Welcome to the Clas Ohlson Q3 2025/2026 report presentation. For the first part of the presentation, participants will be in listen only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to CEO, Kristofer Tonström and CFO, Pernilla Walfridsson. Please go ahead.
Good morning, everyone, and welcome to the Clas Ohlson Q3 report presentation. My name is Kristofer Tonström, and I'm CEO, and here together with Pernilla Walfridsson, CFO. The agenda for today is to review the business update, the financial development for the quarter, and then the events after the reporting period. We'll do a short summary and move into Q&A. To highlight the highlights of the third quarter, really the key takeaway from this quarter is that we again show a combination of continued sales growth and improved margins. Looking at sales, we came in just above SEK 4 billion, which represented an organic growth of 8%. Our operating profit came in at SEK 659 million, which resulted in an operating margin of 16.2%.
Our operating cash flow for the first three quarters amounted to SEK 2.091 billion, that is also up versus last year. We still have a solid financial position with a net debt/EBITDA -1.3, which means we have a net cash position closing the quarter. EPS for the first three quarters came in at SEK 16.22 , also up versus last year. Today, we also reported our sales numbers for February. I'll come back to that, but we delivered 9% organic growth also in February. Moving into the business update, looking first at our strategic position. In general, we operate in several attractive everyday niches where we can be highly relevant to our customers.
I believe it's the combination of this relevance but also our focus that allows us to build a business that is both scalable and capital efficient. We focus on our areas where we wanna become stronger: assortment, brand, customer meeting. With the focus, we do everything to also develop a more scalable operating model that generates strong free cash flow that can be reinvested. Moving into the strategy execution, this slide really shows how the strategy is being executed across the organization with tangible results. We continue to see progress in several areas: assortment development, omni growth, store expansion, marketing efficiency, and cost competitiveness. To just mention a few things from the quarter, starting with assortment. We do see continued strong development across our five consumer missions, i.e., the five niches.
We also saw that January came in strongly. Here we also saw a seasonal effect when the weather turned. We were able to also sell a lot of seasonal products that had slower growth in November, December. We've also kept the assortment renewal high. We renew approximately 30% of the assortment every year, which really helps us to drive relevance. On the profitable growing online business, we have seen continued strong development versus business to consumers. The Clas Ohlson standalone part is growing 15% in the quarter, and now online sales represents 21% of our total sales in the third quarter. On the robust store network, we continue to see strong like-for-like development, which is obviously crucial. High customer satisfaction.
As we're now soon closing the year, we will add eight new stores in 2025-2026. Slightly below the ambition of 10, but it's nothing dramatic. We have seven stores planned now over the next few months. Our target that we announced today for next year is also, again, approximately 10 new stores for fiscal year 2026-2027. When it comes to customer communication, I wanted to highlight a survey that came out in Norway during the quarter where Clas Ohlson was awarded the strongest brand in retail in Norway. So the brand in the eyes of the consumer is actually now stronger than local brands like Norwegian, but also big other brands like IKEA. We have a very solid position in Norway.
On the competitive cost base, we announced last quarter that we're increasing capacity but also efficiency in our logistics by investing more in our distribution center. When it comes to sustainability, we have just signed a new agreement with PostNord, and here we will have more fossil-free transports to all our Nordic logistic hubs. Going to the next point, for us, customer relevance is really at the center of the business and everything that we do. I believe that a strong customer position is really one of the clearest proof points that the model is working. As you can see on the slide, we continue to see strong customer trust, improving affordability, and also high customer satisfaction.
The NPS is dropping a little bit in the third quarter, which it usually does given the high amount of volumes, but across the store network and our eCom, NPS remains very high. Going to the next slide. We also know that and can confirm also for the third quarter that the growth is broad-based. We do work with our five consumer missions to really win the five niches. Here in the quarter, all prioritized missions are contributing to growth. This also confirms that our assortment strategy is working well, and we're less dependent on individual single product categories. My final point is also just a few words about the January sales development. We continue to see that we are strengthening our relevance throughout the year.
January used to be a month where we had around SEK 600 million net sales for many years, and then over the last three years we have really taken steps in the right direction. First SEK 800 million, SEK 900 million, and this fiscal year we came above SEK 1.6 billion in January . Again, I think that shows that a more balanced assortment means that the business actually becomes less dependent on seasonal peaks, and that we can be relevant to our customers also in a month following the big peak season. With that, I'll hand over to Pernilla to take us through the financial development.
Good morning everyone, and thank you, Kristofer. I will guide you through the financials of the third quarter. To begin with, net sales were up 6% in the quarter, of which 8% relates to organic sales increase, 1% relates to our recent acquired subsidiaries, and -2% relates to currency effects. 6% of the increase relates to like-for-like growth, and 1% relates to expansion of the store network. Online sales grow by 17% in total, including the acquired PhoneLife and Teknikdelar online businesses. All in all, our business-to-consumer online sales develop very good. At the same time, we still have challenges in the Spares business-to-business, which is reflected in sales in other markets. For the nine-month period, total sales amounted to SEK 9.9 billion, and the organic sales increase was 9%.
Looking at our home markets, we had organic sales growth well above our long-term targets in all markets in the third quarter. We are pleased with all markets, but would like to underline the development in Finland with 9% organic growth in the quarter. Also, when it comes to macro trends impacting our business, we have seen a weaker NOK and a weaker US dollar for quite some time now. The NOK has an immediate and negative impact, which is not fully compensated by more favorable purchasing in US dollar. Transportation costs remain at reasonable levels, which now is contributing to an improved gross margin, which we'll see on the next slide.
Input costs are favorable right now, and together with the previously mentioned transportation costs, these are the main explanations for the big improvement in gross margin by 2% to 46.8%. Currency impact was negative with weaker sales currencies partially offset by more favorable purchasing currencies. Please also note that the gross margin reflects our new reporting method, nature of expense method, which we have informed about before. When it comes to the income statement, we see a strong increase in operating profit at 659 million SEK and an EBIT margin of 16.2%, both of which are an all-time high in our third quarter. The increase in personal expenses relate to higher volumes in our logistic chain, wage increases, and new stores.
Other external expenses also increased in the quarter, mainly due to increased investment in marketing and due to the addition of the acquired businesses. The EPS for the quarter was SEK 8.09 and SEK 16.22 for the nine-month period. The inventory is slightly down compared to the same period last year. The main factors behind the well-balanced inventory were higher efficiency, lower purchasing prices and currencies, and higher sales. Cash flow for the nine-month period improved versus last year. Cash flow from operating activities totaled almost SEK 2.1 billion, an improvement from SEK 1.9 billion last year, mainly thanks to improved profit. Free cash flow for the period amounted to SEK 1.5 billion. Net debt EBITDA, excluding IFRS 16, was -1.3, so we maintained a strong net cash position.
With that, I'm handing back the presentation to you, Kristofer.
Thank you, Pernilla. Moving into the events after the reporting period and our February sales numbers that we also released today. We see that the continued positive sales development continues, reporting 9% organic growth now in February. The growth continues to be broad-based, with Norway having the highest organic growth at 11%, Sweden at 7%, and Finland at 5%. We also see broad-based growth across our five consumer missions also in February. The store network is six stores higher in February versus last year. Moving into the summary and looking at this slide that I do believe really shows the summarized Clas Ohlson case.
You know, we have a strong brand, relevant assortment, efficient omni model, and disciplined capital allocation. Also from the trend, I think we can see that the business is structurally stronger today than it was a few years ago. Of course, we maintain the focus on being really well-positioned in our product niches thanks to the consumer missions. Really focusing on a needs-driven assortment and continuously delivering a high customer satisfaction. Balancing the strength of the store network and also the profitable eCom growth. That summarizes a little bit where we are now across the third quarter. With that, we'll open up for Q&A.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Niklas Ekman from DNB Carnegie. Please go ahead.
Thank you, and congrats on another set of strong sales and earnings. Can I start asking about the margin outlook? If you look at the last few quarters now, we've seen both the gross and EBIT margin rising by about 2 percentage points. I'm curious on your view on the outlook here based on current freight and most importantly, the dollar rate. It seems to suggest that this has potential to continue, but is there anything that we should consider when we look at the quarters ahead here in terms of input costs and how that could impact the margins? Thanks.
Yeah. If we look at the gross margin, right now on the development, let's break it down into a few different buckets. First of all, when it comes to currencies, as we shown Pernilla's graph, sorry, the Norwegian krona has obviously strengthened over the last couple of weeks, but we've also seen that it's been volatile. Having a close look on the Norwegian krona versus last year, also in the fourth quarter is important. In April, we start meeting kind of a lower base on the Norwegian krona. The US dollar has slightly strengthened a little bit over the last couple of weeks. All in all, as we also reported this quarter, we do see a help from the US dollar offsetting the part of the Norwegian krona effect.
Net-net currencies has been negative also in this, slightly negative in the quarter. Keeping a close eye on that moving forward. Second, when it comes to input cost, obviously we have done a good job now over the last year to improve input costs, and we don't wanna guide specifically on the development on that, but of course, we always work with being as efficient as we can in our buying processes. And the one other thing to keep an eye on is obviously the pricing development in the market. The US dollar effect will be something that obviously benefits everybody in the market. And as always, we wanna be very price competitive and affordable. Here it's too early to tell what will happen with the price development.
Last but not least, to be clear on the crisis going on right now in the Middle East, there's no direct impact on our freight costs today. Of course that develops by the day and week. Let's see how that continues, if there are any secondary implications moving forward. Right now, there's no impact on our freight costs. Those are some areas to look at as we look into the gross margin for the next quarter.
Very clear. Thank you. Just a quick follow-up. Am I interpreting right that you have yet to see any real price pressure in your market? Because, as you said, now everyone has been facing a weaker US dollar and lower input costs, but there's no clear signs of price pressure among your peers.
I think over the third quarter, as always, November, December obviously was kind of promotion heavy. We haven't seen any structural big shifts in pricing, but we have heard others communicate and talk about in the market that there might not be a full impact of the US dollar. I think it's we haven't seen any big changes across Sweden or Finland now. Let's see how that develops.
Thank you. Second question here on Finland, where you've seen a very strong improvement since October, but a little bit of slowdown here in the February sales. Can you talk a little bit about it? I believe you've had a little bit of a relaunch in your Finnish ambitions. Can you talk a little bit about this and how you're seeing that progressing?
Yeah. We have over the last, I would say 18 months, worked deliberately on improving the performance in Finland. We started with a lot of work on taking out cost, slimming the store network. We have also done some assortment adjustments, rebuilt all the stores, and then as of the fall, we started to activate the brand a bit more, and have done more in terms of pricing, promotion, et cetera. We've seen the positive effect of that, with the 9% organic growth across the third quarter.
As you say then in February, the growth was 5% organic, so slightly below the third quarter. In general, we see that the activities we have initiated and the work we do is helping us move in the right direction. Of course the ambition is to continue growing also in Finland being the smallest market. As I've said before, it won't be a quick fix. Our ambition is to win in Finland. I do believe we have started to find a few things that work for us.
Very good. Thank you. Just a final question. Your balance sheet, as you mentioned here, is very strong now. You have over SEK 2 billion in net cash, and that's after a recent acquisition and recent dividends as well. Can you elaborate a little bit on your thoughts on the use of proceeds here? I mean, the payout, the dividend payout has only been around 50% in the last three years. Is that something you're looking at, potentially increasing? Are you looking at considering buybacks? What is your view on M&A now after the acquisitions of Spares, PhoneLife, and Teknikdelar online? Is that something you're looking at continuing?
As always, we want to have a very strong balance sheet and then looking at kind of the capital allocation principles for us, we're obviously prioritizing investing in the core business with the investments in DC and et cetera, new stores, refurbishing stores. That's number one. Then we've of course done selective growth investments, M&A being one of those activities with the three acquisitions. Then third, obviously it's about distributing that excess cash to our shareholders. We're trying to really work within that framework, and ahead of the fourth quarter, the board will make a decision on the proposed dividend following where we are right now. We'll come back on that on the fourth quarter, what will happen on the dividends.
Very clear. Can you just quickly say anything about M&A potential? Is that something you're looking at continuously? Do you see medium-sized acquisitions as well, or is it more smaller add-ons like you've done in the past?
Obviously, I think we have proven that M&A is part of the toolbox if the right opportunity arises. There is nothing here and now, but of course, we always keep track and look for opportunities. When it comes to the acquisitions we have done, they've all been done kind of on the same platform, starting with Spares and then to add on acquisitions to strengthen that platform further. We're open. Nothing is assumed will happen, but we're open for it. I also believe, as seen over the last few years, there are very few targets that actually meet our threshold, and the three we have done have done that. Of course, we're open to find more, but it's nothing I would count on.
Very clear. Thank you so much for taking my questions.
Thank you.
The next question comes from Andreas Lundberg from SEB. Please go ahead.
Yeah, thank you. Good morning, everyone. A few questions from my side. Going back to the, you know, input cost question, you have benefited, you know, on that for some time. Could you talk a little bit more perhaps about how much is, you know, structural and what is cyclical and whether it can be repeated going forward? That's my first question.
Good morning, Andreas. Looking at the input costs, we have done a lot of work over the last few years in terms of becoming structurally stronger when it comes to sourcing. The key thing here has been to broaden our sourcing network. Today we have our own organization based in Shanghai, in Vietnam, now in India since a few months back, in Poland, and we're also looking at setting up an organization in Turkey. Of course, we're also sourcing as much as we can locally from the Nordics. I think one part of the improvement comes from us having even more options to choose from. I think a second part of the improvement also, of course, comes from scale.
We have grown volumes significantly over the last few years. I would say when it comes to the more cyclical, obviously there has been, if you look at the Producer Price Index, especially in China, that has been minus for a while. Of course, there are some cyclical elements also to the input costs. I don't wanna guide specifically on this moving forward, but I believe it's a combination of becoming structurally stronger and combined with also some cyclical elements, especially related to China.
Okay. Thanks for that. A follow-up on the M&A, what are your thresholds and what are you looking for, you know, be it product channels, geographies, et cetera? Can you give more color on that? Thank you.
I think the easiest way to talk about that is to talk about the three we've already done. I think the key for us when we identified Spares, PhoneLife, and Teknikdelar as attractive targets, it's really been the combination of the strategic aspect of strengthening Clas Ohlson in one of the prioritized niches. These companies obviously operate within the connected tech accessories and spare parts niche. It's really about strategically strengthening us both in terms of assortment, customer relevance, and the right pricing. The second aspect of these companies have been that they are all profitable. They've been built as profitable companies as of day one. There are no turnarounds. They've also produced a positive cash flow since a long time back.
Third, obviously, we also believe that all three of these are scalable. They are in different parts of their journeys, but we believe they will could have the potential to grow further. So that they stand alone become an attractive investment. Those are some of the key things that made us conclude that those were the right three things. If we were to do this again, those are some of the important criteria. Again, I wanna emphasize there's nothing in the pipeline here and now. It's an opportunity. We keep that door open. Obviously, in terms of capital allocation, number one is strengthening the core.
Got it. Thank you so much.
Thank you.
The next question comes from Erik Sandstedt from Kepler Cheuvreux. Please go ahead.
Hi there. Thanks. Just a few follow-ups. Firstly, just, you mentioned Middle East already, and if I understood it correctly, you see no sort of direct impacts. Do you see any impacts from rerouting and delays?
At this stage, obviously, we need to be careful to conclude exactly what it will look like. If I look here and now today, we obviously have already rerouted our transportation from Asia following the issues in the Suez Canal, if it was one or two years ago. We have already rerouted transportation around Africa. There's not been any changes to that here and now. As said, of course, we are monitoring this to see whether there could be any secondary impacts following the other routes, so to say. There are now no direct impact on the routes that our transportation is taking.
Yeah. Perfect. Thanks. Also, if you could maybe share. I know you touched upon it, but share some more details on Norway and the strong performance there. What have you done differently or are you getting help from improving macro? Maybe trying to sort of divide that a little bit. We've obviously seen pretty strong growth rates now for quite some time there.
I think as a starting point, the business model and the foundation and the core is exactly the same in Norway as in the other two countries. We have the same strategy, we have the same core. What I think stands out in Norway is, one area is, of course, the strength of the Clas Ohlson brand in the Norwegian market with the high trust that I referred to earlier in my presentation. Second, I think the network and availability in Norway, given that it's half the population than Sweden, and we almost have as many stores as in Sweden. Obviously, the strength of that store network gives a very strong availability for our customers, and it really helps us both on the store side and on the e-com side.
When it comes to more macro aspects and then the Norwegian economy is obviously strong. The consumer confidence has been lower in Norway over the last few years. Versus the other two markets, we still have seen, you know, a cautious consumer also in Norway, but maybe less impact versus a, for example, comparison with the Finnish market. In general, the core is the same, but I think in the strength of the core is even stronger in Norway than in, especially in Finland, but also versus Sweden.
Perfect. Thanks. And also maybe if you could help us better understand how to think about sort of comparison basis now going forward in terms of revenues here, because March sales was very strong last year. I suppose it had to do also with the shift of Easter, whereas April was a bit lighter. Maybe just to sort of get the basis correct here. Was it the Easter shift that drove March last year?
Yes, you're right. Last year, the Easter shift drove more growth in March. Looking at the calendar now for this spring, Easter is still in April, so there's no shift. It's a little bit earlier in April this year than it was last year. No major shifts. The same type of calendar as last year. No major shifts as it was last year.
Okay, thanks. Just a detailed question perhaps, but depreciation continues to be lower year-over-year. Is the current level now a good proxy for how to think about it over the coming year or so?
It's a lot of different things that affect our depreciation. I mean, we have certain effect from IFRS 16. We renegotiate agreements and things like that, and that has an effect. There is depreciation that is things that is fully written off, and that has been a mix of things during the quarters. If you look forward, I think that this is approximately a good mix.
Great. Thanks. Just finally, maybe if you could share any more details on your work with agentic commerce and whether that's relevant for your business, and if so, how your work is progressing.
Yeah. Of course, this is high up on everybody's agendas. There's a big hype, of course, about this. Our hypothesis and our paradigm is very much that the key thing is to have structure in terms of data, structure in terms of relevance, in terms of product pricing, product mix, et cetera. We're doing a lot of work, as always, to ensure a strong base structure. Second, of course, there are a lot of examples flowing around, and we have seen things happening in the U.S. with ChatGPT starting and stopping with buy buttons, et cetera. We're following this progress.
We have chosen to work very closely with Google across the Nordics and obviously are part of their AI search and work with that. We believe the basis if we can continue being as relevant as we are today versus the customers we need to find ways of being as relevant if the market moves into agents actually shopping for customers. However, we believe that won't change overnight. As always, we don't wanna rush into things, spending a lot of money on things that has yet to be proven. We're very close to the development, and we're working very much with our core to ensure that we are well-positioned no matter what happens.
This, of course, goes into development of the website and all of these things. We're keeping a close eye on it, and of course, the development in this space is fast. Hope that's helpful.
Yeah, very helpful. Thanks a lot. Thanks.
Thank you.
There are no more phone questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.
We do have a couple of written questions, also. First one from Philip Berke. Could you provide some color on the split between price and volume growth in Q3 and in February? Yeah. It's really a combination, and, as we have seen that, over the last year that there is a combination of volume growth and pricing. We do not report this in detail, but it's a strong combination. For us, it's important to ensure that we also keep driving volumes and, in that sense also, capital efficiency by turning over higher volumes. I also have a question from Lukas Lundbäck . You cite mix effects, as a partial driver of gross margin improvement.
Has the share of customers and branded products in your revenue mix increased over the past two years, and is that a deliberate strategic priority going forward? Let me divide that answer into two buckets. The first one, I think this refers to the nine-month explanation of the gross margin improvement. When we refer to mix here, the primary aspect is that the sales on Spares business to business has been lower over the last few quarters. There is a structural mix effect because the gross margin on business to business is lower than business to consumer. I think that's one of the key drivers of the mix impact on gross margin over the first nine months.
To the second part of the question on private label, we obviously work with both private label development and strong brands and always see private label as a top priority, but we wanna carry both, and we wanna grow both. Of course, private label is a way to drive uniqueness, but also gross margin. Primarily what we refer to in the report was linked to the business to business impact. Great. That was all the questions from the teleconference and from the webcast. By that, I'm handing over to Kristofer for some final remarks. Okay. Thank you very much for calling in.
Before we close off, I also wanted to just make a quick reminder we sent out to save the date for June third, where we plan both to report the Q4 numbers during the morning and then during the day also hold a capital markets day. We haven't had a CMD since 2022, so we felt it's a good time to now update about a little bit about the future. I hope to see all of you there on June third, and more details will follow on this as we get closer with exact timings and locations, et cetera. Thank you very much for today. Have a good day.