Tokmanni Group Oyj

F:TK9

Good morning, everyone, and welcome to Tokmanni Group's quarterly report and analyze the situation. We are very happy to welcome you all here online together with my CFO, Tapio Arimo. Tapio will be on stage pretty soon after I have given a general description where we are today.

We actually have given a title for this presentation saying that Dollarstore segment's revenue and comparable EBIT improved, but at the same time, Group's comparable EBIT declined slightly.

Before we go to the presentation, which has been prepared already a few years -- a few days ago, I need to reflect about the news from yesterday. Yesterday afternoon, we actually gave a guidance update based to the Q3 report, but also based to the October sales performance.

We did saws in July a weaker footfall here in Finland. At the same time, we did saw good signs in Sweden. When we moved from Q3 to October, we started to see declining customer confidence, both in Finland and Sweden. And therefore, we actually came into a conclusion to make a slight revision for the expected revenue, and we moved guidance from EUR 1.78 billion up to EUR 1.83 billion.

At the same time, we also revised our expected comparable EBIT, and the new guidance is in between EUR 75 million to EUR 90 million.

Before I move to my presentation, it's also good to mention that a year ago, we had a substantial sales increase in Q3 and especially in July. We might remember well how actually our stores had the queues of customers queuing for summer-related items as well as cooling devices. This year, the season was different, and we could have been better prepared for an alternative offer, which did not happen. And therefore, actually, we were forced to make this slight adjustment in revenue as well as in comparable EBIT.

But now it's time to move for a well-prepared presentation, which actually describes our Q3 highlights, Q3 successes, as well as Q3 challenges met. The agenda, it is actually after my description, Tapio will join with the key figures. Together, we are sharing our looking ahead, as well as Christmas season, and a few words about the strategic work, which we've been working during the autumn time and which we are now continuing in November as well as in December. And we are finalizing this event together with questions and answers like we've been doing also earlier.

Our store network, as we well know, is well established in Finland. And we start to see and, actually, we do see that our store network in Sweden is also well established. In Denmark, we will have also opened new stores during Q3.

What makes me especially happy is actually growing amount of private labels, almost 30% already. Also makes me very happy to see that our sourcing synergies will be appearing with a strengthening shared amount of products. That concerns private labels, seasonal products, as well as branded products. It's already over 8,000 SKUs, which are shared in between all our markets.

Like I said, it has still been a period where the new stores has been opened. Especially in Sweden, year-on-year store account has been rising by 8 new stores, Denmark by 3 new stores. And as you saw from the press release earlier this morning, we've been also investing for the EUROSPAR store network here in Finland.

We are now close to 400 stores until the end of September. And when we are reaching year-end, we are slightly above 400 stores all combined.

Tokmanni Group in total, like we have actually said here, revenue and gross profit improved, while higher costs were waiting on our EBIT. We could have actually been much more aggressive when it concerns OpEx and operating costs. But at the same time, we needed to invest for the ongoing store network development. And that the store network development did cause us additional costs, not only investments, but also operating costs, while every store we are opening has also meant manpower needed as well as investments for more smaller items and fittings in every store.

We do see that our revenue grew by 2.9%, up to EUR 445.2 million. And we do see a modest comparable EBIT decline by EUR 0.6 million, down to EUR 25.8 million. And of course, we are very happy to see that our operations in Sweden have been improving during Q3 in sales, in gross margin, and also in EBIT.

Especially here in Finland, like I've been saying earlier, we did saw a softer like-for-like sales. At the same time, we had a nice improvement in gross margin. This combined with the store network development, especially opening new EUROSPAR stores, which are long-term investments because it's not only for 1 quarter, these stores are meant to serve our customers for years from -- years and years from now on, has actually beaten our EBIT level by EUR 1 million. And this is actually something like I mentioned earlier, we could have actually predicted better. At the same time, these investments were necessity for the long-term development.

I thought that instead of only talking about EUROSPAR, also to show that we have now 10 new stores open in Finland. We start to have a good view that these new stores are increasing our footfall and these stores also have a good impact on our average basket.

By the end of the year, we are also opening 2 new stores as planned. These are all according to our business plan. There will be a store open in Mantsala very close to our offices, and there will be a store opened up north in Kemi. And we are completing this year with 12 EUROSPAR stores in combined.

Instead of only talking about store network, instead of only talking about joint sourcing, it's also good to have a look at how do we communicate with our customers. And in the previous presentation 3 months ago, we were talking quite a lot about Tokmanni Klubi and members account.

It's really good to see that Tokmanni Klubi and mobile app is capturing our audience. It gives our frequent customers more personalized offers, better digitalized services, and customer engagement.

Myself, I have actually learned that on Sundays, I might actually open my Klubi app and have a look what specifically is meant for me and my household. And I do find myself queuing with fellow mates and other Klubi members in our Vantaa stores because I have quite a few of them next to me.

It's also good to see that our online store, which is today available in Finland, will be seeing a new opening. We are right now developing our online store and in-store experience to be very closely working one-on-one. But already today, you can do your shopping, come to the store, and pick up your basket with a reasonable timing, and especially fulfilling a customer need.

Digitalization in stores is also taking new steps. We have started to trial electronic shelf labels in Jarvenpaa store, and it will be also installed in Vantaa Kivisto store, which will be opening, I think, 2 weeks of time.

These capabilities are also moving to commercial objectives. And it is really important for us that we pay attention for easiness and frequency when we consider about our customers. We need to be even more relevant and timely when it comes to concerns customer engagement.

As we saw from the Q1 report, we also need to pay attention for the average basket size. The Finnish average basket declined in the summertime, but at the same time, we saw average basket growing in Sweden. Sweden especially is a big positive topic from our sake. At the same time, paying attention here in Finland to increase the average basket will take place already now Q4 and for the Christmas trade.

When we have digitalized approach to meet our customers, it will be also improving our marketing effectiveness and our messages will be even more customized depending on about your history, depending about your preferences, and depending on what kind of initiatives you have given to us. It's really important that we pay attention for this digitalization part.

I did already mention Dollarstore segment and segment's average basket. 3.4% growth within Q3 is such a positive note for us, which gave us improved sales, which also gave us a higher gross margin and increased our comparable EBIT.

At the same time, we almost met like-for-like customer flow within the segment -- within the summer period. If I recall right, we lost 0.4% only. And we do see that customers are returning back to our stores week by week, even day by day.

Earlier this week, I went to visit our store in Upplands Vasby, spoke with the store personnel, met customers at till roll, and heard from people how happy they are visiting our new store. And since we are next to the customers, one might come today, but also tomorrow, and the customer frequency is important for us to pay attention.

Total revenue grew by 10.2% and comparable EBIT grew by EUR 0.2 million. This is, of course, positive signs from Sweden. And at the same time, we do see that the new stores in Denmark have been met -- are actually meeting well our customer preferences.

I went to the store opening as well as Tapio went to see one of the store openings now during Q3. And we do see that customers do buy everything from fast-moving consumer goods to the clothing as well as small domestic appliances, toys, but even floor mats and mattresses, gardening goods. So actually, our stores are meeting local customer needs very well already in Denmark too.

I think it's also a necessity to mention here that our Swedish store network, like I've been saying, we are well positioned from Malmo up to Kiruna. Our network really is well covering Swedish inhabitation. At the same time, when I look to next year, we have only 2 new stores contracted.

And therefore, we are really paying attention not only in Finland, but also in Sweden to keep the footfall, increase the like-for-like footfall, make sure that average basket will be even higher than today. And the positive development will be floating down to profit development. This also requires tighter operating expenses and control what we are about to do, what we will be investing, and why.

We do also see that our store network rollout in Denmark has brought us 5 new stores since September 2025. We have 2 new stores contracted for next fiscal year in Denmark.

Talking a few words about our assortment development in Sweden and in Denmark. It has really been an interesting journey. While when we are introducing new SKUs, we also see customers seeking for new products. Now during the summertime and especially the autumn time with the new store openings, also Hoka shoes has been introduced as an impulse goods to the stores and a massive amount of customers have been there browsing for suitable shoes.

Nine-thousand -- almost 1,000 new SKUs has been introduced in each and every our store. And this is, of course, supporting our average basket development.

Just lately, I mean in 2 weeks' time, we have also started to introduce our SPAR products in Sweden. Unfortunately, we are unable to do that one in Denmark, while SPAR license covers Sweden as well as Finland. But we do see that it might be potato chips, it might be jams, it might be marshmallows, it might be granulated sugar. They are all the products which are well meeting our customer expectation in both Sweden and Finnish countries or stores.

A good example, extending the toy assortment in Sweden really peaks up. Introducing BRIO, introducing LEGO, makes our toy department lively and customers have more to buy. We have also seen that extended assortment with A-brands is bringing in stronger sales than earlier.

Here is actually a good picture about Novita yarns, well-known trademark from Finland. Yarns are something which both Finns and Swedes love to buy and knitting is an important topic for quite many of us, not for myself, but if I look into my household, I do find people and a lot of family members buying Novita yarns constantly.

A good example about the renewed assortment also concerns shoes and clothing, something which Dollarstore did not have earlier. And we do see customers buying underwear, sportswear, as well as everyday clothing from our stores.

We do believe that this approach is definitely right, and it will be supporting our average basket development also in upcoming quarters.

Now I think Tapio, soon your time, and you could come and say a few words about our key figures and key performance. Which side do you want to be?

I can be on the left-hand side.

I'll pass to you that one, here you are.

Thanks, Sampo. So good morning on my behalf as well. So let's dive a little bit deeper into the figures.

So when we look at our revenue, the growth as such was not that bad, 2.9%. But what really was not satisfactory was the like-for-like revenue growth, which actually declined slightly by 0.5 percentage point, and that was really driven by Tokmanni segment.

Our comparable gross profit actually increased quite nicely, so about EUR 7.4 million increase over the previous year's quarter. And the comparable gross margin also improved, driven by both segments. And our comparable EBIT, as Sampo mentioned, declined slightly, and that was really due to the increases in the store network that resulted in increased costs.

And our cash flow continued to be on a very nice level. We were slightly below last year, so EUR 16.1 million. But last year, we were really ramping down the inventory. So this season, in Q3, is the sort of more normal cash flow when actually the inventories are peaking typically at the end of Q3.

When you look at the revenue composition, as said, the total growth was 2.9% to EUR 445.2 million, and our like-for-like decreased slightly by 0.5 percentage point. Tokmanni segment's revenue was a disappointment for us. The revenue increased by 0.2%, so essentially flat. And of course, the like-for-like revenue declined.

What was really positive, on the other hand, was the revenue growth in Dollarstore segment, total of 10.2% to EUR 131.2 million and also the like-for-like revenue growth was clearly positive.

When you look at our sales mix, we continue to see the trend that we have been on basically since COVID times. So the grocery business is sort of growing, while the non-grocery side of the business is essentially flat. So on the Tokmanni side, the share of grocery business climbed to 51.9% from 51% a year ago. And in the Dollarstore side, the grocery business reached 56.7% from 56.3% a year ago.

And you have to remember now that the grocery includes not only food, but also, for example, pet products, health products, household papers, magazines, cleaning detergents, et cetera.

So our private label growth was also very good during the third quarter. So we increased quite significantly our share of private label sales. So it now totaled 29.1% in Q3, up from 27.5% a year ago. And you can see our private labels. We have now introduced most of our Tokmanni side private labels also into Dollarstore.

And this is a new chart for the investors. And this, I think, is good to go through a little bit in detail. So where the revenue growth or decline comes from.

So on the Tokmanni segment side, the like-for-like revenue decreased by 1.7%. And the like-for-like customer visits actually grew slightly during Q3, but the like-for-like average basket size decreased by 2.2 percentage points. And that has been really driven by the non-grocery side of the business. So the grocery side of the business is doing okay, but the consumers are still very in making purchases on, let's say, nonessential stuff.

And the Dollarstore segment, the story is actually quite different. So our like-for-like revenue growth was very healthy, 3 percentage points. And where it came from is actually the like-for-like basket size.

And here, you can really see the impact of our widening of the assortment and bringing in more Tokmanni assortment to the Dollarstore side. And when you look at last year, also you can see that last year also the like-for-like average basket size grew significantly, so 3.6%. So in 2 years, we've managed to increase the Dollarstore average basket size by about 7 percentage points.

And of course, the negative side is that the like-for-like customer visits were still slightly below 0. So that is something that we will continue to work very hard on to make sure that we start seeing also increasing like-for-like customer visits going forward. And that will, of course, help us drive up the like-for-like revenue at Dollarstore in addition to continuing to grow the average basket size.

Then when you look at the comparable gross margin, that's, I would say, a good story. So we were very disciplined in our pricing during the third quarter. We had very successful campaigning in the sense that we were able to increase the gross margin despite having good campaigns and the cheapest in Finland and the similar campaign in Sweden continued very successfully.

And yet, we managed to increase both segments' comparable gross profit sizably in Finland. Of course, you have to remember that the previous quarter, we had very low gross margin due to the very high discount sales in July last year. So of course, the comparison matters to some extent. But still, the 34.8% gross margin is pretty good.

And also in Dollarstore side, we managed to increase the gross margin slightly to 37.1%. And of course, we continue to work on this to make sure that we try to improve the gross margin percent going forward as well. But you also have to remember that the average gross margin on the grocery business is clearly lower than the average gross margin on the non-grocery products. So that shift has had an impact, of course, on an overall gross margin of the company.

Then our operating costs. So in the third quarter, our comparable operating expenses were 22.2% of revenue compared to 21.2% last year. And there's a clear growth there of about EUR 7 million, and that was driven by several factors. Of course, the personnel expenses are one thing. So they increased to EUR 59.9 million from EUR 56.1 million a year before. And that has been driven by, of course, the increased number of stores, but also we've had quite a lot of buildups and renovations during Q3. So the extra cost from just those added to EUR 0.9 million during the third quarter. And of those costs, of course, the large majority is personnel costs, but of course, there are other OpExs as well related to those buildups and renovations.

And you also need to remember that the wage increases in both countries have an impact, of course. So in Finland, there was, 1st of August, 2.5%. And in Sweden, it was 1st of May, 2.7%, if I remember correctly.

And the Dollarstore side, of course, 25.5% compared to 25.2%. That's a slight increase. And of course, that has been driven by the amount of new store openings and the personnel that is needed to run those stores, obviously, also rents and other building and electricity costs and so on, scale up with the increased number of stores.

So that then resulted in the slight decline in the group's comparable EBIT, so EUR 600,000 less than a year ago. But if we had had like-for-like renovation and opening of new stores, we actually would have had a slightly improved EBIT. So you have to take into consideration the circumstances as well.

And the Dollarstore segment's comparable EBIT, that was EUR 1.3 million, which is a slight increase over the last year, and we're especially happy with that. Of course, the EBIT percent level is still low, but we do see that we are now, finally, let's say, going in the right direction at least.

And of course, the group functions and eliminations then are sort of, let's say, normal head office costs. In the Tokmanni side, we had EUR 1 million less EBIT from a year ago. And again, out of that EUR 1 million, EUR 0.9 million you can almost attribute to the SPAR renovations.

Then when you look at our inventory, the inventory is essentially flat compared to a year ago, and we feel that is a really decent result when you take into consideration that we actually have 14 more stores than we had a year ago. And of course, each store carries a sizable amount of inventory. So that means that the inventory that is in our central warehouse and in our logistics chain has clearly decreased from a year ago. And both segments are actually pretty much on par with last year's level.

And then when you look at our financing, so we continue to be in a solid position regarding that. So the debt and loans from financial institutions, that has gone down clearly from a year ago. So a year ago, it was EUR 332.1 million, and now we're at EUR 307.5 million. And of course, the vast majority of our debt is related to the lease liabilities. So that brings our total debt to EUR 923.3 million, which is also down from a year ago.

So we are managing the cash quite prudently as we go along. And it's good to see that we continue to be on sort of being able to pay down the sort of banking related real debt. And of course, the lease liabilities live a little bit of a life of their own depending on how many new stores we open, when we renew the leases, et cetera, et cetera. So that is something that we, of course, manage by actively managing our lease portfolio.

Then when you look at our net debt to comparable EBITDA, so at the moment, the number, including the IFRS 16 lease liabilities was 4.16 and the number excluding is 3.49. So both are down slightly from a year ago. And as I said, we continue to be in a good financial position. And our target, the 2.25 at year-end, I think we will be quite close to it, most likely, but probably slightly above. So if you look at last year, the number was 2.57.

So if everything goes sort of fairly normally, I would say we are quite close to that figure again this year.

And our cash flow from operating activities. So in Q3, we had clearly lower cash flow than last year. But at the same time, this is a sort of, I would say, a more normal quarter. Last year, we were ramping down the inventory quite aggressively during the sort of summer and fall. So that's reflected positively in last year's cash flow. And if you look at the cumulative cash flow for the year, we're still clearly ahead of last year.

Then finally, a little bit on our group's capital expenditure. So we continue to spend, I would say, quite normal level. And again, these go to the store network and IT-related investments for the vast majority. So EUR 5.7 million was the total CapEx for Q3. And when you look at the full cumulative 9 months, we were at EUR 19.3 million, slightly above last year. And let's see where we end up, but it is, I would say, a very normal year from capital expenditure perspective.

Then I invite Sampo back to talk a little bit about what's ahead for us.

Thank you, Tapio, for the key figures and performance description. We thought that it's also good to look for the short-term priorities as well as bit longer-term priorities and also say a few words about our strategy process. Even though the strategy process is still ongoing, a few highlights is -- will be good to share with you already at this stage.

If I would be a President of Finland, I would be having 3 key points for the short-term priorities. But in the reality, we listed 5 together with Tapio to be shared with you at this stage. It's really important that in each and every of our stores, in each and every working shift, we are prepared to meet customers and the Christmas season. We have just left the Halloween season behind and stores have started to prepare them for the Christmas season. It's actually the most crucial period from our perspective, to deliver what we have actually written down in guidance, both in revenue as well as in EBIT.

It also means that our value chain plays an important role, while having the goods at the warehouses does not yet mean that it will be filled in the shelves. So actually, value chain and product availability plays really an important role. At today's situation, we do not see any difficulties in that manner. So actually, all the seasonal articles are already either in Mantsala DC or in Orebro DC or they have met already our stores.

It's also important that we pay attention for the customer footfall, both in Tokmanni segment as well as in Dollarstore segment. We also want to sustain a positive sales momentum in Sweden, while we did saw good average basket, thanks to the extended assortment. And like Tapio, you were just describing, we almost met the like-for-like footfall in Sweden during the semester. And that one actually what we are driving for.

It would be -- let's peel it like this. It's also really important that we are paying attention for our expenses. Tight cost control in everyday life on a weekly planning as well as monthly planning really is a necessity. We did saw that we could have -- we would have met our OpEx from the previous year if we would have paid a bit more attention for the -- and weekly planning as well as monthly planning. So tight cost control is certainly appear all through markets and all through every store.

When we look to the year-end, beginning of the next fiscal, we will definitely continue to restore profitable like-for-like growth here at the home base. We have actually -- we have a really good background for within Tokmanni segment to deliver quarter-by-quarter. And this modest dip in the previous quarter, like Tapio, you described, is partially due to wage increases, but also partially due to long-term commitment to renew our store network and be available in the cities and in the municipalities where Tokmanni exists.

We also will be definitely paying attention for the Dollarstore profitability. Tapio, you also mentioned that figures tend to be positive, but still actually the EBIT is modest. So there's definitely a room to improve.

But also we do see that working together, having the synergies is actually making all our markets more profitable. And therefore, working tighter together in between countries and having management teams really able to meet the local demand and twist when necessity will be also on our agenda.

Just this week's Monday, we also had Martin Sorenhag starting as a Managing Director for our Swedish and Danish operations. So we are welcoming Martin to our management team.

And of course, last but not least, gross margin improvements, higher EBIT, and stronger cash flow is in our everyone's agenda and every day on our desktops and desks when we are steering our customer meet for the upcoming months and quarters.

Not going into in-depth analysis from the strategy work, but to mention that August, September, October, and also now beginning of November, we've been working a lot together within the segments, within their teams, involving our regional managers, involving our key people to understand where we are today and what kind of challenges we have met and what kind of questions we are there to solve to make Tokmanni Group even more profitable.

So of course, market and business analysis are something which has brought us up to date and have the same picture, what shall we do? Not by coincidence, we have actually written here, customer understanding. We do have a lot in common when we compare 3 countries, but we also have differences. And therefore, it's a necessity to pay out that when we can work together with one solution, it will be enrolled in 3 markets in each and every store, but also to understand that there needs to be a local twist.

As here in Finland, we tend to wait for Christmas, and we tend to wait for snow and for possibility to go for skiing. Same applies actually in central part and northern part of Sweden. But moving to Denmark, moving to Gothenburg, suddenly, we realize that local twist is a necessity. Winter is totally different than we are used to have. So actually, it will have -- it will adjust our commercial calendar. It will adjust our offer. And at the same time, we are always starting spring season earlier in Denmark than we are starting here in Finland.

We are setting clear priorities and ownership, making sure that the one who has a mandate to decide can decide and will act upon. We will not have a hierarchy to make a situation, to make actually very clear on the store level and the regional level that where the customer meets a store, there's a mandate to decide on behalf of customer and make us agile and really customer-driven.

And this actually applies to the last, but not least, when our strategy will be communicated, it's our responsibility to make that strategy alive day by day, week by week, month by month. And we will be setting clear milestones to steer group of companies to the right direction.

Now it's also an information for you, which we kindly ask you to pencil down. We are arranging our Capital Market Day at the end of January 27. We actually have been calculating what will be the most feasible time for everyone to participate. And we came into a conclusion that end of January we'll be meeting, both our planning window as well as our focus for Christmas and beginning of the New Year. And hopefully, this date is something which is also easy for you to attend. More event details will be following later.

At this time, we are thanking you all for listening us, and we give a room for discussion and questions.

Okay. Shall we first take Maria Wikstrom.

It's a really good question, Maria. And thank you for the question. It was nice to also meet you at the airport earlier this week.

When we look at our store network, and I'm not here to evaluate Clas Ohlson. When we look to our store network and our offer, of course, when the October itself, the season has not yet started for winter items, not for winter clothing, will have an -- has an impact. At the same time, when we say consumer confidence, our big amount of stores is not located at the capitals nor they are not located at the shopping malls, which also means that customers are coming from the distance and are coming by walking, and not by walking, but by cars and by public.

And when you look for the audience in Sweden as well as in Finland, you do talk, our customers talking about gasoline prices, they do talk about energy prices, and they are hesitant to invest or they're very hesitant to invest. We do hope, especially now when we see the weather forecast, and you should never explain with the weather.

But we do see that for colder mornings will start to bring customers into our stores, but it's a necessity to renew and revisit your clothes, your rubber boots are moving to winter shoes. So categories which were affected are both seasonal as well high-ticket items. And I'm not here to compare us to any another competitor.

Will you take that, Tapio?

I can take that. Yes, of course, we try to make a range so that we meet the range in all foreseeable circumstances. So of course, if we were to fall short of our range, I think there would be something extraordinary that would have to happen during the rest of the year.

And I think it's likewise for the upside that something extraordinary would need to happen that should we go over. Of course, you have to remember, there's still 2 months of sales, which are the, I would say, the biggest season for us clearly. So it's more than 1/6 of the sales. It's more like 1/4 or 1/5 of the sales are still coming in. And of course, the profitability is the highest than during these peak months.

So you have more variance during the end of the year than you have in the beginning of the year. But having said that, we, of course, know how you forecast and we try to guide you with our range as well so that it should give you an idea where we, of course, ourselves expect to land. And of course, no one has a crystal ball. So things do happen.

But that range, I would say it's not bulletproof, but it's almost bulletproof that something really extraordinary would need to happen if we were to miss our guidance.

So I think Tapio made it very clear that guidance is to be met. At the same time, we do work hard in each and every store to meet the guidance. Therefore, also both in Sweden and in Finland, we are launching extraordinary activities in each and every store to meet the customer and increase the average basket. While one might call them sales competitions, while it's really important that stores are prepared to meet the customers in upcoming weeks.

Then Joonas, you seem to be next.

Well, we don't foresee anything extraordinary at the moment. So I think it's more a function of our -- in a way, the fixed cost base is relatively fixed, and we can, of course, do some things like ad hours, takeaway hours, ad marketing, takeaway marketing. But the real variance comes from the sales.

So when you think about our gross margin, it's somewhere, let's say, 35%. So if you have a EUR 50 million delta in sales and that flows then through to the gross margin, it's about EUR 15 million. And then when you assume that the OpEx, you don't need that much more or less OpEx to deliver that difference in sales. It sort of gives you roughly the EUR 15 million range.

So we try to always predict the sales and the EBIT in a sort of a period, so it makes logical sense as well, the extreme ends.

Joonas, it's a really good question. When we look at the store network through from north to south, we do see pretty steady and stable customer flow in most of the stores and most of the regions. This 0.4% decline can be actually easily calculated from the cities where we have opened a second store or a third store.

So actually, it's partially and mainly our own cannibalization from the store net expansion. And especially, we have some stores which we have moved from location to another, which has also caused a decline short-term in customer footfall. So we do pay attention that the upcoming activities are also inviting customers to our stores.

Yes. So first of all, you have to remember last year. So last year, we had a very low gross margin percent, and that was really driven by the July, which we had very high sales and very low margin due to the 3-week heat wave there after a very cold June. So that's one thing, obviously.

The second thing, of course, we try to always optimize the profitability. So the pricing is, in a way, science, but it's also art and, of course, what competitors do affect our doings as well, especially in pricing if we have a campaign and no one else has similar campaign, it's better than everybody having the same campaign. So it's also a little bit of luck.

So I would say there's some natural variability in how well the campaigns impact. But also, of course, we always try to optimize for the absolute gross margin, not the relative. So if we make more absolute gross margin with a lower relative gross margin, it's better for us. So the gross margin percent is, of course, important, but more important for us, we try to optimize the absolute gross profit.

I assume Arttu, you will be the next in row, so please.

I think, actually, Tapio answered to your question earlier, saying that, of course, we are happy that Dollarstore delivered within the quarter. At the same time, there's definitely a room to improve from 1% up. And I think in the previous quarterly review, we also mentioned that nothing should be hindering us to reach equal EBIT level in Sweden that we have gained in Finland, but it does not happen over a day or over a quarter. It needs to be taken step by step.

We should not yet speculate that one, Arttu. I'm happy to return back to your question within the Capital Market Day. But yes, at the same time, every step what we are doing when it takes common sourcing, common assortment, is improving our profitability also in Sweden.

Do you want to take that?

Yes. That's true. That's one, if you talk about the percentage in gross margin, that is one headwind that we try to tackle and offset, of course. But at the same time, we do see also potential in Finland to improve our assortment and be even more attractive to our customers. So there is always room for improvement in Finland as well.

But you're right in the sense that if the grocery and food sales especially increase, the gross margin percent there is clearly lower than in the non-grocery side of the business.

And then, of course, Arttu, when we have combined volumes in all 3 countries, and we have one sourcing/category management department, we are working with the full volume in our hands, not splitting that one into 3 countries. And especially when we move to Far East or to Eastern direction, having the full containers floating towards Europe and Nordic countries, it's increasing also our profitability here in Finland, not only in Sweden and Denmark.

I think...

On that we will know after Q4 reporting, of course. But I think, like we said in our profit warning, October was challenging.

And we do hope that we are meeting our customer expectations in November and in December, while that's actually crucial to show a good performance in all markets, and it does not only apply to Sweden at this case, Arttu.

We have one more hand up here. It's [ Miika ]. So Miika, your turn, please.

I may start and Tapio will continue. We did saw slower footfall, partially as planned when we take our commercial calendar and partially due to the delayed season start. At the same time, we do hope and we do expect that our activities now in November and in December will be peaking up.

And therefore, we also hope that there are no unpleasant surprises when we take into account macroeconomic issues, which we cannot influence. But actually, our customers are meeting when they consider how much they are spending for the Christmas gifts.

It's a good question. I think I partially responded to your question earlier. When we look to the next fiscal year, our store network in Sweden is more or less accomplished. It will be, of course, meaning maintenance, renovation, some store movements. We have contracted only 2 new stores for next fiscal.

And when I look to Denmark, we have contracted 2 new stores for next fiscal. We are getting back to this network expansion question also within the Capital Market Day. But yes, you can see that Finland and Sweden have actually nationwide networks meeting our customers.

I think Tapio will take that one. I'm just saying to you that budgeting process for next year is right now ongoing. And of course, budgeting process will definitely take into account this OpEx development and our savings targets. Tapio?

Yes. And of course, we do see headwinds in certain costs and especially the oil price has some more direct impacts and then some impacts that come with a longer lead time. So we, of course, need to work very hard to offset those, whether it's in the way we operate or what kind of products we source and what kind of materials are used for those products. But for example, shipping costs. So they're very difficult to circumvent if the fuel prices go up, it's quite rapidly usually reflects in the either fuel surcharges or otherwise hikes in shipping costs as well as delivery costs then from the logistics center to the stores.

So definitely, we track this very closely. And of course, we need to find offsetting measures and we try to be very prudent on the pricing in the sense that we are a discounter. We have to have very competitive prices. So we try everything else before pushing the, let's say, increases in cost to the end user prices.

I can see that Svante, you also have a question to us. So please. And I think then we are about to conclude this event. So Svante, your turn.

It's a good question, Svante. When I look to nationwide network, of course, we have locations which are closer to block houses, which might be closer to villas. But in reality, I'm always steering a store in Jarfalla in Barkarby shopping mall, while depending on about the weekday, I always find cars parked in front of our store.

And the cars are actually telling that each and every suite is visiting our stores. And we do see that we are attracting low-income, mid-income, and even the higher income suites. And it's important that when customers are visiting us more frequently, they will also find out that our assortment has widened and there's more to buy.

Instead of having our narrow down basket, we also are meeting more and more, not only seasonalities, not only festivals, but also, like I said, toys is a really good example. Toys is bringing in family customers. And when family customers are floating in, they also tend to buy more than the ones who only came for once or twice a year to celebrate a birthday party or to celebrate some another family occasion.

Tapio?

Well, I think that is a good signal on the strength of our balance sheet, even though we are more levered than some of our competitors. But of course, we feel confident that we can pay the dividend. If the Board wasn't confident in that, then they probably would have decided something else.

So -- and of course, coming on also on the back of the strategy that we will launch soon. Of course, typically, when you launch a new strategy, there are some investment areas. But even with that knowledge, the Board felt comfortable in paying the maximum dividend that was in their power to pay. So I think it's a very positive signal.

Thank you all for participating. I intentionally took a Christmas leaflet from Dollarstore. While I have it with me, I'm also welcoming you all to visit one or multiple of our stores in Finland or in Sweden or in Denmark.

Please also buy a lot, increase our average basket. It's a good signal when we see average basket growing and footfall growing. And those are key parameters for January, February, and March as well when we are closing this fiscal and starting a next.

And also pay attention to pencil down our Capital Market Day, 27th of January next year. Thank you all for participating.

Thank you.