Hi, everyone, welcome to Musti's third quarter report. With you today, you have David Rönnberg here in Stockholm, and you have Toni Rannikko in Helsinki. We can start going into some of the summary that we have from the quarter. Excellent Q3 on track with the long-term targets. We came in at the net sales that increased with 16%, and in this kind of environment, we are extremely happy with that. Our adjusted EBITDA growth was even stronger, came in at 21%. We also look at it from a two-year growth perspective. We saw that the two-year growth was accelerating to 39%, which is super strong. We are also very happy with the cash flow that came in at EUR 40 million.
Something that we've been working with a lot is the gross margin, and that continued to increase to 46.4% versus last year, 45.4%. It has to do with our own and exclusive share of sales and of course the campaign pressure. We are selling more and more goods with full price. In this environment that of course really good. We added nine new stores during the period, and the loyalty club was growing with 12%. Overall, good numbers in the most important KPIs that we're looking at. Let's move in and look more into the details in the report. As I said, it was a strong and as we see it, maybe an excellent Q3.
Net sales 16% growth EUR 95.5 million, and driven mostly from new customers as before. We are continuing taking market share in all three countries. In Q3, like-for-like sales growth was 8.3% and 7.4% for the period October to June. As I said earlier, the adjusted EBITDA increased by 20.8% to EUR 15.6 million, and the adjusted EBITDA margin was 16.3% versus last year 15.6%. In October to June, adjusted EBITDA was EUR 49.3 million versus last year EUR 41.7 million, so up by 18.4%. Loyal customers was growing with 12%.
We have now 1.4 million, and if we include all the customers that we have data on, we are at the level now that is 1.7 million customers, which is actually a new record. In the Q3 period, the group's adjusted EBITDA increased by 14% as well to EUR 8.3. The margin, the adjusted EBITDA margin was 8.7% versus last year 8.8%, so more or less in the same line. We focus a bit more on the EBITDA because of the J-curve that we have with all the new stores that we opened the last 12 months. Cash flow came in at EUR 14 versus last year at EUR 10.1, and Toni will go through the details more later.
After the period, as we also have communicated, the current trading has continued to be strong. Let's look more into the growth of the company. Yeah, we look at it in different ways, but the top line growth 15.5% during Q3, and during the period October to June, 16%. For Q3, Finland had 13.3% growth, strong growth in stores and a bit lower online, meeting still a bit high comps from an online perspective. Sweden had 11.7% growth, strong growth in stores and online, and Norway had 37.6% growth, so very strong growth both in stores and online.
Online share of sales was 22.6% versus last year at 24.1%, so a bit lower number, and the reason is that we're growing so fast in the store. CAGR sales growth June to October 2019 to same period 2022 has been steady at 17%, so good trends. Net sales rolling 12 months was EUR 381 million, which was then the growth of 17%. Per segment, as communicated before, Sweden and Norway are taking a bigger share, that is planned. Finland had 43% versus Sweden and Norway 57%. Last year, same period, Sweden and Norway had together 53%. Sweden and Norway are growing faster than Finland.
If we look at sales from a longer perspective, we can see that it has been extremely strong. You see here the kind of a one year growth. You see that we have sixteen percent growth in Q3. But we look at it on a two-year basis as well because the COVID period came there, as you can see, during Q2, Q3, Q4, Q1, fiscal year 2021 and 2022, where the growth on a two-year basis was very strong. But I think we're now back, as you can see, coming in at 39% on a very high level. We see that this is maybe the new normal, pacing this strong growth.
In this environment that we are in at the moment, we are extremely happy about this. On a two-year basis, we believe that we're gonna be at somewhere in these levels, which is good for us. Let's look at our strong gross margin development. Something that we're focusing a lot on is, of course, our gross margin. That's supported by how we work with our own exclusive products. It's supported by how we are campaigning and doing offers with the products. It's also supported by how many stores that is directly operated. You know that we have been acquiring franchise stores and opened new corporate-owned stores, and that is also supporting the margin.
Here again, coming in higher than last year, 46.4% versus last year, 45.4%. We can see also that the O&E, owned and exclusive share of sales, is increasing as well. Of course, impacting the profitability, and also supporting the strengths of the concept. That is, of course, key for us and maybe one of the most important thing with our business model. If we move on and look at our EBITDA development, we can see that we had a bounce back since last quarter that, when the consumer confidence was a bit lower, especially in February in Finland, and now we are back on the more normalized levels. We came in at EUR 15.6 million.
If you look over a longer period of time, you can see the nine months adjusted EBITDA. We had 22% growth since 2019. If you look at the last year compared, it's 18%, coming in at EUR 49.3 million. Stable trends, even here, even though you can see that there are some seasonalities between the quarters where Q4 and Q1 are the strongest. We look more as two periods, so we combine Q3, Q4, Q1, and Q2 because of the seasonality effect. Now I will hand over to Toni that will go through the EBITDA and the segments.
Thank you, David. Let's look at the EBITDA, which increased 14% to EUR 8.3 million in quarter three. Like David mentioned, they're improving gross margin, improving EBITDA. As we've been adding the new stores all along, the IFRS 16 impact in the depreciation is then taking some of it in the EBITDA level. Therefore, we internally look at more EBITDAs as well. Kind of the drivers here, the gross margin, but also the tighter cost control. We've been talking about that for previous quarters and in the quarter we were quite happy with the results there. Also the kind of outprice part is helping us in the equation.
There were no adjustments in the EBITDA and partially also in the group cost. Our central warehouse, Eskilstuna, is improving week after week and month after month and progress there is very positive. We have runway still both on the kind of a group cost and our end-to-end process improvements where we are now eagerly waiting also that our new COO, Ms. Pamela Nelimarkka, will join the company next month, and there will be even more focus on this part where there is a good upsides for Musti. Really good improvement on EBIT. Almost 30% better than last year.
Kind of looking then in the longer term, group EBITDA improved in the year-to-date 11.7%, and EBIT almost 13%. Then going into the segments, it was actually kind of a second-best quarter ever looking at all the quarters for the segments. Usually the seasonality with Musti is that quarter two and quarter three are a bit milder than quarter four and quarter one. This was excellent quarter, like David said there earlier. Finland growing over 13%, our most mature market. That's a really good result, especially if remembering the quarter two and maybe some uncertainty with the consumers.
We have proven that kind of our customers, our brands, and our model is very resilient in all types of cycles of economy. This growth was kind of supported with the new stores opened and acquired. Almost a year ago, we acquired all the rest of the Finnish franchisees, 16 stores at the time. That is visible. They are kind of looking at the like-for-like difference and the growth. We calculate into the like-for-like the or remove the new stores added in the last 12 months. Kind of building the omnichannel multi-brand offering in all the markets. There is some effect on that. Adjusted EBITDA decreased a bit from last year.
The main reason here for Finland is that we had more personnel, more hours in the stores to kind of answer to the more consumers coming into the stores after the COVID periods, so the stores grew faster in the quarter than online. Maybe during the COVID period there was a quite thin resourcing on the stores and now we have added it. We're looking at the right balance here in the Finland market and as well in the other markets. Adjusted EBITDA margin for Finland was 18.2%. During the quarter in Finland we didn't add any new stores into the network. In Sweden growth almost 12% to over EUR 40 million in the quarter.
Also second-best quarter ever in Sweden and clearly the best quarter three ever. Like-for-like 10% and little bit headwind from the currencies in SEK so take that into consideration as well. Really impressive profit improvement in Sweden market. Kind of operating leverage, growing sales, network condition there made that to be true. Adjusted EBITDA margin, big leap from 12.5% to 15.5%. In Sweden we added one greenfield store and acquired five franchise stores during the period and closed one store in Sweden. Norway, again our fastest-growing market on its own numbers. Top line growing almost 40% and like-for-like being there almost 16%.
This is the speed that we have in Norway all the time. That's the market where we add most of the stores. We've been using the phrase that one per month, but Erik and the team have been very busy there. Five new greenfield stores open in Norway. Big kudos for Erik and Geir and the team there doing all this in such a fast pace. Great profit improvement as well. Little bit tailwind from the NOK and making a good profit for the period in Norway. One slide about the financial position. The cash flow David mentioned there. The EUR 14 million, 40% improvement from last year. We, like many other retail operators, have had a bit higher inventories.
We have done this on purpose to have the good availability on the stores. There is still a bit of a turmoil on the global supply chain, how fast we get the goods, so there's a bit of a buffer there. We decrease the inventories a bit, but still keep them on a sort of a bit higher level than in the normal world. That brought a good positive impact to the cash flow. Gearing was around 90% in the period and the net debt of EUR 140 million. If you split the net debt, sort of, the real interest-bearing debt, it was EUR 60 million.
The lease liabilities, meaning basically our store network, which is all rented premises is amounting to a bit over EUR 80 million out of that number. From the total number calculating the last 12 months adjusted EBITDA to net debt was 2.1, which is well below our target of 2.5. Cash equivalents around EUR 2 million at the end of the quarter and investments in the quarter EUR 3 million plus on top of that the acquisitions of franchise stores in Sweden cumulated to EUR 5.5 million. Final slide before handing over back to David is a reminder of our long-term financial targets, which we keep steady. Net sales reaching at least EUR 500 million by the end of our financial year 2024.
EBITDA margin at least 13% and keeping the multiple below 2.5 on EBITDA to net debt. Dividend policy 60%-80% of net profit, and we pay the dividend twice in two sets during the fiscal year. The second payment for this year is happening eighteenth of this month. From a CFO perspective, very solid quarter three. Big thanks for the team and back to you, David.
Thank you, Toni. Yes, to summarize the quarter, as we said, you know, we have an excellent quarter, with strong net sales growth close to 16%, 15.5%. We were actually growing profitability EBITDA even more, so close to 21%, 20.8%. On a two-year basis we were growing 39%, which is extremely strong. The pet sector has, you know, been proven once again the resilience and it will continue going forward. We are in a fantastic position with our gross margin that was increasing again to 46.4 versus last year, 45.4. With the kind of inflation is of course impacting us as everyone else, but we are in a good position to handle it. We have had a very strong expansion with, opening 55 stores, the last 12 months.
Those stores, we need to have in mind that they have burdened us a bit short term, but they will support us and the profitability going forward. It's also very important to reach our long-term targets. We've seen an opportunity to speed up the last 12 months, taking more position in the market, which we've done. We are also well on track with our long-term financial targets, and we are in a very strong position as we communicated earlier, and see very positive about the future. I think with that, we are handing over to Q&A.
Thank you. If you wish to ask a question, please dial one on your telephone keypads now to enter the queue. Once your name has been announced, you can ask your question. If it's answered before it's your turn to speak, you can dial zero two to cancel. Our first question, line of Santi Krail of Nordea. Please go ahead. Your line is open.
Thank you. Thank you, David and Toni, for the presentation. A couple of questions. First one relating to the sales development during the quarter. After the Q2 report, you disclosed then that the April level was returning to normal. Would you like to comment a bit about April, May, June, and perhaps something about July also? There have been some mixed signals from Nordic retailers regarding the July development. Thank you.
Yeah. I think we communicated April last time because we had this kind of an offset or one-time impact that we saw there in February. We can say that it has been very stable since April, May, June, and also going forward. I think we're seeing a new normal kind of growth from Musti, which is very stable since the impact we saw there in February.
Okay. Thank you. Have you seen any change in customer behavior when it comes to discretionary products?
No. Even there, even in that area, it has been very, very stable. We could say that maybe we were as long as maybe other COVID winners in the period where people were spending a lot more time with their pets. We saw that especially on a two-year growth staples coming up to 44%-44%. That maybe was a bit too good to be true. We have been able to come down to a more normalized level, I would say now, where it's which is close to 40% on a two-year basis. It's both food and accessories that is going well.
Okay. Thank you. Regarding ASP, just a slight decline in the quarter with Finland and Sweden being down, Norway up. Do you have any comments on this?
No. We can see that the consumer confidence is impacting us a bit. We're supporting that, the deviation with adding a lot of more new customers still coming in, and they are coming in at a lower average spend, which means that the total average spend is coming down a bit. But that is the impact. We're seeing that the loyal customers are spending a bit less, but we still are able to add a lot of new customers, and that equation takes the total average spend up.
Okay. A question about the central warehouse in Eskilstuna. Is that now approaching the efficiency that you are targeting or do we still have to wait a bit for that?
We can see that we are in a situation now when it's going better than last year, and it's stable. We have it, you know, under control and, etc. Because of the kind of a supply chain turbulence and inflation and also the reasons why we've been adding a lot more inventory levels, we have not been able to get the full potential out of the supply chain. We still believe that we can deliver it, but it has been taking a bit longer time.
Okay. Thank you. The last one about the competitive environment. I think you said in conjunction with the last conf call that Kesko and S Group have improved their operations in this segment. Any change there and what do you see in the online space?
Nothing new both in online or Kesko, S Group, I would say. I think it's more visible how we're seeing it than it's actually impacting our numbers. Nothing specific new.
Okay, thank you. That's all from me.
Thank you. Currently we have one-third person in the queue. Just as a reminder to participants, if you do wish to ask a question, please dial zero one now. That next person is, Maria Ekström of SEB. Please go ahead, your line is open.
Yes, thank you. Thank you very much. I mean, obviously very good quarter. I still want to touch upon a little bit that, because I think what is the theme on the consumption market, at the moment which is consumers, if they start trading down to a cheaper product. Is this something that you see currently at all, like within your network? Do you expect it to see consumers trading down now when they return from holidays?
Yeah, exactly. When they return back from holidays. I think there are people, you know. Dogs need to eat, even though they are on holiday. With that said, we don't expect that, and we haven't seen it. We don't believe that, specifically our customers that are more pet parents than kind of pet owners. They tend to take care of their pets as family members and kids, so they would probably not shift up.
Okay, thanks. And then I would be interested to hear, I mean, comments that what you hear from your breeder network. I think the latest July number in Sweden was indicating, was it down 7%, but we are still 20% on the puppy registration, 20% on 2019 level. Just a little bit that I mean, as you have these like deferred breeders, since you talk a lot that what are they saying about people's willingness to take new family members?
It's still good. It's not as strong as it was six, 12 months ago, but it's still, you know, on a very high level. There are still queues and waiting lists for specific breeds. Yeah, good signals from there.
Okay. Finally maybe, I mean, you have a little bit higher inventory levels. I mean, I would guess that, I mean, your availability is pretty good. Have you seen, I mean, any bottlenecks, what comes to like, any pet food, or any other, like products that you are selling?
Maybe Toni, you can take that.
Yeah, thank you there. I wouldn't maybe call them bottlenecks, but maybe some slowness in deliveries. We have seen that occasionally in some categories, momentarily in cat litter, momentarily in some food items. But in general, the situation is getting better and better all the time. We haven't had an empty shelf syndrome through that.
Okay. Maybe the final question on my side would be about, I mean, the cost of the inventory, because I think that's been the theme in the consumer segment over the Q2 that a lot of the players have been complaining that as you have higher inventories and then you outsource quite a bit of the inventory, which then generates higher costs, I mean, to maintain that inventory. But at least it's not visible at all in your numbers with the gross margin up. This obviously doesn't seem to be any problem for you guys.
That's not an issue for us, no.
Okay, thank you. No further questions on my behalf.
Thank you. As we have no further questions in the line at this time, I'll hand the floor back to our speakers.
No more questions. Do we have anything in the chat?
No.
No? Okay. Once again, thanks for listening in and good questions. Thank you very much and we keep in contact. Thank you. Bye-bye.