Good morning, warm welcome to Tokmanni's Q1 Result Presentation. My name is Mika Rautiainen, and I will first present the highlights of Tokmanni's Q1. After that, Tokmanni's CFO, Mr. Markku Pirskanen, will give you a more detailed outlook on the Q1 financials. After that, we have time for conclusions and questions. Let's start. First of all, Tokmanni had an excellent start for the year 2021. All product groups were selling well. There were strong growth for all product groups, including clothing, which was actually last year when the pandemic started, it had a lot of problems. Also, last year, it was strong sales for groceries. This year, during the Q1, all product groups were performing well. Gross margin improved due to this more normal sales mix compared to last year. Expenses were well in control, and EBIT improved significantly.
It was a very good combination. Stronger sales, improved gross margin, and expenses in control. Obviously, it was a very special quarter due to the customer behavior. It was very exceptional compared to a normal situation. First of all, the customers were visiting Tokmanni stores a lot more seldom, not as often at all as before, but the average basket was much higher. The very nice thing, and I would actually like to say thanks to all our customers, the behavior in our stores of customers was very responsible. Everybody was using face masks, keeping distances to other customers and to personnel, using all the disinfectant items as well. Of course, thanks to our Tokmanni personnel, were doing an excellent job during the Q1. At the moment, we have a new spring and summer assortment available in our stores despite of the international transportation problems.
Actually, we do have from the shipments from March, we have maybe a three to four-week delay. Already the shipments in April, they are well in time. There are only a couple of product groups have some lacks in the availability. I would say that the customers will have a full assortment in our stores already, and it will be in the beginning of May, a normal situation. The revenue grew by 13.6%, and it was EUR 226.1 million. Like-for-like revenue growth, very good 12.7%. Gross margin was 33.1% compared to last year's 32.1%. The comparable EBIT amounted to EUR 6.8 million. Last year, Q1 of Tokmanni was for the first time positive result with EUR 300,000. This year, a much better result, EUR 6.8 million.
Cash flow was minus EUR 22 million compared to last year's EUR 23.5 million. That's due to the fact that we call basically all the seasonal items to our warehouse much earlier than during the previous year. Diluted earnings per share was EUR 0.07 compared to last year, minus EUR 0.04. Here's the exceptional behavior of customers. First of all, we had a lot of discussions regarding all restrictions regarding COVID-19 in Finland during February and especially in March. A lot of discussions on the restrictions. However, all Tokmanni stores were open during these times, but customers were basically very careful with their behavior. Customers were coming to our stores a lot less than during the normal times, but we were very successful with selling a lot more to customers when visiting Tokmanni stores. Actually, the like-for-like average basket grew with 14.3%.
Last year, the growth of average basket was almost 10%, the beginning of this year, Q1, was exceptional with 14.3%. Basically, we do see already a little bit getting to a normal situation in Finland. Vaccinations, it's almost 30% of the Finnish population, COVID-19 contamination figures are already very low. Obviously it's a very positive atmosphere in Finland in that sense. For Tokmanni store network, we have basically started a normal time store network developing program. At the end of March this year, we had 192 stores compared to last year's 190 stores. We have been renewing four stores in Hämeenlinna, Loviisa, Järvenpää, and Raisio. There will be new premises for Tokmanni stores in Lahti Center, and Jyväskylä Center. A big renewal of the Mäntsälä store.
We do have already new store agreements or agreements made for new stores in Helsinki, in Iitti, in Oulu, and in Nurmijärvi, and there will be a new much bigger store in Leppävirta. These last ones, all of them won't be opened during this year, but it's actually a little bit of depending on the situation on COVID-19. The store network developing program is getting back to normal, and as basically mentioned also in our strategic targets. About Tokmanni online business. During the Q1, special efforts were made to expand the product range and improve operational reliability. The online sales grew by almost 150%, but it was still very small part of the Tokmanni business, only 1.3% of the total revenue. The development with the online sales is moving. The sales grew particularly in home and leisure products, skincare and garden products.
Obviously, it had also a lot to do with the pandemic. Finns were not traveling, was happening in Finland. A lot of families driving to the north part of Finland to Lapland. We were actually selling a lot of, for example, ski boxes. It was also pretty heavy winter in Finland. It still is in the northern part of Finland. Basically, we're selling in our online a lot of snowwork equipment. Also, we launched a selective cosmetics category in the end of last year during the Black Friday campaign. At the moment, it's growing extremely well. Also, the garden products all started basically already in February, which was obviously a little bit of a surprise, a little bit early stage, to start selling garden products in Finland. It was actually a great success. Here are the figures.
The red one, the red curve, is basically Tokmanni's development in Finland's non-grocery market. The black one is all the other players, which are reported in the Finnish Grocery Trade Association's figures. Clearly, this shows that Tokmanni is gaining market share in the Finnish market. However, I have to say that the online sales figures are basically missing out from these figures. It looks very good from Tokmanni perspective when it comes to the market share in Finland. This was basically a short recap on the highlights of Q1, and then Markku will tell you a little bit more detailed information regarding the financials. Markku, please go ahead.
Okay. Thank you.
Thanks.
Okay. Hello to everybody from my side also, let's go through these key figures a bit deeply. Let's start from revenue side, we have here a chart in which we have taken this last four years' development. As we can see that the development has been quite strong already during 2018, 2019, and 2020. Now looking this Q1 2021, we see that we managed to achieve EUR 27 million increase, which is very strong improvement. It was when we are looking like-for-like revenue growth 12.7%. How it came? Basically, as Mika Rautiainen already mentioned, very strong sales was in leisure products and home electronics. All product groups sold very well. Of course, there were different kind of developments.
If you think last year's Q1, meaning 2020, we had at the end of quarter, so-called panic buying phase, when people starting to buy toilet papers, different kind of groceries, and this kind of stuff. Of course, last year figure in these product groups was already good, and of course the development was, during this year's quarter, so strong, but still it was good even in these product groups. Jumping to our gross profit and gross margin, if we start to look this development again, for last four years' quarters, we see that we have managed to achieve quite nice development also here. Starting from 2019, 31.2%, last year 32.1%, now 33.1%. We achieve 1% unit increase. Why that one? For this quarter, the sales mix was good for us, and that, of course, affected strongly to gross margin.
When we are looking our sales mix, it's clear that it is in connection to direct import, and what is the share of private labels or own brands. These two indicators or items affects how well we are developing in gross margin. In some product groups, the share of private labels is on higher level, and if we are able to sell these product groups, that of course helps. Last year, we were struggling a bit because, for example, the apparel sales was at lower level, and that of course affected to the share of private labels. Here next, the issue about the private labels and then direct import. If we start about the chart on left-hand side, looking first the share of different kind of product labels.
First I'd like to mention that we have changed a bit the title of this red part of this bar, meaning earlier it was private labels. We were calling it private labels. Now we changed it to the title which is called Labels Managed by Tokmanni, because we are thinking that it is describing better that part. It includes private labels, white labels, and brands where Tokmanni has exclusive rights. As I said, the content has been earlier totally the same, but now we are thinking that the Labels Managed by Tokmanni is describing better this group. Still remembering that the private labels are clearly the biggest part in that group. Looking how it has been developed, Q1 29.6%, and last year 29.2%. Now we have increased the Sorry.
Now we have achieved the increase in that part, that's of course according what we have targeted to do. Also on direct import side, if you look last three years' development, starting from 2019 Q1, 22.2%, jumping 23.6%, and now Q1 2021, we have on the level of 24.5%. This has also developed according our plans, and to the right direction. Next one, operating expenses, again starting from this chart and looking the development there, first EUR amounts. Now we were on the level of EUR 52.5 million, last year EUR 48.5 million. EUR 4 million increase in euro-wise, and mostly that is explained by increase in store personnel salaries. Like to remind you that when the volume is increasing, we are needing more hours in our stores. For example, to putting different kind of products to the shelf.
Basically, our store personnel salaries are, we are calling them at least partly variable expenses. The other thing which affected to euro-wise expenses was heavy winter which we have in Finland. It was clear that it affected to our store maintenance expenses. The other thing, COVID-19, we had to do different kind of actions in our stores to make with these infections. That, of course, affected too our expenses. What is the most important thing here is that when we are looking what is our expenses against revenue, what is this kind of ratio? If we start from Q1 2018, we were level of 25%, and now Q1 2021, we were at the level of 23.2%. That, of course, means 1.8% improvement. 1.8% units improvement, which is good achievement here. Comparable EBIT.
It's clear that it is end result from our revenue, our gross margin, and how the expenses has been developed. Now Q1 2021, EUR 6.8 million EBIT compared to last year's EUR 0.3 million. A clear improvement. At the same time, when we are looking the EBIT in 2019 and 2018 in Q1, we are seeing that we have been on zero level or even on minus level when we are looking history. Now we jumped totally the new level when we achieve EUR 6.8 million EBIT. A couple words from balance sheet, financing, and then cash flow. One main item here is, of course, our inventory levels. Looking again the four years history figures here in Q1, seeing that we have increased our inventory level and ending EUR 139 million.
It seems to be quite big increase, but when we are looking the turnover ratio of our inventories, we can note that now in Q1 2021, it was on the level of roughly 3.1, and last year it was level of 2.8. When we are looking turnover ratio, we are seeing that we are going to the right direction when we are speaking about the inventory, even the euro amounts are increasing. Of course, having clear and strong emphasis on inventory levels because it affects directly to our cash flow. Looking Q1 cash flow, it was EUR -22 million. Last year, EUR -23.5 million. These minus figures are clear for Q1, which is a low quarter, but also we are preparing to our season for Q2, and we have to take our products into our inventory.
It's very natural that when we have a minus cash flow for Q1 figures. Long-term loans, at the same level what it has been, EUR 100 million, when we are looking the total interest-bearing debt, we were level of roughly EUR 400 million, and this difference comes from IFRS 16 accounting rules when we are taking our rents or rental agreements as an interest-bearing debt to our balance sheet. The ratio of net debt to comparable EBITDA, 2.1, which is clearly lower compared to our long-term target, 3.2, we are in a good position on that figure also. Looking the return on capital employed start to be on a good level, 17.6%, when we are speaking about rolling 12 months figure. Couple words about the net capital expenditure or investments. Q1 2021 was a bit lower level compared to last year, now EUR 2.3, last year EUR 3.2.
Looking the 2020 total figure, EUR 12.8 million. Last year, we started to slow down our investments when COVID-19 started. This year, most probably, we are accelerating it a little bit when we are going forward to the end of the year. That's why we are expecting our investments to be at the level of EUR 16 million-EUR 18 million in 2021. We published that we are reviewing the expansion possibilities of the Mäntsälä logistic center. Now I have to say that they are still ongoing. Let's see how it goes. That's about the figures. I still give a speech to Mika.
Okay, thanks. Thank you, Markku, for very informative information package. About the year 2021, the rest of the year. Basically, we'll keep the Tokmanni outlook, the original outlook for this year unchanged. Tokmanni forecasts slight growth in revenue for 2021. Group profitability measured in EUR comparable EBIT is expected to be on the same level as last year. Basically, it's a very good start for the year 2021. At the same time, as Markku already mentioned, the Q1 is basically the way smallest in Tokmanni's year of the quarters. That's why we will still be looking, for example, the spring season quite carefully. Last year, if I remember correct, the Q2 sales growth was 19.2%. Basically in Finland, it's a lot to do with the weather forecast.
Whether the snowing still continues in April and May, it has a lot to do with the success of the garden season. Basically, everything looks quite okay. We're being careful at this moment. Basically, the customer behavior is becoming more normal. It looks good in that sense. Anyway, the outlook will be, at this point, unchanged. We had the Tokmanni CMD in the end of March, where we basically said that the target will be to continue with the strong growth. Now, just to remind you that here are the figures.
The revenue target for 2025 is EUR 1.5 billion, and the EBIT target for 2025 is EUR 150 million. Basically, the work has started, and the work is going very well at the moment. We will be concentrating on improving the customer confidence. As for a variety discounter, it's basically everything starts with the cost efficiency. That's what we're basically doing at the moment. That was basically the Q1 result presentation. Operator, now it's time for questions, please.
Thank you. Ladies and gentlemen, if you do wish to ask a question, please press zero one on your telephone keypad now. That is zero one to register for a question. We have a question from the line of Svante Krokfors from Nordea. Please go ahead.
Yes. Hi, Mika and Markku. Thank you for taking my questions.
Hi, Svante.
The first one, probably don't have a direct answer, could you a bit elaborate on how you look at opening up the society will impact you in which ways, and what kind of risk and opportunities do you see from your side?
Well, first of all, the consumer confidence in Finland, as you probably know very well, it's on a very high level. That's always very good for retail business when the consumer confidence is good. That's basically, it looks good. As already mentioned in the presentation, the customer behavior has been quite exceptional during the last 12 months. But I would say that the biggest changes were during the first three months of this year. I could imagine that basically, the traveling abroad won't start that heavily for Finns during the next couple of quarters.
Basically, that's good. There is like a boom for summer houses in Finland, so that's also very good for Tokmanni. We see sunshine with the spring season. However, for example, last weekend, it was still snowing and not very good for the garden season. It looks basically everything we're quite confident on the coming months for Tokmanni. Markku, would you like to add something?
I think so. That was good answer.
Okay, thank you. Then also, I think you mentioned in the Q4 report that you increased the number of new customers by something like around 20%. Have you seen that trend continuing, or are you not now kind of getting the benefit from having been able to get new customers?
First of all, we're not basically reporting the amount of new customers on a quarterly basis. Yes, we've seen new customers also during the Q1 of this year. I would say that it's more about the Tokmanni in Finland. It has become everybody's variety discounter in Finland, and I think it's very important for us for this year, for the coming years as well. We do see a clear change with becoming everybody's store in Finland.
Okay, thank you. Perhaps on that note, you have outgrown the market substantially for many years now. Who do you believe you have taken the most market share from, and who do you expect to continue to take market share from? Could you elaborate a bit on that? I guess the competitive landscape is also intensifying with a lot of peers also ramping up growth.
Yeah. First of all, it's a little bit difficult to say, where do we have this growth from. I would actually say that the market is growing in Tokmanni destination categories. At this moment, we can obviously talk about the garden products and garden category. I think the market is growing really well. I could imagine that almost all garden products retailers have been doing quite okay. The market is really growing very well at the moment.
I cannot really say who's been losing. Obviously, there are some figures already available. Not all of them. It would be a little bit difficult to say from where we have gained our sales growth. I also would like to say that Tokmanni's combination of destination categories is quite unique. I don't really see this kind of destination categories selection with our competitors. It's a lot of different competitors, and it's always about the category, which category we're talking about.
Thank you. That's a good answer. You mentioned at the CMD that you will introduce the large store concept also. What's the timing on that? Can we expect something during this year? I guess the Leppävirta store, which you said is bigger, is that probably not the part of the large store concept. Could you elaborate a bit on that timing?
We are in the middle of negotiations at the moment for the first sites. The decisions are not made, so unfortunately, I cannot say whether it will be this year or next year. We're definitely preparing that. You're absolutely right, Leppävirta is not part of the large scale Tokmanni ideas. We're basically looking for sites in the bigger cities in Finland. Leppävirta is not one of them.
Okay. Perhaps a question more to Markku regarding the logistics costs. What's your view on that for the remainder of the year?
Yeah. Logistics costs are increasing. That's clear as we have said. Still remembering that, as we said in financial statements, that if you speak about the freight price, it's 0.8%. Still it's increasing and, of course, affecting to our costs. Always it's a question how it is affecting to all other players. That, of course, again, affecting to how these price levels are developing. Basically, of course, the prices are increasing. That's sure. Still it's under control with us.
I guess you will try to, given the current situation, you will probably order, for example, Christmas products rather earlier than later.
Yeah. That's true.
As early as possible.
That's true.
Yeah. Okay, that's all from me. Thank you.
Thank you.
Thank you.
We have a question from the line of Nicklas Skogman from Handelsbanken. Please go ahead.
Yes. Hello.
Hello.
I only have two questions that haven't been answered. The first one is, at the CMD, you announced that you were evaluating opportunities for international cooperation and expansion. Do you have an update on where you are on that?
If I recall correct, it was mentioned that after the pandemic situation is on a healthier stage, then we will start the activities when it comes to international expansion or cooperation. The situation in Finland actually is pretty good. In Europe, it's probably not as good as in Finland. I don't have anything to add to what was mentioned during the CMD.
Yes, I get it. It was a bit early. The second question is on the doubling, I think it was, of SKUs from 25 to 50,000. How do you see that ramping up over the coming years? How many do you expect to have by the end of this year and then following year?
It's a lot about the categories, like with which categories we're basically working and, for example, in this presentation, we said that with the online business, we have been concentrating on adding the assortment. Basically, there are already a couple of thousands of new SKUs in our online business. We always start with online. We add the SKUs in online. If they're performing well, we also start selling them the products. We're working at the same time with several different categories and the new products, new SKUs.
For example, this year it will be quite a lot of new, basically spring/summer products in our online store, but not yet in our stores. Anyway, that's the logic. First to online, if they are performing well and, also we see a lot of potential selling these products also in our stores, so then they will be ending up in our stores. I think that already during this year, it will be a rough estimation with from 5-10,000 new SKUs in online store.
Okay. Thank you very much.
Thank you.
There are no further questions registered. I hand back to the speakers.
Okay. Well, thank you very much. This was the Q1 of Tokmanni's year. Yes, it's the smallest quarter, and actually we're looking for a very sunny and warm Q2 in Finland. We'll come back to that in the end of July. Thank you very much.
Good. Thank you.