Thank you, and good morning. This is the Axfood third quarter 2020 telephone conference. With me today are Klas Balkow, our President and CEO, and Anders Lexmon, our CFO. In the investor section of our website, you will find the presentation for today's call, which is intended to be viewed in conjunction with our prepared commentary. We encourage you to follow along with that presentation. After our prepared commentary, we will be taking questions. A recording of this call will be made available on the Axfood website. I will now turn the conference call over to Klas.
Thank you, Alex, and let me, of course, also welcome you to the presentation of Axfood's interim report for the third quarter 2020. Let's start by turning to page number two. Here you'll find the agenda for today. I will provide an update on the market development, and then I'll go through the third quarter for Axfood. Anders will then, our CFO, present the financials and provide an update on our financial position. I will then turn in to give you an update on the strategic agenda and highlight some of our recent initiatives. We will conclude the presentation with an outlook and a quick summary, and then we'll end the conference, as Alex said, with a Q&A session. Please go to next page number three. Before we go into the third quarter, a quick reminder for you who don't follow us on a daily basis.
We are a leading food retailer in Sweden with a clear house of brand strategy and a vision to be leading in good and sustainable food. Our rolling 12-month sales is now approximately SEK 53 billion, we have more than 11,000 employees in the group. Together, we engage with approximately 4.5 million customers every week at more than 300 group-owned stores. We are also on online and in some 900 collaborating stores. Let's move on to page number four. With that, let me go through some recent developments on the overall market. Please, again, turn page to page number five. During this quarter, the third quarter, the Swedish food retail market continued to be impacted by the changed shopping behaviors due to the ongoing pandemic.
As you may know, we are still seeing a very strong market growth within food retail, both in stores and on online, as consumers have continued to eat at home and many people stay away from cafe and restaurants. As a result, the demand in the restaurant market is still relatively weak, and as you may know, this affects also part of our business. However, we've seen in the quarter somewhat improved situation if we compare that to the second quarter this year. Now, while growth in the food retail market is generally strong, the situation is still challenging within certain segments of the food retail market, such as stores in the central urban locations, the cross-border trade towards Norway, as well as the service trade.
We now go to page number six, here you'll find the chart that shows monthly growth year-over-year on the food retail market in Sweden. We have, in this chart, adjusted it for calendar effects. As you can see, the growth is still high and at an overall higher level than before the corona pandemic broke out. We can also note somewhat slowdown in the growth rate, which I would say partly is reflecting the now lower inflation rate. If you go to page number seven, also growth is very high on the online channel. We see some fluctuations in the growth rate month-over-month, but the overall trend is clear at high levels, even if also here you'll find the growth slows down somewhat, but again, still at a very high level.
The online channel still accounts for only a small share of the food retail market as we estimate it to be approximately 4% as share of sales. Let's now turn to page number eight. I'll continue to talk a little bit on the online market. Because in the online segment, growth is considerably stronger for the store pickup alternative versus the home delivery. This year, the growth rate for the store pickup option or the click and collect, as we call it, have been approximately 3 x higher than the growth rate for home deliveries. Let's now turn to page number nine. I would now like to move on from the market and go into Axfood's development and our key ratios. Turn page, first some summary comments on page number 10.
It is good to remind ourselves that we are still in an exceptional time with an ongoing pandemic that continues to affect us. For Axfood, the third quarter, though, was very strong despite challenges within certain parts of the organization, with strong growth and market share gains. The development within parts of the company where the growth rate for Willys stores once again stood out compensated for the business with group-owned that continues to be negatively affected by the pandemic. Our profit was higher, our profitability improved. Even though we put all our focus to handle the pandemic, we continue to maintain a high level of activity to develop business for the future, something that I will come back to a bit later. Let's now start to go through some of our key ratios for the third quarter for Axfood.
First you'll find sales. We are now on page number 11. Our consolidated net sales grew 5.5% during the quarter to SEK 13.4 billion . We have a lower inflation rate if we compare that to the first half of the year. Our high growth is clearly above the market for Willys despite a continued headwind from Eurocash, something I also reflect a bit later. Hemköp grew in line with the market or slightly above, despite the large negative impact on our group-owned stores from very low levels of consumer traffic in the city centers. I must also say that I'm pleased to report that Snabbgross showed a very strong development in the prevailing situation and recovered from the performance in the second quarter. Let's now turn to page number 12. If you look at our store sales, we continue to gain market shares.
As I said, this is achieved despite the continued headwind from Eurocash, which is included in our store sales figures. The sales for Eurocash fell by approximately 60% in the quarter compared with the same quarter last year. If you calculate that, this has a negative effect of approximately 2.5 percentage points on the store sales for the Axfood group. Our total growth amounted to 7.6% in the quarter, which should then be compared with 5.8% for the market. We are clearly gaining market shares. If you then go to page number 13. As I mentioned, the market growth for e-commerce was once again exceptionally high, amounted to 101% during the third quarter. If you look at our online growth, it was a full 120%, once again, also here outperforming the market growth.
We have clearly worked to develop our presence and rolled out our e-commerce to more stores and locations. If I continue on the online subject, we can go then to turn page to go to number 14. Because the store pickup alternative is growing considerably faster than home deliveries, not only for the market but also for Axfood. It is evident that many consumers appreciate and see the benefit with this solution. We continue our successful rollout, and our growth with our click and collect has outpaced the growth in the market. More than 2/3 of our online sales for Willys and Hemköp are now through the click and collect solution. Please now turn to page number 15, and we'll go into the key ratios for operating profit in the quarter.
We report a significantly higher profit of SEK 796 million and an improved margin at 5.9%. Profit growth was mainly a result of the strong growth in our like-for-like sales and a higher operating profit for Dagab. Some of our business continued to experience a challenging situation due to the pandemic, which then again include Eurocash and certain Hemköp stores at particularly urban locations. This obviously had a negative impact on our operating profit. We also had some costs to handle more than the doubling of our e-commerce volume. Moving on, look how this turns out by segment. Looking at Willys' performance in the third quarter on page number 16. Once again, a very strong quarter.
Total sales growth of more than 8% and approximately 7% like-for-like, outpacing the market despite the challenging situation in Eurocash, which is included in this segment. The operating profit was 4% higher at SEK 474 million, the margin slightly lower at 6%. It is clearly a strong growth in like-for-like sales at our Willys stores that was countered by a loss for Eurocash and higher staff costs associated with the online sales development. Please turn to page number 17, and I want to actually talk a little bit more about the Willys concept. In a time of great economic uncertainty, Willys benefits from its position as Sweden's leading discount chain. I have to stress that with that said, Willys continued to develop its offering and concept in a high pace.
Our expansion online, we continued to roll out the click and collect and new solutions to increase availability for our consumers. We have a high pace in modernization and improving our stores. In this year, more than 25 stores has been refurbished so far. We also improved our digital platforms and digital customer experience, including new digital tools in our stores. We continued to do the successful marketing campaigns and are pleased that we were awarded Marketeer of the Year at the Swedish Retail Awards. With that, let's move on from the Willys chain, and we are still on the same segment. Then please go to page number 18. As I'd like to illustrate the somewhat difficult situation for Eurocash and what we are facing at the cross-border trade. Because in the cross-border trade, we have overwhelming majority of customers are Norwegians.
In mid-March, as you may know, Norway introduced some clear travel restrictions. Restrictions were, however, lifted during periods for certain regions. Norway has been looking at this on a two-week basis, so we have faced, I must say, a very volatile situation. As you can see on the slide, for the regions where Eurocash operate, the borders has mostly been closed, which is illustrated then by the red line. While we have tried to reduce costs to mitigate the effects of the sharply lower sales, a significant part of the cost base is still there, such as rents and personnel. All in all, 60% sales decline in the quarter and significant loss for Eurocash in the third quarter. At the moment, the entire border is closed and has been since early October.
Now, we of course hope that the border will open up soon, even if I'm currently not too optimistic. Moving on to Hemköp and slide number 19. Our total store sales increased 6.2%, which is then in line or slightly above the market. We have a like-for-like at 3.9% and a very positive effect from also in Hemköp, a higher consumption at home. However, the growth for the group-owned stores was clearly hampered by low levels of customer traffic in central urban locations, which is still a challenging situation for some certain parts of the group and in some certain stores. As we have shared with you earlier, our group-owned Hemköp stores have a higher share of stores at central urban locations than our franchise concept or franchise stores.
Our minimart stores in the Tempo chain continue to show a very strong growth, we are reporting a somewhat lower operating profit for the segment at SEK 62 million. The decrease in the operating profit was then mainly driven by a sharp decline in the sales for a number of stores in our central urban locations. Let's now turn to Snabbgross' performance in the third quarter on slide number 20. Sales showed a distinct rebound compared with performance during the second quarter of this year. The restaurant market is still weak, although the situation has improved compared to the second quarter this year. Snabbgross navigate the environment, I must say, very well and has clearly outperformed the market. The availability through its store base and attractive customer offers has resulted in increase of our customer base as many customers now appreciate the flexibility that Snabbgross is offering.
Our operating profit increased to SEK 64 million, and the margin was higher at 6.5%, which is then of largely an effect of our like-for-like growth. If we continue with Snabbgross, please turn to page number 21. There you will see Snabbgross' performance compared to the restaurant wholesale market. The chart here shows the period from March to September this year. As the market declined approximately 25% during this period, while Snabbgross sales were down only 2%. As a result, Snabbgross market share increased almost 5 percentage points to almost 20% or 19.1%. Let's now move on to slide number 22 and look into Dagab. I have to say, Dagab, one of the most positive highlights in the report, delivers a strong quarter, a result very much based on a solid and efficient operation.
Also pleased to share that we are now seeing a higher delivery reliability compared to the second quarter. Our sales in Dagab grow by 7.6%. We see an effect of the strong sales to Willys, Hemköp, and Snabbgross, but we also have negative impact from lower sales through Eurocash. Sales to the service trade has been affected as less people is now moving around, even if also in that segment, we've seen a gradual improvement during the period. We have a clear sales decline for our restaurant concept, Urban Deli, who is still facing a challenging situation due to the pandemic. We have a positive development for Mat.se, and that is also seeing some efficiency gains in this company. We report a significantly higher profit for Dagab at SEK 246 million SEK and a significantly higher margin at 2.5%.
Sales growth and efficiencies in the wholesale business is a positive contributor. I also want to remember that last year we had costs associated with our Stockholm dark store integration that is making the comparable a bit different. We also had costs last year to support our growth in Apohem and somewhat higher cost this year to support Apohem. Again, we have a weak result for Urban Deli that impacts the profit. With that, I would like to ask you to please turn to page number 23 and hand over to our CFO, Mr. Anders Lexmon, who will present our financial position. Please, Anders.
Thank you, Klas, very much. Let's then turn to page number 24. Let me first sum up the net sales and operating profit for the first nine months. Net sales for the group increased with 6.3% to just above SEK 40 billion. Store sales for the Axfood Group increased by 9.2% to compare with the total market growth of 7.6%. We can thereby conclude that Axfood also in the first nine months gained market share. The operating profit increased with SEK 143 million or 7.9%. Operating margin increased somewhat from 4.8% last year to 4.9%. Let's then turn to page number 25, going into the cash flow. For the first nine months, we continue to show higher operating profit compared to last year due to strong sales, despite the challenges for the pandemic, as Klas mentioned earlier.
We had some lower paid tax this year, mainly due to payment of supplementary preliminary tax last year. We also saw a positive deviation of net working capital performance of SEK 604 million compared to last year. We had a positive working capital performance of SEK 99 million this year, thanks to mainly strong development of accounts payable despite the one-day negative calendar effect this year. The relatively weak working capital performance last year, SEK -505 million, was mainly due to a three-day negative calendar effect. The higher investing activities this year mainly explained by a divestment of land last year. In the third quarter, dividend number two was paid out and total dividend this year was SEK 7.25 per share compared to SEK 7 last year. We turn page to page number 26.
Coming back to the investments, the CapEx for the first nine months amounted to SEK 730 million, a little bit higher than last year. The investments in our retail operation was up SEK 26 million due to both higher pace in refurbishments, new establishments, and relocation of stores, mainly in Willys but also in Hemköp and in Snabbgross. We also saw some higher investments in IT this year, also that due to higher store activities, but also higher investments in our IT projects. The wholesale investments decreased somewhat due to the investment in our warehouse in Jönköping last year. We turn page to page number 27. We have in the third quarter further decreased our net working capital compared to sales from - 3.1% to - 3.2%.
We continue to be more efficient in our inventory due to the strong like-for-like growth. We also continue to increase our payment terms for accounts payable. Our SCF program also helps us to increase accounts payable. We turn page to page 28. Looking then at the development of net debt, at the end of September, we had a net receivable position of SEK 350 million if we exclude IFRS 16. That's the dark red staple in the chart as you can see, despite the second dividend we made in September. The strong position at quarter end is also mainly explained by a strong operating cash flow. The net debt decreased also somewhat if we include IFRS 16. The net debt EBITDA ratio was in line with June, 1.1.
The equity ratio was in line with both last year end and the first nine months last year, around 24%. We turn page to page 29. The capital employed increased with approximately SEK 500 million, mainly due to a strong profit in the third quarter and was in line with year end 2019. ROC continued to be on a very stable level around 25% and correspond well to approximately 40% pre IFRS 16. To sum up, we can conclude that Axfood continue to invest in the future and at the same time have a strong cash flow and a solid financial position. That end my part of the presentation, Klas, and I thereby hand over to you again. Please.
Thank you, Anders. Let me now as we follow the agenda, go through some of our initiatives that we've done in our strategic agenda. Please turn to page number 31. Just a reminder of our strategic focus, as you know, we have six strategic areas, and today I will focus on three of them, customer offering, customer meeting, and our supply chain. Please go to the next page and if we start with the customer offering, and I just highlight some parts, which is through our private labels in Axfood, we are now launching significant and several more innovative products and leading the change for a sustainable and healthy assortment. As you can see on the slide, this is some of our recent launches which includes protein bars, vegan pizzas, plant-based nuggets, eggs from free-range outdoor hens, and vegan mayo, among others.
Far this year, we had more than 200 new launches and our private label share increased 0.7 percentage points during the nine months to September 30 compared with prior year period, which is an important part for us to secure a strong price value position in the market. If we turn page to slide number 33 and I move into our customer meeting, some of the initiatives we've done there. In early October, we launched Hemköp's new loyalty program, Klubb Hemköp. With this innovative and favorable loyalty program, Hemköp is first out in the industry to reward sustainable choices that are positive for the climate as well as for people's own health. We want to inspire its 1.7 million members in the program. The program will also support for a significant improvement in more offering personal and individual offers.
This is early days as we just launched the program, but initially we are off at a very good start with significant increase of new members. I'll continue on the customer meeting, please turn to slide number 34. I must say it has been a while since we launched an entirely new concept in the market. We think it's about time. We have identified a consumer need to buy groceries, food products, and household goods of high quality in bulk packages and at attractive prices. We have actually worked on this concept for some time, long time before the pandemic broke out. As you may remember, in the pandemic, we opened up several normal Snabbgross stores to consumers, that just proved our theory that there is a consumer demand for a new retail concept in the Swedish market.
At the end of November, we will launch Snabbgross Club. At Snabbgross Club, consumers will get the opportunity to shop for the same food products as mainly the restaurants and cafes. It is an exciting launch for us. Snabbgross Club will be among the first in the country to open up a membership-based grocery store where consumers gain access to unique and attractive priced assortment that very often only is available for restaurant owners. Please go to page number 35, and some more comments about the customer meeting. Through our various concepts, Axfood strives to meet customers' diverse needs, no matter where, when, or how the customer interacts with us. One priority is obviously to strengthen our digital customer meeting. Recently, self-scanning and payment via mobile phones were launched in a number of Willys and Hemköp stores, called Scan & Go.
Mat.se aspires to simplify daily life for people. In September, we were first out in Sweden with a voice-controlled personal grocery shopper in a pilot with Google's Nest Hub. This is a pilot with 50 consumers where we have the aim to learn and to see how we can adapt our future in this interesting area. In our stores, we started the rollout of the new payment terminals, which is streamlining the shopping process and allowing for additional payment methods. Please turn then to next page. As on slide 36, you'll also find some recent initiatives within the supply chain. First, by the end of 2020, we'll have a pilot test of our new transport system that will be initiated. It is a clear step toward a more sustainable and efficient transport model.
Secondly, we have recently went into partnership with the truck maker Scania to develop new solutions for electrifying heavy transports. Third, we work on the new highly automated logistical center in Bålsta, as we have talked several times before, which is located outside Stockholm. The building goes according to plan. We have now worked on the construction, and we start to see the building coming up in a very nice way. As you know, this will be fully operational in 2023 and will be one of the largest and most modern in Europe for distribution and groceries to stores as well as online customers. Finally, we work on the expansion of our dark store in Stockholm, Årsta. This is also on schedule to be open up end of the year.
The warehouse are to be doubled, which will create more capacity for our e-com concepts and also include space for our pharmacy online concept Apohem, which will also create synergies together with the rest of our concepts. Now let's turn to page number 37, and I'll talk a little bit about sustainability as we have recently launched the report Mat 2030 or Food 2030. We want to achieve sustainability in the whole food industry, where everyone in the value chain needs to contribute from producers to consumers. Mat 2030 is a report with actually 86 recommendations for politicians and the business sector for a more sustainable and competitive food strategy for the whole Sweden. We see this initiative for us to be a positive force for change with focus towards a more sustainable total food value chain.
With that, please turn to the next page as we will now go into our outlook on page number 38. I will actually ask you to directly turn page to page number 39. Now, before I go into the outlook, first, some quick comments and thoughts on the long and short-term business impact from COVID-19. Again, of course, it is difficult to assess all the implications as it's also something that we are in the middle of. The food retail market is relatively insensitive to economic swings. However, obviously, an overall weaker economy may impact overall consumption. With that said, weak economy, the price value will be also even more important, which we also are then well positioned, particularly with our Willys concept.
Eating at restaurants is still at a low level, where we see a shift from food consumption to food retail, which affects some of our business, although Snabbgross has managed so far to navigate this environment fairly well. As I said before, the border towards Norway is closed again, and there is virtually no activity in the border trade at the moment. It is still very little movement of people in the city centers, which is also affecting some individual Hemköp stores that is located in these areas. Conclusion all in all, it is difficult to assess the impacts of COVID-19, particularly also now where we see some regional restrictions that comes out the recent week that creates, I would say, further uncertainty. Please now move to slide number 40, and I will then go into our Outlook 2020. We see no changes to our 2020 outlook.
We plan to invest SEK 900 million-SEK 1 billion this year with no major investments in our automation project in Bålsta. Our plan is to open up 5-10 new stores with five new stores so far is going to open up this year. With that, please turn to page number 41. We are in the final part of this presentation, so let me just sum it up. We think the third quarter marks a strong achievement for Axfood with clear market share gains despite continued challenges within certain parts of our organization. We continue to work hard to meet the changed customer behaviors and the increased demand that we see in the market. Our strong growth was again supported by the outstanding achievement by Willys.
Actually we grew more than the market and actually in all our larger retail concept, we outperformed the market and our online business developed further in a positive way. With the strong growth and efficiencies, our profit was higher and our profitability improved. If we look forward, we are well-positioned and we continue also to face some challenges, particularly in Eurocash. As Anders reported, our financial position is strong and the activity level within the organization is very high with sights set on the long term to strengthen Axfood. With that, I please ask you to turn to the next page number 43, and hand over to the operator to open up for the questions. Thank you.
Thank you. Ladies and gentlemen, if you have a question for the speakers, please press zero one on your telephone keypad. The first question comes from Magnus Råman from Kepler Cheuvreux. Please go ahead.
Thank you. I'd like to start first with Dagab here to understand the split of drivers behind the beat in Dagab's earnings. Of course, there have been, I think two soft Q3 quarters or in two years in a row now. We've been looking at 2015 to 2017 Q3 quarters. I think Dagab's operating profit represents roughly just below 30% of annual operating profit. Obviously it's a seasonally strong quarter, but just to help us understand the split of drivers here, would you say that the 35% year-on-year growth in operating profit is mainly explained by soft comparison or is it the leverage on strong volumes and efficiency that you derived?
Hi, Magnus. It's a good question, and even if we don't split it up, but I've tried to explain it as well in the report that we have a clear positive effect from high volumes and obviously we are now, and I'm pleased to see that our KPIs in terms of our operation has been very good in the quarter. We are clearly having a very efficient base operation. That has been very supportive. Also, as you noted yourself, we have some currency effects from the strong Swedish krona that support it. Clearly last year we had some, call it, one-time where we cost for starting up our dark store operation for the online that was burden the result a bit last year. Somewhat easier comps as well.
It has been a mix out of that, but main part is now also that we are seeing a very efficient operation.
All right. Main part. Thank you. On Willys, just to understand the operating profit impact from Eurocash here. We discussed this already in the Q2 conference calls, but perhaps you can provide any leads on the change in operating margin in Eurocash or if you would like to describe it on an even broader terms? Would you perhaps be able to answer the question if Willys would have performed a margin expansion in Q3 instead of a contraction if Eurocash posted, say, normal numbers?
Obviously, if you just look at it and if you see the large impact we have on Eurocash and we have a very healthy business in Eurocash and particularly healthy during the seasonally important months in June, July, and August. Obviously it has been, as we also share in the report from total Axfood, a strong negative impact of growth. Obviously, the same goes then for the segment for Willys. If you look at the impact then on our profitability, it's been significant in the quarter. With that said, if you just would sort out Willys outside that, I think you can conclude that they have seen a very strong growth, a very strong like-for-like and with that helps our margin to develop in a positive way.
Right. Are the cost expanding here? For example, handling the high e-commerce volumes would not have offset Willys total sort of.
It has an impact, but with this kind of like-for-like it is offsetting that.
Right. That's helpful. I'll just pose one final question here on the new Snabbgross initiative, just to understand here. In the presentation, I read that you would actually be opening actual new stores under this format. Will you also allow these new club members to shop in the existing Snabbgross store network, or will you close that down?
No, to be clear, it is a new concept that is called Snabbgross Club. It will be one store open up north of Stockholm, where we will invite the members to shop and the consumers to be members to shop. That is unique for that store. Not to mix it up, we had during the pandemic open up, not every Snabbgross store, just open up to shop. That has been on a temporary basis together with the area to open up, to ease up for consumers or for them to shop at more places. This is a clear, unique concept in this one store.
Okay. That's clear. Thank you.
Thanks.
Thank you. The next question comes from Daniel Schmidt from Danske Bank. Please go ahead.
Yes, good morning, Klas, Anders, and Alexander. Just a couple of questions from me, then I'm going to follow up right away on what you talked about, Willys and Eurocash and so on, and you said that all the, of course, Norwegian border is completely closed again after being open for a little while during Q3. If you take that in and then sort of look two months ahead, then it's still, of course, some time to go before we reach the Christmas season. What's your feeling when it comes to Christmas this year around when it comes to the COVID impact on people maybe not gathering to the same extent as they would normally do when they celebrate Christmas, sort of the behavioral change? What do you think? Do you have any thoughts on that to start with?
What's my guess on the difficult question? I understand what you're aiming at. You're now not relating specifically to Eurocash, if I understand right, Daniel?
No, I'm just saying that with maybe the border still closed two months out and on top of that, maybe a changed behavior when it comes to gathering around Christmas and all that. What could that do to volumes, basically?
Yeah. I think obviously it's difficult to say, but I think one could theorize a bit about Christmas. I think still we will have Christmas dinners, even if we will have it maybe in smaller families rather than larger families, we will still celebrate Christmas. I think if everything equals, there is a positive that we probably will travel less during the Christmas. The Sweden consumers will stay more at home. In that aspect, it should be on a positive note. On the maybe more negative, we'll see if it will be less food because we are having smaller families. I don't know, Daniel.
No. It's very difficult, I understand that. Is there any sort of parallels to be drawn when it comes to how you experienced Easter, or was that too difficult to dissect given the very height of the COVID pandemic going on back then? Is there any conclusions to be drawn?
I think when the Easter came, it was a bit of in the middle of the breakout of the pandemic. As you may remember, we were also working extremely hard to secure that we had a good service level out in the stores and trying to manage the situation. We are, as I also comment on the report, we are now back on track in terms of service levels, et cetera. That feels good. It was also more at the time, a little bit different situation in the spring, I think, versus where it is now. With that said, I think it is an uncertainty at the moment with the spread of the virus and some regional new advices that comes out that will maybe stress the situation even further.
I think that all in all, and we look at that we should handle the Christmas in a healthy way.
Yeah. Thanks. Just moving on to the initiatives. You do have a lot of initiatives going on right now, and as you say, sort of very high activity level in the organization in general, and one of those things are Klubb Hemköp that you mentioned. I think you said it's been quite a good reception so far since the start of October when you launched it. You're sort of really promoting sustainability and healthy choices like no one else. What's been the sort of pickup on that, and what is the impact for you guys when you look at P&L and profitability?
No, I think this is not something new for Hemköp. We worked on this agenda for a long time, now we're also adjusting even our membership program too. I think it's important to say that it's an attractive program overall for everyone, we're also trying to promote and to award if you are buying somewhat even healthier food when you're shopping. I think it's in line with Hemköp's overall strategy. We are obviously early days. This is not a game changer day one, it's a long-term, the right thing to do both for the society also for Hemköp, I think they are well in line with their position, how they would also want to continue to position themselves. We also see we've got several or significant, or I would say a lot of positive reactions from the consumers behind this.
In the early days now we are seeing more members to join. Again, as I want to point out, it's more of a long-term thing than rather than you see something quickly the coming weeks or months in our operation.
No. Okay. Good. It's a final question on Dagab. If you look ahead, all else equal right now, we're still going to see positive FX impacts also in Q4. What's the latest on sick leave compensation? How much was that in Q3? Was that filtering through mostly in Dagab? What's happening in Q4 on sick leave compensation?
We'll see where the currency goes. I don't think we will have that much of a currency improvement. If you look at the sick leave part, you know that it's changed the support because it's changed into the extra sick leave that you have. That's what you're being compensated for. I would say it is not much. The effect is on a high -single-digit level for the total group in this quarter.
Yeah. Okay.
What we're seeing also, which is positive that the sick leave compared to the second quarter is going down, even if we are still at a somewhat higher level, but it's going in the right direction. Then I of course have to flag that we don't know because again, it seems like we are into a bit of a second wave at the moment.
Exactly. There's no change to the regulations when it comes to government support on sick leave moving into October versus what it was in Q3 or?
Well, it changed after I think August 1 it changed. You had the full sick leave compensation up till July, and then after 1st of August, you only get compensated for the sick leave above normal levels.
Okay. That's still intact?
That is as far as I know is intact.
Yes.
Yeah.
Okay. That's all for me. Thank you.
Thanks, Daniel.
Thank you. The next question comes from Fredrik Ivarsson from ABG. Please go ahead.
Hi. Good morning all. Fredrik here. A few questions from my side as well. I first can elaborate a little bit on Magnus' question regarding Willys margin. I'm doing the math right, Willys margin in the legacy stores, if we exclude the cross-border stores seem to be up around 30, 40 basis points. Maybe if you could first confirm that number and maybe also help us with the building blocks of that margin improvement. Again, if we exclude Eurocash, is all of that 40, 30 basis points stemming from higher volumes or anything else in there that could be driving?
Well, I'm sorry to make you disappointed since I will not confirm it as it is not in the report. You're right, and I think that as we talked with Magnus as well, is that the key driver when you're seeing this kind of because I think you can calculate that this kind of like-for-like in Willys, yes, we'll have some more staff cost obviously, but we are getting some productivity gains, particularly when we are in the same kind of stores and so forth. We are getting an efficiency out of the system, which is very positive. The one that we talked about that is holding up a little bit is that the staff cost is increasing somewhat, and that is related to the increased more staff for the online. Now as I commented as well, the click-and-collect solution is going really well.
We are developing and rolling out more and more click and collect stores and offerings through Willys, which is very, very positive. It is supported by the consumers. It somewhat drives higher staff costs, but all in all, if you look at the total for the total stores, it is supporting our overall business. I know I didn't answer your question completely, but I think and I hope you got some indication at least.
Yeah, that's fair enough. Thanks, Klas. One more on Hemköp. Looking at your own stores, obviously suffered due to the many locations in central areas. Have you seen any changes in terms of the footfall over the last month if people seem to be getting back to their offices?
It's a very good question. I think it is not as bad as it was in the spring. It's also not good. We've seen a slight improvement. You also have some data points that has been out and has been a mix from various sources, where I think you still have a lot of the spending downtown, if you relate that to that we still have many customers or consumers work from home. That is still more or less the same. Now, I think we're seeing somewhat more people going out in the cities, which is supporting a little bit. It depends on how you look and what kind of data you look at.
Clearly, and again, coming back to the situation we are facing right now, we're also facing a Christmas period, and we'll see how that will evolve when all the Christmas shopping will start. Yes, still a relatively high impact from too little traffic in parts of these traditionally high traffic areas.
Perfect. That's helpful. One last quick question from my side. Did you note any big changes regarding competitiveness in the market in Q3 versus Q2?
We are in a very competitive market overall. I think if you look at the way we can see it, if you look at the overall market, the volume is still on a significantly higher level, but somewhat lower than we saw in the Q2 and in the summer. I think all actors in the market are obviously doing what they can to meet both the new demand, but also adapt into a booming online channel.
Okay, no big step change quarter wise?
No.
Okay, perfect. That's all my questions.
Thanks.
Thank you. Ladies and gentlemen, I remind you that if you want to ask a question, you will have to press zero one on your telephone keypad. Thank you. The next question comes from Gustav Hagéus from SEB. Please go ahead.
Thank you. Good morning, guys. I have a few follow-ups. Firstly, at this stage, if you were to assume that online was to take on a more modest growth trajectory from 2021, say 20% annually going forward, at what stage without price increases would you assume that you're starting to get some profitability out of that? I'm mainly referring to the business that is not click and collect, but the true online business. Thanks.
Hi, Gustav. I understand your first part, but what was the exact question? What kind of price you said? What did you say?
Yeah, because sometimes I've heard people say that online is going to get profitable when you get reasonable pricing for it. In a scenario where you're not able to raise prices for online, but prices are at a similar rate as they are today, when do you actually get profitability from your online business excluding your click and collect?
Yeah. Of course, pricing in the market is very much a competitive area as well. If the market was completely priced up, then of course it will be uncompetitive versus what you find in the stores. You will get some volume, but not maybe the development you want to see. I think the clear thing or the real step forward towards profitability, I think one, we are pleased to see that the click and collect solution is really driving this channel at the moment. That is an area where we see significantly better operations in. The second part with the home deliveries, we need to get automation in the system and also more volumes to be able to get more efficient transports. Then you can argue if that will happen or not.
If I look at Willys, who is basically the only chain at the moment that has a clear fixed fee to deliver to your home or also click and collect, they are doing very well. Many of the others are not following that yet, and we'll see if that happens. That will support it, but I think the key thing is to get the automation and transport efficiency up in a better rate.
Okay. Returning to Dagab, which had a good performance in the quarter. Now that Årsta is up and running year-over-year, should we extrapolate this margin level going forward? Are there the further expansions you talked about with the warehouse in Årsta, is that again going to hurt profitability, you think, in the near term?
Not in the same way as we saw last year, because last year we were not having the efficiency we want to see as we set it up, and it took some time until we got the efficiency. Obviously, with the double space, we will get more rent, but on the other hand, we'll get the more space that we need to be able to run an efficient operation as well. We need that because if you're too tight, you're not also efficient in your operations. We will get obviously, when this is up and running in the fourth quarter, we'll get some more rent costs. We expect now to see a more better, smooth operation where we are trimming in the picking tools and we are trimming in the overall operation for us.
Okay. As we get closer to you actually opening the automated warehouse, I'm a bit curious in how large share of your actual cost base do you actually address through this increased automation level? Is it fair to assume that about 6% to your sales is logistics cost today, and of that about three quarters relate to transports?
Even if I'm not splitting that one out, if you look at, I think we talked that and we still have the same agenda and the same forecast, is that our share of sales logistical cost as a whole when we open up, that will be on par with what we had last year. Obviously with the volume that now starts to come in and that will come in, it will create further efficiencies.
Okay. All right. Lastly from me, I'm a little bit curious about the UTP Directive, which has been somewhat in the news lately. Do you foresee any effects from that as that it goes into play next year in terms of your working cap release, which has been strong lately, or your ability to drive private label or an effect on shrink, or is this at all relevant for you?
Obviously, we'll see if it goes in place. What we have argued obviously is that we think the overall EU Directive is, it has an aim to protect the smaller farmer and so on from the large player, which also is large suppliers in that perspective, and also large retailers. We think the over-implementation that Sweden has come up with is not really reflecting the aim for it, because it also protects some of the multinational suppliers, which is not the aim of what we want or the aim of the EU Directive. We'll see how this sorts out. I think you have some clear directives in it, and I think that we'll have to watch out and see how it will evolve. I can't comment much more about it right now.
All right. Thank you, Klas.