Good morning, welcome to this webcast, where we will present the first quarter results for Europris. I'm Espen Eldal, and together with me today I have Trine Engløkken, that will facilitate the questions that come in from the web audience. Europris is the number one discount variety retailer in Norway. We have said that for quite some time, but in the first quarter it really became a truth. Europris has proven the important role the company plays for both our customers and the Norwegian community. At a critical time, we have provided Norway with necessary goods to keep the everyday life going for most people. With our wide range of products at low prices and the unique store network across the country, we have been able to play an important role in the society.
That makes us proud in Europris, and I'm very pleased with the efforts our employees have done to make this possible. Europris is also a growth story, and since the opening of the first store back in 1992, the company has grown every single year, in both financially good times and in more challenging periods. 2019 was a relative soft year for Norwegian retail, but Europris delivered solid growth, and we see that trend continued into the first quarter of 2020. In the first quarter, Europris had a growth of 11.8%, with a like-for-like growth of 10.4%, partly driven by increased sales following COVID-19. The gross margin was reduced by one percentage point owing to sales mix change towards groceries and other necessities.
Adjusted EBITDA rose by 21.3%, and profits were also positively impacted by unrealized currency gains, more or less a reversal of the negative effect we saw at year-end. In connection with the refinancing, we booked one-off cost of NOK 8 million in the finance. At the end of the quarter, we have a solid financial position with cash and available credits of nearly NOK 1 billion. Inventory, which was an issue last year, has been reduced by NOK 145 million since the first quarter last year. During COVID-19, safeguarding employees and operations has remained our top priority. We initiated crisis management plans already in January. Firstly, to secure our employees at the Shanghai purchasing office, and also to secure delivery and production of goods from the Far East. As the pandemic spread globally, we strengthened the crisis management and implemented a number of measures locally.
Europris adheres to the guidelines issued by the Norwegian Institute of Public Health at all times. We have initiated several measures in the stores to comply with these guidelines, done a lot of work to improve our routines and also improve frequency of cleaning of all stores, and also at head office and warehouses. We have initiated store strict procedures in case of outbreaks to ensure quick and safe reopening of stores. We've had virus outbreaks in two of our stores. Both are reopened. We maintain a close dialogue with suppliers to safeguard flow of goods, only minor delays has been recorded. On the sales side, we saw early indications to lower customer traffic but larger baskets. The first week after the national measures were introduced was marked by hoarding.
The hoarding basically took place for a small week, and that ended soon. After that, I've actually never seen such a clear change in customer buying patterns in such a short period of time. We see less traffic in city center stores and also at shopping centers, while suburban stores and retail park stores, and of course, especially those close to the Swedish borders, are experiencing a very positive development, both in basket size, but also in customer traffic. We have one border store that is actually performing below normal. That is the store at Kirkenes, where the Russians now are not coming into Norway to do their shopping. We've seen very big deviations. Of course, the mountain stores has been struggling, but the suburban stores, and especially in the southern part of Norway, has performed very well.
The geographical area where we see less changes in sales is actually in the northern part of Norway. In the wake of COVID-19 and the oil price fall, we've seen large currency fluctuations. Europris follow the currency hedging strategy and secure all placed purchase orders in dollars and euros for six months. Historically, this has provided sufficient time to adjust retail sales prices. We renegotiate prices wherever possible, especially for those suppliers that do not have their cost base in US dollars or euros. That also applies to purchase orders we have already placed. Looking at sales performance in the first quarter, that was strong. Total retail sales growth of 12%. We saw good merchandising in the early months, and a positive impact from the effects of COVID-19 in the end of the quarter.
We continue the strong focus we've had on implementation of campaigns throughout the value chain. This is high on the agenda, both in supply chain and in the stores. As we said in late January, when we presented the fourth quarter of last year, we had a negative start to the year. This was caused by an exceptionally mild winter and required swift actions. Europris operates a seasonal concept. We use the seasonal products to attract customer traffic to our stores. That meant we had to make a significant change in product selection and marketing to turn the negative trend. We shifted the focus from seasonal products and concepts to groceries and necessities. This was a successful change, and we regained customer traffic and sales growth.
This underpins the value of having a wide range of products and an organization that is used to quick transitions from one season to another. With the COVID-19 outbreak, our employees have shown formidable commitment. They quickly adapted to new guidelines and changes in customer behavior. When we look at the market figures, the market was down by 4% in the quarter and with a like-for-like of -4.4%. Our growth exceeds the market by far, but the comparison is not really fair. We have kept all our stores open, but the market data is based on shopping center data, where many stores have closed, and they have experienced significant reduction in traffic. For the moment, the market benchmark is not really telling the exact story. We believe that overall we have been far above market in the first quarter. Gross margin, in the quarter, was 40.4%.
That was a reduction of 1% point from last year. That was due to the change in product mix towards groceries. Gross profit on the other side increased by 8.9% from the higher sales. Operating expenses was NOK 406 million, up by 5% from last year, which corresponds to the increase we had in directly operated stores. Last year was negatively affected by NOK 11 million owing to the high fill rate at the central warehouse. In % of sales, the OpEx was reduced from 31.3% to 29.4%. That means that we have been able to tackle the increase in sales in our stores without adding additional costs. Adjusted EBITDA was NOK 152 million, an increase of 21.3% from last year.
Remember that the first quarter is our smallest quarter, both in terms of sales and profits, but we are pleased to see the increase in EBITDA margin to 11% in the quarter. Net change in working capital was negative in the period following a normal buildup of inventory ahead of the summer season. Overall, inventory has been significantly reduced from last year as we have improved the flow of incoming goods where we had some issues last year. The refinancing was completed in January, and we now have a term loan of NOK 1 billion, an RCF of NOK 1.2 billion, and an overdraft facility of NOK 200 million. Cash and liquidity reserves at the end of the quarter was close to NOK 1 billion. Europris' key strategic initiatives are to strengthen the price and cost position, to improve the customer experience and to drive customer growth.
Let's have a look at the progress we made in the first quarter this year. Starting with the price and cost position. We are in progress with the new warehouse as planned. Operation was started in the high bay area in February and at the end of the quarter, lease expires at the two smaller warehouses and the second largest warehouse in Fredrikstad. There are no changes to other milestones, and we maintain our savings target for the project that come after the period of transition we are in. When we look at the automatic high bay warehouse, that will increase the capacity significantly at the new central warehouse. It became operational in February, and the storage capacity at the new central warehouse increased from 34,000 to 99,000 pallet places. Operations will be scaled up gradually, and full operation is expected before the summer.
The relocation process of two existing warehouses was accelerated as a result of the increased capacity. We have one issue on the automated picking solution in the low bay area that has been delayed due to COVID-19. The testing was scheduled to start in late June has now been postponed. The delay is so far within the overall timeframe for the project. The sourcing partnership with Tokmanni and ÖoB continue to make progress, and the key activity in the first quarter has been joint purchasing of Christmas goods for the season 2020. We continue to work on joint private label products. We also give an operational and sales update on ÖoB. The new CEO of ÖoB, Magnus Carlsson, joined the company on the 1st of March. Magnus come from the position as CEO of Reitan Convenience in Sweden, a very experienced retailer and a great operational focus.
Like Europris, ÖoB saw a positive sales development in the quarter. They had a 10% like-for-like growth. Like us, they also saw a slow start to the quarter and a significant sales increase in the wake of COVID-19 outbreak. At the end of March, all stores were kept open, but ÖoB will consider to close stores experiencing significantly lower customer traffic. ÖoB has seen the same thing as us when it comes to this basket size. They've seen that the growth is mainly driven by the increase in the basket, and they also see an increase in the grocery part of the categories. The latter has a negative effect on gross margin. Overall, the gross profit has increased as a result of the increase in sales.
After the quarter in April, ÖoB has closed one store that is in Charlottenberg close to the Norwegian border. ÖoB is actually experiencing the exact opposite effect of what we see towards the Swedish border. We see huge sales growth. They see, of course, the totally opposite. On improving the customer experience, concept and category development is the key for Europris. Continuous improvement of concept and category is the backbone and will be a very important driver for sales growth going forward. In the first quarter, we have introduced the price-conscious chef in all our stores. I think the timing couldn't be better now as everyone has more time at home in their own kitchen as a result of COVID-19. That's also reflected in the first sales figures we have seen from the new upgrade.
We have introduced a more distinct shop-in-shop solution, where display of kitchen products has been significantly improved. In addition, we have introduced a clear, good, better, best strategy for pots and pans using both well-known brands and private label products. There will be more category initiatives in the coming quarters. On the e-commerce, we continue to make progress, and the focus in the first quarter has been to recruit more members to our customer club, Mer. Since year-end, we have increased the membership base by 65%, and we're getting very close to our target of half a million members before the summer. Most of the new members, they registered their credit cards and give us permission to use their purchase history for analytics and personal marketing. Since COVID-19, we have used digital marketing and eCRM to regain customer traffic for stores that experienced a negative trend.
For most of these stores, we were successful, and the stores performed above average in the following weeks. I think this underlined the value of continuously developing good eCRM solutions and to use targeted digital marketing. The new e-commerce solution, which was scheduled for launch in the first quarter, was delayed for technical issues, but we enjoyed a successful launch on Tuesday this week. E-commerce will serve as a complementary source for revenue growth, and combined with eCRM, we may attract new customers, both online and drive traffic to the physical stores. An important driver for customer growth is to utilize the opportunities we have in the existing store base as well as the opening of new stores. The potential of improving existing stores is considerable, and we see that we are constantly being offered better locations to attractive rental levels.
During the first quarter, we have opened one new store, we have relocated one store, and we have completed two store expansions. We have four new stores in the pipeline for 2020 and beyond but see a potential for several new stores in Norway. We still believe that rent levels are high and that landlords will have to change their terms in the time to come. The potential closing of the store at Grini has been postponed due to COVID-19. The hearing in the district court was scheduled for April and is now rescheduled to October 2020. I think it is time to summarize. The strong sales trend we experienced in the wake of COVID-19 has continued in the beginning of April. We see an increase in the shopping basket while the number of customers has normalized after the week of hoarding.
It's too early to draw conclusions about the long-term financial effects of the current situation. Like I already commented, the new e-commerce platform has now been launched, and we have a pipeline of four new stores for 2020 and beyond. One franchise store was taken over on 1st of April, and we expect another one to two takeovers for 2020. On ÖoB transaction, we expect to receive ÖoB's 2019 financials at the start of May. With that, we will start our due diligence process. Assuming that we agree on their 2019 EBITDA within the 30-day deadline, the six-month option period will start in June and end in December. Europris is well-positioned as Norway's number one in the sector, with ample opportunities and the financial position to continue our profitable growth journey.
The important summer season, that's now ahead of us, and we are well-prepared for a summer season where many Norwegians will spend their summer holiday at home in their own gardens, by the sea in their cabins, or in the mountains. Our ambition remains the same, be the best discount variety retailer in Norway. With that, Trine, I think we will open up for questions from the web audience.
Yes, there are some questions on the web. The first one is from Gard Aarvik, Pareto Securities. "Can you comment on the sales mix so far in April? You say that basket size is still high. Is this still driven by groceries, or do you have more normalizing buying patterns?
It's still driven by more groceries. We see the same trend, but not to the same extreme extent as we saw during the hoarding. The hoarding was one week, a short period, extreme share of groceries. Now it's still a higher share, but it's not that significant.
The next question is Eivind Meum, SpareBank 1 Markets. "You went out of Q2 2019 with higher than normal inventories and now refers to normal inventory build-up ahead of the summer season. Does this mean that you predict higher than normal demand through Q2 and Q3?
No, it doesn't. We have increased the inventory from year-end, so that's the normal build-up we have. We have, of course, when we place the purchase orders for the summer season 2020, we have taken into consideration that we bought too much last year, and we already have that on stock. We have planned for a normal season, and that might mean that we will be sold out of some products.
Here's a question from Ole Martin Westgaard, DNB Markets. One, "When you look at your customer traffic, do you see new customers, or is this existing customers that have increased basket?" The second one, "How was like-for-like in March relative to February and January, and how should they think about the March like-for-like relative to what you are seeing in April?
That was extremely long questions.
You can take the first one first.
Yeah, take the first one, yeah.
When you look at your customer traffic, do you see new customers, or is this existing customers that have increased basket?
We don't have good data to see if it's new customers. We see that we get some new members in our customer club, but we don't know if they have been customers before, so it's not that easy to say. We believe that overall, we don't get that many new customers, but the existing customers are buying more, but of course, some new as well.
Number two was, how was like-for-like in March relative to February and January, and how should you think about the March like-for-like relative to what you're seeing in April?
As we said back in January, we had a negative start to the year. That means January was very low. We made some significant changes to our product mix and the offering and how we operate the stores in February. We saw a very positive result from that with increased customer traffic and also increasing sales. February was very positive, and also then after the national measures was implemented on the 12th of March, we saw significant increase in sales. In terms of if you should split the quarter, January was low, February was good, and of course, March was a little bit extreme. If you try to see how that will develop going forward, it's very early days.
We've completed some 20 days into April, and we have Easter in there, so it's a lot of abnormal activities that makes it impossible, really, to say how we should measure it. We see overall increase in sales in April so far, and that is driven by the higher baskets.
Comes one more question. It's from Carl Fredrik Bjerke. "Is it possible to provide some detail on e-commerce sales in Q1 2020?
E-commerce sales is still from a very low base, so we don't think it's really valuable to comment on those figures. Let's have the new e-commerce platform starting up and see some time operation, and then we will come back with figures.
No more questions on the web.
Okay, thank you.