Welcome, everyone, to Synsam Group's Q&A session as we release the interim report for the third quarter 2025 this morning. My name is Frida Leim, and I'm Head of Investor Relations at Synsam Group and the moderator of this Q&A. Today, I'm joined by our CFO, Per Hedblom, and our CCO, Jimmy Engström. Those of you watching this live, you can ask your question in the chat, and we try to answer as many questions as possible. We have also our analyst from Citi joining us. I would like to welcome and hand over to Yang Yang from Citi. Hi, Yang, and welcome with your questions.
Hi, Frida, and hi, Per, and Jimmy. Thanks very much for having me on the call today. You know how I like to start these things before diving into individual segments, as we always do on this call. Can you give us a roundup of what you are seeing across your markets in terms of market trends and also what their effects are on your product mix? In particular, is there any change in Q4 so far versus Q3 or nine months? Thank you.
If we look at Sweden and Norway, I mean, it's a continuing weak market, but we have performed well in that market during Q3, I would say. Denmark, more competitive situation, but that's been the case for quite a long time now. Finland, I would say, also competitive situation, but where we, with our concepts, have taken significant market shares also this quarter. Going into Q4, continued weak demand. We have to create our own market, basically. We need to, I mean, efforts are required to perform, and we are taking action continuously. Do you want to add, Jimmy?
No, I think that puts it well. It's a cautious consumer sentiment, still a bit uncertain. There's always a competition within our industry and also, of course, for the consumer's wallet overall.
Thank you. I think the year so far has been pretty solid despite what you see as a weak market. Is there anything that might derail the momentum in Q4? Is there any one-off that we should know about?
It's quite a strong word, but I mean, we continue weak market. We're looking very closely at the Black Friday behavior among consumers. Of course, there's a Black Friday every year, but might be even more focused among consumers on saving for the Black Friday event. Potentially, I mean, the event hasn't occurred yet, but that's something we look very hard on specifically in Q4.
Okay. We also mentioned a couple of times increased competition, and it has been a topic for a couple of quarters now. I know you just mentioned earlier Finland and Denmark. How about in Norway and also in Sweden? Can you maybe contextualize a bit who are you seeing the most kind of competitive pressures from?
No, we don't want to go into specific competitors in this call, but I mean, on a more general level, of course, I mean, since we are taking market share and we're progressing as we do, I mean, we have, of course, able competitors. We have a lot of respect for them. I mean, of course, they take action. We take market share, and they respond basically on a more general level. That's how it works.
Maybe let's now go into Denmark. I think the results showed a very healthy beat versus consensus expectations, not only on top line, but also on bottom line. Just start by looking at the revenue line. What do you think has gone right this quarter despite ongoing impact from the lifestyle extension from the credit legislation? Did it surprise you actually to see a positive growth rate this quarter?
If it surprised, no, it didn't surprise us. We're taking action. I mean, the way Denmark during this quarter has been able to grow with the cash business, we think is healthy. I wouldn't say surprised, but I mean, there are challenges in Denmark. This quarter, they were able to compensate for lifestyle decline with the cash, which is, we think, very important and in line with what we aim to do, basically. Of course, we want to improve lifestyle, but I mean, in the meantime, cash is what we can work on most, I think.
Yeah, and I mean, the action program continues with improved store network, assortment upgrades, and customer offering. As we see it, I mean, the Danish operation is operating well. After all, also with high margins, it has an EBIT margin of 14.8%. Given the circumstances with the impact from regulations and also the consumer environment, it is progressing well.
Thank you. How sustainable do you think this momentum will carry on into Q4 and also in 2026? Should we expect this kind of momentum to stay? Should we expect some further recovery in Denmark?
Long term, of course, we expect a further recovery. Like I was saying, we are taking action. As Jimmy mentioned, assortment, store network, and so forth. We, of course, expect that to pay off. I do not want to go into specific quarter. It can fluctuate between quarters, but the long-term view is quite clear for us.
Maybe not on a quarterly basis, but if I could push you on 2026, for example, do you expect on an underlying basis for Denmark to recover into growth already? That is before you take into account soft comms.
Taking into account soft comms, if you look at the sort of our face like this, we indeed have the potential to have positive growth in Denmark in 2026 compared to 2025. All depends on market situation, all depends on operational challenges and so forth, but I mean, we do have the potential, yes.
Are you anticipating any further changes to the credit legislation in Denmark or in any other countries that you are operating in?
We do not see any changes that we are aware of at this stage in Denmark. The restriction on prolongings took effect from first quarter 2025. We do not see any additional changes coming into effect in 2026. For the rest of the Nordics, I mean, there will be some minor changes, we believe, in legislation, but not affecting our lifestyle sales really. If we.
No, exactly. Of course, we follow this area all the time to see how it develops.
Thank you. Maybe departing Denmark for a second, let's go to Sweden. You flagged in the release that Synsam IVU accounted for, I think, 17% of the exam ice in the quarter. I think in the first half, it was around 13%. There was a demonstration of the ramp up there. Can you help us translate that into benefit to growth rates? Because when I look at your growth rate on the two-year stack, it seems like despite the ramp, the rates have been largely stable. How should we think about this?
I think it's very important to not look at growth coming automatically. I mean, if you look at the growth rates and they seem stable, to maintain such a high growth rate requires efforts. I mean, to take market share continuously and grow at the level which Sweden has done in the third quarter, organic 15% after having grown quite a lot last years, that requires something extra. And that's, I think, we have accomplished a lot of actions we've taken whereof Synsam IVU is one important factor.
I mean, worth adding is, of course, that the summer period is a period where we have had capacity constraints. It adds capacity and has done so. Also, the accessibility, as we have pointed out, that we can become more accessible also during weekends, evenings, and also, of course, across the store network. That helps us serve more customers.
Thank you. Given all of this, do you, and I must say the nine months performance has been very, very good in Sweden. Do you still see the organic growth for Sweden to stay within this sort of 8-12% range as likely for the near term?
I'll give you another forecast. I mean, we have an 8-12% organic growth target for the group as such. And Sweden is one of, well, the largest markets. So it's, of course, expects Sweden to be very close to that interval continuously. Of course, 8-12% for the group is a target medium term.
Makes sense. Another sort of Synsam IVU country is Norway, so let's just go there. Again, I look at the disclosed sort of percentage of exams done with the IVU, and I realized that it stayed at around 20% in Q3, as was the case in the first half. How should we think about the pace of ramp for IVU in Norway? Is 20% sort of the level that you're looking to stay at for a period of time, or should we expect to continue seeing this moving up?
Long term, we should expect it to move up. This is an okay level to start with, which we've done, but we don't expect it to remain at that level long term without going into quarterly data. We have the potential to increase that level indeed long term.
When you think of IVU sort of both in Sweden and in Norway, if you think of maybe three years from now, what would be a realistic penetration level that you would expect to see in both countries?
I don't want to give a three-year forecast, but we have mentioned in other situations that it's possible at some point to arrive at the 40-50% penetration level.
Okay, thank you. Again, I kept looking at growth on the two-year stack, and maybe you'll remind me that it doesn't make a ton of sense, but in Norway specifically, if you look at it on the two-year stack, the growth rate has moderated a little going from the first half to the third quarter. Is there anything that I should take into account thinking about the Q4 growth rate?
For Norway specifically?
Yep.
Not for Norway specifically. I mean, continued challenging market across the Nordics. So nothing specific for Norway.
Thank you. Maybe let's just move away from revenue and into gross margin. So gross margins have been contracting year on year through the first three quarters of the year. Can you first run us through the drivers behind this?
Yeah, I mean, the important drivers are, I mean, mix effects, what type of products you sell and so forth. That's had an impact. That can vary. I mean, it can be positive or negative. It has been negative some quarters. Also, I mean, planned campaigns, which has been necessary in this market. These are the main drivers, I would say. Then, of course, we have other effects. As we become larger and larger, we can negotiate conditions. That is balancing out the effects I just mentioned in that direction. Sort of we always talk about and it's important, the mix between new sales and prolongings in lifestyle. I mean, prolongings is generally good when it comes to gross margin, for example. But overall, these two first factors have quite important last quarters. Did I miss anything, Jimmy?
No, I think you covered it.
Is there any specifics to consider by the different region? Because, for example, Finland in Q3 was the only region, I believe, to see gross margin expansion. What was different there in Finland versus the rest of the business?
Yes, it does. Great that you mentioned that because Finland has for a very long time, they've had a lower gross margin than the rest of the group. It's been a conscious approach, actually, to reduce discounts in Finland. That has paid off this quarter. That's very encouraging that they maintained this high growth rate, even though discounts have been reduced to some extent in Finland specifically.
How do you think about this sort of balance between operating leverage and supply and negotiations against discounting plans as we head into Q4? Should we still expect further gross margin contraction in Q4, seeing that it's the holiday seasons? Maybe there's more campaigns that we might be running. Should we expect to see improving dynamics here?
It's tricky, actually, to we're in the middle of the fourth quarter, so it's really too early to talk about gross margin specifically in fourth quarter. I mean, it's continuous challenging conditions in the market, and we are taking the actions we need. We are in the middle of the fourth quarter. Too early, really.
I suppose in general, and especially given a weak consumer backdrop, would you expect to be running more campaigns just to stimulate that kind of big holidays demand as a principle?
No, we can't go into that in this call. It's too operational.
Okay, makes sense. Then further down the P&L, I want to refocus back on Denmark because, again, it performed very, very well in Q3. Can you talk to the drivers of Denmark's margin performance in the quarter? How sustainable are they going into the next couple of months or going into the new year?
How should I put it? I mean, this is becoming too much of a forecast. I mean, of course, when you talk about sustainable going forward, I mean, we are taking actions, as Jimmy mentioned. We are adding assortment. We are upgrading our stores and focusing on the parts of the business that we can really affect. We all do this in order to long-term improve Denmark. We believe Denmark has potential to improve long-term. We cannot talk about how sustainable a certain margin level is for a certain quarter or something. We can't do this here, unfortunately.
Yeah, no, I think I was thinking more about we were talking about a lot of different investment into store network, into assortment in order to counter the credit legislation. I was very happy to see that despite all of those investments, the margins in Denmark turned out to be very solid in the third quarter.
Yes, indeed.
I was wondering whether you still expect to see sort of your ability to improve the profitability profile in Denmark despite all this investment.
I would say, okay, then I understand your question. It's quite simple, actually. I mean, if we are able to maintain a healthy growth in Denmark, a positive growth, there is a potential for margin improvement because it's very much an operation leverage situation. If we would be able to improve growth, then we would have a positive effect further down the income statement in Denmark. That's the mechanics, really. It's not, I mean, the costs for doing these types of exercises we talked about, Jimmy, are not significant. It's more about adding some inventory. It's a certain amount of CapEx, but it's more that we need to do these things in the right order.
I think, I mean, as we see in all markets, it also is the case for Denmark, the best store in town strategy or that ambition that we have to have the best store in every town, in every mall. When we do this, it, of course, helps us attract customers and also then to support all the business drivers of that store. That is sort of the underlying sort of ambition also in Denmark in all locations.
Makes sense. Thank you. Maybe just take a step back and think about operating margin at the group level. Can you give some examples of what initiatives are being done through the OpEX to partly offset the gross margin pressure from planned increase campaigns? Specifically, are you still seeing some monitoring costs related to Synsam IVU?
I mean, the big rollout exercise was performed up until June this year in Sweden. It was performed until Q4 last year in Norway. The large rollout costs we do not have anymore. We do have some central functions still, which we need to have to monitor the improvement, which we expect going forward. We do have some central teams. Also, we look very much at optician consultants. The cost of optician consultants could be reduced somewhat going forward. We have some extra actions to do there. That's what I can say, really. I also want to mention, though, quite important here regarding the group as such, which is not part of your question, but I mean, our factory is improving continuously. Gradually, we are improving, sort of increasing volume, which has a positive effect on profitability for the factory as well.
That's one detail which we should mention as well, I think.
Yeah. I think regarding Synsam IVU, although the sort of the rollout was completed before summer, there is always an ongoing work in order to trim the processes in every store in order to utilize everything in the optimal way. That is, of course, something that we continuously work with on individual store levels.
Very clear. Thank you. Still on the topic of margin, but just looking at a few years out, how do you see the group margins and whether it is gross or EBIT margin? How do you see it trending given that the higher gross regions are likely the ones with lower margins today? Specifically with regards to Finland, where do you think once you get to scale, where do you think the margins for Finland would get to?
I mean, the important here, we set a financial target of 12-15% EBIT margin on group level. That's the interval we want to be in. We're slightly below that right now. We want to move further up in that interval over the years. That's important. If you look at Finland, yes, they do have a lower margin than the rest of the group, but we have seen, as you mentioned, the improvement in gross margin. There are some scale benefits as well. There is a certain margin improvement potential in Finland as we grow. Whether Finland will move into the same territory as, let's say, Sweden, I don't want to say that here, but there is potential for margin improvement in Finland over the years.
That's clear. Thank you. For the next few questions, maybe I will step away from the financials, get a bit into the new products, and we were very excited about that when I saw you guys at the CMD. First of all, the smart glasses, all the hype at the moment. Maybe talk a little bit about the uptake of smart glasses in your store so far and remind us what models are currently on sales.
No, I mean, during Q3, we have rolled this out, as we mentioned, at the capital markets day in the first batch of stores. It has been sort of a gradual rollout also with new products. Currently in the store, we have both the Ray-Ban Meta and we also have the Oakley Meta in these stores. The rollout continues over the winter. Regarding the uptake, it has been positively received by the consumer. There is an interest and there is a buzz around this for sure. It follows sort of the expectations overall, I would say.
In terms of the purchases that you have already seen, is there anything you can comment in terms of the mix between consumers buying the smart glasses with plano lenses versus a prescription lens? Is there any details on that?
No, I do not think we can give exact numbers, but there is a mix between that. There are definitely a lot of consumers that want with prescription, but it is also accessible to buy a plano, both in stores and in our e-commerce business. You can buy it as well cash if you want, and you can have it as a part of your subscription offering as well.
That's helpful. Thank you. The other kind of new tech-driven products that we spoke to is the, I think you guys call it the hearing spectacles. Again, can you talk about the uptake of this? I also want to understand whether they are being sold only in your sort of standard Synsam eyewear store. Are you also selling them in the Synsam hearing stores?
No, new ones, as they are called. These new type of hearing enhancement glasses we launched actually just a week ago, a little bit more than a week ago. It is very new, of course, in our operations. We launched it in the first batch of stores. The same goes there that we will continue to roll it out in Sweden in the winter and over next year. This is also the case in Denmark, as we have communicated. They are very interesting, of course, since it is, after all, a product where you can get hearing enhancement for mild to moderate hearing losses. I mean, there are roughly 2.5 million people in the Nordics with a mild to moderate hearing loss.
To have a product that can help you see and to help you hear well while also, of course, it's being hidden in the frame, taking away a bit of that stigma that a lot of consumers could feel of having other type of hearing enhancement solutions. We look very positively on this and with large excitement to see how this will develop. It is too early to say any numbers because it is just launched now, a week ago, basically.
That's very exciting. Are these glasses already sold in the hearing stores? Are you planning to be selling them in Synsam hearing stores?
We can sell this in all our stores as it does not require an audiologist per se in the customer meeting. It is the case also in other markets in Europe. The hearing, the stores where we also have a hearing business, we sell them, but also in other stores. We have rolled out the first batch of stores and we will continue to roll out for the remainder stores gradually.
Makes sense. Thank you. Is there anything that I should have asked related to this quarter that I haven't asked?
I can't think of anything. We try to be quite transparent in our reports with lots of data to help everyone to understand our business. I think we've communicated what we think is important. I don't think of anything else, really.
That is very clear. Thank you. I think that took me to the end of my question list, and I will pass it back to Frida. Thanks.
Thank you, Yang. Thank you. We also have some questions from the chat. Here is one. What actions are you taking to increase sales growth for the group?
To increase sales growth? To have a growth target of between 8% and 12%, we can say. I mean, our strategy to be best in town.
Exactly. To be best in town, that is sort of the umbrella concept that we try to achieve. With that, of course, comes a lot of things to have the best assortment, the best offering, the best service, and so on. This is something that we have worked on for a long time, building a solid platform, a strategic platform for the group, and we'll continue to do so.
Thank you. So it's time to wrap up, but before we do so, anything you would like to add, Per or Jimmy?
As we talked about, it was a strong quarter regarding both sales and EBIT. In a cautious market, we believe it has been a strong quarter, actually, for us.
Great. Last words. Big thank you to Per and Jimmy. Thank you to all of you watching this live. See you next quarter. Thank you.