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Good morning. And welcome, everyone, to H&M Group's Conference Call, 3 months report for 2025.

[Operator Instructions] Please be advised that today's conference call is being recorded.

Today, I'm pleased to present Joseph Ahlberg, Head of Investor Relations. I'll now hand over to your speakers. Please begin.

Good morning and warm welcome, everyone. Today, we present the first quarter results for 2025 for the H&M group.

I am Joseph Ahlberg and I am Head of Investor Relations.

Before I hand over to our CEO, Daniel Ervér, I'd like to share this morning's setup. Daniel will share a short summary of our results, give you a run-through of selected highlights from the quarter as well as a brief outlook. We then continue with a Q&A session where Daniel; our CFO, Adam Karlsson; and myself are available to answer your questions.

So here is his summary of H&M group's first quarter. Please welcome Daniel.

Thank you, Joseph. And good morning, everyone. It's great to get a chance to speak to you again.

During the first quarter, we have had full focus on implementing our plan for long-term profitable and sustainable growth. Our main strategic priority is to drive organic growth by focusing on the H&M brand. To achieve this, we have set 3 key areas where we continue to raise the bar: first, an elevated price offering; secondly, a more inspiring shopping experience; and thirdly, a strengthened brand. We see positive effects in the areas where we have put our focus, particularly in womenswear and online. This progress indicates that we are moving in the right direction. With this said, even if we have taken important steps, we are not satisfied with our result in the first quarter.

So to summarize our key results. Sales grew with 3% in Swedish krona and 2% in local currencies. We saw good sales development in Western, Southern and Eastern Europe, where Germany and Poland progressed particularly well. However, in Northern Europe, including Nordics and the U.K.; as well as the U.S., we were slightly weaker during the period.

We continued our long-term efforts to optimize our store portfolio by net closing stores, something that affected sales in the quarter. We started off with almost 120 fewer stores compared to the same time last year, and we net closed 40 stores during the period. Our portfolio brands facing high comparison figures from last year increased net sales in the first quarter by 2% in Swedish krona and level with last year in local currencies. Our secondhand platform, Sellpy, showed very strong sales in the quarter. Sales for the month of March are expected to increase by 1% in local currencies.

Operating profit for the first quarter amounted to SEK 1.2 billion, with the gross profit development being weaker compared to last year. The gross margin of 49.1% was affected by several factors. During Q1, we saw negative external factors as well as increased markdowns and investments into our customer offer affecting the gross margin. We estimate that the negative effect of these factors combined will be significantly smaller already in the second quarter compared to the first. At present, we see conditions for the effect from external factors, markdowns and continuing investments in our customer offering, combined with an even closer collaboration with our strategic suppliers, to have positive effect on the second half of the year.

Inventory increased by 9% in Swedish krona compared to the previous year. Higher purchasing costs reflected in the weaker gross margin in the first quarter explained the majority of the increase in stock in trade. In addition, extended transport lead times connected to the situation in the Red Sea continued to affect inventory. That said, we assess that the composition of inventory is good and we are well set up for transitioning into the spring and summer season.

Our cost control remained strong during the quarter, primarily by reduced administrative costs and good operational cost control.

As said, the positive progress in the areas where we are putting most of our focus continued during the quarter, indicating a strong potential in our plan. Firstly, the positive customer reception of H&M womenswear remained strong in the quarter. Secondly, our digital store continued to perform very well. And thirdly, our sportswear range, H&M Move, also continues its positive performance. With this in mind, we stand steadfast in our focus on our long-term plan on what makes the biggest difference for our customers. We have maintained a high pace in executing on our plan during the quarter.

So let's start with our first priority, our product offering. We continue to see improvements in womenswear, for example, an improved trend responsiveness for a more relevant assortment and a simplified organization for faster decision-making. We have now also started to implement these improvements further in the organization for all of our concepts.

Our priority #2 is an elevated shopping experience. Here we are very pleased with the continued positive development of our online stores with a more inspiring experience driving both engagement and sales. Upgrading the customer experience is also a high priority for our physical stores. In 2025, our priority is to upgrade a significant share of our store portfolio. This means, for example, layout improvements, added tech functionality and improved product availability and an improved assortment mix. We do this along with a continued focus on updating our presence in our most important cities across the globe.

Our priority #3 remains to strengthen our brand. The spring campaign continues to build on the connection between fashion and music, partnering up with world artists. And in this case, Tyla is one of the headlines of the spring campaign. The collection has 2 major drops. 1 released last week. And the second 1 will be released with a major music and fashion event in L.A. in early April. I'm really proud of our talented in-house designers and creative teams who have created the collections that you can see on some of the imagery in front of you.

Looking ahead, we see a world with increased macroeconomic and geopolitical uncertainty. However, we are well positioned to meet this with a strong plan implemented at high pace, with positive signals in key areas. A clear priority on the H&M brand: an organic growth; a relevant customer offering combining fashion, quality, price and sustainability; a flexible and responsive supply chain; and a robust financial position with maintained focus on cost control.

To conclude. We have made progress, but there is still more potential. It's crucial to keep our focus on what matters the most to our customers and where we are seeing a positive momentum even if reaching the full effect of some of our initiatives will take time. With our relevant position in the market, our strong plan and a diverse customer offering, I am confident that we as a group are well positioned for long-term profitable and sustainable growth.

Today, we are launching our annual and sustainability report for 2024. Please make sure that you download a copy on hmgroup.com or by scanning the QR code on this slide. We are really proud of the progress we have made, particularly in increasing the use of recycled and sustainably sourced materials as well as reducing our overall climate impact. These are 2 crucial areas for creating a sustainable future for our industry.

Thank you so much for listening. And now I hand you over to Joseph, and we will start the Q&A session. Thank you.

Thank you, Daniel.

[Operator Instructions] With that, we welcome your questions. So back to the operator.

[Operator Instructions] Our first question for today comes from Daniel Schmidt, Danske Bank.

Yes. Then 2 questions from me and starting with the first one. When you reported last time, you -- and we could see that as well, of course, in the current trading numbers from Q3. You had a quite big spike in terms of sales growth in September and relating, I guess, quite a lot to the new collection and brand direction that was launched in mid-September. You also said by then that you learned that you will do 2 installments for the spring season. And as I heard it, you started last week. And then there will be another drop of the spring season collection in early April, but if you look at the March sales numbers, you don't see, at least what we can detect, any big sort of spike in sales compared to what you had in September. Is this a timing issue? Or is it sort of has -- the impact of the new brand direction had a less -- much less of an impact?

Thank you, Daniel. I will start with answering your questions. So the work that we do in strengthening our brand is to build long-term relevant brand attracting fashion-engaged customers, and that is a long-term journey that we're on. We're doing that in many different ways, where products and strengthening the product offer is the most important, but also by activations like the one we did in September and the one we will do now in March and April. September, we had, we estimate, a positive effect, but that was also supported by low comparable numbers and a positive weather shift particularly at that time. We see that the sales trend is gradually improving steadily step by step throughout the year. And that is the intention, so we don't expect these activations to have a very major short-term effect. Looking at the March number, it's, of course, only 1 month, which makes it volatile. It's a month that is affected a lot by the timing of spring weather. And it's also a month where Easter fell, last year; and Easter falls in April this year. So the intention with the activation we do this spring is to extend the activation period to reach a longer, more long-lasting impact. And that's how we will evaluate the activation as we come to the close of the second quarter.

Okay, okay, okay. Then just on another question. You guide for -- although higher markdowns in Q2 and negative impact from external factors in Q2 but much less so than in Q1. How does this tally when it comes to sort of the quite slow start that you've had for Q2 and the quite elevated inventory and the fact that the Swedish krona has continued to strengthen?

Yes. So Adam here. What we see is that we have, of course -- some of the difference between the quarters is that the first quarter is a high-markdown quarter. And we have a -- less of a sort of general markdown level throughout the second quarter, so that will, of course, also reduce some of the negative pressure on the gross margin into second quarter. And then we also have some of the other long-term effect, as we called out in the Q4 report, that we had higher prices connected to material prices throughout parts of 2024 and also some negative currency headwinds. And what we also see is that some of the negative effects that we have from shipping rates being elevated, compared to last year, during this year will start to ease towards the end of the quarter. So there are a couple of factors here. Some of them are more of technical nature connected then to being a lower-markdown quarter. And others are some easening despite still being negative on the external factors.

Okay. Because I think maybe the strengthening of the Swedish krona surprised me a little bit. I didn't think about that. And that has continued, but you're basically saying that the easening of shipping costs will neutralize the strength in the SEK.

At least it will help to mitigate it. And that's more of a long term but sort of effect into third and fourth quarter, but I think we will start to see positive effects, towards the end of second quarter, of some of these negative external factors, whereas shipping costs has been one of them.

Our next question comes from Manjari Dhar of RBC.

I also have 2, if I may. For the first one, I just wondered if you could give some more color on the investments you've made into the customer offer. Was this sort of investment into prices or more into quality of style? That's my first one.

So when we talk about the investments in the customer offer, we're talking about all the different parts of our long-term offering, so both the product and the assortment, [ which is ] the most important, but it's also how we invest in an upgraded experience, physical and digital, as well as how we strengthen the brand to build a stronger, more attractive customer proposition for the customer. Specifically when it comes to the product, it's a combination of investments that we have made in better qualities, more investment into craftmanship, trims, component, detail, qualities to really provide an very, very attractive, outstanding value-for-money proposition for our customers; and also combined with an -- so what we talked about in Q4, Q1, also some price investments to be -- on a market-specific basis to make sure that we protect our competitive positioning. But the main focus have been on increasing the perceived and the real value of the product, yes. So that's gone into trim, materials, components, making, by both investing in the materials themselves but also focusing and targeting and working closer with our best, most competent suppliers.

Great. So my second question, I wondered if you could give some more color on what you're seeing in terms of customer behaviors in markets like the U.S. and maybe also in Germany as well.

So we believe that we are still in an high-inflation climate where the customer's spending power is limited, so we stay very focused on providing outstanding value for money by having done good cost control; deep, strong partnerships with our suppliers to make sure that we can really provide best value for money. And we think that is -- continues to be more important than ever. We see -- and that is valid, I believe, for all geographies. And we see that there is a very high appreciation for our updated experience both in the physical store but particularly in the online experience where we have reached a global impact on the updated experience, where customer seems to really appreciate and have an affinity for more inspiration and more an elevated product presentation.

Our next question comes from Fredrik Ivarsson of ABG Sundal Collier.

First question, if we could come back to the March figure and maybe compare it to the end of Q1. What's your assessment of the market environment? I guess we've heard quite a few retailers talking about bad weather conditions, especially in the U.S. during February and so forth. And also, I guess, if you could talk a bit about the potentials of Easter being a bit later in Q2. That's my first question.

So in general, we have also seen a bit more fluctuations in consumer confidence in the end of the first quarter as well as in March. Of course, March -- and apart from the consumer confidence, March is also very effectively when the spring shift comes for us in fashion. So that's a timing issue where we have to look at March and April in a longer perspective, but we see also that it's been consumer that's been challenged. And it's been difficult with challenging marketing conditions -- or market conditions, but that -- for us, that only means that we should be even more focused on really providing an outstanding value for money and make sure that we have a really, really attractive offer because, at the end of the day, that what's sort of convinces the customer to come to us. So yes, we see some challenging market conditions, but we believe that our focus is then even more important. And it's another call for us to accelerate the pace of our -- the execution of our plan.

And I think -- this is Joseph. I think on -- now when we move into April and Easter, we have really good transitional offering. And as we've mentioned earlier, we have then 2 drops of fashion, the 1 we launched last week and the coming drops, to really support this important period where we set the tone for the spring and summer season by showing off a great fashion offering to our customers.

Good. Second question, on the online platform. I've been asking this before, but I'll give it another try again. It sounds like you're very happy with the results from it. And are you ready to share any firm KPIs that you're seeing? I guess conversion rates or average ticket sizes or whatnot. Anything would be helpful.

So we are very happy with how the customer has received the updated experience. And it's both the updated technical platform that we have rolled out gradually with -- now it's in way beyond the majority of our markets, but it's also how we have elevated inventory. It's also how we have merchandised the online site and what products goes where, so it's a combination of efforts that helps us to drive that positive growth. We see that customers feel that they get more inspiration and get more excited about our offering from participating in our new experience. And we see that they are more interested to come back more frequently to us, but more than that, we don't share specific KPIs.

[Operator Instructions] Our next question comes from Vandita Sood of Citigroup.

The first question is just you mentioned that sales grew very strongly in Sellpy. I just wondered if you have a way of measuring whether these same shoppers are then going on to spend less in the new products. Or if you don't have a way of measuring that: Alternatively, do people who make money from selling secondhand purchase more secondhand or more new products? I guess the overall question is do you see the secondhand market as eating into the volumes of the new purchasing.

We see a -- I will start, [ and then resume ]. We'll see, of course, a shift in customer behavior; that with improved secondhand offering, that becomes a more attractive part of how you fill out your wardrobe. And we believe that Sellpy combined with the other offering of H&M will be strengthening and mutually enforcing each other. So that's what we believe is important because the customer behavior, we believe, will change into secondhand, being a natural part of how you shop and how you find your style.

Okay. And the second question was just if -- firstly, if you could outline how much year-on-year your marketing investments were in the first quarter. Because I think you were explicit about those numbers in the last 2 quarters. And then if I could just check, in that, could you apportion out roughly how much is just paid advertising that is leading to sort of click-through rates and sales? And how much is wider, as you say, long-term investments in the brand?

In first quarter, marketing investment and costs affecting the profit were slightly elevated compared to last year. We predict that to be an increase during second quarter, as Daniel spoke about and Joseph also mentioned, with our -- the releases of our spring campaign and the activation around it. And we don't see it as either, or. It's as Daniel also said. It should drive short-term interest to our spring fashion but also then connect to the long-term ambition of the brand, so we see it as a combined effort, where we expect to see short-term interest and the long-term benefits to the perception of H&M as a fashion place.

Our next question comes from Mia Strauss of BNP Paribas.

I just have 2. When you talk about the inspiring shopping experience, can you maybe give a bit more color what you mean here, some examples of that? And then just secondly, on product innovation, when are you going to start looking at doing this for menswear and kids' wear?

Thank you for the questions. I'll start with inspiring shopping experience. So what we mean with that is how we inspire the customer to discover our collections and also find their personal style and their expression. And that is how we are displaying garments in our app and on our site. It can be how we story tell and curate around trends and trend stories, yes, and how we put it together. It can be on how we show detailed imagery of it so you as a customer really see and appreciate the quality and the make of the product. It can be related to how we recommend products that we believe are great styling complements to the product that you're looking at, to build a full outfit. So it's the holistic experience you get as a customer on finding your style, your expression; and discovering our assortment. And that's done through a combination of those examples I just mentioned.

Secondly, product elevation. We see continued great traction on the improved work that we have done in womenswear, connected a lot to believing in the creative power of our teams by giving them quicker decision -- being able to take quick decisions by simplifying the organization, by partnering closer to our best suppliers, by working with proximity markets to be quickly to react to trends, by using data in more effective ways. All of these things are contributing to a strong womenswear assortment, a combination of sort of structural improvements and creativity and craftmanship combined. We are actively working at a high pace to spread the learnings we made in womenswear to the other customer groups. And we see that there are a lot of the key findings in womenswear that would also support the strengthening offering in menswear, kids and all our concepts.

Our next question comes from William Woods of Bernstein SG.

The first question is on inventories. Can you just talk about how you feel about the inventory position given the significant increase in the quarter?

Adam here. Yes, inventory levels are up year-on-year. And there are a number of factors contributing to that increased inventory level. The biggest one is that the higher purchasing costs affect technically, of course, the inventory levels. Second part is that we still cater for a slightly longer shipping lead time. So to ensure, for example, that we -- when we have the spring campaign start, we need to ensure that all products are in the right place at the right time. And then we give us some extra leeway connected to the transportation disturbances throughout the Red Sea then to ensure that we have the right product at the right time. So these are the 2 factors. What we see very positively is that we have a very healthy composition of the inventory, so throughout the activities -- to first quarter, with higher markdowns, we've been able to manage the inventory composition really well. So we are well set up to drive spring selling and then hope for seeing some easening of the technical aspects of the inventory increase.

Great. And then the second question is just on the marketing spend. Obviously you've spent a lot over the last 6 to 9 months on marketing. How do you feel about the rollouts of that? Has that gone down? And how do you think your marketing spend will evolve over the next couple of quarters given [ that rollout effects ]?

We learn as we go, of course, and always adjust to optimize. So we learned that some of the markets responded really well. And those are the ones we also call out that we see, that Central and East Europe and so forth. So here we're sort of strengthening the efforts and then we reassess more firmly in other markets. So strong returns but some adjustments to how we distribute the resources throughout the autumn to sort of optimize during the end of first quarter, into second quarter.

Our next question comes from Magnus Råman of Kepler Cheuvreux.

I have, firstly, question on tariffs, if you perhaps can comment on the effects you see from tariffs into the U.S. market and if you could possibly comment on how large share of your products that you sell in U.S. are sourced from China and what the opportunity is to alter this balance or this percentage.

Yes. There's a long-term and a short-term answer to this. We will, of course, be affected by tariffs. What we do to mitigate that is to use the flexibility we have of our supply chain to then shift between sourcing markets with less burden connected then to the tariffs. So that is work that started already throughout the autumn and is ongoing now throughout the spring. We have better visibility of how this will play out. We don't call out specific market shares, but of course, China is globally an important sourcing market for us, so the work has been ongoing for quite some time then to find relative alternatives to ensure that we can offer also the U.S. customer the best value for money despite some of these strains to global trade.

Great. And -- but then secondly, on the same sort of overview theme. So do you see, the potential removal of the de minimis rules, that they -- that this could actually level the playing field in terms of competitive position for the Chinese direct delivery models that have been benefiting from these rules and the rest of the industry?

This is Daniel. Yes, we believe it's an important -- it's important that we have a level playing field where everyone can compete on equal terms. And those changes will make the competitive landscape more equal, and we believe that's important. And that will also, of course, make it -- make us more competitive. So we believe an equal -- competition on equal terms is very important, so we support changes that creates a more level playing field, yes.

[Operator Instructions] Our next question comes from Niklas Ekman of Carnegie.

Yes. Just a question on womenswear because you've been talking about womenswear being strong now for quite a while. I think, for almost 2 years, you've talked about the recovery in womenswear. Given that I assume that we're talking about around 50% of your sales, either the recovery is not that great or you're seeing a sharp underperformance elsewhere, based on the sales figures that you've been reporting now for the past couple of quarters. So I'm just curious, what -- which one is it? What kind of recovery are you seeing in womenswear? And which are the underperforming divisions?

For the last 2 quarters, we have been talking about a steady growth in womenswear, where we have made significant changes into the customer offering. And we believe, both from listening to customers, from seeing the collections, from seeing the way we work, that we've made significant improvements in providing a stronger customer offering in womenswear, which has also generated positive sales results. And that's the improvement we continue to push. And then we see that there are several learnings, like I mentioned before, in the way of working that is also relevant for all our customer groups. And we are working very hard to implement those improvements across the board.

Fair enough. Second question is on kind of the focus for you going forward. Because late '23, you were focusing a lot on cost savings and with this 10% margin target. Then in late '24, you shifted to sales growth. And now we've seen your 12 months margin drop to 7%, which is quite a step below your 10% margin target. What is the main focus going forward? Is it still now to revive sales as a means to getting to that 10%? Or do you see that there might be need for further cost reductions if sales failed to pick up from the current levels?

This is Daniel again. First priority is to build a really strong customer offer. And that is about the product, the assortment, priority #1, #2 and #3. Then it's about building an exciting experience and strengthening the brand. Doing that, we believe, will drive growth over time, but the starting point is to be really attractive, relevant; and delight and surprise the customer with the offering that we are providing. So that's the #1 priority, and we believe that will lead to sales growth. Then we know some of the changes comes quicker. Some of the changes take more time. We know that we are acting in a market environment with a lot of uncertainties. Hence, cost control and being disciplined on the cost side is also tremendously important for us to make sure that we can sustain the investment levels we believe that we need to do to build a really attractive customer offer. So that's how [ we will see ].

Our next question comes from Matthew Clements of Barclays.

First question is a quick one on average selling price. Is that a positive or negative contributor in the 2% local currency growth in the first quarter? And what expectations do you have for 2Q and beyond? I'll start there.

Yes. So for the first quarter, the sales growth of 2% in local currencies is volume-driven. And then as we look ahead, we work on optimizing the price range, yes, as we always do, to make sure that we are competitive in each market and offer outstanding value for money, but also, of course, with an updated experience, with updated product and design, we see that we can also sell a wider price range. So we are working on both ends looking forward.

Okay, so going forwards, can I read that as a -- maybe a neutral price impact for this year?

Neutral to slightly positive, given the receipts we see in the assortment and, as Daniel said, our ability to sell a wider price range. So we are looking into continuing the volume increases but then also reinforcing some parts of the assortment that could contribute to a slightly higher average [ sold ] price.

That's very helpful. And the second question, sorry to go back, on inventory at 17% last 12 months sales. How much old stock are you carrying into the second quarter? I mean, what kind of KPIs do you follow here? I'm just interested in how that might influence the 2Q sales development.

We have visibility on, of course, the average age and the composition, both on the -- on how the current sell-through no matter how old or new the stock is. So we manage that very, very actively. And as I said previously, we have a very healthy stock composition connected to relevance for Q2 and onward selling. So the majority of the stock level increase comes then from the higher in -- purchasing prices that are negatively affecting the stock as sort of more of a technical measurement, but we are satisfied with the composition. We manage it actively. And we see that we have a healthy and good composition to drive selling throughout second quarter.

Okay. And then just a final question -- sorry. Go on. Sorry.

And Joseph adding on here. I just wanted to add on that, that year-over-year, we see an overall improvement of the composition, to give you a also flavor of the direction. So it's we're happy.

Okay [indiscernible], yes. That's very helpful. And then just a final, cheeky one, if I can. So U.S. sales. In your annual report, U.S. sales are down 7% year-on-year last year. I assume that's an even greater decrease in local currency terms. And you -- I know you've previously talked about issues around price positioning and product flow into the U.S. I'm just interested in an update on where we stand with those issues now; and what your expectations for the U.S. might be for the year ahead, neutral, down, up, in terms of sales.

Yes. So we called out -- this is Joseph speaking. So when we summarized 2024, we called out the U.S. as being one of the drainers for us overall, one of the big challenges for us to drive top line. And we have called out that some of this has been related to our offering; and that we have, throughout the year, been addressing that and improving our offering, working on and securing the strategic low prices and the right inventory composition for the customer. And towards the end of 2024, we were at a much better shape and situation in the U.S., but still we feel there is more potential for us to regain some of the market share that we have been losing throughout the past year.

And to stress: We believe the U.S. is a tremendously important market for us. We are working very focused on how we support the U.S. both by strengthening the global offering but also locally adapt to the market to make sure that we are relevant both from an assortment side, from a store portfolio optimization side, from a supply chain side. And that remains a key priority. To Joseph's point, we are seeing some pickup and recovery, but we want to accelerate that pace moving forward. It is a very, very important market for H&M.

Our next question comes from Magnus Råman of Kepler Cheuvreux.

Yes. I just had a follow-up here on online. You mentioned you're happy with the sales development online, but can, could you possibly also comment on the profitability development? And maybe if you can comment on the status of rolling out return fees in various markets.

So if we look at the online channel and the store channel. Both channels are profitable, and we see also opportunity to improve the profitability in both channels. And with our omni model, we try to optimize the totality and, of course, always with the customer in mind, to have the right offer and the good terms in whichever channels they choose to shop with us. The rollout of return fees, et cetera, this is very much driven to be on market standard levels. So that work is ongoing and, well, sort of always ongoing, but we are making some changes now during spring. We have, for instance, done that in Belgium. And we have good outcomes on how that is working.

And I think we, of course, monitor the profitability of both channels individually, but we also see the big potential lies in the combination, like Joseph said, of the omni offer, where we can use the 2 channels to support each other both in driving availability at lower stock levels but also to help us with -- both help the customer to simplify returns and services but also help us in -- specifically in certain markets to lower transportation costs and logistic costs by leveraging the store network. So that is something that we're working also actively on, especially for the markets where it will have the most positive impact on our cost side.

Sure. And I mean, given unit economics, is it fair to assume that reinstatement of delivery costs or return fees will have a disproportionately positive effect for the players that have low average basket, which is for a player with a value-for-money fashion offering should be the case?

Yes, exactly. So by doing this, we affect many small orders but not the sort of the big basket. So we address sort of the tail and then finding ways to use this also as a mean to create a reason to come to our stores and experience our experience in the physical stores. So we see multiple benefits of this, cutting the tail with small, unprofitable orders; and also then supporting the -- as Daniel said, the omni offer that we want to give to the customer.

Our next question comes from Daniel Schmidt of Danske Bank.

Yes. I just also had a follow-up, on the tariffs, Adam and Daniel and Joseph. It sounded like you haven't been affected yet. And so correct me if I'm wrong there. And you also mentioned, of course, that you will shift between markets to lower the impact, so when do you think that you will see an impact? And secondly, given that you've had a weakening position in the U.S. market in the recent years, although you have improved as of late, what is sort of your best guess when it comes to neutralizing the impact that you will have? And is there any chance that you will be able to compensate fully and also protect margins? Or how do you look at it?

Well, first is that maybe where we haven't been affected yet is that -- first quarter hasn't been affected, but of course, we are affected as soon as the tariffs are implemented. And that then is a reason why we started to prepare for this and set action plans in place already when it was still uncertain whether and how would -- they will be implemented. What we will do, and I -- as I said then to find ways to mitigate this by creating an equally strong product offer but potentially from another sourcing market with less impact from the tariffs. And then we will, of course, also work with the price positioning. We will follow how competitors do this. And we will be sort of very diligent in how we assess that we continue to give relatively better value than anyone else. And that will steer some of the out-price actions we do, but currently we're working on securing our sourcing structure to ensure that we, as well as we can, create the same assortment with protecting great value for money also in U.S.

But with that being said, we, of course, monitor the price position as well. So over time, increased tariffs will have an impact on the consumer and the pricing.

Yes.

Yes.

Yes. I mean I was just trying to get to sort of compared to 2019, when we had this situation. Maybe now it's even more elevated in terms of the size of the tariffs. And just given where you are in terms of your own position in the U.S. market, which has been a bit depressed in the past couple of years -- and maybe that's a bit different compared to 2019. How is that sort of impacting your proposition in terms of value for money? Do you need to be less -- do you need to be more aggressive on prices in this situation than you wished that you had to be, compared to 2019, in order to mitigate this, if you follow my drift?

Maybe if I do -- but there's 2 parts to the question. We believe that we are in an equal or better position to handle this given the flexibility and the global reach of our supply chain. So that, we see as a relative strength compared to potentially more local competition, but of course, we need to find ways to adjust to market conditions. And this is not something we or anyone else believing in -- is a good thing for the consumer, at the end of the day, so as Daniel said, we will monitor how the competition act. And we potentially, over time, need to adjust prices to compensate for some increased costs, but overall setup-wise, I believe that we are in a relatively good position compared to competition in the U.S. market.

And when we look at the total strategy sort of coming together, raising the bar and providing an even stronger customer offer in total, there is nothing that we see in the development in the U.S. that doesn't say that that's also relevant for the U.S. consumer. We see good traction on where we will come the furthest of the work of our plan globally but also in the U.S.

Our next question comes from Vandita Sood of Citi.

I just have a quick follow-up as well. I think you've said now for 2 years that online sales are around 30%. Can I just check if they're growing ahead of store sales and maybe if you can be more specific?

[ Vandi ], this is Joseph. And so online sale is progressing well. So we show here an approximate share with you of 30%. This share is seasonal as well, so it varies across the months of the year, which we again see as a strength of the omni model because we can serve the customer in the channel where they are shopping, depending on which season it is. So again, very strong, that we have our 2 channels serving the customer, but in the recent couple of quarters, when we have called out that digital is progressing well, of course, this is driving up the online share a bit actually.

Our question comes from Fredrik Ivarsson of ABG Sundal Collier.

Yes. 2 quick follow-ups. First, on the inventory, do you -- because you have this 12% to 14% of sales target or ambition, but do you think you're able to end the year at a lower level than you ended last year?

So we -- long-term direction is 12% to 14%, and that's what we have as our target and what we're working towards. And we see that we have a lot of components coming into place. For this year, we strive to end the year in a better situation than where we ended last year.

Okay, good. And second one, on the impact of the winding down Afound and Monki, would you be able to sort of quantify the impact of that in Q1, please?

We -- this is Joseph. So we quantified that with the Q4 report, as you remember, where it -- the impact of Afound and Monki had a quite significant impact within portfolio brands for the year. And for the group, the impact is relatively small, so we don't call it out specifically enough for the first quarter.

At this time, we currently have no further questions, so I hand back to Daniel for any further remarks.

Thank you. Then thank you to everyone for participating in today's conference call. And from here, we wish you all a very nice day. Thank you.

Thank you all for joining today's call. You may now disconnect your lines.