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Good morning, ladies and gentlemen, and thank you for standing by, and welcome to the Maisons du Monde Third Quarter 2021 Results Conference Call. [Operator Instructions] I must advice that your conference call is being recorded today, Tuesday, the 26th of October 2021.I would now like to hand over to your first speaker for today, Mr. Christopher Welton. Please go ahead.
Thank you, operator. Good morning, and thank you very much for joining this call to present Maisons du Monde's Third Quarter and 9 months 2021 sales. Hosting today's call is our CEO, Julie Walbaum. She is joined by our CFO, Regis Massuyeau. Julie and Regis will be making today's presentation, and then we will open up the call for your questions. You have certainly seen the press release we issued this morning. The conference call slides can be downloaded and viewed from our website, maisonsdumonde.com. This call is also being audio webcast, and a replay will be available on our website later today. All listeners are reminded to read the forward-looking disclaimer on Slide 2. I will now turn the call over to Julie. Julie?
Thank you, Chris. Good morning to everyone, and thank you for being with us this morning. I will start with an overview of the 9-month performance. Regis will then detail our financials and I will come back to share 2 important strategic announcements that we made this morning and also to present our updated 2021 guidance.Let me start on Slide 5 with the key highlights of our performance. The first important highlight is that we have achieved solid sales growth in the first 9 months of the year. With sales of EUR 980 million, we are 21% above the same period last year, with comparable lockdown-related store closures over the period. We are also significantly above pre-pandemic levels with sales 16% above the first 9 months of 2019. This dynamic shows again the appeal of a brand offering as well as the strength of our omnichannel and pan-European model.The second important highlight is that on the back of this strong performance, we are raising our full year guidance. We now expect sales to grow in the low teens and EBIT margin to land somewhere between 9% and 9.5%. Free cash flow should now be materially above last year's level. This significant upgrade confirms our ability to navigate a complex environment in an agile yet disciplined manner, including supply and freight forwarder management, product mix optimization, smart revenue management and site cost monitoring.Third highlight, we are announcing today that we have reached an agreement with Optimal Investment Group that will reduce our stake in Modani to 15% from 70% currently following the strategic review we announced last March. We are confident this new setup will deliver the highest return for our shareholders. Modani will be accompanied by a local private equity fund to pursue its growth trajectory while we, Maisons du Monde, will fully focus on our development in Europe.Finally, we are launching a EUR 50 million ESG Impact share buyback program, reflecting both our solid free cash flow generation and our commitment to sustainability. Considering the upgrade of the guidance that confirms our very good business development and the future proceeds to come from the Modani's transaction, buying our shares in the current environment is a very good investment. We consider it is a good time to launch the first share buyback program with -- along with a high payout ratio underpins our permanent focus on returning value to our stakeholders.Let's now look into this in greater detail. On Slide 6, you see that over the first 9 months of the year, Maisons du Monde turned in a very strong and broad-based outperformance. Store sales were up nearly 17% and online sales increased by nearly 29% in the first 9 months. Our selective marketplace continued to gain momentum and made a significant contribution to the acceleration of our digital sales, accounting for 21% of French online GMV over the 9 months. As a result, online gained further share in total sales mix from 34% over the first 9 months of the year in 2020 to 36% this year. This performance clearly attached to our ability to execute our growth agenda while navigating through the volatile environment we're facing.Remember, we explained at the end of H1 that pandemic-related lockdown in the first half of the year reduced our total sales by an estimated EUR 45 million as a EUR 15 million gain in online sales could not fully offset a EUR 60 million drop in store sales.Another source of satisfaction is our strong brand and customer dynamics, our active customer base that is customers who bought with us over the last 12 months has increased by 23% year-on-year in the 9-month period. Within that, customer growth was balanced. Number of new customers increased by 22%, one number of returning customers increased by 23%. Also, a number of omnichannel customers in the period, that is both online and off-line, over the 9 months increased by 37%. Furthermore, we continue to see active engagement by our customers across social media channels. For instance, our Instagram community rose by 23% to reach 5.2 million followers at the end of September.On Slide 7, we present our traditional look at sales by Geography, Channel and Category. And as you can see, we posted high double-digit growth across the board. By geography, both France and International were up strongly, respectively, by nearly 18% and 25%, demonstrating that activity has picked up across all of our markets. As you can see, our growth is not only above last year, but also above the first 9 months of 2019 with France up 8% and International up 24%.In the third quarter, sales in France were down 3.3% as we cycled above the quarter last year that was marked by strong post-lockdown consumption, while International sales were up 1%. As a reminder, all our stores were opened this year in Q3 following the Q2 '21 where international stores were more open than last year, while France was broadly even.The complementarity of our channels is once again demonstrated by the 17% growth of in-store activity and the even stronger 29% in online as consumers shifted from 1 channel to another to adapt to restrictions in different markets since the start of the year. On a 2-year basis, store activity is broadly stable, reflecting the impact of lockdown in H1 this year. While online is up by an extremely strong 61%, validating our strategic decision to build a digital-led omnichannel model and to launch a curated marketplace. In Q3, as expected, store sales were more or less stable, while online sales were slightly down 2% against a high comparable base.By category, year-on-year growth was also strong with a 19% increase in Furniture and nearly 23% in Decoration. This is true also on a 2-year stack with Furniture at 12% and higher margin Decoration. In Q3, both were slightly down, Furniture by 2.4% and Decoration by 0.4% due to high comps and limited product availability, particularly for Furniture.On Slide 8, we look at the key operational milestones over the first 9 months. We launched our Fall/Winter collection, which includes 5,700 SKUs and were designed around 6 different themes. In line with our DNA, we offered our customers the experience of traveling around the world with a particular focus on rough and natural fabrics, such as Linen, [Han, Sansu and Wood]. This responds to our customers' desire to have more nature in the everyday life.Our color block and golden collections were also particularly successful as vivid colors and exotic themes convey some return to the buoyancy of life for our customers after so many months of restrictions. That's what they tell us.In terms of product categories, we saw continued good dynamics around home office and also around decoration and greenery; plants, right flower arrangements, candles, mirrors, wall decor and so on. To celebrate our 25th anniversary, we partnered with the design Duo Marine and Marine of Renee Recyle to launch its colorful capsule collections of small furniture made from minimum demand products returned by our customers. This recycling capital was sold down in a couple of weeks and all profits were donated to the Fondation des Femmes, an NGO that defends women's rights.To continue to expand our customers' choices, we launched the Kids categories on our marketplace with again a very curated selection of brands renowned for their style and good quality price ratio. We introduced 100 brands and 7,000 products, which means we multiply by 6 our Kids offering and started to offer new categories such as bedding or [bathing] for childcare.In terms of brand recognition, Maison du Monde was designated by Reech, a social media listening agency as the second most mentioned brand by Home & Living influencers in France on an organic basis. This illustrates once again how much Maisons du Monde is natural reference for experts and fans in Furniture and Decoration.Finally, we kept enhancing our omnichannel proposition. We launched our 24-hour home delivery service for online decoration orders. And even more notably, we launched a bit ahead of time, our in-store marketplace solution on vendor [tablets] in first 40 stores across the French network. It is still holidays, but qualitative feedback from sales associates is very promising.On Slide 9, we focus more specifically on our curated marketplace with extensive yet highly selective offering complements our own product range and with success helps drive our online growth. We saw a very good level of activity over the first 9 months with gross merchandise value or GMV, reaching EUR 46 million. That is 21% of our total French online GMV, well ahead of our expectations. We continue to see an increase in the number of vendors, nearly doubling the number of vendors since the beginning of the year, adding over 30 in Q3 alone. The number of brands in the marketplace now exceed 700, which represent over 85,000 products. We realized over 280,000 transactions already and customer satisfaction is excellent with a score above 4 out of 5 for all marketplace orders.Best-selling categories on the marketplace include sofas and armchairs with also outdoor furniture as well as bedding and bed linen. Those latest categories, bedding and bed linen benefited from material catalog extensions, especially here where MDM offering is fairly limited.On the following slide, Slide 10, you can see the evolution of our store network over the first 9 months of the year. The current environment as well as the underlying trend towards more digital do lead us to slow expansion in terms of number of openings. It does not, however, change our strategy, which is to dynamically manage our store network and to selectively open new stores in high potential areas. Stores help build proximity with our customers, showcases our brand and is a key enabler of our omnichannel strategy. So at the end of September, we operated 367 stores, too fewer versus December of last year. In Q3, specifically, we opened 2 new stores, 1 in France and 1 in Switzerland. And we closed 4, 3 in France and 1 Italy. Over the 9-month period, we opened 13 stores in total, all the 3 outside of France, and we closed 15, 11 in France and 4 in Europe. As a result, we have a net reduction of 8 stores in France and a net addition of 6 stores in the rest of Europe. As you will see later on, we expect the total number of stores to be slightly higher at the end of 2021 compared to the end of 2020.On Slide 11, we look at the continuing progress we are making on our CSR commitments, a key pillar of our strategy. We described most of these measures at our first half presentation. So let me just highlight the extra step we took in the third quarter. We were one of the first 10 French e-merchants to sign the French E-commerce Federation Logistics Charter for sustainable e-commerce. This charter notably commits us to reduce the volume of product packaging and to use environmentally-friendly logistics such as electric vehicle companies. These efforts are all part of our longstanding commitment to become an even more sustainable company.And with this, let me now hand over to Regis
Thank you, Julie, and hello to everyone. Let me start on Slide 13 with our Q3 sales bridge. As you can see from the bridge, our sales in Q3 stood at EUR 317 million, not far off last year's record high third quarter sales. Like-for-like sales dropped by EUR 12 million or 3%. As mentioned earlier, this comes on the back of challenging comps as Q3 lastlast year, like-for-like growth was around plus 13, 1-3, taking full benefit of the end of the lockdown in 2020. This was partly offset by sales from new stores opening, which added another EUR 6 million in sales, fairly split between stores opened last year and those opened this year. Finally, Modani and Rhinov added another EUR 2 million in sales over the quarter.On Slide 14, we set the backdrop against which we operated in the third quarter. The environment continued to be tricky, notably in terms of supply, which continues to fill the aftershocks of the pandemic. I will go into more detail in a minute. In this context, our omnichannel model delivered the resilience performance against a very high comparable base as trends normalize after the atypical pandemic period. Overall, we can sum up the quarter as being driven by online in France and by the rest of Europe at store level.Let's drill down on stores. Our sales of EUR 229 million were broadly stable versus the third quarter last year, which, as you recall, benefited from strong pent-up demand as stores reopen post lockdown. We saw here a contrasting performance between France, where store sales were down 6%. And International, where they were up 5%, an obvious consequence of more store openings outside of France this year versus last year.In addition, it's important to observe this performance against pre-pandemic 2019. Over a 2-year period, we posted SC growth of 8% in store sales driven by International at 14 benefiting notably from the net opening of 9 stores, while France increased by 4% despite a net decrease of 7 stores.Turning to online. Sales performed quite well in the face of a high comparable base. Q3 sales were slightly down only 2% year-on-year at EUR 89 million, on the back of a strong 24% growth in Q3 of last year. In terms of mix, online represented this quarter 28% of total sales, a stable ratio year-on-year and a 2-point increase over a 2-year period. Here, its trends that led the way with 12% growth against Q3 of last year. International was down 7% as stores were opened more this year and customer resulted less to online. Overall, on a 2-year stack, online sales are up by a robust 22%, confirming that it is a strong growth engine for Maisons du Monde everywhere we operate.Finally, the Q3 context was obviously marked by continued tensions on maritime transport and the supply chain. We saw heightened pricing pressure on maritime threat. In this context, we were able to secure most of our 2021 shipping allocation and avoided so far, thanks to our 21 contracts, incurring major short-term cost inflation. The result is that we expect a lower impact on our profitability this year.In parallel to the inflationary environment, the suspension is linked to container availability with an increase in blank savings, meaning shipments get regularly canceled. Both elements put significant pressure on our inventory, which continues to run at a suboptimal level as our suppliers in India and Vietnam operating below capacity. Indeed, while manufacturing in India has been progressively ramping up, capabilities in Vietnam have been severely hit by the pandemic. In particular, our factory in Vietnam had to close for 6 weeks to the end of September and its activity is only progressively resuming this month. This continues to impact inventory resupply, notably in Furniture.Focusing on best sellers and monitoring our suppliers and freight forwarders extremely closely to minimize shortages have been a success this quarter and is the reason why we are confident in raising our full year forecast. While uncertainty and volatility remains, we consider we are well equipped to limit the effect for the rest of the year.Turning to Slide 15. We look at the components of our 9-month sales growth. As you can see on the bridge, our sales in the period reached EUR 980 million adding EUR 169 million since Q3 2020. That translates into a robust 21% growth. That growth was largely driven by like-for-like sales, which added EUR 143 million attesting to the strength of our omnichannel model.New store sales added another EUR 15 million, of which EUR 9 million come from stores opened in 2020 and EUR 6 million from stores opened this year. Modani and Rhinov contributed an additional EUR 12 million in sales. Over 9 months, Modani sales are up by a solid 34%, demonstrating both good category dynamics and tight management of operations.Slide 16 looks at our performance by channel over 9 months, showing our omnichannel model is well adapted to the environment in which we operated. As previously, sorry, mentioned by Julie, store sales have clearly rebounded versus 9 months of last year, growing by 17% in the period. Growth was particularly strong in International, up 26% year-on-year and 9% versus 9 months of 2019. While France saw a recovery versus the third quarter of last year, rising by 9% but is down 8% compared to Q3 2 years ago, due notably to COVID and 7 fewer stores.Online sales were up 29% versus 9 months of 2020, driven mainly by France, which is a very strong 37%. Over 2 years, growth is 61% and is roughly the same in France and International market, respectively, 62% and 60%, showing the relevance of the model in every country where we operate. Finally, supply chain conditions in which we operate are not that different from what I described for Q3 as most of the elements started in Q2. As mentioned above, this resulted in our inventory rebuilding in longer than what we expected. We expect these challenges will have an impact in Q4, and will -- and very likely in the first part of 2022. Julie will say more about this shortly.Switching to Slide 17. Let's have a look at the evolution of our sales mix. By Geo, International is gaining momentum, growing from 48% in the first 9 months to 49% this year. By channel, online is increasing its contribution reaching 36% of this year -- in the 9 months of this year versus 34% in the same period last year. We know that in the last 18 months, performance in online has been boosted by the COVID impact, but we have also materially strengthened our online platform, notably via the launch of our marketplace. And as a result, we sustainably crossed the 30% line. By category, Decoration is penetrating fairly more on e-commerce and enhancing the repurchase rates. Deco is increasing its shares to 52%. This is as well due for the time being to the short-term tension on furniture supply.On Slide 18 and before handing over to Julie, I will end where -- on this slide where we zoom in our performance by quarter since 2019. Basically, to remind that our activity in each of the first 3 quarters of this year shows double-digit growth against the same quarters of 2019, really important to always take that base as a reference. Looking over this 2-year period and correcting by 2021 for the COVID effect. It's interesting to point out that Maisons du Monde has been posting a very positive high single-digit CAGR in sales growth.Concluding this session with that reference to 2019, let me hand back to Julie.
Thank you, Regis. I would now like to share with you 2 important decisions that we have made. First, on Slide 20, we're announcing today that we are reducing our stake in Modani to 15% from 70% by selling 55% of the company to Optimal Investment Group, a U.S.-based private investment group specialized in midsized company. This decision is in line with the strategic review that we launched in March and reflects our decision to focus our attention and allocate our capital to further developing Maisons du Monde's existing positions in Europe, where we see better value creation opportunities for our stakeholders over the next few years.Modani's activity is well ramping as demonstrated by 34% sales growth over the first 9 months. And we believe that Optimal Investment Group is the right partner to combining them in the next phase of their development. With our remaining 15% stake, we will be able to continue to observe evolutions in the U.S. market and also benefit from future value creation as Modani continues its growth. We expect the transaction to close in the coming days.Our second strategic decision on Slide 21 is the launch of EUR 50 million ESG impact share buyback program. The group intends to repurchase sales over a period that begins on October 27 and run through the end of May 2022. The ESG component consists of an allocation of the outperformance in purchasing the shares over the program execution to 2 nonprofit organizations, namely the Maisons du Monde Foundation to promote actions in favor of forests and trees. And another soon to be selected non-profit optimization dedicated to promoting diversity and inclusion in the workforce. This buyback is then pursuant to the authorization granted by our shareholders at our June 4 Annual General Meeting. This initiative reflects our solid cash generation and demonstrates our commitment to create long-term sustainable value for all our stakeholders.On Slide 22, we turn to our commercial and development priorities for the fourth quarter. Our first priority, as you can imagine, in today's context, is to manage constraints in maritime freight capacity and cost increases to protect future profitability while ensuring supply, with the continued emphasis on bestselling items. Our teams are fully mobilized to strike the right balance between product availability and cost management. Supported by a series of tools and processes that we implemented last year and we enhanced throughout 2021. We will also complete by year-end our 2022 freight forwarder negotiations.Second, we will reinforce our customer proximity through the launch of new services. Specifically, we will introduce our 4-hour Click-&-Collect service so that customers can pick up their online orders 4 hours later at a Maisons du Monde store near their home. And we will deploy our pickup point service for large items through hard France.Third, we will continue to enrich our omnichannel proposition with 2 main initiatives. First, we will roll out our new online mobile platform in Italy. And we will continue deploying our marketplace in the 40 French stores where it was just launched. And as always, we will keep sustaining our CSR efforts.On Slide 23, let me share with you a bit of color on how we see Q4 activity. While the comparable pace for Q4 is once again usual given the partial lockdown in November and the exceptional rebound in December last year. Dynamics are expected to be different across channels. On the one hand, web performance in Q4 will be down for 3 reasons: one, comparable base; two, product availability; and three, product protection. Let me detail each.First, comp. The comparable base for web is very high, plus 31% growth last year versus 2019. In 2020, indeed, online benefited from the combined effect of high demand for home furnitures, acceleration of digitalization, store closures in November and in France, the November launch of our marketplace.Second, product availability. As already stated by Regis, product availability is under pressure, especially Furniture, which accounts for 70% of online sales. As we enter the quarter, Furniture inventory is lower than at the same time last year. As in the context of heavy shipping constraints, we have deliberately chosen to favor shipment of decoration items to set forth the Christmas season in our stores. I remind you that Q4 is for Maisons du Monde very much of a Decoration and Store-based quarter. Marketplace offering will help mitigate this effect in France. However, suppliers are running low in inventory across the sector, and it will not fully compensate.Third reason, product protection. Despite the promotional pressure we are currently observing online across the market, we choose not to overspend on rebates or marketing as our agenda is to drive profitable growth at all times and especially this quarter where product supply remains a challenge.On the other hand, Store sales are expected higher than last year. Traffic should be up as we don't anticipate any lockdown this quarter. However, traffic to South Commission will be impacted as well by limited product availability at least in Furniture. As a result, we currently expect our top line growth rate in Q4 to be slightly negative. Now after all year low points in September regarding shipping capacity, we have been able to raise our weekly shipments since the start of October, and we expect to close the year at a better inventory level compared to the end of 2020.Let me conclude on Slide 24 with our full year guidance, which factors in all the headwinds I just mentioned. Visibility has improved even if some uncertainty remains linked to ongoing supply chain challenges. On the back of our strong 9-month performance and assuming that store activity is not materially disrupted for the rest of the year, I am pleased to say that we are in a position today to raise our full year target. We now target top line year-on-year growth in the low teens versus high single digit previously. EBIT margin of between 9% and 9.5% in versus margins up -- by up to 50 bps previously. As a reminder, our 2020 EBIT margin was 7.3%. So this new guidance represents a gain of between 170 and 220 basis points.Free cash flow should be materially above its 2020 level, while our previous guidance was above. And we expect a slightly higher stock count at year-end versus predictable. Let me also remind you that we will hold the Capital Markets Day on Monday, November 8, to present our strategic road map, and we look forward to seeing you there.So before getting into Q&A, let me reiterate our 2 key messages of the day. First one is that navigating through COVID disruptions over the last 18 months now, our performance shows the strength of our brand and the resilience of our omnichannel model. Second is that announcing today the disposal of the majority of our stake in Modani and the launch of share buyback program, shows our permanent focus on returning sustainable value to all our stakeholders.Thank you for your attention. Regis and I will now take your questions.
[Operator Instructions] We have the first question coming from the line of Marie Fort from Societe Generale.
Could you give us more insight about your disposal -- your Modani's disposal. How would it impact your P&L in terms of cash? And will it happen before the end of the year?My second question is regarding your pretty confidence about the end of the year. Have you -- do you have a difference in terms of inventories between Furniture and Decorations? And as Decorations accounts more in Q4 in terms of sales. Is it the reason why you are pretty confident for the end of the year?Also in terms of number of stores, you're going to open more stores at the end of the year. Could you precise us where and give us an idea of numbers?And also last question is about inflation costs for 2022. It's a bit in advance, but could you give us some idea of how do you see the 2022 inflation cost?
Thank you, Marie. So Regis will answer your first question around Modani. I will take questions 2 and 3, and Regis will answer the last question, Regis.
Thank you. On Modani, first of all, vis-a-vis the closing. We expect the closing of the transaction to happen in the coming days as we do not see any complexity to proceed that's complete onwards.Second, you had a question vis-a-vis the economics. We decided not to disclose all of them, but 2 elements I can share already is that, a, it will have a slightly moderate positive effect on EPS for the year. And second, obviously, we get proceeds, which is one of the reasons this morning. We as well combine the announcement of Modani to the share buyback program.I can take the fourth question vis-a-vis inflation costs for 2022. It's a bit early to be conclusive on this, obviously, as mentioned by Julie, in one of the slides. We are, at the moment, negotiating our contracts for '22 on freight forwarders. What we can already say and we will come back in due course with more detail, but this inflation will impact '22 quite significantly. You all know the context on freight. Against that backdrop, we have been able to put in place a selective price increase that will offset most of this effect. So I will -- we will come back very soon with more detail vis-a-vis all other elements of inflation. But I think the question would probably have been around the specific element of context that we have highlighted. This is what I can say today in parallel of managing all those suppliers in terms of mix management as well.
On your question about year-end and the mix between Furniture and Decoration, you're absolutely right. The Q4 is more Store gears and Decoration gears.. That's absolutely the case as of a seasonal effect. And this is why we have deliberately chosen to favor shipments of Decoration over Furniture because for us, it was really important to safeguard the Christmas season, which is Store and Decoration base and holds a lot of our gross margin on the year. So in terms of striking the right balance between availability and margin protection, we did decide to favor Decoration shipments over Furniture. And this is why, indeed, we expect store performance to be positive and that explains the raising of our guidance for the full year, indeed.Regarding the third question around the number and location of new stores. So we are saying slightly higher. So we should -- we could count around the 0 to 5 net addition of stores, and they will be mostly, if not all outside of France.
[Operator Instructions] We have the next questions coming from the phone lines from the line of Clement Genelot from Bryan Garnier & Co.
I have 3 questions from my side, if I may. The first one is on guidance. Can you help us understand what block or what metric is driving EBIT margin guidance upgrade? I mean, is it to have some bullish view on the gross margin? Or may be to have a strong OpEx cost marketing.My second question is on Modani. Regarding valuation, do you have -- well, let's say, expect a higher valuation versus 2018 when you moved about Modani. And if I'm right, at that time, the valuation was at 1.2x sales.And my third question is on the buybacks. Do we have to expect to -- could I use buybacks in the future? Or may it have a one-off this time just because buyback share quite low?
Thanks, Clement. I will start with your 2 first questions, if I may. First one, if I understood well, is about the margin EBIT upgrade of the guidance. To help your understanding, I think it's 4 different elements. Without any surprise, increasing prospects vis-a-vis sales is obviously an enabler of improving the margin over the year. And it -- because it does create a better leverage. And I think on this part, you could consider that it's probably 1 quarter of the total increase of the margin projections.The second one is vis-a-vis the way we manage the mix over the semester. We mentioned the supply constraint and our key focus on making sure notably that for the end of the year, we can secure Decoration for store activity. We have a better mix on higher margin Decoration over in H2 versus what we were expected. And in parallel of this, a lower level of promotion. We are running below the level of last year. The context of availability of the product is one thing and the management of profitability is the second element to drive this. But promo is probably around 2 points below what it used to be last year, which is the second element overall over mix, which is one key element of increasing the margin projection.The third one, you mentioned is, is about efficiencies and strict management of our SG&A. Efficiencies in logistics, in warehousing, warehousing with leverage, but as well some productivity, which is notable in H2 and since the beginning of the year. And logistics in the way we operate transport to the customer directly or to stores. And I think all of these initiatives probably counts for EUR 10 million rollback versus what we were expecting at the beginning of the year and notably versus our expectation when we were earlier this semester.Finally, and it's an important element. I think the -- we have less of an effect of freight cost inflation that we were expecting in July. There is inflation on freight maritime. Our contract 2021 did protect us versus the huge level of inflation. And we had to pay to ensure delivery some extra costs. But at the end, we have less extra costs than expected earlier in the summer. So that's the 4 reasons that really are supporting the upgrade of EBIT, and I do not come back on this rate towards 2022 because I answered this point in the first question. I hope it does clarify about the equation. Vis-a-vis Modani, we will not disclose more precisely elements, as I said, vis-a-vis the valuation and the metrics of the transaction unless to reemphasize that it will be a positive effect on EPS and that the proceeds will obviously occur this year on a cash perspective.I hand over to Julie for your question vis-a-vis share buyback.
Thank you. So our first priority, just to make it super clear for everyone is to create in fuel sustainable growth. This is our main primary objective. This is how we create value for shareholders. This means that we invest every year and we'll continue to do so a significant share of our cash generated into further investments, whether it is for tech or all capabilities or marketing.Now dividend is our main vehicle to return part of this value to shareholders. And this is really our sort of normative model. Now on an opportunistic basis, we may decide if it's of additional initiative to return value to shareholders. This is the case now with particularly strong cash generation and proceeds from the Modani divestment because you should see that as an opportunistic way to return extra value to shareholders on top of our normative dividend payment policy, which is, as you know, very good as we have one of the highest payout ratio of the category.
We have a question from the webcast audience. This comes from Christian Devismes from CIC. And the question is as follows: 3 quick questions on the cost of sea freight. One, what can you say about the increase in costs you have incurred in 2021? Two, what can you say about the increase you will support in 2022? And three, do you think you can offset rising costs in 2022 with price increases and savings elsewhere?
Thanks, Christian and Chris for reading the question. 3 different elements there. 2021 inflation, as I said, we have been able to ring-fence our position considering the contracts we had in place. As I said, we were not immune to inflation. We had to pay extra cost on some of the lanes just to guarantee shipment allocation and we were making sure that we were able to source as much as possible our stores and customers. But indeed, the inflation is not at all at the level you can observe on the market if you compare spot market price, not at all.For 2022, yes, it will be much higher than 2021. As I said, we -- and Julie mentioned it, we are at the moment completing the negotiations, I will not give you specific figures, but the increase is very material. Again, not to the extent of market spots you can observe on some of the lines, which are above 10,000 per container, we are not at that. But however, it will be materially up versus 2021. In this context, we will limit the inflation via the supplier negotiation I was mentioning and indeed, a reasonable, selective and price increase that we are currently putting in place at the rhythm of our collection and subcategory, subfamily by subfamily to make sure that we can protect our competitive advantage and have a reasonable price increase. At the end, we consider it will be sufficient to offset most of the effect of the freight. So I think at the moment, that's what you can consider in your projection, and we will come back probably later to you with further details.
Operator, do we have any more calls?
We have no further questions at this time. Please continue.
Well, thank you very much...
Sorry to interrupt. We just have a follow-up question that just come through from the line of Marie Fort from Societe Generale.
Yes. Sorry, I've got another one, if I may. It's just in terms of 2022 order book, given the bottlenecks you've got on inventories, do you have already a visibility for the Furniture that you won't be able to deliver at the end of the year that could be comes out to the beginning of the next year?
It is true that -- thank you, Marie-Line. It's true that we allow customers to place orders when the merchandise gets shipped from Asia. So on average right now, the lead time between Asia and Marseille is about 6 weeks' time. So in December, we will start indeed having orders placed for merchandise that will be delivered in Marseille, maybe early January, and then we'll convert into sales in Q1 next year. But that data will materialize only in December.
We have another question coming from the line of Jill [Criswell].
Congratulations for the great quarter. I had 1, I don't know if you'd like to give us some color on the rhythm of new openings that you are considering for '22? Or is that something you would like to say for the Market Day?
Indeed, I think it will be clearer as we explained, the full omnichannel strategy on the Capital Markets Day. So if you may, you would have to wait another 10 days for that, and you'll have more details there.
We have another question from the webcast audience. This comes from Ajay Nandal from Citi. The question is, what is your thought process around the online offering? Pure play digital home furnitures are targeting more than 20% sales CAGR over the midterm. Do you have similar targets for the online channel?
Well, I would then say the same thing as for the previous question. At the CMD, we intend indeed to give you more color on our overall online strategy embedded in our omnichannel strategy. But 1 sure thing is that we do intend to expand our offering via third party. If you look at the presentation, you could see that the marketplace offering already is 85,000 products. That makes a total offering of 1,000 products already. Maisons du Monde offering is only now a small share of our total online offering. And it is true that the marketplace did help online growth over Q3 and will continue to do so in Q4 as we are using the mass effect in the context of limited availability. So as we have more vendors, it does help fulfilling the need of our customers, even though we don't have the products ourselves. It's interesting to note, by the way, that over the Q3 an 80% -- the customers of the marketplace where an 80% Maisons du Monde returning customers. So the marketplace right now is really playing the role of increasing the share wallet for our own customers. So it's really interesting. It does play this role of long tail of product offering that will indeed fuel future growth. And again, more details to follow at the Capital Markets Day.So there are no more questions. So thank you for listening today, and we hope to hear or see as many of you at the Capital Markets Day that will take place on the 8th of November. Thank you very much, and have a nice day, everyone.
And Chris and myself are obviously available today for any follow-up questions or calls. Thank you very much.
Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may now disconnect your lines. Thank you.