Earnings Call: Q2 2021

Jul 15, 2021

This is the Ax Food Second Quarter 2021 Telephone Conference. With me today are Claus Dahlko, our President and CEO and Anders Lichtman, our CFO. In the Investors section of our website, you will find the presentation for today's call, which is intended to be due in conjunction with our prepared commentary. We encourage you to follow along with that presentation. After our prepared commentary, we will be taking questions. And a recording of this call will be made available on the Agilent website. And with that, I will now turn the conference call over to you, Claus. Please go ahead. Thank you, Alex, and of course, good morning, everyone, and Let me also welcome you to today's call. But let's now start on Page number 2 of the presentation. Here, you'll To see the agenda for today. So first, I would like to provide you with a market update and then a summary of our Q2's performance for Axford. Anders will then go through our financial position. And after his part, I will continue then to talk about our strategy by highlighting some of our current initiatives. Also here, give you an update on our proposed Berndalls transaction. And also, we have, as you may have seen, announced some slightly news this morning with regards to our logistical platform that I will go through in more detail. The last part of the presentation is about the outlook 2021. And after that, we'll open up for questions. So let's get started. And please go to the next page, Page 3. As usual, before we deeper into the quarter, just a quick reminder about who we are for those 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. During the 12 month period ending June 30, sales amounted to slightly more than SEK 54,000,000,000 and we have more than 11,000 employees in the group. Together, we engage with approximately 4,500,000 customers every week at more than 300 group owned stores and in online. Let's now turn to Page number 4, and I will now like to go through the market development during the Q2. So please turn another page and go to Page number 5. During the Q2, demand in the Swedish food retail market continued to be strong and was still impacted by the effects from the pandemic, including the changed shopping behaviors among consumers. However, as seen in the Q1 this year, the market continued to face high comps. Consumption during the Q2 last year was strong and significantly impacted by the changed shopping behaviors that I just talked about. In addition, the calendar effect this quarter was negative at minus 1%, mainly due to the negative Easter effect. And lastly, this quarter, we had a negative food price inflation amounting to minus 0.6%, which, of course, had had a negative impact on the overall growth. Growth in the online segment was strong, but the rate of growth was significantly lower in the prior quarters due to high comps in the prior year and also consumers now also returning more to our stores. While demand Within food retail in general remained high. The situation continued to be challenging for certain segments of the market, including for certain businesses with exposure to central city locations, cross border shopping and in the service trade. However, in the latter part of the quarter, we saw some encouraging developments, which mainly correlates with the overall better situation around the pandemic in Sweden, I. E, the current low spread of the infection and ongoing vaccination rollout. As an example, in the cross border trade, the situation started to improve from mid June with the eased travel restriction imposed by the Norwegian authorities. The restaurant market faced easy comps during this quarter as the Q2 development last year was very weak in the early phase of the pandemic. And although the market grew year on year, it's worth noting that consumption levels are still significantly lower than before the pandemic. Let's now go into some more details. So please turn to Page number 6 in the presentation. As I mentioned, this quarter had a negative development and for food prices, especially then in May. And according to data from Statistics Sweden, you have to go back to early 2000 to find a higher year on year decline. Part of the decline was due to the strengthening of the SEK versus the euro, but you also had Price increase in certain categories last year that were due to supply chain disruptions during the initial phase of the pandemic. But important to note going forward is that food price comps are lower in the second half of this year. So eventually, we expect inflation to come back. Let's now turn to Page 7, and let's look into the monthly growth rates year on year for the Swedish food retail market. As you can see on the slide, growth has slowed down considerably this year on the back of high comps. Note that the chart on the slide shows total growth, So you see some quarterly fluctuations due to, for example, calendar effects and inflation. And if you then turn to next page, Page 8. And here you'll find the chart on the left side of this slide shows market growth rates adjusted for price and calendar effects. So growth has eventually come down from levels seen in 2020. Over the last 3 months, adjusting for price and calendar, Growth has been pretty stable at around 2% to 3%. However, I would also like to add that in general, the market is resilient. And as said before, consumption levels compared to the situation before the pandemic remained high, which is evident by the data in the chart on the right on the slide, which shows the market value for food retail market every year going back to 2011. During this period, the compounded annual growth rate amounted to approximately 3%. If we then go to Page number 9 and growth within the online segment. As with the overall market growth, growth in the online channel has come down quite in the last couple of months, mainly due to high comps. While the interest among consumers to shop grocery online is still high, we see that some people are increasing their purchases in stores, which most likely is due to the improved situation around the pandemic. As an example, for Villis E Commerce, the share of consumers aged 65% and above has in the recent months been lowest since October last year, a clear change of trend in that segment. In the Q2 this year, sales in the online channel accounted for approximately 6% of total food retail sales. While this share compares to slightly more than 5% in the Q2 of 2020, it is actually lower compared to the Q1 this year when sales on the online CEO. In the online segment of the market, growth continued to be considerably stronger for the Click and Collect option John versus the home delivery. Moving then to the next page, and we are now on Page number 10. And with that, let's just Turn to the Q2 development for Axwood. So please go to Page number 11. Total store sales for Axwood grew 1.1% during the Q2, which is higher than the market growth of 0.6%. However, obviously, both these growth rates are significantly lower than before, impacted by high comps, negative calendar effect and food price deflation. Let's now go to Page number 12. We continue to expand our presence online and add more stores and locations. We also continued to outperform the market. And in the Q2, online sales to consumers once again exceeded SEK 1,000,000,000. While our growth amounted to 36%, online growth to the market was 27%. Let's now move to Page number 13, and get into our key ratios. Consolidated net sales for Swed grew by 2.5% during the Q2 and amounted to SEK 13,900,000,000 Comps were high from the prior year and negatively impacted then again by the calendar and food price deflation. Lillith and Hampshire grew more than the market. And Groupon's Hampshire stores grew at a lower rate than the market, We're which is explained by conversions of stores to franchise as Hemshaft like for like outperformed the market overall growth. Sales for Snabdros increased significantly owing to low comps and a somewhat improved situation in the cafe and restaurant Please now turn to Page number 14. As we have some large investments and initiatives in the year to come, such as, for an example, our new logistics center in Bolstad and the Baringdas transaction, we will start to see non comparable of Limpaks. Therefore, as of this quarter, items affecting comparability will be reported separately. This refers to the financial effects in the combination with major acquisitions and divestments or other major structural changes. And these items are reported separately to facilitate understanding of the group's overall financial performance when comparing different periods. So during the Q2, our operating profit includes items affecting comparability and more specifically, acquisitions cost of SEK 54,000,000 associated with the Barentas transaction. As a reminder, we expect to incur total integration cost of approximately SEK 200,000,000 during the period to 2023. Then into the ratios. In total, group operating profit amounted to SEK607,000,000 and the operating margin was 4.4%. Operating profit, excluding items affecting comparability, amounted to SEK 661,000,000 and the corresponding margin was 4.8 The higher operating profit, excluding items affecting comparability, is mainly a view to a higher operating profit for Dagab, Snagros and Hemshaft. The lower operating profit for Villers is mainly attributed to negative like for like sales Growth owing to very high comps and a negative result for Eurocash. We then talk about Willys. Let's go now to Page 15% and get into the Villis segment. Volume growth for Villis was high in the quarter, but the rate of sales growth was lower due to the negative effect and food price deflation. Village had very high comps in the quarter. And if you look back at the prior year growth for the larger format Village stores, Higher growth in the Q2 2020 compared to the Q2 2019, it amounted to a full 15%. So high comps. But during the Q2 this year, growth for these stores amounted to 1.2% this year. So lastly, we are still growing, but from high levels. Lastly, the development for food price has been negative. It is worth noting that we as other business faced upwards pressure in terms of wages and salaries. Eurocash experienced a very challenging period throughout most of the Q2, and sales were only up 5% from an exceptionally low base. However, the situation improved from mid June as Customer traffic started to gradually increase with in combination with the eased travel restrictions. In all, total sales growth for the segment amounted to 0.9%, slightly above the market, And like for like growth was minus 1.1%. Operating profit decreased to SEK 372,000,000 and the margin was lower at 4.6%. The lower operating profit is mainly attributable to the negative like for like sales growth and also then the negative results for Eurocash. And some comments about Eurocash and the cross border trading. So let's move to Page 16. We within Eurocash, we recently commissioned YouGov to survey Norwegian consumers about their views and intentions to shop in the cross border trade after the pandemic. And according to the survey, which was carried out in June, The share of Norwegians with an intention to shop in Swedish stores along the border after the pandemic is still very high and essentially similar to the corresponding level before the pandemic. While the Norwegian consumers, 1st and foremost, appreciate the low prices in the cross border trade. They also appreciate the trip itself over to Sweden as well as the Swedish store's wider and more varied assortment, including new and exciting products. Lastly, the ease of shopping is another reason to why Norwegians cross the border to go to shop in Sweden. These results are, of course, very encouraging. But in this difficult time during the pandemic, we have Kept our site on the long term positioning for Urcash and focused on improving Urcash stores and concept, educating employees and maintain Very good stores to welcome Norwegian consumers with an even better customer offering once they come back. Let's now move from miller segment over to Hampshire. So we are now on Page number 17 and the performance for the Hampshire segment. Total store sales growth amounted to 1.5% and like for like growth was 1.1%. While the franchise stores grew faster than the overall market, sales for the Groupon stores were negatively impacted by conversions. The like for like growth for the Groupon stores was, however, solid at 1.9%. The Tempo chain continued its positive development increased and amounted to SEK 62,000,000 and the operating margin was higher at 4%. The increase is mainly attributed to positive like for like Store growth and improved sales mix and good cost control. Please now turn to Page number 18. And turning then to Snagros. The 2nd quarter sales increased strongly by 13.1% in total and 10.9% like for like. The comps then in the prior year were low as a result of the weak market development during the initial phase of the pandemic. And consequently, the market development was positive this quarter. However, the SEK 971,000,000 in sales for Snubgrove was actually higher than its sales for the Q2 in 2019, I. E, before the pandemic. So in other words, record sales for Snablos, an impressive achievement considering that we are still in part of the pandemic period. Snagros continued to increase its customer base and the higher average ticket value also contributed to the increase in net sales. And with the positive development in like for like sales, Snagro's operating profit increased significantly in the quarter and amounted to 57,000,000. Page and we are now on Page number 19 and the operating performance for the DAGAP segment. DAGAP's 2nd quarter was once again Quarter in which earnings improved considerably, and DAG have continued to deliver very high productivity with truly solid operations. Sales increased by 2.8%, driven by higher sales to Hemship, Snubgrove and also service trade. The operating profit increased significantly in the quarter by approximately 25% to SEK 235,000,000. The operating margin was 1.9%, up from 1.6% in the prior year period. The increase comes mainly from a high capacity utilization improved productivity for both stores and e commerce logistics. But please note that we, in the Q2 last year, had cost in transports and warehouse to meet the high demand that arose in the connection with initial phase of the pandemic Work on improving efficiency in the joint group dock stores continued to higher efficiency and more positive development reflected in Maarten Dessi's of Performance. Moving on to Page number 20. And with that, I would like to hand over to our CFO, Mr. Anders Svan, who will present our financial position. Anders, please go ahead. Thank you, Claus. And then we are on Page 21. Let me first sum up net sales and operating profit for the first half year. Net sales for the group increased with 1.8 percent to SEK 27,100,000,000. Store sales for the Exelter Group increased by 1.7% and was in line with the overall market growth for the period. The operating profit, excluding items affecting comparability of SEK 54,000,000 increased with SEK 78,000,000 or 6.7%. The operating margin increased from 4.3% to 4.5%. Items affecting comparability consist of costs relating to the ongoing acquisition of Berndas Food and was recognized in the 2nd quarter. Let's then go to Page 22. Looking at the cash flow for the first half year. We continue to show higher operating profit compared to last year mainly due to high efficiency and a strong result in DAGA, but also in Snab Gross due to a strong second quarter. We have a positive working capital effect of SEK 161,000,000, slightly below the positive effect of SEK 192,000,000 in the first half year twenty twenty. There were no calendar effect in the period. Further, we can see some higher investment Activity in the 1st 6 months compared to last year. The deviation is mainly related to investments in the retail operation and in IT. To summarize, the total cash flow for the period amounted to SEK 10,000,000, a negative deviation of SEK 75,000,000 compared to last year. Then let's go to Page 23. Total investments for the first half year amounted to SEK 596,000,000. The investments in our retail operation was up SEK 37,000,000 mainly due to your cash acquisition of the store in long flown. But the pace of refurbishments both the pace of refurbishments and new establishments were in line with last year. The investments in our wholesale operation increased with SEK 19,000,000, explained by some higher investments in both Snambrios and in our logistics operation in Darga. The investments in our IT operation was up SEK 36,000,000 mainly due to investments in new cash registers and payment terminals in our stores. Let's then move to Page 24. In the 1st 6 months, we have further decreased our net working capital compared to sales from minus 3.4 percent to minus 3.7. We continue our focus on working capital with improved payment terms on accounts payable. Our SEF program also helps us increase the accounts payable. Let's then go to Page 25. Looking then at the development of net debt at the end of June, we had a net receivable position of SEK 1,150,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000, SEK 6,000,000 excluding IFRS 16, and that's the dark staple in the chart. The net debt decreased during the Q2 as a consequence the positive working capital development and the strong operating cash flow. The net debt to EBITDA ratio remained stable at the 1 on CRO level. And the equity ratio was 19.9%, an improvement of 0.4 percentage points compared to June last year. And then let's go to Page 26. The capital employed decreased with approximately SEK 350,000,000 for the first half year. Return on capital employed continued to be on a very stable level between 25% 26% and correspond to approximately 40% if we exclude IFRS 16. And to sum up, we can conclude that AXA will continue to invest in the future and at the same time have strong cash flow and a solid financial position. And by that, Claus, I'm fine with my presentation. I hand over to you Again? Thank you, Anders. And I would now like to give you an update with regards to our strategic agenda. So please now turn to Page 28. Let me first just give an to update on the status for the Ballendal transaction. On May 31, we announced our agreement with Ballendal to acquire 100% of Varenold Foods. In addition, as part of the strategic partnership, we will acquire a minority stake corresponding to 9.9% of the shares in Sittigros with an option to increase our total shareholding to 30%. This is a compelling deal with a clear industrial logic. Akzo and Berndals are 2 well managed and family founded companies governed by values with a long term perspective in both business and how we see our role in Zijpid. We want to make a difference for the consumers and be a positive force. The transaction will result in economies of scale, cost synergies and increased competitiveness. Through increased efficiency as well as product range and logistic improvements, and will also benefit wholesale customers and Swedish consumers. The partnership with Axwood will strengthen city growth's competitiveness and create conditions for further development of the concept and higher market share in the hypermarket segment. The partnership will also give Axford exposure to the hypermarket segment of the Swedish food retail market and increase our presence and reach. Now completion of the transaction is subject to approval by the Swedish Competition authority. And the review, which can take up to 4 months, is ongoing. According to our agreement with Beiersndalls, closing can take a place no earlier than September 1 this year. Let's now move to Page number 29 in the And as a quick reminder, we are pursuing a strategy of growth promoting and efficiency enhancing priorities to become the market leader in good and Sustainable Food. I'm sure many of you are already familiar with how we work with our 6 strategic focus areas, and you can see them on this slide. And today, I would like to highlight initiatives within our supply chain and most notably, the initiatives and investment that we announced this morning. So please go to Page number 30. And let me just start that work on our new highly automated logistics Peter Centrum Bolstad, outside Stockholm is proceeding on schedule. Recently, the first trucks loaded with automation equipment have rolled in and unloaded, And we are now entering the next phase in which we begin work on installing the automation in the dry goods warehouse section. The logistics center is planned to be fully operational in 2023 and will be one of the largest and most modern facilities in Europe for distribution of groceries to store as well as directly to e commerce customers. Let's now turn page, and we are now on Page 31. And as I mentioned in the beginning of the presentation, we shared with you some exciting news this morning about several new investments in our supply chain. As to develop an even more sustainable, efficient and competitive product supply, we are now taking the next step in solidifying the base for a top class a nationwide logistical platform. Today, we unveil new exciting initiatives entailing that in the coming years, we will be moving and automating our e commerce warehouse in Baca, Gothenburg expanding and automating our high bay warehouse in Baca and automating our new fruit and vegetable warehouse in Lanskyoana. These investments will complement our new and highly automated logistical center in Ballstad by covering the southern parts of Sweden and will create further conditions for growth and profitability for many years to come. Please turn to Page 32, and let's dig a little bit deeper into these initiatives. First, in Gothenburg, we are planning to build an all new highly automated e commerce warehouse adjacent to the distribution center in Baka, where Dagab today owns the neighborhood property. An agreement has been signed with Vitron, who already provides us with the automation for the Bolstad facility to deliver the automation solution. In total, the new warehouse will have 5 times higher capacity than the current dark stores that we are operating south of Gothenburg. The new warehouse is expected to be completed by year end 2024 and will be fully operational during spring 2025. Until then, the group's existing dark store in Westaffelna will continue to be developed. This new warehouse will dramatically increase capacity as well as efficiency compared with existing warehouse, where picking is done manually. The total investment with Vitron will amount to EUR 48,000,000 during the period 2021 to 2024. Let's now move to Slide 33. And second, to add additional Pallet space and meet future volume growth in Southern Sweden, Daghav's existing high bay warehouse at BAKKA distribution center will be strengthened and expanded with new automated aisles. This will increase the total capacity by approximately 30% and thereby ensure that The warehouse will be able to meet future growth. Our existing agreement with the automation and logistical company Daifuku is being extended, And the investment in automation amounts to approximately EUR 3,000,000. Let's turn page and go to Slide 34 and go through the 3rd initiative that we are communicating today. When we released our Intrium report for the Q1 this year, we also announced To develop and streamline the logistic operation and accommodate future volume growth, had signed a 15 year lease for a new larger nationwide warehouse for fruit and vegetables in Lanskyona. The new warehouse, which is planned to be fully operational at the end of 20 22 has a prime location and infrastructure and will replace the existing warehouse in Helsingborg. Today though, we have announced that an agreement has been signed with the automation provider KNAP to automate parts of the warehouse. This new automation will which is planned to be fully operational in 2024 significantly increases our capacity and efficiency and also provides us with more flexibility. The total investment in automation will amount to EUR 14,000,000 during the period 2021 to 2024. And as a reminder, KNAPP is already an existing provider of automation for us through the automation solution that is currently in use at the Perceval's warehouse in Johan Sjerfding. Let's now go to next Page, number 35. And before we go into the outlook, I just want to highlight that we are also taking steps with sustainability, and we're taking now the steps in the collaboration with Scania with the investment in Scania's first series manufactured and delivered fully electrical heavy truck in Sweden and an all new plug in hybrid truck, which are making daily deliveries of groceries to stores in Greater Stockholm area. Dahlgopf is one of the first actors in Europe to put electrical trucks into operation in this way, representing a major step in our journey to fossil free transports. Overall, as you may know, trucks can be driven on alternative to fossil fuels now, in our case, accounts for roughly 2 thirds of Daghav's Delivery Fleet. With that, move to Page 36, and let's go into the outlook. So please then again Turn page to Page 37. We are still in an exceptional time due to the coronavirus pandemic. And while the overall situation in the society has improved, There is still a lot of uncertainty. Although the food retail market in general benefits from the high demand as people continue to CEO. There are still large variations between segments. However, it should be noted that the situation for the Worst affected segment has become better, for example, in the cross border trade. During the back half of this year, the market continues to face high comps. Eventually, we anticipate food price inflation to come back. However, for the full year, we have a lower level of food price inflation than in 2020. Let's now move to the next page, Page 38. And this year, we plan for capital expenditures in the range SEK 1,800,000,000 to SEK 1,900,000,000. This estimate includes an investment of SEK 585,000,000 in automation solution for our new logistical center in Volstad as well as SEK 115,000,000 investment in land in connection with the facility to secure further expansion possibilities. In terms of expansion, we plan to establish 5 to 10 new stores, and we also continue the online rollout by adding more stores and locations for our e commerce to consumers. While our outlook for the year is unchanged, we anticipate that we will be in the upper range of the guidance for both So with that, I would like to sum up the presentation and can happily note that we have closed yet another strong quarter, actually another all time high. We are emerging from the first half of twenty twenty one, which was characterized By the pandemic and changes in the market, stronger and more competitive than before. Our employees have worked really hard and with great energy during these very special circumstances, which is something that I'm really proud of and grateful for. Our financial position is strong, and we continue to maintain a high tempo, not the least in our future investments to ensure our competitiveness also for the longer Sir, please turn to next page. As a final remark, I would like to encourage you to save the date for Akzo's Capital Market Day 2021, which will be held on December 16 this year. At this event, we will cover many other areas that are of importance for the group to continue to drive profitable growth. More details around the event will follow in due time. And with that, please turn to Page 41, and I hand over to the operator to open up the line for questions. Thank you. Thank CEO. Our first question comes from the line of Frode Liebeschond from ABG. Please go ahead. Thank you very much. Good morning, guys. A few questions from my side. First, if we can start with Willis. I think like for like most was minus 1.1. The market grew 0.6%. I guess that's almost a 2% deviation. And you mentioned tough comps as an explanation for that. But would you say that there's any other Can I start to yes, Hi, Frederik? Can I start to comment on that? Because obviously, the market growth is 0.6%, VILIS grew 0.9%. So, Gillez outperformed or grew faster than the market. Just to make it clear that when you're comparing market growth, that is not Market for like for like market, that is total market. So that's the right comparison. So just to state that, so you cannot take the like for like as a comparison. Now then I think it's worth noting, if you look at the rest of the market last year, Large Village had a 15% growth. So of course, we are, I think, fair to say meeting extremely high comps. And I think with that in mind, Still increasing with 0.9%, it's not that bad. So It is Kemena. They are still we continue to strengthen billings. We continue to see the increase of More loyal consumers, our click and collect solutions goes really well. So I see nothing else more than in this report that we are meeting high comps. Okay, right. Yes, I'm fully aware that It's not a complete apple to apple comparison, but still if looking at the history, the deviation, if comparing like for like versus market growth has been Quite astonishing in, Willis, and now it wasn't. So just curious to hear whether there could be any other things like consumer matters or weather. No, okay. Fair enough. But it is I think that if you Just for an example, look at growth for Villis since 2019. It's very strong. Yes. No, definitely. And also when looking into the second half of the year, comps are basically as tough, though. Yes. It is tough comps, though. Yes. Okay. And then on Eurocash, you mentioned that the situation started to improve in June. Can you say anything about where you were versus 2019 figures during the end of Q2 or maybe? Yes. No, I think if when we it's As we also reported, we grew 5%, which is obviously from an extremely low, low, low level. So it is not really I mean, it's on the low side because in the end of June, it started to open up. But what I can say that after the on early July, we saw some ease in the restrictions. Still, It is a bit still of a hassle for to cross the border, but it's significantly better. I think you've seen in the media and it's very public that We now start to see customers in our stores. It is really encouraging and drives a lot of energy for particularly our employees that We can now start to meet customers again. They are very happy customer there as well, but it's still not fully speed because it's still some It's not that easy to cross the trade and not all areas are open up. So but it is encouraging start in July And we hope not the restrictions will ease even further and we'll get back to full speed. But it's encouraging in the beginning of July. Great. Thanks. And the last one for me on CapEx. Can you say anything about the timing of the investments into the new ecom warehouse in Gatlinburg. Yes. We'll have to come back with that. We will have some signing cost, obviously, but that's what we guided. We will be within the current range. Now the majority of the investments for that will be linked into 2023 2024 for the e commerce part. So but more details on that. So I have to come back with that. Great. Thank you. Thanks. The next question comes from the line of Daniel Schmidt from Danske Bank. Please go ahead. Yes. Good morning, Claus and Anders. Just a follow-up, Claus, on the Eurocash discussion, because you have given us sort of the impact in terms of losses quarter by quarter when it comes to the pandemic and Eurocash. Are you willing to do that now for Q2? The losses are more or less CEO. The same as they are slightly higher in this quarter versus quarter 2 last year, which is more Reflecting to that we have 1 more stores now in operation. We you may recall, we acquired Longfluen. So we have an additional store. So that He's on a small, he's not a major, but slightly worse, if I may say so. So We are more or less equal on that. Obviously, we hope now with getting some volume back that we will start to use that. But of course, it has We did significantly last year. And we hope now that we now start to see a turning point. Again, July looks encouraging, but I am humble to make Any forecast on how the pandemic will develop relates to this, but we hope that it will continue to ease and That will get back to full speed. So and that will obviously support the negative impact that we have on Eurocash. Yes. And does that mean just very detailed, does that mean that it's apple to apple comparison when it comes to the 5 And given that you added one store, I think you maybe removed one store as well and made it into a building. Yes. It's apple to apple, the 5% growth. So and then, yes, and then the financial Losses is some is slightly worse due to the long haul. Yes, yes, yes, good. And could you if we then move on to the This is Snappgrass, which grew by 13%, and there we saw easing of restrictions by the beginning of June. So of course, probably the 1st 2 months were not that Great. But probably to a shift towards the latter half of the quarter going into Q3, could you say something about the sort of the exit rate In Snap Jaws, if you grew by 13% for the entire quarter, was growth in June? And how should we think about it in Q4? I no, but I also think it's fair to say that it was not only June. We actually had somewhat better as well in May, which I think also corresponds a bit to the Snaibros positioning. We serve a lot of cafe and restaurants. And not to say that You should talk too much about the weather and so forth, but it has been fairly good spring that has supported these outdoor that consumers would like to sit outdoors and so forth. So it is as It's not been on the June, to first say, but I but no. No, okay. But would you say that it's been a sort of a good trend, of course, in the quarter moving into Q3? Is that a fair assumption? Yes. But it's not that dramatic so that you can think that we were everything was coming in, in June. That's what I would like to reflect on. Okay. But also, as you mentioned in your prepared comments, you saw some sort of Light at the end of the tunnel also when it came to the pandemic and city locations, if I got you right, and Maybe referring to Hampshire then, and Hampshire is, of course, also improving their profitability in the quarter. Would you say that leading the quarter. Hans Joop, his outlook is looking up a little bit. Well, obviously, when you look at The pandemic effects, it has we have been hurt significant in some of these city locations. As you know, we have large Amsterdam stores in some of the largest cities very downtown located. And traffic is has improved, but have to say still a bit from 2019 levels. So we are still a way to go, which very much relates to obviously still We as customers or consumers are still urged to work from home, meaning that we are spending less time in our offices, spending less time traveling to these areas. So I think we want to see a more of a more normal stage on that. So but as you point out, and you can see that reflected as well, in the like for like compared to the market that has been an improvement. But still, I think we still have some way to go. Yeah. Okay. And then finally on the optimization acceleration that you announced in a couple of sites today. Is it obvious that you proceed with Vitron when it comes to the Gothenburg in warehouse, but not when it comes to the Landkroner. Yes, it's Very different it's completely different technology. So and this fits very well with us. First of all, the cooperation with Vittron and in Volstad goes, it's very It's a very good cooperation. Secondly, as you know, e commerce, the platform for e Forum for E Commerce, we're now getting the same systems in Bolstein and in Gothenburg in terms of Terms and data integration and IT, etcetera. So there's a lot of good synergies around that. So that fits well. Then The automation for fruit and vegetables is more similar to the automation we do in Johan Sjoping, where we already have Knappt, which is a completely of to our operation very well. Okay. Okay. So you're implicitly saying it's a vote of confidence for both these suppliers then? Correct, correct. And also confidence in the technique that is needed because it's different techniques in the various warehouses. And then finally on Varian Dahl. If I Read it correctly, the Swedish Competition Authorities are entering in second phase now their study. And That was a couple of days ago. Is this a little bit delayed compared to what you initially thought by the end of May? No, it is spot on time. They have the 1st 25 days and then It is a large project, so to speak. There are many involved. They need CEO. So it is according to our expectations that this will go into the next phase, which They announced on earlier this week. Yes. And given that you're taking charges, does that basically mean that you're moving ahead with the assumption that this will go through, of course, and you are sort of executing on your plan already, not sort of awaiting the ruling. Well, we have taken, yes, the costs that we've had, as you know, we have costs for All the advisers and legal costs when you go through this. So obviously, these costs we have. So but then Obviously, we do what we can in terms of planning, but we also we cannot go into any further Integration until we have the verdict, so to speak. So That we are we can just do our internal planning, but then we wait for the decision. But obviously, we have some costs despite that, and that's what we announced. Yes, okay. I get it. Okay, guys. Thanks a lot. Thanks. The next question comes from the line of Gustaf Aguios from SEB. Please go ahead. Thanks, operator. Good morning, guys. Thanks for taking my questions. Good morning. Good morning. I think we touched on it before, but I'm curious to hear you're thinking about the decision with the size of these logistics hub, The bolsters 40% above current volumes and Bakke 30% above. And you show that Short. And in this report that the market grows maybe 3% over time, and the fair share of that is inflation. So It seems a bit excessive to go so big initially as it would take also if you grow In excess of the market, it's going to take you quite some time to catch up with that. So is that I'm just curious, is that capacity also calculating Could you tell us an optionality in terms of M and A or maybe category expansion? Or could you please let us in a little bit on the thinking of the size of the Well, I think, Kerst, you should see it as you when you are doing these investments, obviously, you don't want to You want to make sure that you plan for some growth for years to come. And if you're looking at Bolst, as an example, we have then the opportunity to increase our capacity with 40% within the current Facility, that gives us multiple room. Then the there will be some of the you don't need you don't sit with overcapacity initially. You can add that as well further on, but it gives you room for that. And one should also say that this facility increases our opportunity for significantly larger range and assortment that open up for new opportunities. So for us, it just gives us flexibility for the long term, which we think is very positive. Related to Bakka, it is a bit of a different operation. We have made the conclusion that it's the most It's a cost efficient way of running the volumes around Gothenburg with the increase in the high bay warehouse as well as increasing specifically the automation for e commerce that needs to be automated in conjunction with the nearby the warehouse. So with the 30% capacity of The high bay, we can storage more, but also that we can use. It's not that we it's not in a high extra cost for having that extra capacity. But clearly, we need to make sure that we are more efficient on the e commerce, logistics and hence the investment. Okay. And then I'm curious about your view on sort of threat of quick commercial rollout. A major player in Sweden announced there They have a plan to expand sort of mini dark stores by a number of 50. I think it was 15 by year end. In the event that consumer behavior shifts more towards very quick delivery for most bought products, are you able to Follow that trend with current investments. They seem to be based sort of on another sale logic than these quick commerce Pleiros? No, it's true. And I think it's interesting to follow all these new initiatives that just gives the interest of our market, which I think is positive. And but also think it's fair that you can look at it. It is, Gimena. Currently, as you have the service trade today, and now this is I would say this is kind of a digitalization of the service Trade where you it's not that you are in these cases, you're buying your weekly shopping of 40 kilos of shopping bags. It's just complementary and that we need to go quick, which is very much the service trade part. So Interesting to follow. And I think that currently, we are also having Fresh delivery, same day deliveries with our e commerce when you wanted to buy a full grocery bags. And I think this is an Interesting part to complement the service trade for digitalization of that site. But with your position, Claus, as a house Brand sort of company, you could be in contrast to, I guess, your 2 larger competitors. It seems easier for you to take up the competition and Do something on your own in this area. Is that something that is at all on the agenda? Or have you locked into more of a traditional online with larger Jose, please turn the line back in with Yes, I understand. No, it's a good comment. I understand. But I think that we have not locked in at all. We are following and we are closely looking into how the market developed. But I think it's fair to say it is very, very small today, and we need to see how that trend develops. Again, we have no own brands in the service trade, but we support the service Trade Today, we are distributing to the majority of the service trade today from a warehouse perspective, and we have not gone into And on brand on that, but we follow this and see how it develops. And we have not locked ourselves into any that we will not Go into this, but I think it's it also currently, it's fairly small. Okay. Thanks. And the next question comes from the line of Niklas Ekman from Carnegie. Please go ahead. Thank you. Yes. Firstly, a follow-up here on the Eurocash. I'm just curious if you could say anything about the footfall, what that looks like towards the end of June and particularly here in the beginning of July when I think restrictions have been eased further. I mean, first of all, are you seeing these restrictions in all stores? Or are there Some that are still significantly impacted by travel restrictions. And what kind of volumes or at least footfall are you seeing in the stores that have and where the Board has fully reopened. The end of June, as You see on the numbers, not really an impact on the footfall. It has opened up, but it was not that easy to cross the border. After July or beginning of July, it has opened up in certain areas. Some areas not that easy. There are it's a variation, I must say. But in the one that is mostly easy, it has Ben, I mean, it's not 100%. It's more close to 50% footfall coming back. But I also have to say that it's encouraging to see that Despite in some areas, you have like 3 hours queuing time to get back into the country, they are still making a fairly hefty effort to make the trip. So it is still not that easy, but the restriction, as you've seen, it's Continues to open up, and we hope it will ease up even further. But a clear improvement in early July. Okay. But it sounds you say one store is close to 50% and the others are still lower than that. So you're still well below 2019 level basically. I'd say the stores that is now located to the larger part north of Boersland is the one that that border is Got one that is close to €50,000,000 Okay. Very good. Thank you. And then a general question Here on online profitability. I'm just curious here because your earnings have held up really well here in the past 12 months in challenging times and in a period where Online has grown from around 3% of sales in 2019 to close to 9% here in H1. And I'm curious because Dagab, obviously, has been a major earnings driver here even though a lot of online costs are taken for Dagab. So I'm just curious here if you can say anything about the total online profitability. Are you seeing that the absolute losses for your online business Those are similar to or could they even be lower than they were prior to the pandemic? Or how should we think about that? We are overall lowering the absolute numbers, but still it's still challenging. Particularly the share of Click and Collect is also significantly improving, and there we have a better situation. So that is much as any guidance I can give. Okay. Fair enough. Thank you so much. Thanks, Nicolas. And we have one more question from Magnus Holman from Kepler Cheuvreux. A lot of questions already Hansard, but I can just come back to the exciting news here about the e comm investments in Gothenburg. Could you perhaps elaborate a little bit of around more in numbers, say, cost per handled unit? What type of reduction in cost Do you expect after you finalize this investment compared to the manual handling? Is it are we talking 10% reduction or a 50% reduction in cost per header unit? I think it's fair to say that we announced the Capital Market Day, and we will then give you more Detail in terms of how we look at this. We wanted to announce the investment now and then but as you point out, We are significantly more efficient with this warehouse. And then also, it is a volume case, as you may know. So as there are large investments involved, it is also based on how much volume we can get into the facility. So it relates somewhat to that when you look into cost prices and so forth. Right. I was ready to refrain to question to say payback time on investment instead. But I hear you now, so we'll wait for the C and D. But anyhow, perhaps I could just also ask about it's always been talked about The sort of rationale for choosing Bitron here as well, but can you remind us from the Capital Markets Day when they presented, I believe that they had done Very few or perhaps just a handful or even less dedicated online warehouse automation Installations, is that the same picture now? Or have they done do you have any examples of that they've done this type of installations previously. Well, they have done several, but I don't sit on it handy right now. We can come back to that, obviously. But I think the solution that they come up with and it fits very well with The needs that we have, we think it's a very competitive solution and it fits into our systems as well. So and they have experience with that. The new part that was kind of there was not too many of that was built. That was a combination of e commerce and Physical stores in the same building when we launched Volstad. There is nothing unique in each of them, but Combination of them. And obviously, it makes a lot of sense. And if you look at further along, many others is now looking into the same kind of Structure where they combine the warehouse into 1 because obviously that creates an inefficiency in terms of you don't need to ship The goods from warehouse to the specific e commerce warehouse, you are in the same area. Right. And then just finally on ecomlogistics, thinking about the in Sweden. You mean you closed down the Vadkundesia dark store in Malmo region. Do You expect to come back there with investments? Is that the next announcement we'll have? Or is this what we're going to see in the coming years? I think we'll follow and see how the market develops at the time. And still at the time, we think it's the volumes is more Tredet for our Click and Collect solutions that we have in since both Hemshoppe and Villis are very active there with their Solutions. So we cover the market from that angle, from the stores angles in that perspective. And we are not seeing at this stage at least that The volume is there for an automated warehouse system for it. So and then I think it's worth commenting to see how this developed and how it's evolved. If you look at the market data now in that was released this morning, The volume for e commerce is the growth is going down. And if you look at this, the growth is significantly higher now in terms of value into back to the physical stores. So it is a post pandemic We need to track and follow on and see how this market develop and where it goes. We still believe in the mix. We still believe in the strong e Commerce, we are showing that we are growing faster in the e commerce versus the market, so we developed that. But we also think that the stores is playing an important role here. And I think we need to look at it the post pandemic also see how this evolves in terms of total volumes in this market, which is difficult to predict at this stage. Makes sense. Thank you very much, my side. Thanks. And as there are no further questions, I'll hand it back to the speakers for closing remarks. Well, with that, I thanks for listening and Thanks for the questions. And I just want to end in saying wish you all a nice summer. Thanks.