Good morning everybody, and welcome to this Q1 presentation for Kid ASA. We will do a separate Q&A session at the end, so feel free to type in any questions, and we will do them at the end of this session. Q1 was yet another strong quarter for the Kid group, continued revenue growth and maintained strong gross margin. Cost increased mainly due to one-off COVID-19 effects last year. These are the key takeaways from the first quarter. The revenue increased by 9.3% on top of a very strong last year that was 10.4%. The like-for-like revenue increased by 7.3% compared to 9.3% last year. The gross margin increased by 0.2% despite the increased freight cost and also an increased cost on the raw materials.
The EBITDA decreased by NOK 2.3 million to NOK 110.4 million, mainly due to one-off COVID-19 cost reduction that we saw last year. This gives us the eighth consecutive quarter with a year-on-year increase in earnings per share. The group revenue in April were up by 14.4%, and by the end of April, the year-to-date revenue was up 10.6% compared to the same period last year. Bear in mind that we also had closed stores during Q1 and also in April last year. During Q1, as previous, we've been focusing on the demanding supply chain situation. We have worked with the early deliveries to reduce the risks, and going forward, we will expect early deliveries of autumn products in July, where they normally arrive in August.
We also plan for early deliveries of goods for the forthcoming Q4. The new warehouse in Sweden is proceeding according to plan, and we are still aiming for opening in Q2 2023. We have now signed an agreement to install an AutoStore automation system in the warehouse in Sweden. It's the same type of automation that we have in the Norwegian warehouse, although it's slightly larger and more scalable for the years to come. The total investment related to the new warehouse, including offices and inventory and so on, is estimated to about NOK 100 million, which will be financed through an increased long-term debt.
As the storage capacity in Norway is about to reach its limits during the peak season, we will from Q3 2023 also use the warehouse in Sweden to handle parts of the Kid Interior inventory, which also will increase flexibility in our inventory across markets. 52% of our assortment in 2021 was labeled Act with the Heart or Handle med Hjertet, as we say in Norway. This contributes to a positive impact on both people and planet. Our sustainability goals going forward include increasing share of such products, and during 2022, we will set science-based targets to reduce our climate emissions according to the Paris Agreement. Further details is available on our sustainability report for 2021, which you can find on our website. With that said, I'll leave the floor for you.
Fantastic. Comparing revenues in this quarter compared to Q1 last year is a bit challenging, both because of COVID-19 and also because of the effect of Easter. During Q1 last year, Kid Interior Norwegian market had on average 39 stores temporarily closed, and it wasn't until early May that all stores were open. This also affects the mixture between traffic to physical stores and online. Traffic to physical stores has been materially higher in both segments all through the quarter, and the online traffic is down in Sweden. I think that's also basically in line with the general market in Sweden.
The effect of Easter was a couple of weeks later this year, so we think that some of the revenues has been postponed to April, and that's why we're also disclosing the April figures, showing a group increase in group revenues of 14.4%, with a year-to-date growth of 10.6%. This is calculated in constant currency, and I like to, for once, dive a little bit into a technical thing. The FX exchange rate between NOK and SEK influences our Q1 figures quite much this quarter. Last year, the exchange rate was 1.01 compared to 0.95 this year, meaning that both Swedish revenues and Swedish costs, hence the EBITDA, will be less worth measured in NOK this quarter. That affects when analyzing Hemtex segment.
That's an important factor to remember. Looking a bit closer at the things that we actually can influence, we are happy to see that our new products and categories are developing positively. We also have growth all through our four main categories, being seasonal, curtains, duvet, pillows, and bed linen. Anders is dying to get into these slides a little bit later on, so showing how the new categories have developed. The gross margin is basically in line with last year. We still see high freight costs, and the stock currently held in as inventory has approximately 25% freight cost of the cost of goods purchased, compared to pre-COVID levels of 5%-7%. We will see higher freight costs in our financials also going forward.
One of the main reasons for maintaining the gross margin level despite increased freight costs and cost of raw materials is the fact that we have full control of the value chain, meaning that we can actively adjust prices and campaigns. Both freight costs, changes to FX, and also cost of raw materials are things that we are able to foresee. For instance, in terms of FX, we do hedging nine to 11 months ahead, so we're able to price the products at the right level way ahead of these cost increases. EBITDA, the gross profit is up by NOK 22 million, while the EBITDA is down by NOK 2 million, meaning that costs year-on-year are up by NOK 24 million, explained by two main reasons.
First of all, the COVID and the bonus reversals last year, reducing costs last year by NOK 10 million, almost like a one-off effect. The remaining NOK 14 million is, in general, it's general cost increases, but also due to higher activity. We have increased the marketing campaigns and also a bit higher prices on marketing, accounting for approximately NOK 3 million of those NOK 14 million. We have an all-time high inventory level, meaning that, logistical costs are high, so that's costs following higher activity. There is also effects like, higher costs of electricity with NOK 1.5 million-NOK 2 million during the quarter, and some more employees at headquarters with salary increases, accounting for approximately five of those NOK 14 million. I think that's about it.
Cash flow.
Cash flow from operations is down by NOK 85 million, three main reasons. First of all, we have to pay higher taxes. We're quite happy about that. That means we have better profit. We also have, as already mentioned, a higher inventory. That's also a wanted situation. We have placed orders earlier than we usually do, and we have actually had the deliveries earlier than we were expecting to have them. So that accounts for approximately NOK 20 million in negative cash flow. There is also a technical situation at the end of last year affecting trade creditors. Nordea in Sweden had problems executing payments at year-end, so SEK 50 million was supposed to be paid ahead of year-end, but was paid the first days of January.
Over the NOK 86 million, tax payments, increased inventory, and changes to trade creditors are the main factors. There is also one more thing to mention. Net cash flow from investments have been increased by approximately NOK 25 million. That is due to our new warehouse project in Sweden. NOK 22.5 million has been invested in purchasing the lot and starting up the construction work. That, I think, leaves the floor to you, Anders.
Thank you. We would like to use this opportunity to focus on our growth strategy going forward. We have divided this into three different boxes, the like-for-like growth, which I will touch on, and also the store network. When it comes to the omnichannel, I would like to highlight that we, during 2021, have introduced a new online platform in all segments. Also, that we opened a new e-commerce platform in Estonia in Q4. With a new Nordic organization on the omnichannel platform, we are looking forward for this in the years to come. Bear in mind that we still have a large integration potential on the cost side when it comes to synergies with Hemtex, which we will work on in the years to come as well.
New categories has been very important for Kid and will be even more important in the time to come. New products and categories remain a significant growth driver. Categories launched since 2017 have added NOK 257 million in revenue in 2021. If you look into Q1 2022, it represent NOK 58 million compared to NOK 44 million in 2021. These categories includes, for instance, examples like kitchen accessories, lamps and lighting, large carpet rugs and outdoor furniture, and also some indoor furniture that has been launched lately. Based on this, we are further expanding these categories and launching new ones. We have, since 2017, launched at least one category yearly, and we will now fuel this expansion of category and also launching new category new products within the existing categories. Some of the new categories are currently available only online and in some selected stores.
We intend to widen the distribution and increase the areas of smaller stores to make room for the full assortment in our stores. As you can see on the chart, you can see how the development from Kid and also for Hemtex, and I will come back to that, but we are limited by store space, both in Kid and also in Hemtex, since we have launched so many new initiatives since 2017. Some of the initiatives we have launched are lamps, as I mentioned, but in this quarter, we launched a small selection of carpet that have been highly successful.
We have never sold carpets in Kid before, but the introduction of carpets has been very warmly welcomed by our customers, so we will fuel the program for adding new and more carpets in the time to come. We have earlier spoken about the outdoor furniture. I would also like to highlight that we have launched quite a few smaller furniture for indoor use that also are very successful. There's a large group that we call kitchen accessories, which is everything you can find in the kitchen. That is probably one of the largest drivers for growth that we have seen for the last years and where we are aiming to add a much wider assortment in the time to come.
When it comes to the store portfolio, we have worked for many years on optimizing the portfolio, and we see now that we have to strengthen this work. One very important message today is that we see that to have space for all the categories, we need to enlarge the stores. The stores need to be approximately 600 square meters to be able to display all the current categories we have, today. Bear in mind, we will add more categories. The store category size is based on the historical categories, and concept, not what we have planned for the future. After expanding the assortment in recent years, we will target an increased store size going forward and expand and/or relocate current stores in all markets. That also includes the Norwegian market.
As you can see on the chart, you see the majority of our stores are between 300-400 square meters. There's only a few stores now that potentially can display all the categories. We have 17 + 6 stores that are 600 square meters or larger, or a base of a little less than 280 stores. We see a large potential for enlarging our stores. When we did the acquisition of Hemtex in May 2019, they had smaller stores due to their concept and the range of products. As you can see on the chart, the average store size for Hemtex is about 367 square meters, while in Kid is 458 square meters. Sorry, Kid.
We have been able to increase the sales per store in Hemtex and in Kid for the last years. These figures exclude online. These are only sales per store that were fully open in 2021. As we have told you earlier, we have also a project with a new warehouse being able to have a common assortment in the Nordics, and this is very important platform to drive the growth for Hemtex as well. At the moment, we do not have all the categories on the websites in Hemtex due to the situation with the warehouse. We will target an equal assortment and store size in all markets to streamline the concept and drive further growth.
When it comes to refurbishment of stores, eight stores and six Kid stores were refurbished with our new concept in 2021, and these stores has outperformed the remaining store portfolio when it comes to growth. You see that the Hemtex stores had a growth of 7.8%, while the like-for-like base had 2.9%. 26 stores has been upgraded to the Kid store concept at the year-end 2021. The compound annual growth from 2019 till 2021 was 7.9%, and for the comparable stores it was 3.4%.
We will ramp up the store investment program going forward and increase the CapEx to NOK 100 million on an annual basis to support expansion and the refurbishment and relocation of the stores. We want to relocate, enlarge the stores and refurbish them. All these three initiatives drive growth. The current store portfolio is 272 fully owned and operated stores across Nordics, and then we have 11 franchisees in Sweden. We have reviewed the potential for new stores in all markets, and based on this analysis, we have increased the total number of potential stores from approximately 300 to 320. We have signed 70 stores to be refurbished this year, but we are currently signing more also for this year and for the years to come.
At the moment, we have signed four new stores in Norway that will open in 2022 and 2023. We did open a new store in Skøyen in May, just a couple of days ago. The CapEx for the new store openings is in the range of NOK 2 million. Bear in mind that the payback time for these investments, including the inventory buildup, was for the 10 stores mentioned on these slides, approximately 17 months. If you exclude the inventory buildup, the payback time was less than 12 months. With that, I will leave this last slide for you, Eystein.
Yep. Just to sum up our financial objectives, with a few modifications now since Anders' update. In a normalized market, we target a like-for-like growth of 3%-4%. We are, as we have been saying, quite a few times, aiming at gross margin levels in line with the past 10 years on a yearly basis, emphasizing that. OpEx, meaning employee expenses and operating expenses, excluding IFRS 16, should be below 45%. In terms of store portfolio, as already mentioned, we are looking at approximately 320 fully owned stores. We do have 11 franchise stores in Sweden in addition. CapEx will be increased to up to NOK 100 million. That is excluding new openings, so that's relocations and refurbishments.
In terms of dividends, there are no changes. I forgot to mention, by the way, that the cash flow in Q2 will be negatively influenced by a dividend payment of NOK 4 per share. I'm happy to say that NOK 163 million will leave our accounts in the days to come. We will still do semi-annual dividend payments. Should there be any reason to, we will of course distribute any excess capital as we did during last year or the year before. I can't remember right now. The balance sheet should be with moderate debt. We are currently at 0.56x at the end of the year and never above 1.4x during the year.
With that, I think we will open up for questions. For those of you who are online, please type in your question at the end, at the bottom of the screen. If there are any questions from the audience, we will do that first. There's a question. Yes.
Thank you. Thank you for the presentation. I have a couple of questions, but I think it mostly relates to consumer behavior because I think that's quite interesting to hear your views here. Have you seen any changes in what kind of categories that are demanded? And quite a lot of your new categories are quite discretionary. Are you seeing any differences across the markets in recent months that signs of consumers changing any type of behavior will be interesting to hear. Thank you.
Well, honestly, I can't see that we see any structural changes, any changes in customer behavior. We do see that trends are shifting. That's more when it comes to trend side, not the behavior of the customer. We have seen during COVID that there was an explosion on all e-commerce, including our e-commerce. We see now that it's more normalizing during Q1 and moving into Q2. When it comes to the revenue, there's no signs in Q1 that there's changes in the customer behavior.
Okay. Thank you. On your gross margin, are there any mix effects that we should keep in mind going forward that, yeah, some changes in categories that were demanded last year that may not be as demanded this year, that could impact your margin, going forward?
I can make a few comments on product mix, historically in the quarter that's been. I will not comment upon any quarters to come. We do see that the introduction of, for instance, bed linen in Hemtex has a positive effect on the product mix, and those specific products have a slightly higher gross margin. In general, I think it's fair to say that the products that we're introducing in Hemtex have added positively to the gross margin level. That will be under the theme of product mix. Going forward, we are not specifically commenting upon that.
Okay. Thank you. I'll leave the word.
Are there any other questions from the audience? Looks like we've been clear. There's one question here.
I have one question on the web. Would you mind explaining or commenting upon the growth split between volume and prices? Would we do that?
Yeah, you can.
We don't disclose specifics, but it's fair to say that it's both volumes and prices.
Mm.
Yeah.
We did price increase during 2021.
Yes
Because of the supply, the increased freight costs, but there has been not many, not any specific price increases in this quarter.
It's also, again, challenging quarter to analyze because of different customer behavior last year. You may, might purchase different kind of goods online compared to in the physical stores. That also affects the number of items you put in your basket, and it might also affect the type of products that you're actually buying, so in both in terms of prices and margins. It is both volume and prices, but again, difficult to conclude or to analyze compared to last quarter, first quarter last year.
I think we have one more question.
Many retailers are seeing some higher campaign activity in the market to drive store traffic. What are you seeing?
Well, I'm not sure if we're gonna comment on all the other retailers, but yes, when it comes to Kid, we have a normalized traffic situation. We haven't done any dramatic changes when it comes to campaign activity. As a consumer, I am probably agreeing with the question that we see a bit more campaign in the market, and especially on the e-commerce side. That's not a comment on our business or our niche. It's what is in retail in general.
We did mention that we have increased market activity.
Yes
We also see slightly higher prices on those kind of activities. That's part of the reason why costs are up by about NOK 3 million in cost increases in Q1.
Are there any more question either from the audience? Yes, there's one more from the audience.
Here comes the tough questions.
Yeah, of course, just one question on April, and if you can elaborate a bit on the growth in Hemtex compared with Kid, if you can relate that to, say, Q1, and if there are any meaningful differences in growth rate of Hemtex and sort of the Norwegian business. Yeah, also in relation to Q1 would be helpful. Thank you.
We do not split the April growth figures. We report the group figures. That's what we did last year. We've done this year and probably do it next year, so we won't split that as per now. You have to wait until early July. Sorry, I lost the last part of your question, Markus. Can you repeat that?
Because there were different growth rates in Norway and Sweden in Q1.
Yeah.
If there are similar sort of developments in April or, yeah.
I think you're doing your job very good by challenging us on this topic. As Eystein said, we will not comment on the splits between the two segments in April. In general, I would say we are very happy with the performance both in Kid and Hemtex.
It's also fair to say that traffic to physical stores are up in both segments. Then I saw some comments that online is down in Norway. After Q1, it was down by 100,000 compared to last year, so that's basically nothing. In Sweden, though, it's like 16% or 17% down, but that's more a market trend, I think, in Sweden. It's nothing to do with Hemtex specifically. Those trends haven't changed materially in April, I think it's fair to say that.
In 2021, there was governmental restrictions from having real sale advertising in January that influenced, gave a boost to the e-commerce in all segments, in all markets. We had the opposite trend, more normalized market in Q1 2022. That affected the figures in, specifically in, Hemtex.
That's helpful.
Thank you.
Okay. With that, I think there's no more questions. To those of you who met up in the audience today, we like to see some faces. For those of you that have been online, thank you very much, and have a nice day.