Welcome to TOKMANI's Second Quarter Result Presentation.
My name
is Micah Routier, and I'm the CEO of Tochmane Group. And today with me, I have Tochmane's CFO, Mr. Marco Perestanen. First, I will go through the Q2 highlights, and Marco will then dig deeper with the numbers. After that, I'll come back and to the outlook for the second half of this year.
Then we'll have time for your questions. Well, it's it's, of course, my great pleasure to share the results of the Q2 of TOKMARE with you. It's been a very strong quarter for TOKMANI. It's a very difficult environment. And that's, of course, many thanks to our customers and personnel.
We think that one of the key drivers for the great performance was basically the customer confidence that we've been building up for the last couple of years. It has been on a very, very high level. And of course, in this situation, we basically had our, let's say, most difficult times at the end of March. And then we decided that we won't start any we won't do any layoffs of personnel, and we just decided that we'll go through these difficult times together. And basically, our money.
Employees, they've been doing fantastic job during these exceptional times. And luckily enough, we were only we were we had basically 3 registered corona cases within the company of more than 4,000 people working for TOKMAIN. And due to this fantastic job, we basically we've decided to give a special reward for our personnel from the 2nd quarter performance. The spring season was basically excellent for TOKMANI and the very strong revenue growth that also led to result to a very strong result. Of course, we had, well, almost 20% revenue growth.
At the same time, with the supply chain, especially in our warehouse, we're forced to basically make sure that employees in our warehouse, they are in a very safe situation. We basically had to divide the whole team into very, very small groups. And this led to, let's say, 10% less efficient work flow in with our supply chain. This combined with plus 20% higher sales, I think that on the best weeks, we had plus 40% to plus 50% growth. So this combination was, of course, very difficult.
And the shelf availability in our stores, that was on a couple of weeks, it was on a very difficult level or let's say, bad level and not according to our targets. But of course, we're working at the moment very hard to get the situation back on track. In Finland, and I'm sure, and all other countries as well, there is a lot of question or discussion regarding the changes with the retail business from the stores to online. These are the figures which actually don't include the customer visits from our online business. And the like for like customer visits for the first half of twenty twenty, was plus 2.2%.
We consider this as a very, very good achievement. As mentioned, the end of Q1 of this year was very difficult. It was a dramatic drop with the customer visits in our stores. And of course, in the beginning of April, it was still well, it was a there was no growth at all. So considering all of this, we think that this is a very good achievement.
We were able to invite a lot of new customers in the TOKMONE stores. And of course, in the end of March and the beginning of April, we also decided to stick to a discounter model as strong as we can to make sure that we will succeed in these difficult times. Of course, the average basket was basically on an excellent growth. We especially the all the product groups that were related to basically our customers' home and whether it's like home decoration, home improvements, all of these product groups, they were doing excellent as well as food products, they were doing very, very well. At the same time, with the clothing and cosmetics, these product groups, the sales development was lower.
Actually, with clothing, it was a little bit lower than in the previous year. That's only natural when people were basically staying at home and also like working online. So there was no real need for new clothing products. But I would say that I personally consider this as a great achievement that we were reaching almost the same level as in the previous year. And then about the figures, both revenue and result impairment revenue figures were already informed before.
Also mentioned that we expect that the gross margin will be slightly lower than last year, ending actually with 0.7% lower level compared to last year. And comparable EBIT during this the second quarter was EUR 30,600,000 from our point of view on a very good level, 10.7%. Cash flow from the operating activities amounted on to €70,000,000 almost €79,000,000 A big change with this was, of course, with better results and better control with the working capital. Earnings per share during the Q2 were €0.38 About the online sales, of course, it grew strongly from the end of March. I think that the basically new customers or customer visits, it was like 3x higher than previous year.
The online sales, it's still on a very low level, 1.4% of total revenue. But of course, a very positive thing is that the business was the online business was profitable. We were successful with the expansion of product range, especially for the online business. And then, of course, the customer experience side functionality and how to find products, These improved significantly, and that was, of course, a very positive thing. We actually the visitors on our website, that was a very, very strong growth.
And the combination with our online business and with our nationwide store network with 190 stores, that works very well together. Basically, in Finland, the Tochmane is located approximately 5 minutes for every fan. So it's actually quite easy to check the products out on the our website. And then just 5 minutes away, you can pick up the product. This seemed to work very well for TOKMANI.
Well, regarding the first half of twenty twenty, revenue growth was 13.3% and like for like growth was 11.8%, very good figures. We were basically at the same level with the gross margin being 33.5 compared to last year's 33.4. The EBIT amounted to €30,900,000 compared to last year, EUR 16,500,000. So the growth was very good. And as already mentioned, the cash flow was significantly higher than the previous year, amounted to €55,300,000 and earnings per share €0.34 Based on these figures, TOKMANI Board of Directors have made a decision of an additional dividend for year 2019, and it will be €0.37 per share.
And this will basically be in addition to the €0.25 which was paid on the 12th June this year. And altogether, this is €0.62 as the plan was originally. So basically, we feel that the situation for TOKMANI is getting more normal. Actually, it's even better than normal. So we are able to stick to the original plans when it comes to the TOKMANI dividend from year 2019.
And as a last part of the highlights of the Q2, It's the TOKmoney and non grocery market development. And here you can see top money figures with the red line. And then it's the Finnish Grocery Trade Association's information regarding the department store and hypermarket chains. And as you can see, the non grocery market was developing positively during the Q2, but TOKMANI really gained some market share when it comes to the non grocery market. This is, of course, very good from our perspective.
So that's the highlights of the second quarter. And then, Marco, please can you open up a little bit financial details? Please go ahead.
Thank you. So let's go a bit deeper on our finance sales, and then I will start about revenue and then looking at this Q2 numbers and taking a little bit longer time frame by taking also the figures from Q2 2018. And as we see, we have had a good development during the last 3 Q2s. And with 19.2%, which we achieved now 2020, it's we can say it's exceptional. And of course, when we are looking at last year, we achieved over 10% increase.
So these 2 together are big numbers. What's good here is our operating profit no, sorry, EBIT figure. And then when we are looking 2018 Q2, we were at the level of €13,000,000 and now coming up to €30,600,000 which is very good development. Comparable gross profit, we had a good revenue. And due to this nice good revenue, we achieved also higher gross profit when we are looking that on euros.
And that's, of course, the most important thing that you will get more euros there. But when we are looking on percentage wise, we had now 34.5% compared last year, 35 0.2%. So we lost 0.7% in gross margin percentage. And this is due to the 2 different reasons. Mika already mentioned that in the beginning of April, we started to push our prices so that the customer has good prices.
And of course, it was a little bit unstable or not a little bit, it was an unstable situation, and we didn't know how the demand will develop. And we wanted to ensure the good revenue by pushing with the prices. And that, of course, affected to our gross margin percentages. And other thing which affected to the margin was also the sales structure. People bought different kind of products what they have usually bought during the Q2.
We estimated that when we published 2nd of July pre information about our revenue and margin, that it will be the difference to the last year of Q2 will be 1%, and we ended up to 0.7%, which is, of course, good because it's slower figure, lower difference. And there were 2 different reasons behind that. Our shrinkage, when we look at that on proportional way, was on better position compared last year. And also, we were managing better our inventory, which meant that we didn't have so much nonmarketable products at the end of Q2. All in all, looking at the situation, after 6 months, our gross margin percentage is about the same level compared last year.
We have said that we are targeting to increase private label shares share. And now looking the numbers after 6 months, we are about the same level compared to last year. But especially during Q2, due to the reason that the sales mix was different, we were on lower level, so ending up 31.4% compared last year's 32.2%. And as I said, it's coming from our sales structure. This private label is going on hand to hand with our direct import somewhat hand to hand.
During Q2, the private label share was a bit lower. But when we are looking our direct import share, we managed to increase it a bit. We ended up to 25.1% compared last year 24.4%. So there are 0.7 percentage unit increase. But of course, when we are looking at the cumulative figures, we see that the increase was slowlier during Q2 compared to Q1 2020.
Revenue margin and after that, looking at operating expenses. And I have to say that operating expenses were well in control. In euro wise, somewhat increased. But when we are looking at relative figures, we achieved during Q2, 18.5 percent operating expenses against the revenue compared last year's 21.5%. So there are 3% difference, and that's, how would I say, big amount.
And of course, it when we are going forward, most probably very difficult to achieve these kind of steps. But we're looking due to very good performance when we are looking operating expenses. And the biggest part here in operating expenses are personal expenses. And we see that we had a €31,800,000 personal expenses out of that with total expenses, which were €52,900,000 And also, when we are looking at internal expenses, 11.1% against 12.9%, so good development on that side, too. But there were different kind of items which affected to our personal expenses.
There were pluses and minuses. It was clear that when we made some arrangements to prevent the spread of coronavirus epidemic. We have to make the different kind of shifts, separate the shifts in stores and our logistics center. That's clear, but they effect to our efficiency there, which increase the expenses. The other one which effect here is the additional bonuses to employees, €600,000 which we are paying.
And have to say that these people really deserve these bonuses when they have been serving the customers and taking somewhat risks with the coronavirus. Other direction on cost side was this employee pension payment reduction, which was decided by the Finnish government, and it's temporary. And it affected to the Q2 by
€900,000
Comparable EBIT. We already discussed about the numbers. But looking at percentages, we see that when we are looking at the 6 months development last year, 3.9 percent. And now we achieved 6.4%. And I have to say that's good development.
Balance sheet, financing and cash flow. Especially when this coronavirus epidemic started, we put strong emphasis on cash flow and then finance situation. And one part that was, of course, this postponement, difficult word, postponing the payment of dividend. But also, we are looking the investments and this kind of issue by really concentrating how our cash flow will develop during Q2. But now afterwards, we can see that we were managing well with our inventory.
And due to the good inventory management and good result, the cash flow was very strong during the first half of the year. And when we are looking our cash position at the end of June, we see that now we have SEK 49,800,000 and comparing that last year's figure, SEK 5,800,000. So the cash position is really, as said, stable. Interesting interest bearing debt, it's €420,000,000 And mostly, these liabilities are coming from our lease liabilities. But at the same time saying that as a whole €110,000,000 are so called real debt out of that EUR 420,000,000.
Ratio of net debt to comparable EBITDA was 2.5 and at the same time saying that our long term target is 3.2%. And so we are now under this 3.2% clearly. And about the investments. As I already have mentioned that when we were at the beginning of April and then coronavirus started, we decided to postpone some investments to our store network and secure our cash flow. And therefore, we can see that our investments during Q2 'twenty is only €3,100,000 and last year, it was €5,600,000 So we are clearly on a lower level.
But now when the situation has somewhat came in Finland back to not normal, but at least near normal. We are starting to make the investments to our store network again, and we are expecting them to be at the level of €15,000,000 which was also originally planned earlier. So that's about the numbers somewhat. And now Mikka will continue again by looking at H2 2020. Thank you.
Thank you, Marco. Well, as described, the combination of very strong customer confidence in TOKMONEY, excellent springsummer season. And Toquemani's very active commercial plan during the Q2. This was very successful. And obviously, we will have a very strong focus on discount retailing during the second half of the year as well.
However, I have to also say that during the Q3, it's not really any specific season for Top of My Name. Of course, the most important season is Christmas season, which is basically the Q4. But we feel that the situation in Finland will start getting a little bit closer to the normal commercial situation. But of course, our key actions, we will continue all the investments regarding the security and well-being of our customers, personnel and partners. For top money, of course, as you can see from the big picture, the warehouse supply chain is very critical, and we're really investing to, 1st of all, getting the shelf availability on track, plus, of course, for maybe if there will be a second wave of COVID-nineteen also in Finland, we basically made all the preparation for it.
During the spring season, basically during the first or in the end of Q1 of this year, we had from 2 to 4 week delay with our imports from Far East for our spring season. Now this time, we've been making the action points to secure the supply chain and product flow from Far East. And we will have basically the Christmas season products in Finland. Part of them is already over here, but latest in the beginning of September. So basically, during October sorry, basically during August, they will be here in Finland.
So we will kind of secure the sales of Christmas season. And as mentioned already several times, we will be improving the efficiency of the supply chain and the shelf availability. And the strong commercial plan for the rest of the year, we will continue with that. We basically made the plan end March, beginning April. And of course, it has basically showed it works well.
So we'll continue with this one. And based on all this information, we our outlook, we will forecast strong growth in revenue and like for like revenue in 2020. And the group profitability is expected to improve the previous year. Of course, this outlook is basically it's based on the assumption that there will be no significant disturbances or situations with the environment of the TOKMANI business. So basically, that's it.
And operator, I think it's now a good time for questions. Marco, could you please come over here as well to answer the questions? Please go
ahead. Thank Our first question is from Niklas Gugman from Handelsbanken. Please go ahead.
Yes. Hello there. I'm, of course, keen to hear what you can say about current trading. In the report, you said that currently, shopping behavior has returned to almost normal. Are you then talking about the way people shop by more normal average baskets and more normal traffic store traffic?
And maybe that sales remain elevated because of more domestic holidaying and so on? Or do you actually mean that sales growth is trending down toward normal like for like levels now already in July?
Well, yes. Well, I think we cannot speak about the normal situation really with the current situation. But let's put it this way. 1st of all, in the end of March, it was a dramatic drop with the customer visits. Then during the in June, basically, as Nicolas, you very well know this midsummer timing.
So during that timing in the middle of June, the customers visits were there were very strong growth with that. And so first down and then up very quite a lot. And then I think that now the level is getting more normal from our perspective. But of course, it's very early to really say anything about this, but let's say that there are no dramatic changes. As mentioned that we were in June, like the revenue growth was there were weeks with plus 40%, four-zero percent to plus five-zero percent.
So that's, of course, little bit higher. I think that we also we were basically we succeeded with the seasonal products. We were able to or basically our buying and sourcing, we're doing a very, very good job with having a very good assortment of products. And now when the school started getting closer, well, it's too early to say anything about the average basket. But it's like it's on a positive normal level.
It's very round answer, but I'm sure you understand why.
But as an additional, what Mikael said, it's clear that this Q2 was exceptional. And as said, we are coming back to a normal direction.
Okay. It still sounds like July is pretty strong, though. Okay. On your guidance, I don't think you have ever defined what you mean by strong sales growth. But should we assume that you're talking 5% to 10%?
Well, if it's, let's say, 5%, I would call it already with retail, I would call it already a strong growth.
Okay. Thank you. And then finally, for now at least, I'm looking at your the other operating expenses, OpEx, excluding staff costs. They only increased by less than 2% in the quarter. Did you hold back on marketing?
Or is there anything else that sort of on a low level in Q2?
There are clearly certain items in which we got the savings because people were working remotely. It, of course, meant that there were no traveling, which made some saves. They were not driving. They were cars, which made some savings. And then this kind of stuff, we achieved there.
Of course, they are not huge, but of course, they are also effect there. But marketing was roughly on the normal level.
Yes. Actually, we even made some investments with the marketing because we yes, again, in the beginning of the quarter, Q2, we decided that as a discounter, we try to push it hard. If there is like a drop with all the retail, we will be there like still getting some market share. And we did make some investments additional investments with the marketing. So no savings from there, but let's say not huge additional costs either.
Okay. Good. That's it for now. Thank you very much.
Thank you. Thanks,
And there seem to be no further audio questions at the time. I will hand the word back to the speakers.
Okay. Thank you all, and thank you very much. The next third quarter presentation will be published on the 29th October. See you later then. Thank you.
Thank you.