Tokmanni Group Oyj

OMXH:TOKMAN

Earnings Call Transcript 2019-Q4

[Mika Rautiainen, CEO & Member of Executive Board]

Good morning, and warm welcome to Tokmanni Q4 and Full Year Presentation. My name is Mika Rautiainen. And together with me today to give the presentation is Tokmanni CFO, Mr. Markku Pirskanen. I will first go through the highlights of Q4 and the full year, and then Markku will dig deeper in numbers. After that, we'll have couple of words about year 2020. And then, of course, there is time for questions. Now first of all, it's an honor and pleasure to present the report of all-time-high revenue and result for, actually, both Q4 and the full year. Some of the Q4 highlights. We had 2 very successful new store openings in Vääksy and Virrat. These actually -- these both small towns are in the, let's say, summer towns, summer vacation or summer holiday locations. And of course, we're a little bit nervous about opening these 2 stores in the end of November, but they were actually very successful openings. So we're very happy about that. We arranged Tokmanni 30th birthday campaign and a Black Friday campaign, and these -- both of these campaigns were very successful. This, of course, was -- the 30th birthday campaign was in October, and we actually -- of course, we were very well aware about -- of the timing of the tax refunds that like didn't happen in December, as it usually does, and that's why we arranged quite big campaigns earlier than December. During the Q4, we were also able to increase our share of direct import strongly, and as well the private labels progressed well. Actually, during last year, we launched 2 new private labels, Pisara and Perfekt+, and both of these were a good success, so we're very happy about it. Like already mentioned, the Finnish government decided about a little bit different timing for the tax refunds. For already decades, it has been in the beginning of December, which has, of course, boosted the Christmas sales of basically every store, every retailer. This time, this year, it was mainly divided in several months starting from August, so that's why we were kind of missing the boost for the Christmas sales. But I think we did quite okay compared to, for example, the market. Unfortunately, in the southern part Finland, even though at the moment it's freezing cold, the winter season hasn't really started yet. This, of course, has slowed down a little bit the seasonal sales of winter products. And in November, we had the postal strike. It had caused a little difficulties for us when -- difficulties in distributing the advertising leaflets. But that was, of course, a little bit like a minor difficulties. But anyway, even though there were things that caused a little bit slowdown with the Christmas sales, we managed to reach an all-time-high revenue and result for Q4, with revenue growth of 6.1% compared to last year's 8% and like-for-like revenue of 3.1%; last year, it was 4.7%. And even though it's, let's put it this way, only 3.1%, we're very happy when we're looking at what has been happening in the market. So I think that we succeeded very well when it comes to the like-for-like sales for Q4. And of course, we're very happy about the gross margin, 35.2% compared to 34.4% from last year. And comparable EBIT totaled in EUR 32 million, with plus 26% growth compared to last year. And this 11.2% of revenue is all-time high for Tokmanni. Earnings per share were EUR 0.39. And then about year 2019. Exactly 12 months ago, we were working quite hard with the new stores that we acquired in beginning of the year. And of course, that also caused some costs for the first quarter in 2019. But actually, after the costs for the first quarter, we were able to start managing these new stores very well, and they're actually now very successful. That's, of course, one of the main issues in the beginning of 2019. As already mentioned, we launched 2 new private label ranges, also very, very successful. But we're still in the beginning. We can see that there is a lot of potential for both Pisara and Perfekt+. As mentioned for our plans for 2019, we were determined to increase the Far East imports and also batch buying, and that's something that increased significantly. And we're also happy about this development. Our focus for 2019 was the improvements in Tokmanni profitability. And we were successful with property maintenance costs, something that was already bringing us savings from the beginning of the year. Personally, very happy about the reduction of shrinkage, especially with garden. Our people with -- the garden people made an excellent job with that area as well. Also good savings through flexible work arrangements. Then with online sales and cost savings, when it comes to our packaging line, we renewed that, and we're able to achieve major savings with redesigning the packaging line. From my point of view, one of the most important issues for 2019 was that more than 3,300 Tokmanni employees, including myself, we participated in the customer experience training. Now discount retailer -- general discount retailer and customer service is not necessarily a very common combination, but I think that we're doing in this area a very good job. Our customers are very happy about our customer service level, and we will invest in this also in year 2020. So we ended up with lower operating expenses compared to revenue and a higher gross margin, very good results for year 2019. Strong improvement of profitability, which actually was the focus for the whole year. Year 2018, we reached 9.3% growth in revenue. And we consider that a very good achievement that we were able to grow revenues with 8.5% last year. Like-for-like revenue growth was 4.3%; when last year, it was 5.6%. Of course, it's not easy to keep up with the same phase, but I think that we succeeded very well. Of course, the last quarter was a little bit more difficult, but anyway, as a total, it was a good success. And finally, we also managed to improve the gross margin to 34.4%, when last year it was 33.9%. And like mentioned, especially during the first quarter, the gross margin due to conversions of these acquired stores, we're taking the gross margin a little too low. So we're happy that we were able to improve the level of gross margin during the second half of the year. And operating expenses, 21% of revenue; last year, 21.8%, so very good development over here as well. And all-time-high EBIT level of EUR 70.4 million, 7.5% of revenue and approximately 36% improvement compared to last year. Earnings per share were EUR 0.80. And Tokmanni Board of Directors proposal of dividend is EUR 0.62. And previous year, this was EUR 0.50 per share. At this point of time, it's for my colleagues, thank you very much for excellent job. So a couple of comments regarding online sales. Our online sales grew strongly by 43.5%. But to be honest, we could have had even stronger growth over here, and that's why we will be investing a little bit more especially already starting this spring on the online sales. The setup is actually very much okay with low prices and our surprising and wide assortment and also with support of our nationwide store network. But still -- and now also with the packaging line redesign, we're working very well over there, but we still have room to improve in this area. But anyway, it's growing, and that's also something that we're investing in. Another -- not exactly a detail but an important issue for Tokmanni and especially for Tokmanni customers is our corporate responsibility achievements in 2019. We were able to start a very good progress year 2019 with corporate responsibility. Our work was also awarded with Best Challenger Award and Responsibility Reporting Competition. We're very happy about it. We understand that we're started, but we also want to combine these 2 things, a discount retailer and corporate responsibility. And I think that our customers are -- at the moment, according to our surveys, they're happy about the development that Tokmanni has taken when it comes to the sustainability issues. So we're going to be continuing with this area during this year and, of course, next year as well, but a good start. Here's a figure about the Finnish non-grocery market development: with red line, Tokmanni figures; and with black, the market figures. It's accord to Finnish Grocery Trade Association, so this actually doesn't include online retail sales. But anyway, as you can all see, it's -- the fourth quarter of last year for the market was a little bit difficult due to the tax -- due to the lacking of the tax refunds but also for Tokmanni. But still, we think that we made a good job over here. So that's shortly of the highlights, and then please, Markku, the financial review and the figures.

[Markku Pirskanen, CFO, Deputy CEO & Member of Executive Board]

Thank you. So Mika already looked a little bit of these financial figures, but let's look then a little bit deeper. I always like to start with this graph, which shows that Tokmanni's business is clearly seasonal. And as you see that when looking at these bars and then also the curve, which is describing our EBIT, they look very similar when we are looking different years. First quarter is the last one. Second and third quarter, clearly, is about the same level. And the fourth quarter is really the one which makes or not makes the company's result because it's clearly the biggest one. And I'm happy to look these curves from year 2018 and from 2019. Despite of first quarter result, this year, we have been able to increase our profits and also increase our revenue. And when we are looking into Q4 2019, even we have some external factors, which Mika already mentioned, which make all our sales a little bit more difficult, we were able to achieve this nice 3.1% like-for-like growth. Yearly based revenue development. We see here about year 2018 and 2019, we have achieved good growth and have to say that the actions which we started at the beginning of 2018, meaning that we concentrate on low prices, made our assortment wider and also made some changes in different departments in our stores, seems to have been the right actions. And of course, we have the main issues, but at the same time, I have to say that the bonus model, which gives some employees -- all of our employees certainly has had some effect. If you look with 2019 like-for-like revenue development, this 4.3%, we can split it a little bit. And we can mention that the number of our customers in like-for-like stores increased by 2.3%. And at the same time, we were able to increase the basket size by 1.9%, which means that the average baskets last year was EUR 17.90, which is still quite small, or at least we can feel that it's still quite small, so there are some potential to increase that basket size in the future. Gross profit, it's -- we can here also see that it also improved, yearly based, 34.4% last year compared to 33.9% in 2018. So we achieved half -- sorry, 0.5% increase there. And as Mika mentioned, at the beginning of the year, we struggled a little bit with this margin. And I have to say that it takes some time when you start to make different kind of actions. And the main actions, what we have all communicated, has been the increase per share of direct imports and also increase the private label shares because it's quite clear when we are able to do that, it means that our margin should increase accordingly. Of course, also looking at the whole year's figure, I have to say that one element there is that we have a professional sourcing. And here, I'm happy to say that we really have a professional sourcing, and it's one part, of course, where we are improving our margins here. To make a good sourcing, you are able to get the low purchasing prices and prove that you are also able to sell with the low prices. So speaking of splitting between direct imports and private labels, let's start about the direct imports. Q4, we see here that we were able to increase the share of direct imports from 26.4% up to 28.6%, so that was clear good jump; and looking at the whole year, from 24.4% to 25.6%. And at the same time, when we are looking our import through our Shanghai office, we were also able to increase that share. Private labels. As Mika mentioned, we're bringing 2 new private labels last year, the products called Pisara and Perfekt+. And here, you can see the nice-looking Perfekt+ products. And if we look the figures, during the Q4, we were able to increase the share of private labels from 33.3% (sic) [ 33.0% ] up to 33.6%. Still looking at the whole year, we were about the same level, which was 31.7%. And as said, it was same during the 2018. Good thing was also that our operating expenses were in good control. And here, we can see that development. And when we're looking at the whole year, we were able to drop this share from 21.8% down to 21%. And last quarter, the development in percentage-wise was also the same direction, from 19.8% down to 18.9%. When we are looking at euro-wise, the whole year, we went up from EUR 190 million roughly to EUR 198 million, which means, of course, the EUR 8 million increase. And the main reason or main part from where it came was with personnel expenses, where we're up from EUR 107 million to EUR 114 million. And even when euro was increased, the good thing was that the salary percentage was also going to the right direction from 12.3% down to 12.1%. One point which I like to take up is the last quarter's Q4's absolute euro-term expenses. We went up, EUR 53.2 million to EUR 53.9 million, so increase of EUR 0.7 million, which was a bit less compared to previous quarters during 2019. We were able to make some good savings during Q4. But also, at the same time, I like to remind you that when we are looking at Q4 2018, we had this decorative lights coincidence, 2018, and that, of course, caused some expenses. And during 2019 -- Q4 2019, we didn't have this kind of expenses, so that explained partially why this difference between these 2 figures are less compared to previous quarters. And the end result of all of this was, of course, the EBIT, which was strong development in that figure already mentioned this Q4. But when we are looking for whole year figure, we ended up to a little bit over EUR 70 million compared to 2018's EUR 51.9 million. So we were able to improve almost EUR 20 million during this 1 year time. And in percentage-wise, from 6% up to 7.5%, good development. Some words about the balance sheet, cash flow and financial position. When you are looking at these inventory values, it shows quite big increase, roughly EUR 30 million. And it was due to the growth in store network, planned increase in our assortment, but also with a little portion, this later start of winter. I have to say that now when we are looking in percentage-wise, when we put this inventory against the revenue, we start to be on the level that this is -- we will not anymore increase that relation and, of course, all the time doing the job, but we have a right level of inventory compared to how much we achieve sales. This is always some kind of margin issue to have a certain level of inventory and certain level of increase in sales. In this business, it's clearly so that you have to have inventory where you make a good sales but, of course, with some limitations. Interest-bearing debt. When we take into use this IFRS 16 at the beginning of 2019, it, of course, in mathematical based, increased our debt up to a little bit over EUR 400 million. But when we are looking at so-called real debt, meaning some loans from financial institutions, we are roughly a level of EUR 100 million. Good development in the ratio of net debt to comparable EBITDA. Now at the end of 2019, we were at a level of 2.9, which is even lower compared to our strategic target, which is 3.2, so we are in a good position on that sense. Investments. Earlier, we said that we will end up at the level of EUR 15 million in investments. And now when we are looking into 2019 investments, we were in the figure of EUR 15.4 million, so that went according with plan. 2018 figure was EUR 19.8 million, and it is a bit higher level due to the reason that, that figure includes also some acquisitions which we made 2018. When we are looking at our investments during 2020, we are estimating that we will end up roughly at the level of EUR 16 million. Employees. We have roughly 3,600 employees. And I'd like to mention that roughly 85% out of this figure is working at the stores and 7% in -- at warehouse and 7% roughly at other functions. And I'm happy to also say that we paid roughly EUR 2 million to our employees in sales and performance bonuses during 2019. And of course, it's good when company's result is developing to the right direction. And we are making a good result, we are happy to pay off to our employees. Just to remind our long-term target. When we are speaking about the EBIT, we have said that our strategic target for EBIT is 9%. And we started from a figure of 6% at the end of -- during the 2018. And we have split this target between 6% and 9%, how we will achieve it between operating expenses improvement and also to the gross margin improvement. And now when we are looking at development during 2019, we can see that between 6% and 7.5%, 1% came from operating expenses improvement and 0.5% came from gross margin. And now when we are starting to go forward and trying to improve our EBIT, we see that there are 2 potential parts. First of all, we are continuing to improve our operating expenses in relation to revenue, and we see that there are 0.5% to 1% potential. And when we are looking at gross margins, it's something like 0.5% to 1.5%. Looking back how we see this issue earlier, now we think that there are perhaps a bit more potential compared to our previous thinking in operating expenses side. But this is the way how we are going forward and continues how we're to work to achieve in long term this 9% EBIT level but we're continuous, as said. So that was about the financial figures. And now I'd like to move to Mika, so he can continue the presentation. Thank you.

[Mika Rautiainen, CEO & Member of Executive Board]

Thank you, Markku. About Tokmanni key focus on 2020, a little bit of background of this. In the beginning of year 2018, we decided to go back to general discount retailer roots that was behind Tokmanni as well. And we're very much pushing here 2018, bringing back the customer confidence. Year -- that was a good success. Year 2019, improvement of the profitability of Tokmanni was in focus, and that was a success. For 2020, based on our customer surveys and discussions with our customers, we just have to make sure that Tokmanni stays on what it's doing well, and that's the discount retailer business model, with a low price level, with wide assortment, good customer service and so on. Of course, Tokmanni -- well, we would like to say that Tokmanni is -- actually, we would like to say that Tokmanni is a small company, a small and fast company. But when we compare ourselves with discount retailers in the other Nordic markets and European markets and U.S. markets, of course, we're a small company. But I think that that's one of our strengths, that we can react quickly and we can also develop quickly. We're actually all the time doing quite wide surveys on what's happening in the general discount markets when it comes to the Nordic markets, Sweden, Norway, Denmark, European market and U.S. market and following up very closely like what's happening with other discounters and what's the development. And obviously, we can see at the moment that the combination of store network with online store -- successful online store seems to be the winning combination at the moment. And that's also something that we will be pushing with -- in Tokmanni as well. The discounter segment continuously seems to be successful in everywhere. We think that, obviously, it's the price level. It's -- for customers, it's very visible at the moment. Through your mobile applications, you can quickly see the price levels all around the market, so it's easy to compare the price level. So that's why it's very important that the discounters stick to the low price level because it's also very successful. Naturally, the digital and technological solutions in retail are accelerating the change. That's also something that Tokmanni will be investing with the support of our store personnel, with different tools for our store personnel, with AI applications for pricing and also, of course, with the supply chain management. It's very important. These are the areas we're investing in 2020. And for our customers in Finland, sustainability issues and local market understanding, also with the assortment, it's very important. And that's something we are able to react quite quickly, so we'll stick to that as well here in 2020. And as already mentioned before, the customer and sales-oriented personnel seems to be -- I did say it at the moment, I can see that we can make a competitive advantage of this customer and sale-oriented personnel. We have -- at the moment, our customers are very happy about our people, our service level of our people, so that's why we will be investing in the training as well quite hard. In 2020, Tokmanni targets good sales growth and market leadership in our destination categories, which are, for example, garden, clothing, health and beauty care, home decoration, home improvement and so on. We will make sure that the price level in these destination categories will continuously be on the best price level in Finland. And also, the assortment, that's something that we're working all the time, especially in these destination categories. And we can see that there is a lot of potential also in these categories still. And we do target better gross margins by increasing direct imports and batch buying as well as developing our private labels. We launched last year 2 new private label ranges. We will launch at least one new private label range in 2020. But we will also invest in developing the current private label ranges. I think that we have active and potential private labels, all together, approximately 220 private label ranges. And we will be working with this, this year and, of course, during the coming years. And last but not -- definitely not least is the efficiencies in our supply chain management, and this is starting already from the logistics in the Far East imports. And, of course, in our central warehouse in Mantsala will also -- there will be some new working models. And of course, then the distribution to our stores and the store people working in the stores, how we can develop their work in our stores is -- all will be in the focus area for 2020. And of course, as already mentioned, the key success factors, this we will have a strong hold on low price level in Finland, wide product assortment. And of course, it's good availability of the products, it's something to keep in mind every single day and sales and service-oriented personnel. Our job will be to help and support our store personnel to concentrate on our customers even better in future. And as mentioned already, we will also be investing in our online stores together with our nationwide store network. We already launched in the end of 2018 our CMD. We'll -- as a target, we'll have a revenue level of EUR 1 billion, and we will be working very hard to achieve that level. For 2020 outlook, we expect a good revenue growth and slight growth in like-for-like stores -- or like-for-like revenue and improvement of group profitability on previous year. Next business review, we'll be launching on the 29th of April. So that's about -- this is actually a picture of our Tokmanni kickoff occasion some 3, 4 weeks ago for kickoff for 2020, all our store managers together with our headquarter personnel. Pretty good spirit with people. I'm very happy about that. Anyway, thank you very much. I think now it's time for questions. Markku, could you please also join me with answering the questions?

[Markku Pirskanen, CFO, Deputy CEO & Member of Executive Board]

Yes. Thank you. Yes, sure.

[Mika Rautiainen, CEO & Member of Executive Board]

Operator, are there any questions on the line?

[Operator]

There are some questions on the line so far. [Operator Instructions] Our first question comes from the line of Nicklas Skogman of Handelsbanken.

[Nicklas Skogman, Research Analyst]

Congratulations on a very strong 2019, very impressive.

[Mika Rautiainen, CEO & Member of Executive Board]

Thank you.

[Markku Pirskanen, CFO, Deputy CEO & Member of Executive Board]

Thank you.

[Nicklas Skogman, Research Analyst]

So when I look ahead now, it does seem like the margin improvement will need to come mainly from gross margin expansion. And you mentioned more direct sourcing in private label as key focus areas in 2020, which I think we all agree on. But -- and if you disregard Q1 2019, which was impacted by the clearance of inventory in acquired stores, you grew private label penetration by 90 bps in Q3 and 60 bps in Q4. Is that the sort of improvement or increase year-on-year that we should expect in 2020? Or are you targeting more than that?

[Markku Pirskanen, CFO, Deputy CEO & Member of Executive Board]

Could you please -- which figure you referred?

[Nicklas Skogman, Research Analyst]

Private label share of sales, the 60 bps in Q4 and 90 bps in Q3.

[Markku Pirskanen, CFO, Deputy CEO & Member of Executive Board]

Yes. It's, of course, very difficult to say exactly what will be the development of -- development in percentages. And of course, when we look the whole year 2019, the private labels were still at the same level when it was 2018. But certainly, we are targeting to continue the work to have clearly a higher shares in the coming quarters, but I can't give you an exact guidance what will be the improvement. But we have worked very hard on that. And certainly, we are expecting that development, at certain level, it continues.

[Mika Rautiainen, CEO & Member of Executive Board]

I would add on something over there. It's -- we've noticed that we're actually improving our private label sales if we'll also have some A brands besides our private label products. But of course, sometimes, it happens that like our price level in our A brands are also like very tempting to our customers. So that's why it's always like a customer decision whether the customers are choosing our private label or the A brand products. But for sure, we've noticed that it's better not to make the decision for the customer so that, for example, we would skip the A brands totally. We have very good results when we have A brands and private label together. But that's why it's always a little bit difficult to estimate like what will be the customers' final decision when choosing products. But definitely, we will look for a stronger private label share.

[Nicklas Skogman, Research Analyst]

I think a year ago or so, you said you had your orders for the direct sourcing had increased 20% compared to previous year. Is there a similar increase in orders? Because these are long lead time orders, as I understand it, is there a similar increase this year?

[Mika Rautiainen, CEO & Member of Executive Board]

Well, we're not exactly talking about the increase but -- the exact percentages, but yes, we are increasing that. And we also will look forward to increased Far East imports. And at the same time, we are working closely together with Europris and Norway together with OoB in Sweden. And we can see also potential with -- we can still see a lot of, actually, potential with these joint efforts when it comes to joint buying with the Nordic companies. So that's for sure. But yes, it's increasing. We're not launching the exact figures or growth percentages.

[Nicklas Skogman, Research Analyst]

Yes. Okay. And on the China sourcing, are you seeing any disruptions from the coronavirus at this point?

[Mika Rautiainen, CEO & Member of Executive Board]

Well, it's a serious matter. And we've started to follow up that daily, basically, from the start of the -- when we heard about it. And obviously, our personnel in our Shanghai office, that's, of course, the most important issue there. Personnel and their families' health is our first priority. And that's why we decided that the people will start coming back from the Chinese New Year vacation only starting from next year -- sorry, next week, starting in Monday. And we do see that there are lower capacities used in the factories and also in the harbors. And for all the products that are very important for us for our spring season start, they are already on their way or they're already in Finland. But we follow this very closely, what's the development, what's the situation when it comes to the coronavirus and the Chinese environment. And of course, it's very difficult to estimate anything. Of course, we hope that everything will -- or let's say, the peak will be soon -- be seen soon. And then, of course, the development will be healthier for the whole nation over there. But yes, it's a difficult issue. At the moment, we don't have difficulties with that, but we see that if it continues, then, of course, there will be like difficulties, I would say, globally.

[Nicklas Skogman, Research Analyst]

Okay. And then you guide for slight like-for-like growth. If I'm reading that, say, 2%, and you have the EUR 1 billion sales target for 2020, that implies roughly 4% growth contribution from stores. Is that what you're looking at as well now?

[Markku Pirskanen, CFO, Deputy CEO & Member of Executive Board]

Unfortunately, we haven't given the exact number for what it's like. But of course, we all know that it's not a huge number, of course. And as we have said, it's low single digit. And then, of course, it's up to you to think what it exactly is. But as said, we haven't given any exact number. Sorry about this mystery cancer but...

[Operator]

Our next question comes from the line of [indiscernible].

[Unknown Analyst]

I have 3. My first one would be a follow-up question on the Chinese lockdown on coronavirus. I understand that you have 16% of your import coming from the Shanghai JV. But I guess you have other imports from China, like [ 80 ] -- I would like to know if you could give us a kind of number of like total import, direct and indirect, coming from China.And I have understood that the Easter campaign products are on their way. So when do we have to like -- kind of when that -- when like the coronavirus and the Chinese lockdown could be a problem actually for you?

[Markku Pirskanen, CFO, Deputy CEO & Member of Executive Board]

Sorry, we had a little bit difficulties to hear, but did you mean that -- or referred to this coronavirus and when we are expecting when the challenges or problems will appear in our deliveries or purchases from China? Did I...

[Unknown Analyst]

Yes, yes, exactly. So I wanted to know if you could tell me -- well, I know that 16% of your import products are coming from the Shanghai JV, but what's the total number coming from China of the import direct and indirect? Yes, I've understood that the Easter products are already on their way, so it's not a problem. But maybe when that lockdown could become a problem?

[Markku Pirskanen, CFO, Deputy CEO & Member of Executive Board]

It's -- as Mika had mentioned, that product for spring season already are on way or are already in Finland. And of course, these products are not any more problem. But of course, if we're looking a little bit far -- more far and starting to look at summer and next autumn, of course, we can't know how this virus issues will develop. And if it will be more and more serious, it, of course, start to affect our businesses. That's absolutely clear. But of course, it's a little bit later on, on this year.

[Mika Rautiainen, CEO & Member of Executive Board]

Yes. And of course, let's say, the near future, the coming months are probably okay, I could say. But if, for example, for all retailers and nonfood retailers, Canton Fair in April is very important, if there will be problems with that, then, of course, it will start showing that like the retailers will be looking at different markets in -- for example, in Europe, in Turkey, countries like this, in Vietnam and so on if the Canton Fair fails in one way or another. So near future is okay. But let's say, with a little bit later, of course, there might be some problems. And this is something that we're basically working on every day what to do if we will start having problems with deliveries from China.

[Unknown Analyst]

Okay. Can I ask another question on that one? When do you usually ship your summer products, in like April or May or before?

[Mika Rautiainen, CEO & Member of Executive Board]

Yes. Like -- let's say, the first part is already in its way. But then we -- when we start, like when the season starts, then we usually get more products and more shipments, they haven't started yet from China. And this is, of course, something that then we need to see what's going to be happening with these shipments.

[Unknown Analyst]

Okay. I had another question on private label. You launched 2 lines in 2019, and I wanted to know if you were planning to launch other new lines this year or in the short term?

[Mika Rautiainen, CEO & Member of Executive Board]

Well, we'll be launching at least one new private label range this year. And we will be also -- we will be renewing some of our private label ranges that we have already. Some of them are -- they're still selling quite well, but we -- but they need to have like renewal and a little bit like a new idea over there. But there is like good sales to start with, so that's why we don't necessarily need to launch new ones, but we will definitely renew some of our existing private label ranges. But at least one new private label range will be launched during the first half of the year.

[Unknown Analyst]

Okay. And maybe my last question would be on online. You had a tremendous growth this year, but it's still a very, very low portion of yourself.

[Mika Rautiainen, CEO & Member of Executive Board]

That's true.

[Unknown Analyst]

Is it something structural in Finland, the registration realm on your business?

[Mika Rautiainen, CEO & Member of Executive Board]

Well, first of all, I'm afraid, I just have to say that we -- in Finland, we come a little bit behind to other markets when it comes to online business. It's not that well developed in Finland when it comes to a retail market. And -- but when -- about the Tokmanni online sales, it's a little bit like -- also like a structural issue would be working with the packaging lines and things like this. But now it's -- we will be concentrating a little bit more on our destination categories. We definitely want to be the #1 -- for example, #1 garden online retailer in Finland. But at the moment, it doesn't show on our online store. And this is, for example, one, let's say, structural issue that we will be working during 2020. Of course, garden -- #1 garden retailer is not the only one, but we will be focusing a little bit more compared to last year with the online sales.

[Markku Pirskanen, CFO, Deputy CEO & Member of Executive Board]

And then perhaps some additional -- addition to this online potential, what we had. When we are looking, that we have this 191 stores at this moment; and then when you are remembering that Finland -- in Finland, the distances are quite long; and looking at the whole Finland, it gives us a good possibility to deliver these products to our customers. Even if they are buying through online, in the future, hopefully, more to deliver with the efficient way because when we are looking our stores and then thinking the click-and-collect model, we are quite near to every customer or every people here in Finland, even we are in a southern or northern part of Finland. And that, of course, gives us a good, good potential to increase our online sales with profitable way.

[Operator]

And our next question comes from the line of Tushar Jain of Goldman Sachs.

[Tushar Jain, Research Analyst]

A couple of questions. In terms of -- you talked about the basket size. I'm just wondering, any initiatives you are taking to improve basket size in the near term? Or it's more like a medium-term growth for you, how you're thinking about it?

[Markku Pirskanen, CFO, Deputy CEO & Member of Executive Board]

As I said, last year, we were able to increase with 1.1%. And at this moment, it's EUR 17.90. And also mentioned, we -- that we think that -- and believe that there are certain potential where -- but at the same time, have to say that it's not a quick process to get the people buy more. So to your question, I would say that it's step-by-step going forward and increasing the basket size, but there will most probably not be any big jump with a short run.

[Tushar Jain, Research Analyst]

Got it. And the second question, on supply chain benefits, we should be thinking that these should start to be incrementally more from here given the initiatives you're doing with Europris and OoB. So just trying to get a sense of what benefit we should be modeling.

[Markku Pirskanen, CFO, Deputy CEO & Member of Executive Board]

As I have said earlier, the development of supply chain and the benefits out of that action is clearly the long-term actions. And we -- as Mika mentioned, we are really pushing to improve the supply chain. And of course, we are getting throughout time smaller parts and then going also here step by step. But to get bigger jump also here, it's very difficult to say and/or get. And we have to look the whole process there when we are speaking about supply chain, starting from the factory to the end, meaning the store and then trying to improve the whole process there. And I believe that we will get benefits with smaller portions throughout the time, starting, of course, from 2020 but, of course, continuing in 2021 and so on.

[Operator]

[Operator Instructions] And we have one further follow-up question coming through. That's from Nicklas Skogman of Handelsbanken.

[Nicklas Skogman, Research Analyst]

Yes. One last question on working capital. Do you expect to -- I think you mentioned you said inventories were at a level where you don't want to go higher at the moment. Do you expect, I mean like benefits from working capital in 2020?

[Markku Pirskanen, CFO, Deputy CEO & Member of Executive Board]

As I said, that we are clearly now at the level that relation between inventory and revenue is, I would say, we're on the highest, or I don't know if the highest. But anyhow, but we will not any more increase that share. And trying to keep it at least on that share, there might be a small potential to get some benefit on that side. But today, I don't -- or I can't say that this will happen. But anyhow, we will not in relative wise to increase inventory anymore.

[Nicklas Skogman, Research Analyst]

Okay. And now also, I remember that you said you will invest more in online in 2020. What does that entail?

[Mika Rautiainen, CEO & Member of Executive Board]

Sorry...

[Markku Pirskanen, CFO, Deputy CEO & Member of Executive Board]

Investing online.

[Mika Rautiainen, CEO & Member of Executive Board]

Investing online. Yes, as mentioned, we will focus more on the business areas, especially our destination categories with Tokmanni online. Well, if you look at the -- our online store, it's basically offering everything, all our assortment at the moment. But it's not really focusing on any specific area well enough, and that's something that we're going to be working with. Especially I think that one of the first ones will be this garden online store, which, of course, yes, they're not only the products but also like advice and ideas of professionals when it comes to gardening, what to do with your garden and things like this. So we will be bringing some content also on our online store. But it will be like more focused instead of our full assortment. So yes, that's one of the main investments in the online business.

[Markku Pirskanen, CFO, Deputy CEO & Member of Executive Board]

Yes. And we have to still remember that, most probably, you are looking also in money-wise, that one, it's not a huge amount of money. And certainly, when I said that for 2020, total amount of investments will be at the level of EUR 60 million, that's inside these figures. And we are not -- yes, that's including, and we are not speaking in money-wise huge amount of amounts.

[Nicklas Skogman, Research Analyst]

Yes. That was the CapEx, right, the EUR 60 million.

[Markku Pirskanen, CFO, Deputy CEO & Member of Executive Board]

Yes. That's was the CapEx, yes.

[Nicklas Skogman, Research Analyst]

On OpEx as well, you said there is -- yes. Okay. Very good.

[Operator]

And as there are no further questions, I'll hand back to our speakers for the closing comments.

[Mika Rautiainen, CEO & Member of Executive Board]

Okay. Thank you very much, and talk to you next time, latest on the 29th of April. Thank you very much.

[Markku Pirskanen, CFO, Deputy CEO & Member of Executive Board]

Thank you.