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Hi, everyone, and welcome to Musti first quarter report. Very happy to be here in Stockholm. My name is David Ronnberg. And from Helsinki, we have Toni, our CFO. We are, of course, extremely happy with the numbers that we'll go through, but we can start with kind of the highlights in the report. The sales came in at 20% growth. And when we had that fantastic growth coming from all countries, we were able to drive gross profit even more. So we had 24% growth from a gross profit perspective. Our profitability on the adjusted EBITDA was stronger than the sales was -- that came in at 25% growth.Cash flow was strong as well. There are some seasonality that Toni will go through later, but they came in at EUR 13 million. The loyalty club members growth came in at 13% growth. We were also able to increase our average spend with 2%, and we were also able to increase our own exclusive brand share sales to 54%.We added directly operated stores with 14 during the quarter, and the sales in the quarter came in at 101. On a 2-year growth perspective, that is actually 44% growth. So overall, on all of these KPIs that we're looking at, we were breaking records. And the adjusted EBITDA came in at EUR 13.3 million. So overall, fantastic KPIs and numbers.But let's look more into the Q1 report in detail. Sales came in at EUR 101.3 million. As I said, that was 20.2% growth, mainly driven from new customers. As it has been before, we are continuing taking market share in all 3 countries.Sales in like-for-like was 9.2% in total, coming from 6.6% in stores and about 18% from online. We were meeting quite high online growth numbers last year due to COVID-19 impact.The group adjusted EBITDA increased with 26.5% to EUR 19.8 million, and the adjusted EBITDA margin was close to 20%, 19.6% versus last year, 18.6%. So very good performance there as well. And as I said earlier, our adjusted EBITDA increased with 25.4% to EUR 13.3 million. The margin was also going up versus last year. It came in at 13.1% versus 12.6%. The cash flow, what I was talking about earlier, Toni will go through the details later on. One of the most important things that we're looking at is the number of loyal customers that came in -- that was increasing to 1.34 million customers, which is approximately 13% growth. If you add all our online verticals and look at the data that we're having, we are close to 1.6 million customers, which is a record as well. And important also to highlight that most of this underlying growth has continued to be strong after the quarter.So let's look in more into the growth drivers that we're looking at. We have been discussing and also reviewing the Musti puppy wins over a longer time, and that has a very positive growth. And that's supported by our share gain.If you look on the left side, you can see how the puppy registration has been month by month. If you look at the first quarter, the registration from the Swedish Jordbruksverket has been minus 10%. Interesting to see that the last month in January was actually up again with 3%.Also important to know here that we're meeting extremely high comps. That's why we also look at it from a 2-year perspective. So it was 16% growth on a 2-year growth. Maybe more important here is to see how many of these puppies we are getting into our system. At the same period, when the registration was down 10%, Musti was gaining market share, and we're able to get 10% growth on puppy -- new puppy food customers into our system. And on a 2-year perspective, we were actually [ 16% ] growth, which is very, very high numbers, especially compared to the numbers of puppies coming into the system all in all in the market. We believe that this is the similar trends in all 3 markets, and we're seeing it both in Norway and Finland. The most important thing with this is that not only that we're getting more than our market share of puppies into our system. It's that all of these tubes will hopefully stick in our system for the coming 10 years. And when that happens, they will then -- they will support our growth.We can move on to the sales. Net sales increased by 20.2%. Once again, a very strong quarter. 9% like-for-like. Strong growth in all countries. Finland came in at 12% growth, strong growth in stores and a bit lower online due to meeting high comparison numbers last year due to COVID-19. Sweden, 20% growth, strong growth in stores and online. And Norway, 52% growth, very strong growth in both stores and online. Net sales the last 12 months was EUR 358 million. So a very good trend here as well. And per segment, Sweden and Norway are taking bigger share, where Finland has 43%; Sweden and Norway, 56%. And last year, at the same period, Sweden and Norway had 53%. So Sweden and Norway are taking a bigger share of the market and the sales of the company. And this is also planned. So a very good trend here as well. And if we look at the sales on a longer perspective on the next slide. I was talking earlier at the growth on a 2-year basis, and this is very important. When we look at the quarter, we have seen that the last 6 quarters, we had around 20% growth. But if we look at it on a 2-year perspective, the growth in the quarter was 44%, which is the highest ever. And all of the important indicators supporting strong and sustainable growth are going into the right direction. We are constantly winning new customers. The average spend is going upwards. Customer satisfaction continues to stay on a high level, and the share of owned and exclusive products is growing. We also had a record percentage of owned and exclusive sales in the quarter. And this is, of course, important for everything when we look going forward, and this is supporting our growth trends. And if we look at the trends, as we see in the chart, this looks very, very positive for us. So if we look at our profitability. We are following a lot of KPIs, but of course, we are following EBITDA as well. And most delivers the record EBITDA with a record margin in the quarter. In Q1, Musti delivers EUR 19.8 million in EBITDA with 19.6% margin. We have a seasonality effect between the quarters, that also is reflected in the margin where Q2 and Q3 is the lowest and Q4 and Q1 is the highest. But nevertheless, if you look at the trend, this looks extremely positive going forward. And also we are breaking a record here again.Now Toni will go through Q1 EBITDA and gross margin.
Thank you, David. So as you saw the great development there on the sales and profitability, so let's dig more into the profitability, and we could start from the gross margin. A record high gross margin for Musti Group in the quarter, and this was driven mainly by the more of directly operated stores. So as we have in our strategy, we are acquiring the franchising stores and opening new greenfield stores. So the share of these grew in the group and also the Christmas time favorable product mix. It was quite cold December in Scandinavia, kind of accelerating then the sales together with the Christmas period for accessories. And also, our owned and exclusive brands increased in the portfolio.And despite the kind of a global supply chain turmoil, that there is, we were able to improve the gross margin. So especially the flights from Asia that also from our accessories are, to some extent, coming from is impacting the cost.Then on the EBITA -- The Group's adjusted EBITA increased by 25% and was the new best quarterly result for most history. And this is, of course, derived from the same reasons through the gross margin and strong season sales.We had some adjustments to EBITA, and these are pretty much all related to our development project in our end-to-end supply chain where [ Eskilstuna] warehouse is playing an important part, but we are looking the picture more wide. So these costs occurred there. Operating profit spiking first time over EUR 10 million in most history. Then on the next page, more on the -- our familiar curves showing the development there on adjusted EBITA margin over the years. So looking at the 2019 where they're a bit below the 9% level and '20 is at 10.5%. And now last year, almost 11%. And if you are looking at the latest 12 months, we are now breaking also the 11% limit here. So well on the track in our long-term targets.On a 2-year basis, looking at the EBITA development, so over 70% improvement in that one. And then as I hope and probably all of us hope that the pandemic situation is coming to an end, so these curves on the right side picture should then, in the future, a look more as they have been, and we cannot forget the exceptional ones in there between '20 and '21.Then if we look at the country by country, the performance there. So if you -- as we move a couple of slides further, I think we have Finland there. Yes. Great. So in Finland, the net sales increased by 12%, good development there. And then looking at the profitability of Finland. So kind of there are some maybe group internal cost allocation methods, which are affecting here. So as you might recall, in Finland, we have, during last year, acquired quite a few franchise stores altogether 17. And then the change there in the top line of Finland and the franchise fees, how they flow into our system and then how we allocate the group cost to different segments. So in these external IFRS numbers, Finland is getting a bit more punishment on that as the top line is the driver for these cost allocations. And at the same time, then Sweden and Norway benefiting out of that. But then got more interested about the topics of why we clean these effects out. Actually, also Finland is improving on the gross margin level, the profitability a bit. So when we have then completed our strategy also in Sweden related to the franchising stores, these effects will then again normalize.During the quarter 1, we opened 5 new stores in Finland. And in general, a good performance from our most mature market.And on the next page, we go to Sweden. Strong sales and profitability in Sweden, growing over 20%, good growth both in stores, in online, and a lot of new customers in the Musti system. EBITDA in Sweden increased by over 40%, closer to 45%, to EUR 8 million. And it's good to remember that also in the Sweden numbers, there was no significant currency headwind or tailwind. So it was quite on par with that one. So a really good performance from Sweden. And as I said, there, we execute at the moment the franchise acquisitions. So there were 5 franchise acquisitions down in Sweden, which is up than a bit over half of our total investments for the quarter.And then on the final segment page, we have our rapid grower in Norway, totally on its own level again. So net sales increasing over 50%, profitability increasing closer to 70%. So very good performance, a bit of a currency tailwind on the top line. But nevertheless, the performance in Norway is good. The pace of opening new stores is -- we like it. And also the vintages of the stores in our portfolio are developing well. And therefore, you can see the clear improvement on the profitability of Norway.So then the financial position on the following slides. So the cash flow, big burden on the quarter, quite on a satisfactory level, but kind of a high inventory what we had in the quarter, impacting around EUR 8 million in the cash flow, taking that into consideration is a very good result from us. And that will, of course, then bounce back in the following quarters when we empty the shelves in the stores. But this was sort of a known decision that we wanted to secure the availability and all products on the shelves during the important holiday period for us.Gearing balance sheet, in general, quite on the steady mode. Our leverage on the same level as it has been, and cash position strong. During the quarter, we also renegotiated our loan portfolio. And there, in a full year level, the positive impact on the better margins on the loan is around EUR 0.5 million.Investments in the quarter, as mentioned, so EUR 5.5 million on the M&A or franchising acquisitions and then EUR 4.7 million on store refurbishments and refreshments, IT part, digital capabilities and a bit also in our supply chain.And then we go into the long-term financial targets. So no change in that. As mentioned, we are well on track to achieve this and keep the promises on this one. And then also today was the first day in our history that we are now paying the dividend in 2 installments. And the first installment of the year was splitting out from the share today.
Perfect. So thanks, Toni. Great. So if I just will summarize the quarter with these fantastic numbers. So first of all, we've had a very strong first quarter. Record sales, record EBITDA, record EBITDA, record margins, et cetera. We were growing 20% in the quarter, mainly driven from new customers as before. On a 2-year basis, that's actually 44% growth. All 3 segments showed strong growth. Store sales increased with close to 25% and online share sales was 21.5%.Gross margin was strong and increased to 47.5%. Last year, it was 46.1%. So a very good achievement as well. And also here, we've been continuing to focus on profitable growth supported by our efficient and scalable platform, and that's related also to the Eskilstuna [indiscernible] that we have been talking to about earlier. Things are going much better there. We're seeing good progress. And that also supports the fantastic EBITDA that is increased by 26.5% to EUR 19.8 million.And as we -- Toni talked about Sweden and Norway's adjusted EBITDA margin, was very high, 18.7% and 20.8% versus Finland [ 23.7% ]. And Musti's underlying growth has continued to be strong after the first quarter. So overall, we're extremely happy with the report and the development. So with this, I would like to hand over to Q&A.
[Operator Instructions] And our first question comes from the line of Svante Krokfors from Nordea.
A couple of questions, a bit detail perhaps. But first on group costs impact on adjusted EBITDA was EUR 1.4 million year-on-year. Can you split up what that consists of?
Yes. That's -- thank you, Svante. That's actually a good question because in the group functions or group cost, you could easily think that it's only sort of a head office cost. But actually, that includes also sort of a variable element from our supply chain and Eskilstuna warehouse. So when the volumes go up, also then the group cost in that part goes up. So it's a portion of there. So roughly 25% of group cost is that part.So then if we kind of split that into an element, so of course, the volumes were really high in the quarter. That portion went up. But then looking at the group, central costs more on the kind of head office cost. So there, the development compared to previous year was maybe on a [ 15% ] level rising up, so kind of a scaling in that sense quite well. And we need to also then remember that during '21, quite a few new colleagues joined Musti, so we can feel that impact on these quarters, but it's -- then stating down as we have said together with David that we take a more emphasis and more look on the scalability in the company.
Okay. So the absolute level that you had in Q4, is that what we should have as a run rate? Or were there some extras in Q1?
Are you referring to the one-off, Svante?
No, no. In the adjusted, I mean, was there some -- I think you mentioned the securement of availability for Christmas sales. Did that have some impact also on that? Or was it in another line?
Yes. I think we're referring to is the kind of securing availability and pushing a lot of goods in from Far East, et cetera, that has an impact on -- a bit on the cost in a way for the quarter, I think towards that.
Okay. And then on -- you mentioned on Finland, the increased allocated costs. Should we then assume that a similar amount has been taken away from Sweden and Norway? And could you elaborate a bit around that? And what was the underlying margin improvement in Finland, Sweden and Norway if we adjust for kind of the change in allocation?
Yes. Well, kind of then in the future, Sweden still has around 30 franchise stores. So this will even off in the coming quarters and years during that time. So in a cleaned-up version, Finland improved slightly, and then the other countries improved a bit more on the gross margin level. What kind of other [indiscernible] going into the internal ways of calculating, we will just probably be more confusing for all of us. So we stick with these ones.
And then the Finland like-for-like sales was a bit lower perhaps than one could expect, but was that due to the online comes from previous years? Or what does explain that?
Yes. So one reason is that we were meeting pretty high comps from restrictions in the online part that was affecting the like-for-like. Yes, that's true.
And then in the report, you mentioned wage inflation in Norway. Could you be a bit more specific there? And do you see wage inflation in other countries accelerating also?
Yes. The wage inflation in Norway is more coming from the last year where there were the increases in the local salaries. And now we know in Finland that the salary inflation will be around 2% level, which is fairly normal. And we expect Sweden to then follow more on that level.
Our next question comes from the line of Maria Wikstrom,
Perfect. Some of my questions were actually already answered, but touching more on the owned and exclusive brands and the shares increased in the Q1. And just giving a little bit of color that where -- like if we look at geographically that given that the share of the owned and exclusive brands have been the lowest in Sweden, so were that the country contributing of most of the lift? Or was there any variation across the regions in that metric?
You can say that it has been fairly stable in Finland the last year. The uplift what we're seeing, the positive trend is coming from Sweden and Norway. The kind of biggest dedication from a positive perspective is coming in Sweden. Also, both stores and online where online is picking up pretty fast. That's related to the online acquisitions where we did with Animail and VetZoo. But from a geographical perspective, it's Sweden that, yes, has the biggest uplift.
Okay. Perfect. And then how do you see now that, I mean, if we get more to a normalized trading conditions now, I mean, within a couple of the -- I mean, maybe a couple of months when most of the restrictions are removed that do you see the channel shift going back more in stores? Or what's your anticipation? What is like -- what -- how does it look like the channel split in your operations now when we enter normal conditions?
I think the last months, we don't see any impact in the channel shift. So if you look at the quarter and also last quarter, that is more or less normalized levels, I would say. I think our type of customers are -- has been going to the stores, even though there's been lighter restrictions, mainly also correlated to services and trusted advice and all of that. So we don't believe that it will shift from a channel perspective going forward.
Okay. Interesting. And then maybe one on the loyal customers. And you reported a very nice growth in your loyal customers. And I think that -- I mean data is key in today's retail. But what do you think, I mean the -- I mean how have you achieved this high number of new loyal customers? So I mean what do you think is contributing there? And then a little bit that, I mean, what do you plan for this year, I mean, to basically take the most out of your loyal customers?
I think it's hard to mention then only one thing is it's a total concept to start with trusted advice, and then we've been -- from a timing perspective, it has been good that we've added all of these puppy features, puppy books and all of that, that we're doing. But I think overall that we're helping the customer for all the needs more or less, and we can give the trust. And also, we have had, as Toni talked about, that we have had very good and high availability. Even though there have been supply chain problems, we have been having smooth deliveries online or we're having the store -- products in the stores, et cetera. So all of this gives convenience, and that's why we're also seeing very high NPS numbers from our customers and recurrence of course. So yes, I think overall, it's hard to just mention one thing.Going forward, if we look at the kind of growth in customers coming in, in the loyalty program, it has been fairly stable at the 12%, 13% every quarter. And we're seeing it from new customers coming in from -- in the puppy phase, but we're also kind of taking more market share from groceries and stealing some of their customers.
And then just a little bit one thing to know that you have had this press coverage in Finland about the -- some of the store employees complaining about the -- I mean some of the issues, I mean, as a source. So I mean how have you responded to these issues? And do you think you need to introduce, I mean, some of like new elements when it comes to training or actually have more people in stores to reduce the workload? Or what's your response, I mean, to these claims?
I mean, first of all, I think we have done a great place to work service for many years, and they have been on a very, very high level, top 3 in the Nordics for many years. We ended with that in 2021 was the last one, and it was also a very high number in early '21. Then COVID-19 came, we didn't do it. So maybe we missed something there. But of course, the COVID-19 situation hasn't helped. When the traffic has gone back and forth from stores to online, we have been adjusting store hours, et cetera. So what we did -- and then also training has been a problem because -- from a physical perspective. We have been trying to adapt as quick as possible. We are doing service now. We are having meetings with the store personnel. We will add back training hours now when the restrictions is coming -- is fading away, which is good. And then we will need to add back some store hours, but that is in smaller locations where people have been working more or less lonely in the stores. It will not have an impact, I would say, from a -- from a cost perspective, it will have a very, very small impact.
Our next question comes from the line of Olli Vilppo from Inderes.
Congrats for the great numbers. I wanted to ask about cost inflation in the products that you purchased, is there any? And how do you plan to take it to the prices?
Paul, that's a valid question at this time. So far, the cost inflation has been quite moderate for us. Looking at the last 12 months back, we're talking about something between 1% and 2%. And now looking at the quarter 1, we talk about maybe 3%. And in the near future, this is also -- the level that we see is affecting us. So the main drivers have been the freight cost from Asia. So roughly 6% to 7% of our goods come directly from there and, of course, indirectly bit larger portion via European trader's, but we have our ways to do that.The first and foremost is not the one that we would push them to the customers, but that's, of course, partially what we need to do as well. So we work in our whole supply chain to make it more efficient. We work hard in our sourcing to take care that we get the best prices in the market. So Musti has grown in the past years quite a lot. So we have a different type of leverage when we negotiate our sourcing deals. And we also improve that function other ways in the -- during these times. And then the final one is, of course, that we have the ability to raise the prices, and we have a bit used that already, but not to the extent that it's too visible. So it's a combination of all of these. And we are monitoring, looking at it every week, almost every day in these functions.
Okay. Another question. Did you book the extra tax to that P&L that you had this EUR 0.9 million?
Yes. I think it's booked there. It's quite sure matter that it will be returned for us, we believe.
Okay. And final question about this media scandal in Finland. Did it affect your customer relations? Has anybody thought that they are not anymore loyal customers because of this?
No. We, of course, have been following this very closely, and we haven't seen anything that -- we haven't seen any drop in the loyal customers at all, which is, of course, important, but low impact.
The next question is a follow-up question from the line of Svante Krokfors from Nordea.
Svante from Nordea. On a more positive note, perhaps you have there in appendix, you have your Musti Group ecosystem. Could you elaborate a bit around that what you have introduced recently and then what we could expect going forward?
Yes. Sure. What we launched is something that is working extremely well is the live shopping that we're doing. So if you go into our websites a couple of days a week, we're doing live shopping simultaneously in all countries. And that is working extremely well. It's something that we are able to do now when we have the same platforms with the online and the website, et cetera. And on top of that, we've been launching things in the loyalty program and also a lot of things related to the puppy phase.But all in all, I think these kind of digital things that we're working with is supporting also the number of new customers coming into the loyalty program. But more will come. It's not related to heavy CapEx or stuff like that. We're doing the most of it internally, and it's mainly related to marketing, in a way.
Do you believe that it's going to be more easy to add the use of your services once the -- or you expand your ecosystem as the societies open up after the pandemic? Is it easier to do it in stores?
Yes, we think so. We are also looking into the services, physical services, et cetera. And that's been part of the strategy, of course. But we're going to speed up the number of service stations in the stores. It's important for the offering and also driving customer satisfaction, loyalty and also average spend.
Thank you. And as we have no more questions registered, I now hand back to our speakers.
All right. Thanks, everyone, for listening. And if you have follow-up questions, please contact Essi, and we will set up meetings. Thank you very much.
Thank you.
Thank you. Bye-bye.