Good morning, and welcome to the second quarter presentation for Kid. My name is Henriette Trondsen, covering the consumer and some retail companies in Arctic. And with me, I have the CEO of Kid, Anders Fjeld, and the CFO, Mads Kigen, which will take you through the presentation, and then followed by a Q&A session at the end. And feel free to send your questions during the presentation. Yes, Anders.
Thank you, Henriette, and, everybody, good morning, and welcome to this, presentation for our second quarter. We are satisfied to present the fourth consecutive quarter with double-digit growth. The growth is attributed to continuously category and omni-channel development, as well as project initiatives. These project involves refurbishment, relocation, and/or expansions of already existing stores. In Q2, we reached an all-time high revenue of 797.8 million NOK. In the first half of 2024, we experienced a revenue growth of 12.4% compared to last year. Note that the first half of 2023 was weak compared to 2022, with a revenue decrease of 0.4%. The second half of 2024 has tougher comparable growth against last year. The growth in the second half of 2023 was 13%, largely explained by Hemtex's fifty-year anniversary campaign last year.
With a record strong margin of 63.2%, a strict cost control, EBITDA increased to NOK 201.5 million and strengthened our EPS to 1.19. The cash flow from operations of NOK 111.2 million, impacted by planned inventory build-up. Categories introduced since 2022 accounted for NOK 22.5 million in the quarter, compared to 12.1 last year. This has also enhanced enhanced the sales of our other existing assortment. As a part of our strategic focus, category development fueled both existing categories and introduced entirely new ones. The Extended concept was launched online and in selected larger stores in Hemtex during the first quarter. Actually, it was in the, at the end of the first quarter.
I must say that we are satisfied with the results of the launch, and this initiative will be one of the important growth drivers going forward. Made-to-measure technical sun screening was launched in Hemtex, both in physical stores and online in April. The ordering model enables Swedish, Finnish, and Estonian customers to order blinds, shutters, and curtains tailored to specific measurements. Investment in our customer loyalty program has yielded positive results again, with a membership portfolio reaching now 3.2 million by the end of the quarter, an increase of 10.4% compared to the same time last year, and for the first time, we crossed the milestone of 1.5 million members in Norway. In the second quarter, we continue the store project activity that fuels growth. We have completed six store project in Kid and Hemtex.
And additionally, we have opened four new stores, where two of these stores are located in Norway and two are located in Sweden. The new stores are located in Egersund in Norway, Vetlanda, Småland in Sweden, and finally, Ringen in Stockholm. And the fourth store we opened was a large Extended store at Grini in Bærum, just outside the Oslo city center. This is a very important opening for us, as we finally can showcase the Extended concept to the greater Oslo region. With the opening at Grini, we now have six open Extended stores. Additionally, we have signed three new contracts this quarter, which means we have a pipeline of total of seven stores that we plan to open during twenty twenty-four and twenty twenty-five. The extension of our warehouse in Sweden is progressing according to plan.
Agreements with providers of optimization solutions and warehouse management system, so-called WMS, have been negotiated and signed during the quarter. We still estimate that operation in a common warehouse for the group will commence mid-year 2025. Okay. The general acceptance for the Kid concept is positive in the Nordics. Preliminary market studies support that our concept and products have a potential outside the current markets. On the back of this, we have decided to pilot and test markets beyond the Nordic region and the Baltics under the Hemtex brand. We have great respect for the challenges of establishing ourselves in new and foreign markets. Accordingly, a German language website will be launched with local marketing investments for the market in Germany. Additionally, an English language site targeting other European countries will be launched with no specific marketing investments.
The pilot includes the establishment of the two mentioned websites, but does not include establishment of physical store in this phase. In the next twelve months, total expected cost amount to less than 10 million NOK, which of approximately 50% will be capitalized. The launch of the low-risk e-commerce pilot is scheduled to take place during the last half of next year. So with that, I'll leave the stage for you, Mads.
Thank you, Anders. Good morning, everyone. I will start with the revenues, and for the quarter, reported group revenues increased by NOK 73.7 million compared to last year. This represent an increase of 10.2%. On a constant currency basis, the total growth was 10.6%, and the like-for-like growth was 9.2%. This is driven by both physical stores and online. Please also note that we, in Q1, reported a strong April compared to previous year. The revenue growth was at the expense of May, due to a change in the campaign plan for Kid Interior. We observed a variation within the quarter, but are satisfied with the quarter in total. The revenue growth for the group is mainly attributed to an increased basket size and number of customers.
We are happy to see and present continued positive development for the major categories, where bed linen, duvets and pillows, and curtains stands out in both segments. In addition, I would like to point out that we are satisfied with the bathroom category development initiative, where new products and products group have been added on top of the historical assortment. This initiative is supported by new bathroom furnishing for displaying in stores, which have been rolled out in conjunction with our store projects. The online group revenues increased by 9.8%, excluding the currency effects, and the group online share was steady on 12.1%. The revenues for Kid was up by 11%, and the like-for-like growth was up 9.5%.
The like-for-like growth includes the online revenue growth of 15.4%, which comes on the top of a high, and positive growth last year as well. If we exclude the online revenues, the like-for-like growth from our stores was 8.8%. And in for Kid, we had additional two more shopping days compared to the quarter last year. For Hemtex, we experienced a reported growth of 8.8%. On a constant currency, the revenue was up 9.9%. The like-for-like growth was 8.7% compared to last year, driven by like-for-like stores with 9.8% growth. Please remember the comment from Anders earlier this presentation, that we, in the first half, or in the second half, we'll face. This year, we'll face more challenging comparable figures than we had in the first half this year.
That said, I am very pleased to present a total revenue growth for the group of 10.6% on a constant currency basis, and we see positive growth in both segments for stores and online. The gross margin increased by one percentage point to 63.2 in the quarter compared to last year. This is driven up by both segments. This is a robust margin in a historical perspective for the group, and I would like to underline and explain the following related to the margin this quarter. Most of our goods is usually or are produced in Asia and then shipped to Europe, where the purchase price is usually settled in USD. The development and the strong dollar versus both the NOK and the SEK, as well as higher freight costs due to the unrest in the Red Sea, are consequently negative for Kid.
Early price adjustments have so far compensated for this cost increase, resulting in a strong reported gross margin this quarter. We are constantly monitoring the situation and are prepared to take further action if necessary. Summarized, I am pleased to present the Q2 gross margin of 63.2%. In terms of OpEx, excluding the IFRS 16 effects, the OpEx to sales ratio decreased by 0.4 percentage points to 50.7% of the revenues for the quarter. Reported OpEx base increased by 6.9% in the quarter, and I will share some flavor on the drivers. The employee benefit expenses increased by NOK 17.3 million, and is mainly due to general salary increases to our staff and employees. Increased number of working hours according to plan.
This is also impacted by the additional two shopping days mentioned for Kid Interior, and that we have high project activity for the group. Finally, net new stores is also an element explaining or driving the cost base related to employee. The increase is also attributed to the logistic employee benefit expenses, which is explained that we have taken the logistic operation in Sweden in-house, and have a line shift from the other OpEx to employee benefit expenses. This is also increased by the positive online revenue development, as I mentioned, of 15.4% in terms of revenue growth this quarter. All these items were partly offset by tight cost control in store operation through stable working hours in our stores in Norway compared to last year. Reported other operating expenses increased by NOK 2.4 million this quarter.
The increase is mainly explained by marketing costs and last mile distribution of larger furniture. This is partly offset by the logistics operations in Sweden, as explained, where we see a line shift to employee benefit expenses from the other operating expenses. To summarize the development for the quarter, we have increased revenue from both stores and online. We have a strong gross margin and our OpEx as presented. This resulting in our second quarter EBITDA improved 20.9% to NOK 201.5 million. In terms of cash flow, I would like to comment on the following items this quarter. Cash flow from operations was impacted by a planned inventory buildup during the quarter. This buildup follows new category initiatives, including the launch of the Extended concept in Hemtex.
In addition, we have more goods coming in earlier this year compared to last year, due to the unrest in the Red Sea. Cash flow from investments mainly relates this quarter to our store portfolio, new openings, and store projects. The cash flow from financing is explained by lease payments following IFRS 16, net interest expenses, change in net debt, in addition to the dividend paid in May, NOK 3.5 per share. This resulting in a change in cash of 3 million when we exclude the FX translation from the cash. This cash flow follows a cyclical historical pattern for the group.
At the end of the quarter, we had cash and credit facilities of a total of NOK 357.5, and when we exclude the IFRS 16, net interest-bearing debt was NOK 756. This results in a financial gearing ratio of 1.22, compared to 2.4 last year. All in all, a satisfactory financial position for the Kid Group. That said, I would like to give the word to you, Janusz.
Thank you, Mads. We are getting close to the end. Let's have a quick look at the store portfolio activity. We have signed several new store contracts during the quarter, and I would like to highlight that we finally have succeeded in signing a lease contract at Bryn, an important shopping center in Oslo, with the opening in estimated to be in Q2 next year. In addition, we also will open at Grünerløkka in Oslo next year, and Værste in the next quarter. Værste, which is in Fredrikstad. Additionally, we have two more contracts in Hemtex at key shopping centers, which we will come back to in which areas these are on a later stage.
With the new contract at Moa, Ålesund, Tiller, Trondheim, Lagunen Bergen, and also in an important trading area in Oslo, we are taking new steps with Extended. Furthermore, we have one contract, which we will expect to final decision on an implementation timeline, and we will provide update on that in the beginning of twenty twenty-five. So with three Extended stores opening this fall, the period leading up to Black Friday and Christmas shopping season will be both busy and exciting. So we are now the total of thirteen Extended stores in the Norwegian market, where our ambition is fifteen. We also have an ambition of finding three Extended stores in the Swedish market, but so far, we haven't signed any contract for the Swedish markets.
All these new openings that you will see bottom right on the charts in Norway are in key shopping areas, some of which are the largest shopping centers or shopping areas in Norway. As of today, we have a total of seven store projects planned for the last part of this year. The autumn will be busy again, and we expect these projects, like the previous store projects, to be important contributors to future growth. We are closely monitoring the shipping situation. A large portion of goods for Q4 are on the way, and many will be shipped in the coming weeks. We have received indicators of minor delays, but not at a level that we expect to have any negative impact. The delays we are experiencing within some shipments are in no way comparable to what we experienced during COVID.
So with that, we are finished with the presentation, then we open up for questions. So-
Yes, the European expansion is the most interesting news today. Can you talk about why you have chosen Germany for marketing investments, and also the competitive landscape in Germany? What is the reason behind you chosen this country?
Yeah, well, I'll try to be short. Just to clarify, we opened one international, let's call it that, website in English, with no further marketing investments in any market, specific markets. That's like opening the door to Europe. We already have international customers visiting our stores in Sweden, for instance, we have Germans, we have Danes, and so on. But with the Hemtex site we have now, the Swedish Hemtex site, there's no possibility to do shipping to other countries than the existing market. So this means that Danes, Germans, and others are able to buy online and have shipping to the local countries. It also means that Norwegians with holiday homes in other countries could buy online and have shipping directly to wherever their holiday home is in Europe.
So that's the one international step we take, which is just like opening a door to Europe. The other, more important, or where we see larger potential in this stage, is opening a door to the German market. Meaning we will launch a German language website with targeting investment to Germany. We have, of course, followed the German market for a long time. We have visited Germany, we have seen other e-com players in the German market. And we have great respect for going outside our existing markets, but we see that the Nordic style trend is highly attractive in the German market. Meaning that we believe our store... Not, not store, our product portfolio will be very commercial in the market.
So far, the surveys we have done conclude that there's a good potential in Germany. There will be a low-risk investment, since our e-commerce platform has been tailored to add new languages or new geographic areas. We'll add local payments, we will have local freight. So with limited risk, we will open the door to Germany, and we are quite exciting, but still, I would say humble, going outside our markets. That was an extremely long answer for a short question. Did I answer everything you-
Yeah.
Yeah? Thank you.
Can you quantify the expected investment for the European expansion, the level of investment?
Yes. So far, we have said that the investment will be limited. As said, during the presentation, in the next 12 months, prior to the opening, we will invest approximately a little less than NOK 10 million, where half of this will be capitalized.
If the pilot study is successful, how should we think about further investments compared to sustainability of dividend from twenty twenty-six and the coming years?
I would say time would show about the potential in the German market. I would like to just clarify, we do not go in with an extremely heavy marketing investment. We are willing to invest in marketing to drive traffic to our website. And the results after the opening and what we expect, I think we'll come back to that on a later stage.
Will you eventually launch stores in Germany?
We believe in the omni-channel concept and that's been highly successful in our existing markets. The way we now have decided to enter the German market and also open the door to Europe is a way of testing our concept, our product portfolio with limited risk. Of course, if this is highly successful, we would consider at a later stage to open stores as well, but now it's an e-commerce only strategy.
For your furniture sales, have you seen any changes in the growth after opening larger Extended stores?
We are, I must say, very happy with the development of furniture. As Mads also said, we see that adding more categories, more new products contribute to sales of already existing categories, and bear in mind that we are very positive with what we've seen so far in Hemtex. We do not have any Extended stores in the Swedish market, making it difficult to display all our furniture for the Swedish customers. Of course, we have quite a few stores that has been enlarged, so they have some display of the furniture. I would say we are still on the early stage, but we are happy with the development that we see.
Where do you produce your furniture?
If we see at what we would say, like sofas and beds and some of our larger furniture, they're mainly produced in the Baltics. Our outdoor furniture are mainly produced in the Far East.
June was quite weak across the retail space. How has growth been into July and August? Can you say anything about the ...? Do you have any comments?
The simple question is no. We'll come back to that in November. Yep.
Will you also be offering the extended product for the European market?
Yes, we think that the whole product portfolio is commercial in these markets, so our plan is to, how do you say, mirror the already existing e-commerce sites and offer the whole package of products for both the German market and for the rest of Europe.
Can you give me some color on the competitive landscape in Germany?
I think so far we might come back to that. We are humble. There's the competitive landscape is different from what we see here. But we have seen other e-commerce players that have had, I would say, quite success with going into the German market, so, which of course we have followed for a long time. But more on that, I think I will not go into the competitive landscape at this point in time.
You have a target on increasing the store size. How easy has that been to secure prime locations or new locations?
We are working in all markets to secure and to find both relocate and enlarge our stores. I would say it's quite easy if you're willing to pay any lease to have larger stores, but it's important to have good lease deals. The store I mentioned that we are, I mentioned one store in Sweden, which will be very important, I can't say where it is, is an example where we, yeah, for like, I would say, one and a half, close to two years, have been searching for a store large enough and with the right, sorry, the right lease.
We've not been able to negotiate the right deal with the landlords, but throughout the summer months, we have seen a slight change in this specific location, so being able to sign a new lease. There are positive changes in the market, which we've seen for a long time now. We are quite happy with the potential of having more larger store, which we also communicated during Q1, where we raised our CapEx ambition from NOK 100 million-NOK 125 million. That's a result of the potentials we see in the market now.
Yes, we have no further questions. But we will look forward to follow the launch into the European markets. Do you have any concluding remarks?
No, I think I hope you've all been inspired by the beautiful pictures we see on our presentation, so I think with that much, we are happy, and we thank everybody who have listened in to us this morning, and if there are any questions, feel free to reach out. Just either call us or contact us during the day or later.
Thank you.
Thank you.