Good morning and welcome to Tokmanni Group's second quarter result presentation. My name is Mika Rautiainen and today, together with me, doing the presentation will be Tokmanni Group's CFO, Mr. Tapio Arimo. I will go through the key points of the second quarter first. Tapio will present the financial figures. I'll come back to explain a little bit of the action points for the second half of 2025. Afterwards, it's time for questions. Let's get started. As already published in July, the second quarter for Tokmanni Group, especially for the Tokmanni segment, was very disappointing. We are satisfied with the increase of customer visits and also the revenue increase, especially for Dollarstore, and also a slight revenue increase for Tokmanni as well. Due to lower gross margin and higher OpEx, the profitability declined clearly, which was, of course, extremely disappointing.
Let me go through a little bit detailed at the second quarter happenings. Before that, a familiar slide regarding the Tokmanni Group position in the Nordic market. One point I would like to highlight over here is the share for Dollarstore for the total revenues. It's 27%. Last year, second quarter, it was 25%. We are obviously very happy regarding the growth in Sweden and in Denmark for the whole group. The group's second quarter customer visits, as already mentioned, increased in both segments and revenue increased, especially in Dollarstore. Basically, Dollarstore segment, which means Dollarstore in Sweden and Big Dollar in Denmark. The sales of spring and summer season products were weak, especially in Finland, due to the pretty cold spring, summer, especially the months May and June. Due to this, comparable gross margin declined due to Tokmanni's low seasonal product sales.
On the other hand, the grocery sales were developing very well, which of course was very good for the revenues and the customer visits. Of course, the gross margin with groceries is clearly lower compared with seasonal products, non-food products, which basically at the same time are a little bit with higher priced, high ticket products. With Dollarstore, the segment's comparable gross margin improved, which was of course very good after the lousy first quarter for Dollarstore. This was a clear improvement, which was of course satisfying us. Again, something causing a negative impact was the high personnel and marketing costs, which impacted EBIT negatively. The personnel costs grew due to salary increases, new store openings, and extra hours needed in implementing the new supply chain management systems. In Tokmanni segment, we actually launched the same system as Dollarstore is using for forecasting and replenishment.
On the other hand, the Dollarstore segment was implementing a new warehouse management system that is actually something which the Tokmanni segment is using all the time. Our main purpose is to combine these supply chain systems to get later on the efficiencies, but the implementation phase was actually causing quite a lot of costs. Cash flow was on a very good level, driven by inventory actions taken, and the renewed one-company management model is proceeding well. Let's take a look at the Tokmanni segment. Comparable customer visits increased by 2.5%, which I consider a pretty good result, but the like-for-like revenue grew only by 0.8%. That's due to the fact that the like-for-like average basket size decreased by 1.7%. That's, of course, the seasonal setup for Tokmanni. Tokmanni is probably the market leader in Finland regarding the garden products.
Garden products are usually slightly higher ticket products like garden furniture, barbecues, summer toys and pools, this kind of products. Of course, when the sales were on a very, very low level, that caused the drop with like-for-like average basket. At the same time, a good part was that the grocery sales increased by 5%. I believe that with 5% growth in grocery sales, we were able to take some market share as well, which is of course a good thing. As already mentioned, grocery sales are always slightly lower gross margin. Seasonal sales were at the low level and comparable gross margin declined a lot, meaning by 1.4 percentage points. As already explained, it was the seasonal products and good sales for groceries. Operating expenses increased mainly due to higher personnel and marketing costs.
I already mentioned this, the new replenishment and forecasting system, which was implemented during the second half. At the same time, we prepared quite well for a good spring-summer season with both marketing and store hours, meaning like we were prepared with very good service in our garden departments. Unfortunately, the end result with the sales wasn't on a good level. Regarding the store networks, the Tokmanni store network continues to expand. We didn't have any new openings during the first half. In the second half, we will open three new stores, or actually at the moment, the plan is to open three new stores, to relocate one. We're going to close one old store and then open a new one. There is one closure of a Tokmanni store. It's one of the smallest stores in the store network. This will happen during the second half of 2025.
Some good parts: Tokmanni Club, Tokmanni Klubi, has over 800 app customers, and the customers who have downloaded the Tokmanni Club app have a significantly higher average basket size than other customers. This is, of course, a very good development that we have been able to do with Tokmanni Club. It's proceeding very well. Actually, during the second quarter, we opened the first EUROSPAR supermarket in connection with the Tokmanni store in Ylöjärvi in Pirkanmaa on the 12th of June, so a couple of months ago. During the opening, it was very good, very interesting. I can say that Tokmanni is learning a lot through the cooperation with SPAR International. This Ylöjärvi store is, after the two first months, one of the biggest stores in the Tokmanni chain in Finland. It looks good. We will go through the Dollarstore segment during the second quarter.
The comparable customer visits increased well by 1.7%. This is, of course, comparable customer visits, and the total customer visits was even higher. The total revenue increased by 8.8% and the like-for-like by 5.1% in local currencies. The Dollarstore and Tokmanni segment, it's a slightly different setup. We are, of course, with Dollarstore very happy that actually the non-grocery sales increased by 9.7% in local currencies, driven by the wider assortment of Tokmanni Group's private label products. The private label products, this was the first summer, spring-summer season when we launched basically the Parco Garden products, BBQ King barbecues in Sweden, as well as several other private label product ranges like Kotik ulta and Energy+ . The total sales are on a very good level. Like-for-like average basket size grew by 3.3%, which is also very good.
There are basically slightly higher ticket products available in Dollarstore at the moment via the Tokmanni Group's private label product ranges. Comparable gross profit improved by EUR 5 million compared to the corresponding period of the previous year. This is, of course, a very good achievement because especially during the first quarter, Dollarstore gross margin was on a very low level. Very good development in Dollarstore regarding the gross profit. Operating expenses, on the other hand, were increasing, basically also too much. That's due to the salary increases, the new store openings, and an increase in working hours in both the warehouse and in the stores.
This was due to the new warehouse management system where we actually had to make sure that things will go smoothly for the customers with the launch of the new system, which, of course, didn't happen without some hiccups, but they should be over at the moment. Inventory level in Dollarstore was at the lower level compared with the end of March. These were the key points for both segments. Regarding the Dollarstore segment, it continues to expand. During the first half of 2025, one new Dollarstore and two new relocations in Sweden and two new Big Dollar stores in Denmark during the first half. The second half of 2025 will be very, very active, especially in Sweden and in Denmark, with five new and two relocations in Sweden and two new stores in Denmark. That's about it with the segments, the key points.
Tapio will explain a little bit more detail the group's key financial figures. Tapio, please go ahead.
Thank you, Mika. Good morning, everyone, on my behalf as well. Let's dive into the numbers a bit more. If we look at the total figures, like Mika said, our sales or revenue actually wasn't that bad. We grew by 4.8% during the second quarter, and our total revenue was approximately EUR 443 million. Also, our like-for-like revenue increased by a total of 1.9% compared to last year when it actually declined. Our comparable gross profit totaled EUR 157.7 million, a slight increase over last year. Like Mika said, the gross margin percent declined clearly, being 35.6% for the group, a drop of 1.1 percentage points over last year. Due to the lower gross margin percent and the higher operating expenses, our comparable EBIT amounted to EUR 21.4 million, which is a clear drop from a year ago of EUR 27.9 million. The relative EBIT margin was 4.8 percentage points.
What I'm most happy about in this slide is the cash flow from our operating activities, which amounted to EUR 73.1 million. That was driven by our focused efforts to control the inventories during the second quarter. We continued those actions during the third quarter as well. Our earnings per share diluted was EUR 0.17. Now, a little bit deeper into the revenue mix. As you can see, in our second quarter, there was, especially in euro terms, a big increase in the Dollarstore, which Mika explained and which we're very happy with, especially the fact that it was driven by the, let's say, non-grocery revenues and the increase in the group private label sales. Our like-for-like revenue in total increased 1.9%, as mentioned. That was also helped by Easter in April when you compare it to last year when it was in March. The Tokmanni segment's revenue also increased by 1.9%.
Positive results in terms of sales growth for both segments. The Dollarstore revenue increased by 8.8% in local currencies and about 11% in euro terms compared to last year. Now we look at the product mix a little bit more in detail. As you can see, our total mix of groceries continued to grow in the Tokmanni segment and was 54.5% of total revenue. That obviously, like Mika said, was driven not only by the strong sales of groceries helped by Easter, but also the very low sales of spring seasonal products during the quarter. In Dollarstore, the mix development was very different. There we had strong sales growth overall, especially the non-grocery sales grew more than the grocery sales. The proportion of non-groceries increased to 43.9% during the second quarter.
We're very happy with that because it means that also the Tokmanni private labels that we have introduced more and more into Dollarstore offering continue to drive the sales growth and also obviously help in the margin development as well. We look at the gross profit. There we saw slight growth during the second quarter, but as I said, the relative margin was clearly lower. That was especially driven by Finland and the change in mix and the low seasonal products mentioned earlier. The comparable gross profit in the Tokmanni segment actually declined from a year ago. The gross margin percent clearly declined by 1.4 percentage points. Dollarstore, on the other hand, grew their gross profit significantly from a year ago, about EUR 5 million. The comparable gross margin was down slightly, so 0.4 percentage points. If you compare this to the first quarter, the growth was even more remarkable.
If you remember, the first quarter, Dollarstore was really, really poor. Now we are basically, you could say, almost to normal levels during Q2 already. That's a very good achievement. The operating expenses, this is one area where we clearly are going to put more focus on going forward. The operating expenses as a percent of sales continued to grow during the second quarter. Obviously, somewhat impacted also by the sales being low on the seasonal products at Tokmanni, but more than that, it was the absolute increase in the expenses in both segments. Personnel expenses increased by EUR 6 million from a year ago. The total operating expenses also increased significantly. For Tokmanni, it was 22.4% of net sales, over EUR 72.2 million, which is a growth of about EUR 4 million, slightly less. The Dollarstore also grew significantly. Their operating expenses also were close to EUR 5 million.
As a result of that, the overall percentage of operating expenses in the group was 23.6% during the quarter. The operating expenses and the, let's say, lower gross margin percent combined, that resulted in the EBIT that we have for the second quarter, which was EUR 21.4 million or 4.8% of net sales or revenue. We're definitely not happy with the performance during the second quarter. We are taking actions to improve the performance going forward. For the Tokmanni segment, the comparable EBIT was EUR 20.8 million, a decline of EUR 5.7 million. For the Dollarstore segment, the comparable EBIT was EUR 1.6 million, a slight decline from the previous year's EUR 2.1 million. Looking at the inventories, on a normal year, the inventories typically grow slightly during the second quarter. We managed to reduce the inventories from the end of the first quarter, which is a good result.
We continue to drive the inventory actions also during the third quarter. The third quarter end of September is basically the peak for our inventories. We do expect the inventory levels maybe to grow slightly or see a slight decline, but definitely not much growth from the second quarter levels. Obviously, it depends a little bit on the timing of the deliveries of the Christmas products and also, of course, a little bit on the sales during the third quarter. The total value of the inventory at the end of the second quarter was EUR 465 million. Out of that, EUR 328 million was Tokmanni and EUR 137 million was Dollarstore. Looking at our financing, our total interest-bearing debt at the end of the quarter was EUR 924 million, which is a significant increase from last year. If you look at the quarter before, the level was fairly flat.
We do have most of our debt in the lease liabilities. If you want to call it bank debt or financial institution debt, we had about EUR 347 million or EUR 346 million of financial debt at the end of the second quarter. Looking at our net debt to comparable EBITDA ratio, that was flat during the second quarter from the first quarter at 4.2 including IFRS and 3.6 not including IFRS liabilities. We have the target of 2.25 for the year end, and we still are able to achieve it. Of course, we need to manage the inventory carefully, but it's within reach. I have no doubt about that. Our financial position is very stable. The cash flow from operating activities was especially positive during the second quarter.
It was almost as high as our record quarter in 2023. I am very happy with that, and that's obviously driven by our inventory reduction actions taken during the second quarter. As I said, we continue to work on that. For the whole half, the operating cash flow was pretty much at the same level as a year before. Roughly at par. On the capital expenditure side, this quarter we had clearly lower capital expenditure as we were not spending that much money on new store locations. Most of the capital spending during the second quarter was IT and maintenance-related CapEx. I invite Mika back on stage to talk about our guidance.
Thank you, Tapio. Please don't go too far because we're going to start answering questions pretty soon about the guidance first. We expect Tokmanni Group's revenue to be during 2025 EUR 1.7 billion-EUR 1.79 billion. We expect Tokmanni Group's EBIT to be between EUR 85 million and EUR 105 million in 2025. Obviously, based on the first half results, first half of 2025 results in Tokmanni Group, the full focus at the moment for the whole group is on profitability. The actions are ongoing, obviously, already quite some time. We'll continue with this, with the actions for improving profitability. Obviously, the first point is to continue to drive with like-for-like sales. This, of course, will always be over there. We shouldn't be having any seasonal effects anymore during the second half of 2025. We'll be, of course, focusing also on improving gross margin for the whole group, actually.
The biggest action points will be on the costs. We'll definitely have extremely tight cost control during the second half. We do believe that after implementing, for example, the supply chain new systems, we will be able to improve the efficiencies in both our warehouses and in stores. We've already made the decisions to improve our marketing effectiveness, and we'll continue with that. Also, the managing of inventory levels at the moment looks good. Of course, it takes a little bit of time, but it still looks quite promising. For the second half, basically, it's four months left for that. It will be full focus on profitability. Maybe a couple of words regarding what we call one-company model. We, at the same time, with the full focus on profitability, are also tightening the integration of Tokmanni and Dollarstore. This is actually also something to do with the profitability.
First of all, we've launched the new management model. We're combining, for example, the sourcing organizations into one. It will be starting from the 1st of September as one organization. Basically, we'll combine the best parts of both retail companies, trying to get the best practices from both segments in all operating countries. As already mentioned several times about the supply chain, we are at the moment creating a common operating model also for the supply chain, which hopefully will also improve the store efficiencies in both segments. SPAR International gives us basically a view to, let's say, world-class practices. We will definitely improve our operation based on the expertise coming from SPAR International. Yes, the annual synergy target of over EUR 20 million at the end of 2025 is there as well. This one company, basically, we now have some experiences with the two separate segments.
Of course, the segments will be separate also in the future. Basically, as you know, like operating as two separate companies, we can clearly see that tightening the integration will bring us more savings in the future. That is why this one-company model is very, very important for us. Tapio, I guess that's it for the result presentation. Now it's time for questions and answers. Please, I think that you'll find the link for the questions under the broadcast. We can see that there are already the first hands up in the chat. The first one to make questions is Maria. Maria, please go ahead.
Yes, let me thank you for the presentation. I have a few questions. I wanted to start with the gross margin outlook for the second half of the year, given that the decline this quarter came mainly from the Tokmanni segment. There, I mean, obviously, are some explanations coming from a very cold, early summer weather. What would you say, I mean, the outlook for the second half for the gross margin in the Tokmanni segment now when the weather has, say, more normalized?
Yeah.
Want me to comment?
Let's say that, of course, the change, especially in Finland, and those who haven't been spending the summer in Finland, have very cold weather till almost like half of July, but afterwards, an extremely nice summer weather. Of course, we were able to clear the inventory for the summer products pretty well during the start of the second half, which is, of course, very good for the inventories and, well, sales inventories. Unfortunately, there is already, like in July, it's already like the sales period for summer products for, and basically with all the retailers, whether it's like clothing or garden or barbecue or whatever summer products. Obviously, it had an effect on the gross margin with Tokmanni segment. If we take a little bit bigger picture, it's obviously a very positive thing from the total picture's point of view.
When it comes to the rest of the year, the gross margin, we don't expect any specific elements in Tokmanni segments which would be declining the gross margin. Tapio?
Yeah, obviously, it's driven by the mix to some extent. If the grocery continues to outperform the non-grocery, then you can expect a small decline in the relative margin as well. Of course, the economic picture for Finland is quite mixed. There are some positive signals and some negative signals, especially regarding the consumer spending on more expensive items. Obviously, if the consumers start to spend more on non-grocery products, that would be very positive for a relative margin. It will be interesting to see how the second half sales develop.
Thank you. I had a second question. Maybe Tapio, you can help me out a bit on the personnel cost. Let's now talk about the Tokmanni segment. I think you had like some 150 people less. If you calculated, let's say, like the whole year, people, as a whole work year, I don't know what the term is, whole work year employees. Still, your employee cost increased by 6%, so by EUR 2.5 million. How do you attribute this lower number of full-time employees and at the same time, you have a 6% growth in your salary costs?
Yeah, so.
What is the outlook for the second half? Have you had these extra hours, will they be cleared for the second half of the year?
Yeah, we're trying to, let's say, work very hard on that, that let's say put a little bit tighter control on the hours in the stores and warehouse. Of course, like Mika said, we have new systems implemented and like all new, let's say, pretty complex systems, it takes a little bit of time to optimize the performance there. We had more hours than we were planning. At the same time, you know, you have to also keep the customer satisfaction level at some level. It's always a balance there. If you think about the growth, I would say we had about 2.9% on average is the salary increase compared to a year ago. The rest is really due to increase in the work. I mean, it's a, let's say, very simple math from that perspective.
The FTEs, of course, depend a little bit on the average salary, how it develops. I think the financial math is, in a sense, fairly simple, that 2.9% came from statutory increases and then the rest is mainly from the extra hours worked.
They are not reflected in the number, which is full-time employees.
Yeah, that's a very good question. I will have to look into that a little bit more in detail. Obviously, the FTE calculation method is quite complex. That's a good question. I will look into that and get back to you.
Okay, perfect. Thank you.
Thank you, Maria. The next one is Calle Loikkanen. Please, Calle, go ahead.
Yes, hello. This is Calle Loikkanen from Danske Bank. A couple of questions. You mentioned that the July sales or sales in the first part of the second half of the year and that you got the summer stuff kind of going. I just want to check that. Have you seen any kind of significant catch-up in the sales in July and then early August in terms of the spring and summer products?
I don't know what you mean by catch-up. Like Mika said, I think we're pretty happy with the leftover inventory from the spring and summer season. We managed to sell most of it. Of course, you want to end up with a little bit of inventory. Otherwise, you've been missing out on sales, which no one wants to do. I think in that sense, it's been caught up pretty nicely. Of course, from a revenue and profitability perspective, like Mika said, July is already, you know, sales month for the seasonal summer products in many cases. The net sales from per item is less, and as well as the profitability per item is less.
Okay, got it. You're not kind of worried about any inventory issues like having to store stuff over the winter or anything like that?
No, not in any significant amounts, no.
Okay, perfect. Still continuing on the operating expenses and kind of your expectations for the second half, you mentioned salary increases 2.9% on average. That will, of course, continue to be there. Anything else in terms of other expenses like marketing, anything else that we should kind of be aware of?
I think, like Mika said, we are going to be pretty tight on the marketing expense. I think we will be tighter on the store hours and warehouse hours as well during the rest of the year. Of course, it's not a dramatic change. It's not like a 10% change, but maybe, you know, a couple of percentage points tops.
Yes, several action points already taken. For example, with consumer confidence, that's something that we can't basically affect or can't manage at all. Of course, operating expenses is something that it's basically in our own hands. We will make the necessary action points regarding the operating expenses. They won't happen just like this with all expenses, but many of the decisions have already been taken.
Okay, got it. I was just wondering about the price increases. Is it kind of impossible to do those kinds of things in this environment, given that the salary inflation is there and so on? Is it impossible for you to raise prices in this environment?
At the moment, we're not working on increasing prices. Actually, let's say the buying prices are on the same level or even slightly lower level. That's, of course, something that the combined buying and sourcing organization is doing, basically concentrating on combining the volumes and getting better buying prices. As a low-price operator, we're not at the moment thinking about increasing the prices.
Okay, thank you. Lastly, regarding SPAR, obviously, you sound very pleased about how things have been going and what you've been learning. Are there any kind of financial figures that you would like to share with us regarding SPAR and the performance early on?
No, not at the moment. First of all, the first SPAR, EUROSPAR store in Ylöjärvi, it's been open exactly two months. Yes, the beginning is positive. We're learning a lot, and we're basically preparing the two new openings. What we also have been discussing with SPAR International, it's good to have several stores to get all the learnings regarding the market and then make also decisions and maybe be more, let's say, public regarding the first SPAR steps. With one store and two months, it's too early to start sharing any further information except the fact that Ylöjärvi is one of the biggest stores in Tokmanni Group at the moment.
Okay, that's clear. That's all for me. Thank you very much.
Thank you, Calle. The next one is Arttu Heikura . Arttu, please go ahead.
Yes, thank you, Arttu Heikura. A couple of questions from my side. Given that the summer sales were quite poor in the market level, my question is, did you see any increased price competition during the quarter? If so, has it continued to?
Yes, of course. As you might remember yourself, it was a very, very cold May and June. Usually, the sales start right before the midsummer in Finland. We noticed that quite a lot of sales started already in the beginning of June, which was, of course, telling about the market situation generally. At the moment, we don't see any further.
I mean, the competition, I would say it's in the same level as before. I wouldn't say it has increased, but it hasn't much decreased either. I would say both countries are in the same level as they've been for the past six months at least.
Yeah, that's true.
Okay, thank you. A more technical question on income taxes, which were relatively low during the Q2. Were there any specific factors?
It's basically just because of the loss-making, there were some reserves between Q1 and Q2. If you look at the total first half, it should be quite okay level. Of course, there's always some risk. Can you recoup the losses? I think the first half total level should be quite well in line.
All right, thank you.
Thank you, Arttu. The next one is Svante Krokfors. Svante, please go ahead.
Thank you, Mika and Tapio, for the presentation. The first one regarding introducing Tokmanni's private label products into the Dollarstore network. Can you elaborate a bit on how that has developed recently, and what kind of share is that, or what kind of share of Dollarstore sales has that increased, and what is your target there?
First of all, as mentioned, the summer season in Dollarstore and in Big Dollar, when it comes to, for example, the Tokmanni garden, barbecue, summer toys, all these products, that was a very good start. We have to take into consideration that Dollarstore, Big Dollar, they were not that strong on these categories at all. While starting with that, that was a good start, and I could imagine that in the future, it will be very, very good, actually. I think there is at the moment approximately 3,000 SKUs, private labels from different private label ranges in Dollarstore. One of the biggest ones is Kotik ulta and, as mentioned, the Energy+ also, like a very good one. All of the ranges are performing very well, depending slightly a little bit on the timing and so. Sales increase has been very, very promising. We will also continue.
We have to take into consideration the inventory levels also in Dollarstore. We're doing everything a bit by bit. We have to actually take into consideration the Dollarstore. The Dollarstore used to use middlemen quite a lot, wholesalers in between, which is, of course, quite easy for the inventory management. Now, of course, it's more like direct imports. That's why it's also like a learning thing for Dollarstore. The new warehouse management system is extremely important for them, and it looks good. We have to stabilize with the 3,000 private label SKUs, but we will be coming with more SKUs in the future, especially for the Christmas period. I could imagine that actually it's a little bit vice versa. Dollarstore was, for example, or is very strong in Sweden and in Denmark with Halloween season. Basically, Tokmanni has copied that almost like 100%.
We have like a joint buying over there for both segments. The season will start in the beginning of next month or something like that. Yes, these look good, but we haven't launched any targets for the private label shares. At the moment, it looks pretty promising.
If you remember that when we bought Dollarstore, they had very little private label sales, if at all. We've been steadily increasing the amount since we got the first products into the offering, which was like last December or two years ago December, I think, were the first private label products from Tokmanni. There has been a steady increase in the sales if you think about that. We're very happy with that. It seems to be that every month it's slightly better in terms of the share of private label at Dollarstore.
Maybe a little bit more, if you don't mind, Svante, maybe a little bit more about the Dollarstore setup. Dollarstore, basically, during the last 20 years, Dollarstore has had the idea that they're always offering the lowest price in the Swedish market. Obviously, it means that the products that they have been selling, it's always like an, as you call it, entry-level products. Now we're widening the assortment. We're bringing like Tokmanni's, let's say, best value for money private labels, which is, of course, first of all, widening the assortment, deepening the assortment. Of course, it's a little bit more valuable products, which we can see with the average basket and also the share of non-groceries. This is exactly the development that we are looking for in Sweden and in Denmark.
In a way, the Tokmanni Group private label product ranges are deepening the assortment of Dollarstore and at the same time offering more value for customers.
Thank you. That is helpful. Regarding Dollarstore, is it so that you haven't had and will not have any need for clearance sales? You are done with that?
Let's say the magnitude that we have in the first quarter, I think we're done with that. Of course, you always have seasonal clearing sales at the end of the season, or normally you do that. Of course, sometimes you run out of product and you don't need to, but let's say normal years, you do have the end-of-season sales. We do continue to have those also at Dollarstore.
Thank you. Regarding the slow sales in Q2 of summer products, have you had to make any significant discounts when clearing up the inventory during the beginning of Q3?
Normal discounts?
Yeah, normal seasonal clearance sales for the summer products. I wouldn't say that we had higher discounts than we would normally have, but of course, we had a little bit more stuff at the beginning.
Products.
Yeah, or even seasonal products because the May and June sales were very poor for those, but we did manage to clear most of it. We are very, very pleased with the inventory situation for the seasonal products at this moment.
Thank you. The last question on your net debt to EBITDA. You said that you are confident you will reach 2.25 at the year end. What are the assumptions behind that? Does it assume?
We have a lot of actions in place, like Mika said. Of course, we expect those to have some impact on the figures for the second half of the year. Those are the assumptions behind it. Of course, if something goes very wrong during the second half, that usually means that you have a little bit more debt.
Okay, thank you. That's all from me.
Thank you, Svante. The next one is Mika Ihamäki. Mika, please go ahead.
Thank you very much for taking my question and for a good presentation. Most of my questions have been asked, but I'm just wondering, given that you have a lot of actions now in place to improve your profitability in the second half of the year, is there any reason to look at your current store network, either in Tokmanni, Finland, or Dollarstore in Sweden? Are you happy with how all the stores in the network are performing at the moment, or should we expect that there also could be certain store closures in the future, maybe at a bit more unusually higher pace than what you would normally see?
No, we don't have any store closures in... There is one, of course, during the second half. That's basically the rental agreement ends, and we're not able to continue over there. This is one of the smallest revenue-wise, so it's not a big thing, actually. We are looking for some relocations over there. First of all, with Tokmanni segments, I would say all of the stores are profitable. We don't have like a pressure in closing the stores. With Dollarstore, we feel that there are a lot more, a lot more possibilities and potential with, for example, increasing the sales in all stores. We're not seeing any pressure in closing any stores in Sweden or in Denmark either at the moment.
Thank you. A second one still on Dollarstore. Given that you're now revamping how the total assortment at Dollarstore will look given the private labels, etc., and a number of SKUs increasing, are you saying that the inventory levels in Sweden are likely to come down from today's levels, or are you expecting inventories in value terms still to increase? Let's now just assume that excluding the impact of new stores.
Basically, the setup in Dollarstore, as already mentioned, is now different compared to, let's say, two years ago. Two years ago, Dollarstore was using quite a lot of middlemen, wholesalers, Swedish wholesalers. Our target is to cut most of these away and move to direct sourcing and also joint buying together with Tokmanni segments. Obviously, this will increase the inventory value. That's, of course, something which has been happening in Dollarstore. Basically, it's like a trade-off with cutting the wholesalers off. Since we took quite a lot of private labels and direct sourcing for the second quarter to our own warehouse in Örebro for Dollarstore, at the moment, we're basically like taking a little time out with increasing the private label ranges because there are some seasons, like for example, the Halloween and, of course, the Christmas season. There are also private label products, but there are also non-label products.
They will be direct sourcing. We won't be adding any new ranges for Dollarstore at the moment. We want to see how things will go during the second half with very, very important seasons like Halloween and Christmas. That's, I think, regarding the inventory level. Tapio, would you like to add something?
Yeah, I think that's a good summary. Obviously, at the moment, the warehouse in Dollarstore is at pretty much the capacity that it can reasonably hold. We don't expect to grow that much further. Of course, we need to get more efficient. The warehouse management system that we put there during the second quarter will help us in the future to be more efficient in the inventory management. Going forward, a little bit longer, we will look at the whole group inventory and supply chain management if there are things that we can do to optimize that on a group level. I do see potential for more efficient operation, especially in the logistics side. The store inventory is, you have a certain amount of stuff or product in the store. As the number of stores increases, we do see an increase in the store inventory levels.
The logistics side, the warehouses, I think we will need to do a little bit better job going forward with that.
All right, thank you.
Thank you, Mika. Actually, I don't see any more questions. As already mentioned, improving the profitability for the whole Tokmanni Group will be the theme for the second half of 2025. It will be the main theme for 2026 as well. We will be explaining a little bit more detail about this when launching the third quarter results on the 14th of November. See you then, and thank you at this time.
Thank you.