Good morning, welcome to Tokmanni First Quarter Presentation. My name is Mika Rautiainen, and together with me today to do the presentation is Tokmanni CFO, Mr. Markku Pirskanen. Let's jump right away into the figures. From our point of view, in Tokmanni, we had good performance during the first quarter. Revenue grew by 5.8%, and I'm especially happy about the like-for-like revenue growth, which was 4.4% compared to last year's 4.1%. I think that this was a good achievement. We were able to improve our gross margin, which was 32.1%, compared with last year's 31.2%. Our target for the first quarter was to have a first-time positive result for the first quarter performance. We're especially happy about the fact that we succeeded, and we got the positive result. Comparable EBIT was EUR 300,000 compared with last year's EUR 2.2 million loss.
If we compare Tokmanni's performance with the non-food market in Finland, based on the stats from Finnish Grocery Trade Association, we performed well as well. At the same time, we all have to take to consideration that these stats, they don't include the online retail sales of, for example, from abroad. But anyway, good performance. Some of the highlights for the first quarter, as already mentioned, like-for-like revenue developed very well. For Tokmanni, this lack of normal winter season in the southern part of Finland was actually more critical than coronavirus during the first quarter when it comes to revenue performance. Now, the southern part of Finland, we're talking about 70% of Tokmanni customers, and lacking the normal winter season, of course, it did have an effect on the business. I think that we managed this quite well.
However, some of the winter products were left for the coming season after the end of the winter season. As already mentioned, it was like a combination of good sales performance, improved gross margin, and efficient operations that we managed to end up with a positive comparable EBIT for the first time in Tokmanni's history. Due to coronavirus, we canceled our guidance for 2020 on 26th of March, and started the changes with the action plan already in the first part of the first half of March. Some facts about the, well, impact on coronavirus on Tokmanni business during the first quarter. We have this Tokmanni Europris Shanghai trading office, and of course, we heard already during the Chinese New Year about the virus itself.
We started basically daily contacts with our Shanghai office to get more information about, of course, about the delays with the supply chain and deliveries. At its worst, it was like three to four-week delays with deliveries. For the moment, this part of the supply chain is quite okay. Actually, goods coming from China are now even faster over here in Finland than expected. In the beginning of February, we faced basically three to four weeks delays. Of course, the grocery sales increased a lot when the start of the panic buys started about, well, toilet papers, cleaning products, and things like this. When the government set the restrictions, then we faced a clear drop with customer visits. From our point of view, the change was quite dramatic because we've basically been able to increase the customer visits during the last two years.
Suddenly, a drop with the customer visits was, from our point of view, quite dramatic. However, the customer behavior, of course, changed, and the basket size increased strongly. Of course, online sales started a strong growth also in the end of March. From Tokmanni point of view, online sales, it's been only 0.6% of the total sales during 2019. We're talking about quite limited part of business, but still, the strong growth with our online business started at the end of March. Of course, the biggest or the strongest sales were coming from the sports and leisure product groups and yard and garden. The spring season almost started in Finland, the yard and garden products had very strong sales already by the end of March. And of course, cleaning and tidying and home decoration.
We started the investments in the development on our digital services and online business already in the beginning of February. Since the customers with our online business, well, they're basically more than five times more customers than before. Obviously, we're able to also get a lot of customer feedback, and we're able to develop our online services based on the customer feedback. With our online sales, based on the customer feedback, the target is also to expand the product range, even multiply that. It's currently approximately 20,000 SKUs. The action points, expanding the product range, are already happening at the moment. Most of the action points regarding the crisis or the coronavirus epidemic and the crisis itself, actually, from Tokmanni's point of view, they happened already during the second half of March.
A lot of action points were done regarding the safety in stores for our personnel, in stores, in our warehouse, in our office, and of course, also the safety regarding customer visits. A lot of these action points took place already in March. Of course, these have a clear effect on additional costs as well. There will be additional costs regarding the safety for our personnel in stores and in our warehouse also during the second quarter, probably during the third quarter as well. Anyway, I'm very happy that we were able to very, very quickly do these action points, and that's why things are already getting better. We see already things getting a little bit better during the second quarter. Of course, that has something to do with development in the Finnish society as well.
At this point of time, I would like to say many thanks to Tokmanni employees over here in Finland, as well as in Shanghai, regarding the commitment and excellent work during these exceptional times. Let's dig a little bit deeper to the financial figures. Markku, please go ahead.
Okay. Thank you. As Mika said, a little bit deeper concerning the financial figures. Let's start it about this quarterly based graph. This graph is, as I said also earlier, tells us that Tokmanni business is clearly seasonal. Normally, the first quarter is the lowest one, and then the normal situation, second and third quarter is roughly on the same level, and then the fourth quarter is clearly the biggest for Tokmanni. Here you can see the red bars, which is the Q1 figures, and I have to say that we are satisfied for this like-for-like revenue growth we achieved now during the Q1 2020 with 4.4%. Last year it was 4.1%. If we look this 2018 Q1 figure, at that time, we achieved roughly 6% like-for-like growth. That means that we have had now three consecutive quarters, which we have had a nice like-for-like growth.
Comparable gross profit on our long-term targets, we have said that we are trying to improve our gross margin. Now when we are looking for Q1 numbers, we see that we managed to achieve 0.9% improvement by ending to 32.1%. The things which we have already earlier said that we are trying to improve or increase the share of direct imports and private label products. We managed to do that during the Q1. Of course, at the same time, when this crisis situation started, our product mix changed in March a bit, and we sold more grocery products, which have a lower, lower margin. That, of course, affected a bit for Q1 margin figures. As said, we increased the direct import share and ending up to 23.6% during Q1 now to 2020.
I have to say also at the same time, when you look this red portion from that bar, that we were able to utilize our import through Shanghai office, which is, of course, good because we have targeted to do that. Also said that the private label share increased and now up to 29.1%. Last three year, 28.1%. Operating expenses. If we look at relative share of these expenses, we have targeted to improve that share. Now we managed to do that a bit, ending to 24.4% compared to last year's 24.9%. As I have said also earlier, that when we are able to increase our like-for-like revenue and also the total revenue, and at the same time we are keeping our expenses well in control, that will mean that this share will improve.
Of course, when we now start the end of Q1, when this crisis started, we have some extra expenses to make our stores and logistics center on safe places to work, where were different kind of actions, for example, on shifts, that the people were not meet each other and so on. That, of course, affected to this ratio, clearly. Of course, have to remember also at the same time that it's obvious that these expenses will continue on some level during the Q2. Okay. Comparable EBIT, nice improvement, EUR 2.5 million improvement, and ending up to on comparable EBIT at the level of EUR 0.3 million. On that time, I have to say that cash flow and financial position are very critical. Of course, we have put our eyes on that and really concentrate on that. This is on good shape.
Starting from inventories, if you look at balance sheet items here, the increase of inventories were higher compared to the like-for-like or total revenue increase. There are two different kind of items which affected to that one. If you look that our winter was missing somewhat half of Finland this year, that of course, affected to that we have still some winter products which we were not able to sell. Of course, they are now on warehouse. The good thing is, of course, that there are some products which we are able to sell next year. But for example, if we speak about the winter clothing, that's a bit more difficult issue. Other thing which affected to the level of inventory was that when this panic buying started, we really ordered some products to guarantee that we have products in our stores to sell.
When we look at situation at the end of March, we clearly have more this kind of products in our inventories. These two issues really affected to the level of inventory. When we look our cash or basically cash or financial position, as you see here that we have a certain limits or credit limits which we are able to use, and we are speaking about roughly EUR 58 million at this moment, and that gives us a good space to make our normal activities. We can say that the Tokmanni's liquidity is at good level. Looking at our debt situation, total number of interest-bearing debt is EUR 425 million, and the biggest portion out of that is coming out our rental liabilities based on this IFRS 16 booking principles.
If you look what kind of real bank loans we have, we have non-current loans, EUR 100 million, and the current loans, EUR 13.9 million. Totaling roughly EUR 114 million, which is so-called bank loans. Smaller portion out of this EUR 425 million. Net capital expenditure. Investments, a little bit higher level during Q1 compared to last year, now EUR 3.2 million. We're really looking very carefully what kind of investments we are doing and at this situation, and consider every detailed investments and investment decision, because you have to be very careful with your cash flow. At this moment, we are estimating that our investments during 2020 is at the level of EUR 15 million. I will transfer the speech for Mika again.
Thank you, Markku.
Thanks.
Thank you for the review. In the end of 2019, we decided that our key focus for 2020 will be strengthening the discount retailer business model, which basically means low prices, interesting assortment, and very efficient supply chain management. Now, in this current situation, this focus, of course, stays and is even stronger at the moment. Because especially the low price level with all the layoffs and uncertainty, that's very important for our customers. Of course, we are adding or we have to adapt to the changes in the market environment. That's why we've been really focusing on quick reaction on the different market changes and changes with the whole society, with the whole situation. Some of the impacts of the coronavirus from Tokmanni's point of view, as already mentioned earlier, we saw the biggest action points already during the first quarter.
Of course, the biggest impacts, we estimate, will happen during the second quarter. These have something to do, of course, with all the restrictions and the decisions of Finnish government, and things like this. Of course, there is a big uncertainty, but this is how we see it, that the biggest impact on Tokmanni's business will happen during the second quarter. Regarding the second quarter, it will be, of course, still a lower level on customer visits. At the same time, the average basket is higher. There is a clear change with the customer behavior. At the moment, we are all the time, basically every day, observing that, how the changes are moving day by day. At the moment, this is the clear change with the customer behavior.
Of course, as already mentioned as well, by Markku and myself, there will be additional costs on the safety issues regarding our employees and customers, of course. Well, we can see a very strong development on our online business all the time. That's, of course, backing up the situation very nicely. But of course, it's still compared to all our 191 stores, it's still a smaller part of the business. We estimate that during the third quarter, there will be, of course, already a lot of stabilization happening from a Tokmanni's point of view. Of course, there is always the uncertainty, but still, we have already plans that we will return to normal opening hours. At the moment, especially in Tokmanni's located in shopping malls, we've basically reduced the opening hours because the shopping malls are basically losing most of the customers at the moment.
We feel that we can also normalize the workplace arrangements where basically, especially in the warehouse and in the stores, our employees are working in the small teams to make sure that people will stay as healthy as possible. Of course, a very clear chance for, or a very clear opportunity for a discounter is buying the stock lots, which there exist quite a lot at the moment. This is something that we will clearly look at already during the second quarter. And then of course, we estimate at the moment that the fourth quarter will be a time of recovery. We estimate that we can fully concentrate on the Christmas season during the fourth quarter, and basically we can deliver the discounter retailer business model, which is the low price level, an interesting assortment.
But of course, everything has to do with the consumer confidence, which is in Finland at the moment, it's on a very, very low level. Of course, the amount of money available after the layoffs and things like this, these have something to do. Of course, especially with possible new restrictions or how the restrictions will be withdrawn and so on. These all, of course, they have an effect on Tokmanni's business. As mentioned, the economic and industry's outlook has changed rapidly, we won't be issuing guidance for 2020. Once the visibility improves and the uncertainties have cleared, of course, we will update our outlook and issue a new guidance. Hopefully, this can happen by the half-year financial review, which will be published in three months time, on 29th of July. So thank you very much, and I believe now it's time for questions.
Thank you.
Yes, please, Markku.
Ladies and gentlemen, if you would like to ask a question, please press zero one on your telephone keypad now. Our first question comes from the line of Manon Coulon from Erasmus Gestion. Please go ahead. Your line is now open.
Thank you for taking my question. I have three. First, you thought about extra cost due to COVID-19 safety plans. Can you maybe detail more on that one, especially in terms of numbers? You thought as well about cost saving measures. Can you give us a sense of how much it would be? Same question. And then on flow of customers, you said it decreased significantly end of March. What you seeing in April? What are you seeing in the last few days now that looks like the peak is behind us now, and I think some restriction of movement have been lifted in Finland. I'm not sure. What have you seen so far in April? Thank you very much.
Thank you for the questions. Markku, would you like to start with the first one?
Well, what was the first one?
Unfortunately, the line wasn't so clear for us. Could you please repeat the first question?
Oh, sorry. My first question was on how much do you plan on extra cost due to COVID-19?
Sorry, now I can't follow. I'm very sorry about that, but could you somewhat repeat?
Okay. I'm very sorry. Can you hear me? Hello? My question was, how much do you plan to have on extra cost due to COVID-19, additional costs?
Okay. Now, sorry, sorry. Now I got it. Yeah. Of course, it is very difficult to estimate the exact increase of extra costs. At the end of March, we clearly saw some extra costs when we started to make the safety arrangement in our stores and putting different kind of shelters, putting hand hygiene material and this kind of stuff. Of course, they all cost when you have 190 stores. Of course, that will continue. That's clear, and we are speaking, of course, very difficult to estimate exact figures, but some hundreds of thousands EUR, that's clear.
Otherwise, of course, it's depending how this situation will develop and what kind of restrictions we have when we are speaking about, for example, how much we are paying salaries, because that is dependent on how many different kind of special arrangements we have to have in the shifts and in stores or logistic center. It's absolutely very difficult to estimate here at this time. With other issues is easier, but with other side is more difficult.
I think that the second question was regarding the kind of savings program. First of all, Tokmanni we didn't do any layoffs. Actually, we were able to cut actually quite a big part of the hours from our stores. At the moment we're back to almost like normal level because the spring season is the second biggest season for Tokmanni, and we have to make sure that our stores are in a good shape and all the, for example, garden department as well as spring, summer clothing departments are good enough for our customers. Even though the level of customer visits is still a little bit lower. Otherwise, regarding the savings program, we basically still negotiating the rental agreements. That's, of course, very difficult. We've basically stopped all the development projects for the moment. Of course, we're being extremely cautious with all the additional costs.
That's how a discounter basically behaves otherwise as well. It's a little bit limited that we're able to do if we're basically not doing any layoffs on things like this. I think that the third question was regarding the customer visits. Yes, as mentioned earlier, during the last couple of years, we've used to the fact that the customer visits are increasing. It's, of course, in the end of March, it was very dramatic due to the fact that basically the Finnish government was telling everybody in Finland to stay at home. Of course, it showed also in our customers' behavior. Yes, we can see that the situation is improving at the moment, but it's still a lower level than compared to, for example, last year. At the same time, well, there is this consumer behavior change.
Well, while people are visiting the stores less often and then buying more at the same time. We definitely need to follow that day by day to see how things will develop. At the moment, the situation is not that dramatic due to the higher basket size of our customers. I hope that these were good enough answers to your questions.
It was. Thank you very much.
Thank you. Just as a reminder, if you would like to ask a question, please press zero one on your telephone keypad now. There seems to be no further questions at the moment, I will hand the word back to our speaker for any final comments. Please go ahead.
Thank you very much. Thank you for following the presentation. As mentioned, we, of course, observe the situation in Finland and for Tokmanni daily very much. Of course, we try to make the guidance as quickly as possible. At the moment, the situation in Finland is still so uncertain that we are not able to give any new guidance in the coming weeks. We definitely hope to be able to do that during the second quarter. We'll see that latest by the 29th of July. Thank you very much.