Good morning, everyone, and welcome to Tokmanni Group's quarterly report and the analysis situation. We are very happy to welcome you all here online together with my CFO, Tapio Arimo. Tapio will be on stage pretty soon after I have given a general description where we are today. We actually have given a title for this presentation, saying that Dollarstore segment's revenue and comparable EBIT improved, but at the same time, Group's comparable EBIT declined slightly. Before we go to the presentation, which has been prepared already a few days ago, I need to reflect about the news from yesterday. Yesterday afternoon, we actually gave a guidance update based to the Q3 report, but also based to the October sales performance. We did saw in July a weaker footfall here in Finland. At the same time, we did saw good signs in Sweden.
When we moved from Q3 to October, we started to see declining customer confidence both in Finland and Sweden, and therefore, we actually came into a conclusion to make a slight revision for the expected revenue, and we moved guidance from EUR 1.78 billion up to EUR 1.83 billion. At the same time, we also revised our expected comparable EBIT, and the new guidance is in between EUR 75-9 0 million. Before I move to my presentation, it's also good to mention that a year ago, we had a substantial sales increase in Q3, and especially in July. We might remember well how actually our stores got the queues of customers queuing for summer-related items as well as cooling devices.
This year, the season was different, and we could have been better prepared for alternative offer, which did not happen, and therefore, actually, we were forced to make this slight adjustment in revenue as well as in comparable EBIT. But now it's time to move for the well-prepared presentation, which actually describes our Q3 highlights, Q3 successes, as well as Q3 challenges met. The agenda, it is actually, after my description, Tapio will join with the key figures. Together, we are sharing our looking ahead as well as Christmas season, and a few words about the strategic work which we've been working during the autumn time and which we are now continuing in November as well as in December. We are finalizing this event together with questions and answers like we've been doing also earlier.
Our store network, as we well know, is well established in Finland, and we start to see, and actually we do see, that our store network in Sweden is also well established. In Denmark, we have also opened new stores during Q3. What makes me especially happy is actually growing amount of private labels, almost 30% already. Also makes me very happy to see that our sourcing synergies will be appearing with a strengthening shared amount of products. That concerns private labels, seasonal products, as well as branded products. It's already over 8,000 SKUs which are shared in between all our markets. Like I said, it has still been a period where the new stores has been opened. Especially in Sweden, year on year, store account has been rising by eight new stores, Denmark by three new stores.
As you saw from the press release earlier this morning, we have been also investing for the EUROSPAR store network here in Finland. We are now close to 400 stores until the end of September, and when we are reaching year end, we are slightly above 400 stores all combined. Tokmanni Group in total, like we have actually said here, revenue and gross profit improved, while higher costs were weighing on our EBIT. We could have actually been much more aggressive when it concerns OPEX and operating costs, but at the same time, we needed to invest for the ongoing store network development. The store network development did cause us additional costs, not only investments, but also operating costs, while every store we are opening has also meant manpower needed, as well as investments for more smaller items and fittings in every store.
We do see that our revenue grew by 2.9% up to EUR 445.2 million, and we do see a modest comparable EBIT decline by EUR 0.6 million down to EUR 25.8 million. Of course, we are very happy to see that our operations in Sweden have been improving during Q3 in sales, in gross margin, and also in EBIT. Especially here in Finland, like I have been saying earlier, we did saw a softer like-for-like sales. At the same time, we had a nice improvement in gross margin. These combined with the store network development, especially opening new EUROSPAR stores, which are long-term investments, because it is not only for one quarter. These stores are meant to serve our customers for years and years from now on, has actually eaten our EBIT level by EUR 1 million.
This is actually something, like I mentioned earlier, we could have actually predicted better. At the same time, these investments were necessity for the long-term development. I thought that instead of only talking about EUROSPAR, also to show that we have now 10 new stores open in Finland. We start to have a good view that these new stores are increasing our footfall, and these stores also have a good impact on our average basket. By the end of the year, we are also opening two new stores as planned. These are all according to our business plan. There will be a store open in Mäntsälä, very close to our offices, and there will be a store opened up north in Kemi. We are completing this year with the 12 EUROSPAR stores in combined.
Instead of only talking about store network, instead of only talking about joint sourcing, it is also good to have a look at how do we communicate with our customers. In the previous presentation three months ago, we were talking quite a lot about Tokmanni Klubi and members account. It is really good to see that Tokmanni Klubi and mobile app is capturing our audience. It gives our frequent customers more personalized offers, better digitalized services, and customer engagement. Myself, I have actually learned that on Sundays, I might actually open my Klubi app and have a look what specifically is meant for me and my household. I do find myself queuing with fellow mates and other Klubi members in our Vantaa stores, because I have quite a few of them next to me.
It is also good to see that our online store, which is today available in Finland, will be seeing a new opening. We are right now developing our online store and in-store experience to be very closely working one-on-one. But already today, you can do your shopping, come to the store, and pick up your basket with a reasonable timing, and especially fulfilling a customer need. Digitalization in stores is also taking new steps. We have started to trial electronic shelf labels in Järvenpää store, and it will be also installed in Vantaa Kivistö store, which will be opening, I think, two weeks of a time. These capabilities are also moving to commercial objectives. It is really important for us that we pay attention for easiness and frequency when we consider about our customers. We need to be even more relevant and timely when it concerns customer engagement.
As we saw from the Q1 report, we also need to pay attention for the average basket size. The Finnish average basket declined in the summertime, but at the same time, we saw average basket growing in Sweden. Sweden especially is a big positive topic from our sake. At the same time, paying attention here in Finland to increase the average basket will take place already now Q4 and for the Christmas trade. When we have digitalized approach to meet our customers, it will be also improving our marketing effectiveness, and our messages will be even more customized depending on about your history, depending about your preferences, and depending on what kind of initiatives you have given to us. It is really important that we pay attention for this digitalization part. I did already mention Dollarstore segment and segment's average basket.
3.4% growth within Q3 is such a positive note for us, which gave us improved sales, which also gave us a higher gross margin and increased our comparable EBIT. At the same time, we almost met like-for-like customer flow within the summer period. If I recall right, we lost 0.4% only. We do see that customers are returning back to our stores week by week, even day by day. Earlier this week, I went to visit our store in Upplands Väsby, spoke with the store personnel, met customers at the till, and heard from people how happy they are visiting our new store. Since we are next to the customers, one might come today, but also tomorrow. The customer frequency is important for us to pay attention. Total revenue grew by 10.2%. Comparable EBIT grew by EUR 0.2 million.
This is, of course, positive signs from Sweden, and at the same time, we do see that the new stores in Denmark are actually meeting well our customer preferences. I went to the store opening, as well as Tapio Arimo went to see one of the store openings now during Q3, and we do see that customers do buy everything from fast-moving consumer goods to the clothing, as well as small domestic appliances, toys, but even for mats and mattresses, gardening goods. So actually, our stores are meeting local customer needs very well already in Denmark too. I think it is also a necessity to mention here that our Swedish store network, like I have been saying, we are well positioned from Malmö up to Kiruna. Our network really is well covering Swedish inhabitation.
At the same time, when I look to next year, we have only two new stores contracted. Therefore, we are really paying attention, not only in Finland, but also in Sweden, to keep the footfall, increase the like-for-like footfall, make sure that average basket will be even higher than today, and the positive development will be floating down to profit development. This also requires tighter operating expenses and control what we are about to do, what we will be investing, and why. We do also see that our store network rollout in Denmark has brought us five new stores since September 2025. We have two new stores contracted for next fiscal year in Denmark. Talking few words about our assortment development in Sweden and in Denmark, it has really been an interesting journey. While when we are introducing new SKUs, we also see customers seeking for new products.
Now during the summertime, and especially the autumn time with the new store openings, also HOKA shoes has been introduced as an impulse goods to the stores, and a massive amount of customers have been there browsing for suitable shoes. 9,000, almost 1,000 new SKUs has been introduced in each and every our store, and this is, of course, supporting our average basket development. Just lately, meaning two weeks' time, we have also started to introduce our SPAR products in Sweden. Unfortunately, we are unable to do that one in Denmark, while SPAR license covers Sweden as well as Finland. But we do see that it might be potato chips, it might be jams, it might be marshmallows, it might be granulated sugar. They are all the products which are well meeting our customer expectation in both Sweden and Finnish countries or stores.
A good example, extending a toy assortment in Sweden really picks up. Introducing Brio, introducing Lego, makes our toy department lively, and customers have more to buy. We have also seen that extended assortment with A brands is bringing in stronger sales than earlier. Here is actually a good picture about Novita Yarns, well-known trademark from Finland. Yarns are something which both Finns and Swedes love to buy, and knitting is an important hobby for quite many of us. Not for myself, but if I look into my household, I do find people and family members buying Novita Yarns constantly. A good example about the renewed assortment also concerns shoes and clothing, something which Dollarstore did not have earlier. And we do see customers buying underwear, sportswear, as well as everyday clothing from our stores.
We do believe that this approach is definitely right, and it will be supporting our average basket development also in upcoming quarters. Now I think, Tapio, soon your time, and you could come and say a few words about our key figures and key performance. Which side do you want to be?
I can be on the left-hand side.
I will pass you that one. Here you are.
Thanks, Sampo. Good morning on my behalf as well. Let's dive a little bit deeper into the figures. When we look at our revenue, the growth as such was not that bad, 2.9%. But what really was not satisfactory was the like-for-like revenue growth, which actually declined slightly by half a percentage point, and that was really driven by Tokmanni segment. Our comparable gross profit actually increased quite nicely, about EUR 7.4 million increase over the previous year's quarter. And the comparable gross margin also improved, driven by both segments. Our comparable EBIT, as Sampo mentioned, declined slightly. That was really due to the increases in the store network that resulted in increased costs. Our cash flow continued to be on a very nice level.
We were slightly below last year, EUR 16.1 million, but last year we were really ramping down the inventory. This season in Q3 is the more normal cash flow when actually the inventories are peaking typically at the end of Q3. When you look at the revenue composition, as said, the total growth was 2.9% to EUR 445.2 million, and our like-for-like decreased slightly by half a percentage point. Tokmanni segment's revenue was a disappointment for us. The revenue increased by 0.2%, so essentially flat, and of course, the like-for-like revenue declined. What was really positive, on the other hand, was the revenue growth in Dollarstore segment, total of 10.2% to EUR 131.2 million, and also the like-for-like revenue growth was clearly positive. When you look at our sales mix, we continue to see the trend that we have been on basically since COVID times.
The grocery business is sort of growing while the non-grocery side of the business is essentially flat. On the Tokmanni side, the share of grocery business climbed to 51.9% from 51% a year ago, and in the Dollarstore side, the grocery business reached 56.7% from 56.3% a year ago. You have to remember now that the grocery includes not only food, but also, for example, pet products, health products, household papers, magazines, cleaning detergents, et cetera. Our private label growth was also very good during the third quarter, so we increased quite significantly our share of private label sales. It now totaled 29.1% in the Q3, up from 27.5% a year ago. You can see our private labels, we have now introduced most of our Tokmanni side private labels also into Dollarstore.
This is a new chart for the investors, and this, I think, is good to go through a little bit in detail, so where the revenue growth or decline comes from. On the Tokmanni segment side, the like-for-like revenue decreased by 1.7%, and the like-for-like customer visits actually grew slightly during Q3, but the like-for-like average basket size decreased by 2.2 percentage points, and that has been really driven by the non-grocery side of the business. The grocery side of the business is doing okay, but the consumers are still very in making purchases on the, let's say, non-essential stuff. The Dollarstore segment, the story is actually quite different. Our like-for-like revenue growth was very healthy, 3 percentage points, and where it came from is actually the like-for-like basket size.
Here you can really see the impact of our widening of the assortment and bringing in more Tokmanni assortment to the Dollarstore side. When you look at last year, also you can see that last year also the like-for-like average basket size grew significantly, so 3.6%. In two years, we've managed to increase the Dollarstore average basket size by about 7 percentage points. Of course, the negative side is that the like-for-like customer visits were still slightly below zero, so that is something that we will continue to work very hard on to make sure that we start seeing also increasing like-for-like customer visits going forward, and that will, of course, help us drive up the like-for-like revenue at Dollarstore, in addition to continuing to grow the average basket size.
When you look at the comparable gross margin, that's a, I would say, a good story. We were very disciplined in our pricing during the third quarter. We had very successful campaigning in the sense that we were able to increase the gross margin despite having good campaigns, and the cheapest in Finland and the similar campaign in Sweden continued very successfully, and yet we managed to increase both segments' comparable gross profit sizably in Finland. Of course, you have to remember that the previous quarter we had very low gross margin due to the very high discount sales in July last year, so of course, the comparison matters to some extent, but still, the 34.8% gross margin is pretty good. Also in Dollarstore side, we managed to increase the gross margin slightly to 37.1%.
We continue to work on this to make sure that we try to improve the gross margin percent going forward as well, but you also have to remember that the average gross margin on the grocery business is clearly lower than the average gross margin on the non-grocery products, so that shift has had an impact, of course, on our overall gross margin of the company. Our operating costs. In the third quarter, our comparable operating expenses were 22.2% of revenue compared to 21.2% last year, and there is a clear growth there of about EUR 7 million, and that was driven by several factors.
Of course, the personnel expenses are one thing, so they increased to EUR 59.9 million from EUR 56.1 million a year before, and that has been driven by, of course, the increased number of stores, but also we have had quite a lot of buildups and renovations during Q3, so the extra costs from just those added to EUR 0.9 million during the third quarter. Of those costs, of course, a large majority is personnel cost, but of course, there are other OPEX as well related to those buildups and renovations. You also need to remember that the wage increases in both countries have an impact, of course. In Finland, there was 1st of August, 2.5%, and in Sweden, it was 1st of May, 2.7%, if I remember correctly.
The Dollarstore side, of course, 25.5% compared to 25.2%, that is a slight increase, and of course, that has been driven by the amount of new store openings and the personnel that is needed to run those stores, obviously, also rents and other building and electricity costs and so on scale up with the increased number of stores. That then resulted in the slight decline in the group's comparable EBIT, so EUR 600,000 less than a year ago. If we had had like-for-like renovation and opening of new stores, we actually would have had a slightly improved EBIT, so you have to take into consideration the circumstances as well. The Dollarstore segment's comparable EBIT, that was EUR 1.3 million, which is a slight increase over the last year, and we are especially happy with that.
Of course, the EBIT percent level is still low, but we do see that we are now finally, let us say, going in the right direction at least. Of course, the group functions eliminations then are sort of our, let us say, normal head office costs. The Tokmanni side, we had EUR 1 million less EBIT from a year ago, and again, out of that EUR 1 million, 0.9 you can almost attribute to the SPAR renovations. When you look at our inventory, the inventory is essentially flat compared to a year ago, and we feel that is a really decent result when you take into consideration that we actually have 14 more stores than we had a year ago, and of course, each store carries a sizable amount of inventory.
That means that the inventory that is in our central warehouse and in our logistics chain has clearly decreased from a year ago, and both segments are actually pretty much on par with last year's level. When you look at our financing, we continue to be in a solid position regarding that. The debt and loans from financial institutions, that has gone down clearly from a year ago. A year ago, it was EUR 332.1 million, and now we are at EUR 307.5. Of course, the vast majority of our debt is related to the lease liabilities, so that brings our total debt to EUR 923.3 million, which is also down from a year ago.
We are managing the cash quite prudently as we go along, and it is good to see that we continue to be able to pay down the bank and related real debt. Of course, the lease liabilities live a little bit of a life of their own depending on how many new stores we open, when we renew the leases, et cetera, et cetera. That is something that we, of course, manage by actively managing our lease portfolio. When you look at our net debt to comparable EBITDA, at the moment, the number including the IFRS 16 lease liabilities was 4.16, and the number excluding was 3.49. Both are down slightly from a year ago, and as said, we continue to be in a good financial position.
Our target, the 2.25 at year end, I think we will be quite close to it, most likely, but probably slightly above. If you look at last year, the number was 2.57. If everything goes fairly normally, I would say we are quite close to that figure again this year. In our cash flow from operating activities, in Q3, we had clearly lower cash flow than last year, but at the same time, this is a more normal quarter. Last year, we were ramping down the inventory quite aggressively during the summer and fall, so that reflected positively in last year's cash flow. If you look at the cumulative cash flow for the year, we are still clearly ahead of last year. Finally, a little bit on our group's CapEx.
We continue to spend, I would say, quite normal level. Again, these go to the store network and IT-related investments for the vast majority. EUR 5.7 million was the total CapEx for Q3. When you look at the full cumulative nine months, we were at EUR 19.3 million, slightly above last year. Let us see where we end up, but it is, I would say, a very normal year from CapEx perspective. I might jump back to talk a little bit about what is ahead for us.
Thank you, Tapio, for the key figures and performance description. We thought that it is also good to look for the short-term priorities as well as bit longer-term priorities, and also say a few words about our strategy process. Even though the strategy process is still ongoing, a few highlights will be good to share with you already at this stage. If I would be a president of Finland, I would be having three key points for the short-term priorities. But in reality, we listed five together with Tapio to be shared with you at this stage. It is really important that in each and every of our stores, in each and every working shift, we are prepared to meet customers and the Christmas season. We have just left the Halloween season behind, and stores have started to prepare them for the Christmas season.
It is actually the most crucial period from our perspective to deliver what we have actually written down in guidance, both in revenue as well as in EBIT. It also means that our value chain plays an important role. While having the goods at the warehouses does not yet mean that it will be filled in the shelves. So actually, value chain and product availability plays really an important role. At today's situation, we do not see any difficulties in that manner. So actually, all the seasonal articles are already either in Mäntsälä DC or in Örebro DC, or they have met already our stores.
It is also important that we pay attention for the customer footfall, both in Tokmanni segment as well as in Dollarstore segment. We also want to sustain a positive sales momentum in Sweden, while we did saw a good average basket, thanks to the extended assortment.
Like Tapio, you were just describing, we almost met the like-for-like footfall within Sweden during the semester. And that one actually what we are driving for. It would be No, let's build it like this. It is also really important that we are paying attention for our expenses. Tight cost control in everyday life, on a weekly planning, as well as monthly planning, really is a necessity. We did saw that we would have met our OPEX from the previous year if we would have paid a bit more attention for the weekly planning as well as our monthly planning. So tight cost control will certainly appear all through markets and all through every store. When we look to the year end, beginning of the next fiscal, we will definitely continue to restore profitable like-for-like growth here at the home base.
We have a really good background for within Tokmanni segment to deliver quarter by quarter. And this modest dip in the previous quarter, like Tapio, you described, is partially due to wage increases, but also partially due to long-term commitment to renew our store network and be available in the cities and in the municipalities where Tokmanni exists. We also will be definitely paying attention for the Dollarstore's profitability. Tapio, you also mentioned that figures tend to be positive, but still actually the EBIT is a modest. So there is definitely a room to improve. But also, we do see that working together, having the synergies is actually making all our markets more profitable. Therefore, working tighter together in between countries and having a management teams really able to meet the local demand and twist when necessity will be also on our agenda.
Just this week's Monday, we also had Martin Sörenhag starting as a Managing Director for our Swedish and Danish operations. We are welcoming Martin to our management team. Of course, last but not least, gross margin improvements, higher EBIT, and stronger cash flow is in everyone's agenda and every day on our desktops and desks when we are steering our customer meet for the upcoming months and quarters. Not going into in-depth analyses from the strategy work, but to mention that August, September, October, and also now beginning of November, we've been working a lot together within the segments, within the teams, involving our regional managers, involving our key people to understand where we are today, and what kind of challenges we have met, and what kind of questions we are there to solve to make Tokmanni Group even more profitable.
Market and business analyses are something which has brought us up-to-date and have a same picture, what shall we do? Not by coincidence, we have actually written here customer understanding. We do have a lot in common when we compare three countries, but we also have differences, and therefore it's a necessity to pay out that when we can work together with one solution, it will be enrolled in three markets in each and every store, but also to understand that there needs to be a local twist. Us here in Finland, we tend to wait for Christmas, and we tend to wait for snow and for possibility to go for skiing. Same applies actually in central part and northern part of Sweden. But moving to Denmark, moving to Gothenburg, suddenly we realized that local twist is a necessity.
Winter is totally different than we are used to have. Actually, it will adjust our commercial calendar, it will adjust our offer, and at the same time, we are always starting spring season earlier in Denmark than we are starting here in Finland. We are setting clear priorities and ownership, making sure that the one who has a mandate to decide can decide and will act upon. We will not have a hierarchy to make a situation, to make actually very clear on the store level and the regional level that where the customer meets a store, there's a mandate to decide on behalf of customer and make us agile and really customer-driven. This actually applies to the last but not least. When our strategy will be communicated, it's our responsibility to make that strategy alive day by day, week by week, month by month.
We will be setting clear milestones to steer group of companies to the right direction. Now, it's also an information for you, which we kindly ask you to pencil down. We are arranging our Capital Markets Day at the end of January 27th. We actually have been calculating what will be the most feasible time for everyone to participate, and we came into a conclusion that end of January will be meeting both our planning window as well as our focus for Christmas and beginning of the new year, and hopefully this date is something which is also easy for you to attend. More event details will be following later. At this time, we are thanking you all for listening us, and we give a room for discussion and questions.
Okay. Shall we first take Maria Wikström?
Yes, I mean, thank you. I have a few questions. Seems like your stock is trading like an AI stock that down 12 yesterday and now it is up 11. Putting that aside, that was not my question. My question was, I think in the yesterday's release, you talked about the October, where you said that the consumer confidence, I mean, both in Sweden and Finland have affected your sales negatively. Yet again, I mean, we got the Clas Ohlson October figures this morning, which showed, I think it was 9% like-for-like growth for Sweden and 13% for Finland. How can you be so sure that your weak sales trend is related to overall weak consumer environment rather than you being on the wrong side of the assortment?
It is a really good question, Maria, and thank you for the question. It was nice to also meet you at the airport earlier this week. When we look our store network, and I am not here to evaluate Clas Ohlson, when we look to our store network and our offer, of course, when the October itself, the season has not yet started for winter items, not for winter clothing, has an impact. At the same time, when we say consumer confidence, our big amount of stores is not located at the capitals, nor they are not located at the shopping malls, which also means that customers are coming from the distance and are coming by walking, and not by walking, but by cars and by public.
When you look for the audience in Sweden as well as in Finland, you do talk our customers talking about gasoline prices, they do talk about energy prices, and they are hesitant to invest, or they were hesitant to invest. We do hope, especially now when we see the weather forecast, and you should never explain with the weather, but we do see that colder mornings will start to bring customers in into our stores. But it is a necessity to renew and revisit your clothes, your rubber boots are moving to winter shoes. So categories which were affected are both seasonal as well high-ticket items. I am not here to compare us to any another competitor.
Thank you. I wanted to ask on your new guidance range. You put the low end of the range at 75. Last year you did 85. Just thinking that, I think your EBIT trend has improved sequentially throughout the year, and you were just 2% behind last year in Q3. If I would take what you made for the first nine months, and then I would rip out what is the expectation for Q4 if you would end in the low end of the range, which is the 75, your EBIT would be down 13% year-over-year. My question is what would need to happen in order you to reach the low end of the current guidance range?
Will you take that, Tapio?
I can take that. Yes, of course, we try to make the range so that we meet the range in all foreseeable circumstances. Of course, if we were to fall short of our range, I think there would be something extraordinary that would have to happen during the rest of the year. I think it's likewise for the upside, that something extraordinary would need to happen that should we go over. Of course, you have to remember there's still two months of sales, which are, I would say, the biggest season for us, clearly. It's more than one-sixth of the sales. It's more like one-fourth or one-fifth of the sales are still coming in.
Of course, the profitability is the highest then during these peak months, so you have more variance during the end of the year than you have in the beginning of the year. Having said that, we, of course, know how you forecast, and we try to guide you with our range as well, so that it should give you an idea where we, of course, ourselves expect to land. Of course, no one has a crystal ball, so things do happen. That range, I would say, it's not bulletproof, but it's almost bulletproof that something really extraordinary would need to happen if we were to miss our guidance.
Tapio made it very clear that guidance is to be met. At the same time, we do work hard in each and every store to meet the guidance. Therefore, also, both in Sweden and in Finland, we are launching extraordinary activities in each and every store to meet the customer and increase the average basket. While one might call them sales competitions, it is really important that stores are prepared to meet the customers in upcoming weeks. Joonas, you seem to be next.
Yes, thank you. Joonas from OP. I would like to come back to the guidance question, because at the start of the year, you started the year with a EUR 20 million range for EBIT, and then you had 10 months ahead. Now you have two months ahead, and you are still having a EUR 15 million range. Maybe you kind of touched upon this already, but is there anything extraordinary in costs perhaps that might impact you for explaining why the range is so wide still, even though there is only two months left?
Well, we do not foresee anything extraordinary at the moment. I think it is more a function of, in a way, the fixed cost base is relatively fixed, and we can, of course, do some things like add hours, take away hours, add marketing, take away marketing. But the real variance comes from the sales. When you think about our gross margin is somewhere, let us say, 35%. If you have a EUR 50 million delta in sales, and that flows then through to the gross margin, it is about EUR 15 million. When you assume that the OPEX, you do not need that much more or less OPEX to deliver that difference in sales, it sort of gives you roughly the EUR 15 million range.
We try to always predict the sales and the EBIT in a sort of a pair it, so it makes logical sense as well, the extreme ends.
Okay, thank you. Regarding Dollarstore, the like-for-like traffic was close to flat this quarter. How confident are you that the customer losses that you have had before are now behind?
Joonas, it is a really good question. When we look at the store network through from north to south, we do see pretty steady and stable customer flow in most of the stores and most of the regions. This 0.4% decline can be actually easily calculated from the cities where we have opened a second store or a third store. So actually, it is partially and mainly our own cannibalization from the store net expansion. Especially, we have some stores which we have moved from location to another, which has also caused a decline short term in customer footfall. So we do pay attention that the upcoming activities are also inviting customers to our stores.
Okay, thank you. Finally, regarding the gross margin in Finland, that improved even though your sales mix was unfavorable once again. Can you talk us through the drivers for improvement?
Yeah. First of all, you have to remember last year. Last year, we had a very low gross margin percent, and that was really driven by the July, which we had very high sales and very low margin due to the three-week heat wave there after a very cold June. So, that is one thing, obviously. The second thing, of course, we try to always optimize the profitability. So, the pricing is, in a way, science, but it is also art. Of course, what competitors do affect our doings as well, especially in pricing. If we have a campaign and no one else has similar campaign, it is better than everybody having the same campaign. So, it is also a little bit of luck.
I would say there is some natural variability in how well the campaigns impact, but also, of course, we always try to optimize for the absolute gross margin, not the relative. If we make more absolute gross margin with a lower relative gross margin, it is better for us. The gross margin percent is, of course, important, but more important for us, we try to optimize the absolute gross profit.
Okay. Thank you.
I assume, Arttu, you will be the next in row, so please.
Yes, thank you. It is Arttu Heikura from Inderes. Few questions. First, are you satisfied with the magnitude of Dollarstore's EBIT improvement in Q3, and how do you see the EBIT improving going forward? I mean, are you expecting it to pick up or continuing on the same pace?
I think actually Tapio answered your question earlier, saying that, of course, we are happy that Dollarstore delivered within the quarter. At the same time, there is definitely a room to improve from 1% up. I think in the previous quarterly review, we also mentioned that nothing should be hindering us to reach equal EBIT level in Sweden that we have gained in Finland. It does not happen over a day or over a quarter. It needs to be taken step by step.
Do you think that this EBIT margin improvement is coming during next year, or does it take several years?
We should not yet speculate that one, Arttu. I am happy to return back to your question within the Capital Markets Day. Yes, at the same time, every step what we are doing when it takes common sourcing, common assortment, is improving our profitability also in Sweden.
All right. Then, you said that you target gross margin improvements in long term. Is this coming purely from Dollarstore? Because I assume that in Finland, it is much harder to improve gross margin given that your non-food sales is growing faster than I mean, food sales are growing faster than non-food sales.
Do you want to take that one?
Yes, that is true. That is one, if you talk about the percentage in gross margin, that is one headwind that we try to tackle and offset, of course. At the same time, we do see also potential in Finland to improve our assortment and be even more attractive to our customers. So, there is always room for improvement in Finland as well. But you are right in the sense that if the grocery and food sales especially increase, the gross margin percent there is clearly lower than in the non-grocery side of the business.
Then, of course, Arttu, when we have combined volumes in all three countries, and we have one sourcing/category management department, we are working with a full volume in our hands, not splitting that one into three countries. Especially when we move to Far East or to eastern direction, having the full containers floating towards Europe and Nordic countries, it is increasing also our profitability here in Finland, not only in Sweden and Denmark.
Right. Then my last question. I just want to make sure that the Dollarstore's positive momentum has also continued in Q4.
I think it's
That we will know after Q4 reporting, of course. I think, like we said in our profit warning, October was challenging.
We do hope that we are meeting our customer expectations in November and in December. That's actually crucial to show a good performance in all markets, and it does not only apply to Sweden at this case, Arttu.
All right. Thank you.
We have one more hand up here. It's Miika. Miika, your turn, please.
Thank you very much for taking my question. My first would be just on, as you flagged, weaker October sales and impacting both Finland and Sweden. Are you able to give us some kind of a quantification? Was this a meaningful negative delta sequentially from September to October, or how would you describe this?
I may start, and Tapio Arimo will continue. We did see slower footfall, partially as planned when we take our commercial calendar, and partially due to the delayed season start. At the same time, we do hope and we do expect that our activities now in November and in December will be picking up. Therefore, we also hope that there are no unpleasant surprises when we take into account macroeconomic issues which we cannot influence, but actually our customers are meeting when they consider how much they are spending for the Christmas gifts.
Thank you. That's clear. As far as I can see, there is only one new store in Denmark and one in Finland that have been announced so far for next year. How should we think about store growth and with it IFRS 16 lease liability growth? Should they largely stop in 2027, or will lease renewals still add materially to your lease liabilities and expenses?
It is a good question. I think I partially responded to your question earlier. When we look to the next fiscal year, our store network in Sweden is more or less accomplished. It will be, of course, meaning maintenance, renovation, some store movements. We have contracted only two new stores for next fiscal. When I look to Denmark, we have contracted two new stores for next fiscal. We are getting back to this network expansion question also within the Capital Markets Day. Yes, you can see that Finland and Sweden have actually nationwide networks meeting our customers.
Thank you. Then on sort of costs outlook. I was wondering that did your volume consolidation benefits, whether it is coming from higher private label share or generally lower sourcing costs, more than offset freight and sort of any pressure on plastic prices, for example, that then filters through to your assortment? At the same time that beyond this strict cost control that you mentioned, is there a quantified savings program for 2027, and what does that include?
I think Tapio will take that one. I am just saying to you that budgeting process for next year is right now ongoing. Of course, budgeting process will definitely take into account this OPEX development and our savings targets. Tapio.
Yes, of course, we do see headwinds in certain costs, and especially the oil price has some more direct impacts and then some impacts that come with a longer lead time. So, we, of course, need to work very hard to offset those, whether it is in the way we operate or what kind of products we source and what kind of materials are used for those products. But for example, shipping costs, they are very difficult to circumvent. If the fuel prices go up, it quite rapidly usually reflects in the either fuel surcharges or otherwise hikes in shipping costs, as well as delivery costs then from the logistics center to the stores. So definitely, we track this very closely, and of course, we need to find offsetting measures then, and we try to be very prudent on the pricing in the sense that we are a discounter.
We have to have very competitive prices, so we try everything else before pushing the, let's say, increases in cost to the end user prices.
I can see that, Svante, you also have a question to us, so please, and I think then we are about to conclude this event. Svante, your turn.
Yes, thank you very much. Couple of questions left. The first one regarding the good increase in average basket size in Dollarstore. Have you seen a change in the mix of customers, meaning that have you seen customers with higher purchasing power finding your stores, or how is it mainly explained apart from the fact that you have introduced SPAR products into the assortment?
It's a good question, Svante. When I look to nationwide network, of course, we have locations which are closer to block houses, which might be closer to villas. But in reality, I'm always steering a store in Järfälla, in Barkarby Shopping Mall, while depending on about the weekday, I always find cars parked in front of our store. And the cars are actually telling that each and every Swede is visiting our stores, and we do see that we are attracting low-income, mid-income, and even the higher-income Swedes. And it's important that when customers are visiting us more frequently, they will also find out that our assortment has widened, and there's more to buy. Instead of having the narrow down basket, we also are meeting more and more, not only seasonalities, not only festivals, but also, like I said, toys is a really good example.
Toys is bringing in family customers, and when family customers are floating in, they also tend to buy more than the ones who only came for once or twice a year to celebrate a birthday party or to celebrate some another family occasion.
Thank you. The last question regarding the second installment of the dividend which you decided, or the board decided to pay this fall. Do you have any comments on that? I know it's board decisions, but there has been some uncertainty whether you will pay it or not.
Tapio.
Well, I think that is a good signal on the strength of our balance sheet, even though we are more levered than some of our competitors. But of course, we feel confident that we can pay the dividend. If the board wasn't confident in that, then they probably would have decided something else. Of course, coming on also on the back of the strategy that we will launch soon. Of course, typically when you launch a new strategy, there are some investment areas, but even with that knowledge, the board felt comfortable in paying the maximum dividend that was in their power to pay. I think it's a very positive signal.
Thank you all for participating. I intentionally took a Christmas leaflet from Dollarstore. While I have it with me, I'm also welcoming you all to visit one or multiple of our stores in Finland or in Sweden or in Denmark. Please also buy a lot, increase our average basket. It's a good signal when we see average basket growing and footfall growing, and those are key parameters for January, February, and March as well when we are closing this fiscal and starting a next. Also pay attention to pencil down our Capital Markets Day, 27th of January next year. Thank you all for participating.
Thank you.