So good morning, everybody, and welcome to this 3rd quarter report for the Thule Group. And we can then start by saying it has been a very strange year for everybody in 2020. But interestingly enough, if I would have been asked in the beginning of the year in January, February before the COVID pandemic outbreak started, where we would have expected and targeted to be around this time in the year, we are actually there, which means that we are showing year to date 7% currency adjusted growth and we are at a 19.1% rolling 12 EBIT margin. But the way we've come here is, of course, absurdly different from what we had expected. So we saw already in conjunction with our Q2 report, I communicated to you in July that we had after extreme lockdown measures in the world in the spring of 2020 in April.
We saw that we in the beginning of the factor of the summer, we had a situation of a pickup of the bike category and a pickup of general vacationing that normally would have happened already in April May that now instead has been in a very compressed season. That compressed season meant that we also had a fantastic Q3. So the Q3 was a growth of 52% currency adjusted, of course, very strong. And what I'm most impressed with is, as I said, not necessarily that we sold so much because if you add the 2 quarters, Q23 together, it is in line with what we would have expected. But it's the team's fantastic ability to show the strength of our operations being able to handle such tremendous demand swings and be able to meet up with such growth.
So fantastic job by the team in making it up. And also, if you have a very scalable and efficient business as we have, meant, of course, that with such a strong sales development in the quarter, we also had a very strong EBIT development for the quarter. And in fact, we delivered an underlying EBIT margin of 24.5%, significantly higher than previous years, which was then 16.3%. Also our cash flow was strong in the quarter, And we, of course, had a contribution of cash of $764,000,000 versus the SEK 571 that we had last year. If you turn to the next slide, we can then say that in terms of net sales and underlying EBIT development, we can really focus on the full year.
For the full year or year to date, we are delivering, as I said, a 7% growth and a fantastic EBIT performance at 21.7%, which then, as I said, means that we are at 19 point 1% in terms of a rolling 12 month EBIT margin. It also means that we, for the year so far, have grown our EBIT with 13% currency adjusted. And when we come to a regional performance, if you go to the next slide and look at region Europe and Rest of World, which is our biggest region, you can see that we have a 50 9% growth. So fantastic performance across categories and also across all European markets. So as we mentioned in the spring, we saw very different performances in markets due to the actual situation with a different level of lockdown measures being deployed at different times during the spring.
And we look at Q3 as more of a performance situation where most markets were opened to a more less restrictive, let's put it like that, situation. And that meant that actually all markets in Europe had a fantastic Q3. Our fantastic portfolio, market leading portfolio, as we say, in both bike racks, bike trailers and child bike seats was, of course, the biggest contributor here. It's a big part of our business. And not only was the season compressed, but there is also strong underlying positive trend for Viking.
I am sure you all have read a lot of articles both about bike sales and bikes not being able to be found almost in stores because as people have chosen to bike commute rather than taking a bus. And as people have not been able to go out and do their long trips, they've taken shorter bike trips with family and friends as part of a way of having a fun summer. That bike trend helps the Thule Group as bike related products is a big chunk of our business. And what was positive to see also in then the Q3 was that also our other 2 big categories in what we call sporting cargo carrier, so our roof racks and roof boxes, also had a very strong summer. And of course, that is related to, once again, that there was a bit of phasing.
Some of these products normally would have been sold during the springtime and now the season became compressed in a 4 month season, you could say, from June to September rather than what normally would have been a season from April more to August. If you look at strollers, there it is less of a connection to a compression of the season. It's just a continuous strong performance of us growing and becoming more and more an established player with a strong portfolio with now 3 stroller models. And of course, if we compare quarter to quarter, we did not have the 3rd model to this bring our small one hand folded city stroller in our portfolio at this time last year. So that means that we on top of the strong performance on the 2 models we had last year, the sleek and the development light 2, we also got a contribution of an additional third model.
Strollers continues to do very well. For the RV product category, as I'm sure there has been a lot of you even considering maybe renting an RV or having at least read about how hot the RV industry has been, I think you can say that the RV industry is, as we have communicated many times, the one where we have a less direct timing facing despite the fact that we sell about 55% of our business to dealers and about 45% to OEM, so to manufacturers' RVs. It still is a business with a longer lead time than our the rest of our more retail sold product categories. And if you look at that and remember what we communicated and have heard from other companies that are stock listed that are in the RV industry world, It was a case of many of the factories closing down in the spring, and these factories have more complex supply chains with a lot of supply bases and especially a limitation of chassis from the chassis manufacturers. So it took a longer time for them to get their supply chain up and running.
And that meant that in a few markets, especially the biggest market in Europe, the German market, there was a very strong sales out at the dealerships of existing RVs on their lots, but not as much production, which, of course, now the manufacturers, when they are getting their manufacturing supply chain up and running are catching up with. And if you've seen the reports from the manufacturers, they foresee a strong ending of the year, and we could see that with a strong ending of the quarter as the RV industry was catching up with the production back. Finally, in the region, we do have, especially in Asia but also in some European markets, a solid bags business. And of course, we did see, as a natural consequence of the COVID pandemic, an extreme reduction in international travel that there was very negative development in the luggage part of our business. Furthermore, there was also some negatives in terms of what is normally a strong back to campus season for us in selling laptop day packs or backpacks for daily use, so to speak, as many schools and universities the world around were closed.
So a tougher period for our packs, bags and luggage category, which, of course, is the smallest category in this region. But overall, a very strong performance and a strong trend in the business. If we then turn to Region Americas and look at what Region Americas business looked like, also there a strong sales development, 36% growth. And the main difference in why Europe had an even faster growth is really about product category exposure, 1st and foremost. In the Americas region, we have a higher share of sales in the packs, bags and luggage category, and we have a very small component of RV products.
Those are the two main reasons for why there was a difference between the regions. And then there's a third reason. In the Latin American markets, we saw a later development of the COVID pandemic and as that later development meant later lockdown measures. And in all markets in Latin America, except Brazil, we also operate the distributors. And in a situation like this where the distributors do have some stock on hand and a concern about how long the lockdowns and the pandemic would last, you can generally see a rather cautious purchasing behavior from those distributors.
So Latin America, excluding then Brazil, had a very tough quarter. But also here in the U. S. Market, we had a very strong bike related category. You have to remember that biking is very different in the U.
S. There is a limited amount of bike commuting. You have a few cities like Portland, Minneapolis and a few others. But generally, in the U. S, it's more of a recreational weekend use of bikes.
But even that part of the business for us meant great sales of our bike racks for the car and also strong sales of bike child seats and bike trailers, which is, however, a much smaller part of the business in the region of Merit. Also here and even more so actually than in Europe, we had a fantastic development of our Thistle Urban Glide all terrain stroller and a very strong drive of our Thistle spring stroller. So feel very good about the stroller segment development in Region Americas. Similar way to the RV traveling where you can more or less live in your own little bubble rather than staying in hotels. Of course, even if we don't sell a lot of RV related products in the region of Americas, we do have nowadays our very nice rooftop tent business.
And as you could imagine, that was a very strong performing category as well for us in the Q3. I did mention bags already, but it is clear that there is some challenges on all the international and long haul travel that also within the U. S. Consumers normally do. We do have a strong portfolio in more hiking packs and other sport related bags.
And also in the U. S, we've been able to offset some of those challenges also in supporting some major shifts of staying at home. Even people staying at home do need to sometimes put their products and laptops and things and go maybe do a cafe and go sometimes to work, and that has meant that it has not been a dramatic decline on our everyday bag packs and everyday bags, but a challenge, of course, in our luggage oriented business. And as I mentioned, a challenge in our Latin American business. So that's a little bit about how the business has developed.
I will now hand over to Jonas, who can talk a little bit about our financials.
Thank you so much, Magnus. I will move to Slide number 6. And I want to call your attention to a few items in the income statement and also regarding working capital and cash flow. I won't comment more on the sales development. And as you can see, the gross margin was up by 4.4 percentage points in the quarter compared with the same quarter last year.
And this significant increase was primarily driven by the volumes in the quarter, giving very good capacity utilization, which resulted in over absorption of production costs. In addition, the production mix was favorable, and we have seen continued lower material costs. Our SG and A expenses increased in the quarter to some extent driven directly by the increased volumes, but also by the fact that we could not run all the initiatives for long term growth at full pace in the spring and now could dial these up. We have not held back on product development. And as Magnus mentioned, we have also, during the pandemic, done a lot of initiatives to support online retail and increase our own direct to consumer sales.
The drop through was very satisfactory with an increased EBIT margin of more than 8 percentage points in the quarter. The tax rate in the quarter was EUR 22,700,000, which is lower than in the same quarter last year when it was EUR 23,700,000. The difference is a mix effect between countries with different tax rates. Moving over to Slide 7. The delay of the peak season in 2020 also affected the development of the working capital.
We exited the quarter with an operating working capital on approximately the same level as the same quarter the year before. In reporting rates, it's somewhat lower, as you can see. And in fixed rates, it's somewhat higher. The main difference is accounts receivable, which is quite a bit higher as a logical consequence of the strong Q3 sales. This, however, is almost to 2 thirds balanced by increased accounts payable.
Another effect by the strong demand is that the inventory level is even lower than what we would have wanted. And taking this reduction into account, we have actually managed to go out of this quarter with, as I mentioned, only a modest increase in our net working capital. Working capital in fixed rate is about SEK 50,000,000 higher compared with the same quarter last year. The inventory level is approximately SEK 800,000,000 and SEK 100,000,000 lower in fixed exchange rates than in the same quarter last year. Accounts receivables of just about SEK 1,200,000,000 are SEK 360,000,000 higher than last year, and the high activity level has also impacted accounts payables, which are SEK 220,000,000 higher than last year.
You can see the currency effect for each of the categories of working capital in the presentation. Operating cash flow in the quarter has been SEK 177,000,000 higher than for the same quarter last year, and the main reason is the increasing profit in the 3rd quarter. Capital expenditure amounted to SEK 32,000,000 in the quarter against SEK 34,000,000 for the same quarter last year. And during the quarter, we have used our strong cash position to reduce utilization of our revolving credit facility. Thank you, Magnus.
Thank you, Jonas. And if we then turn to looking at our performance versus financial targets. It's, of course, nice to be able to say that year to date, we are now at a 7.1% growth in organic growth in constant currency. We have also, if you look at our underlying EBIT margin with a 21.7% for the 1st 9 months and remembering that our Q4, which is our smallest revenue quarter, is also therefore the lowest EV quarter. It still means that on a rolling 12 month basis, we are now at 19.1%.
From a net debt to EBITDA, we are at a half time leverage. So that, of course, has been improving all along. And as you are aware and as we already communicated, the Board of Directors proposed and the AGM agreed to no dividend this year. So looking then forward to what's to come, and I think you always need to balance the short term and long term. So if we turn to next slide, it is a situation that we have to admit that there are short term uncertainties, I think, generally out in the world.
We are having to learn new types of terminologies like circuit breaker lockdowns and other things where different states and regulations are being placed in different parts of the world. We had examples of the Czech Republic and Ireland in the last few days communicating partial or complete lockdowns. And as you saw in the spring and as you realized in the summer, what is the most important factor for Tesla to continue to do well is the ability for people to be allowed to go outside and have fun with family and friends and go and be active. If they are allowed to do that, I am very confident that we will continue to develop very strongly. But that has to be a possibility because otherwise the group sales will not be strong.
If you look at it, it's clear that many brick and mortar stores have certain limitations still and are implementing various measures. But if you also combine with our strong total distribution in omnichannel and online realities, we feel very good about our breadth of a channel market approach. This whole uncertainty level, of course, means that we need to continue to do what we've been doing for years and have especially proven this year, the ability to manage extreme flexibility by CAT screen, by market in different plans at different paces. And I think the team, as I mentioned, has done a phenomenal job in showing that we do that well. Even with that phenomenal job, we do have to admit that in some of the bike related categories, we did struggle during weeks in this period in Q3 to keep up with demand.
So when I look at the 4th quarter, there is a little bit of a positive effect in the very beginning now here in October, where normally biking season would be long over. It isn't in 2020. 1, because the Viking trend is positive 2, because weather has been unusually mild in September, early October in the Northern Hemisphere and thirdly, because we did have some backlog of some of the bike related products exiting September. Aside from that, you also do need to remember that the 4th quarter, which is not only our smallest quarter, it is also normally the quarter where we have by far the biggest portfolio exposure in terms of share of sales to the least well performing categories. So we normally have a much higher share of sales in packs, packs and luggage in the Q4, and we normally have a very small sales of bike in the Q4.
So from a category exposure and trends, it is the least positive. And the positive contribution factor that might help to offset that somewhat is then the fact that we did have some positive start of the quarter in the bike related category. If I take the lift the ice to the right and it's very easy to get too fixated with quarters weeks months, so you need to look at long term. We have as we already communicated in the spring and decided to push ahead very aggressively for the long term growth, we have not held back any of the investments we're doing in terms of product development or capital expenditure. In fact, 202120 22 will be higher than average CapEx years for the Thule Group as we are going in with some major expansions to be able to continue to meet what we expect to be strong demand in the coming years and to open up some new exciting categories as we come.
So big ambitions on growth for the coming years in also ensuring we do the right things from a CapEx portfolio. If you look at the perspective of how the business looks in a longer term and trend wise, we have presented ourselves for many years as a staycation oriented company that does best when people want to be active and when they want to do it in a decent vicinity to their home because that's when they mostly need our product. We have no doubt that if you look on the already before COVID existing trends and now more boosted by COVID that we sit in a very good position from a trend perspective in the marketplace. I'm also incredibly sure that we will do a better job than most in capturing that. And I am very confident that we have a very strong portfolio of products also for the future.
So when I look at it, I think it is a short term uncertainty. We need to know a challenging Q4 due to product category mix, but overall, a very positive long term view in the market, of course, subject to that we don't see big returns on lockdowns due to any pandemic. With that, let's open the floor for questions. Thank you.
The first question comes from Daniel Schmidt at Danske Bank. Please go ahead.
Yes, good morning, guys. This is Daniel. A couple of questions for me then. And starting with what you basically ended with in terms of Viking and I think you said that you've had a quite positive start also to Q4 on the back of weather conditions and maybe some overhang from September in terms of deliveries. And at the other hand, of course, you have this overexposure to the weak parts.
Sort of if you try to sort of see the net effect of that, are we still in a quite decent growth trajectory going into Q4? Of course, not at all at the same level as you saw in Q3. Is that a fair assumption?
Good morning, Daniel. Yes, we don't like to do forward looking statements that are too clear. But yes, we believe in a general positive positive trend. And yes, you're right that it's going to be mostly now in the beginning of the quarter, thanks to the bike related. And then generally, the other strollers will continue to do well.
RV is doing well. So that will be helping them to offset the obvious decline in what is a bigger quarter for the pack size of light.
Yes. And also that you mentioned and you wrote about it on RV, and of course, we heard about it as well. You said growth rate was, of course, picking up quite well towards the end. Could you say anything between the difference, September versus July, to get a feeling for where we are in terms of the ramp up?
If you look at it, they were very much struggling in July. August is generally a closed period because most of those plants actually closed completely down, and they did this year as well despite demand because there are various rules in place in terms of for the employees. So you can say it was really in September, it started picking up a lot, catching up some of the things that have been left on the table, so to speak, in July August. I don't think quarter 4 will be at the same pace as September. But clearly, the case is if you listen to few years in the RV industry believing that there wasn't as strong.
I stopped being that now because looking at the trends and also talking to friends that never would have considered potentially buying an RV that are now talking about it, I believe that RV trend is here to stay for a few years definitely.
Yes. Yes, that looks quite strong. But just coming back to the biking segment, and it's been, of course, a tremendous recovery and demand and partly supported by governments across Europe when it comes to infrastructure and subsidies and so on. But also, if I read sort of news, it looks like sort of the e bike is getting a further push Are you seeing that? And how is that impacting your business mix and so on?
If you look into next year, what do you believe?
Yes. We believe in a continued strong biking trend. Most if you talk to the big companies in bike manufacturing as we do, so the big, big brands and if you talk to the big retailers and you talk to the Shimano's of the world, that's like all the bike manufacturers, there is a strong belief that despite a record breaking 20 in number of bikes sold that, that momentum will continue to be positive. So there is a general strong positive trend. The biggest strength in that trend is e bikes, which we like for 2 obvious reasons.
One is that if your bike is significantly more expensive, proportionally, your bike rack can be more expensive and it still feels okay. So a market leading high quality top end type of player that us is better served by the bikes being more expensive. Secondly, because the bikes are much heavier and more expensive, you're going to be much more cautious about just technically being sure that it stays on when you're driving around in your vicinity of home, driving over speed bumps and doing things. So then a lot of our competitors, which actually, honestly, the bike wouldn't stay on for some of them, There are other quality brands in Telluride, but there are some very mediocre products out there. That, of course, also helps us because people will be prepared to pay for something that truly technically can solve what they do.
So from that perspective, it does help us. The mix trend to e bike is definitely a positive for us.
Yes, yes. And maybe just finishing off, sort of the cash flow, of course, has been very strong in the quarter, supported by the earnings mostly. And you're down to 0.5% in terms of net debt to EBITDA, which is quite far off the targeted range that you do have. Sort of how do you view your balance sheet going forward basically? And okay, you're stating that CapEx will pick up a bit.
And but apart from that, I think you've said historically that M and A is not really sort of there's no big ones out there. Has that changed?
I haven't said no big ones. I've said they're far between, to be honest. But there are a few and far between still that would be interesting. That hasn't changed. There are, of course, a number of small ones, and we I think we've proven very well that we can acquire small things and quickly get a lot of benefits from it.
So we are definitely going to do more of those, I am sure. But still, that means since there it's far few and far between of the big ones and small ones are small, it still means that we will, of course, sit with a very strong balance sheet. And obviously, it's a discussion that we're having with the Board on what are the future targets really. It is, if I think anything, a target that nobody minds at the moment that we are meeting. But of course, logically, we should be having a direction that makes the best use of capital in the company.
And therefore, I'm sure we will be discussing and looking at that. But the strong cash generation in itself, of course, with not doing that much M and A means that there is a great opportunity of large dividend.
Yes. And that's the other part of the coin, of course. But just coming back to M and A, do you feel that it's sort of the sort of the ice is melting a bit when it comes to the possibility to do due diligence, which I guess has been a problem during COVID?
Yes. I think everybody hit the pause button. Sellers and buyers have hit the pause button because there was so much uncertainty. And then everybody in the world has needed to learn that also for everyday business, you're doing more digitally than you would historically done. But when you do a real due diligence, you do absolutely want the manufacturing sites and as well.
So there will be the need of being able to do some type of travel. I think also in DD process, people will do less travel than they historically have done. So yes, you're right, it's starting to open up. We're starting to see more movements in them in any market again.
Thank you, Magnus. That's all for me.
So we just have one follow-up from Daniel at Danske Bank. Please go ahead.
Okay. Do you hear me again?
We do. Okay.
Okay. Just moving on then, I think you I touched upon it in the last question. You said that you will continue to invest heavily in 2021 2022, and I think you said the CapEx will be higher. Could you give us a number? And you also said that you're sort of planning to launch new exciting categories.
Could you shed some more light on that?
So for the CapEx, you know we've been saying that 2% to 2.5% ish is what we've been traveling at. If you look at it, we will go above 3% and maybe even a little bit above that during next year because we have a number of big exciting things we're doing. And then we will go back in the following years to the more traditional level. So it's a short term because we have always said we're not going to do things to make the numbers look good any given year. We're going to do it when it makes sense for the business.
So a higher next year than average and then going back to normal levels. If you look at it from a category point of view, we are going to hold firm to that. When we tell the retailers what the brand new category is, we will tell you guys as investors and analysts. What is clear is that we're in the meantime launching a lot of new product within the categories we're in. So we've had our digital sales meetings as they have been digital this year and we've introduced a number of new bike carriers and number of new other products in our portfolio in both cargo solutions and other things that are looking very exciting for 2021.
So we will be sharing more of those with you as we roll them out in stores. But for the big category, you still will have to hold your patience back.
But
is it more for 2022 rather than 2021 or sort of any timeline?
It would have been for 2021. We would have already needed to tell Retail. So it's firm to what we have said to you guys in the past that it is no new category, brand new category in 2021. That will only happen beyond that.
Okay.
I know you said then the worst period in the spring, I think it was in connection with the Q1 report that you were holding back the planned investments that you had when it came to luggage. Is it fair to assume that they are now back on board? Or what are you saying in between the lines when it comes to investments in 2021 2022? Are they in there? Or is it redirected?
There is. We were already far down the track with, for example, one new luggage collection that we felt that we were so far down the track that it would be stupid waste of money not to finalize something because it's always the key in various product development initiatives to look, do you really save money or you're adding cost by holding something. So what we are doing is, yes, there will be new luggage collection coming because we were far down the track. What we were holding back to was more some of the other new things that we were planning to do because it doesn't make commercial sense to launch a lot of new luggage collections in the coming years because there will be limited travel. But the one we were already far down the track will be coming in the second half of twenty twenty one.
Yes. And just since there's no one else, operator, is there anyone else asking wanted to ask questions?
Currently, there are no other questions in the queue.
Okay. So maybe I can continue.
It is fast.
Yes. I'm
not going to drag on. I just wanted to a few more. Given the sort of enormous support that you've seen in terms of bike related demand and you have these 3 major bike categories, which are one of them is much, much bigger, of course, but still all of them, I guess, seeing very good growth. And you're saying that you will have supplements next year in each existing category. Is this a category where we see much more product development coming out being with products being launched next year?
Or how does it divide basically?
Yes. Luckily there, because it isn't like you shouldn't dial up and down in a few months and believe you can throw out a multiple extra product. I think those type of products that you speed to the market are always unsuccessful products because you haven't done your homework and you haven't done well enough. But luckily, we were already believing in the long term Viking trend and already had a lot of initiatives in the Viking category coming anyway for 2021 2022. So there's actually no chance change to our plans because we already had a very ambitious plan in everything bike related as we stood beforehand.
So we are launching a lot of bike related products, but that's not because we've decided in the last few months that we needed to. It was because we were already so convinced about that trend.
And is that more upgrades of existing products? Or is it sort of new products within?
It's brand new products. So if you take, for example, the bike category, we're launching 2 brand new top of car bike carriers and a fantastic really game changer in terms of bikes being carried on the back of the car even for cars without a towbar. So there we're launching a new completely new product coming in March next year And then as I said to new top of car products as well for the more avid bikers that have their road bikes, etcetera. So more niche but very cool with a lot of smart patented solutions. So we're broadening that field definitely with brand new things, not just small little tweaks.
Okay. Good.
You already touched upon sort of the bags being a bit overexposed in Q4 due to seasonality and bikes coming off a bit even though it's a bit stronger than normal and the season is a bit longer. And maybe it's just a trend as well, of course, with people avoiding public transport that continues to elevate the biking demand, I guess. But winter season is, of course, approaching. It's not a big season for you guys. But any reflections on the winter season at all in terms of what sort of demand that's directly related to skiing and stuff like that or cross country for that matter?
Yes, you're right. I mean we do have some countries and some markets where the winter season is relatively big, the Nordics, some of the out countries. In Canada, a bit. So in a few markets, winter is pretty big for us. The majority of markets, it isn't.
But if you look at winter season, I think it's going to be the most extreme, in some cases very good, in some cases quite terrible. And you can see that
on the bookings and the hotel bookings and the trends
resorts. So if you take the Nordics, fantastic situation. It's not listed. Skystar has already informed the market about that. So that's not a secret.
Best ever. And that's a definitely, of course, something that we look positively on because a lot of people will want to bring their stuff up to those resource in Saill and Rysil and Ora, for example. If you take some of the out countries, it's an absolute opposite. There are a number of out resource that are seeing dramatic declines in bookings and some of them are even considering potentially closing lift systems due to all the restrictions that are in place. If you look at the North American ski resorts, you see mixed bag.
Some of the smaller ones, the ones more similar to the type of skiing vacation you do in the Nordics, so some of the Canadian ones are looking optimistic at it, while some of the bigger American ones are worried. So I think it's a relatively mixed bag into the winter season expectation. And of course, it will be very dependent on those last few weeks just leading up to the classical winter season periods, which is Christmas, New Year's. You then have the skiing holiday in February period and then you have Easter, it will all depend on what levels of lockdowns will be deployed in those smaller specific places where you go ski.
Yes, yes. But I guess people still want to do some things. If they're not sort of doing downhill, maybe they'll do more cross country
and it's Yes, they will. But they still need to be moving themselves to a location where they feel comfortable in staying. And that's why the Nordics are looking so good because there's so many lodges and places where you can be in your personal bubble. And that's why some of the other places like the Beaaver Creeks of the world where you mostly stay in huge hotels are less positively exposed. So that you can more or less simplify by saying ski resorts where you have the ability to stay in a small little cabin, they're going to do a great winter.
And the ski resorts expose a huge skyscraper. The tinnies of the world, so to speak, where you're staying in huge hotels in very tight spaces, they are going to struggle.
Yes. Okay. But it sounds like it's fairly neutral for you guys if you look at your own geographical exposure.
I would hope. And it all will depend, as I said, on that uncertainty of lockdowns. But yes, as I said, there's good and bad in it. So hopefully, yes.
Yes. And then the last question on the efforts and investments that you touched upon and we've talked about CapEx. But could you say anything about product development spending in terms of percentage of sales? The caused very uncertain. But is that even though you said that you're full speed ahead on product development spending, is that now coming down as a percentage of sales given that you had such a strong sales number for Q3?
Yes. As I said in the beginning of the call, we are now, when we look at it in October, more or less where we thought we would be. We just had the weirdest travel to get there that I've ever been through. But actually, we're relatively close to what we expected when we came into the year. And as we had indicated to you guys and to investors coming into this year, we were going to expect it to go down a little bit, not dramatically, but a little bit.
So that's exactly what is happening actually now that as a percentage of sales, as we're now tracking to expectation, our expectation also on how product development spend as a share of sales is more line with what we thought, which is then a bit lower than it was last year.
And looking into next year, is that going to drop a bit further or stay at this level in terms of percentage?
Yes, roughly the same level. So we're as we said, we weren't dramatically dialing it down, but we also acknowledged already some years ago that we would have 2 years where we were over investing, especially in Active with Kids, which is the more costly product development side. There's a lot of tooling and a lot of technically complex products you do there versus the proportional sales. As you are hearing from us, we're doing very well in growth in active with kids. That means, of course, that proportional logic of the spend is still high because we're coming with a lot of new cool activity kids products, but the category has grown a lot.
So therefore, we are now in a more logical share of sales there.
Yes. All right. Super. Thank you, guys. I think that's all for me.
Thank you, Daniel.
We've just had another question registered from Mats Liss at Kepler Cheuvreux. Please go ahead.
Yes. Thank you. Not a good question there. But just a couple of follow ups, I guess. I mean, you have a very strong quarter now.
And do you I mean, is there sort of a pent up demand initially now and we shouldn't expect the same development going forward. I mean, do you see that some of the, say, future sales have been taken away from Japan. The market is sort of maturing to some extent, especially in the buyback segment then?
No, Mats. I wouldn't say that we've taken anything away from the future at all. We've mostly caught up with the past. And I think if you look at the trend that Viking is expected to do well means that we do not believe we have pre sold anything. If anything, maybe at the very end of the quarter, we were a little bit behind on some of the things we should have sold.
So I feel very comfortable that we haven't filled up the market in any shape or form. But of course, as I'm trying to remind everybody, don't look at the absurd number for Q3. It's easy to get fooled by that. Look at 7% growth year to date. That's the interesting one.
So I think if you look at it, if anything, a continued nice growth pace, a little bit helped clearly by a stronger biking trend, a little bit helped by me having been too cautious historically about the RV product category that now seems to be having a very strong expectation. And then a little bit negatively affected by we were more optimistic on packs, bags and luggage than we are now with the realities of travel. So no, nothing stolen, so to speak, from the future.
Right. And then about the e bike trend, does it sort of trigger a replacement demand? Or do you see new customers in this? If you have an old bike rack from I mean, you can buy an e bike, you need to make a replacement? Or how does it work?
It all depends on how old and which models you bought. So we've had, for a number of years, a number of platform towbar mounted bike carriers that definitely could handle the weights of a 23 kilo plus several of those e bikes. But many consumers didn't have the need to buy those products unless those are the more expensive products in our portfolio, some didn't. So there might be some consumers that already had a Tula bike carrier that was good enough technically to meet up to the demands of their normal bikes that now need to move. Some will not.
But it's also, as you say, a partly new consumer group at times that are choosing to now buy this type of bike. And it's also, as I tried to explain before, maybe sometimes a consumer group that bought a typical average city bike, normal one for SEK 5,000 or SEK 500 then. And then they felt EUR 500 for the bike. I'm not going to spend EUR 500 for the bike carrier. Now they're spending 2,500 euros for the bike, and they will now all of a sudden consider the Thule brand as a logical match where they previously would have gone on a no name product that would be rusting and maybe not be the world's most practical, but from a price point made more sense to what they were buying before.
So it's partly a new consumer group for us as well.
And finally, just about I mean, it seems you have a good volume and pricing trend now, and it seems that product development costs are part of sales won't sort of increase. So I guess we will see margins recover gradually from these levels and maybe the target is somewhat obsolescence in a few years or what you say?
Yes. I wouldn't say recover because that sounds like we've had a negative trend before and it didn't go badly. It hasn't actually. We've had a very continuous positive trend that we will continue. And yes, the 20% EBIT target we set in the Capital Markets Day of 2017 and at that time already said that will take roughly 5 years to reach.
I haven't changed my mind. I didn't even change my mind after Q2 report about that one. And now with the strong Q3 report, I still don't change my mind on that. I'm very convinced that we will reach our 5% EBIT target. And as always, when you reach targets, at those times, you can step back and say, is there a need or a logic for why changing a target?
That might not be the case. 1st and foremost, you need to reach your target. And we're even if we're at 19 0.1% on a rolling 12 months basis, we're not at 20% yet. So first, we need to get there.
Okay. Great. Thanks a lot.
Thank you.
So currently, we have no further questions on the call. At this point, I would hand back to Magnus.
Thank you very much, and thank you for taking the time and listening in. And I hope you have a great awesome period and that you are in those places where you are allowed to go and do some fantastic winter vacationing and of course that you use a lot of to the product when you do that. And then we'll speak again when we summarize the year in the beginning of 2021. Thank you very much.