Good morning and welcome to this Q1 presentation for Kid. We're happy to have CEO Anders Fjeld and CFO Mads Kigen with us here today. If you have any questions during the presentation, please post them on the chat function and we will go through them in the end. Anders, the floor is yours.
Thank you, Joakim, and good morning everybody, both for you who are here at Pareto and for those of you present on the web. Well, we are pleased to present our third consecutive quarter with double-digit growth. Our value-for-money position and concept remain resilient amid continuing challenging market conditions. Growth in the quarter was accelerated by store project, combined with our omnichannel and category development initiatives. Historically, store projects mainly focused on refurbishing and relocating existing stores, whereas we today consider expansion an additional and very important growth driver. In constant currency, the group revenue increased by 13.7%, and our like-for-like revenue increased by 13.5%. With a significant improvement in gross margin, we increased EBITDA from NOK 67.9 million to NOK 124.5 million.
As you can see, the EPS increased from -1.15 last year to -0.23 for the quarter. Well, as said, the third consecutive quarter with double-digit growth. Categories launched since 2022 accounted for NOK 27 million in the quarter, compared to NOK 9.8 million in last year. A majority of this growth comes from the initiative in the Extended program. In addition to new categories, expansion of existing categories and increased inspiration level in the stores was an important growth driver in the quarter. The Extended concept was launched online and in selected larger stores in Hemtex during the quarter, meaning that we now have the Extended program all across all markets. We are satisfied with the results from the launch and look forward to continuing rollout throughout the year. Our omnichannel model and the category development with the store project have accelerated the growth throughout the quarter.
We are pleased to also update you on that our warehouse project in Sweden is on schedule. As previously communicated, we estimate the operation in the common warehouse for the group to commence mid-2025. With that, Mads will give you some details on the revenues.
Thank you, Anders. Good morning, everyone. I will present some financial numbers for the quarter, and I start with the group revenues that increased by NOK 91.1 million in the period compared to last year, representing an increase of 15%. On a constant currency basis, the total growth was 13.7%, and the like-for-like growth was 13.5%. This is driven by both physical stores and online. Also note that we observed growth in all months during the quarter for both our segments. The robust growth is driven by increased basket size and number of customers in all markets. In terms of categories, we continue to see a positive development across several categories, whereas bed linen, curtains, and furniture stand out as important drivers for both segments. Regarding online revenues, I'm satisfied to point out that we had a quarter with a strong growth of 16.2% excluding the currency effect.
The group online share was 12.0%, up by 0.2 percentage points from last year. For Kid Interiør, reported revenues were up by 13.4%, and the like-for-like growth was up by 12.7% compared to the same quarter previous year. The like-for-like growth includes an online growth of 33.3%. Excluding the online revenue growth, the online revenues from the like-for-like growth from our store were still 10.4%. New categories, as Anders explained, are an important growth driver and initiatives to fuel our growth. We have updated the definition from the reporting from last quarter, where we reported new categories since 2017, where we now report new categories since 2022. Those categories accounted for NOK 27 million in the quarter compared to NOK 9.8 million previous year. Also want to underline that we had successful Easter assortment impacted the growth positively despite reduced shopping days.
For Hemtex, we experienced a strong reported growth of 17.9%, and on a constant currency basis, the growth was 14.3%. Like-for-like growth was driven by a growth in our stores, our physical stores of 18.2%, and somewhat negative offset by the online development. And the online development is explained by a change in the campaign, in the January campaign, which we also reported last year, the same quarter. And I also want to say that we saw a positive development throughout the quarter towards the end. Summarized, I am pleased to present a strong like-for-like growth of 13.5% on a constant currency basis. Then the gross margin for the quarter increased by 5.5 percentage points to 61.5% for the group, driven by both our segments, Kid Interiør increased by 6.1 percentage points and Hemtex by 4.2 percentage points.
This is a record high margin for the group on a historical perspective. The improvement to the gross margin is attributed to the price adjustments implemented to meet higher currency hedge levels going forward, combined with an inventory currently comprising relatively lower freight costs due to freight rates returning to historical levels in the quarter. I want to also highlight that we had a strong Q4 last year, which also then consequently reduced the need for seasonal clearance sale compared to historical periods with a positive impact to our margin this quarter. About the freight situation, I just want to note you that we are monitoring the situation of the Red Sea closely and are ready to take necessary actions if needed. In terms of the operating expenses, the OpEx-to-sales ratio, excluding the IFRS 16, reduced by three percentage points to 57.5% in the quarter.
The reported OpEx base increased 7.6% in the quarter, where overall key drivers were general salary increases to our personnel. We also had significant currency effects from the Swedish to the Norwegian krone. We had increased marketing investments and also increased last-mile distribution costs from our furniture produced in the Baltics. Give some more details on the employee benefit expenses. That increased by NOK 18.1 million, and that is mainly due to the general salary increases, as mentioned, and somewhat increased hours worked in Hemtex compared to previous year. And that is also a result of the strong performance we have delivered this quarter. We also have an increase in logistic employee benefit expenses, and that is mainly explained from the logistic operations in Sweden. We have taken in-house. So last year, this quarter, we had an external third-party logistics provider where we now have the internal process.
So we have a line shift from other OpEx to employee benefit expenses. And finally, we had NOK 1.9 million attributed to currency effects compared to last year also, and drive all the numbers reported for employee benefit expenses. The other operating expenses increased by NOK 3.3 million, and the increase is mainly explained by marketing costs where we increase the digital spend. We have also launched the Extended assortment in Hemtex, some of the explanatory factors, so the development. In addition, we have also positive development in our furniture produced in the Baltics, where we have some increase of NOK 1.2 million related to the last-mile distribution to the end customer of these items. And finally, we have this line shift item from other operating expenses last year related to logistics to then employee benefit expenses.
Summarized the development in the first quarter, we had increased revenues from both stores and online of NOK 91 million. We had robust gross margin development increased of 5.5 percentage points and the OpEx base, as explained, resulting in a first quarter EBITDA of NOK 124.5 million. And then some flavor on the cash flow. I would like to highlight the following items. The cash flow from operations was impacted by inventory buildup during the quarter. Please bear in mind that we in Q4 last year reported historically low net working capital, and this is linked to this. Cash flow from investments mainly relates to capital expenditures to our store portfolio and store projects and new openings. And the cash flow from financing is explained by lease payments following the IFRS 16, net change in debt due to the overdraft facility, and the net interest expenses.
This resulted in a change in cash of NOK 232 million during the quarter. I also want to note and comment that this pattern we see is a cyclical pattern for the group, which is normal. Then the cash and credit facilities. At the end of the quarter, we had cash and available credit facilities of NOK 554.7 million, which includes a new term loan from Q4 last year of NOK 125 million to be used financing the project, warehouse project in Sweden. Excluding IFRS 16, the net interest-bearing debt was NOK 568.9 million, resulting in a financial gearing ratio of 0.95 compared to 1.94 last year. All in all, satisfactory liquidity position and financial position for Kid Group in total. That said, I leave this to you, Anders.
Yes. Thank you, Mads. As commented earlier, we maintain a high investment in the store base.
I will go a bit more into details, but just to make a few comments on this slide. As seen on the top, the store in Egersund and the store at Vetlanda and Ringen in Stockholm has already opened, so they are running and performing well from day one. And as you see on the bottom right, we now have signed 5 new Extended stores, making that comes in addition to the 5 stores that are open running. I'm pleased to say that we have our first store that will open in Bærum at Grini, and a shopping area where we used to have a store a few years ago, but that was closed. But now we will open a new Extended in the beginning of June. We also will open in Tønsberg, as mentioned earlier, and also at City Nord.
There's two more leases that have been signed, but they are subject to final approval by the landlord, which we hope will be finalized within the next month. We want to take this opportunity to share some insights related to the optimization and development effects of our store portfolio. Existing categories and products need at least 600 square meters to be displayed in a physical store, which is the foundation for a new standard store size. Out of the 271 stores that you see on the chart, nearly 87% of the stores are smaller than our new store format. In plain terms, this means that they are too small to display the assortment we ideally want to showcase and lack sufficient space for inspiration. We will work to develop the store portfolio towards the new standard store size by expanding and/or relocating existing stores across all markets.
Preliminary conclusion from the Q1 2022 presentation has been verified, and that the increased size in the store portfolio drives profitable growth. Historically, we have seen that the full potential is performed in year three. So as you can see on the chart, we are moving towards larger store formats that drive contribution, and this will be an important goal going forward. The overview also includes the five Extended stores, as you see on the far right side of the chart. Please note that even though these were operating throughout 2023, all of them, only 1 of the stores was Extended for the entire year. The remaining 4 stores were enlarged and opened during the first 4 months of last year. 14 Kid stores and 15 Hemtex stores were refurbished or relocated with our latest concept in 2023 and outperformed the remaining store portfolio.
Expansion combined with refurbishment or relocation is considered as an important growth driver. 53 Hemtex stores have been upgraded to the Kid concept. Bear in mind, the acquisition was done in May 2019. But many of these stores also need to be enlarged. So that doesn't mean that 53 of the stores have the ideal store format. We already have started to enlarge some of these stores. An example is Sickla that was opened in Q4 last year with targeting our new store format that has been highly successful after the opening. The compound annual growth from 2021 to 2023 was 5.4% for these stores compared to 1.1%. Sorry. We will continue to wrap up the store investment program going forward, as we'll come back to. Compared to 2021, Kid and Hemtex have increased their average store size by 4.3% and 9.5%, respectively.
The five Extended stores are excluded from the overview. The Kid Group is aiming to develop the store portfolio towards the new standard of 600 sq m. As mentioned earlier, there's a large number of stores that will be increased in size. We do not expect every single one to reach 600 sq m, but a clear majority will. Additionally, we will see that some of the stores exceed 600 sq m in cases where the layout or the condition for the premises allows for this. It's important to emphasize that Hemtex, as you have seen on the previous slides, has a greater potential for increased store size. Historically, Hemtex has had smaller stores than Kid, and as shown, the store projects in Hemtex have had a very positive impact, which increased with increased store size being one of the driving factors for revenue growth.
The store portfolio figures for 2021 were reported in our Q1 2022 presentation, which is included on the upper table for comparable purposes. In the first half of this year, we have so far signed 15 store projects in Kid and 12 in Hemtex. We have raised our ambition and plan to increase the number of Extended stores from 10 in Norway to 15. We already have some interesting discussion with landlords and expect to sign more leases within the next months. Additionally, we remain committed to open three Extended stores in Sweden. Made-to-measure technical sunscreening was launched in Hemtex only a few days ago, both in physical stores and online. Group revenues in constant currency were up 25.5% compared to a drop of 5.1% in April and up by 16.6% year to date per April.
The revenue was highly impacted by change in a campaign plan in Kid, fueling the April development at the expense of revenues in May. Please also note that the number of shopping days in Kid was 25 in April compared to 22 last year, and the number of shopping days was 30 days in both years for Hemtex. Sale of our Swedish warehouse property will be considered over the coming six to 12 months, and Colliers has been selected as the advisor. We have also updated our financial objectives. The acceptance for our concept is, in general, very positive, and on the back of the three quarters with significant growth, we have raised our like-for-like growth ambitions with 1 percentage point from previously 3%-4% to 4%-5% going forward. The targeted growth is partly fueled by investments in stores.
Expected maintenance CapEx is consequently increased from NOK 100 million to NOK 125 million per year. In addition, new stores are expected to trigger an additional NOK 3 million or NOK 6 million for Extended stores. OpEx relative to sales are expected to stay at current levels, and the targeted dividend payout ratio stays at 80%-100% of the adjusted net profit. A complete list of the financial objectives you see here, and it was also launched and presented in our annual report for 2023. So with that, I think we are ready for Q&A. So I leave the floor to you, Joakim, and Mads and I will do the best to answer the incoming questions.
Fantastic. Thank you very much, Anders and Mads. I guess I can start with a question. Surely we're expecting this, but could you elaborate a bit on the sort of changes you've made in the campaigning plan that impacted April sales and will impact May sales as well?
Yeah, it's not. I will not say.
Dramatic change. We have updated the campaign plan for 2024, mainly impacting Kid, not Hemtex. The changes were done in Hemtex last year. This means that you will see some changes between months, but if you look in the quarter in total, it's comparable to last year. So what we've seen in this quarter in April is that it's positively impacting April, but you will see a slightly more negative effect in May, as mentioned. But in total, the quarter will be comparable to last year.
Fantastic. So one more question for me. Another really strong quarter in terms of sales, predisclosed, of course. But could you share a bit of information on sort of the split between volumes and price development in Q1?
Yeah, I'm not sure if we share the numbers historically, but of course, it's a major price effect, but we also have a positive volume effect in the quarter.
Yeah, so it's important. Like Mads says, it has price effects, but also positive volume effects due to the, how to say, the initiatives that we have mentioned during the presentation.
Yeah. Fantastic. Other than that, it seems like everything was crystal clear from you guys today because there are no questions in the chat. So.
Any questions from those of you present in the audience?
Yeah. Go ahead, please.
Thanks for an excellent result. For the April, you mentioned 25 versus 22 shopping days in Norway. I assume that that's effective about 10%. The shopping day effect is about 10% for Kid sales total for April versus last year?
It's hard to give you an exact number. I'm not going to go in on an argument if it's 10, 8, or whatever, but it's probably a good assumption that's in the range of 8%-10%.
Could you also elaborate? You said that there was an improvement during the quarter, in the first quarter. Is that both for Kid and for Hemtex?
What I said was about the online revenues in Hemtex, yeah, where we have negative growth in total for the quarter, but we saw positive development towards the end of the quarter.
That's a change in the campaign plan where we had an extremely aggressive campaign on e-commerce last year, which we decided not to have this year. But going out on the quarter, we had very good e-commerce sales in Hemtex.
Yeah. Okay, it seems like we have some questions now, actually. I'll start with the first ones from Francisco Vilches. A few questions about the Extended concept. Is there a product or set of products that is performing particularly well?
We will not go into specific details, but as mentioned, large furniture is one of the product groups, but there are also additional product groups in the Extended concept. We are very happy with the performance of the new categories. So as Mads and I mentioned during the presentation, we have disclosed the figures for the new categories. But bear in mind, there's two additional growth drivers for the Extended program. It's also growth within existing categories, which we are very satisfied with the numbers we see internally. We're not disclosing these numbers. And also, we have more inspiration in the stores, which we also see drives profit revenue. But we must also say that the three categories we highlighted for the quarter were bed linen, curtains, and larger furniture, where larger furniture is a new group related to the Extended program.
Next question. Are you seeing any changes with respect to gross margin as you open new stores?
No. There are no changes in gross margin. We have, as commented earlier, there's a lower margin within larger furniture. But as you can see, with the record high margin we have in this quarter, that doesn't negatively impact the gross margin in this quarter. So there's no large effects on the gross margin side.
Does online or physical store shopping tend to predominate for this type of product, I guess, relating to the Extended products you elaborated on?
We saw in the beginning in Norway that we had a larger online share. We maintained throughout last year growth in online, but the growth in the physical stores was stronger towards the end of 2023. I believe this is related to having more furniture displayed in the stores while we had the full portfolio of products on the e-commerce site from day one. So I predict that we will have both good growth in e-commerce and physical stores going forward. This is sort of the secret or one of what we like with the Kid is the omnichannel functionality. Our customers will visit stores, see our furniture or other products, and they will either buy it in stores or through our e-commerce platforms. We do not try to, how to say, force the customer to choose a platform.
They can shop either in e-commerce or physical store, and that's the strength of the omnichannel concept.
All right. Next question from Håkon Fugle. Can you clarify on how many of your Extended stores that are included in your store pipeline overview?
Going forward, we have signed fiv new leases for the Norwegian market. As I said, we have raised the ambition. That was previously 10 stores. We have raised it to 15. We have good discussion with landlords and expect to sign more leases for Extended stores in the Norwegian market, targeting 15 stores. In Sweden, we also have good discussions, but so far, no leases have been signed.
Next up, Peter Nyström. You raised your ambition from 10-15 Extended stores for Norwegian. In which time frame do you see this happening? Yeah, so the timeline of your 5 additional Extended stores in Norway.
It's hard to say exactly, but going out of 2025, we will be close to the ambition of 15 stores. If there will be 13 or 15, I'm not sure, but that's what we're targeting right now. But bear in mind, there's only 5 leases that have been signed, and two of them are subject to final approval by the landlord.
Final question for now regarding the strong growth in April. Can you share some light on which categories that performed very strong? What about spring/summer products? Did that impact April? Which categories?
I think we will come back to that on the next quarterly presentation, and we'll give you more flavor on that.
Yeah. Good. Any final questions from the audience? Yeah.
No.
Okay. Thank you again, Anders and Mads, and have a great day, everyone.
Thank you.
Bye-bye.