Earnings Call: Q3 2021

Oct 19, 2021

Welcome to the Big Benax Conference Call. Throughout the call, all participants will be on listen only mode. And Just to remind you, this conference call is being recorded. I'll now hand the floor to Matthias Arndt Bay, CEO, please begin your meeting. Thank you and welcome everybody to this Brygmaq Q3 Conference call with me is also as usual our CFO, Helena Nachorst and Helena and I will take turn to Go through this conference call, as usual, we will open up for Q and A after the presentation. And also as usual, we will presentation that's available on our Sigma's IR website. And if we start kick it off On Page 2, Q3 marks another strong quarter for us at Big Macs, which we of course are very pleased with. It's a continued momentum from earlier quarters and a quite nice trend now. So highlights financially, Net sales is up 9% in the quarter, meeting quite tough comparables of plus 21% from last Here, so getting to SEK2.4 billion, we continue as in many quarters now to take market share, Although this time in a bit different market environment with a small decline, which we will get back to you. Like for like sales is up 2% and e commerce was 18% of the total group's sales in the quarter. We have also quite importantly another quarter with continued increase in gross margin and also Little bit of a big mark for Mark, very solid cost discipline. So in total we get very strong scale effects and then EBITA Increase to SEK406 1,000,000 compared to SEK335 1,000,000 from last year, so up over 20%. EBITDA margin of almost 17% and a rolling 12% EBITDA margin now of 12.3%. So Very pleased of course with the financial development. If we turn to the key events for the quarter specifically on Page 3, of course, we are still In the COVID-nineteen situation, we have done a lot of precautions during this entire pandemic period that we to a large extent continue to do also in the quarter. We've continued to upgrade our store portfolio to what we call Store 3.0 and we also opened 2 more stores in the quarter. We completed the acquisition that was announced in July of the Norwegian company called Right Price Tile. It's been completed by August 31. And we also launched a share buyback program during the second September during the quarter and all these points we will of course get back to you during this presentation. Turning to Page 4, Wanted to just start off by highlighting in some ways another type of event that is really important to us, which is we continue to Strengthen the sort of low price position that we have. And as you are aware, we are a discount retailer and we are really proud of Being the discount leader in the markets that we're in, then we are also proud To be awarded by the several independent surveys as the leading Price player in the market. And particularly in this environment, I think you were extra benefited by Having this low price position so strongly in our favor with e commerce highlighting price transparency and the higher cost, Higher price environment before. So we've continued to receive several awards also during the quarter and I cannot think of probably And the year where we've been so recognized for the discount position in 2021, very pleased with that. We continue to take market share to about the same extent that we have been doing for the last, I guess, 7 6, 7 quarters almost Highlighted on Page 5. So we do that in a slightly different market environment than before. And we are for those of you who followed up for some time quite fortunate these days since the start of last year, start of 2020 there are 2 institutes providing us with public data on the B2C DIY market in the Nordics, 1 in Sweden and 1 in Norway. And we could see from Those numbers as well as Big Mac's consumer panels, there is a bit of a different market environment this time. We've had of course a clear stay home effect or a boost Throughout the pandemic and that is now starting to ease with the easing of restrictions, Particularly during the summer vacation period and then a bit stronger again in September. So in total, the market decreased by 2% to 4% during the Q3 of the year, which is still corresponding to 8% to 10% above the 2019 level, which is important to note. So And we do continue to see positive effects compared to last year from the higher consumer prices, about the same level as we saw in Q2. And perhaps a bit more importantly for the coming year or even years, We do see a continued very high activity on the housing market. So a record number of housing transactions both in Sweden and in Norway, which is important for us as it is a driver of underlying demand or renovation and home improvement projects. Continued market share gains then, so the market is down 2% to 4% and we as mentioned in the beginning increased by 9% in the quarter. And this increase versus last year and also versus the market is Virtually fully driven by the growth initiatives that we are driving at the company. And these Initiatives are the same as we've been driving for almost 3 years now. We have seen good effects from them throughout the period. And on Page 6, we outline the specific initiatives and the sort of high level effects of them, and then I'll get back to the details On some of them on a few pages following this. But overall, there are 4. Firstly, we drive the store upgrade program ahead of us. So we now have 54% of our Big Mac store portfolio on the Coles store 3.0, which is a better performing store concept driving 6% sales increase Store per store. Secondly, we continue to see good growth on e commerce. We have very tough comparables on the Big Mac brand and e commerce from last year with plus 40% and we have a small growth in total this year, which we're very pleased about Achieving growth versus those comps, but underlying that is actually super strong development in our core categories still And some negative effects of supply chain disruptions in certain online exclusive categories. So we have been Fortunate overall to be very little impacted by the sort of overall global supply chain disruptions, but there are some spots in this. Still managing a plus which we're quite pleased about. Store expansion continues to add sort of continuous growth for us, adding 3% Sales in the quarter from 2 new stores and on top of that we expanded our portfolio with the acquired right price sales stores, but the Big Mac stores Drives 3% sales growth for us. And then the acquisitions and 4 percentage points of sales on top of that. So There are 2 acquisitions. There's the Danish acquisition that we made in January and then the Norwegian rice price type of close on August 31st and in total those at 4% of the Group's sales. So very good progress on all areas and Positive growth contributions from all four areas. Moving from that into some details on a View of the growth drivers to provide transparency and hopefully a bit more insight to what we are trying to achieve. We can start on Page 7 with the e com growth where we do see continued growth as just mentioned. We see very strong growth, Continuously very strong growth from sort of digitizing our store assortment offer and all the Basically, assortment continues with a very strong event that we've seen for several quarters now, both the collective store offer and the home delivery option for the customers. And then as mentioned, we do have a quite wide online exclusive assortments where there's been mixed performance by category, some really strong categories, For example, flooring where we have continued very good momentum, but we have some supply chain disruptions or supply shortages particularly around products Connected to either electronic components such as garden machines or some big bigger supplier risk Areas, for example, sheds and storage, etcetera, has been impacted by timber shortages in the market. So Overall, the positive to see the positive growth and we have been very fortunate throughout a long period to have A manageable supply situation and not actually be impacted a lot by disruption, but there are some spots in the online And we continue to see also the customers really appreciate this e commerce offer that we are building where we connect Stores with e commerce, so we continue to see the fastest growth coming from collected store offer, Which is order online pickup in store, although we also see growth in home delivery, collected store is outperforming again. And we also continue to see that e commerce in the geography increases when we open a new store in that area. So We clearly see benefits of connecting the 2 channels for Big Mac's customers. On Page 8, wanted to outline the importance and the continued focus On the upgrades of our stores to Store 3.0, we now these days since about 2 years Operator, three formats. We have our smaller formats, which are this format for smaller towns. We have a regular format and we have A large format that has particularly also a large garden departments, but also a larger offer of certain other categories and all three of these formats now exist in what we call the Store 3.0 version, which includes More product categories and improved quality experience, so new store design, a new customer track Better. Space management has made room for more categories, particularly categories related to smaller home improvement projects. So things like Storage, pain, tools, power tools, fastening, etcetera. And this has proven really Proven really successful for us and we have now 2 years of rolling this out, well almost 3 and we continue to see that when we upgrade a That store increased the sales by about 6 percentage points compared to everything else. So 6 percentage points kick from the upgrades, Which we're very pleased about. And on Page 9, we show the more details on the store portfolio, the Big Mac branded store portfolio that is And we are now at 54% of that portfolio at Store 3.0, which means there is almost half of our portfolio to continue to And continue to get this positive effect from our core. Adding some more color to the store portfolio, we as mentioned opened 2 new stores In the quarter, both in Sweden, we closed 1 in Norway. We've continued to upgrade as I said and we now have 54% of the portfolio at 3.0. We have garden departments in 74 of the stores and garden has been a good driver for us as you know the last couple of years, Of which 22 stores are the large formats, they have large garden departments. And we also have 20 stores now of this format for small towns. And on top of these Big Mac branded stores in the Big Mac segment, there is 12 new stores from the acquired rights by type But those are not included in the 181 store counts. We will open 1 more store before the year and we will relocate one more store before the year end. That's it for the store portfolio. And then two more points before we move over to Helena and the financials. I wanted to highlight on Page 10, our start In Denmark, some may remember that we entered Denmark in January of this year. We entered through an acquisition of a company called Net Bedla Prisfre. It was a founder led discount concept quite similar to Big Macs, Maybe similar to Big Macs a few years ago, with the sales of DKK125 million last year and good profitability and And quite good on the e commerce part with sort of 30% of sales coming from e commerce. And we of course had I'm quite positive and high expectations of the fit with Big Mac and how we could work together and develop The company and we are now really pleased to see after Q3 that those expectations have come through or been realized. We have Increasingly throughout the year, shifted supply in the Danish operations to being sourced from the Big Mac Supply chain, so we have an increasing share of the assortment sold in Denmark that is coming from Big Mac supply base and suppliers, which is of course driving both sales and gross margin Development and we overall see a very positive development in the Danish business in 2021 with Very good performance on both growth and profitability and particularly strong on the e commerce part. So we are of course also continuing to make Further expansion plans and really look forward to the coming adventure in Denmark. And also then On Page 11, a few points around Kontobrikwar which is reported as our 2nd segment, Of course much, much smaller than the Big Mac segment accounted for 8% of the total group sales in Q3 And the Constantijnvoilers sales decreased 15% in the Q3, which is a break in the trend that's been going on for a very long time. And we can add some color to that. Firstly say that in a really strong sales growth for the first half of the year, so there's probably some pull forward effect. And then in line with the market development with a bit of a dip during the vacation week, so That effect was also the Civilian's company with order sales and that the order intake increased again at the end of the quarter above last year's level in September. Stepping back a bit, we are also quite pleased to see that still although sales decreased a little bit, profitability improved in the quarter compared to last year. And the 2 main growth drivers we've been focusing always in Skankivib are following the completed cost Restructuring in 2018, those 2 growth drivers have been a digital sales and marketing model to fit the Sort of big ticket, high configuration, e commerce model that comes to Big Horizon and that has proven quite quickly, quite successful To say the least. And then secondly, we've done a lot of work on product development and strengthening the portfolio of own product, our own design products. And That is a process that takes a bit more time, but now we clearly see this is giving very good effect and in the quarter see Very positive financial effects from that with a strong product portfolio on brands with strong gross margin and really helping Skolto Bighbor delivered better financial results in the quarter despite decreased sales for the quarter specifically. So the trend of many, many quarters now in a row with continued profit, increased responsibility work continues And our focus forward also continues. We continue to drive improvement in product development in the product portfolio in digital sales and marketing and also further expansion of this offer into Norway and Finland. And with that, I hand over to Helena to go through financials on a bit more detail. Yes. We are on Page 12. This is our sales development in the quarter, a little bit more in detail. Again, a very strong quarter. We are very pleased. Continued growth momentum, as mentioned, despite Plus comparables and a declining market. If we start looking at the total, group sales reached SEK 2,400,000,000 in the quarter. It's growth of 9.1% and like for like 2.3%. We have a small currency exposure mainly against the Norwegian krona and has not had a material impact in the quarter. If we look into the sales of our 2 segments, we have a Big Macs and of the Big Oru. Big Macs is now including our acquisition in August of Right Price tiles and the entering of Denmark by the acquisition of 4 stores in January. And in the segment, the Acquisitions contributed with 4% of the sales growth in this quarter. And New stores, we have 9 new stores year to date, 2 new stores in the quarter. New stores contributed with 3.4% of the quarterly sales growth. Sales of 11.5% in the quarter is strongly Contribution from the initiatives, as mentioned before, we have the e com contributing With mainly collected stores growing strongly, store upgrades now at 54% of the portfolio, having a better product Mix in sales growth and then we have the new stores. Looking at Skonska Bivior, Satya gave a little bit of flavor on the sales decrease in the quarter and this is following a very From sales development in the first half year. So looking at year to date, we have a sales growth of 12.4% and the order intake increased again at the end of this quarter. Continuing to the next Page 13, looking at the P and L. We have the sales of 2 point SEK 4,000,000,000 as described on the last page. The gross margin increased. It is now all time high at 34.8 It has positively impacted by favorable mix effects and Gale from Logistics and Supply in both of our segments. Looking at the cost We continue to have strong cost control in the quarter. Comparable cost increased Right, dollars 2,000,000 and the cost increase is related to new and acquired stores of The other increase of SEK 32,000,000. So in all, we realized big scale effects from increased sales. EBITDA increased from SEK335,000,000 to SEK 406,000,000 and we have a strong margin at 16.9%. Both segments have scaled FX contributed from Both improved gross margin and strong cost control converted into strengthened EBITDA margins. Moving on to Page 14 and cash flow and net debt. We have cash flow from operating activities Increased with SEK 81,000,000 compared to same period last year. The change in our cash So is attributable to the increase in EBIT in the period. We have movements within working capital, but a Looking at the table to the right, we can see Strong balance sheet with a new level of net debt and comparable net debt at the end of the quarter versus The same quarter last year, it is at a similar level, but one has to take into account the acquisitions of The Norwegian Life Size trials and Danish NLT in the period. Continue to next Page 15. We have in the quarter launched the buyback program. The Board of Directors decided to initiate a granted repurchase of own share. We have a maximum amount of CHF 200,000,000, maxed 5% of the outstanding shares. We started out the repurchases from the 20th September, And we communicate weekly on our website. The volumes and the intention of The repurchased shares are to be drawn through a reduction of the share capital as a decision on the next At the time of the initiating the program, The max amount of SEK200 1,000,000 corresponds to SEK3.28 per share. Thank you, Liliana. We then turn to summarizing and forward looking. So we can start by summarizing on Page 15. If we step back and Look at our performance compared to the financial targets we have set for ourselves, we are of course pleased with the development. We have a target of reaching SEK10 1,000,000,000 in sales by 2025. We are rolling 12 on SEK7.6 compared to SEK6.5 A year ago, so very good progress. We continue to be clearly above the EBITA margin target now at 12.3% rolling 12%. As Elena mentioned, we have a strong balance sheet with not a lot of net debt, By the actions taken on dividend and acquisitions and investment in organic growth and also the launch The buyback program although it's early days. And dividend, we have a target of paying 50% and the Board decided to Then also SEK200 1,000,000 in buybacks as mentioned. We also have a clear target for our sustainability work where we focus on Communicating the impact of our CO2 reductions, the target of reducing CO2 from goods transport by 70% in 2030 and we are Currently at minus 32%. So making good progress. So To look a bit ahead, we could start on Page 17 to understand where we're going, just First by understanding where we are so to speak. So we are of course pleased in many ways that we Or exiting we hope the pandemic period that of course has been beneficial for Big Mac financially, But it's also interesting to step back and say what are the learnings from this from these years. I think of course we have been Benefiting from the market boost during the COVID pandemic, which has been transparent to everybody. But Let's look a little bit beyond that a little bit deeper and see what else has happened because there are also of course other really interesting effects that could Speak for the future. So five points. As mentioned, the market has been boosted and according to public statistics now available and matching really well with our own panels. The rolling twelve markets is 22% up compared to 2019. So the market is up 22% compared to before the pandemic. During this period, we, Big Macs Group has increased sales by 43%, so almost double the pace of the market growth, which is of course means we've taken a lot of market share during this period. And particularly, we see very good progress on the sort of modern approach we take to discount with the modern stores and the e commerce offer connection That's driving the majority of this outperformance. Thirdly, we are quite pleased to also say that we are now successful in new categories, In e commerce, as mentioned, also in new countries, if we look at, for example, the Big Macs branded e commerce, it has doubled in sales compared to 2019. Or if we look at Garden products, which has been the focus areas for us, it's also doubled since before the pandemic. And we've also had very good progress in these Smaller project categories or sort of everyday DIY with around storage, fastening, electricity tools, etcetera. In terms of geographic or countries, we turned around our Finnish operation in 2019. So just before the pandemic, which has In historically unprofitable since entry until 2019, which we're really pleased about that. And we've also now successfully entered Denmark in 2021. We are now successful in all the 4 countries where we are operating measuring successes financial success that is so Very pleased about that too. We have also during this period become sort of even stronger in our leading discount position and Or perhaps a little bit too proud of the sort of awards we get from independent service as the price leader in our markets. And also to the point of being in modern We are also really pleased that at the same time consumers increasingly associate pigmax with quality and relevant assortment and good service. So that's also a clear plus for us in terms of our consumer position. And lastly, 0.5, As perhaps is evident, we get really big scale effect from increased sales where our EBITDA margin has more than doubled since 2019 with a Good continued continuous development on the gross margin and also very strong leverage on OpEx. So Yes, a clear benefit in all from the pandemic, but there's a lot of other things that happen in DreamWorks as well, which also has boosted up a lot during this period and which will boost us in the coming period. If we then look ahead, we may not be in a pandemic anymore, we all hope, But we do have other trends that are favorable and provide tailwind for BIGMAX going forward. So There are 3 we would like to highlight particularly. So first of all, the discount phenomenon is by this Stage, I think, evident that this is a winning retail position across categories and countries and we see a further acceleration on discount that in other retail Category particularly in a higher price environment. Secondly, the home is A big trend for us and we see the role of the home as having sort of a new level in people's lives With the home playing a larger role after the pandemic than before the pandemic and I think the best example is probably that Many consumers nowadays have already started to find a new everyday solution where they work partly from their home. So of course, the increased role of the home is really positive for Big Mac. And then the last trend is e commerce, which has been on the growth for several years, but also accelerated during the pandemic and which we also are benefiting from. So 3 strong favorable market trends that helping us going forward. And in summary then on Page 19, our focus remains very Clear to execute our path to the SEK10 billion sales target in 2025. And we are really pleased that we have Prove initiatives, organic growth initiatives that all have much more to give. So we will continue to focus on Upgrading our stores to 3.0 to build out our e commerce offer and also add new stores in the white spots, Which remains in the Nordic countries, these are actually quite a few. We will also during this coming period evaluate add on acquisitions And at the appropriate opportunity, also consider adding business through acquisitions. So We are remain very focused on the targets we have set on the plan we've already communicated. And we are again pleased to see that there are macro trends that provide support. And in summary, that means that we are Also reiterating the view on the market that we've communicated in the previous quarter, which is that we expect a DIY market, which is larger Post the pandemic than before the pandemic, but not as large as during the pandemic. So that is our view and we Consider Q3 to be confirming that view and the step in that direction. In all then, much more to give from Bridgmax On initiatives and trends that support us going forward, although we will not be in pandemic anymore, we all hope. So with that, we conclude the presentation part of this conference call and turn to operator to handle questions. Comes from the line of Karl Demberg of Carnegie. Please go ahead. Your line is open. So first a question on the gross margin here, quite an extensive expansion year on year, 100 and Could you describe maybe or sort of splitting out the three factors, sort of the contribution here, mix versus scale versus Pryce on the expansion. And maybe my second question also on the gross margin here going into Q4. You had a very strong gross margin in Q4 last year. I know that this is partly due to seasonality, but were there any other drivers of the gross margin in Q4 last that we should remember here going into Q4 this year? Thank you. Thank you, Karl. I'll start by the first question and then we'll dig in and then we'll take the second one. Nava, you're right, it's posting the 3 main drivers All the gross margin expansion in the quarter and now we get into details, but you may remember that in the previous quarter in Q2, we had a quite a Big benefit from what we call price. So the consumer prices increased faster than sort of the input price which helped us a lot. That effect is smaller in Q3, sort of the different trends have sort of caught up Or the timing effect is now gone, so to speak. There is a smaller positive effect from that factor. I would say it was Probably 3 quarters of the expansion in Q2, maybe it's 1 quarter now in Q3. And the other two factors are Quite similar in size, I would say, and you have to correct me if I'm wrong, but she's nodding her head. So there is a continuous good Product mix effect, which we've seen for many quarters in a row now was slightly different in specifically Q3 is that beyond sort of the Big Mac Store 3.0 build out. We also get really good contribution from Skompertuvarush Own product portfolio, which is starting to kick in nicely. So that sort of adds to the product mix effect for the group. And then scale effects are significant. I mean, we run our own logistics. We're on the import business and sort of the internal wholesaler. We of course have suppliers where we unfortunately get a bit better conditions where we have High volumes, so all that amounts to also a quite substantial part. So the price one is smaller and the other 2 are roughly similar. And then you're right that Q4 was really strong also last year. And I Cannot sort of on the spot think of any major one off or any sort of thing that was really sticking out in terms of the quarter except for continued good Maybe Helene could guide if there's something else that you may remember. So It was a really strong quarter with the seasonality effect the last year in Q4, Karl, but no one not for north sort of single points that are worth to bring up at this stage. Okay, perfect. That's very helpful. And then a second question here on the disruptions that you're Primarily then on the e commerce offering. Do you see the situation sort of improving here going into Q4 Or assets are worse than going into Q4? Or is it similar as in Q3? Or how do you see that as sort of a shortage Situation developing here in the near term? That's a good question. And For those who may not be as initiated, I mean we sort of divide our assortment offer, freight offer into 2 main parts. First is the sort of the core offer which we have in The stores then that represent also or half of the e commerce sales and then we have the online exclusive offer, which is the much, much wider range of categories that we only For online, it's really category specific to that part. We have a continued very strong momentum, some online exclusive categories like flooring, for example, whereas others Have been heard and the ones that have been heard now in the quarter from supply disruptions been mainly around sort of garden machine Sort of component issues and sheds and storage sort of timber or construction material issues. The mix varies a bit into Q4. So We expect to have some types of disruption also in Q4, but the category mix It's different. So supply issues in these categories in Q3 does not imply But there will be supply issues in Q4. There could be others, but not specifically these will carry forward in Q4. Okay, perfect. And then a final question here. If you could say anything on Current trading here going into Q4, slightly tougher comparison sequentially from Q3 last year. And if you could just say anything on the maybe like for like or what you've seen here in the 1st 20 days in Q4? Yes. We are entering the as you say, Q4 is a smaller quarter, so it's Slightly more sensitive and it's a really strong comparable from last year, as you say, accelerating. And so we are entering we think it's a really good level, which is a small Quite very small negative like for like performance in the first stages of October, Which is then back to our point of the marketing and now being much, much stronger than 2 years ago is of course then very, Very strong compared to 2019. So a small negative like for like at the start of before. Okay, perfect. Thank you very much. That was everything from my side. Thank you. Our next question comes from the line of Anna Danfoss of ABG. Please go ahead. Your line is open. Hi. Thank you for your presentation, Atias and Helena, I just have a minor detail question about the raw material prices. As you mentioned, there have been some certain supply chain disruptions and you have not been affected in a to a significant extent. But I Just wonder a little bit on your view of the development of the raw price raw material prices ahead and to what extent this could further Affect you in certain product categories, I assume, but there are some categories that would be more affected than others. And What's your take on that going forward? It's of course an important macro question and I think it relates both to, as you say, on our supply situation and sort of the price level. And when it comes to supply situation, we have been really fortunate throughout this period to have what we call the fully manageable supply situation. There has been Selected spots and maybe now specifically in the online exclusive few categories, but in general, we'll have very good supply and have not materially impacted us negatively. And we see And we see except for some of them smaller categories or individual areas, We see a supply situation which is continuing to be very manageable for us also going forward, which is positive. On the price side, I mean, if you look, There is of course a lot of development, but we would say in during the Q3, the development has been or the level has been rather Stable if you look at the total from the start of the quarter compared to the end of the quarter with a lot of variations between products groups to your point. We expect going forward that Particularly timber prices which are really important to us should start to come down a little bit from a very high level, But there are also other product areas where we continue to see price increases in the markets around steel and plastic for example. So that's the view we have. And then in terms of what that means for margin structure, I think this industry has over time Pass on raw material increases to consumer prices. So the sort of margin structure has pretty much remained as it was before any major price So that is the best probably guidance or direction we could provide at the moment. Okay. All right. Thank you. That's a lot of help. That's all I had. So thank you very much. Thank you. And we have a few further questions coming through. The next is from the line of Lars Ron Hi, thanks for taking the question. Lars Ramonze from Investo Could you just go through, if you look at your targets for 2025 and You on the rolling 12 months, you're at SEK 7,600,000,000 of sales. And for SEK 25, you got €10,000,000,000 of target and you're saying that it's a little bit of COVID related extra turnover now. How should we think about sort of should top line go down and then go up? Because if you annualize it Just from the SEK 7,600,000,000 you were looking at something like 8% on an annualized Turnover increase and if you could also walk us through how to get the margin down from 12.3% to below 8% in the meantime. Thank you, Lars. Happy to answer that question, sorry. And I would also say that we have more detail on this if you would like to dig into it At the Capital Markets Day event we had in March, so you could dig through that for some more details. But A few different components then. So first of all, we expect the market to come down from the pandemic levels. It's up again about 22%. So Maybe it comes down half, maybe a bit more, maybe a bit less, but that will have a negative impact, of course. And then we have taken a lot of market share during this period and we, Of course, have the ambition to continue to do so. If that means that the sales will go slightly down before it goes up Or if we are flat or if we continue to have a smaller class next year, all that remains to be seen. But I think that the growth pace we've had for the last year or 2, Of course, we'll be impacted by a market which is coming down overall. So there will be some kind of resetting and let's see What that means for the total sales number? In terms of profitability margin, we are as you speak clearly above The target at the moment and we expect to see the market coming down which will of course Have a negative impact also on profitability leverage. We also expect to invest quite a lot in growth initiatives and perhaps even Set that up in the coming period to try to reach the SEK10 billion to a large extent by own initiatives, which May hurt the margin a little bit also. And then on top of that, we will have to evaluate if there is still headroom to the EBITDA margin target After that or not, but we are of the view that SEK10 1,000,000,000 is Fully doable at a margin of 7% to 8% and then the path there will probably The less of a growth spurt in the 'twenty two given the trends, but more concerned to be honest that the management give about the Slightly longer term target of 2025 than exactly the development into the couple of next quarters or even year. Okay, great. Thank you. Thank you. Our next question comes from the line of Jan Vertu of This is Giulio Batog from Pascale Advisors. Three questions for me. The first one would be on The price impact on the top line, if you could share a bit details and especially to Big Macs and Big Werra. The second question would be on the inventory position. How much the M and A bring to The number because the number is fairly high compared to even Q2, while seasonally usually inventory position is lower. And also obviously the price impact on the Inventory side. And the last question is on the share buyback. We are very happy, obviously, but the rhythm is pretty low. I was just calculating that if you continue at this level, you will be ended up in 9 to 10 months. So do you plan to step up a little bit the rhythm? Thank you. Thank you, Julian. I will take the first two, maybe Julian I can take the 3rd. On the pricing impact, well, it's been around the same level in total as in Q2. So we see about a 15% price impact in total, which is a lot or up to 50%, I should maybe say. On the inventory side, you are right that the inventory is up a lot and there are several effects into that price Acquisition, to your point. And also we have to say given the situation with supply disruptions, We have earlier orders of certain products to have it sort of in stock already in Q3, which we usually maybe not do. So Then there may be other effects that I could dilute as well, but I think those are the biggest ones, the big Stores, price and acquisitions are the big ones. Do you know on the buyback? On the price, you say 15% Yes. Okay. And on the buyback, Helene, I could maybe elude a little bit. Yes. The levels agreed there were a bit low. It's not monitored by us. We have an agreement and potentially the Speed will be a little bit higher going forward, but it's tend to be over a longer period. So Nathalie, what is the limitation for the mandate? Is it what, 5% of daily volume? Do you know? No, the volume, yes. The volume is we should not exceed 5% and the Maximum amount is €200,000,000 Yes. No, no, no, but 5%. No, my question is, is the People in charge of the dealings. I guess, they must have a limit in terms of how much they buy every day compared to daily volume. Yes, there is a limit and they're following the regulations. And that's and that you say this is 5%. No, that is not the regulations. They are following the regulations on the buyback, and I have no limit on them. The way it is working, we can take it separately if you like, but there are short range on the We mandate to that maintains this within the regulatory environment, which we are obliged to follow and that's the way that works. Okay. Excellent. Thank you. Thank you. We have one further question in the queue. So just as a reminder to the participants, if you do wish Some who is a private investor, please go ahead. Your line is open. Hello. I have a question regarding the Stock in trade, which if I have calculated it correctly, it's up about 15% Q on Q. Do you have any Is it due to lesser sales in Q3? Or do we have an optimistic view on Q4? Or is it And are there reasons? Can you elaborate something on that please? And the expansion plan in Denmark, can you tell us Something about that please. We're breaking up a little bit, but if we understood your question right, You're asking about stock and trade or inventory and then mix up expansion in Denmark. And regarding the inventory, as maybe Quickly around through on the previous question, it is partly due to price effects, partly due to acquired companies that of course have inventory and then some Earlier orders on certain products, those are the main drivers. And on Denmark, yes, we have further expansion plans, both with e commerce initiatives, but also with new stores. And we follow a process where we announce Specific new stores when we have all the agreements signed and And all the conditions met and all the approvals met by different municipalities and authorities. So the details of the dense Expansion plans we would have to get back to, but the plan is to continue to expand in Denmark. Thank you. No further questions. Thank you. And as there are no further questions in the queue at this time, I'll hand back to our speakers for the closing comments. Thank you everybody for joining the call. Wish you a great day and hope to speak to you again in 1 quarter's time.