Good morning, everyone, and welcome to this earnings call for Lyko 's second quarter for this year and the half-year report. We will start with a presentation from Rickard Lyko, followed with the numbers by our CFO, Ylva Norlén. After that, we will open up for questions. The call will be recorded and published on our website and in the Quarter app. My name is Tom Thörnblom, and I'm heading up Investor Relations and Communications. Please be free to reach out after if you have any more questions. With that start, we leave over to a live report from our new automated warehouse in Vansbro. Rickard, please go ahead.
Thank you, Tom, and welcome, everyone. Yeah, I'm at the new automation at the warehouse here in Vansbro, and we have just started off with the decounting. We're starting to put in real products in storage bins. What we have changed is the process in how we are delivering in products. We have many more stations, and in every station, we have dividing. We have different departments, so we can split up the products faster and better. That's what we're doing now. We will start with some live orders the coming weeks. We are very pleased to see that everything is working very good so far. Everything has been green as we're going. A lot of the problems that used to be in a new automation is the software, and that one we have developed by ourselves.
If there is a problem, we know where the problem is, and we can fix that. We will try to ramp it up under this summer. I will get up to the office here, and Tom maybe should start off with a presentation.
Yes, let's start. Here we can see. Yeah, as you all know, we want to be the starting point of beauty. With that, we mean that if consumers run out of a product, we want to be the first company that they think of, and they will start their journey with us. We want to be in the center of the beauty ecosystem in between the brands and the consumers. We want to give the inspiration and guidance and the widest assortment of products for the consumers. We want to build and attract brands for the brands and attract the right customers. We want to do that by reducing the friction, by adding technology and scale to this. We operate in the center of all of these pictures.
What we see is that there's an omnichannel around it where we have the stores in one end and the web in the other part. We fill it with customer service, the apps, Lyko lovables, and all the different things that we create at Lyko. Rickard, you are in place. I'll leave it over to you.
Yeah, thank you. What we keep investing in is for sure this picture in the different part of the beauty journey. Part of it, we can change the picture, is the community where we also now launch Stories. If we look into the result, we keep on growing a little bit slower than we are used to, but we think it will pick up and the consumer is coming back. We see that we are able to get out the result of the scaling of our operation, which is something that we think is very prioritized and important for us. We jump to the next. We have Lyko on Wheels in Norway. We know that we have a good attraction in Norway. We wanted to see and look out when we open up more stores in Norway. Where do we want to open them and how does it work?
Now we've been around the whole Norwegian and a really good welcome from all the consumers. It's really showing that they really want some more physical stores. That is something we're really looking into now. We are also signing new stores in Norway that we'll open later this year. We have also launched D'or, which is a consumer brand from a TikTok influencer, which has been really popular. I think one really interesting part of this brand is that it's selling more in stores than online. It's showing that the really young consumers, they prioritize buying in stores because they want the experience of a store and have something more than just place an order on a website. That has been working really good and also strengthening our position, reaching out to a younger consumer and have unique products that no one else has in their assortment.
We have launched Stories and community. We know that our community is really important for us, and it's something we really believe in to invest in for the long run because it's really building the community and also building the position as we want. If we jump to the next one, the last release we have done is Stories. Stories is something you have similar on TikTok and Instagram. The good thing is that it's only views for 24 hours, which means that you can put up some different content. It doesn't need to be as produced because you know it will go away. It also makes a habit for the consumer that you need to go in every day to not miss out the ones you are following and getting all those tips.
We think that is something that really will help us to building the awareness from the consumer in our app. We also keep on developing our own brands. The last thing we have launched now is a new brand that we have created by ourselves called Scandinavian Soap Factory, which is a hand soap and balm that's really on a good price point. We know we have a lot of consumers who want to buy those kinds of products for the right price. We see that we can really do that. We can create a brand from scratch, creating all the visual part, but also take it from an idea to producing it, to delivering it, and distribute it, and building it from scratch. I think this has been working really good. We are almost sold out of the first batch. We keep producing up more now.
In total, if you look to our own brands, which is also very important for the long run and for our profitability and our uniqueness, we keep on developing that. We have a lot of launches. We have been launching a lot in the quarter. We're seeing that it will pick up, but it takes some time. We see that it's growing, but we're right now still on 7.8 on the rolling 12. I'm here at the warehouse, as you can see in the background. There is some great weather, and there are also some great improvements in the logistic part because now we will go live with the first test orders next week. We are really live now putting in real products in the bins, and we're test driving a lot. It looks really good.
I think we will hold to the schedule and keep the ramp up to the end of the year when we need the capacity under Black Week. I hand over to Ylva.
Yes, thank you. Let's get going. We will take it from the top with the net sales of the group. The net sales in the quarter amounted to SEK 939 million. That was an increase by 6.8% against the same quarter last year. We had really high grounds from last year, 22%. We also saw that in the quarter, we had a negative impact from FX. In local currencies, the growth was 8.9%. We had solid growth in both channels, online and store side, and saw particularly strong increases in Norway and Finland, where we also recently opened stores. We are convinced we're gaining market shares by this. Particularly, we saw that the two major campaigns we had in the quarter were very encouraging. Right now, as you can see, our rolling 12 performance is now exceeding SEK 3.7 billion.
The gross margin is something we particularly want to highlight in the quarter. We managed to grow it against the same quarter last year and also grow it against Q1. We think this is a particularly strong result given that we had two major campaigns in the quarter where we invested heavily together with our suppliers in a really good price and offering for our customers. On the personnel and OpEx side, we keep having a really good cost control, and we are lower in share of business as a percent versus last year and see really good developments here. Also, when it comes to our group functions, the central functions supporting the whole group, we remain steady here in terms of cost, and we remain focused on reaping the benefits of scale here.
We will keep on investing a little bit here in this area, but do it with a strong focus on the strategic priorities. On to the profitability. We are, of course, very happy now that we have had a healthy profit development since the end of 2024. It's a + 89% hike versus the same quarter last year, making this our second most profitable quarter to date. We can also point out that in the quarter, we had one-off costs of SEK 0.5 million impacting the quarter negatively. When it comes to the segments, in our Nordic segment, now accounting for 93% of our net sales, we keep on growing steadily. We had a 7.4% growth in the quarter, very high grounds here too, almost 23%. We had a really strong June where we saw double-digit growth in the very successful birthday campaign. Here, we had negative effects on sales.
In local currencies, we were at 9.5% growth. The EBIT in the Nordics keeps on developing really well as well. It's up 16% against the same quarter last year and now above SEK 100 million. It's really exciting to see that both in the quarter and on the rolling 12 levels, we're now above 12%. When it comes to Europe, we had a decrease in sales versus the same quarter last year, -6.8%. We had negative effects here too. It would have been - 2% in local currencies. As you can see on the right-hand graph here, we have been hovering around SEK 140 million rolling 12 since the beginning of 2024. This is due to us focusing on a business model where we can grow more steadily profitable going forward.
If we look at the profit side, just like in previous quarters, we continue to decrease the losses that we're making in Europe. We see particularly encouraging results in Poland, both on top and bottom line. Finally, to give you some facts as well on the Vansbro automation projects, as Rickard Lyko was on to, we are now in the ramp-up testing phase, and everything is looking very positive. Just to recap, the total frame there is SEK 498 million that we're investing in the automation, which will give us 150% more capacity from the end of this year. We're paying rent since the beginning of 2024, and the term loan is at present at SEK 297 million. We will start to amortize from Q2 next year with quarterly installations of SEK 13.75 million.
When it comes to the stock levels, we keep sort of holding this in a really good way. Compared to Q2 last year, we have the same stock-to-sales ratio as last year. Really pleased with our ability of growing, but yet keeping the stock levels in check. That was all for me. I hand over to you, Tom.
Thank you, Ylva. Let's go over to questions. Please raise your hand if you have any questions. First, we have a question from Johan Fred at SEB. Please go ahead.
Yes, good morning, guys. Thank you for taking my questions. Just a follow-up on the gross margin development. You managed to grow or expand gross margins both sequentially and year on year despite, as you mentioned, price investments in two large campaigns. Essentially, my question is, what drove the improvement in gross margin?
Lyko on Wheels campaign.
Go ahead, Helen.
The biggest change is in the product margin. On the product side of things, where it's a strong collaboration between assortment strategy, price strategy, and also the collaboration with our suppliers, we also have smaller effects when it comes to channel mix, where it was negative due to online growing faster than retail, and positive effects when it comes to Nordics growing more than Europe.
Got it. Thank you.
Let me go to the next person, Benjamin Wahlstedt from ABG. Please go ahead.
Perfect. Thank you very much. I have a couple of questions as well. First of all, maybe on marketing costs, low yet again. Could you give us an idea of what your plan is from here in terms of marketing spend? I believe you've previously commented on trying to stick to the sort of 2024 level of marketing spend. Right now, your run rate marketing ratio is well below.
Yes, we anticipate that we will increase the spending somewhat in the second half of the year since our biggest commercial quarters are yet ahead of us. It's possible that we will come in below what we had communicated as a target level, but we have big brand campaigns coming up. I think it's likely that we come under a little bit the 2024 levels, but let's see.
Perfect. Thank you. Just to clarify here, when you're talking about coming under 2024 levels, are you talking absolute terms or as a ratio to sales?
As a ratio to sales.
Perfect. I was also wondering about your Outlook commentary. You speak of double-digit growth in June and also a strong start to July. I'm trying to sort of gauge if you would have said double-digit growth in June and July if that was the case. Would you care to comment on the growth in slightly more specific terms, please?
I think it's more due to that July is only halfway. In June, we know the whole month, and now we are in.
All right. Fair enough. I was wondering as well, European expansion. I believe last quarter you said you were sort of getting to a more mature sort of assortment and could potentially see some growth there as well. Any idea what happened in Q2, or is it just too small to be, or is it just so small that it's volatile by design, basically?
I would say that. We're still, I mean, up till today, we still have a problem to manage the volume in the old warehouse and cannot expand the assortment, but that will change the coming weeks.
Right. When you're speaking about having a hard time to handle volume, you're talking about volumes in Vansbro or in the German?
No, in Vansbro.
All right. Perfect. A detailed question, what were the one-off costs related to?
Personnel.
All right. I think that's all I had for now. Thank you very much.
Are there any more questions from the floor? Please raise your hand. Maybe one. I was a little fast there getting the word forward. I don't see any more questions.
I can shoot one more, if I may. You talk about more supplier collaboration improving your gross margins. Would you agree that this effect is likely to be larger in more campaign-intensive periods, such as Q4?
I mean, that was a lot why we had the better result in Q4. It has a bigger impact in bigger campaigns, period.
I know it's a busy morning. If I don't see any more hands, we are very pleased that you wanted to join us this morning. Thank you so much. We wish you all a good summer. Please take care. See you in the autumn. Bye-bye.
Thank you.
Thank you and well done.