Good morning, everyone, and welcome to the quarter report for the third quarter from Lyko Group. Today, we will start with a presentation from our CEO, Rickard Lyko, and then our CFO, Ylva Norlén, will present the numbers for the quarter. And, after that, we will open up for questions. The call will be recorded, and, we will present it on the Quartr app and on our website. We are today here at our office in Stockholm. We are about a hundred and twenty people here at the moment, and, we also have set up a little studio here. So we're super happy to have you with us today, and, yeah, we will start the presentation, but first we will have a short video.
[Foreign language] .
Thank you, Tom, for the introduction, and welcome, everyone. My name is Rickard, and I'm gonna present the Q3 report. As just to remind you, we are aiming to be the starting point of beauty, and we're taking a lot of steps going forward to becoming that, and I think the last quarter is really showing the proof of that as well, with movement to the app and also all the engagement we're getting around the branding we are doing. We are changing the concept. We did that this summer, and that we are keeping on rolling that out, and we're seeing really good impact on it. We are measuring everything for sure and seeing if there is something to adjust or, and so on, and we are seeing that it is really working into all the markets.
So very positive feedback on that, and we are also seeing that our brand tracking keeps on increasing, and this is something we are investing in for the long term, and we have done for quite some time, and it's really nice to see that the jump in Finland and Norway as well. Then it's taking longer time for sure when we're coming up to higher numbers. It's a little bit easier in the beginning. We are driving a lot of events, and this quarter hasn't been any exception of that. The last two event was the Halloween event that we did in Sweden here, but also in Norway.
We are investing a lot in that, but we're doing that together with the brands, and we're seeing that they want this more and more, and also proof of that is that they are choosing to launch a lot of brands to us. And the last one of that was e.l.f., we're seeing. We did the launch together with H&M, and we're seeing the impact of those kind of brands, but also the impact that they are really seeing us as a platform to launching the brands, talking to the younger consumer, because we're knowing a lot of those brands, that's what they are aiming for. They need to find a way into the newer consumer, and we are really sitting on that key.
We were also winning Retail Experience Award here this quarter, so very proud of that, and a really good work from the retail team that are keep on delivering, and now the last will, which will open this Saturday in Bergen, which we're looking forward to. And I think the localization that we're doing now when we're entering Bergen is on a new level, and we're really seeing that it's working. We're really already seeing the impact in the Bergen. We keep on the journey in growing and being the fastest-growing beauty specialist, and we're really seeing that we are that in the Nordics, and then we want to take that out in a bigger European segment.
But in the Nordics, it's really working, and if you look into the online, we're really seeing that we are taking a big leap from the rest of our colleagues in the business. We are also investing in our own brands, and we have been talking about that for a long time. We're seeing this quarter as well. We are close to 10%, and that is just through our own channel. Then we have the business-to-business part, which is moving quite big volumes, but even it's not as high on the turnover. And on the rolling twelve, we're seeing that it's starting to increase as well. We have working a lot on these products and the brands, and it's taking time. I mean, that's the downside in the beauty industry.
If you're gonna launch a new product, a new brand, it take about two to three years, and if you look into this picture, I have shown this picture before, but the new thing is, in this picture, is all the products that you're seeing down there, they are new, and some highlights from that is that we are relaunching the By Lyko brand. It's gonna be the Lyko and a little bit update in the look and also going more into the skincare part in that, and we're seeing this is a really important piece of the puzzle when we are building uniqueness but also profitability, because the margins in this category is sure much better when we are producing a lot of this by ourselves as well. Make Up Store, we did that acquisition a few years back.
We have been working with that a lot, and the launch of the new look of Make Up Store will come in beginning of next year. And we did the relaunch of Rebecca Stella, and we're really seeing how that is improving and also keep on growing the brand. So we're seeing it's really working when we're doing this update on those kind of brands. The calendars was a big success. We have launched that one. We didn't manage to delivering everything in the quarter, so we have kept on delivering. We are now up in pace where we should be with that, but we're seeing this is also improving year after year, and also a lot of the brands are learning that this is working well for them as well, investing in putting in product into the calendar, but also selling other calendars.
This is something we have been optimizing and keep on doing, and it will be an important part of the business going forward as well. We are increasing the warehouse, as you know, and a lot of investment in that, that we have been talking for quite some time now. We are shifting all the software in the warehouse, and we have done that, and that is going live, and it's been working really well. We are really preparing now to going live this summer with the new warehouse, and yeah, right now it is, we are on the border what we are able to handle in the warehouse, and it will be tough going into Q4 before delivering on these volumes.
We manage that, but if it hasn't been a problem, I will be more worried because then we have investing too early in this automation, but we're really looking forward going into the new warehouse, and that is also something that holding us back a little bit on the stock levels and so on. We are optimizing that, but it's also a restraint that we don't have any room in automation because we are maximizing the automation that we do have now. Something we're also investing and have put a lot of focus on in the years to come that we are going through is the Lyko Community, and we started that. I think it's five or six years back, working with a lot of that.
We relaunched the platform because to be able to handle the volume of the community, and we are also shifting a little bit. We have been inspired by the TikTok flow, so if you go into that, you will feel that there are some similarities to TikTok, just to be relevant in that, but that is also increasing, and the traffic to the app is increasing through that. We are also seeing a possibility because when you're in the app and you're looking into our community, you are in a different mode. You are not just there for shopping. You are there to consume, looking for the next product and so on, and that is also giving us the possibility to interact and also delivering different message.
And one of that thing that we can do and have been starting, so if you're going in there, you will see advertising, and now we will roll that out bigger with retail media going into the next year. And I will show just a short how that will look, and yeah, I can say the brand love this when they can take over and delivering their message. And it's quite hard to do that in an optimized e-commerce flow, but if you are in the community, you are a little bit in a different mode to take in that, and we are also knowing in our industry, they like to see advertising. And here is just an example in something that we are rolling live now in the app.
This is the possibility for the brands to delivering really what they are all about, building that brand, building everything about the feeling around those products that are so important to find into the new products, and that is a position that we do want to have. That was everything for me, so I will hand over to Ylva, going a little bit deeper into the numbers and telling us what's happening there.
Hello, everyone. My name is Ylva Norlén. I'm the CFO here at Lyko, since about seven months back, and I will take you through the results for Q3, so overall top line was up 8.2% versus Q3 last year, and it's been a little bit of a while since it was a single-digit growth figure here at Lyko, and I will go through a little bit why that has been the case. Partly, we have really high growth from Q3 2023 at 26%, and secondly, September ended up being a really intense commercial month for us with the Club Week campaign, the e.l.f. Cosmetics launch, and then an earlier advent calendar launch, and we can also see, due to the warehouse capacity, that we ended up with a significant backlog.
In a normal month, we have about two days between order to delivery at the end of the month, but this time, we ended up with a 4x higher backlog. In general, we see that channel performance follows the market tendencies, and we saw stronger growth in retail compared to online. The gross margin in the quarter was actually up versus Q1 and Q2, but we keep seeing a negative rolling twelve trend, and this is the same factors that we talked about before. It's the category mix and mainly a pricing effect. When it comes to the other external costs, these were up a little bit, share-wise, in the quarter, due to the that we have costs taken in September related to revenue that now will be attributed to October, and here it was mainly performance marketing standing out.
Before the September sort of backlog occurred, we were well on track to a lower OpEx level for the quarter. Personnel costs also follow the quarter size and the selling, but here, as Rickard was also saying, we consider that we now have a full organization on group level and on local level. And the difference, if we compare to 2023 on personnel side, is mainly that we have open new stores. We have also now fully recruited the country team members, and we have increased the own brands team since we're investing a lot there, and we have also increased some group functions.
And then the EBIT result for the quarter, of course, due to the selling being lower, we ended up lower here and come in at the 1.1% EBIT percentage level compared to 1.8% in the previous quarters. Coming on to the Nordics, we continue well here. We see really strong growth, 9% up for the quarter, and, we have also here really strong growth from last year with 25%. We see continuously that the omni model is working really well, so both stores and online develop really well, and we can also see now that the app share of business is up to 29%.
EBIT in the Nordics increased by 16% on last year's quarter, and we're now on a profit level of 11.6, and this is really something that we're looking forward to continuing to develop. What's different to Q3 in last year is that we've now recruited country managers in Sweden, Norway, Finland, and Denmark, and they joined us during spring this year. In Europe, we continue the focus since a couple of quarters back on profit, and this has taken a toll on the overall selling. So we've lost some selling in the quarter. On the other hand, we've been able to add some really important brands lately, and we look forward to seeing what that will take us.
EBIT-wise, this focus is paying off, and it's the third quarter in a row that we're reducing our losses in Europe, and we see that cost control is really on a good level, so we're looking forward to now looking into the paths that we have for Europe in the future. When it comes to the group functions, meaning, mainly the head office here and also part head office in Vansbro, we have similar level to previous quarters, and this is, of course, due to some additions from the first half of the year in the organization, mainly within marketing, purchasing, and in finance, and then a new slide for this quarter presentation. We get a lot of questions, of course, about the ongoing investments in the Vansbro extension, and just to further underline, the project is going really well and on time.
We will have 150% more capacity by this time next year. And here we have chosen to outline now how the term loan distribution looks like between the years. We are paying rent for the property since the beginning of 2024, and at present, the term loan is at SEK 186 million. We have a flexible interest rate set up on the loan, and amortization is planned to start from Q2 2026. And as Rickard was on to, we're focusing a lot on stock levels at the moment and securing selling with improved stock levels. And in this quarter, we had a 14% stock to sales ratio compared to 18% last year.
So in summary, it is a lower net sales growth, but it's partly due to challenging grounds, but also affected by this backlog in outbound logistics. We do see that the long-term focus in the Nordics is really paying off well, and we will continue to open strategic store locations, next one coming this week in Bergen. We continue to tweak our business model in Europe towards profitable growth, and the warehouse extension project is progressing well. And in general, investments both centrally and locally in organization, we see that we will be able to scale that in a good way going forward. Thank you. That was all.
Ylva, then we will open up for questions. So please raise the hand, and I will give the words around. We will have the first question from Johan Fred, SEB. Please go ahead.
Yeah. Hi, good morning, guys, and thank you for the presentation. Starting off with the effects on the sales effect from Christmas calendars, is there any chance that you can quantify or give us a rough estimates on the effects from sales being pushed into Q4, please?
Not more than the guidance that I just gave in the results section.
Okay, but percentage-wise, you stated that your biggest launch was pushed into Q4, for example, or booked in Q4. What does that imply? Is that 50% of the calendars, or how should we think about that?
The guidance we can give is that in a normal month, we have two days of backlog at the end of it, between ordered and shipped, and this time it was 4x higher.
Okay. Got it. Thank you. And the second question on sort of campaign activity and price pressures. You've, It's been high for quite a few quarters now. Could you elaborate on what you've seen in terms of the trend during the quarter? Are the pressures less pronounced than compared to earlier this year, or are they persisting?
I think it's a similar pattern, but we're also seeing, I think, when you are having a little bit tougher consumer, they are prioritizing putting their orders on the campaign period and so on. So that's I think is the pattern we have seen, and I think that will probably been keeping for quite some time.
Got it. Is this concentrated to a specific product categories, or is it more broad-based?
More broad-based.
Okay, got it. Got it. And in terms of private label sales performing well and continue to account for a larger share of your sales, is this due to channel mix with higher retail sales during the quarter? Or are you also seeing similar kind of growth in your online channels?
Similar kind of growth in both, but for sure it's helping that retail is going strong, but we see it in total, and I think that is a lot to do to the launches of the products and that we are working with that assortment.
I got it. Very clear, and the final question on sort of capacity constraints. We are heading into the sort of high season with Black Friday campaigns and Singles' Days and what have you. How are you feeling in terms of your current capacity? Will you be able to sort of deliver the volumes you intend to, or how should we think about the capacity going into the high season?
It will be really sweaty. We will handle it. It could be that we need to have a little bit longer delivering times and so on to consumer. But if what I've seen from the past is there's some time when the customers are fine with that, it's under the Black Week campaigns and so on. So I think we can handle it, but it will be on the limit where we are, because yeah, we need a new automation, but we have a plan for handling it.
Okay, great. Those were all of my questions. Thank you so much, guys.
Then we leave the floor to Benjamin Wahlstedt from ABG. Please go ahead.
Thank you very much. And I'd first like to follow on the previous question on capacity. You appear to be at least slightly worried about Q4 capacity. You see sort of a longer order backlog already in Q3. Like, what is the normal order backlog going out of a Q4, roughly, in terms of days?
I think, yeah, when we're going out of Q4, we will be able to empty the stock, because, I mean, it's more about what's happening in December. I mean, the Black Week will end before this quarter. The campaign was in the end of the quarter, and we are now on track again, so now the backlog, we have handled it. So, I don't see any problem with that going out on Q4.
All right, perfect. You also note that online growth picked up the pace in September, and I was wondering if you would like to share like, did you grow online throughout the quarter, please?
I think we had the big campaign in the end of September. We saw that that was good volumes on, and I think that due to the consumer choosing to buy a little bit more when we are doing campaigns, but also that we were able to launch the e.l.f., and also some calendars. So it was a mix there where we saw really good volumes.
Perfect. And, or in the unlikely event that someone listening might have missed the release dates of all the different calendars, could you remind us which ones sort of fell into Q4, please?
The thing is that.
Or, which ones were delivered in.
Some of our own calendars, we were releasing a little bit earlier than we did last year, but then again, we were not able to delivering most of them. The Make Up Store we launched earlier, that one has sold out, and everything is delivering. We are also increasing the volumes compared to last year, and then we have other brands' calendars, but that's coming in similar time as last year, I would say.
All right, and then one final question. The other segment, I was wondering if you could talk a bit about that, softer profitability versus Q2 as well, I believe.
Yes, and this segment is a little bit special, especially at the moment. So selling was partly down in this segment, which due to the internal eliminations, only include the B2B export sales and 3PL sales. On the cost side, though, it carries the whole organization for our own brands team, our B2B team, and production team. So the profit and sales in this segment, which isn't a like a real segment in that sense, doesn't entirely follow. So during this year, we have added more colleagues in the own brands organization. So yes, this segment is a little bit tricky to follow for sure.
Perfect. And then perhaps one final one. On own brands, the penetration difference year on year in the quarter is somewhere between three and four percentage points, if my calculations are correct. This should, with a twenty percentage point higher gross margin, give, like, a gross margin support of 70 basis points. And if you have any flavor on the gross margin at all, that would be helpful, please.
Yes, we see that the own brands will be a really important mean for us going forward in terms of gross margin mitigation, both due to the share of business, but also the positive margin development. More guidance than that is not possible to give right now.
All right. Thank you.
Then we leave the floor to Daniel Schmidt from Danske Bank.
Yes, good morning, guys. Just a clarification maybe. I don't know if every sort of previous question. I think it was a bit strange the way they were sort of put when it comes to the calendars related to Christmas. That was a launch. They were in the market earlier than last year, correct? If you look at last year, the entire launch was at the beginning of October, right?
Yeah, that's right. Yeah.
Yeah. So you actually had some support from that launch when it came to Q3 revenues, even though it sounds like it was fairly small, given the lead times in deliveries. Is that a fair statement?
Yeah.
Yeah. But you want sort of, you don't want to provide any numbers on, is it sort of very little, or is it anything worth mentioning?
I think the ones that Ylva has already given is the flavor we can give on that question.
Okay. Okay. But you're making a point in connection to that, that you took a lot of costs when it comes to performance marketing in connection with that launch in the report. Do you want to quantify that number?
No, not in relation to that either. I think the flavor we're giving there is that we were well on track on coming in lower than the Q2 OpEx levels before this occurred. So marketing as a share of revenue is down, compared to Q3 last year, but this trend looked even better, before this.
Okay. And was it a late decision then that you decided to launch the calendars a bit earlier this year? It sounds like that.
No, it was in the plans, but I think September ended up being an exceptional month due to not only the calendar release, but also the e.l.f. Cosmetics release. It was on the last days of September as well, and a really well-performed club week. We also changed our warehouse management system right at the beginning of September. So in terms of planning, and the result being an outbound backlog, yes, the planning could have been better there, but on the other hand, we, I think we made a lot of customers happy during the month.
So the reason why we released it earlier was because that's what we were seeing in the market the year before, that the releases.
Okay
Of the calendar was earlier, so we wanted to be in line with the other competitors in the market.
Okay. But speaking about the market, and I don't see you writing anything about it, but you do deliver the lowest growth since you became a listed company for a single quarter. And it's a quite big step down. Is this sort of a reflection of the market being weaker in general or more sluggish? Or is it your own performance? Are you seeing more competition coming through in your core markets?
I think we are meeting tougher numbers, as you've seen, but also that we are not growing in Europe, which has been helping us earlier. But then I think also that we were not able to delivering all the orders, which also playing in that. So I think those are the reason more than we're seeing that the pattern has changed that much.
Sure, but the orders are also related to an earlier launch of the campaign, which you didn't have last year. So I'm just thinking you've had more difficult comps earlier, and we've seen sort of Matas saying that KICKS is gonna be more aggressive on price, starting this summer in Sweden and Finland. Has that impacted you at all?
Yeah, we see that they are active, but I haven't seen that it has impact our numbers. The campaign was in the same time as last year, so we haven't changed that. So it was just a calendar, but then also the release of e.l.f., which we cannot choose when to release. We just get the release date when to do that.
Okay, so you don't think that it's tougher competition that's slowing your growth? It's just basically comps that are difficult?
I would say.
Okay.
I think weather-wise as well, compared to last summer, last summer was quite ideal for sales.
Okay, and then just maybe your statement in terms of the European business, and you are basically evaluating that business. Could you shed some light on what you want to do with that business?
It's about finding the right assortment, finding the right customers, and so on, and we're seeing that it's starting to working, and then we're seeing which number we are meeting. But now it's about finding profitability going forward. That is the focus, and then finding growth after that.
And would you sort of, should we expect top line to be flattish, while you're in this situation where you're sort of trying to find more profitable growth? Or how should we view that business in the coming quarters, you think?
I think Q4 will be tough on the top line for sure, because we want to make sure that we are making the right margins, and so on. So we will not be as aggressive as we have been in the past in Europe, so.
Okay. And then just maybe, coming to the cash flow, which was quite strong. But I also noticed that account payables are up 33%, which is a lot more than what you grew on top line. Is that a timing issue? Is that gonna reverse in Q4?
I mean, we are rolling around the warehouse faster because we need to, because we don't have the room, and now we're starting the build up for next, or for the big season with Black Week, and we need to do that earlier as well, because to be able to handle the volumes, and there we get better terms from the brands and so on, to be able to do that in time.
And that is a change, you think, compared to what you've had in terms of terms, before?
It has been because we need it this year, because. It's also when we're talking about the volumes and be able to handle the volumes in the automation, a lot is also to be able to get in the products in time, and we need to starting that earlier, to be able to have a chance to handle the volumes.
Okay. Speaking about volumes, sort of how. Can you shed some light on sort of the difference, how much more strain Black Week is on capacity compared to the end of September?
I mean, it's a different thing because the end of September was one week, now it will be for a longer time. But, I mean, the volumes is much more, but we have more time to delivering because, I mean, we will not promising to be delivering it in the end of November. So we will have a lot of orders going into December for sure, but, I mean, we have the whole December to delivering in to make it to the quarter. So it will not be a problem with the quarter, but it will be a question in what we can say to customers, how long a delivering time it will be on the free delivering.
Because we will still be able to manage fast delivering on the ones that are paying for it, but it's the free choice that will be longer delivery time on.
Don't you think that's gonna give you a disadvantage in this market coming into Q4?
Sure, some definitely. I don't think it will affect us that much, but for sure it is.
Okay. Okay, thank you, guys.
Then we leave the floor to Victor Hansen from Carnegie.
Hello. Hi, Rick, Ylva, and Tom. Thanks for taking my questions here. If I keep, if we stay on the topic of working capital, my calculations here, it's in significant and negative territory. This means that the suppliers are currently helping finance your business. And I'm wondering here, should we expect this to normalize in the near term, or what's behind this big increase in negative working capital? And you mentioned the higher payables. Would you say that those are sustainable, or will they reverse already in Q4? How should we view this? Because currently it's SEK 100 million .
The thing that we need to prioritize on the warehouse is setting more focusing on A movers and B movers, which mean that we are turning around the warehouse faster, and I think that is something we need to keep on doing until we're getting into the new warehouse, so that is, I mean, with the collaboration with our brands, is something we need to keep on doing. Yeah.
Okay, so it should stay.
A bit like.
Yeah. Okay. Okay. And then, just quickly, an outlook for your store openings. Is it one in Q4 or more?
One is Bergen, the next, next week now.
Okay. Thank you.
Then we have a question from Fredrik Andersson.
Hello, thank you for taking my questions. I just have a few questions. You wrote in the report that EBIT has ended at SEK 8.3 million, compared to SEK 20 million in the same quarter at the same year, last year, and the earnings for the period was negative with SEK 9.8 million. Can you explain something more about this?
We have a new transfer pricing model since last year that has affected the overall taxing. So that is also why we end up on a negative basis there.
Did you calculate with this result, or are you surprised that it ended with a negative result on earnings for the period?
No, it was expected based on the EBIT performance.
Can you say something more specific about how Norway performed in the third quarter?
Norway is performing good, and we're seeing good momentum in Norway, definitely, and we also saw that, as we presented the brand awareness, and I mean, in some categories, which if you look into the lower or the younger consumer, we are even stronger in Norway than in Sweden, so Norway is really performing well. Yeah.
And finally, some more questions about Norway. Next week, you will open in Bergen, which is your fourth store in Norway, and you also write that you see many opportunities to further expand your business in Norway. Could you tell something more about this, how your plans are looking like?
I mean, we're looking into that, and what the guidance we have given is three to five stores for each year. I mean, there is room in all the countries, I would say, to open up more stores, Sweden as well. So we will see where we get the best opportunity and then trying to roll out after that.
Could you say something about where in Norway you're looking to expand, in which cities?
No, but I mean, it's just looking where people are living, and you can guess where it will be. So I mean, we will following that, so it's not. It will not be something else. I mean, we're seeing when we look into Norway, we are selling in the whole Norway, so we don't see any pattern that it will be any different to that.
Is there any store openings planned in Norway for the next year?
We haven't signed any more openings yet, so. But we are in a lot of discussions. Yeah.
Thank you.
Thank you, Fredrik. We go back to Benjamin Wahlstedt again, once again.
Yeah, sorry, guys. Just one more. Could you confirm whether or not you are growing double digits in October so far?
No, cannot confirm that. We don't talk about October yet.
Yeah, I suspected that would be the case. I tried. Thank you.
Okay, then we have a question from Per Johansson.
Yeah, thank you. If one takes a step back, it would be interesting to hear your view on the competitive environment, especially from maybe the pharmacies, the online pharmacies, how you've seen them over the last couple of years, and currently, in this year, if you see any change, if they are more aggressive or less aggressive, if their offering has changed, et cetera. Maybe they are more profit-focused and have changed their behavior. That's one question, and on the same sort of line on the competitive situation with the KICKS, having a new owner, maybe not much have changed yet, but what do you see them likely to sort of find.
How will they find their new role in the market, in your view, or will they just continue as usual, or as in history? It would be interesting to get your perspective on the different competitors and competitive parts, et cetera, in the different countries.
I think part of the assortment is really, really competitive and has been for quite some time, but it's increasing even more. So I mean, on the pharmacy brands that they are strong in, yeah, the competition is really intense, but it has been that as well. So adding another pharmacy doesn't make that much of a difference. Then I think, yeah, Sweden is standing out, which is the most competitive, but what we're also seeing, and more players talking about the broad, about beauty. But that is not necessarily something bad. It's really helping us to driving the segment as well. But that the competition is keep on increasing and are tough in part of it, it's definitely the case, so but, it has also been that for quite some time, and then you have Matas and KICKS.
Yeah, we're seeing that, and we're seeing they are a little bit more aggressive and talking more about price and changing a little bit the position, going from high-end brands still a little bit lower and launching their own brands and so on. So it will affect, but I think the biggest change, if you look into our part of the business, is that we are seeing movement to the retail, that the customers is going back to retail and that online has tougher numbers to meet and keep on growing on. But I think that will definitely change, but when it will change, we will see, but that is the movement I think is the most clear.
I mean, in our case, we don't have enough retail to get up everything, so we are leaving money on the table in that case.
And if you look at the, like, the bottom-performing, like, quartile of the industry in Sweden and maybe in Norway, which, I'm not sure who, who you think they are, but if you're looking at them, are they. Like, how would you describe their situation right now versus, a year or two ago? And who, what kind of companies are they, and. Yeah, just interested in how you're looking at the, the sort of the competitors that have the toughest, situation right now and in the last couple of years. What are they doing?
I think the pure players are having the toughest time, and we see some pure players starting to going into the retail segment. And if you look into the pharmacy players, some of them, they have a different prices online versus offline. And sure, we understand why. I don't think it is a long-term strategy that you can go to the consumer with, but for them, they can be really aggressive online because it's such a small part of the business, and they are very heavy in the retail. And we are also seeing the one that's having a lot of stores is going good because you have organic growth in the retail stores, and if you have a lot of stores, then it helps a lot.
So, I think that is the most clear, and I think a lot of pure players, e-commerce players, that has not been profitable and then now not growing, they will have tough going forward to getting the investment they need to keep on growing.
Okay, thank you.
Then we have a last question from Daniel Schmidt.
Hi, one final from me, or maybe two. What do you think if you look at your European business again, which has been struggling, and it's been still loss-making, and actually, here you're going for more profitability. But what would it sort of take to take the decision to close that business entirely? What's the patience?
I mean, it's an ongoing decision or discussion for sure, and we will have that up to see. If we don't see it going in the right direction, and we don't see the movement that we need to see, then we will take that decision. But right now we're seeing it moving in the right direction. But it's something that we coming back to quarter to quarter to see what the strategy should be.
Okay. And then just a short one maybe on offline, given that you're mentioning that the flow is sort of, coming back to offline for the time being, and it has been the case for some time, I guess. And you also have a new owner, and when it comes to Åhléns, and the Swedish market, as you mentioned, it is already quite competitive. Are you seeing any changes in their behavior?
No, not really, and I mean, we're seeing that it's really working for us with the retail, and I mean, Åhléns, we are close to them at Drottninggatan, but I think it working for both of us, in that case. So I don't really see a big change there, more than it's the movement to that channel, and then we will see for how long that will hold on, and then we don't know. It's hard to say the impact of the Chinese e-commerce players buying a lot of the volumes in some channels, which I guess affect the e-commerce in total, but really hard to say.
Okay, but do you think the sort of shift from online to offline that you're highlighting today is that more accentuated now than it was before the summer, or do you think it's the same trend that we've seen for a while? It sounds like, 'cause when I read the report and listened to you today, it sounds like that has become a bit of a bigger issue lately, or is that the wrong interpretation?
little hard to say, but I think it is a similar pattern, but we see the pattern is keep on happening. And I think when the retailers are having a little bit better times, they're helping each other, driving that up. But, yeah, we will see. for how long. But, I think that the e-commerce will come again. It will definitely happen, and I think in the numbers for the industry, we're seeing that the e-commerce starting to taking up pace. And I think the Black Week will be, or Black Month, will be quite a good thing for e-commerce to set that top of mind again.
Okay. Thank you. Thank you, guys.
Thank you, everyone, for joining in this morning. You will find the report on the website, and this call will have been recorded and will be possible to reach through the Quartr app. We will see each other in the beginning of February next time for the Q4. But follow us online, see what we're doing, and there's some very interesting Black Week coming up. Thank you so much.