Good morning, everyone, and welcome to Europris presentation for the second quarter and first half year, 2023. It's mid-July, and it's not many people in the room, but I greatly appreciate those who have turned up. I also thank Carnegie for hosting today's presentation. My name is Espen Eldal, and I will present the details today together with CFO Stina Byre, who will give more information about the financials, and the IR officer Trine Engløkken, who will manage the Q&A session at the end of the presentation. You may type in your questions on the web as we speak, and you can also ask questions here in the room at the end of the presentation. Let's have a look at the highlights for the second quarter.
I'm very pleased to see that we gained sales growth in a very competitive market. Sales grew by 4.3%, with a like-for-like growth of 1.1% for the Europris chain. As expected, the gross margin declined from a record level last year, but the gross margin was still above the pre-pandemic levels, with 44.5% in the quarter. I know we report quarter-over-quarter, but sometimes it's worth, you know, taking a look at the longer lines and the bigger picture. Overall, Europris is very satisfied with the progress we have made over the past years. Sales have increased and established at a significantly higher level than before, while we, at the same time, have increased our margins.
Going back to the second quarter, I have to admit it has been a little bit mixed quarter. After a very slow start in April, we saw growth and improvements in profitability and sales, both in May and in June. A positive development in the quarter. The sales growth itself has been driven by inflation, and the volume has been reduced. This is also reflected in operating expenses, where we have adjusted the variable cost according with the volume decline, and that resulted in a slightly lower OpEx to sales ratio in the quarter. EBITDA ended at NOK 531 million, a reduction of 9.8%. At the end of the quarter, we completed the refinancing, securing the financing of Europris for the next two years, plus an option for additional two years.
I was very pleased to see that the competition among the banks was hard. At the end, we actually had to say no to banks that want us to finance us. I think that is a strong signal from the banks in a very tough market. Let's also have a quick look at the highlights for the first half year. Total sales growth of 7.9% and 5.7%, excluding the acquisition of Strikkemekka. Gross margin of 44%, down 2.5 percentage points, still around 2 percentage points above the pre-pandemic levels. OpEx to sales ratio slightly down from last year. EBITDA was NOK 842 million. Net profit was NOK 331 million.
We have a solid financial position with net cash and liquidity reserves of NOK 1 billion at the first half year. Let's also have a look at the market. I think it's fair to say that we are experiencing a very mixed retail market at the moment. The market figures for June are not yet available, we share the data as of May. Total retail grew by 1 percent point. It's a fairly mixed market, as I said, and the various retail segments are experiencing the change in consumer behavior differently. The winners are those who offer essential goods at low prices. Grocery has the highest growth, and from media, we can see that within the grocery sector, the consumers flock around the discount concepts, while the supermarkets are losing market shares.
We also see from the media that the market loses are those who offer discretionary items and high-value ticket items. Europris is in the variety retail segment, which grew by 2.3%, while Europris had the growth of 3.9% per May. I believe that Europris' concept, with a broad product range, with a focus on consumables, low prices, and strong campaigns, is a good fit in today's market and set to perform quite well. Now, I will leave the stage to Stina to talk more about the financial details.
Thank you, Espen. I will take you through the financials for the second quarter. Group sales were NOK 2.3 billion, up by 4.3% or up by 2.7% if we exclude for the acquisition of Strikkemekka. The Europris chain had a like-for-like sales growth of 1.1%, where an earlier Easter and one less sales day had a negative impact. After a slow start in April, sales performance improved in May and June. We also saw higher footfall to stores. Consumers remained cautious about investment purchases, for products with a price point above NOK 1,000, we saw a sales decline of 3.9%, compared to a sales decline of 25.1% last year. These sales only constituted 6.6% of chain sales.
As this development was expected, the organization had turned its attention towards lower valued seasonal items, and here we saw sales growth. Overall, the sales growth was higher for consumables than non-food. Total e-commerce sales were NOK 176 million, up by 20%, or down by 2.6%, if we exclude Strikkemekka. The Lekekassen Group had sales growth from continued good performance in both Sweden and Denmark. In Norway, sales fell behind last year, but the decline was lower than in the first quarter. Sales in Strikkemekka also fell behind last year. Where europris.no is concerned, we have narrowed the product range available for online shopping based on customer sales and search history. For selected categories and a defined seasonal range, the aim is that the majority of this assortment shall be available for online shopping.
The gross margin was 44.5%, down by 3.7 percentage points from the record levels last year. A lower gross margin was expected and is still above the levels before the pandemic. There has been price competition, especially for consumables, paired with higher input costs. Price pressure in the market eased somewhat from May, and we saw a smaller margin decline throughout the quarter. There was campaign activity to support volumes of higher valued seasonal items, and combined with negative cost effect on seasonal carryovers from last year due to the old freight agreement. There was an unrealized loss of NOK 8 million on hedging contracts, compared to a gain of NOK 20 million last year.
As explained in the financial presentation for the first quarter, calculation differences are now booked in the quarter they occur, and not at the time of inventory counting, and NOK 20 million was booked due to this in the second quarter. OpEx was NOK 497 million, up by 3.6%, or marginally up if we exclude for Strikkemekka. The OpEx development was positively impacted by a reduction in variable cost elements, following the lower volumes. We also had lower costs for transportation to stores than we did last year. The OpEx to sales ratio was 25.1%, slightly lower than last year. EBITDA was NOK 531 million, down 9.8% from the record levels last year, and this development was impacted by the lower gross margin.
I will here comment on the figures for the first half. Cash from operating activities was NOK 208 million, compared to negative at NOK 8 million last year. This improvement was explained by a less negative change in networking capital than last year, largely as a result of the inventory development. Last year, the inventory was negatively impacted by increased purchase prices and had a negative cash effect. As we entered this year, we had excess volumes of seasonal summer items in stock, at June 30th, this had normalized with a corresponding positive cash effect. The net change in cash was negative, with NOK 593 million, compared to negative at NOK 603 million last year. This year, the group acquired the remaining 33% of Lekekassen for NOK 212 million.
Net debt was north of NOK 4.2 billion, and if we exclude lease liabilities, it was NOK 1.6 billion. The financial position remains solid, with cash and liquidity reserves of NOK 1 billion. The group has completed the refinancing, as has been said, securing facilities for the next three to five years. To sum up, the inventory situation has been normalized, the financial position is sound, and we have completed the refinancing. With that, I will hand it back to Espen.
Thank you, Stina. I'll give a short update on some of the strategic initiatives we are working on. We talked before about the focus on category upgrades and seasonal products as very important, and we see in this quarter that that had a positive impact on sales. As Stina just told you, we have seen a decline in sales of high-value items, but the focus we put on accessories and low-value seasonal items has really paid off. I talked about this before. Europris is a very flexible concept, and we are able to shift focus according to the changes in consumer behavior and the demand in the market. Already last year, we saw a shift in the consumer behavior, trending away from the high-ticket items towards lower-value items and consumables. This year, we planned differently.
We planned the season with sales of accessories, lower-value items. We scaled down the purchase of high-ticket items. The reward has been higher sales, of course, of the low-value seasonal items, as Stina said, but also we have a normalized inventory. The inventory is back to normal, and we have cleared out all the old stock. That was a job well done, and it's important that you manage these seasons in a good way, and we have done that this year. Another important asset to the Europris concept are the category upgrades. That is important to drive sales growth, but also to improve the customer experience in the stores.
In the second quarter, you see that the recently upgraded categories are those who really drive the sales growth, with the growth way above the chain's average. Laundry and cleaning was upgraded in the first quarter this year, while toys was upgraded in the fourth quarter of last year, and both categories are performing extremely strong in the second quarter. The growth in toys, clearly demonstrate that the assortment we developed together with Lekekassen, has really been positively received by our customers.
That is very pleasing for us to see, because taking in toys into our stores was one of the key reasons behind the acquisitions of Lekekassen, and it really shows that we, by acquiring an online specialist in toys, we have managed to lift the impressions and also lift sales and customer satisfaction in the physical stores of Europris. DIY and Pet was upgraded in the third and the first quarter of last year and continue to show a very positive development. I talked about the customer club also several times, and the membership base is increasing, and we are now getting close to 1.4 million members. The club is actually becoming a very important driver of traffic to our physical stores.
In the second quarter, we have tested on a fairly large scale, more personalized newsletters, and we see that that drives both the opening rates and the click rates. To reach non-members, we have also scaled up the digital marketing. I'm not saying that, you know, this physical leaflet is going to stop in the near future. It's still an important tool, but we are preparing for a future where all marketing will be digital, and then the customer club is very important to we have that reach in the market. If you look on new stores, we opened two new stores in the second quarter, one at Dombås and one in Hamar.
I myself, I was born in Hamar, so it was a great pleasure for me to be present at the store opening together with Maria Solsvik and her brilliant team of dedicated personnel up there at the store, and it really had a good opening. Both stores has opened fine, settling themselves in their markets, and we have planned seven stores. We have that in the pipeline now for the coming years, and three of those are subject to planning permissions. In the second quarter, we also did two store relocations and three store modernizations. One new addition to the strategy that we presented on the capital markets update in December last year was the theme about acting responsibly.
That is an important part of our new strategy, and we are even putting now even more focus on sustainability. We have applied for science-based targets, and we have committed ourselves to zero emissions. In that connection, we are now strengthening the sustainability team with two more positions. I'm sure that this will help accelerate the sustainability work in Europris. We're also working with reducing emissions in our own supply chain. Together with Maersk, we have replaced fossil fuel with biofuel for the deep sea, deep-sea transportation between Asia and Europe, and that will actually reduce those emissions by 90%. I think this is a very good proof that working together with our partners, we are able to achieve more than we could do alone.
We talked at the CMD that working on sustainability demands that we work together with other partners. Like we have presented them, we work with the domestic distribution together with ASKO, and now we are doing that with international freight, together with Maersk. This is really showing that together, we can actually achieve something. We're also working on improving the recycling rates, both in the stores and at the head office, and we have good progress on that. We also started a project to reduce the packaging material and the waste we have from that in our own supply chain. A lot of focus on supply chain at the moment to reduce emissions in our own value chain. It's time to summarize and also have a quick look at the outlook.
I think we have delivered another strong quarter, the momentum we have gained over the recent years are maintained. Sales has established on a higher level, we have taken market shares, and over time, we have also increased profitability. We see that the Europris concept is strong in the current market. The consumers and media pays high attention to price at the moment, we expect that household finances will remain to be under pressure following the hiked interests and also higher inflation following the weak Norwegian currency. All of this should be supporting for Europris concept with a broad range of consumable products, low prices, and very attractive campaigns. With that closing remark, I think I will invite Stina back on stage, we will open up for questions.
Thank you. Eirik from Carnegie. A couple of questions from me. I think if we can start almost to the end of the presentation, Espen. You showed some interesting data on the category updates that drive above average growth. Sorry, some trouble with the microphone there. Eirik from Carnegie. Espen, you showed some interesting data on how the category updates drive above average growth rates. Could you say anything about your plans for category upgrades now going forward in this climate?
We have several in the pipeline. We have, you know, basically planned for the next three years, and, you know, we will, we'll tell which categories when we are ready. We have not disclosed any yet, but of course, this is a very planned and systematic work.
Perfect. Thank you. Also, I note that there's nothing on the city stores in the slide deck here today. Could you give a update on how these have performed in Q2?
Yeah, we have opened one new store at Grensen just before Easter, so it has, you know, completed the first quarter. We have to admit that start has been a little bit slower than expected, but the other stores are performing well. I think what we have seen with city stores is that they actually need some more time to settle than actually the stores in the more rural areas. Yeah, you know, if you open a store at Setermoen, everybody knows that Europris is coming to town, so it's, you know, it's big news. If you open one at Grensen, it actually takes, you know, months before, you know, the people that pass there every day realize it's a new store there.
Perfect. Thank you. Lastly, I think one for you, Stina. Could you give any details on the terms of the refinancing, either, you know, in absolute terms or relative to the former terms?
We have, relatively set, slightly improved commercial terms.
Thank you.
We have some questions from the web. The first one is Håkon Fuglu, SEB. Can you please elaborate on the OpEx development this quarter, which seemed to be low, and what should we expect going forward?
We are, of course, impacted by inflation and the collective agreements. We work continuously to ensure that we work where we can when it comes to the cost base, and we saw in, as you saw in the quarter, lower volumes have also had a positive impact, and the transportation to stores was more expensive last year. We expect that, unless the fuel prices rise again, that should have a positive effect. I think you shouldn't expect necessarily that we can keep costs at the same rate, but we do work to take a good development in cost wherever we can.
We are impacted by higher costs, but work where we can.
A second question from Håkon . Tokmanni recently acquired Dollarstore in Sweden. Will this impact the ÖoB process?
Yeah. First of all, I would like to congratulate Tokmanni on the acquisition. I think it's good news for them, and of course, also good news for the collaboration we have with them on sourcing. It brings more volume to the partnership. It will not have any impact on the ÖoB transaction. That is totally different from that perspective.
Ole Martin Westgaard, DNB. What is the mix on organic growth between volume and price?
The basket overall is slightly higher, where volumes are down, but prices are up.
You comment that the gross margin pressure eased from May. How was the development in gross margin year on year from May and June relative to last year? Can you quantify how much of the gross margin pressure that was due to seasonal campaigns?
The gross margin, the decline was smaller throughout the quarter, so it was a positive effect. It was tougher both for consumables and non-food, but it was tougher for consumables. I forget if there was something more in the question there that I did not answer. Long question.
Yeah, this was a long question. Can you quantify how much of the gross margin pressure that was due to seasonal campaigns?
Can't give an exact figure, as I said, it was the price competition for consumables hit the hardest. We did have higher volume, higher campaign share on to ensure that we did have a volume of the higher seasonable, higher valued seasonable items, so that we would get a good inventory situation, and we are definitely on track to that. I think we have made good decisions when it comes to this dynamic. It's a challenging environment, and the organization is continuously working on this balance between pricing, campaigns, and margin.
The last one, In your discussions with vendors when you do, some are prices developing year on year?
It's a mixed picture. Of course, there are a lot of costs that the market needs to still take out. If we look more towards Asia, especially, then prices are. It's a positive development, but of course, the weak NOK does not help. It's a mixed picture how it will affect us in total.
That was all of the questions for today.
Thank you.