Warm welcome to everyone, dialing into this presentation of the Q3 results. I will together with Göran Melin, our CFO, give a business update, a presentation of the financial development, short around some events after the period end, then we go into Q&A. I will now turn to page 3, business update. In this part, I will give an overview of what we are doing in the short term, the midterm, and the long term. Turning then to page 4, we are experiencing exciting times with many opportunities in retail in general and for Clas Ohlson specifically. We at Clas Ohlson start from a very strong position, both from a brand and financial point of view.
With this as a base, we are working in a systematic way to develop our customer offering, customer meeting, and our sales channels. We are following the development on a daily, weekly, monthly basis to make sure that we capture as many opportunities as possible. This is of course for the short term, but also for the long term. I'm now going to page 5, solid Q3 sales development. Starting a little bit in the short-term perspective, we report solid sales development with like-for-like during Q3 growing with 1% and sales in total in local currency growing 4%. To achieve this, we have invested in both extra marketing and extra margin.
I would like to emphasize that by doing this, we have ensured that many people have chosen Clas Ohlson for their Christmas shopping. This is important not only for what we report today, but also for the future customer base for Clas Ohlson. I'm now turning to page 6, development by country. Looking more in detail at the sales development, Sweden increased by 1%. Norway grew 7% in local currency. Finland grew 7% in local currency. If I then turn outside the Nordics, I would like to highlight that we see strong development in e-com traffic and e-com sales in the U.K.. We also now have a presence in Germany consisting of 4 stores and e-com, and developing also well.
As we have previously reported, we have terminated the franchise agreement in Dubai, and the two stores in Dubai are now closed. If I then move from the short term to updating about some recent initiatives to develop Clas Ohlson further, going to page seven, a cooperation with MatHem. We have previously informed about that we are starting up a cooperation with MatHem. The MatHem from Jesse is the largest online grocery store in Sweden. The intention with this partnership is that parts of our product range will be offered through MatHem's digital platform, but also that customer shopping e-com at Clas Ohlson from the SE or NO or so on could actually use MatHem as a last mile delivery option when living in Sweden, of course.
What we are happy to say today is that the first customer order is expected to be delivered now within a couple of weeks. This will happen in a pilot in Malmö. Shortly after this, we will roll out further in Gothenburg and Stockholm. I will then turn to page 8 and to another important partnership that we are now in a pilot phase, and that is the cooperation with Telenor. This was kicked off in March in six stores in Sweden. This is then a pilot project where Telenor offers sales and products and services in a dedicated area in our store and with own staff.
This is a way for us to offer a more complete multimedia assortment. It's also a way for us to test another service provided in the stores to give more reason to visit the stores. If I continue west, turning to page 9, Click & Collect launched, we have during February, launched Click & Collect in all stores across Norway. We are still in a ramp-up phase, so this has not been marketed in a very aggressive way. Still, without marketing of it, we see a very positive response. This is of course, on one hand, a step towards a more convenient offer for all our Norwegian customers.
It's also an important test for Clas Ohlson in its totality. These were some examples of steps that we are taking on the way to improving both our customer offer and our customer meeting. Then turning to page 10, in parallel with capturing daily opportunities, taking these step-by-step initiatives, we are also developing the plan for future growth. We are in a very intense wrap-up phase of this. As we have previously informed, we will present this new plan for growth at our Capital Markets Day on May 3rd in Stockholm. That concludes the business update, and I will hand over to Göran.
Okay. Thank you, Lotta. Starting at page 11. Going into the numbers, we start with our 3rd quarter covering the period 1st of November to end of January. Next slide, sales Q3. In the quarter, we had a sales growth of 2% in SEK, increase in Sweden and Norway of 1% each, in Finland up 9%, and outside Nordic countries, a decline of 5% affected by the store closures in the U.K. In local currencies, sales was up 4% and like-for-like growth 1%, and there are 11 more stores in the network compared to end of period last year. Next slide, sales development per market.
Divided by country and local currencies, we see a rather solid sales growth in our home markets, with Sweden up 1%, Norway and Finland up 7%. Outside Nordic sales were down 5% in local currencies affected by the store closures in the U.K. Next slide, gross margin Q3. Our gross margin is down 1 percentage point. The gross margin was negatively affected by the weaker NOK, the stronger U.S. dollar, and increased commercial investments during the quarter. This was largely offset by currency hedges in NOK and exchange rate effects related to delay in inventory. Next slide, share of selling expenses. The share of selling expenses increased by 0.3 percentage points to 25.7%. The share increased as a result of commercial investments and increased costs in Germany, which was partly offset by lower costs in the U.K.
Next slide, administrative expenses. Administrative expenses were impacted by approximately SEK 10 million as a result of the 100 more years strategic review. Expected administrative expenses will increase with approximately SEK 10 million per quarter for the upcoming three quarters related to the strategic review, launch, and implementation. Next slide, profits Q3. This adds up to an operating profit of SEK 349 million in the third quarter and an operating margin of 12.7%. Earnings per share is SEK 4.28. Next slide. We now move into the first nine months covering the period first of May until end of January. Next slide, sales Q1, Q3. During the period, sales growth was 2% in SEK.
Sweden was up 1%, Norway 2%, Finland 9%, and outside Nordic countries decreased with 14% as an effect of the store closures in the U.K.. In local currencies, sales increased by 3% and like-for-like growth was flat. There are 11 more stores in the network compared to end of period last year. Next slide, profit Q1, Q3. Operating profit amounted to SEK 574 million during the period with an operating margin amounting to 8.8%. Earnings per share amounted to SEK 7.02. Next slide, investments. Total investments, SEK 422 million compared to SEK 192 million last year. MatHem investment amounted for SEK 224 million, including transaction costs.
The new stores and refurbishments, an investment of SEK 67 million, and in IT system, we invested SEK 89 million. Next slide, strong financial position. We have a strong financial position and a strong cash flow of SEK 772 million. To ensure the continuity of the supply chain, an inventory increase has been planned ahead of implementing the inventory module in our new IT platform named sCORE. Cash flow after investments and financing activities is minus SEK 40 million compared to last year, SEK 145 million, and the decline is a result of the investment in MatHem. We have a net cash position of SEK 584 million. That concludes the first nine months. Let's move into the February sales on page 24. Sales in February are up 2% in SEK and 3% in local currencies.
Divided by country, sales development is in Sweden up 2%, in Norway down 1%, and in Finland up 9%, and outside Nordics is down 7%, affected by the store closures in the U.K. like-for-like sales were flat in February, and there are 12 more stores in the network compared to end of period last year. That concludes the financial report, so back to you, Lotta.
Thank you, Göran. To just quickly summarize, we have delivered the best Christmas sales ever in this exciting market conditions. We are in parallel doing many activities and new initiatives to further develop both what we offer our customers and the meeting with the customer. This is impacting us both in the short term, but also an important platform to build forward on in the long term. Thirdly, in parallel, we are developing the long-term plan for growth that will be presented on May third. That concludes the presentation part. I hand over it back to the operator for Q&A.
Thank you. Ladies and gentlemen, if you wish to ask a question, please dial zero one on your telephone keypads now to enter the queue. Once your name is announced, you can ask your question. Our first question comes from Niklas Fhärm of SEB Equities. Please go ahead. Your line is open.
Thanks, operator, and good morning, everybody. I wanted to ask you if you could give us some more detail on the gross margin development. For example, we understand, of course, that currents have been a bit of a negative headwind, and there's also some other costs. Also, I'm particularly interested in if you could outline sort of any price and mix effects, such as from private label, share of sales, et cetera, in that total net gross margin development, please.
Well, yeah. Here I can go through a little bit of the gross margin, and starting as always with the currencies. As you say, we had a headwind of from the selling currencies, but also have a negative effect from the U.S. dollar. Even if the spot rate now in the U.S. dollar is down due to the time lag in inventory and also our hedges, we see a negative effect since the products rolling out now in our P&L is bought at higher U.S. dollar rates. This has also been, I mean, positive effect in the gross margin has been hedges from Norwegian krona. On top of that, we have had commercial investments as we also mentioned in the report, ending up in the negative development in the gross margin.
Going to your question about mix effects, there are not so much mix effects, affecting the gross margin for this quarter.
Okay, perfect. Can I also ask you, just for the record, now you spent about SEK 10 million in sort of investment related costs for a few quarters? Would you like to provide any guidance on that for the coming quarter or the coming two quarters possibly, please?
You mean if was the cost for the strategic work we mentioned in the report that it has affected Q3 with around SEK 10 million, and also guided in the report that it will be the same amount approximately for the coming three quarters, meaning Q4, Q1, and Q2.
Excellent. Thank you. Final question, then maybe I can come back. Now obviously you're, you're running at a sort of a negative operating leverage in a way that you know, your SG&As excluding the strategic related costs are increasing more than sales, right? I was just wondering, not on a quarterly basis necessarily, but what do you actually think and plan for over the coming year, given, you know, increased competition perhaps and the obvious transition from retail to online? Do you think that you need to continue to spend slightly higher share of sales and selling costs in order to get that same krona back in like-for-like, please?
Nicholas, Lotta here. I think maybe two perspectives on that one. First of all, as I mentioned before, I think it's important that the spendings in a certain quarter do not only impact that quarter, but it's also a way to build customer base over time. My view is that that's especially important in these exciting times, so to say. Then I think the more long-term sort of approach to this, I would like to save it for May third, when we will present sort of the overall strategy, which of course addresses this perspective.
All right. Thank you very much for now, and I may come back. Thanks.
Thank you. Our next question comes from Niklas Eriksson of Carnegie. Please go ahead. Your line is open.
Thank you. Yes, a couple of follow-ups. I'm curious when you talk about this gross margin pressure of 100 basis points. If I hear you correctly, you have negative impacts from currencies that are partly or maybe even fully mitigated by hedges. I'm curious about how much of this 100 basis point gross margin contraction was related to these increased commercial activities. If there's any way you could quantify that to just help us understand.
No, I will, well, I will not quantify it in detail, but saying it's been quite significant effects from both selling currencies, as you know, negatively and the negative effect from U.S. dollar, and we had a positive effect from hedges, but also, as we said, the negative effect from investment in market investments.
Okay.
specify the different components, but.
Okay.
Yeah.
Yeah. Fair, fair enough. Had to try. I'm curious, these SEK 10 million in costs for strategic review. I think you had SEK 10 million in the previous quarter and now another SEK 30 million over the next 3 quarters. So in total, SEK 50 million. I'm a little curious, if you could say anything about what these costs are related to. Are they, are there a lot of one-offs or what kind of strategic investments that you are doing? Just some more flavor here before the Capital Markets Day.
Yeah. I mean, the major component of the strategic costs are the costs related to formulate the new or, you know, the new strategy. Basically it's external consultancy costs that are helping us through this process.
Maybe to add, it is connected to actually defining the strategy and implementing sort of communicating that in the first step, both internally and externally. Then the actual sort of the total view on what the strategy will entail, will be presented on May 3rd. Maybe also to add, part of this is also connected to the highlighting of the fact that we turn 100 years. It's a combination of all of this that we are packaging into a, you can say, implementation and communication of the strategy.
Okay. Very, very helpful. Thank you. A broader question here, but I'm just curious, again, coming back to this shift, that you announced earlier from store expansion to maybe, investing more in online sales. I mean, first of all, if, if there's any way you could quantify the share of online sales. I know that when you stopped reporting this, a few years ago, it was a mere 2% of sales, but I assume that this has increased, since then. I'm curious how you see yourself positioned in the online world, both, regarding your logistical solutions but also regarding your prices.
If you see that you have to make, fairly significant, adjustments in order to compete, online, or what your view is on these, sort of structural changes in the market.
Niklas, Lotta here. I can say that our online is growing substantially, both sales wise and traffic wise. We will present the complete plan around this on May third, both including front end and back end, so to say, the logistics side of things. I will have to ask for your patience another six weeks, and you will get the story.
Okay. I assume that in association with this, you will always also use that as an opportunity to update your financial targets. I believe your margin target of 10% has not been achieved since 2009. I'm assuming that you will provide some more guidance on your view on store expansion and margin outlook as well. Is that likely or is that fair to assume?
No, I think it's spot on. What you will get is a revised financial target, both in terms of parameters, levels, and the plan behind to achieve them.
Excellent. We look forward to that. Thank you very much.
Thank you. Our next question comes from Magnus Roman of Handelsbanken. Please go ahead. Your line is open.
Thank you. I came in a bit late here, so perhaps it's already been mentioned, the SEK 10 million second in cost for the 100 more years strategic review, is that all put in administrative expenses? I see they are growing by around 26% year-over-year. That's my first question.
Yes, that is correct. It's on the line for administrative expenses.
Right. Then perhaps if I can follow on the online questions that were being put forward here. Do you have any insights to share with us in your view of the implemented postal package fees from PostNord for direct imported online goods? To what effect you think that this change might change the local competitive landscape for some of your categories?
Hey, Magnus. Lotta here. Our hypothesis, I mean, it's quite early days, but our hypothesis is that it's likely to have an impact, but it's too early to say what it will mean and sort of how it will substantiate.
If you would just allude to, do you think it would be primarily, if it's gonna be an easing for you, the effect, would it be primarily due to, increasing volumes again in certain categories, or you think it would be on easing price pressure?
Yeah, again, it's more hypothesis, but I think it, the effect would come in volume.
All right. Thank you.
Thank you. Once again, if there are any further questions, please dial zero one on your telephone keypads now. As there are no further questions coming through at this time, I'll hand back to our speakers for the closing comments.
Okay. Thank you very much, operators. We say goodbye from our side, and thanks for dialing in.