![Europris ASA Logo](https://ik.imagekit.io/kkbzr2uz4cp/stock/ose/epr.png?tr=w-200)
Europris ASA
OSE:EPR
![Europris ASA Logo](https://ik.imagekit.io/kkbzr2uz4cp/stock/ose/epr.png)
US |
![]() |
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
US |
![]() |
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
US |
![]() |
Bank of America Corp
NYSE:BAC
|
Banking
|
US |
![]() |
Mastercard Inc
NYSE:MA
|
Technology
|
US |
![]() |
Abbvie Inc
NYSE:ABBV
|
Biotechnology
|
US |
![]() |
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
US |
![]() |
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
US |
![]() |
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
US |
![]() |
Visa Inc
NYSE:V
|
Technology
|
CN |
![]() |
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
US |
![]() |
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
US |
![]() |
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
US |
![]() |
Coca-Cola Co
NYSE:KO
|
Beverages
|
US |
![]() |
Realty Income Corp
NYSE:O
|
Real Estate
|
US |
![]() |
Walt Disney Co
NYSE:DIS
|
Media
|
US |
![]() |
PayPal Holdings Inc
NASDAQ:PYPL
|
Technology
|
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
52 Week Range |
58.05
82.05
|
Price Target |
|
We'll email you a reminder when the closing price reaches NOK.
Choose the stock you wish to monitor with a price alert.
![]() |
Johnson & Johnson
NYSE:JNJ
|
US |
![]() |
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
![]() |
Bank of America Corp
NYSE:BAC
|
US |
![]() |
Mastercard Inc
NYSE:MA
|
US |
![]() |
Abbvie Inc
NYSE:ABBV
|
US |
![]() |
Pfizer Inc
NYSE:PFE
|
US |
![]() |
Palantir Technologies Inc
NYSE:PLTR
|
US |
![]() |
Nike Inc
NYSE:NKE
|
US |
![]() |
Visa Inc
NYSE:V
|
US |
![]() |
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
![]() |
3M Co
NYSE:MMM
|
US |
![]() |
JPMorgan Chase & Co
NYSE:JPM
|
US |
![]() |
Coca-Cola Co
NYSE:KO
|
US |
![]() |
Realty Income Corp
NYSE:O
|
US |
![]() |
Walt Disney Co
NYSE:DIS
|
US |
![]() |
PayPal Holdings Inc
NASDAQ:PYPL
|
US |
This alert will be permanently deleted.
![](https://ik.imagekit.io/kkbzr2uz4cp/stock/ose/epr.png)
Good morning, everyone, and welcome to Europris First Quarter Presentation for 2023. Warm welcome to everybody that are actually present here in the room this morning, I know it's a very busy day with a lot of presentations, and also welcome to the web audience. With me today, I have Stina Byre, who will present the financial details afterwards. And at the end of the presentation, Trine Englokken, our IR Officer, will manage the Q&A session. We will start with questions from the room and of course you at the web are also welcome to type in questions as we speak and we will have all those questions towards the end of the presentation. Let's get into it. Well, not yet. I think we have a small technical issue and we will try to fix this remote so we can actually switch the slides.Europris is the #1 discount variety retailer in Norway. We have a very strong brand and a loyal and growing customer base. It's no doubt it's a tougher market out there and we face this this year. But with our low prices, the powerful marketing and the very impressive campaign engine; we managed to deliver a very solid first quarter. Europris continued the profitable growth journey in the first quarter. Total sales ended at NOK1.9 billion, up by 12.7%. Excluding the acquisition of Strikkemekka, the growth was 9.6%. There are some positive effects to the sales in the first quarter; of course an early Easter that is positive for a seasonal business like Europris and as a low price retailer, we also saw hoarding of goods towards the end of January when the consumers were facing or at least expecting increased prices in the market from 1st of February.The gross margin ended at 43.5%. That is a reduction of 0.8% from last year and of course we also see, like everybody else, higher input costs and we also see an increased price competition. Especially on seasonal items before Easter, we saw quite tough campaigning in the market to attract traffic to stores. OpEx-to-sales ratio ended at 27.4%. And all this resulted in an EBITDA that increased by 12.2% to NOK311 million. Net profit ended at NOK71 million, which is a reduction from last year and that is caused by the effect on the interest rate swaps we have. We booked a profit of NOK30 million in the same quarter of last year and a loss of NOK5 million this year. So a difference of NOK35 million between the quarters. We have secured 60% of our long-term loans at very attractive interest rates. Towards the end of the quarter, we acquired the remaining 33% of Lekekassen and I will come back to that shortly.And still we have a solid financial position with cash and liquidity reserves of close to NOK1.1 billion. I think we have delivered a strong sales performance in the first quarter. But looking at the market figures that are available at the moment, the market has also been quite strong. Of course it's 1 more sales day this quarter compared to last year and it's also an early Easter. Looking at the market figures, we only have figures from the shopping centers which had a growth of 5.8% in the first quarter compared to Europris growth of 8.5%. The figures year-over-year are becoming more and more comparable, but still there were some COVID effects in the beginning of the first quarter last year, which I believe that had a more negative impact on the shopping centers than on Europris. I think it's a strong performance to continue to beat the market and take market shares.Coming back to the acquisition of the remaining 33% of Lekekassen. The founder and CEO of Lekekassen, Andreas Skalleberg, has decided to resign from his position as CEO and take up an advisory role in the company. We knew that this day was coming, but I have to admit it happened a little bit faster and sooner than we expected. We have prepared for this and in December 2021, Severin Baugsto Hanssen was appointed CEO of the company with the intention that he should step up and take the CEO role when Andreas decided to resign. Now that day has come and I'm really happy that Severin has accepted the challenge and all the other core managers of the Lekekassen team will remain in their positions. It's a good spirit in the company. I spent a full day last Friday with the management in Grimstad and we're looking forward and we're also looking forward to have Andreas with us at least until the end of 2024 in an advisory role. So it's a good spirit and we are looking forward to work with Lekekassen in the times ahead.So Stina, let's look at the financials.
Thank you, Espen. I will repeat some of the things you have now been told. Group sales ended at NOK1.9 billion. This is an increase of 12.7%. And if we exclude structural growth from the acquisition of Strikkemekka, the sales growth was 9.6%. The Europris chain had a like-for-like growth of 6.7%. And an earlier Easter had a positive timing impact, which will of course then have the correspondingly negative timing impact in the second quarter. And as Espen said, normally in Norwegian grocery there are 2 price adjustments a year; 1st of February and 1st of July. And ahead of the expected price increase in February, the media attention was very intense and this led to hoarding affecting sales numbers positively in the latter part of January. And in the current retail environment to stay relevant, we have focused particularly on consumables in our marketing leaflet and this has positively affected footfall to stores and sales.Total e-commerce sales were NOK165 million. Excluding structural growth from Strikkemekka, this represents a sales increase of 11%. And total e-commerce sales constituted 8.5% of group sales. Lekekassen had sales growth from a strong quarter in both Sweden and Denmark while Norway fell behind last year. The Strikkemekka Group also had sales growth due to the development in the yarn business. Gross margin was 43.5%, down by 0.8 percentage points. And as you recall normally prices are adjusted in February, but this was not the case this year meaning that higher input cost was not offset by corresponding price increases, putting pressure on the margin. And there are 2 other effects I would like to mention. I will start with the one that is easiest to explain and that is unrealized effects from currency hedging where there was a gain of NOK5 million this year compared to a loss of NOK5 million last year. And the other one is a bit more technical, but I will give it a go.But first, I would like to emphasize that it must not be considered as oneoff effects, it is a matter of timing. What happens is that when we sell a product, a calculated gross margin is booked and this may deviate from the actual gross margin meaning that a calculation difference arises. Normally in the previous years, we have booked these calculation differences at the time of inventory accounting, which has been in the third and fourth quarters. But as from the first quarter this year, we will book these calculation differences when they arise meaning that we will have a more accurate gross margin throughout the year and in the first quarter this year, NOK15 million was booked due to this. So last year, the gross margin in the first half was a bit too low and in the second half a bit too high. OpEx was NOK529 million, an increase of 9.7%. But if we exclude structural OpEx growth from Strikkemekka, the OpEx increased by 5.5%. The OpEx to sales ratio declined by 0.7 percentage points to 27.4% and this was obviously also positively impacted by the timing of Easter sales.EBITDA was NOK311 million, up by 12.2% and the EBITDA margin was roughly on a par with last year at 16.1%. The first quarter is normally a weak quarter when it comes to cash due to seasonality and the net change in cash was negative with NOK495 million compared to negative with NOK576 million last year. But I would like to remind you that last year was negatively impacted by earlier shipping of goods. The remaining 33% of Lekekassen was acquired for NOK212 million. And I would just like to inform you that we have made a calculation change when it comes to financial debt and net debt where also current lease liabilities are included and we have restated last year's figures so that they are comparable. Net debt was NOK4.1 billion, up from NOK3.5 billion last year. If we exclude lease liabilities, net debt was NOK1.4 billion compared to NOK1.1 billion last year. The group has a solid financial position with cash and liquidity reserves of close to NOK1.1 billion.Thank you. And back to Espen.
Thank you, Stina. On our Capital Markets update in December last year, we presented our strategy plan and the medicine for Europris in the future is actually more of the same as we've done in the past, but always a little bit better. And the strategy is all about strengthening the price and cost position, it's about improving customer experience, drive customer growth and act responsibly. Act responsibly is the new addition we made to the strategy plan and that includes a more focused approach to sustainability and I think that we last year made great progress in our work where also our application to join the science-based targets was approved. When we look at strategy for Europris, the concept is all about low prices, campaigns and seasons. That is what we do to drive sales and also get customers into the stores.And in the first quarter this year, campaign activity has been extremely important and it's a vital part of the concept. And using campaigns to attract customers, giving them what they come to the stores for is extremely important for Europris. And we are totally devoted to fulfilling the customers' needs. If they come for a product to us that are on campaign, they should get the campaign product every day of the week. And while campaigns are important to drive the overall traffic, also the seasonal concept has been important in the first quarter. And Easter, it's a very intense short season, but it's an important season to drive traffic to Europris. And we had a successful Easter campaign, but it was also driven by good footfall, good weather and so on to our stores. And 1 thing that we have worked on and talked a lot about lately is the category upgrades we are doing and we are continuously working to improve the shop-in-shop solutions we have in the stores and this quarter it was about updating the cleaning category.We have modernized the shop-in-shop and the store layout and we also introduced new sales promoting items. It's still too early to evaluate the full impact of the changes we made, but the results so far are promising. When we look at driving footfall, we have talked a lot about the customer club over the last couple of years and we have reached a new all-time high at the end of this quarter with close to little bit more than 1.3 million members in the customer club. But getting the members in, it sounds hard, but that is actually quite easy compared to using all the data we get in a good way to be relevant and actually increase the shopping frequency of the customers. But we are trying, we're working hard on this. We have worked a lot on social media in the quarter, doing more local activities and doing local social media promotions from the stores.We are doing targeted campaigns to our customer club Mer members to increase frequency and we are trying to address the customers with changed shopping behaviors. When we see that the customers are changing their behavior, we are trying to address them in a new way to get them back into the loop. And of course we are also doing small tests, scale testing of personalized product recommendations. So it's all about being more relevant for the consumers. We have a lot of data and we are starting to use it and starting to be smarter in the way we approach the customers. On the physical store space, we are continuing to build new stores. We opened up another city concept store here at Grensen in Oslo in the quarter. That brings the total portfolio of city stores to 4. And now we are out of the COVID-19 comparable years so we will start now to have a good benchmark and see how these stores actually perform and evaluate if it's room for more city stores in the years to come.We also opened up another store in Froland in Agder county in the quarter and we have 9 stores in the pipeline for the rest of the year and the years to come, 3 of the stores are subject to planning permissions. At the Capital Markets update in December we also talked about an IT upgrade, which might seem a little bit boring, but it's an extremely important addition to the strategic projects of Europris. We are actually rebuilding and building a totally new IT platform for the company. I'm really happy to say that we have now delivered and successfully gone live with the ERP project in the quarter. It was delivered on time and actually below budget and we had no disturbances to operations. It's a 2-year project and I'm really proud of the project team we have had working on this for 2 years and actually deliver an IT project fully working and without any issues for the operations. So that went live in February.In parallel to this, we have worked with upgrading the data warehouse. We have a new platform and we are still adding new components to this, but it's all working and going live with all solutions pretty soon. And we have some other large projects also ongoing and that is the point-of-sale system. We started almost a year-ago by selecting a new supplier for the point-of-sale system. We have developed solution together with them and we are ready to go live with the first test within a couple of weeks and we expect the rollout to be completed in all stores by mid-2024. And then when all this is complete, we will do the accounting system. So it's a big project, but we have good teams in place and very good project managers and everything is running according to plan and according to budget at the moment. So what about the outlook? And honestly, I think Europris is well positioned in the current markets.The consumers have a higher need for good deals and affordable campaigns. We saw that in mid or towards the end of January. When hoarding started because of consumers expecting price increases, they came to Europris. So being top of mind for the consumers when it comes to price is a very good position to be in when you have a tougher market. We talked about the sales growth for the first quarter, but of course we had an early Easter and that affects the sales. When we talk -- look at this chain sales growth per 25 April, that eliminates the Easter effect and we had a growth of 4.1%, which I still believe is a strong number. We have planned for another summer with low appetite for investment purchases. Only 7% of chain sales in the first quarter came from -- in the second quarter 2022 it should be came from products with price points above NOK1,000.So I think in historic view, I think we will see lower sales of high ticket items; but compared to last year, I think we will be more or less the same this year. So you have to focus on what you can sell as additional products and to make the summer good for those who are staying at home. I think the high attention to price, as I said, in media and among consumers is very positive for a concept like Europris. We've proven that we have good prices and we have strong campaigns and I think that continued attention to everyday consumables and affordable products will benefit Europris in the times ahead.With that, I think we will open up for questions.
Petter, ABG. So I have 3 questions. First of all, another set of strong numbers so congratulations on that. Is it possible to give some flavor on the like-for-like number 6.7%? How much is price there?
The majority of that is price, but we also see the increase in the number of customers. But we see overall the basket has increased. That is due to price, but the number of articles per customer is slightly down. So price is the dominant factor of the like-for-like.
And then to Stina, I mean you talked about this NOK15 million on the gross margin. I understand it's probably hard to estimate that effect on the coming quarters. But in a historical context, is that NOK15 million high or is it low versus, let's say, a normal quarter?
Well, if we looked at 2022, we had historic high numbers and that's because prices have increased in a way that is a long time since you see those types of increases in input costs. So normally these effects have not been that high. But when inflation occurs, then these calculation differences will also normally be a bit higher. But I think we will have overall for the year a lower number than last year, but still higher numbers than in kind of a normal inflationary environment.
Perfect. And then the final question, that goes on the OpEx and the wage inflation. What should we expect in the coming quarters and will you have a full effect of the higher salaries from Q2 or will that be a second half, let's say, cost increase?
You have the effect from April, that's when we make the adjustments. And we follow collective agreements for all our stores and at the warehouse and we also adjust those with individual salary adjustments with effect from that date. But it has not been finalized yet what these numbers are, but we will make an estimate and accrue for that.
And I now read the questions from the web. The first question comes from Ole Martin Westgaard. What was the consumables share in Q1 compared to Q1 2022?
It was not much difference. We have a higher share of consumables in the first quarter compared to other quarters, but it was slightly higher than the first quarter last year, but not significantly.
And how do you see the competition from groceries and how do you see the impact from the Swedish border trade?
I think as I said, the competition is getting harder and I think what we have seen in the first quarter is that the grocery chains are up for fight. The move from [ Kiwi ] by not increasing prices on February 1 started the price war that continued throughout the quarter and I expect also to continue somewhat into the second quarter. But at one point those companies also need to adjust the prices in order to cover the price increases they have seen. I think it has become tougher in this market and that is of course fun for a company like Europris where we have very good prices and also good campaigns, but it's challenging too because we also need to increase on prices and that you have to maneuver the right way in such markets. And you talked about the Swedish border, of course we are seeing that border trade is picking up. But I think you've seen at least from the press that it has not reached the numbers that it was previously and that is of course impacted by high inflation in Sweden as well and of course by the weaker Norwegian kroner. So it's many aspects impacting the border trade. What we have seen -- overall after the pandemic, we have seen a weaker development in the stores closest to the Swedish border compared to the rest of the chain, but they had a similar opposite effect during the pandemic.
And the last question from Ole Martin. How is the store in Grensen performing? What is the latest thinking on the city store concept and the rollout plan?
The Grensen store has been open for 4 weeks so it's a little bit early to evaluate. Normally we say in Europris we need the full year to see how this store work with the seasons. We have a great opening day I can say that and after that I think it takes some time before the consumers actually detect the stores and find it. We've seen extremely good traffic in the store, but still we are working to get the basket up. That is exactly the same development we saw when we opened up at Gunerius some years ago. We had good traffic, but low basket and it takes time to build that basket up in such location. And the rollout plan is basically that now we should evaluate these 4 stores. But we are working on looking for more locations. We have been struggling to find locations at attractive rents in the good locations we want.
Next question comes from Joachim Harms. There is 1 question to Espen and 1 to Stina. Espen, would you mind providing some color around the reasoning of the Lekekassen CEO early departure?
I think you have to ask Andreas about that. He's giving an interview to the local newspaper today. Basically I think Andreas said it has become a great company, grown a lot. Its new resources coming in with Severin and it's you want to do something else. Not be the manager, but being more the adviser and work with more strategic issues for the company. So the shift in his role, it's not dramatic. It's a good spirit there and I'm looking forward to continue working with Andreas, but in a different role.
And to Stina, is there any particular reason why you decided to change the reporting of 2 important financial statement items, gross margin and the debt?
Yes. If I start with debt, current lease liabilities is part of the balance sheet and when we evaluated our key figures, we realized that we should include also this. So we updated to include both current and also which was already there, the noncurrent part of the leasing liabilities. When it comes to the gross margin, it has been difficult to accurately calculate these effects; but we have worked hard on this and have improved our models. So it is more accurate to book it when these differences arise and we have therefore decided to do that. And in the past these differences have not been that big, but we saw last year that they were rather big. So it's better to take this ongoing than to wait especially when we more accurately can determine the number.
Thank you. There's no more questions.
Okay. Then I wish everybody a good day and thank you for watching the Europris webcast.