Good morning, everybody, and welcome to this Q3 presentation for Kid ASA. We have delivered what I would like to say a good quarter, where Kid delivers strong numbers, but Hemtex has a tougher time reaching the 50-year campaign last year, but all in all, we are satisfied, and together with Mads Kigen, our CFO, we will give you more insight into, sorry, key drivers and explanation behind the numbers for the quarter. Q3 was another strong quarter for the Kid group, and we reached an all-time high revenue of 886.9 million NOK, with notable growth in Kid Interiør standing out. The revenue decline in Hemtex aligns with our expectations and previous communications, mainly due to the extraordinary Hemtex 50-year campaign last year, which particularly impacted the driving traffic to physical stores and online.
The gross margin was flat compared to last year at 62.1%, one of the strongest margins we have seen for the third quarter ever. The EBITDA decreased by NOK 5 million to NOK 236.4 million, and Mads will give you more flavor on that later in the presentation. The EPS ended at 1.73 compared to 2.23 last year, the cash flow from operation at NOK 110.4 million impacted by Q4 preparations, and then, as we will end up, a dividend payment of NOK 3 per share, so I will go a bit into the operational focus in the quarter. Categories introduced since 2022 accounted for NOK 29.3 million compared to NOK 19.7 million last year. New categories are important for enhancing sales of the already existing assortment and driving customer traffic. The categories that contributed the most in the quarter are sofas, house cleaning and storage products, and also office supplies.
The Extended concept was successfully launched in Hemtex in the first quarter, followed by a move to manage technical sourcing in April. We are satisfied with the results since the launch and consider them to be an important growth driver both for Kid and Hemtex going forward. To ensure product availability in a challenging freight market, we chose to bring in the goods for the important Q4 sale somewhat earlier than in previous years. This has ensured us a good access to goods, but also a high level of activity in the logistics in the quarter, as there is a large volume to be handled. We continue to invest in our store portfolio, fueling future growth. The project activity is high, and during the quarter, we have completed three store projects in Kid and Hemtex in total.
In addition to these projects that opened in the quarter, there were high activity with preparation, construction, etc., for store projects that had opening dates in October. In September, we opened our seventh Extended store in Kilen outside Tønsberg in Norway. The old store has moved a few hundred meters and significantly expanded, close to three times the size as the previous store. The store has shown a very good development since the opening, and we also have expanded and renovated the store at Farmandstredet in August, and now, with these two stores, we have significantly strengthened our position in Tønsberg, an important market. Our warehouse project in Sweden is progressing according to plan, and we estimate that the operation in the common warehouse for the group will commence mid-2025, also next year.
The project includes streamlining processes combined with large investment in automation and tech solutions that will strengthen our position in the market going forward. So that, I will introduce Mads, who will go a bit deeper into the revenues and so on.
Thank you, Anders. Good morning, everyone. For the third quarter, reported revenues increased by NOK 56 million compared to last year. This represents an increase of 6.7%. On a constant currency basis, total growth was 4.4%, and the like-for-like growth was 3%, driven by both physical stores and online. In Kid Interiør, partly offset by Hemtex. The online revenue share was slightly down compared to last year at 11.4%. I will share some more insight to the segment details shortly. The key overall drivers to the revenue growth are mainly attributed to basket size, increased basket size, and number of customers to our physical stores on the group level. In terms of categories, we continue to see a positive development across the major categories, and I would like to point out that we had positive, especially positive development on the bathroom and furniture categories, standing out as important drivers.
The positive development in the bathroom category continues from what we reported last quarter, and that is driven by new products and product groups combined with the historical assortment. This initiative is supported by new bathroom display furnishings rolled out in conjunction with the store projects and upgrades. I'm pleased to comment that we see a positive development for this bathroom category, similar to what we did for the kitchen categories going a few years back in time. In addition, I would like to point out that we are satisfied with the furniture category, where outdoor garden furniture has been a positive driver this quarter. In terms of our two segments, the reported revenue growth for Kid Interiør was up by 8.7% compared to the same quarter last year.
Please also bear in mind that the strong development this quarter comes on top of a high revenue growth base last year. In Kid Interiør, we observed strong development in terms of revenue growth for both online and our physical stores. For Hemtex, we experienced and reported a growth of 3.5%, but when you see on a constant currency basis, we have a decline of -2.4%, measured compared to last year. This is driven down by both online and like-for-like stores. The revenue decline in Hemtex, as Anders has mentioned, aligns with our expectations and previous communication, and is mainly due to the extraordinary Hemtex 50-year campaign last year, which was particularly impactful, driving traffic to both online and physical stores.
When we isolate the impact of the Hemtex 50-year campaign, I would like to point out that we have and we see a positive underlying growth to the categories compared to last year. In addition, the change in campaign plan for July impacted the online revenue growth, especially this quarter. That said, I am pleased and satisfied to present the group revenue growth of 6.7% compared to last year, where Kid Interiør performed particularly well this quarter. I would also like to highlight, as you can see on this slide, we have the strong development year to date, and we have reported a 10.2% revenue growth compared to last year. Going to the gross margin, we delivered a stable and strong gross margin of 62.1% for group, driven up by Hemtex and down by Kid Interiør.
This is a robust margin and is very strong in a historical perspective, only beaten by Q3 in 2020, and is flat and unchanged from what we saw last year of 62.1. The development of gross margin is mainly a result of changes in the campaign activity plan in both segments. This means that we had slightly more aggressive campaign activities in Kid Interiør and somewhat less aggressive in Hemtex, following the 50-year campaign, as mentioned. During the quarter, we have seen increased COGS, following, among others, higher freight rate levels, but we do not see any need for any change, and we stick with our communicated financial objectives given the action taken. The freight rates are declining this quarter, following the unrest observed in the Red Sea and Gulf of Aden in late 2023 and in the first half this year.
Still, we are constantly monitoring the situation and are prepared to take any action if considered necessary. Overall, I am very pleased to present a strong margin of 62.1% for the third quarter. The reported operating expenses increased by NOK 40 million, representing a 14.6% increase compared to last year. This may seem high, but I will share some insight into some specific key drivers. First of all, the employee benefit expenses increased NOK 26.8 million, and this is explained by the following key elements. The total bonus provision in the quarter was NOK 13 million, and this represents an increase of NOK 5.1 million compared to last year. This bonus provision is a direct consequence of the strong performance we have had year to date this year. Next, the increase we also see in employee benefit expenses is related to the logistics and is mainly explained by the Q4 and shopping season preparation.
We have more goods coming in and going out from our warehouses, which Anders mentioned, so we are prepared for the shopping season coming up. In addition, we also have an increased activity level in regards to the online development in Norway of approximately 18% compared to the previous year. We have talked about bonus provision, the logistics, and then we have what we call future growth initiatives. We invest and are, among others, in our new stores and our store projects, which is also an explaining factor for the development in the OpEx base and the employee benefit expenses. Finally, in the expenses, we have a significant currency effect of NOK 3.8 millions to the employee benefit expenses. Then we have the other operating expenses increased by NOK 13.3 millions, and the increase is mainly explained by increased marketing costs.
According to our ambitious plans, we have last mile distribution of our larger furniture and shared operating costs to our lease portfolio. Finally, we also have a significant currency effect to the other OpEx of NOK 3.2 million this quarter compared to last year. And to be clear, the OpEx increase we see this quarter is mainly due to higher bonus provision, preparation for Q4 and Christmas shopping season, investments in future growth initiatives, along with a significant currency effect. To summarize, the development in the third quarter, we had increased revenues of NOK 56 million. We have a robust margin of 62.1% and the OpEx base, as explained. This results in an EBITDA of NOK 236.4 million. In terms of cash flow, I would like to comment on the following items this quarter.
The cash flow from operations was impacted by a planned inventory buildup, impacting the figures, which is related to the preparation we have been presenting here for Q4 and the shopping season, the Christmas shopping season, in addition to new category initiatives. In addition, we have more goods coming in earlier this year due to the unrest we have seen in the Red Sea. The cash flow from investments mainly relates to capital expenditures to our store portfolio, two-thirds, and then we have the remaining related to the warehouse expansion project in Sweden. Cash flow from financing is explained by lease payments according to IFRS 16, net interest expenses, and a minor change in debt related to the overdraft facility. This resulted in no change in cash this quarter, and this is a totally normal pattern in our business this time of year.
We have the cash and credit facilities, and we have NOK 329.4 million at the end of this quarter. Excluding the IFRS 16, we had a net interest-bearing debt of NOK 784.3 million and results in a financial gearing ratio of 1.3, down from 1.72 last year. All in all, we are satisfied with the financial position for the group. That said, Anders, I'll give the word to you.
Thank you, Mads. I will move on with a few comments on the store portfolio activity in the quarter. We are experiencing a large influx of opportunity for new establishment expansions and relocating in our stores. I would especially like to highlight that the good sales development we have seen in Hemtex over a long period now means that we now have more opportunities than ever.
We expect to sign several exciting contracts, both for Hemtex and Kid, in the upcoming months. By the end of the year, we are open a total of seven new stores, in addition to many new renovation expansion and/or relocation store projects. Regarding the Extended stores, as we announced, we announced today that we have signed a new contract for opening an Extended store at Alna Senter in Oslo. Finally, an Extended store in Oslo. It will be our first Extended store in one of the most important shopping areas in Oslo, and I would like to say probably one of the most important shopping areas for furniture and home interior in Norway. We are working towards an opening at the end of the quarter next year, end of the first quarter, March.
And together with the previous opened Extended stores at Kid, sorry, at Ski and Grini, we finally now, from the end of March, cover Oslo and the surrounding markets. This means that we now have nine Extended stores in operation and four signed contracts for the Norwegian market. We have a good discussion for at least the last two Extended stores that we are targeting to open in Norway. And we also now have concrete opportunities in Sweden, and I hope that we will sign also our first Extended store for the Swedish market in the upcoming months. And as previously communicated, our target for Sweden is, in this phase, to open three Extended stores. In Q4, we have a total of five store projects in Kid and three in Hemtex. Among these, I would like to highlight the two Extended stores at Tiller in Trondheim and Moa, Ålesund.
These stores opened in October and have shown very good results from day one. With this, we once again have expanded and renovated our stores to the Extended format in some of the largest shopping areas or largest shopping malls in Norway. We have also opened a brand new store at Værste in Fredrikstad, a brand new shopping center that opened on the 31st of October. There are also exciting news for Hemtex. We look forward to the establishment of two new important stores. During the first week of December, we will open a new store in Åbo, Finland, at Hansa Shopping Center. And this Thursday, we will open our largest store in Sweden at 1,000 sq m, which is not an Extended format, but still a very large store, in one of the best locations in Nordstan downtown in Gothenburg.
The store in Nordstan is also a new establishment and will be one of the most important stores in Hemtex. The process for the sale of the Swedish warehouse property is progressing as planned, as we have communicated earlier. We are well prepared, as we have touched into earlier in this presentation, for the most important season in retail. In the coming weeks, we will go through Black Week and Christmas shopping. We have good control due to the initiative that we have mentioned today over the logistics, and we look forward to the retail industry's Champions League. As in previous years, Santa Claus has contacted us to ensure that we can deliver, as Kid and Hemtex products are regulars on the wishlist for both young and old.
As informed on the 1st of November, I have decided to accept the job as CEO of Sport Holding, where I will continue together with Mads and the rest of the team as CEO in Kid until the end of April. So, to sum it up with a dividend slide, in line with our financial targets, we are paying out an advanced dividend for the 2024 results after the third quarter. The board of directors had decided to pay out a half-year dividend of NOK 3 kroner compared to 2.75 last year as a prepayment for the fiscal year 2024. Following the Q4 results, the board of directors will propose the next half-year dividend to the annual general meeting in May. So, with that said, we are finished with this presentation for today.
And as Petter mentioned in the beginning, if you have any questions, please feel free to either send a text message or an email to Petter, and we will do our best to answer from the stage.
Yeah, perfect. Thank you, Anders and Mads. We have received some questions, first from Ole Martin in DNB. He has a couple of questions, so I'll take one at a time. The first one is related to the cost. Your cost looks high in the quarter. How should we think about the cost development going into Q4? You start.
I can start. We have explained the cost development, I guess, with the significant currency effect this quarter. We have the bonus provision, and we have logistic increase in addition to the growth initiatives.
But when it comes to talking about future costs, we do not guide on any figures, but we refer to our financial objectives communicated to the market with OpEx to sales ratio at current levels on an annual basis.
And just to underline that, some of these costs are investments in future growth, but also some are, I would say, especially the bonus provision, as Mads has touched on earlier today, is a kind of, how to say, timing issue compared to last year where the bonus was at the level we picked up. It was 5.
Yeah, we have NOK 5.1 million more. More than last compared to last year. Yeah.
But when you look into Q4 now, will the bonus provisions in Q4 be higher or lower than what you had in Q4 last year based on what you see?
What we can say is, and we have done this higher bonus provision booked in the figures for Q3. But still, the total level of bonus compared to last year has not changed. There's no changes in the bonus system within the company. Meaning, so yeah, you can do the math. Yeah, put it that way.
Yeah, and Ole Martin also asked about, you know, is there any OpEx related to delivery of goods, you know, timing of store openings and those sort of things that also affects the Q3 numbers?
Yeah, we have in the figures reported, we have NOK 1.2 million related to the last mile distribution of our larger furniture. In addition, we have, like Anders has mentioned, high project activity and new stores opening in the beginning of October, which impacts the OpEx in Q3, the preparation for this project activity. And what would you say is investment in future growth that hits the cost base in this quarter?
Okay, perfect. We then go to another question from Ole Martin, which relates to your inventory. Your inventory looks high, 27% up year over year. You state that this is according to plan. Can you quantify how much of the inventory buildup that is related to early delivery of goods and how much is related to new categories?
Yeah, we have an increase in the inventory of NOK 200 million. You can see that some of it is related to higher freight rate levels. In addition, we have some currency effect.
In addition, we have more goods coming in by sea, which is, I will say, it's approximately 50% of the NOK 130 million, which is related to seasonal products, and the remaining is related to what we call the whole year assortment, full year assortment. There is a slight increase in the stock levels due to introducing, for instance, the Extended categories in Hemtex. But to sum it up, the majority of the increase is due to that we chose to have earlier deliveries for the upcoming important Q4 season.
Perfect. A final question then from Ole Martin. What was the like-for-like in Hemtex adjusted for the campaign in Hemtex last year?
We do not have that figure.
We don't share that figure.
But as Mads said, if we isolate out the effect of the Hemtex anniversary campaign last year, we see positive figures and growth, but we have to isolate out that, but we do not share these figures.
Perfect, thank you. I can just add a question there on Hemtex. C an you shed some light on the development in the Swedish market, what you're seeing there in terms of competition, campaign activity, and those sort of things?
Yes, we have seen, we would like to say that in Q4 and also for the last quarter has been a tough situation within the Swedish market. We do experience that we take market shares. We have had lots of many quarters with strong growth. So we are quite confident that we are strengthening our position in the Swedish market.
And as said, we have lots of more new lease negotiations, both in shopping malls where we previously haven't had any dialogue and also on terms now that are interesting. So I take that as a sign that Hemtex is both an important and interesting tenant that performs well in a rather rough market. We have seen figures from larger competitors that have had a drop in revenues, but we primarily focus on what we can and what we do within Hemtex, and we are very pleased with the performance in Hemtex, even if we saw the drop in the revenues that we have explained in this quarter.
Perfect. We're receiving some more questions now from Håkon in SEB. So three questions from him, I'll take one at a time. Can you comment on footfall and price and volume mix in the quarter?
You often get that question.
Like I said, we have increased traffic to other stores in terms of number of customers, but we do not share the price volume externally. But we follow them, of course, but we do not share the price volume effects.
I can just add a question there. I mean, are you seeing any differences between the Norwegian and the Swedish market in terms of how challenging it is to raise these prices, or are those two markets fairly comparable when it comes to setting the price for the different products?
I would say they're fairly comparable.
Thanks. Then we have a question from Håkon. Yeah, how should we think about the net gain on potential sale of the warehouse in Lier?
As communicated, it's progressing as planned. It's in the market, and we'll come back with further details at a later stage.
Sorry, was the question about Lier or Viared?
It must be Viared because in Lier, that's not. Yeah, that's the least expected.
Yeah. Perfect. Then, as always, we get some questions regarding how the start has been to the quarter. So a quarter's shopping index for October seems uplifting, decent numbers. How has October been for the Kid Group?
And as always, we will give insight in that when we disclose our revenues in the beginning of January and our Q4 report. But I would like to highlight that the start of October is important, but the most important period is from week 47 and out. Week 47 will compare to Black Week last year, while Black Week is week 48 this year.
You can have a good start to the quarter, you can have a poor start to the quarter, but still, it's from week 47 and out that determines the result of the quarter, the most important quarter of the year.
I can just add that question there. I mean, we were already seeing some quite aggressive campaign activity for, call it, Christmas products. Are you seeing any material difference when you look at Q4 this year versus what you have seen in the previous four quarters? It's normal that you see that some players, some retailers in the market within all industries, they tend to kickstart Black Week or aggressive Christmas campaign.
Why? It's only speculation from my side. Some might struggle. Some might do that as a planned early campaign activity.
But I wouldn't say that there's lots of differences in terms of aggressive marketing in the retail industry today compared to the previous year because every now and then, there's a few players that are extra aggressive or early out of the market. So it's quite similar to what I've seen for many years, I would say.
Perfect. I think that wraps up the questions we have received. So thank you. Thank you very much.
Thank you very much.
Yep. Have a nice day.