Matas A/S
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Earnings Call Transcript

Earnings Call Transcript
2021-Q4

from 0
Operator

Ladies and gentlemen, welcome to the Annual Report 2020 to 2021. [Operator Instructions] Today, I am pleased to present Gregers Wedell-Wedellsborg. Please begin your meeting.

G
Gregers Christian Wedell-Wedellsborg

Thank you, operator, and welcome, everyone, to the call and webcast covering the financial year 2021, and also a preview of our strategy. With me today, I have Anders Skole-Sørensen, our CFO. Today, we will be covering -- I'll make a few comments on the current situation. Anders will be covering our financial results for the year. I will get back to the guidance for the coming financial year, and then we will move on to the strategy preview. And we will take questions at the end. So that if you have questions for the strategy preview, you can include those as well. As for the financial year, it has, of course, been an exceptional year in so many regards, heavily affected by COVID, but also a testament to the strength of our renewing Matas strategy. Revenues reached DKK 4.164 billion, and our EBITDA before special items came in at DKK 797 million. That is a like-for-like growth of 13.5%, something that we, I don't think that we have ever seen maybe since the beginning of Matas, but of course, driven by the very special circumstances of this year. And an EBITDA margin of 19.1%, which is actually a tad better than last year, which is quite important given our massive online transformation in the year. We have seen -- for the year, if I were to pick out 1 number, it would be that we crossed the threshold and the milestone of DKK 1 billion in online sales, almost DKK 1.1 billion, constituting 26% of total sales. And even in Q4, we actually reached 30 -- just above 32% of all sales. Our EBIT margin of 19.1% is supported by a market leap in our online profitability, and I will get back to that later in the call. And then, of course, notable also, a cash generation at an all-time high of DKK 774 million, which is supported by quite intensive work with optimizing our inventories. On the back of that, the Board will propose a payout of DKK 150 million, split evenly between a dividend of DKK 2 per share and a share buyback program. As for the new year and trading from April 1 to May 22, we have seen 7% growth. We're happy with that. It has been driven by a store comeback. So we're actually seeing stores climbing towards the pre-COVID level. And online sales have actually remained at last year's very, very high level. As for the '21/'22 guidance, and I will get back to that in detail, it is all about sustaining the uplift that we have seen in this year, and we are kickstarting our new strategy and investing both margin and CapEx in reaching higher long-term growth. As for the strategy review, we will just go through the execution of the Renewing Matas strategy. We have reached our financial ambitions way ahead of time, and I will give you a preview of the Matas Group strategy where the key point is that we will position ourselves for better long-term growth. And with that, I will hand over to Anders to cover the financial results.

A
Anders Tormod Skole-Sørensen

Thank you, Gregers. As we can see here, and Gregers has already mentioned it, a very solid growth of 12.9% top line, 13.5% like-for-like. And if we look at the sales sort of splitting a little bit into the areas themselves, you could see that Health & Wellbeing was the star performer for the year, rising almost 19% and still adding around 18% of growth in the fourth quarter. And in the fourth quarter alone, our high-end business performed extremely well growing over 22.5%. And for the whole year, it was also a very solid growth of 13.3%. Mass Beauty was the lowest performer. For instance, Makeup had a hard year during the COVID crisis, not very surprising, perhaps. But it still grew overall by 9.9% in the year, And actually, in the fourth quarter, it made a strong comeback, growing 17.6%. As to the gross margin. Well, in reality, it was really very stable, a marginal drop of 0.3%. And if we look just at the fourth quarter, it was 45.6%, which is shy short of the 45.8% we saw in the fourth quarter of last year. The really impressive here is actually that with an online share of, as Gregers mentioned, over 32% in the fourth quarter versus 19% of last year. That is very impressive because as you -- we've discussed many times over, there is a tendency for gross margin in the online business to be slightly lower. And now, however, and this we will come back to in further detail, that gap has really closed dramatically over the last year. So we're not really seeing much of a gap anymore. The cost, I will come back to in more detail. So just the headline number is they went up by DKK 100 million. EBITDA before special items. Well, the margin was virtually unchanged, as we said, from only rising to 19.1% against 19.0%. In the first quarter alone, EBITDA rose by 28% versus last year, and the margin rose from 14.6% to 15.6%. Of course, the fourth quarter of last year was negatively affected by the lockdown in March of 2020. As to adjusted net profit, well, the rise is basically just the rise we saw an EBITDA minus the taxes. We have to pay taxes. Free cash flow, I will revert to in more excruciating details later. Finally, as the number of transactions you could see, it looks like it's the same number. It's not quite the same number. It actually went up by 0.3% year-on-year. And I -- given the behavioral changes that was brought on by COVID-19, which basically meant that the customers had fewer but larger baskets, we think that is quite a satisfactory development. And if we look at Q4, we actually saw a rise of 1.6% in the number of transactions. As mentioned, larger baskets, we saw that very much throughout the year with the basket size growing 13% year-on-year, and even more in the last quarter where it grew over 17%. Good. If we look at slightly longer-term trends. Well, the revenue growth basically speaks for itself. A strong growth in all quarters peaking in the fourth quarter with almost 20% like-for-like growth. I have to, of course, remember here that particularly the fourth quarter last year was negatively affected, as mentioned by the COVID-19 lockdown. The gross margin development is stabilizing the way we see it, and that is in spite of the channel shift, as mentioned before. The EBITDA margin, also quite stable. If you look over the last 8 quarters -- actually, very stable, I would say, if you look at the numbers quarter per quarter. With regards to longer-term developments in the EBITDA. You can see that, of course, we have actually been increasing our EBITDA in Danish krone, i.e., the sums are going up because of the rising sales. Now I'm just returning a slightly bit to the cost development. The total operating costs were up by DKK 93 million over the year. And in Q4 alone, they rose by DKK 39 million. However, as a percentage of sales, costs were marginally down in 2021 and also in the fourth quarter, where costs fell from 32% to 31% of sales. Throughout the year, the development that has been clear with the rapid increase in online sales, both -- we've seen a rapid increase in the costs associated with the online sales, of course, because we've seen the volume rising as much as we have. However, we've also seen that the costs in the rest of the business have been actually behaving very well, and we've been able to reduce the underlying cost base elsewhere, particularly, of course, in the Firtal stocks. And the net result has been a marginal trend, as shown in the overall cost ratio. As to the cost split between staff costs and other external costs going forward, we see the trend that has been developing. We see that continuing as the margin -- the channel shift continues in the business. So I think it's fair to say that going forward, there is probably a likelihood that other external costs will rise relative to staff costs as long as the channel shift is ongoing. Now we come to the slide that for many of you who've seen this heard me talk about the development in inventories. It's been a bit of a rough ride over the years, but I'm very happy to say that this year, it's a much, much improved picture. Well, cash flow, of course, has been good, and we'll come back to that overall, but it has been helped very much by the inventories. You can see that inventories dropped by almost DKK 100 million in the year, and that was in spite of the fact that we actually had to increase inventories with regards to COVID-19-related products. We all know, we're talking about face masks and hand sanitizers and as such. And also, we had to add on to the inventories at our Humlebæk facility. In particular, Firtal also had to add a little inventory because of the rising volumes. But in the rest of the business, we were able to actually take a lot of inventory out. And overall, inventories dropped. And the drop of 100 -- almost DKK 100 million is impressive in itself, but it's even more impressive if we look at this and compared it to the turnover. Because actually, at the end of last year, if we looked at our inventories as relative to the last 12 months' turnover, we were sitting at 26%, while when we exited the 2021 financial year, that number had dropped to below 21%. So a huge improvement, and basically achieved through a combination of better system support and frankly, more focus, plus more intelligent management on all levels -- or within all levels of the organization. Just to cap off the rest of the cash flow development. We just talked about the inventories, but there was also a positive impact from our trade payables because we had rising volumes, obviously, with the rising sales. So we had another push there of about DKK 125 million. We paid a little more in interest and taxes, not surprising with the rise in the cash flow. CapEx was lower, and that should be noted because what we saw was if you dive into the numbers in more detail, you can see that the CapEx was particularly low with regards to the investments in the store portfolio. That was somewhat partly mitigated or partly outweighed by an increase in investments in IT and in the online business, but not totally. Acquisitions was much, much lower than last year because of -- you remember last year, there was some -- there was an impact because both of some payments in customer-led and also in Firtal's acquisition of Din Frisør Shop. So -- and we didn't have this, this year. So all in all, when you add all of these numbers up, you get that very, very impressive rise in overall free cash flow by almost 600 -- more than DKK 660 million from about DKK 100 million to almost DKK 775 million. So with that, I will give you -- hand it back to Gregers.

G
Gregers Christian Wedell-Wedellsborg

Thank you, Anders, and I will comment on the guidance for the coming financial year. We have seen an exceptional uplift from COVID and this demand during COVID. So obviously, there's a bit of headwind and tailwind in the coming year. So we guide for a flat revenue development with a range of minus 2% to plus 2%. And the background for that is important to understand that we do see some reversal effect, particularly in the second half of the year. Obviously, I'm hoping -- and this is the first time you'll hear me say that, I'm hoping that we won't have any sales in protective equipment going forward, the masks and the hand sanitizer and so on. So I'm actually hoping for those sales to drop. We will also expect to see some normalization effect from consumer spending due to the fact that, hopefully, people would start living normal lives again and go traveling. And of course, in the last financial year, we also saw a significant effect from stimulus packages from the holiday pay that we won't see next year. And we also expect an increase in online competition, a moderate increase in online competition. However, throughout the year, we have set in motion a number of business development activities within subscriptions. We've made the acquisition of Web Sundhed and the partnership with the pharmacy. And we also want to kick start our next strategic journey with what we call a margin investment in future growth, and that covers primarily marketing investments, promotion investments, to fuel a lot of these new initiatives that we are counting on to deliver future growth. So the EBITDA margin. When you look at the EBITDA margin, it's important to understand that we think the underlying business will be able to sustain the EBITDA margin level that we have seen, and we have made a conscious decision to invest up to 1 margin point in those future growth initiatives. As for CapEx, we also upped CapEx, and CapEx split will be different from prior years. We will spend more on our digital business. And as for CapEx to the stores, it will mainly be maintenance and refreshers, but we won't initiate a big concept upgrade rollout. And I should note that we have mentioned many times that we are looking into our future logistics setup that is not included in the CapEx guidance and neither is potential M&A. To give ourselves headroom to -- for both of those things, the logistics and for M&A and other business development opportunities, we have -- the Board has decided to lower the floor for the payout ratio to 20% previously -- or above 20% of net adjusted profit after tax. Previously, it was above 30%. So that's the background for the guidance for the year. We think just leaning back and letting the business run is not the right thing. This is a time where the business had us a lot of momentum and where we see more growth opportunities for the business than we have for a very long time. So with that, I will go on to the strategy preview and review. Looking at our point of departure for Matas, it's been the Renewing Matas strategy that's been the headline and the focus for us and the rest of the crew for these last 3 years. Across all 5 of the strategic tracks that we listed when we announced the strategy in May of '18, we have seen very significant progress. We have seen our brand become a lot stronger. The Matas brand is historically strong at this point, and I'm pleased to say, especially with the young demographic, we have taken a huge leap in brand vitality. And we have seen a massive leap in our matas.dk customer satisfaction over the years. As for online, this is obviously the area where we have made a very speedy and very significant transformation. We are now according to Dansk Bow, the second most used webshop in Denmark, our most frequent webshop in Denmark, online revenues of 26% at 10x increase in 3 years and yes, a whopping 600% growth on just -- on the matas.dk. So some of the online growth, as you know, is acquired through Firtal. And as for the stores, we have gradually reduced our footprint, but we have managed to keep all stores profitable, except for 2 that during COVID have not been profitable because they have very special locations in high-traffic areas, but they will get back to profitability as things normalize. We've also been very successful in getting new growth. Part of the explanation behind our long-term growth journey has been that we are now a much bigger player in the Health & Wellbeing space since we started. And of course, the acquisition of Firtal, which has been very successful, they have come in consistently ahead of the management and investment case. Very happy with that acquisition. We also acquired Kosmolet, and they have been outperforming the Makeup category year-by-year ever since we bought them, even in a year like last year where the Makeup category was definitely not the one growing. And then underlying in the engine room, we have seen a quite significant shift of resources from businesses that don't grow to support all the growth businesses. And the transformation has been actually both a result of organic development and acquisition, as I just mentioned. So here's just a chart to remind you what we have been going through to get to where we are now. I think the key point that I want to highlight today is that we are now a digital company. And if you think with 26% of revenues, how can you say you're a digital company, and I want to go into detail with that, because we are truly a digital company across all areas of the business. So any function in Matas has digital responsibilities. Every role has digital responsibilities. And if you look at what we, as a company, should be good at doing, what our core competencies are, every single one of those, we have digitized over the last 3 years, and we have actually added new -- 2 new significant competencies over the last 3 years. So for our brick-and-mortar, it used to be conventional retail stores. Now they are connected with a digital footprint around the stores. Our colleagues in the stores are live streaming to local consumers, chatting with consumers, selling outside of normal opening hours, so on and so forth. Our offering, the range that we offer our assortment used to be set just to fit the stores and was limited by the shelf space that we have. Now we have an endless aisles assortment strategy and have vastly increased the number of products that we offer to the consumer. Our club has changed dramatically. I think if you go back 5, 6 years, being a member of a club meant carrying a card. Now it is a digital relationship. And then obviously, the e-commerce competence that we have acquired, taking us from top 3 to a leader in the field. But also maybe less appreciated, I think one of the things that we have found out over the last 3 years and really gotten good at -- also with the acquisition of Kosmolet, is knowing how to build consumer brands that is taking products on the shelves and turning them into brands using all the digital tricks in the book. So now we are a digital company leading the online market. We have seen this transformation from being a brick-and-mortar retail with around 4% of revenue being digital to being a true omnichannel retailer with lots of synergies between the stores and online, with 26% as of last year. A very, very significant journey, and one of the fastest retail transformations that we've been able to dig up. We are also -- and this, of course, has been a key question. We are also now a digital company with a profitable business model for our online business and in total. And actually, in many ways, a superior profitability compared to digital peers. The growth that we've been driving over the years with a CAGR of 6%, obviously fueled by tailwinds from COVID. We've been able to sustain the gross margin even though as we transform to online, there has been or -- and is a lower gross margin in our online business for a number of reasons that we can get back to. But we've actually been able to sustain that gross margin level, even though there's been this massive transformation to online. And I think that's really a testament to the strength of our business model. And here's the -- I think the really the killer slide in terms of online profitability, because this has obviously been a question not only for us, and for investors in Matas, but also a question for retail overall. That is, as you changed from conventional brick-and-mortar to online, will you just see your profitability erode year-over-year? And what we have seen over the last 3 years is that, that is not happening. Actually, we're seeing the reverse effect. We are seeing scale effects, and we're seeing a lot of synergies come through. So on the 1 -- nearly DKK 1.1 billion of sales, we have a gross margin of 40% online, which is lower than our store gross margin. But as you can tell, it's been increasing over the years. And even more importantly, when we take in all the direct costs associated with running an online business. So that would be marketing freight cost personnel that is dedicated to online. We have also -- we have seen the scale effects and the synergies really come through so that we deliver a 19%, what we call channel contribution from online. That's still a bit lower than what we get from the stores, and we show this number because then we don't have to have all these discussions about headquarter cost allocations. This is a channel contribution that is super competitive, I think, and against the benchmark. And the reason why we're able to deliver those kinds of channel contribution margins is that we have synergies across a number of areas in the P&L. We do a lot of cross-selling between online and off-line and the customer lifetime value, every time we acquire a customer online, they actually spend money in the stores as well. So the average revenue per user, if you will, is higher than comparable or pure-play onliners. We obviously have better buying power than online competitors. Absolutely key is the fact that our cost of acquiring customers to our online business is a fraction of what you can do if you are a pure-play onliner. And every time we spend money on marketing online, it gives a return not only in the online channel, but also in the off-line channel. Every time we spend money on the off-line channel, it actually has a payoff in the online channel as well. So we get very significant marketing synergies. And then because we have around 30% -- 40%, sorry, when -- 30% to 40% when it's been down, but usually around 50% of Click & Collect, so people will pick up the packages in the stores rather than having them ship to the home, we're able to fulfill much cheaper than online competitors. And then finally, of course, we don't have to build a whole buying department from scratch or a finance department from scratch to serve the online. We do get a lot of synergies on our head offices. So what we are saying here is we have a structural advantage to our online competitors that allows us to get a better profitability and higher growth than online competitors. So this speaks to the fact that we are now a digital company with some competitive advantages that are not going away, but are here to stay. And many of you have seen this before, and I just want to highlight it again, we have been investing heavily in getting a string of assets in place that will help us fend off competitors, that will help us capture growth, that will help us capture value, and we list those KPIs and we follow those KPIs very closely to see that we become stronger and stronger to build the fences, but also the platforms that fuel future growth. And speaking of future growth, we are a digital company with better long-term growth prospects than what we had when we were only a brick-and-mortar retailer, and I will speak to that in a moment. But just reminding you that the health and beauty business, which is our market, is a very attractive market to play in. It is expected to outgrow the general economy. It is an area that is really resilient to economic cycle. It turned out to be very resilient to pandemic cycle. So I hope it's not a cycle, but pandemic events, at least. It is a sector with quite large profit pools across the whole value chain. It is a sector that is really driven by consumer preferences for brands, for newness, for experience, for advice. So it's not a commodity business. And frankly, every time we see a brand getting commoditized, we delist it and we substitute it for something new and exciting. And that's not going away, at least it would be strange if that's the case, because it's been going on forever in that sector. And then, of course, and this is one thing where we've really seen some interesting things the last year. There is massive innovation in the consumer health space, opening up new growth opportunities for us. As we look ahead, we see 6 factors that we should be observant of. First, we think the digitalization of shopping, the social media change of the media landscape will continue. We are very well positioned to capture that. We think we will look into -- at least in our industry, that's the talk of the town, that there is a really pent-up demand to go out and lead the good life once again. There is a lot of pent-up spending capacity as well with the private consumer. So there is a good chance that we will see some roaring changes repeat in the coming period. And then we think that health demand and health consciousness has shifted permanently and will be elevated for years to come due to what we've just been through. And then as we gyrate towards the more a negative territory, and I couldn't bear putting it at red. But we're -- of course, we have seen some COVID-related merchandise. We're seeing some reversal from that, as I said, in connection to the guidance, and that is a good thing for the world, and we will go find without those sales in Matas. We also expect physical retail consolidation to continue. However, and I have to say this, this year, the COVID year has been a huge vote of confidence in physical stores because every time there is a reopening, people flock to the stores. Even though everyone has learned to shop online, they go to the stores because they are missing that way of interaction. And then as I mentioned, we do expect intensified competition over the years. Now with those kind of competitors in-house, we see 3 expansion opportunities for Matas that we haven't talked about in detail before. And this will be part of what we will be chasing over the couple -- the next years. First of all, if you have the second most visited webshop in Denmark, if you have more than 600,000 customers that are really happy with what you do online, our ability to expand into new categories has never been better. We are no longer limited by shelf space. We have all the space in the world online, so we can enter new categories and serve our customers with categories that they think Matas is a natural supplier. Second, health. We think there are very significant opportunities in the digital health space. We've seen that in other markets outside of Denmark. So particularly online, we think there is opportunity in health, but also in-store because our stores has obviously played that role the last year. And then brands. We acquired Kosmolet. We have had the stripes on the shelves for years and years. We have seen Danish brands, local brands, really, really grow strong over the years, and we have looked into our capability to build new brands, and we think there is growth to be had, both in our own channels but also in third-party channels. And then finally, and this may be just opening the door a little bit rather than a big step. Of course, the digital competencies that we have now, together with a brand portfolio might open up some opportunities to sell outside of Denmark that we haven't had before without having to build stores outside of Denmark. So this is an area that we will put on the radar in the future. So what is the essence of the new strategy? And we will get back to the details, the minute details of that on a Capital Markets Day in August. But I want to give you just a brief preview. What we want to do is build a group company, and we want to build it on digital and on the digital competence that we have acquired over these last few years. Our purpose is very, very simple, we aim to deliver health and beauty for life. And I think what you should note here is that health takes a more prominent place in our purpose, and you should note that our business model is about lifetime customer relationships. That's all that we're about. It's not the transaction, it's the lifelong relationship with the customer. This is a more specific way of saying what we want to do. We want to continue the journey that we've been on for the last 3 years of adding digital revenues on top of our store revenues, not instead of our store revenues, and we think that we are positioned to do that over the coming years. So we've set an ambition for the next 5 years to double our digital revenues from the current level. And to do that, we have to go through a number of moves, but we are positioned to do that in a way that we have never been before. The Matas Group -- and this, if you ever look into business models, if you think about Amazon's flywheel, if you want to understand what Matas will become in a few years, this is the slide that you should spend time on and talk to us about because this is our business model and the platforms in our business model that will allow us to outgrow the market, that would allow us to sustain an above-market profitability level. Three platforms with a shared call or shared platform, e-commerce, connected retail and brands. E-commerce is obvious. We see a lot of growth in e-commerce, as I already mentioned. Connected retail is the new way of thinking about the stores. So store revenue is no longer just about customers coming through the door and picking product from the shelf. It is also about enabling the stores to sell directly to consumers via digital channels. For example, by having live events online. So if we did a physical event some years ago, we might have 18.5 customers coming in to buy. Now if we host digital event, we can reach 200 from the physical stores and selling direct online. And then finally, our brands platform, which is super significant to understand, that we will become a more vertically integrated company in the coming years. Now these are not 3 discrete areas. They share a common core, but they also support one another. So obviously, there is a strong connection between e-commerce and commercial -- connected retail. As I mentioned, a much lower customer acquisition cost for our e-com, and a much higher customer lifetime value because we have 2 channels and not just 1. Second, the link between e-commerce and brands. Having our own brands online will be of increasing importance as the online space becomes more crowded. It will also allow us to sustain a high margin on our online business. And having the e-commerce competence will allow us to sell brands direct to consumers inside Denmark but also outside of Denmark eventually. And then the link between having your own brands or having strong strategic partnership with brands and connected retail I think it's one area where we have really seen the light over the last 3 years that if you want to build a brand in Denmark, if you want to reach the Danish consumer, you can take something that is a bottle and then you can turn it into a brand with a significant brand premium in just the space of 3 years. We've seen a number of cases, and we are much more aware of our capabilities to do that. And again, of course, having your own brands will support the margin and the differentiation of our retail offering. So this is our business model. I could talk about it for hours, and we will because we have 5 years to really make it happen and make it strong. But as I mentioned, this is a model that is not unique to us. It's not invented, but we see that this is a model that is able to be very, very competitive and deliver very good results over the coming years. So as for ESG, this is an area that's always been part of our business. It's always been part of the Matas DNA. We have pointed out 3 areas where we want to make a difference over the coming years. First is sustainability. We have -- the big issue that as online goes more online, the shopping goes more online, probably the climate footprint is going to get worse. So we have set the aim of joining the pack that will strive for CO2 neutrality in 2030. And I have to admit, there is no one we ask who can tell us by now what we should do to get there, but we've made that commitment and we'll work towards that goal. Second, I think an area where we can make a significant impact is on plastics and waste reduction. So we've set the target of reducing plastics by 100 million pieces, and that sounds maybe -- what is 100 million pieces of plastic? What you should see here is a specific goal that drives us to specific behavior. And I think if we can find ways of doing that over the coming years, we can actually significantly impact that area. Health. We want to contribute more to public health than we've done before by providing access to digital health solutions for all, but also by increasing choice of green, clean and healthy ranges. And the final one is inclusion. That we actually strive to be the best place to work in retail. And as retail becomes more online, jobs are changing from -- maybe from being in stores to being in warehouses, and we need to be really aware to make sure that we are a great place to work. So these are 3 headline areas we want to work on, with 5 specific areas where we make an impact. So with that, I just want to recap that this is the journey we're going on. We think we can increase our digital revenues without just converting store revenues to digital, by expanding assortment, by doing all the things I just mentioned. And that also means that we are looking at ourselves in a different way that whereas our peers, some years back, would be conventional retailers, and now would be other omnichannel retailers. We are now looking at the playbooks of more pure-play onliners and also looking at the playbooks of companies like LVMH, which has a comparable business model to the one I mentioned before, combining online retail with deeper vertical integration. So this is the journey that we are going on in the next 5 years, and I just want to close off by saying I have a very, very strong group of colleagues and many more than I could fit on this slide. I just want to highlight just one new hire that we have just made. Michael Shin has just joined us. He is our first international addition to the management team. He comes with a long, long background from L'Oreal, from Elizabeth Arden and also from building his own brand with the co-founders over the last year. So he just joined April 4 and added a new dimension to our leadership team and will be taking charge of the branch component of our strategic journey. And with that, I want to close the strategy preview and open up for questions. But first, reiterate the invitation to join us for Capital Markets Day on August 18. We will host it in Copenhagen or you can join via webcast. And of course, you are more than welcome to reach out to Henrik Lund or to Anders or me to set up one to ones to discuss this. Yes. And with that, I conclude our presentation, and we will open for questions for the financial results. And I just have to mention we won't go into details about the financial ambitions or anything surrounding the strategy. That is a topic for the Capital Markets Day. So over to you, operator, for questions.

Operator

[Operator Instructions] The first question comes from the line of Magnus Jensen from SEB.

M
Magnus Thorstholm Jensen
Senior Equities Analyst

I have 3, at least to start with. Maybe starting with the guidance on EBITDA margin, where you say there's a 1 percentage point drag. It sounds like -- talk a little bit about as a one-off. So is this something that you need to sort of -- yes, fuel the sales short term, and then you expect that to continue going forward? Or should we expect that 1 percentage point to continue to be a drag as we had?

G
Gregers Christian Wedell-Wedellsborg

For now we only guide for 1 year, and very specific to say that we think there are some growth opportunities out there that we should pursue. And pursuing those means investing in marketing, investing in promoting new services and products. And what you should see is that, that will have up to 1% margin impact this year, but it will fuel future growth.

M
Magnus Thorstholm Jensen
Senior Equities Analyst

Okay. So it's correct to understand that this is a new level of cost. It is not cost that you will -- it will go away?

G
Gregers Christian Wedell-Wedellsborg

I don't think you can make that conclusion yet. It's just -- for now, it's a 1-year indication that this is something we will do both to stave off sort of the reversal effects from COVID, but also, and primarily, to fuel our business development initiatives that we have been preparing throughout this year, including the acquisition of Web Sundhed.

M
Magnus Thorstholm Jensen
Senior Equities Analyst

Okay. Next question regarding the inventory. It's pretty impressive what you've done through the year, clearly. But is this the end of it, Anders? Or is there more to go from here?

A
Anders Tormod Skole-Sørensen

I think it's fair to say that we've really moved the needle on that one, and I'm not going to stand here and promise that there will be a major movement further on with regards working capital. I don't think that is reasonable. It doesn't mean that we're going to let the foot off and just let it slide. But it does mean I think we've taken a major step, and I don't think you should -- you should not be looking for huge further steps in that direction.

M
Magnus Thorstholm Jensen
Senior Equities Analyst

Okay. And then my final question goes to CapEx. You guide for DKK 140 million, DKK 160 million this year. Is this sort of a normalized level as we look ahead if we exclude the logistics program and then the M&A?

A
Anders Tormod Skole-Sørensen

I think we will -- again, here that we'll have to revert to when we come back on the 18. Otherwise, we'll start sort of discussing since discussing the strategy through the backdoor. So we will guide for the -- we are guiding for the next year, and then we will revert to the longer-term trends.

Operator

Next question comes from the line of Poul Jessen from Danske Bank.

P
Poul Ernst Jessen
Senior Analyst

I assume that's me, Poul Jessen.

Operator

Yes.

P
Poul Ernst Jessen
Senior Analyst

A question first on the logistics, just should be more certain. On Page 11 in the report, you say it's expected that you want to do the investments. And on Page 14, you say if you want to do it. And in the slides, you also say that you've already acquired a plot. So what is the status? Or is that one of those put for the CMD in August?

G
Gregers Christian Wedell-Wedellsborg

I think we can say -- I mean we have acquired the right to buy a plot. That's not quite the same as acquiring a plot. So we have an option on a plot at this point in time, and the decisions have not been made yet. That is the correct way of answering your question.

P
Poul Ernst Jessen
Senior Analyst

Okay.

A
Anders Tormod Skole-Sørensen

It's a different kind of solution designs. There are a lot of ways you can go with this.

P
Poul Ernst Jessen
Senior Analyst

Okay. And then you have -- I know you won't talk about ambitions but -- longer term -- but you say that you want to double the online sales, and I assume it's the DKK 1.1 billion you want to double. But does -- it's just to get more color on -- does that include international ambitions? Or is that domestic only? How did you put it up into...

G
Gregers Christian Wedell-Wedellsborg

Any question or comment related to finances and the composition of what we want to do long term is a topic for the Capital Markets Day. I think it's fair to say that the growth opportunity that we see online is not contingent on us succeeding outside of Denmark. We think we can do a lot in Denmark, where we have the strong brand and we have the position.

P
Poul Ernst Jessen
Senior Analyst

Okay. And then on the tailwind you had in the last year, you talked about the DKK 75 million to DKK 100 million, which should now look as a headwind. From the second half, can you put some level of number on how much tailwind you believe you have, excluding the PPE?

A
Anders Tormod Skole-Sørensen

Yes. We did do that in the accounts. You can see that we put a number there of between DKK 125 million and DKK 150 million. Don't remember what page it's on.

P
Poul Ernst Jessen
Senior Analyst

That's including PPE?

G
Gregers Christian Wedell-Wedellsborg

Yes. That's including PPE.

A
Anders Tormod Skole-Sørensen

Yes. No, we haven't specified the number without that, as you see. No, sorry. But you can say that I think we put in -- just hold on. I think we put in the numbers how much of it was PPE, didn't we?

G
Gregers Christian Wedell-Wedellsborg

Yes, we did.

A
Anders Tormod Skole-Sørensen

I think we did.

P
Poul Ernst Jessen
Senior Analyst

Yes, that's DKK 50 million.

A
Anders Tormod Skole-Sørensen

Yes.

G
Gregers Christian Wedell-Wedellsborg

So what I -- Poul, I think it's fair to say this is a judgment call. This is looking at what was the trend levels going into COVID, what can we isolate of effects looking at the different categories. So this is really a judgment call to say what are the effects of those things that we can be quite specific about. Obviously, there is a general level of increased domestic spending, and there are some other effects that are COVID-specific. But this, we can put a number to.

P
Poul Ernst Jessen
Senior Analyst

I'm just wondering if you say that excluding PPE, that is DKK 75 million to DKK 100 million, and I take that out of your numbers in 2021, then you -- in other words are saying that your underlying grew 6% to 7% from normal operations.

G
Gregers Christian Wedell-Wedellsborg

And as you -- if you recall, the trading update from last year, we just come out of a Christmas quarter, growing 4% like-for-like, and we indicated to you that we had started the year with a all-time high like-for-like growth. Because what we started to see at that point is that online growth did not take away from the stores, but rather supplement the stores and coming in on top of the store revenue. So we did see a 1.25 of seeing that particular model work. And then obviously, we've been in the trenches and we've been in the engine room to try to parcel out what's what in the year that's been going. But again, I have to say that this is a judgment call, and it's just to give you some kind of indication. And we talked about before Poul, travel retail that when there's no travel retail sales, that doesn't migrate into domestic sales because a lot of travel retail sales is associated with the fact that you have to go on a -- to a sunny beach or you have to give a present when you go out. So obviously, there's some windfall for us in that, but it's not as significant as you might imagine.

P
Poul Ernst Jessen
Senior Analyst

Okay. I have 2 more. One is just then for the booking -- the acquisition of Apple in April. How will that be reported going forward? As part of Health & Wellbeing? Or as wholesale?

G
Gregers Christian Wedell-Wedellsborg

We haven't actually, to be honest, Poul, we haven't taken that decision as of yet, but we will inform you just as soon as we report the first time around.

P
Poul Ernst Jessen
Senior Analyst

Okay. And the last one, that's the external cost in the fourth quarter. Where you say it's marketing and its fulfillment costs, which made the increase. But online sale was down quarter-to-quarter by 7%, and the costs were up 28% quarter-on-quarter. Can you say a little more about how much is marketing and how much is fulfillment? And if it's fulfillment, why did it increase that much?

G
Gregers Christian Wedell-Wedellsborg

Online increased dramatically so...

A
Anders Tormod Skole-Sørensen

Yes. I mean you're talking about the fourth against the third quarter one?

P
Poul Ernst Jessen
Senior Analyst

Yes, correct.

A
Anders Tormod Skole-Sørensen

Yes. Fourth against the third quarter, it was up. But this -- when you're talking about the -- I'm talking about the increases very much, of course, on a year-to-year basis. But we're not going to go into details about whether it's fulfillment or other costs at this point.

Operator

[Operator Instructions] We have no further questions. So I will pass back for any closing comments.

G
Gregers Christian Wedell-Wedellsborg

Thank you so much for joining the call. As I mentioned, we invite you to reach out if you want a more in-depth discussion on the numbers or on the strategy preview leading up to the Capital Markets Day. And I hope you will join us on 18th of August, where we can go into more detail on the content on the -- of the strategy and business of the strategy and how we're seeing that we could execute the strategy. So thanks so much for joining, and hopefully, we'll see you soon. Thank you all.

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