Okay. I think we're going to start. Of course, first of all, welcome to the Q4 presentation of Europris. It's a pleasure to welcome you, of course, with these figures, but also since it's been Christmas, we have a special treat for you today. We'll start off with our normal lottery. Trine has asked me to urge you today. Of course, now we have the everyday season. Now it's not Christmas anymore, it's everyday season. Today we have a plastic bucket of everyday products. It's Europris profile products at unbeatable prices. It's everything from toilet brushes to the dustpans and, yeah, a lot of disposable products, of course. Everything you need for daily life until next season is here. Make sure that you bring them so that Trine doesn't have to take them home, all of them. We also have some snacks for you.
Our own private label, just an example of the kind of private label development we do. We are, of course, very big in snacks. Now we are developing also what I would call the medium-level snacks. It's fresh packaging, 100% sunflower oil, NOK 19.90. It's all different types of tastes. It's onion, it's jalapeno, it's bacon, it's cheese, whatever you want. It's served in the disposable product from bamboo fallouts. It's a very environmentally friendly product, so you can have a good conscience when you eat the snacks. We are also going, since it's Christmas, to have a special lottery today. You all have been seeing that it's been snowing in the last few days. Of course, we planned that. We're going to have a snowblower that we're going to give out to one of you.
That snowblower, you won't find in a Europris store, but you will find it on the click and collect selection, of course. The lucky guy can come home and get away all the snow. I urge you to draw the lucky guy or girl. Okay, it's H68. Who's the lucky one? Okay, we are bribing the journalist also, so that's very good. Okay. It's a battery-driven one, so of course, we expect some good press coverage on that one. Okay. With that, with the advertising, I think we go to the juicy stuff. As I said, I think it's a great pleasure to welcome you with these kind of figures. Of course, we always said it that Q4 is the Champions League of retail, and it's very good to win Champions League finals. I think the credit for that performance is to these guys, is the team.
Retail is really a team effort, and in this quarter in particular, it's been a true team effort, not just by the people in the stores, but all the way back through to the people in the warehouse, logistics, and last but not least, in the replenishment team that has been instrumental in making this performance. The good thing was that not only did we do well, but we actually did best when we had the toughest comparables in the quarter. From Black Week and on, I would call it a magic period, actually. It's not magic period every quarter, but this period it was a magic quarter. We have once again cemented our position as the number one discount variety retailer in Norway with respect to customers, marketing, stores, logistics, and sourcing.
Of course, I'm very happy to be able to present 26 years of continued growth for Europris. I'm very sure also that it will continue in the years to come. If you look at the fourth quarter, we had almost 13% increase in group revenues, which is driven by a very solid like-for-like performance. Also, that we are converting, taking over some franchise stores. We had a 7% like-for-like, which is good. Of course, it was last Q4 last year was somewhat on the lower side. As I said, the best part of this quarter was actually where we had really good comparables last year in the Christmas season. It was a very solid performance. Gross margin was down slightly.
It's the same reason that we had in last quarter, where we actually been being better at campaign implementation, making sure that we have all the campaign products you're looking for all through the week. That being said, keep in mind that the majority of the like-for-like sales growth is from non-campaign products. Even though campaign sales has been good and putting a little bit of pressure on the gross margin, the majority of the increase in like-for-like is obviously not campaign products, but it's non-campaign products. OpEx, a little bit affected by the positive sales growth. A part of this quarter, we were operating at 100% capacity. Obviously it's difficult to have scale advantages at 100% capacity. Net profit up almost 14.5%, a little bit more than 14.5%, which is also very good. We're very happy with that.
We are also very happy, obviously, with the fact that the new warehouse, which is the big thing happening this year, is on plan with respect to time and costs. Of course then, we will have a little bit easier operational situation. If you look at the full year, as you faithful people have known, 2018 was a sort of a year of up and downs. Started slow but has picked up. We ended up with 2.2% like-for-like sales for the year, which is on the low side compared to historical figures, but above the market, we should always beat the market. That is our target. The market was on the lower side in 2018. I think that having 2.2% growth in that market condition is okay.
Eight net new stores and eight franchise takeovers. Gross margin for the year was actually up half a percentage point, which was due to the situation in the first part of the quarter, where we deliberately softened the campaign pressure and focused more on the gross margin growth. In the first half, that was the main driver behind the gross margin improvement. Adjusted net profit was then up 10% last year. Once again, I think we can be pretty happy with that, given that it was a tough year and every time you read in the papers, you read about retailers having trouble. Having 10% growth in net profit is okay. It was also a landmark year, of course, with the 20% partial acquisition of the Runsvengruppen. It's also an important long-term thing happening in 2018. Yeah.
Since we are not planning on starting a bank and we are doing okay, we obviously also give a little bit more back to our shareholders. We keep a steady increase in our dividend to our shareholders. If you look at the sales performance, it was high growth throughout the quarter. We had one more sales day in the quarter in October. As I said, the sales actually picked up throughout the quarter. We did best when we really had the toughest comparable and when it matters the most, which is basically Black Week and onwards. That was the most important. I think that's showing the seasonal position that we have at Europris. We had good comparables in 2017, the team stepped up its effort, and we really did a very good seasonal campaign.
It's thousands of details that has to fix in, everyone has to know what they have to do in that part of their plan. This quarter, we really, really performed at a high level, especially towards the end of the quarter. That was a period that we call magical, actually. Very pleasing for us operational people is that we have been presenting to you figures historically that has not been up to your expectations. We said that we are focused a lot on central control of spacing and volumes, that is one of the key drivers behind that improvement in performance. In retail, if you fix something, you don't fix it in the next month or the quarter. It takes some time.
Having worked now over the last one and a half year on operational improvement and getting better systems and better control of the spacing in the stores, I'm very happy that we could see the fruits of that in the important fourth quarter and in important final weeks of that quarter. Really, really good performance by the replenishment team and the systems supporting it. Yeah. These figures, obviously, I hope that we can present it forever, it's fantastic. The green bar far above the market. I can almost not see the market. The market is obviously on the low side, obviously Europris is on the higher side, too. Very good in a tough retail market.
I think that cements what we talked about on December 5th, the fact that there are two segments growing in retail at the moment, not just in Norway, but in the Nordics, in U.K., in U.S. It's e-commerce and it's discount variety retail. In between, it's where the tough times are. This is the same as we talked about in December. We just wanted to reiterate it because it's important. This is the long-term plan. We have a very clear plan for where we're going in the next few years. We are going to do a lot of work to strengthen our price and cost position. We are going to do a lot of things to improve customer experience, we're going to do a lot of things to drive customer growth. That's the three areas that we are focusing on in the years to come.
This we talked about also then in December, effect of one of our prime private labels now becoming Nordic. We are busy translating it to Swedish text and then maybe after a while, also Finnish. We think that we can develop some Nordic private label that is getting scale advantages and also developing and strengthening the brands. You saw the snacks over there, but there's a range of products that we're going to launch within the private label that is very exciting. This is one of the key elements of our new strategic plan is to use private label as a driver for growth and to distinguish ourselves from the other chains. I think with our Nordic kind of footprint, we can actually get scale advantages in that. That's a very interesting area and a focus area for us.
We also, obviously, we are still engaged with ÖoB. We are still in love, it's a very positive development in the working relationship with our friends at ÖoB. We also have, of course, the long-term relationship to Tokmanni. We think that that kind of partnership between these three partners are an important way we can have a competitive advantage in a tough and steadily tougher retail environment. With NOK 17.1 billion in retail sales to customers, we have an unprecedented scale in sourcing for these Nordic kind of products. Distribution is also obviously a very important focus area for us in 2019 and 2020. It's only a few months until we open the first phase of the new central warehouse. It's the new temple, as we call it. It's fantastic. We want to be state-of-the-art operations.
Of course, for our shareholders and ourselves, it's also going to have an economic effect. One thing is a direct economic effect, but the other thing is just that it's also easier to scale when you have that kind of modern automated facilities, compared to operating in five, six different warehouses and trying to do things more manually. That's also an important milestone for us in 2019 and 2020. The other thing, which I think obviously is exciting and a fun part of the job, is doing this constant category development. We saw it once again in this Christmas season. One of the key reasons, in addition to the replenishment systems and procedures, was the category development we've done. We've taken some real leadership in some seasonal categories. We always have to have a portfolio of different category activities.
Some play out in one quarter, some play out in another quarter. It's important to have enough time and resources to spend on that kind of category development. This is the fun part of the job. We always have a long thing. In these days, when we are talking now, we are soon going to roll out some new pharmacy products in our stores. You will see it in a couple of weeks. There's always a continued kind of Some will have a big effect, some will have a small effect, but increasing. I think that it's the sum of those activities that make us distinguish ourselves from our competitors. Really, really happy with that.
Of course, in modern retail, even though we only have 0.5% of our sales is in e-commerce, I think it's very important to understand that for us, the digital area is very important. I don't care where the customers buy our products. A lot of our digital activities is concerned about getting people, reaching them in a different arena, then the sales might come in the physical world. It doesn't really matter. It's up to the customers. We don't distinguish that much between e-commerce and physical commerce. It's just commerce. We try to reach the customers in all different areas where we can reach them, and it doesn't really matter where they end up buying the products. Part of the success in the fourth quarter is also obviously that we are stepping up our efforts in the digital area.
That is never negative for the physical world. That omni-channel experience, customers don't really distinguish between Europris digital and Europris physical. It's Europris. You saw the snowblower today. For Christmas, we also started out having more Christmas trees. I think we took a position on Christmas trees in Norway, artificial Christmas trees. Very positive sales development. Of course, here's another area where not all stores can have all these trees. They're very big items. For example, in the end of March, we're opening a store at the Gunerius. That's going to be 500 sq m sales area. Obviously, you're not going to have space for a lot of Christmas trees, but you can buy it, click and collect, and pick it up in the store or get it home delivery.
We think that that's a very interesting area for our e-commerce operation to extend the assortment online to complement the assortment we have in the physical space. We still have a robust pipeline of new stores. We opened two new stores and closed one in this quarter. Basically, we just moved from Maura to Nannestad, which is quite close. Then we opened another new store at Rjukan, where we haven't had a store. People in Rjukan is very happy because previously they had to drive for 45 minutes to get to the closest Europris store. Now they can buy it in their hometown. Very positive. We have 12 stores as a pipeline for 2019. As I said before, we do not have a sort of hard target on number of new stores.
This year it could be seven, it could be more or it could be less. It's really important that it's the right kind of stores and that they are profitable stores. If we get to an increasing extent, interesting, either new stores or relocations or expansion opportunities, obviously, we will say yes if the calculations are right. It's not our focus to have the maximum number of stores. It's the profitable stores. With that, I think, Espen, you can show us the juicy stuff.
At least we can show the numbers. Gross margin in the quarter was 43.4%, down from 44% in the same quarter last year. As Pål said, we have increased the focus on implementation of the weekly sales campaigns. It doesn't mean that we have increased the level of discounting because that remains on the same level. What we've done is that we have made sure that all the customers coming into our store throughout the week, they actually get the weekly offer. We have enough product that has lifted sales, and we also believe that on the long term, this will also increase the customer satisfaction, also helps to drive traffic going forward. It's deliberately something we've done to increase sales and also to keep the customers more happy, and it's also strengthening our price position with great offers.
On the operating expenses in percent of sales, that was 26.9%, compared to 26.5% the year before. The key reason for increase in cost is the increase we have in number of directly operated stores, going from 205 last year to 221 in the fourth quarter this year. We also experienced that the large volumes we had during the fourth quarter is putting some pressure on the logistics setup we have at the moment. As you know, we're planning for a new warehouse because the old one, we see now that we are reaching the limits. We had to spend some extra cost on third party handling because we couldn't handle all the goods ourselves, and we also need to rent some containers. That added cost of about NOK 8 million in the quarter.
When you compare the numbers year-over-year, please also remember that operating expenses in 2017 was impacted by almost NOK 20 million, reducing cost due to performance-based remuneration and also received marketing support from the suppliers. The benchmark was also tough when it comes to operating expenses. On the adjusted EBITDA, we ended on NOK 304 million in the quarter, up from NOK 285 million the year before. The EBITDA margin was 16.5%. The adjusted EBITDA, of course, affected by the high sales growth, but also then held back a little bit by the extra costs we had related to the large volumes during the quarter. If we look at the cash flow, this quarter the cash flow was reduced from last year due to the share buyback programs we have completed that amounted to NOK 77 million this quarter.
For the full year 2018, the cash flow was impacted by the increase in the inventory. We have increased the inventory in the store slightly. That is basically due to more campaign products, that we're making sure we have enough products that is lifting the inventory slightly in the stores. Also we have increased the inventory at the central warehouse to have better service rate to the stores. We're making sure that we don't run out of products. This is lifting the performance of the stores, helping sales, and also driving customer satisfaction. We have reduced the CapEx from last year, some fewer store projects. Also in 2017, we had an investment in the land area next to the warehouse in Moss. During 2018, we have also completed three share buyback programs amounting to NOK 121 million in total.
Still at the year-end, we have a very solid cash position. Pål?
To sum up and talk a little bit about the outlook, we believe that we are going to see continued growth in the long-term revenue and profits supported by the fact that we are in Norway, favorable retail market sale, and in a segment in Norway and the Nordics and Europe and the world, which is very favorable. We are in the middle of transforming Europris from what I would say a pure physical retailer to being an omni-channel retailer. Keep in mind, we don't really care where the sales is coming, but we are very concerned about making sure that we reach our customers or potential customers in all different areas, physical and digital. We have a healthy pipeline of new stores, but once again, it's not as a hard target.
We will open only stores that are profitable, and we will close any unprofitable stores, even though we have seen a reduced number of unprofitable stores. We have very few unprofitable stores, as you can see in the report, and we are getting fewer in 2018. We expect still some franchise takeovers. Two franchise takeovers completed on the 1st of January, and then two, three more expected throughout the year. It's more for natural reasons. The stores is being refurbished, and the franchisee might not want to or have the money to reinvest. It's nothing dramatic. This is our long-term focus. We want to be the best discount variety retailer in Europe. That's a tough target. There's a lot of really good competitors out there or players out there.
If you set the European benchmark, we are the number one discount variety retailer in Norway, but Europe is at a tougher level. We have to do a lot of things with respect to price and the cost position to be that. We have to still work on the concept, even though I said that concept and seasonal development was an important part of the success in Q4, we still think that that's a continuous effort, and we have a lot of things we need to do that we also talked about on the capital markets day. There's a lot of efforts in doing efficiency in the value chain and cost efficiency, because if you want to have the lowest prices, you need to have the lowest cost.
I also still think that, and we see it more than ever in a quarter like Q4, that culture and execution is really important in retail. If I have to choose between the right strategy and the right culture, I would rather take the right culture because it's in the end, that's the most important aspects of retail if you want to succeed. That's going to be the focus on this. As I said, if we put the benchmark not at the Norwegian level, but at the European level, we are not there yet. We still have some hard work out for us. With that, I think we will open up for some questions. Yeah, microphone is on the way.
Thank you. Preben Rasch-Olsen, Carnegie. Two quick questions. First, Q1 most likely weak because of Easter, but could you say something about the effect from the reversal in the sugar tax and the not longer that hard war on personal care products?
I think, of course, obviously Q1 this year will not have an Easter, so that will have an effect, and I urge you to look at the analytic info we have in the appendix to this presentation to look on the effect of the Easter, and how to calculate that. When it comes to the sugar tax, we believe that, of course, prices will go down. They are on the way down, and that means that we will lose some revenue. We'll see if the volume picks up.
It's still too early to say the exact effect. On the personal care, the price war is more intense a year ago. It has more stabilized. We've seen that we have growth in volumes, but the total revenue has been flat for basically the second half of the year. I think hopefully we can see some growth, but that depends on getting customer growth, basically.
Quickly on the Runsvengruppen acquisition, you have booked it in the balance sheet, but you haven't had the cash outflow yet, right?
That is correct.
That will happen in the first quarter?
That depends. We have bought some treasury shares, that could be used to settle the acquisition of the 20% ownership. We believe that the shares we have on hand by now should be sufficient to cover the purchase of the 20%.
Thanks. Petter Nystrøm, ABG. Two questions. First, can you share some light on your expectation on the gross margin going into 2019? Then, given that we saw some higher share of campaign sales in Q4?
We will for sure continue to make sure that our customers get the campaign products. You should expect that that effort will continue. That has been positive for sales, positive for profits, but dilutive on the margin. We will continue to do that. We believe this is the right thing to do.
Finally, what about share buybacks in 2019?
We have not initiated a new program. We said that we'd buy back shares in order to be ready to either pay for the acquisition of Runsvengruppen or to delete shares. We have enough shares on hand, we believe, to cover the acquisition of Runsvengruppen , and have not initiated a new program at the moment.
Marcus Bjerke from SEB. Going back to the like-for-like of 7%, you mentioned that it was predominantly non-campaign products that drove it. Can you give us some more color on what kind of categories have performed the best? Also if there is any differences in terms of geography?
Yeah. No big difference on geography. I think that the biggest as I said, it was tilted a little bit, growing good all through the quarter, but even better towards the end, when we had the toughest comparables in 2017. In 2017, we had a poor quarter, but it was mainly due to the first part of the quarter, not the last part. It's basically big seasonal categories, the big hero products. We sold a lot of nisser and those kind of things. It was, yeah, Christmas trees, you saw. We mentioned also Christmas lightning, which is a big category that we've really taken some steps. It's really just good category work that has been done by the category team.
Good morning, Carl Bjerke from Arctic. On the Capital Markets Day, you spoke a lot about or mentioned the click and collect and h ow that has showed very strong growth in the first couple of months. For those of us watching the website, you have launched several new products this month already. Could you give us sort of a preliminary update on, are you selling any Lay-Z-Spa Jacuzzis and weapon cabinets?
Of course. I mean, Lay-Z-Spa, you have the Lay-Z-Spa Helsinki, which is very good for when it's very cold. That's a fantastic product now for February. It's a deliberate strategy to increase the kind of product range on click and collect, where you've seen the first part of it now, but actually more is going to come in the next few months. I would say that more than 90% of our online sales is click and collect. That's a majority. It's product that people, that has a certain value. It's not a NOK 20, NOK 25, NOK 30 product people buy online. It's their NOK 200-plus. That's the biggest one. We think that it's going to be even more important in the spring-summer season, where that kind of product is more relevant.
That being said, of course, as I said, the majority of our sales obviously is non-e-commerce, it's still the physical that dominates. We also see that the digital activities we do on e-marketing, CRM and all that stuff is also positively influencing physical sales.
Hello. Martin Westgaard, DNB Markets. When you look at 2018 in total, and you look at your like-for-like growth, how would you split it in terms of volumes and price? When we look into 2019, how do you think the mix will be between those two categories? Secondly, when you look at your basket, has that changed materially from 2017 to 2018?
That's like four questions at least.
Four questions in two.
If we start with the volume on the like-for-like in 2018, total year, 2.2%. That was more or less equally shared between traffic and price. Number of items in the basket, relatively flat. That's the split. Next question was?
Your expectations for 2019 in regard to the mix.
As to the mix, we said that we will work really hard in order to get home and interiors and kitchen products up. We have some good initiatives on that. We've seen good performance on that category during the fourth quarter. Also the seasonal products will be focused. We're working very hard on the category mix, and we believe that is important also to strengthen the margin. It's early days, so we can't really see yet. These days, it's focused on the consumables and the everyday products.
Also, a question on your inventory. It's slightly up, and it looks to be at slightly higher levels. What level are you comfortable with going forward, and do you have a lot of seasonal products that are not sold out after Q4?
No, that is on the same level as the year before. We are very comfortable with the inventory levels we have now. We said before that we expected the inventory to go up, and it did go up, especially in the stores. We're very satisfied with it because that helps driving sales. On the central warehouse, it's always possible to do some improvements if you work on the flow of goods, but that takes time. We are very comfortable with the levels we have today.
There is one question here from Thomas Fosstveit. A vendor note was issued when closing the deal. This will be converted to Europris shares following agreement on the adjusted 2018 EBITDA for ÖoB. Can you elaborate?
We have updated that in this quarter. The vendor note, we have re-estimated to NOK 134 million. Is that correct, Trine?
Yes.
Yeah. That is based on the preliminary results from ÖoB and the exchange rate from SEK to NOK and also the share price at the year-end.
More questions from the web?
No.
Okay. Any more questions? Okay. As I said, please make sure that you bring one or two basket of everyday products. Otherwise, Trine will have a hard time. Feel free to have some jalapeno or whatever cheese snacks you want. Yeah. January is over soon, so you don't have to worry about that.