout down there. So let's do that while the monitors get fixed here. I assume we are still on the Page 3, Flagship Loyalty Tools. Can you confirm that, what's visible from the outside? So we've been, let's say, briefly offline. And now we're back online again. We were talking about subscribe and save before the bonus points. And then we're just short of explaining what happens then with the bonus points after they have been collected by the customers. Customers can use them in particular for sample products and products that they would usually buy for money, and they can buy it for free, turning their bonus points exactly into products of their preference in our bonus points shop. Many people make use of that. Lastly, since we also usage, the apps, the mobile apps, exactly for iOS and Android, play a larger and larger role in running many of our transactions. We're now at a rate of 17% of all transactions done exactly through the mobile phones, and that is growing consistently with double to triple the speed of our, let's say, regular business using desktops and using notebooks and tablets. Mobile for us is just mobile and app. Mobile using the website, of course, is not comprised in exactly the 17% I mentioned before. So here are the numbers, in particular the specifics, subscribe and save, and that's something we've been working on for quite some time, is now, let's say, generating first time more than 50% of all the sales that we do using the Zooplus brand. The average basket is roughly 20% larger than the ordinary basket of non subscribe and save customers. We see frequency that is roughly 20% or a little bit over 20% more intense, more transactions per year, and that leads to, let's say, more than 40% higher sales exactly once people decide to sign up for Subscribe and Save. So it's a fantastic loyalty tool and a tool that now allows us to grow exactly that segment with roughly 24%, whereas our standard business now grows by 16%. Of course, subscribe and save is something that we also push, let's say, early on in the activation process of customers. And that also is one of the reasons why we make a lot more revenue out of less new account setup, better quality and much better engagement with the customer. Same is also true for the bonus points, which are, let's say, in earlier stages, we would have we compare to airlines and their loyalty programs, but probably airlines are not the strongest preferential point these days, unfortunately, for that sector, not for that industry, the prospects look rather bleak. Our bonus points happen to be, let's say, uninhibited by the COVID crisis, we see a quite distinct situation that 70% of all the transactions that we do come from customers that use actively the bonus points. And we have more, 80%, that's a usage rate of the bonus points, either, as mentioned before, for products that they try out, that they sample for the first time or that which they always wanted to have and now they can have it for free or we see many customers also making use of the opportunity to donate their points for charity and we then pass on exact the products that otherwise would have ended up with the customer. With pets in need, we give it to pet shelters as the main outlet or the main, let's say, partner for deploying charity exactly for pets in need. The mobile apps we mentioned before, 17% goes directly through the app plus another even larger share of all transactions going through mobile and the mobile website. And then we also see that here we've been able to design a product that seems to be spot on with what the customer want. We have 4.9 out of 5 stars rating for our apps. So using these 3, Ben has a key loyalty tools plus the well known product. We're able to bring back the retention rate from 91% to 98% in 10 months only. We're very happy about that and it's a game changer for how the company is going to develop in the future. So here, I'm not going to go very much into detail, but that just shows that Zooplus is more than just a shop. It is a shop that also happens to be in your pocket or in your purse or in your handbag in the form of an app. Is also enriched by magazine services. It's also enriched by service and community functions. When the company was set up in 1999, the claim was we do commerce, content and community. It happens to be true also, I would say, 20 years later. We stick to it. We also see that exactly the content part is very good for generating traffic in the website. We see that the traffic overall in the shop section is up by 20% over 1 year before. We see that the focus on customers and probably slightly, I'd say, more relaxed stance on paid for traffic acquisition, fully paid off. The arrangement exactly of services and products seems to be spot on with our key audience, as explained before. So that is what we wanted to say about the recurring nature of our business model. We wanted to give you as color and background about the customers we work for. Now let's then look into the market as it evolves and it's evolving over time. It's a market that is consistently growing at a rate of 4% year by year, partly driven by some price inflation, but also driven by quality trends, specialized nutrition and the humanization of pets, which means that whatever you do to yourself in the best possible sense, you also want to offer your pet. So functional food, premium food, quality food is are all trends that happen to be, say, conforming between the human food market and also the pet food market. We see also underlying growth of the pet population. In fact, over a period of 10 years' time, we've seen a pet population growth of roughly 20%, more pronounced than cats, a little bit less pronounced than dogs. But that is also making clear that we picked the right market. We also picked the right market because it's very, let's say, in a positive sense, prone to making use of the digital shift opportunity. Some people would argue, but then where do we stand in the with the KPI of how much of the market were you taking online already? In fact, the number is for the European market roughly 17%. And that can be considered low if you compare to categories like electronics or like media or music. But you can also consider it pretty high if you compare to the next, let's say, best comparable that we can offer and that is the grocery sector because of that €26,000,000,000 market, the slightly larger part of all of it is dealt exactly to supermarkets. And on the smaller part is done by pet specialists. It is a category of FMCG or dominated by the grocery channel. And that is a bit slow in really catching up on the e commerce opportunity. Let's look into the details when comparing also the European market than with the U. S. Market. We see that we've been taken 17%, and that sits here in the middle of these KPIs of the market online. After 14% the year before, We see that quite really benchmarking. In fact, we produce a factor of 4% when it comes to the speed of online penetration versus the grocery sector. The grocery sector sits between 3% and now 4% for all of Europe with some markets, most noticeably the U. K. Being front runner, but other markets still hovering at levels of no more than 2% of the grocery sales in total having gone online. And that's exactly what we say. We are leading category with pets. We are making use of the digital opportunity, but we have to bear in mind that grocery is a category which is probably one of the last to fully pick up the e commerce trend. We see when looking to the U. S, a substantial different situation. We've seen according to the data that we've been collecting, you see all the data sources given with footnotes and with a detailed description. It will be not barely visible or readable exactly in the live presentation format, but the hard copy and the downloadable version will explain in detail all the sources of it. And according to these sources, we've seen a massive shift of grocery online to online exactly in the U. S. In the year of 2020 from values of 4%, largely comparable with Europe to 10% within 1 year exactly in the year of 2020. We also see that the pet supplies market is taken by a slightly larger or as I say, noticeably larger share already online. It's now standing at 27% or roughly triple the multiplier over the online share for grocery. We also see that the pet market overall in Europe is roughly half the size of the pet market in the U. S. So we compare a market of €26,000,000,000 to roughly €60,000,000,000 and that is only partially explained exactly by a larger number of dogs and cats in the U. S, but it also has to do with the feeding habits. It has to do with the state of evolution exactly of the pet market. So let's look a little bit into the details. The last takeaway on the S chart, I think it sits quite prominently at the bottom. So plus and chewy are both in a position to largely dominate their category Chewy to an extent of 41%, Amazon being then their, let's say, their main competitor, Zuplas sits at 40% of the online market share that we have of the above mentioned 17%. We have like Chewy, Amazon, but we also have offline operators that go multichannel and we have smaller outfits in certain geographies of Europe that also compete for the same market. But that as a kind of orientation around Europe and also the, we think, important comparison between the European market and the U. S. Market. The European market not only happens to be a little bit smaller than the U. S. Market, it's also more fragmented. And it's more fragmented exactly by geographies that also show different speeds of growth. The main drivers for the overall market is what the industry refers to as premiumization. So we sell exactly products which are better, more healthy, let's say, more tasty and more desirable for the pet. We also do something that is probably a little bit less intuitive to understand. We care about calorie conversion. So how much of the calories consumed by all cats and dogs go through specialized pet food we see in large markets of Europe that still, let's say, pets are fed not with products made for them, but with leftovers from the table or whatever kind of calorie source. And that explains why also markets have different speed of growth and why the markets in some situation don't really reflect the size of the economy of the population. One noticeable example here is the Romanian market, which happens to develop, let's say, by a factor of 2 in just 5 years. And that is not because of a growing pet population, but because of much better sales per pet. And we see HEXO plus ourselves, let's say, in the job of supporting both trends, premiumization. We have a strong quality focus in all of our assortment, but also we would like to make dedicated pet food more accessible to consumers all over across Europe. And this is what we quite early on moved really into all corners of Europe. Michel and his team do the biggest part of the job. It's easier to set up 26 or 28 different websites with all the different languages, but really to make sure that we have a consistently good delivery experience in all of Europe and that within manageable costs is the great job done by logistics, by our own team, but also by the strategic partners that we cooperate with. So this is the market structure. We see that the large markets, the big 7, as we call them, provide for a €20,000,000,000 market opportunity, but we also see the midsized markets as valuable to go for. And we explained exactly why, because we have in some situations a terrific combination exactly of relatively small markets, but a very, very strong position of Zupplus. But let's go through this, let's say, 1 by 1, The classic pattern that you would find you see in Germany, Austria and Switzerland. That is a market combined of €6,000,000,000 in revenue, mainly populated by people that speak German and in the case of Switzerland, logically also French and Italian to some fraction of the total of the population. We see that, that in this market, we have now a market penetration of 18% 8%, and we have a growth rate of 15%, which practically means that in 1 year, we take 1.2% of that market, let's say, year by year into the sales of Zuplus. In the French market, we have a slightly lower market penetration, but then we have a slightly bigger growth rate. You would say, here is the classic S curve. You would say the lower the market share, the faster you can grow. But then if you look into the situation that we have in Poland, you would see a market share of 14% and at the same time, a growth rate of 27%. And that means that we take roughly 3.5% of the total market into our system year by year. So you have two trends. You see that larger markets in some situations are more competitive, most noticeably here in the U. K. Market, which highly competitive. But then you also see that midsized markets quite often offer great opportunities of being, let's say, a very dominant player. And being a dominant player does not really come at the expense of, say, the growth rates. In fact, the more you dominate, the more of the total, let's say, shift from offline to online you can absorb into your own P and L or into your own revenues. And this is why we show this chart. It shows that market size, market penetration and growth form different patterns. We are now in a position, and that is also worth mentioning, to catch up. In the U. K, we have a market penetration of Zuplas only of 3%, but we have a growth rate of 22%. We see Italy, as mentioned already previously, with 4% market penetration and a growth rate of 24%. We see Central and Eastern Europe, except Poland, also now catching up with a growth rate of almost 30% and a market penetration of 5%. We're happy that we set ourselves the goal to be available for all customers in all corners of Europe because for that reason, we can really draw from a broad geographical spectrum when it comes to collecting revenues. But also against multi channel players and also against regional outfits that are either sitting, let's say, in the U. K, they sit in the Nordics, they sit in the Iberian Peninsula, for example. And they, let's say, basically do what we do, but they do it without the leverage. What we try to offer, and that's very important not only to our customers but also to our industry partners, is to provide quality growth. And with the best possible customers, we would like to stress not only to the customers but also to our strategic brand partners that we simply put a lot of effort into building a logistics and IT subsystem, I'd say, supporting our business, which is, I'd say, highly specialized for the job that we do, but we also simply provide an environment for quality brands to make full use of the opportunities of premiumization. We have customers that spend a lot more per pet than the average customers. We have the customers that practically everybody wants, and we have a good role in developing that market. So enough of praise exactly for the value proposition of ZEPLUS, but I think we have clear concepts of how to compete against all three types of competitors. It also shows the numbers, and here you can see the development of the growth rate of 2020 compared to the year of 2019, whereas in 2019, we still had certain geographies that were, let's say, in single digit growth, the U. K, for example, Italy, for example, or Spain. And we are now consistently growing double digit in all corners of Europe. And we are also consistently growing percentage wise and also in absolute numbers, of course, faster in the year of 2020 than we did in 2019. So we're not pulling off a good thing in one corner and neglecting another corner. We're not benefiting exactly from COVID because COVID had different impact in different geographies of Europe. What we see is a consistent upward strength in sales and market penetration. Okay. So that was the market topic. And now we would split, Michele, I think in a couple of minutes, I will hand over to you because we will split the part of operational excellence and efficiency in exactly 2 parts. We will talk a little bit more about sales and marketing efficiency, but then we will go over to what is really at the core of operations, what is at the core of, let's say, a business model, which is very well executed both on the customer side and also on the efficiency side. We'll talk about logistics. But first, let's one more time look into the cost structure, and that also makes clear why logistics is so important to us. It is absorbing roughly twothree of, let's say, of our total cost. And that's not because we're inefficient. That's because of the massive job to be done exactly in distributing our products all across Europe. In fact, for the revenues of €1.79 1,000,000,000 this year, we will have to transport close to 500,000 metric tons to our customers. It's a massive number. You can try to make it imaginable to people, but it simply shows what a job is achieved and done in logistics. Very happy to announce that the marketing efficiency has made, I'd say, substantial progress in 2020. So we're back at the efficiency levels exactly of the years of 2018 2017 where we've been sitting below 2% in ad spend. We've seen the numbers. The traffic in the websites is up by 20%. The new business, measured by repeat purchases, is up by 17%. And we've seen the massive positive impact of our loyalty programs exactly towards the revenue retention. So the shift away from advertising into, let's say, a customer focus clearly did as good. We've seen that slide before. And Andreas also mentioned the special effects that we had in IT, administration and foreign exchange, and we also have been commenting a little bit on personnel, we see it as very important that both of these categories, personnel and also IT, are seen as core investments exactly into the product of Zooplus. So the gross margin, we've discussed that also in the questions, is not only stabilizing as in previous years, it had some, say, special effects that brought it to 30% 30.5%, to be precise, in the 1st 9 months. And that benchmark is very favorable to all time low when it comes to operating costs. From 33% in 2013 to 27% really shows how massively we've been working on efficiency. And at the same time, we see that the gross margin that has been under pressure, let's say, all the way between 2012 2018 with lots of competitors trying to chase our customers is now stabilizing. But the main reason behind that is going to be the last of my presentation points. We see here exactly that shift of our spend away from customer or traffic acquisition, So money paid to ad and advertising partners towards money, let's say, really put into the pockets of our customers. You can see in a comparison between the 9 month figures of 2019 and the 9 month figures of 2020, only, let's say, a minimal upwards trend when it comes to the cost of the loyalty programs that went from 0.4% to 0.6%. Since we do it in house, it's also a very efficient loyalty program. You see the repeat customer discounts, so that's subscribe and save going up, I'd say, in fairly manageable categories. We've been cutting down the incentives exactly of setting up new accounts because quite often, we're just creating incentives for repeat customers to set up new accounts. And as mentioned before, we came from a spend of more than 3%, and we're now well below 2%. So how did that impact exactly the large scale project of building a very loyal active repeat customer base? You see in the dotted yellow line, you see until here the actuals the increase of our active customer base. And here, you would see the projection of 2019 if you would have continued exactly with that rate of acquisition and retention, account retention in the year of 2020. What you can see there is that in the course of 2020, we've seen that COVID has been helpful in slightly accelerating, but the higher trajectory is something that is here to stay. And we built, let's say, a more loyal, a bigger active repeat customer that on top of it also spends more per pet as mentioned before, more than 4% increase in spend per account. And that shows that I think we have done a very good combination of efficiency, but also performance when it comes to sales and marketing. So I would say a great achievement by the team. We don't do that on the 3 of us alone, but behind that one are exactly dedicated teams that work on, let's say, highly sophisticated sales and marketing strategy that look deeply into how the customer, let's say, ticks. And then we make sure that we make the customer happy in the most in the best possible way. So I would say on that note, we just look into 3 benchmarks that are the handover then to the logistics topic because what we see is, Micha, I think you can already join me here on stage because the first of these KPIs is one that is directly impacting your business. The basket value was one of the things to say thank you to logistics because we say if you deliver all these parcels to all the customers in Europe, let's put more value into it. And €2 looks like a small increment, but it's already helpful in improving the logistics cost, and we are committed to improving that further. You see the sales per account going up quite significantly. And we did something that is also very important exactly for the overall margin. The share of loss making transactions or loss making orders went from 1 quarter to just 12% over the last 3 years. And these are the last KPIs, which are, I'd say, sales and marketing driven. And now we look into how Misha is handling, I'd say, that enormous job of distributing all across Europe. Yes. Thank you. Good that you mentioned that the basket value, obviously, logistics costs are more on the operational effort you put into that. The basket value or the value of what gets into it is more or less not so much influencing the cost. But for us, it's very important to have that also in there. Yes, a little bit frustration, I mean, the efficiency part of the presentation because it's about a competitive business, right? And the topic here is that logistics is not about efficiency at surplus, it's about the retention of the game. And when we're doing and doing our operations, it is really, really important for us to not only look on the transaction, not only look on the parcel, but it's really, really important to see that in many cases, you're coming from one order and you're going to another order and logistics is in between. So the receiving of the parcel is in between. And therefore, it's very, very important to not only look on logistics and operations from a cost perspective, but also from the factor which we play into the retention. What I'm going to explain you a little bit is I'm trying to convince you that the platform, everything we are building, everything we are doing at the moment is a great achievement, but the best is still to come, right? The more we grow, the better we are, the bigger the whole thing gets. We have scaling effects with region reach and so on and so on. And the more we grow there, the better it gets. And one of the points which is quite important is we are delivering at the moment to 30 countries across Europe. Quite important to understand that Europe is quite different than the U. S. In Europe, you have had a renewed set of different markets. You have different service providers, especially in the last mile area. In the last mile area, you have about 50, 100 different services, different companies which are offering the product to the customers. And it's quite important for us to offer the best to the customer, and we're doing that on the last mile, for example. We're doing that with over 50 different partners, which we are using in getting the parcels to the customers. Next KPI here, 107,000 parcels per day, quite an impressive number. I need to understand that roughly the 107,000 parcels represent about 1,000,000 items, unbelievable amount of items we are putting in the parcels on average every day. What is more important than the average is the peak because if you are in the fast mover consumer goods industry, the people want to receive the goods when they order. As soon as they order, they want to receive the goods. It's really, really important to understand that you need to not only care about the average, the average output, you need to take care about the peaks. And here we have at the moment a peak capacity of up 270,000 parcels a day in our network and we can even increase that a little bit. And this was also one of the main reasons why we are able to deal with the peak which we had during the COVID situation, yeah? During the COVID situation, we had an unbelievable peak. The couple of days where it really rocked and we had quite some nervousness at our logistics partners. How are we able to do with it? It was a little bit of problem, but not a big problem. We came through it. And this is mainly because we have a distributed network and we have very, very strong partners. Another KPI which is quite important, stock availability. FMCG business is clearly, if you don't find the goods, you go somewhere else, you buy something else. This is even more true for e commerce and for the traditional brick and mortar business. The stock availability across all markets is really, really important. We are measuring here 96 percentage points of our availability. Our real availability, customer face availability is higher. The availability we are showing here is taking into consideration also the listing of new products, the delisting of old products and so on and so on. And we are showing here an ambitious level, which is why we are showing here 96 percentage points for the customers. We have different measures to deal with better offerings and so on and so on. And we are probably here in a situation that we have from a customer face an availability of 98 percentage points. And the 98 percentage points are for me, I would say, benchmark. I need to pick up some water. Sorry. How are we doing that? We are doing it through a fulfillment center network. I'm showing a little bit more on the next slide. It's quite important that you understand that this is a network. So we're not having only one country connected to one fulfillment center. We have a network. And when the customer is placing the order, we can steer the parcel to certain fulfillment centers Based on lead time, based on costs, based on availability, based on the portfolio we're offering to the customer, we can decide. And therefore, the network is getting better and better and the more fulfillment centers we're going to add. We're covering now with our fulfillment centers, showing that on the next slide, nearly all across Europe. We are going to grow it a little bit more because we have still some spots where we are not at the moment so present like I want to have it. But the main further growth is happening in increasing their capacity and putting our performance in terms of cost efficiency and so on and so on into the next row. We talked a lot about working capital. At the moment, we have a stock rotation of 35 days. Is there room to improve? Yes, definitely, there's room to improve, but we are playing it safe. One of the reasons why we came so god long with the COVID situation is that we have had stock in excess. Usually, if you are in the 1st mover consumer goods industry, you would say, okay, you need to go below 30, yes? Don't know if you want to go to 25 or 27 or whatever, but we are here playing it really safe. So we are allowing ourselves to have a little bit more stock on board in order to deal with certain situations, which might come up by a shift in customer patterns or by problems with our suppliers or whatever and so on and so on. The basket value. Basket value, €57, Cornelius mentioned that already. The basket value is helping in showing a better development of logistics cost. Logistics cost are per parcel, but in many cases, we are representing them as cost of sales. And if we have then increase in basket value, better assortment, better offering to the customer, then obviously, this is helping us in terms of the basket or the cost efficiency on logistics. On average, we have about 1.2 parcels per order, which means that we are having customer orders which are quite bulky, quite heavy because not all of this 1.2, the 0.2 is coming by, us fulfilling the customer needs by more than one fulfillment center. The majority of this parcel split, how we call it, is created by the customer ordering so much that it's not fitting into 1 single parcel. And then the last KPI, which we're showing here, overall, we're doing that by cost of €9 per parcel, which is, from my understanding, quite benchmark all across Europe and also for the other markets. So what is really important and what is important for me to bring that message to you is we have a good basis, we have a good network, which we can build on. And logistics is pleased not only on the cost efficiency, which you see here at the right lower corner. It is more about the repetitiveness of our business. So we are working heavily to increase the overall quality and bring that quality to our customers. Because in many cases, like I said, from the one order, from the first order, from the second order to the next transaction, it is problems with the items or with logistics. And obviously, we need to lower that because we want to be perfect. And then you need to consider the parcel is not having a value of €40 or something like that. The parcel is the connection from the one transaction to another, and the customer is not there valuing only the one transaction. The customer is there for, I would say, a long, long revenue stream, which Kannes showed before. So this is, I think, a known slide. Europe, on the left side, on the right side, what kind of fulfillment centers we have opened over the last years. What is quite important, I don't know if this works. At the beginning of the journey, we had there, I would say, a strong backbone in the middle of Europe. It was going from the Tillbok in Netherlands over Herzogu and then to Wroclaw. And this was more or less a backbone of the full at surplus fulfillment center network. And we delivered from that backbone. We delivered all across Europe. And the more we grow, obviously, the more we are spreading our fulfillment centers all across Europe. So quite natural that the next series of fulfillment centers which we have opened would not or has not been happened in the backbone of the surplus. It happened that we opened those fulfillment centers more to the south, more to the north and so on. And the fulfillment center, which is quite important here on the left, Birmingham, the fulfillment center there was created in 'nineteen or was moved in 'eighteen. Now we are at a size that we can nearly fulfill all parcels which are needed for the upcoming Brexit. We can fulfill now nearly all passes. I'm saying nearly because we're not done. But when the Brexit is going to happen in January, we can fulfill 100% of the U. K. Demand from that fulfillment center. Other fulfillment centers like Madrid and Milano still have room to grow. At the moment, the local fulfillment center rates there are between 60% 80%. Obviously, we want to have there a high share of local fulfillment, but not to every extent of costs. At the moment, we are balancing our steering, the parcel steering based on certain criterias. But if the customer, for example, is ordering a long tail item, which we have not stored in Madrid or in Milano, we can fulfill those markets also in Tilburg, in Wroclaw or some wells. And this is the beauty of the whole system. The more we grow, the more we can go into different regional into different regions and the better the product will be for the customer. There are two reasons missing at the moment. And two regions missing at the moment. You can see that for the Nordics, we still do not have their fulfillment center. And for the very eastern part of Europe, we also do not have a fulfillment center. Those are the 2 regional spots which we are going to uncover, which we're going to cover over the next years. Good. Then a picture, how does everything look like? And these are three pictures here. On the right side, upper right side, you can see the fulfillment center in Cosmo. It's the biggest what we are currently operating. It has nearly 40,000 square meters, a brand new building. And the building is good for roughly, I would say, around about 1,000,000 parcels per month. On the right side, lower right side, you see something which is also quite important. You see the packing machine, the iPacking machine. The iPacking machine is basically closing. It's folding the carton and is creating a lid, which is quite strong. And this is not only good for operational efficiency. This is not only going to reduce our labor costs. It's also quite good for having their much better quality to the customer. So it is really creating a superior environment where we have on the one side an increase in cost efficiency. On the other side, we are also able to bring their better quality to the customer. What you can see on the left side is current typical logistics process at the moment installed in our fulfillment centers. It's a bit of pity that there are only cartons in there. Usually, there are the other goods, which we store in the fulfillment centers. You can see that we're doing a one stop picking process. The one stop picking process means that we are directly picking, the items from the shelves, from the pallets into the baskets which we are sending out to the customer. This is, I would say, superior to the set of items what we have because we are, in general, operating quite heavy items. An average parcel weight is around 15 kilograms. And if you have that kind of weight, an automation does not make naturally sense for all different processes. However, we are also going the way of having their different layout. The French fulfillment center, which we are going to open in the next 2 to 3 years, is going to have a more automated process There, especially the long tail items will be stored in an auto store system, similar like an auto store system. And by that, we can combine the picking efficiency and the handling of heavy items. And we can combine that. We can build up a more superior process than in the past and this is going to improve even more the cost efficiency of logistics. Good. Hopefully, you have understood that the current network is quite powerful and quite strong, but the best is still to come. So the more the better we grow, the more I can also continue the growth path in terms of efficiency and customer benefit. Thank you very much. Okay. So what still remains to be explained before we come to the, say, the probably one of the highlights or the highlight of today's Capital Markets Day, the outlook or the guidance for 2021 is the topic of margin management. We've seen I'd say we've tried the best possible way to give you a little bit of a feeling of how impactful logistics is for our business, how we organize it and how special and also how powerful our logistics system is. We also a little bit at a loss to present to you how much of, let's say, IT expertise and skill really goes into, let's say, running the show at 2 plus So you see the tip of the iceberg, which are the user facing parts of the shop, the apps as explained before. Again, we try our best. Probably here we come to one topic which is a little bit easier and more intuitive to grasp because we will show you not only with brands we use with our industry partners but also the brands we build in house, which have strategic significance for Zuplus. So what is the big job to be done? We explained that we really put an utmost effort into making catering for your pet using an online specialist and using Zooplus in particular, the best possible experience. And if you look at the right side of the chart, you see just a selection of awards that exactly our efforts there usually get awarded over time. So you would see a Germany Best Online Shop in the category of pet supplies. We're a regular winner on this one for the last 4 years. We get the German Online Retail Award on a slightly broader definition for fast moving consumer goods against we are a serial winner in that category. But we also have been in multiple times in a situation where we're winning the German Online Retail Award across all categories, something that happens in Germany, but something that also happens in the Netherlands, for example, where the most recent award was given to us by ABM AMRO, which runs exactly competition. And again here, zooplus.nl won the award to be the best web shop period across all categories. And we like that. We like that because it shows that what we do is really appreciated by our customers. Most of these awards are given by asking customers what shops they like the most, but it also proves the point that our category is very much suitable for building not only an e commerce outfit, but a vertical around it because what people appreciate is that we are a shop that offers additional values, additional features, starting from product ratings that kind of everybody has, but also going into content and community features, as explained before. We do that, again, also really in all corners of Europe, the Czech Republic, Retailer of the Year in house garden and breeder that also shows how our topic relates either to FMCG, to grocery or exactly to catering for, let's say, the perfect home, including the perfect home for your pet. We also see that we are scoring well in the U. K. But enough of that. And what is behind that is not only the activity of the plus, but it's also, let's say, the efficient partnering that we have with industry brands. And industry brands, we put into, let's say, 2 very important categories. 1 are the big international brands. There is a handful of supremely, let's say, professionally run organizations: Mars, Hills, Royal Canin, Nestle, Purina Pet Care. And these 4 combined make up roughly 70% of the European branded business. And they also take up a large part of our sales share. But then at the same time, we also have very strong small and medium sized companies that have, let's say, top notch products and market relevance usually in their home markets, but also in other adjacent markets. And we're very happy to also do business with exactly niche craft and premium brands that are born exactly in a culture of small and medium sized enterprises. We still see ourselves also as a company having the DNA of entrepreneurship in us. So it's easy also to relate to these strategic partners. We also took a bit of inspiration from both of these brand partners in order to come up with brands that probably would fall technically under the term of own brands. But in fact, there are more. They're brands that really would stick out and stand out all by themselves because they come across and they are by nature brands that are niche, craft and premium and very successful. We'll show a couple of examples on this one. Why is it so important? Because when we look into the profitability of the Plus, the margin will improve over time, but it shall only improve as a consequence of, let's say, a well curated accessories assortment. It should also grow because our own brands by performance grow above average at zooplus. Why is it so important? Because while the total sales share of accessories and own brands is less than 30%, they make up roughly 50% or half of the contribution margin that we make. Or put differently, each euro of revenue that we make with accessories counts like €1.90 whereas each euro that we do with the big international brands, due to the nature of these brands and also due to the heavy competition around these brands, is only worth kind of €0.60 We love them all, but we love some a little bit more. And we love a little bit more, I think that's perfectly understandable, the brands that we built by ourselves. And when we look exactly into our product portfolio, we see that we have, I'd say, a very good opportunity to build a branded business, our own brand business with top notch quality and with rising share of total sales. The whole thing, let's say, now begins to have significant impact to our P and L. In the years 2017, 2018 2019, we've seen steady progress exactly with our own brands, but at the same time, we've seen a relative decline of accessories sales to a level of 14%. And in the year of 2017, we're still doing 17% of our sales exactly with accessories. But that's something that is now balancing out again. And we see exactly that high margin part of our sales mid- and long term grow faster than the rest of our business. So how do we do that? Again, we do that with, let's say, lots of inspiration. We do that with brands that in themselves win awards. So Wolf of Wilderness was a brand not created by looking at somebody else's brand. It was created looking at a trend, and the trend was to bring, let's say, the dog and the way to feed the dog closer to its true nature. And the true nature of the dog is Wolf inside. And we see a brand that is standing for itself up to degree that it was awarded being one of the best 10 pet or dog food brands created in Germany. I think that was the year of 2017 or 2018 that we got this award. And the jury was even unaware that this is our own brands activity because it is as powerful as the best brands that other people can build. The same is true for Pureizon. Pureizon sits when it comes to quality really at the top end of the market. So you would have a meat content and a fresh meat content, which is really, let's say, outperforming also everything that most other brands would offer. We have no added grain, which is a very important feature for dog owners to as a quality benchmark when selecting their product. We also see that we build these brands specifically with not needing the shoulder of Zooplus to lean on because the brands really have their own story to tell. The brands are, for that reason, also building its own loyal customer base. We're really happy to have them. We take that concept also a little bit further when looking into specific categories that are particularly challenging for logistics, and that is cat litter. In essence, we also ship sand with specific features all across Europe. So it's very important also to build our own brands so that they're perfectly in line with logistics. Here we use exactly with Tigurino three sources of ingredients. So it's clumping litter. It's natural litter, but it's also silica based litter, which is a lot lighter to transport. We've optimized the bag sizes so that they specifically fit into the shipment box that we have. And we now have exactly in the cat litter already 34% of all sales done with our own brand efforts. So you can see we're onto something there, and that is also going to impact the mid- and long term margin perspective for Zuplus. So I would say it's 7% to 12%, at least in Europe, and that's we're preparing for, let's say, the high noon at Zuplus. We're running a bit ahead of time, but I think that's all okay. Let's look into what that means in numbers when looking into the perspective of 2021. So here we go. The revenue range we offer for the next year is going to be revenues of €2,040,000,000 at the lower end of the spectrum. And at the upper end of the spectrum, we would look at total revenues of €2,140,000,000 €1,000,000,000 of euro. So we are minimally behind schedule with our long term goal to take this company to the €2,000,000,000 region as explained already in 2016, 2017. But as of now, we can practically call this company a SEK2 billion revenue company. Here, you've got the revenue range for next year. And I think that's also indicating that we are foreseeing, let's say, continuous and robust growth as explained before. We also plan to combine that with a new found strength in the business model based on efficiency, based on very clever assortment management and margin management, as a result, we're able now to offer earnings range between €40,000,000 €80,000,000 Again, let's try to put that into perspective. The growth compared to this year's, let's say, projected outcome, which would be in the mid range of the guidance out, would be a growth between €250,000,000 and €350,000,000 At the lower end exactly of that growth range, we would look at the 2nd best growth ever produced at Zuplus. At the top end of the spectrum, with €350,000,000, we would do the best growth ever Earnings wise, we look at EBITDA margin between 2% 4%, which also shows that we are running a perfectly sustainable business model, not only when it comes to revenue retention and consistency in growth, but also when it comes to producing earnings while growing the business as we do, investing into our future. We try to visualize that also. And we see here the sales growth in the comparison between the years of 2018, growing at €230,000,000 Then we had, let's say, our issues, but these were temporary issues in 2019 where the growth then fell to a level of SEK180 1,000,000. This year, we expect an outcome of, let's say, SEK260 1,000,000 to SEK270 1,000,000 of growth. And next year is going to do, let's say, again better than the, let's say, COVID tailwind year of 2020. We see growth of €250,000,000 to €350,000,000 And we see that as a strong signal that Zuplaz is back, I would say. And that's also true. And if you put the earnings into perspective, we look at an EBITDA level of €9,000,000 or €12,000,000 respectively in 2018 2019, we've seen also helped by certain COVID one offs, in particular when it comes to traffic acquisition spend and EBITDA that will sit between €55,000,000 €60,000,000 or let's say €50,000,000 to €65,000,000 which is the official guidance, we took the mid value of €58,000,000 for 2020. And again, in 2021, we will outperform not only the years of 20 18, 2019. This we already do with the lower end of the guidance. With the upper end of the guidance, we would do a best every year when it comes to profitability of surplus. Very happy to share these news with you. And on that note, we would take a 5 minute break and then we would collect the Q and A. It's going to be the 3 of us here on stage for you to answer all the questions around anything that we've presented around the background and the motivation and the strategy of how we run the company. We're happy to take your questions pretty soon. 3 minutes and then we're back. We had a chat in between in German, so this is why I slipped into German language. So we're back, and we also hope that you're back. We're collecting a couple of questions. And now let's go through the questions 1 by 1. Let's say your management at your disposal for taking the questions. Diana, go ahead with the first one, please. So first question comes from Christian Zales from Halk and Aufeuser. Can you provide an update on current trading? And given the 2nd lockdown, have you again experienced stockpiling effects? And how did the mix between food and accessories develop in Q3 and Q4 so far? Yes. Okay. The if you look very closely to that one chart with the sales per account, you can see a minimal acceleration against the trend exactly when it comes to sales, 12 months trailing, and that is an indicator for a very moderate level, a very moderate level of stockpiling. And this is exactly why we make the distinction between the growth of the customer base, which is not influenced by stockpiling, and then we have the sales per account, which is a clear indicator exactly for stockpiling. What we see is that people gain trust that Zuplas is there to perform, let's say, also in a crisis situation. In fact, the strength of the logistics systems was experienced by many of our customers in the lockdown of March April, and this is why we don't see much of stockpiling. Also, please remember our competing channels, and that's the supermarket, and that is the pet store, are in almost no geography hit by any lockdown. So there is lockdown for other consumer categories, but not for pet food. Adjacent to this one, we don't see a specific shift between food and accessories. What we see as an overall result of 2020 is a reignited interest in accessories, and that is a logical consequence of people spending more time at home. And the second question from Christian Zales is, according to Slide 35, the online pet supplies market is growing by 26% year on year in 2020. Why is Zooplus underperforming the online market? Yes. The true figure here is closer to 21% 21% to 22%. We are rounding for the full percentage digit from 14% to 17%. It's very hard to come by to true data exactly for how the market is growing. What is the reason between, let's say, Zuplus slightly being below that average of market growth is that, in particular, the multichannel retailer are seeing a transitory shift towards online that we expect to swing back to the offline, let's say, nature of their business. So what we see is that there is a bit of a spike in demand in the online outfits exactly of the multichannel retailers. We also see that there is a certain tendency to buy grocery brands exactly as effective stockpiling and the grocery brands are under indexed at Zuplus. We do that for good reason. What matters a lot more for us is who is going to perform in the year of 2020 when COVID is not impacting consumer behavior. And I think that is the most relevant question. So next question comes from Alivira Rau from Barclays. I realize your strategic focus is more on retention rather than acquisition. However, why have you not been more aggressive around new customer acquisition in this year, in particular, considering new customer acquisition cost has been so low and many customers have become amenable to online shopping? Yes. That's the classic question that you would expect. But then go back to 2019 and you see, let's say, the benefits of being aggressive in customer acquisition. And we've seen that being aggressive is the wrong way of dealing with our customers. We need to simply acknowledge then that in the year of 2019, we've been pushing with 70% more spend on traffic acquisition, just yielding a 3% increase in cohort size, new cohort size. When we look into 2020, we see not only that the cohort is growing in absolute terms, but we see that the cohort quality is improving. So the repurchase part of the business is growing by 17%, and that is the best growth ever that we had for the last 5 years. So in fact, we think we made use of the opportunity. But don't look at the one off business of people that don't repeat purchase, but look at the part of the business where people do repeat purchases. And you see that we're not only increasing efficiency, we're also increasing output. It's very important to make that distinction, but I think we've provided all the data. And next question from Elvira is, do you have a new target for own label share in the medium term? I think what we can give you here as a ballpark figure is that by the year of 2022, we will approach €500,000,000 business with our own brands only. So currently, we look at sales of €280,000,000 give and take that we do this year. And just 2 years later, we will look at a business that is going to be €500,000,000 in size, which is going to be the 4th biggest portfolio of brands available in Europe. So that is probably an indication that is helpful for you. So next question is from Svante Krogvos from Nordea Bank. Are there any geographies where you are dissatisfied with the performance? In that case, why? And what are your improvement measures? I think it's something that Michel and me jointly are working on. And in fact, due to the nature I don't know, to be honest, if the question is from a sales point of view or from logistics point of view, I must say. I think you can go into both. Yes. And that is probably the way we look at it. We would say we are growing in all geographies of Europe. And in some situations, it's more challenging, in particular, for logistics when it comes to delivery speed. It's also more challenging in some situation when it comes to delivery cost. And is sometimes also more challenging when it comes to, let's say, the core level of competition. U. K, intensely competitive. Finland, for example, would be something that is, from a logistical point of view, very challenging. Exactly. But as you can see from the growth profile, we do grow in all corners of Europe because we see that as the best way to develop our business model. So next questions come from Nicolas Mauder from Kepler Cheuvreux. First question is, can you explain the reasoning behind the €300,000,000 new cohort size projected for 2021 but also beyond? 2nd question would be, which share of your revenues is most vulnerable to higher online share in grocery sales? And third question is, can you give us an idea of the contribution margin developed by cohorts similar to the picture presented to foreign sales? Yes. Okay. The first question, please read carefully on this one. This is a simulation. And the purpose exactly of that simulation to make the distinction of the long term impact of good revenue retention. So a good revenue retention of 91% is good enough for growing the business to this €2,800,000,000 given the assumption, and that's an assumption only of a €300,000,000 constant new cohort size. If you take the revenue retention to 98%, the gross projection then would simply, let's say, massively benefit to the positive and take the growth to €4,300,000,000 But that is a simulation for the purpose of showing the impact of the revenue retention. It's no mid- or long term guidance or mid- and long term prospect that we're offering here. It's a simulation calculation. So the second part of the question is what would happen if more of that are available in all channels. So as explained, we focus on the top end segment of the market and our sales that are directly overlapping with the supermarkets are fairly limited. To give you an indication, roughly 10% of our sales that we do with brands that are also sold in the supermarket, whereas the total market is roughly 55% served by supermarkets alone and roughly 70% by supermarket or all channel brands. We do not have trouble out of that. In fact, it would be helpful for us that people are, let's say, more used to catering for everything that they need online because then sooner or later, it would be also natural that catering for the pet is entrusted to a specialist, and that's us when it comes to online sales. The contribution margin development by cohort is something where we would make a clear statement. The cohorts are there to build top line performance. The sales mix is there to build a lasting margin performance. But that's something we don't mix that much. What we can clearly state is that more mature customers are more prone to using own brands, which simply require, let's say, a bit of time to build trust. So good news there. And 4th question from Nicolas Maude is why do your suppliers appreciate working with you when you have a clear incentive to steer sales away from their products towards your own brands? Because we don't talk about a cake that is constant in size. In fact, since we grow the business so fast, you can clearly see that we can grow our own brands business and grow the industry brands alongside with it. We've given you a bit of indication because we're saying over the next 2 years, we plan to add roughly SEK 200,000,000 over the next 2 years to our own brand sales. If you look into what we offer as overall growth, I would say we make everybody happy at the party, including the industry brands. And this is why they like to work with us. Thank you. So next question comes from Guillaume Ravi from Vida. Why do you choose to outsource the management of fulfillment centers rather than have it in house like your peer Chewy does? Are you reconsidering? It appears that your process of circa €160,000,000 of sales per fulfillment center versus circa €600,000,000 for your peer, Chewy. Can you please comment on the circa 5x ratio? Maybe I'll take the first part and then you continue with the second part. And first of all, it's clear and important to understand that outsourcing doesn't mean that we have a contract and that we don't then stop talking and stop developing those things together. We have a team of about 30 different people working in collaboration, in strong collaboration with our fulfillment service providers all across Europe. And by that, we are influencing their processes. We have continuous improvement processes and so on and so on. And we are trying to have their real joint partnership with those operators. Why from a strategical point of view, it is so important to outsource fulfillment center operations is, from my point of view, very clear. If you want to be in an industry, you want to be under the top players in that industry. And if you consider what is important in the fulfillment centers in the near future, it is clearly investments into automation and investments into IT. And from that point of view, it is quite obvious that if you cannot be under the top player in that industry, you should not enter into it. And therefore, I think the strategic orientation, which the founders have built that strategy on, is still valid, and we're not considering to take that away. We are having joint operations where we're influencing more. We have a fulfillment center, small fulfillment center in Czech Republic, which we are, I would say, opening operating more on cost plus basis. And the fulfillment center in U. K. Is also a fulfillment center, which was for a certain period run into cost plus operations where we could have a lot of influence on individual processes, right? So we're taking best of both worlds. We're not only taking their partnership approach, we're also trying to have the continuous improvement processes, which are along down the road, bringing the best of both worlds together. I think the second part of the question hints at, does it make sense or what is the optimal size for a fulfillment center? I think the biggest fulfillment center, Michelle, that you operate are exactly doing something like 500 €100,000,000 to €600,000,000 in output with some room to increase. But then Europe is a very fragmented place. Just look at the U. K. In the U. K, we soon will be, let's say, in the need of operating the fulfillment center operation there independently, and we can't simply set up a fulfillment operation of that size for that specific market. If you look exactly in markets like Italy or in Spain, we have good reason for local competitiveness to, let's say, supplement large fulfillment centers, which are in the same size of the Chewy operations, smaller sized market, I'd say, market fulfillment centers. And then maybe only one word regarding the SEK 600,000,000. What I said regarding the big fulfillment center in Krasnoye, we are able to operate there 1,000,000 parcels a month. If you multiply that by the parcel value, then you're coming close to the €600,000,000 in terms of sales relevance. However, what's really important is you do not want to have only supercenters all across Europe, you want to be local. And therefore, the question is not to operate the whole fulfillment center network from a couple of big fulfillment centers, which then have a long, long way to fulfill the parcels to the customers. You want to be local, yes, for various reasons, delivery speed, costs, but also from a sustainability point of view, it's quite important to be local. Therefore, we need to have both. And this is a beauty of the system that we have there at a Genius network where we have the supercenters, but we have also local fulfillment centers with a different value proposition. And the heterogeneous nature of the European market is all the more visible when it comes exactly the topic of service and community because we not only have to operate in these different markets, we also have to operate in different languages. I think the challenge that Zuplas has mastered is making the service experience for the customers as local as possible and also provide quality service in their mother tongue. And that matters much more to our customers rather than having, say, a 20 fourseven service operation that insists on English to be spoken. That is not a situation that European customers or the customers of their respective nations would deem acceptable. So we have a different situation exactly when it comes to the service experience. Mastering the different languages is the bigger challenge and is also what we get appreciation for. When it comes to community services on the website, we build simply on peer to peer services. We build on digital products to simply offer human operators for entertaining individual customers is something that we see as, let's say, non fitting to our market, and that is Europe and our business model. So next questions come from James Lettin from Berenberg. Well, the thing is you get so many advertising impulses, irrespective of media what media that you use, that first of all, people have effective filtering mechanisms. That was one of the reasons why the advertising, let's say, push in the year of 2019 didn't work so well. We know that our customers, let's say, appreciate simply the quality of service that we have. They find our website just like that. We have a 20% growth rate with the traffic on our website. And it's all about conversion and about keeping the customers. Allow me to say it like this. We were surprised that in the year 2019, we didn't receive more challenging questions when it came to loyalty. Because the one thing is, let's say, an advertising strategy that doesn't work with new customers. But what was, let's say, at the core of our strategic analysis of the year of 2019 is how can we stop, let's say, the loss of existing and loyal customers and that we came up with a cohesive and powerful plan is now in the numbers. So we now keep all our customers close to us. The moment you can defend all your customers, it makes all the more sense just to think about advertising, but not the other way around. And this is why we take, let's say, not a relaxed stance about that. We know that acquiring customers is important. But what is even more important is to keep them, to develop them, and this is what we do. Thank you. So second question from James Lettin is, what is Amazon's market share across in Europe and then also in the United States? What is their growth rate? Probably the only people that can really answer that question is Amazon people by themselves. So Amazon doesn't disclose information specifically on their business category by category. So what we can offer is, let's say, our guesses from different sources that we put together. But Amazon is, let's say, for natural reasons, the most difficult, let's say, competitor to judge when it comes to numbers. What we know for sure is that market by market, they have strength in some markets, which is more prominent than in other markets. In some markets, they don't even operate. In some markets, we have a fairly high overlap with the assortment. In some other markets, we have a somewhat limited overlap. What we can only tell is that we grow in all corners of Europe, double digit and kind of irrespective whether this is an Amazon market, not an Amazon market or a strong Amazon market or a so so strong Amazon market. That's all we can offer to you. We would hand over this question, exactly, to Amazon. So next question is from James Lettin. Would you say the reason the U. S. Online penetration has risen so much more than Europe is because of Chuy's higher marketing spend? Well, sure, really, it helps to spend a lot on marketing if you do it the right way. So we won't stop investing ways to acquire new customers in an efficient format. But it's not that much about the cost per acquired account. It's about the quality of the acquired account. And here, in a fairly brief period of reorientation, we already grow the quality part of the business 1 year before by 17%. Of course, also spending more for advertising comes at the expense of bottom line performance. I think the 2% to 4% EBITDA is something that would not be possible with the net spend of Chuy. And last question from James is the chart on Page 23. This is the cohort chart. What is the level of price inflation experienced from 2012 to 2020? Meaning, at a group level, what is real revenue retention over this period? And furthermore, what is the customer retention rate both from new accounts and repeat new accounts? Okay. Then let's look into the margin picture between 20122018. And the gross margin over that period of time came from values of around 40% to values of a little under 30%. That's not a signal of inflation. That's quite the opposite. It's a signal of deflation because of terrific value for money offered to our customers and the highly, I'd say, highly intense price competition, which is the hallmark of all e commerce markets. So I would say between 2012 or 20 10 2017, there was even, let's say, adverse effect of inflation. We had deflation. And then between 2018, 2019, we've seen a dent in revenue retention. We explained that, that this was transitory, and that was only partially, let's say, explained or I say, there was a bit of price inflation, so we had even bigger loss in customer fidelity. What matters, I think, to all of us and should also matter to you is that in a brief period of time, we're rebuilding revenue retention from 91% to 98%. And that's not explained by price increases by 7%. In fact, we keep the prices stable because that's our commitment to our customers. The margin went up because of better sourcing and the margin also went up because of better assortment mix. So inflation is irrelevant, I would even say, for analyzing Zuplus. Next question comes from Alejandro Velez from Close Brothers. In terms of competition, are fast moving consumer goods companies being more aggressive in going after the consumer themselves enabled by online e commerce ready platforms? That's an interesting thesis, but it's a thesis we hear, let's say, for the last 20 years. Practically, let's say, I think at one point in time, P and G was going online with the shop just with their own brands, but that kind of never really took off. It seems to be, let's say, in the nature of collaboration between FMCG and retailers that retailers can do some own brands business, but that apart from a few exceptions, let's say, brands are not very good at running retail operations. If at all we talk about brands which are vertically integrated. So if you think about H and M, you would clearly say this is a brand and a retail operation in 1 folded into 1. Then it's, let's say, in the DNA of these companies. If, let's say, organically grown or if an FMCG company has been growing exactly doing FMG, SCG with retailers for years years, it's very difficult overnight to do them the twofold change. The one is to become a retailer and then on top of all things, an online retailer. So I would say, yes, they have an opportunity there, but there are also barriers for them to be successful. And it's hugely challenging to build what we built over the last 20 years. 2nd question from Alejandro Velez is, have you abandoned all your offline brand and marketing efforts entirely? Assuming that COVID has pushed even smaller offline retailers to compete online, wouldn't you expect significant online acquisition inflation in the future? Wouldn't it make sense to attempt offline brand building at current depressed cost? According to information we have is that the costs are not that depressed anymore. In fact, that our cost per acquired customer went down is not because advertising got cheaper because we simply don't need it for building our business. And in fact, we don't believe that much in building our future top line performance around branding and advertising. We believe that the best way to build our top line performance is, say, the best possible retention, and that's by the best possible product experience, and that is by the best value offer to our customers. Anything else practically falls into your lap without much of effort if you get the basics right. A terrific user experience, value for money and loyalty rewarded. Then once this is done, we can talk about added push of advertising. And given exactly the natural pulling power of our services, the community and content functions, We don't need that. We've proved it the good way in 2020, and we learned it the hard way in 2019. So next question comes from Anubhav Malhotra from Liberum Capital. Is it discount, bulkiness, multiple fulfillment centers or something else? And which factor were you able to influence most to reduce the proportion of loss making orders? Very good question because it hints exactly at the things that we were looking at. Are we accumulating discounts in an unproductive way within the same transaction? We looked into bulkiness and we introduced them that was perfectly accepted by our customers. Additional charge if the shipment is so bulky that it requires multiple parcels. We were also looking into whether we can improve availability in all fulfillment centers so that we don't have to root into the 2nd most efficient fulfillment centers. So in fact, we did it all. But what was probably most helpful was looking for discount allocation. And the second thing is was encouraging people to go from small baskets to medium sized baskets. So we have a follow-up question. Could you please split the new customer acquisition by channel, word-of-mouth, social media, e mail marketing, etcetera? No, we don't disclose that. Next question is from Christian Zales around the guidance. What is the implied gross margin of your 2021 guidance? We guide on top line and we also guide on EBITDA. The combination of efficiency and gross margin is something that we leave to the flexibility of running the business to the best possible combination for best performance in 2021, but also in the years that come, let's say, beyond or after 2021. So you've got guidance for the top line. You've got guidance also for the bottom line, but no guidance on margin. Another question around the guidance from Karl Burns from Valerian Capital. Do you have a medium EBITDA margin target? Yes, we do. But medium is something that we would like to replace with a long term perspective what the business model can achieve, While growing at a rate of, let's say, as announced now for the year of 2021, between 14% to 20%, Growing the company at that speed is absorbing some financial resources. In a steady state scenario, which is not midterm but long term, we see an EBITDA range of 5% to 7% as perfectly doable in our business. The key ingredient is exactly revenue retention and then also increasing share of highly profitable sales with own brands and accessories. EBITDA range suggest a significant downside from 2020? Is it a worst case scenario? And what needs to happen? The thing is we guide with a range of, let's say, 3% plusminus1%. That's already very precise and that speaks for the quality of how this business is run and how the finances are kept by Andreas. If you compare to 2020, you need to bear in mind that we have positive one off effects that equal roughly €20,000,000 when it comes to earnings. So adjusted for 2020 results, we look at a benchmark of €40,000,000 and that's also going to be the benchmark at the lower end for 2021. The range as such is just, let's say, 2% to 4%. More precise, we can't guide. We already provide guidance quite early, let's say, even before the New Year has started. So please accept that as a meaningful guidance with a bit of flexibility. So next question is from Sahil Dey from Dey Capital, also around guidance. What kind of marketing spend CAC assumption does your 2021 guidance assume? Again, this is something that we would leave open to how we develop the business. We gave a clear top line commitment We gave growth projection of €250,000,000 to €350,000,000 plus, which is going to be the best growth ever that this company has achieved. How we do it, you leave it up to us. And the second question from Sahil is, as a percentage of revenues, where do you see private own label brand be in 2021? I would say you use a bit interpolation. We gave you a ballpark figure of €500,000,000 of own brand sales in the year of 2022. We look at €280,000,000 of own brands sales that we do this year. Then the rest we leave up to your imagination. And another question around guidance and EBITDA from Goyam Ravi from Valener. Why do you focus on positive EBITDA and therefore taxes rather than invest all you can into produce 0 EBITDA or close and save on taxes in order to boost growth and capitalize on it or raise EBITDA margin at a later stage? Well, you pay taxes on EBT, right? But you take over this question. So the taxation thing, I think, is of minimal impact. But you're in a better position to explain why we need a healthy capital structure, a good equity base. I think the question is also more so the question why we do not invest more in new customer growth in order to boost growth and accept an EBITDA level of 0. And what would be the consequence? It's not about that we wouldn't have to pay taxes. And of course, it would absorb a little bit of equity because then on EBT level, you will be slightly negative. So you see some investors or some analysts say, why don't you show more profitability? We have other investors that say, why don't you produce more growth? In fact, the management is thinking independently what is in the best interest of the company. We said job number 1 was to rebuild the revenue retention, and we did a fantastic job on this one in 2020. And I think also it's going to stay in that positive territory for the next time to come. And then when we look into growing the business faster, we come back, I'd say, to the year of 2019 where we've seen a failed attempt of trying to push, let's say, the standard way. And the standard way is to say, if you do more advertising, you should grow faster. But it didn't work at Zuplus. It didn't work in the European market, and this is why we don't repeat it. Again, we offer a guidance for 2021 that is showing that we are committed to produce the fastest growth of this company ever before. We look into, let's say, a consumer sentiment that might be, let's say, a little bit hampered by the financial aftermath of the COVID crisis. And then at the same time, I think we here propose a very balanced action between, let's say, growth, sustainability of growth and healthiness of efficiency and margin. And this is what we come up exactly with that guidance because we think that's exactly in the best interest of the company. So next question comes from Alistair La Mas from Pictet Asset Management. What would stop you from joining forces with Chuy? Have they approached you in the past to acquire you? Why have you refused, if yes? We don't comment on this. That's logical. Maybe another question around Chuy from Klara Komenichuk from MainFirst. Chuy introduced a telehealth offering for their customers. Do you have similar plans for future or any initiatives to enter the pet service market? What about pharmaceuticals? Is this a market not attractive to enter for Zuplus? It is, first of all, a very fragmented market and is prone to regulations that are different country by country in Europe. So we're not talking about a market opportunity that looks kind of uniform all across Europe, but it looks different market by market from a regulatory perspective, from a market size perspective, but also from a competitive situation. So what we see as, let's say, the starting point for the pet service market is to offer a meaningful service to our customers. And first of all, we want our customers to find the best vet out there close by. And this is why we launched a vet search that is including, let's say, super valuable and competent ratings exactly by our user base for fellow pet owners that have a pet that needs medical assistance. So we see that as a very natural approach to creating value for the customer. And then we think about how to evolve that probably also into business model where we're a market maker. But customer happiness and value to the customer is first. And bear in mind, the regulatory framework exactly for the vet market is terribly complicated in Europe. And second question from Clark Homenichik is, how much do subscriptions contribute to the sales retention rate? I think we exposed that number. We do 50 percent of all of our sales in the Zuplus brand now with customers that have subscribed for the Saver plan. And that part of the business has a growth rate of 24% versus the other part of the business is doing a growth rate of 16%. So I think the answer is given. Next question comes from Brian Rodriguez from Crestwood Capital. Could you please share your thoughts on embedding an auto ship, set it and forget it feature within your loyalty program, given customers often buying the same product every month and a key driver of retention rate for Chuy? Yes, we do that. And in fact, we are taking a bit of inspiration from this one. As a first guidance, probably, you can see that a cat driven market and European customers tend to have more cats than they have dogs as exposed before. Cat owners need to feed variety to their cat and that makes the orders, let's say, less repetitive than dog orders. We have as a second feature a very, let's say, well working subscription to exactly that permanent discount, which is working very well. And auto shipment would now have to slot in exactly between the value already generated by the SAVER plan. And we are doing, let's say, not only technical preparations, but we're also doing a rollout in certain markets exactly of subscription or out ship service. So I think we will combine the best of both. We have the flexibility for some customers, but we also would have out of shipment for some customers that like to have exactly the same order over and over again. And another question around that comes from Anders Hohen from Select Management. Is there anything you can learn and implement in your business from Chuy's huge success in the U. S. With high growth rates, 47% in the last quarter? Chuy is valued at a sales value of 3.9x and you are at 0.6x sales. How do you plan to improve your valuation? Probably let me start like this. What we showed as performance in 2018 2019 was probably not the best performance in the 20 year history of Zuplus. What we show in 2020 is a return to the best form. So that thing is going to influence the multiplier. Whether you ask whether we should grow faster, we should certainly acknowledge that there is slightly different appreciation for, let's say, growth in the U. S. Capital markets versus the European and the German capital market in particular. You have simply to be fair in the like for like comparison, Chewy is growing a lot faster, but it's also more abrasive to the equity. They accrue losses that Zuplas, let's say, wouldn't be, say, allowed to take. And that please factor into it. We believe that we built a long term strategy that returns to growth rates between 14% 20%. That sets a new record for the overall growth. And I think we're already sending a strong signal that Zupluses is back. Next question comes from Moritz Grae from Maxber Capital. And how far is positive free cash flow here to stay? Yes. As I said already, we made a lot of improvement in that way. And if we have the backing from the positive earnings and we still have the backing from our suppliers, combine both if we combine both, we are more than convinced that we can show positive cash flow year by year. But I would like to also mention one thing. It is also important that we focus on availability for our customers because this is driving the business and it's quite important that we offer the right products in the right amount to our customers. So we to find the right balance between aiming for free cash flow and bringing more cash to the company and also taking care that we show enough availability for our customers. But as I said, we are in a good way. There is room for improvement, and we try to do our best. Next question comes from Jon from FTEAM Asset Management, more around cost efficiency and logistics. There isn't much improvement in logistics costs in the Q3 despite loosening of restrictions in Europe. Can you expand more on the operating leverage opportunities on logistics cost? What is your target for logistics cost per order as a percent of cost in the medium term? I think here the question is how much value we put into the parcels. And that's what we focus on. The key job of logistics is to offer the capacity, the scalability of output, the delivery service quality, the availability KPIs that we were presenting before. It's the job of sales and marketing to reduce the logistics cost. Why? Because in sales and marketing, we develop the strategies to increase the value per parcel or the value per order. And another question around that. What is the long term logistics cost per parcel goal for 2 plus? I think this is really difficult to answer because in many cases, what we are offering in logistics is dependent on the development of certain price developments. If you're talking, for example, on labor cost, how is the labor cost situation going in midterms in Europe? At the moment, we have in Poland quite some movements in the minimum wage compensations. We have there a shortage of labor, which we are using in last mile services and so on and so on. So from my understanding, the most important topic is not the absolute number of logistics cost. The most important is that we decouple our logistics cost from the overall market trend, from the overall cost trend. And this is what we have achieved already in the last years. So I cannot comment on that more than that. Yes. I think that that's more than fair also because the distribution mix, I mean, which countries are going to grow fast, that's very difficult to project long term. We really see the game as a game of putting as much value as possible into the individual shipment to offer quality service. That should sit at the top of everything. If you look at the efficiency of this company, from marketing to discount allocation efficiency, to logistics efficiency, to overhead, I think we're not in the need of being taught efficiency. It's built in the DNA of this company. Next question comes from Michael Gjerse from Union Investment. In which of the 30 countries you are winning, losing market share? That's should we go through all the 30 countries? I'm a bit at a loss here because it's, of course, in some market. Let's take some corners of Eastern Europe, if we were the first one that was offering a decent service to Slovenia, you start with 100% online share that is in your hands. And then naturally, you probably fall a bit from that. I think what we've showed before is that we capture roughly 40% market share of all of Europe, and we defend it against 3 types of competitors. And that is Amazon, that is strong offliners, that are not very strong online, but they try to, let's say, save their future, also pushing into the online category. And we have the regional outfits. So that is the information we can offer. We can't go through all the 30 markets. What we offer to you is the information that all markets grow double digit and that's where the company that has been consistently developing these markets, in some cases, up to 20 years, in some cases, just 5 years. Next questions come from Werner Partners. Can you comment about your strategy vis a vis Amazon and Fresnap? Yes. Very happy. I tried to keep it as compact as possible versus Amazon, I would say, brands, and that is the industry brands, that is the premium brands, build our business. We offer the perfect environment for these brands to exploit the benefits of the online channel, but we also have the best quality customers. Versus Amazon, we also have the massive advantage of being a specialist. It matters to many of the pet owners where they purchase, whether they purchase, whether buy everything else, whether they purchase at a specialist for their beloved pet. When we look to Fresnaf, the clear distinction is, again, a broader spectrum of brands, in particular at the premium end. And here also the channel competence that we have, we know a lot more not only about how to run websites and, I'd say, award winning e commerce practice, but we also know how to operate the logistics needed if the customer doesn't drag the bags home, but we bring it to the doorstep of the customer. So I think that serves already as an indicator of how we plan to compete and already compete for the last 20 years with these two challenges. And second question from Werner Partners is, what is your industry scenario regarding smaller European online players? Is there a minimum revenue level of sustainability? Well, that depends on how much pain you're willing to accept as a smaller outfit. It's very tough. It's a very competitive environment if you have offliners having their off line presence plus an online, let's say, adjacent channel. You have Amazon. You have Zuplus. There is precious little space left for a third or a fourth player in the market. And another question from Nicolas Mauder from Kepler Cheuvreux. Can you confirm the midterm outlook for EBITDA margin presented at the 2019 CMD? I think this is a question we already covered. So if there are any more questions, please type them into the chat window. There's remaining 10 minutes. But then we also really are appreciative of your attention. That already spans now into the 3rd hour. So let's see if there is anything more popping up. If not, I think we also I should say, we spoke a lot about 2 plus We shared a lot of information. I think we shared overall very good news for the year of 2020 but also for the years to come. And that was the main purpose of today's presentation towards you. So we have another question from Brian Rodriguez from Crestwood Capital. What does the 2021 guidance assume about the macroeconomic and COVID dynamics? That's a good one, but we don't have a crystal ball on this one. So what we can tell you, and that's probably very helpful, is that we know from the 2,008 crisis, which also was, let's say, a quite significant recession in Europe, we see that our category is not specifically cyclical. So you see a consistent growth trend, and you see consumer spend practically uninhibited or mostly uninhibited, one should say, by the economic situation of the customers. Having that said, we also know that the crisis of 2021 is going to be bigger than what we've seen in 2,008. So we warn all people to be a little bit careful about what to expect of 2021 because it's going to be a massive act of cleaning up the economic damage of COVID. We don't know any better than anybody else out there. In fact, we hope that other people know better, the policymakers in particular. So Alejandro Velez from Crowe's Brothers is asking any comments about profitability by country? And what are the shared characteristics of these markets where you're already profitable on a sustainable basis? I think here, we take a different stance. We see the markets as something that is responsible for delivering top line performance. All corners of Europe need to contribute. But when it comes to profitability, the profitability per product segment and per supplier is much more important. So we're not that much fans anymore of profitability by country. We look at growth by country. When we look into the profitability, we look into the profitability exactly by product sectors and by brands. That makes much more sense to us. So I think now we officially cut it because I shouldn't repeat the good bye words thrice. So as mentioned before, we're really massively grateful for the attention, the interest, the specific questions we get around surplus. I think we made the most out of the 3 hours and your, as I say, a committed audience for these 3 hours. We hope to see you as soon as possible, but nobody knows when life again because it's great to do a Capital Markets Day like this, but it's even better to have you around in person. So on that note, we say goodbye and speak, I think, for the 3 of us. Yes. Thank you. Thank you. Goodbye.

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