Earnings Call: Q2 2021

Jul 15, 2021

Thank you. Welcome everybody to this Q2 conference call. I also have with me Helena Nordhorst, our CFO. And as usual, we will take turns to go through a presentation and we will also as usual speak to a presentation that is available on our website. I will start. We could kick off on Page 2. Overall, a very strong quarter, the best quarter in history for us despite the very exceptional comparables from Q2 last year. We increased net sales by 13% on the back of a 39% growth last year to just over SEK2.8 billion in sales. Continued strong markets and continued share gains, which we'll come back to you in a minute. Like for like sales up 9%, continued very strong growth from the e commerce part, particularly Big Mac's branded e commerce increased 35% also on the back of very strong comparables. And in all e commerce is 25% of the group sales. We continue to increase gross margin and continue to give very good scale effect. So profitability is clearly up and our operating profit measured as EBITA increased by almost SEK100 1,000,000 versus last year's number already to SEK456 1,000,000. We have a margin in the quarter, an EBITDA margin of just over 16% and a rolling 12% margin of 11.7. It's also been on Page 3 an eventful quarter for us with many things happening during and also just after the quarter, firstly, of course, we are still in a COVID-nineteen pandemic and there's a lot of precautions continuing to be taken to operate in a responsible way. We were impacted as part of that by partial lockdowns in Norway during April and I'll come back to a bit more detail on that in a second. We've continued our long term efforts of upgrading and expanding our store portfolio, opened 5 new stores in the quarter. And we also just after the end of the quarter announced an acquisition of Norwegian tiles discount called Right Price tiles that I will also I'll start by queue. Touching on the COVID-nineteen situation on Page 4 and I think for many purposes, we probably all hope that this is the last time we will have to touch on the COVID-nineteen pandemic situation. But briefly for those of you who follow us, you know that we have been as many very strict on take very careful precautions to operate in responsible way both for our colleagues and also for our customers and those precautions have continued and not changed during the quarter. We did enter the quarter with 23 stores in Norway that were closed for visits, but open for Click and Collect they remain closed about all of them for about all of the month of April. And following that entering May, we have had no negative impact of any store closures or partial lockdowns. So I would say in all, it's a fairly small impact on the total Big Macs numbers in the total quarter. We have had still a positive financial impact during the pandemic in terms of people staying home more during the pandemic obviously and the disruptions that we have faced and we have been able to manage in the appropriate way, so disruptions in all manageable. Moving on to the quarter and the developments in the quarter on Page 5, I think this quarter perhaps almost more than usual is important to start from the discount perspective as there are many forces in play. And as you know, that follow us, Big Mac has the low price position, the leading position in the Nordics And we are therefore, of course, benefiting from the retail phenomena around discount taking market share. And we are perhaps slightly too proud of being able to say that we have strengthened this position also during Q2 and for the full year 2021. And we have received several awards or recognitions from several independent surveys being recognized as the lowest price player in the market. And here are some examples from Sweden and Norway, most of them are from Q2, 1 or 2 from Q1 and including survey done by the biggest newspaper both in Sweden and in Norway. So very positive for us to reinforce that leading discount position. And that also helps us going forward when we in terms of being a relatively stronger player in the taking market share. And on Page 6, we give you an update exactly in line with what we did last quarter about our development versus the market and we continue to take market share. The market is about unchanged versus last year's very high level during the pandemic, then when we talk about the market, we talk about the Nordic consumer market for building materials. For those of you who followed us a bit longer, you know that we were very happy last year to see that finally almost some external institutes starting to track the market and publish data around the BC side of the market, both in Sweden and in Norway through industry associations. And that has helped us to put the numbers together also this quarter. However, a bit more challenging as don't report quarterly and have changed some definitions, but in all, we have a good sense of the market using also our previous internal numbers. So the market has been going to the details of the market in Q2 'twenty one, they are a little bit different between countries with, for example, Norway being negatively impacted by the lockdown as mentioned earlier, Sweden slightly more positive. But overall, there is still a very strong stay home effect that goes on in also Q2. There is a clear positive effect on the market from increased consumer prices, raw material prices have increased in a lot of which has been passed on to the consumers. And also there is a longer term trend for the last well 18 to 24 months with strong housing markets in all Nordic countries basically which of course supports DIY and renovation projects, so very positive. On the right hand side, we summarized Big Mac's development in the quarter and we have a 13% growth both in local currency and reported. The Big Mac segment, the majority of the business about 90%, increased by 12%. We continue to see very good effect of the initiatives that we are driving, e commerce is going really good, good effect from the store upgrades and also from new stores. And the business we acquired as of Jan 1 in Denmark at 2% in the quarter for the Big Mac segment. Skolke Beigvar, the 2nd segment and the smaller segment had an even better performance with plus 21% and really benefit from both being an online player and also the position relating to Garden, which is developing really strongly and also a really good growth initiatives, particularly around Product Development and Digital Sales. So overall, a good quarter in terms of continued market share gains and market share gains in line with both well, basically all the last 5, 6 quarters. Before digging into the initiatives and some more details around the event. We thought it would be good to just step back and look at the market as there's a lot of things going on at the moment and as we sketched out on the Capital Markets Day in March, there are 3 really big macro trends that are impacting Big Macs and we can see development on all three as we close Q2 2021. So the first one and perhaps the biggest one is the discount trend where we see that the further acceleration is going on when the market prices increase, we have several examples of customers that are choosing price levels more carefully or selecting between retailers more carefully and choosing Big Macs that used to go perhaps to other competitors. And the general market increase seems to be very correlated with the general increase in price comparison and accelerating the discount trend. The second big trend is around the home, which we believe and I think many believe by now that the home will play a new and bigger role in many people's lives post the pandemic. There is people many more people expecting to work from home and also people are more oriented around vacation and having invested in perhaps boats or pets or so. So a new level for the home is increasingly in the cards as we entered the pandemic hopefully. And the 3rd big trend is around e commerce, which I think many are aware of the impact and the many new e commerce consumers that have popped up during the pandemic. And as a comment could also mention that we clearly see that e commerce is also strengthening the discount trend that the digital transparency makes it easier to compare prices across different layers. So 3 favorable market trends with a slight update on the spaces of all of them here by Q2 and perhaps the biggest noted the continuous acceleration of this year. Turning to Page 8 and a bit more detail on our own activities and our initiatives. We could as we have done for many quarters quickly go through the impact of our strategic initiatives. There are 3 that we are primarily focusing on. E commerce continues to be a really good driving force for us where we increased e commerce sales under Bigmax brand with 35% in the quarter on top of a very tough comparable figure of plus 65 from last year, we continue to see basically growth across categories and gross delivery options with a very fastest growth from collected store. Store upgrades, where we upgrade store to our newer formats with broader set of categories and a better experience continue to generate 6% sales effect per store at the balance and we now have almost half 49% of the store portfolio upgraded to this concept. We also as part of this concept introduced or rollout I should say our Garden offer which is also performing really strongly and over 2 years the Garden range has doubled in sales for Q2 for Big Macs. Store expansion continues, we have 5 new stores opened in the quarter and 2 in Q1 in addition to the 4 we acquired in Denmark and it also continues to add sales for us. And I'd now like to just go in to some more detail on each one of these three initiatives. So I will start with online on Page 9. As mentioned, a really good growth on backup is good growth and we could see that the fastest growth is really coming from the sort of intersectional of stores and online or store enabled online I guess you could say. The collected store is continuing to grow really fast, which is what we call Pick n Collect, although we have to state that home delivery is also growing really fast. We continue to see good effects of other multi channel efforts such as for example, showrooming, people visiting stores to look at products and then ordering online or and we also continue to see that e commerce is benefiting benefited from opening of new stores. So good really good effect on the e commerce sales and continued very positive effect from the combination of e commerce and stores. It's also an area where we have invested a lot and we will continue to invest a lot and we have introduced in the quarter new private label ranges online both for garden furnitures and bathroom products, which have started well and we've also now in the process of introducing over 200 digital guides and instructions for 200 DIY projects that are come quite far away on our website already. Regarding the store portfolio, on Page 10, we now operate with small, regular and large format and we have an credit version that we call Store 3.0 of each and upgrade to these formats generate about 6% sales per store. We focus our upgrade efforts mainly in the low season Q4, Q1 as we don't want to disturb the stores too much during high season. We continue to see positive effects of the upgrades done during low season and now that we are in high season. And in all, it generates about 6 per sales increase per store. On Page 11, there is more details regarding the development of the store portfolio, which is as you can see increasingly upgraded. And on the positive side there is also more to do. So we're now about halfway through to upgrade the store portfolio to our 3.0 concepts and that of course means that there is half left to do. We keep a good pace of that now also in Q4 and you one planned for the coming season. 5 new stores in the quarter, 4 in Sweden and 1 in Norway. We have relocated one store in Toll Hetan and not performed any upgrades of existing stores beyond that. We have garden departments in 40% of the portfolio of which half are of the large size and we also have 20 stores by now of that format for smaller towns, the small format. So that is the more detail on the core portfolio that rounds off the comments for the Big Mac segment as is for the quarter. And then like to mention briefly something on the second segment Skanska Bighbor before moving into one of the events in the quarter. So on Page 12, just outlining the performance of Skanske Bighvar, that continued very strong, another strong quarter from Skanske Bighvar. As mentioned, it really benefits from the leading online position and the garden position, but also very good results for some own initiatives, particularly around some new products that the team has developed and also continued good effect from digital sales and marketing efforts which are increasingly sharper. Sales increased by 21% in the quarter and profitability continued to increase really well. And we also increased order intake in the quarter somewhat despite very strong comparables from last year. And the strategy for Skankivrikar remains. We continue to focus on the growth initiatives that are in place, which are product development, digital sales and marketing and also further geographic expansion into Norway and Finland. So that summarize the comments on the external environment and the initiatives performed during the quarter, I'd now like to comment on when that happened after the quarter, the positioned on RiceBryce tiles before handing over to Helena Nothorst the financials in more detail. So on Page 13, 2 pages and some comments to the acquisition of Right Price tiles. We can start with the what on Page 13. So we have announced to acquire 100 percent of a Norwegian founder led discount concept called Right Price Style founded 16 years ago with the first store in Oslo, which has a customer offer in the tariff category where Big Mac is not so strong, but consumer proposition very much in line with Big Macs, focused on quality product at the very best prices. Very much focused on the tile category, but also complemented with some bathroom products and flooring. It's a very sort of entrepreneurial driven company, again started from scratch 16 years ago and has a good and long history of profitable organic growth and currently is operated through 14 stores of which 2 are franchise and then a small but really fast growing e commerce business. Right price tiles is also direct importer of private label tiles and related products. In terms of size, excuse me, NOK300 1,000,000 in turnover last year and NOK34 1,000,000 EBITDA. The transaction is structured in 2 installments, so there is an initial consideration of NOK 100 and NOK75 million and an additional concentration that depends on performance of EBITDA in 2021 and 2022 that could as a maximum amount to be SEK110 1,000,000. We should also say that the transaction is subject to approval from the Norwegian competition authorities. So that is the what around the transaction. And then on the next page a bit more on the why and also something on what's next. So the why, well we see tiles as clearly attractive category and the nice complement to the business that we already have. It is a much more of an all year category that is not the seasonal category which we like to complement the current profile that we have and also a good margin category. It is more of a younger customer base and more of a planned, so we call it family project that is more of a discussion around the family for what projects to do and what products to choose. And there are still quite new consumer focused players in the Nordics. So there is a good category to be a consumer focused discounter in. We also like right price tiles because it is a very good fit with Big Mac's proposition, I touched on it earlier, but in summary, we could say the discount mentality and the discount proposition is structured almost identically as Big Macs with quality product at the best prices and same prices for all. And there is a product category which is well selected and carefully selected if perhaps a better wording and very much complementary to BigMark's current offer. And they also clear that Rice Price tiles is the clear price leader in the Norwegian market and the market share winner. So it's a good category and it's a good fit with our proposition. And now we are looking forward and of course there is a period where the current owners and founders will focusing on developing the business according to set targets, but also we are planning for growth under the Big Mac's brand. We aim to integrate this into the Big Mac's brand business. So we will do this in 2 steps. 1st, we will initially offer the products for Right Price Tiles under the Big Mac brand in our e commerce and some selected stores. And then we plan for Bigmax branded tile concept stores particularly outside Norway under the Bigmax brand. So that was some more information about the acquisition, which was announced just after the closing of Q2. And now I will turn to Helena to go through some of the financials before coming back and summarizing. Yes. We move to Page 15 and the sales development for the Q2. Again, a strong market in the quarter with continued stay home and positive effect from increased The consumer market prices in combination with our leading market position and market share gains increased the group sales with 13.4%. The like for like, sales development for the group At 8.6%. And we have positive currency effect below 1%. We have approximately 25% of our sales outside Sweden and the movement is related to the Norwegian Krona in the period. If we look into the segment, Where Bigmax represents 89.2% of the sales in the quarter. In Bigmax, we include our acquired a Danish company, Lopez Brea. And the increase in the sales in the quarter is 12.2%. The acquisition contributes with 2.4% and the like for like is 7.3 The other segment Skonska Bigwaroll has a solid growth and represent a growth of 21 point 2% in the quarter. So if we move to the income statement on the next slide, we can see how the strong sales contributed to the improved EBITDA in the quarter. Next page 16, net sales increased, as we said, by 13.4 percent to SEK2.8 billion. It's a volatile gross margin in the quarter with a difficult supply situation and movement both in supplier and consumer market surprises, and the quarter ended with a positive movement and an increased margin to 33 point 2%. Our cost control remains solid. The increase is mainly related to new and acquired I said, the comparable cost increased, but then comparing to 2020, we have a Quarter where we had early pandemic and there was a high uncertainty on the development going forward. So we had lower levels of activity and initiatives and marketing efforts in that quarter. So in all, EBITDA increased to SEK 456,000,000 in the period, almost SEK 500,000,000 And we have an EBITDA margin of 16.1%. Both segments contributed to the group's improvement via its improved gross margin and cost control converting the sales increase to EBITDA growth, Big Macs increased EBITDA from NOK348 1,000,000 to NOK430 1,000,000 and Skalska Blugvar contributed with as SEK 20,000,000 from SEK 41,000,000 to SEK 62,000,000 on EBITDA. If we continue to Page 16 17, sorry, we have the cash flow and net debt. We have a strong balance sheet and we have a cash position of SEK 200,000,000 compared SEK 247,000,000 in the Q2 2020. Cash flow from operating activities amounts to SEK 821,000,000 in the quarter, it's a decrease of SEK 433,000,000 compared to same Here in the last year. And this is mainly attributed to the decrease in accounts payable. As mentioned, we have a strong position and it has contributed to our flexibility To securing a good supply inventory position and we have used a high degree of our cash discounts during the period. Thank you, Helena. We are just about there in terms of presentation, but would like to round up with 2 more comments and 2 pages. So on Page 18, giving you the status of our current performance versus the financial targets the financial targets were updated and announced at the Capital Markets Day in March this year. We have a sales target to reach SEK10 1,000,000,000 by 2025. We are currently rolling SEK12 1,000,000,000 at SEK7.4 billion and rolling SEK12 1 year ago, we were at at EUR6.1 billion, so clearly moving forward. We have an EBITA margin target of EUR7.8 billion and we have are now trending at 11.7 percent above what we were well before of course, but also 1 year ago at 8.5%. We have a target to have a leverage or net debt EBITDA excluding IFRS 16 effect of below 2.5% and we are about at 0 or slightly cash positive and we have a target to distribute 50% of the net income in terms of dividend of which the Board decided to distribute 35% SEK2.75 per share now in May. We also have another target on this page, which is not a financial target, but a sustainability target. And we have many targets, but the one we are highlighting is the target regarding carbon dioxide emissions from goods transports, which is sort of a scope 2 ish target you could say where we have a high ambition to decrease that by 70% by 2,030 and we are currently at minus 32% as of last full year. So clearly moving forward on the financial targets so far. Rounding off on Page 19, summarizing the quarter and a bit of a future outlook, we could say that it's of course been a record quarter, which we are really pleased about, but also perhaps more pleased about that we really feel that we have strengthened our market position and set ourselves up for the future in an even better way. We have again exceptional comparables, but a really strong result with a strong market and really well performing initiatives, we continue to get very good scale effects and really good leverage in terms of profitability increase. Our main focus remains, we have a set of proven organic growth initiatives that all have clearly much more to give. And we are super focused on continuing to drive e commerce store upgrades and new stores in in sort of white spots, new locations for us also going forward. There's much potential in that. And then we are pleased to have found right price tiles and announced the acquisition, which we think complements the current business really nicely and adds to the growth potential, something we can really develop for the coming years. And then on the external trend side, we are fortunate, we should be humble to say to now be in a situation where the trends are very favorable for us going forward, the acceleration of the discount trend is perhaps the most pronounced one in the quarter given the consumer market price increases, which really benefits us. I think we are also increasingly clear that the home is going to play a more important part of people's lives after the pandemic than before the pandemic. We also benefit from a continued strong e commerce trend. And on the market outlook, we sort of maintain or reiterate or reinforce our view that the market was clearly boosted and in place that it's maybe not the right word, but was very strong during the pandemic level. And we maintained the view that the DIY market will be larger after the pandemic than before the pandemic given the role of the home, but not as large as during the pandemic. And with that, we summarized the presentation, conclude the presentation and hand over to operator to handle questions. Thank you. And our first question comes from Nicholas Heckmann from Carnegie. Can I maybe start with your very last statement here? I mean, I'm curious about the current trading, if there's anything you can say here, because if you look at travel, for instance, here during the summer, We're still far I mean travel holiday traveling this summer, it's still very far from 2019 levels, but it's also much better than what we've seen any other time during the pandemic, more and more people are traveling. Are you seeing any clear shifts in consumer behavior going from kind of Q2 to Q3, or are you seeing that this strong trend that you've seen now going into the summer that that has continued also going into July. Thank you, Niklas. We'll try to elaborate and I am personally also really curious about consumer trends in this of course, one of the more interesting things to observe at the moment, we will try to contribute with the light we can share. I think it should sort of separate 2 or 3 things, we on the sort of mid term, I guess, we clearly see that the sort of market will be higher after the pandemic than before the pandemic. But to your point, there is probably a reopening effect that occurring some time probably about now. And going into the details, if we look for example at our small but still business in Denmark, taking Denmark as an example because it was in our view that the country in the Nordic which opened up the fastest. We could see that there is a sort of dip in volume and sales in the market and for us as the country opens up and people almost and thankfully are free to do other things than just be at home. So April May was below 2020, although still above 2019. But then in June when after I guess 2 months or so after being freed from your home, sales came back again and was sort of in line with 2020. So that's of course, I think that is a reasonable sort of near term pattern to expect as the different markets open up. Then the other factor that comes into play is, of course, price increases that support the sales trend even though that the behavior and the quantities, as you mentioned, Iglot is probably shifting a little bit away from DIY to other things as the opening occurs. Okay. Thanks. That's very clear. And then shifting more here towards Q2 and the gross margin up though more than 200 basis points here year over year, can you just provide some more details here? How much of this is related to price hikes being greater than the rise in input costs, how much is mix, scale benefits? I think you mentioned here that you've been getting discounts from suppliers as well when you make early payments. How big a factor has that been? So just What are the key drivers here behind the gross margin? Yes, absolutely right. And you picked the right sort of drivers and I think you picked the right order also of priorities, so to speak. And the most important factor by far, I would say more than half, probably around 3 quarters of the improvement in the gross margin is related to price hikes and it is it's a bit of a complicated topic to describe, but I'll give it a shot. And it plays out a bit differently by category and we have a strategy of course being the lowest on price, so we are a price follower. In some categories, those sugar prices have increased sort of in anticipation of raw material price increases whereas in others it has more followed raw material increases. So it's been a volatile development during the quarter for us in some weeks we were clearly above last year and some weeks clearly below. But in all, it's played out and of course clearly positive way for us during the quarter. Then there is no guarantee that that will be the effect for the next quarter, but that was the effect during Q2. And then the second and third effect to your point, Niklas, is the continued sort of product mix improvements and we've had that around, I can't remember what we have quantified, but around sort of 20, 30 basis points or so year over year for 2 years or so since we started with the store grades and broader set of categories being rolled out. And then I would get around the same effect maximum is the sort of cash discount program that we have initiated earlier this year. Okay. And it sounds I guess it's fairly safe to assume that these price hikes that impact is not going to last looking into Q3 and then certainly not in the coming quarters, but you could still see some sustained scale effects from higher input costs, right? Yes, I think you're completely right. And I just to clarify, I think that's what you mentioned, but the price level is probably not going to drop in the next quarter or so, but the margin impact we'll probably not be positive versus last year from the price hike here, which is I guess what you meant by that comment. Exactly, exactly. Another question is on this Norwegian acquisitions. If you can say a little bit more here on the strategy Whether you're looking at running this as a complete separate brand or integrate into Big Macs and how quickly can that be done? How quickly can this be you know fully integrated into Big Mac's assortment. And is that really the idea? Do you want to put in a very significant part that assortment in a classical big box store or is it mainly to kind of increase the exposure to tiles? Happy to elaborate. So the plan is to incorporate this onto the Big Mac brand and sort of integrated customer offer. It's going to take a little bit of time, it's going to be in a couple of steps than I can describe. So there is an earn out period where we will allow the current operators and soon to be previous owners to maintain the brand position during the earn out period at least in Norway, right price tag. We will start by introducing some of the products well, probably all the products into our e commerce for Big Macs and some of the products in some of our stores. But to be relevant to the extent that WhiteSpy tiles is I mean the tiles category, you need to meet the customer and talk about the complete project, for example, the bathroom renovation or a kitchen renovation. And that is best served in for the concept stores. And most likely, we will open Bigmax branded type concept stores, particularly in the outside Norway as the second step. And while we will have products on e commerce and some products in all Big Mac stores, the best way to serve these kind of customers and tiles market is through concept focused tile stores then again under the Bigmax brand after a period of time. That makes a lot of sense, I guess. And I guess a follow-up here also on acquisitions. I mean, now you made the Danish acquisition in December. You made this Norwegian acquisition here 2 weeks ago. What kind of further M and A potential do you see? Or do you see a lot of M and A potential going forward? And then what would be kind of the most relevant areas? Is it An acquisition similar to this Norwegian one where you expand into a vertical where you have a weak position today. Is that the Kind of the preferred further M and A that you would see going forward. That's about right. And I could elaborate a bit I think it comes as no surprise to say that we are sort of really big fans of our organic plan. We feel like we have a lot more to do and a lot more to invest in our existing business with initiatives that we already have. So that is clearly the sort of foundation of the growth plan going forward. But then there are and also to your point Niklas, there are some particularly categories, maybe some geographies where we feel that we could complement ourselves by add on acquisitions. So we you should not expect us to do a huge amount, but there could be a few more. We are very much focused on occupied by finding acquisition targets that sort of fit in with Big Macs that really strengthened the Big Macs business and fit with the Big Macs value proposition and brand. So the target list is probably not that long, but for the relevant areas and opportunities that may occur, yes, that could be an option for us. That sounds very good. Thank you so much for taking my questions. Thank you. And our next question comes from Karl Denbauer from Carnegie. Please go ahead. Your line is now open. Perfect. Thank you very much. So a follow-up question here on the raw material prices. We talked in conjunction with the you won report, you estimated that, that had a roughly 5 percentage points positive effect on the sales growth year on year in Q1 and all else equal and also I mean given what you said on the gross margin, The fact has been quite large in Q2 also. Could you say anything sort of what you estimate the sales growth impact has been depending on the price increases here in the quarter. Yes, you're right Carl. We estimated it at 5% in Q1 both for the market and for us And it plays out a little bit different again by categories in countries. But in all, the estimates actually both for the market planned for us for Q2 is that it clearly increased to between 10% 15% price impact on sales both for sort of market level and for our sales. Perfect, very well. And My second question is on the acquisition here of Right Price Tiles. Do you have any base case scenario where do you expect a response from regulatory authorities of approval? I don't know if we have any timeline we could share at the moment. I don't think so, right. We'll have to get back to you on that part. Yeah. And maybe just to follow-up there also, I guess The first consideration here on the payment is then not paid here. We should not assume a cash flow effect so far in Q3, I guess, then, Given that hasn't been approved yet, am I correct there? But I think most likely it would be in the next Quarter that we will have the approval according to the first sort of analysis given to us. Understood. And then the closing will be shortly after that. Okay, Perfect. Thank you. And then my third question is on online here. You saw continued strong growth here in Q2 and we talked also in conjunction with the CMD regarding several improvements in your e commerce offerings such as increasing the number of SKUs quite significantly, we talked about up to 150,000 SKUs here going forward compared with around 50,000, I think you were at 50,000 when we were at the CMB. So could you share any sort of what you have accomplished on the online side here in the quarter and maybe also if you could elaborate, do you see any sort of Any price differences in marketing here during the quarter? We've got some signals that maybe marketing prices in DIY For online players have risen quite significantly in Q2, so it would be interesting to hear that as well from you. Now very good. And no memory serves you well. We did talk a lot about this at the CMD and you picked also the drivers about right, we have done quite a lot also in the quarter and we have sort of 3 main areas I guess we could talk to. We continue to sharpen the delivery sort of offers an options for the customers, which we see actually and we talked a lot about this at the CMDs and we actually see driving growth when we adding new delivery options and we've been particularly successful again with Click and Collect, but actually also several new home delivery options also go really well. And then we have introduced a lot more maybe on the more marketing or qualitative side instructions and guides for the site which actually helps customers and also sales. But then to the maybe core sort of driver points around it, yes, we have increased a bit. We have not increased a huge amount a number of SKUs in the quarter, it is sort of mid high seats and then we have increased a bit, but we have increased in some really good I would say. So we have started using some private label ranges in both for example garden furniture and bathroom products that been out now in Q2 for the first time and been a good first quarter for those kind of products. But you're right Carl that the plan is to continue to invest in this area around e commerce including ramping up the number of SKUs going forward. Very well. And Maybe just finally there, do you see any impact on your sort of marketing strategies or competition here on the online I do in Q2 given that momentum in the market is very, very strong. Do you see any competition on, for example, Google AdWords marketing or other marketing channels for your online offering here going forward? Yes, we could comment on that because it's sort of very specific in detail. But I think we have been quite fortunate in having a good trend also in organic traffic throughout many quarters including this one and probably back to the point around being known for a low price position increasingly becoming sort of a destination of search. So it's not been any material effect negatively for us. I mean there are for those of you who are into those details, some changes that is being done by, for example, Google to how to by and bid for traffic which will most likely in our view increase costs for all players out there, but it's not material for us yet. So I hear what you say and I could sense the effect, but for us we have other effects that have been positive, so it's no material impact for us in the quarter. Okay, perfect. Thank you very much for taking my questions. Thank you. Our next question comes from Julien Bateau from Baskal Advisors. Please go ahead. Your line is open. Yes. Hello. Good morning. Just a few questions from my side. On the like for like at Big Macs, 7%. If I calculate back, it seems to me that around half of that comes from ecom and the rest would come from the stores. And you also say that the price was pretty high. Did you say 10%, 15% impact on top line? So that would suggest that traffic is down mid single digits. So could you confirm? Yes, you're about right on the like for like number and the price impact of around 10% to 15%. So that would mean like for like volume being and e commerce is a big driver at about half that's also about right. So that means that volume would be a bit down in the quarter versus last year. Then you have to remember Julian that last year sales increased by 39%. So they were talking about the peak of the 1st wave pandemic. But in all, yes, that's the logic is correct. Okay. Okay. And the other question I had, it's on the Garden side. You You state that you have 40% of stores that are now equipped with the Garden side and it's Moving very, very successful. So do you plan to increase this 40%? Yes. Good question. Yes, you're right. And this communication we could perhaps be a little bit sharper on. But we have the updated store concept that we are rolling out the 3.0 I include the Garden department, we put it in there in all the 3.0 upgrades starting about a year or so ago, maybe 1.5. And in the regular format, it's a smaller garden department and in the large format, it's a larger garden department. But we are now about half the portfolio at Store 3.0 and as we continue to roll that out, we will have also more garden departments. So arguably Fairly all stores bearing some exceptions could have a garden. Yes, exactly. And now it's details, but the small format store that we have, we do have some garden products, but we don't call that garden department because we feel that the operation is a bit too limited. So they will be the exception. Okay. And then another question on the right price sales. Can you share a little bit the performance so far this year? Is it still growing? I mean is it growing or do they stay the same trend as Big Macs as a whole? Jan, but it's been I would say largely in line with Big Macs. I mean the dry price is in Norwegian business and Norway was and very much focused on sort of greater Oslo and southern part and that was by lockdowns during both March April, which of course significantly impacts the first half of the year. But even so, a good development, a positive development versus last year by not a lot, but at least somewhat positive despite negative lockdown effects versus 2020 so far. Okay. And the earn out is I mean, can you share a bit the hurdle rate For the EA growth or top line growth that it require them to really outperform or is it more the deferred payment to be sure that the management stay in place. Now we the overlap is tied to EBITDA in this year and next year 2021, 2020 you, so Lee tied you to that. And we have agreed with the founders not to share the exact details, but we could comment and say that to reach the full earnout level requires I would almost say dramatic step change in performance. Then it's a real, real step up. But then we hope that of course that would happen. That would be amazing. We hope in any case that the business will continue to improve really well and that there will be a good amount of our amount for the founders, but full potential is very difficult to reach. Sure. And then the last my last question is on the net debt or should I say the net cash because even after paying seems to me right by size, you will be at 0. So the question is, obviously, there's the M and A angle. Would you let cash accumulate on the balance sheet because you still have this target of being as 0.2.5 percent, 2.5 times, which is far cry from where you are now. So, yes, what is thinking around that. Yes. No, it's a good question. And you are I mean completely right. We do have a really strong balance sheet and perhaps too strong balance sheet. And of course, this is partly a Board topic, but I guess I think we can comment and say that there are a few things you can do with the cash. We can maybe invest even more in our organic plan, but it will probably not change the picture that much we can do M and A to your point. We could pay more dividends, so we could buy back shares. And as far as management is concerned, we are not excluding any of the options. But we agree with your I guess that is your view Julian that the balance sheet to sit with sitting with net cash, it's not the optimal structure for us going forward. So actions will have to be taken for sure. Okay. You know, thanks. Thanks a lot. Thank you. Our next question comes Fredrik Iversen from ABG. Please go ahead. Your line is now open. Thanks very much. I Came in a bit late, so sorry if you already touched upon this issue. But I'm curious to hear what you see in terms of the supply of wood materials looking into the coming, say, 6 months or so, I guess, given that the fair share of the global volumes is currently going into the U. S. It looks like. So is this a worry for you or are you all set on that side? It's a good question, Frederica, and something we have not touched on, so good cash. But yes, I know it's a stretched and challenging situation, but in all manageable I would say with the outlook that we have. I guess I should add as a caveat. But I think we have sort of moved from the red lights to maybe orange lights or something like that. The market is really the export market for the Nordic players is really, really hot to your point. But I think there's more visibility on the way that the domestic markets are playing out and we also both have managed to find even some more new suppliers, but I think the suppliers also prioritizing quite actively among their customers and we are fortunate to be a really big buyer of those kind of as Sverdak and get quite good priority actually. So we are not the sort of calling it clear, it's a very topic that we follow very actively, very closely, but we so far feel that it's been manageable and don't see any sort of change in that outlook, we foresee that we will be okay. Sounds reassuring. And in relative terms, would you say that you might be in better shape than many of your competitors then? I would think so to be honest. And then I think it probably is very mixed between the competitors and this I don't know but just here from sort of suppliers in the market that the smaller players tend to have problems the big ones are getting share. And I guess we are most competing with sort of bigger ones, but so maybe it doesn't impact the competitive perspective that much. I think I would almost have to be the case that some particularly smaller players have a really, really tough time getting enough volume. Great. That's my only question. Thanks a lot. Thank you. We have a follow-up question from Karl Dienby from Carnegie. Please go ahead. Your line is now open. Thank you very much. I just had a follow-up question here. Maybe on the current trading and here going into July, I know we're only 2 weeks in here, but could you say anything on demand here going into July? And maybe share also the a bit on sort of how the monthly comparison develops here in Q3 from last year, you're facing very or much easier your comparisons now in Q3 and Q4 compare with Q2, so where did you see sort of peak demand last year? Was that in June to slow down a bit in July? And as. And how did that sort of develop last year will be interesting to hear? Yes, it's a good question, Karl, and one the since we're talking about so short periods of time requires quite nuance and diligence answer, but comparisons were absolutely toughest in April May and a bit well still tough in June and sort of gradually fading off I guess and finding some kind of new stay at home level at about September or so Givor Takekimann. So I think we are sort of through the very toughest comparison. I think to put it like this, the July initial trading has not surprised us and we see a level where we are clearly above 2019 and then depending on sort of day weather sort of comparables, we are about 2020 or thereabouts or sometimes just below, sometimes just a bit above. But it's don't read too much into that information because it is early. If we go into details, there are calorie effects that are impacting, thing for example the number of weeks between midsummer and start of the main vacation period this year and it's also been a couple of days of really nice kind of go to the beach weather. So we are where we thought we would be or thereabouts with current trading and it is not to shy away from anything, but it is way too early to sort of have a trend to say where July will end up given both the weather and the calendar effect during the 1st 2 weeks. I understand. Perfect. Thank you very much. Thank you. And as there are no further questions, I'll return the conference to speakers with any closing remarks. Thank you very much everybody for joining the call. Wish you fantastic summers and look forward to talking to you again at the Q3 call.