BHG Group AB

STO:BHG

Earnings Call Transcript 2020-Q3

[Adam Schatz, President, CEO & Head of Home Furnishing Segment]

Thank you, operator, and good morning, everyone. Moving to Slide 3, please. We came into the quarter on the back of the exceptional pandemic-infused growth from spring and early summer. And as our performance makes clear, demand has remained strong also during the third quarter, with our DIY segment continuing to be especially favorably affected by changed consumer behaviors, but our Home Furnishing segment also performing solidly.Today's agenda follows the format from earlier earnings calls and includes results highlights and business and financial updates as well as a summary, followed by a Q&A session. I'll kick it off, then hand it over to Jesper to cover the financials before I summarize and we launch into the Q&A.Slide 5, please. Cutting straight to the chase, the business grew by almost 40%, and net sales reached SEK 2.3 billion. Organic growth amounted to 32.3%. Adjusted EBIT came in at SEK 194 million, corresponding to an adjusted EBIT margin of 8.5%. And cash flow from operating activities was positive despite the exceptionally strong cash flow of the previous quarter, which, in turn, led to a peak in supplier payments in the third quarter. With year-to-date cash flow amounting to SEK 774 million, our financial position is solid.Clearly, many of the underlying driving forces which led to the exceptional growth that we experienced in the second quarter of the year have also had an effect on the third quarter. Consumer interest in online shopping in general and in home improvements specifically has remained on a high level, and we've been well placed to capture the resulting demand.Commenting briefly on the segments, more on which later. The Home Furnishing segment has delivered very robustly for 8 consecutive quarters now, and the third quarter was, in many ways, a carbon copy of the previous one with good growth and strong margins. It continues to be the DIY segment that is most clearly favorably affected by the unusual trading conditions in the wake of the pandemic. Our 2 largest platforms within DIY, Bygghemma Group SE and BHG Finland both grew in excess of 30% in constant currencies, while some of our niche private label-based units grew at truly exceptional rates.We continue to expect a reversion to more normal trading conditions, but note that trading has remained strong thus far into the fourth quarter.Slide 6, please. Ever from the start, we set out to consolidate the market for home improvement with a two-pronged approach, combining organic growth with acquisitions. And when it comes to the organic component, we're now reporting our fourth quarter in a row with growth in excess of the 15% level, which is our communicated target of our business cycle. The exceptional peak from the second quarter of 42% was followed up in this past quarter with organic growth of 32%, which, in turn, was comprised by the Home Furnishing segments, 29%; and the DIY segment, 35%. With growth at these levels, and although we do not yet have complete market data, we're convinced that we continue to extend our market share in both segments.Slide 7, please. Our strategy remains focused on 4 cornerstones: Firstly, a continued expansion of our leading product range. We've not reached the million SKU mark yet, but we are within touching distance. Secondly, scale and a high share of own brands and our sales mix. With year-to-date growth at 45%, not least fueled by our private label range, we continue building scale advantages. Thirdly, creating the most appealing shopping experience and leading in the digital world. We grew our digital footprint significantly in the quarter, seeing more than 76 million visits to our destinations. And finally, offering the market's best professional guidance, service and support, including in the quarter further expanding the reach of our installation network within DIY as well as the capabilities of our own last-mile delivery setup on the home furnishing side. This is our ecosystem.Moving on to the business update and turning to Slide 9. We've been on the path of profitable growth since inception some 9 years ago. Some key metrics describing who we are today at a glance. On the left-hand side, our CAGR since 2014 amounts to 40%. In this period, EBIT has grown well in excess of 100% per annum. Our EBIT margin on an LTM basis stands at 7.2% and is generated by our over 80 customer-facing web properties. And now moving over to the right-hand side, these properties have been visited well over 200 million times year-to-date, generating some 2 million orders from customers residing in 19 countries across Europe. And finally, our product portfolio is leading in terms of its spread and depth.Slide 10, please. As I've already mentioned, one of our core strategy pillars is to continue expanding our product range within current categories as well as into new categories under the broad home improvement umbrella. As a result of this expansion, and primarily within the DIY segment, we have updated the assessment of our total addressable market. Inclusions compared to our earlier estimates are fields such as leisure, household appliances and smart homes. Based on this broader set of categories, our net sales of SEK 8.3 billion on an LTM basis should be viewed against the backdrop of the Nordic online market for home improvement worth some SEK 35 billion, which, in turn, forms part of the total addressable market in the Nordics worth some SEK 300 billion, which, finally, of course, is dwarfed by the almost 20x larger EU market. And with online penetration standing below 12% still but increasing steadily, the bulk of the growth in the total addressable market will continue to accrue to the online segment for many years to come.Moving on to Slide 11, please. Our main geographic focus to date has been on the Nordic markets. Since the second half of 2018, we're also present in a number of fast-growing Eastern European markets. Moving over to the right-hand side. Our current geographic base provides fertile ground for continued expansion and to sustain our long-term growth trajectory. Within DIY, the online penetration increase and product assortment expansion are perhaps the most important growth drivers. Whereas our Home Furnishing segment, in addition, has clear geographic acceleration opportunities, both in the Nordics -- and here, I can mention Norway as a still significantly fragmented market; as well, of course, as in Eastern Europe. When it comes to stepping into new geographies, we certainly have the critical mass to do so and are also already today extending the geographic reach of our private label businesses by taking them pan-Nordic in the first step as well as selectively entering mainland markets. And we remain committed to M&A as a key accelerant of growth and strategy execution. After a somewhat slower period deal flow-wise, the pipeline is back up at healthy levels.Summing up, we are selectively pursuing geographic expansion, and we're also continuously scanning opportunities for larger geographic moves. However, we view these as optional upsides. Our approach is not reliant on them to deliver our community growth ambition, but we're ready to strike should the right opportunity arise.Slide 12, please. Our business model includes a multi-brand approach, which helps maximize our digital footprint and results in a customer base that is both broad and attractive. The largest cohort consists of customers who are active in the labor market and in their prime when it comes to improving home environments for their families. We have a roughly 50-50 split when it comes to gender, with men being more prevalent within DIY and home and women within Home Furnishing. We consistently grow the active customer base, and this is also in the third quarter. And despite this growth in new customers, we grew the share of returning ones. And the importance we place on curation, the availability of product experts who can help guide customers through the buying journey and the attractive nature of our customer base all combined to yield return rates in the low single digits.The graph in the middle shows how we have not only maintained but actually increased the delta between our gross margin after direct selling costs and our marketing investments partially as a result of growing the share of sales from our private label range. The resulting marketing ROI means that we have a great return already on a customer's first purchase. And as we've seen, our growth has been boosted as a result of the pandemic. However, we've not recorded any significant changes with regards to customer mix and profiles. We're committed to constantly enhancing the customer experience, a commitment which was put to the test during the exceptional demand peak of the second quarter. We've cut lead times and clawed our way back during the third quarter, and we continue to invest in systems and processes to ensure that we meet or surpass our customers' expectations.I'll now hand it over to Jesper, who'll walk us through the financials in more detail. Over to you, Jesper.

[Jesper Flemme, Acting Chief Financial Officer]

Thank you, Adam. Starting at Slide 14. The strong growth in the third quarter clearly demonstrates that the changed customer behavior during the early stages of the pandemic are persisting to a high degree. As Adam mentioned, net sales increased 39.7% to reach SEK 2.290 million, and organic growth reached 32.3%.On the back of continued favorable market conditions, we reported the strongest EBIT and EBIT margin for third quarter to-date reaching SEK 194 million, which corresponds to an EBIT margin of 8.5%. The high adjusted EBIT margin was the result of: one, a favorable price and product mix, including a continuously growing private label share of sales in the digital sales segment; two, operational leverage in fulfillment, logistics and SG&A due to high growth; and three, positive currency effect, which I will get back to.Moving on to Slide 15. Turning to some of the sales drivers in the quarter. Similar to the performance in the second quarter, the continued strong trading conditions led to: Firstly, strong growth in the number of visits to the group destinations, which increased by 58% to 76 million during the quarter and generated 726,000 orders; secondly, conversion rates, which were essentially at the same level as last year despite strong growth in traffic; and thirdly, a changed product mix, which combined with the strengthening of the SEK to result in lower AOV than in the year earlier period. However, as the gross margin trend clearly demonstrates, the decrease in AOV did not have any negative effect on earnings since an advantageous AOV structure could be maintained in relation to the delivery options relevant to a given category. In other words, the AOV for bulky products, which are certain pallets, remained high, and the high-growth for small parcels could be managed by delivering to service points.Turning to Slide 16. Continued favorable market conditions and both segments' strong position contributed to the EBIT margin nearly reaching the all-time high level of the second quarter. Strong top line growth at 39.7% resulted in strong operating leverage, translating to a gross margin increase of 57% and an EBIT increase exceeding 100%. The gross margin improved by 2.8 percentage points to reach 25.9%, our highest gross margin to date, and the product margin amounted to 37.0%. Just as in the first 6 months of the year, the gross margin improvement was, to some extent, driven by the continued focus on cost and process efficiencies in purchasing and logistics as well as a growing share of sales from our own brands. However, in the third quarter, the gross margin improvement was also driven by strong demand, which resulted in few campaigns than usual and positive currency effects from the stronger SEK, resulting in a favorable impact on the gross and EBIT margin by 0.7 percentage points.Let us now turn to our Do-It-Yourself segment. Slide 17, please. The Do-It-Yourself segment follow-up is exceptionally strong performance from the second quarter, yet another strong quarter. Net sales grew by 46% to reach SEK 1.464 million, of which organic growth amounted to 34.6%. The segment platforms in Sweden, Finland and Denmark performed well beyond the quarter when a number of the more specialized operations in Sweden, particularly those with a high private label share of sales, reported very strong growth. Once again, the P&L in the Do-It-Yourself segment was nicely leveraged with a top line growth of 46%, translating to an EBIT increase of 175% reaching SEK 131.2 million, corresponding to an EBIT margin of 9.0%, the highest we have recorded to-date. During the quarter, we continued to develop our customer offering through continued expansion with the market's leading range of external brands, strong growth for our own share of own brand, the further rollout of installation services and improved -- improvements to our delivery capabilities.Slide 18, please. The Home Furnishing segment is now in its eighth consecutive quarter of good growth and a strong operating margin. Net sales in the Home Furnishing segment grew by 29.5% in the quarter reaching SEK 834 million, of which organic growth amounted to 28.6%. Net sales increased the most in the Eastern European, followed by the Swedish and Danish markets. The gross margin improved by 4.1 percentage points to reach 30.7%. Roughly 1/3 of the margin improvement is the result of the previously mentioned currency effects and 2/3 a result of continued scale improvement and inventory management translating to lower fulfillment and process costs in relation to sales. Adjusted EBIT increased by more than 100% and reached SEK 82.9 million in the quarter, corresponding to an EBIT margin of 9.9%. The further development of our warehouse and logistics infrastructure in the Nordics continued. With an upgraded software platform now in place at all last-mile terminals, providing the basis for improved track-and-trace functionality for customers and added flexibility around choosing delivery windows.Let us turn to cash flow. Slide 19, please. The exceptional demand during the second quarter of the year led to an increase in working capital during the third quarter as a result of supplier payments catching up. The exceptional growth and corresponding acceleration of cash flow in the second quarter led to a partially changed seasonal profile for working capital, which usually sees inventory buildup during the first quarter prior to the peak season with high sales and, thus, high cash conversion during the seasonally strong second and third quarters, after which working capital and inventories typically increase in the fourth quarter.Cash flow from operating activities amounted to SEK 20.9 million, corresponding to a cash conversion in relation to adjusted EBITDA of 8%. The right-hand graph showing the development in liquidity walks us through the starting period position of SEK 270.3 million; adding the cash flow from operations; deducting the impact of investing activities, a majority of which is M&A related; and finally, the financing activities, which consists of a mix of amortization of leasing liabilities while funding the ongoing M&A agenda through an acquisition facility, bringing us to the period end SEK 874.2 million of liquidity at hand.Slide 20, please. The group's net debt amounts to SEK 86.5 million at the end of the quarter. Our strong year-to-date operating performance meant that net debt in relation to LTM adjusted EBITDA ended at 0.1x, a significant outperformance of the medium-term financial target range. Our financial position is strong. On top of our liquidity at hand, we had unutilized credit facilities at the end of the quarter of SEK 434 million, which means that we can continue to execute both organic and inorganic growth initiatives.Handing it back over to you, Adam, to summarize and conclude.

[Adam Schatz, President, CEO & Head of Home Furnishing Segment]

Thank you, Jesper. So summarizing on Slide 22. Our position was strong before the pandemic broke out, and it further strengthened 2 quarters into it. We have our people, supply, demand and financial position all under control. We're reporting our fourth quarter in a row with above-target growth. Our gross and bottom line margins are at industry-leading levels on the back of a sound mix development and strong operational control.The financial position, as we just saw, is strong with ample cash on hand and significant undrawn credit facility. Strategy execution is in motion, revolving around our 4 pillars, which make up the BHG ecosystem. And finally, with strong total and organic growth as well as expanding margins, we're on the path to hitting our midterm financial targets, including reaching SEK 10 billion in sales.Turning to our final slide before the Q&A, a call to action. Slide 22, please. This is just a friendly reminder to those who may have been focusing exclusively on the Q3 earnings season until now. Black Friday is around the corner, and Christmas is approaching. This concludes our presentation. And we'll now open the call for questions. Over to you, operator.

[Operator]

[Operator Instructions] Our first question comes from Gustav Hagéus from SEB.

[Gustav Sandström, Research Analyst]

A few questions, if I may. Firstly, on conversion rates, which are rather flattish in the quarter, I assume that the mix was negative to you here since you state that Baltics outgrew the rest of the company. And it's my understanding that the Baltics have significantly lower conversion rates than the rest of your business. So can you elaborate sort of what's the like-for-like conversion rates development here in the Q3?

[Adam Schatz, President, CEO & Head of Home Furnishing Segment]

That's -- Gustav, there is somewhat of a mix effect in the total. But the general picture, I think, still is more or less in line with the conclusion here that conversion rates are similar to the corresponding period in the previous year, also if we look at the picture unit by unit. But yes, a slight negative effect from the mix. You're right there.

[Gustav Sandström, Research Analyst]

Okay. But not materially, it sounds like. Then secondly, I guess, you don't disclose them, but I assume you have some type of NPS scoring or customer complaints scoring that you keep internally. Could you please let us know a little bit how that has developed in the summer here? I assume that there's been quite some constraints on customer support and shipping and all that, which, I guess, would have put some pressure on your customer happiness.

[Adam Schatz, President, CEO & Head of Home Furnishing Segment]

Yes. You're right. We do follow both the various external ratings that are available. But of course, also, we track NPS scores internally. And the picture is somewhat mixed across the group. In fact, if we roll out -- roll up the total NPS for the various group units, we've seen an improvement in Q3 versus the corresponding period in the previous year. And you're right there, Gustav, that -- and we also have commented on that, that the extraordinary demand, especially in the second quarter, did put some strain on our value chain both in terms of our external partners. We did comment a bit on that in Q2 with some challenges on the logistics side, especially April, May, but also with lead times in customer services. To a significant extent, we've eaten up on that deficit there and we see generally a movement in the right direction. We still have improvements to do. There is nothing really that matters more in terms of customer satisfaction than delivery times and delivery accuracy versus promise. So that is the major focus of ours. And the picture between the units, as I did mention initially, is a bit diverse. We have some units that have a fantastically high and really industry-leading NPS, including where we include our installation services. We typically have extremely high NPSs. We also have very high NPSs where we deliver ourselves on the home furnishing side. And then we have some areas where further investments and improvements are necessary, and it's a really key focus of ours.

[Gustav Sandström, Research Analyst]

All right. But in terms of your cost structure, do you feel that Q3 was a bit unsustainable in terms of that you need to do more investments in customer support or other measures to bring this customer satisfaction number up going forward? Or is this a level that you think is sustainable from that aspect?

[Adam Schatz, President, CEO & Head of Home Furnishing Segment]

There is an element around resourcing also in Q3. We did mention that in Q2, and we also reiterated that in the report for the third quarter. So had we known that demand would still be at these elevated levels through Q3, we would have scaled up even quicker. But we are scaling up and yes, there is an element around resourcing in SG&A in Q3.

[Gustav Sandström, Research Analyst]

Okay. And I'm curious about return levels. You're right here at single digits. I believe you were more specific at the time of the IPO. I can't remember the number if it was 1%. Has this number gone up materially underlying? Or is this driven by category expansion and mix rather? And could you be more specific than single digits in terms of returns? That would be helpful for modeling.

[Adam Schatz, President, CEO & Head of Home Furnishing Segment]

Yes. So we actually say low single digits, and we usually say that it's significantly below 5% for the mix of the total business. We have slightly higher return rates within Home Furnishing and really, really low return rates within DIY. But they're below 5% also in Home Furnishing.

[Gustav Sandström, Research Analyst]

Okay. Last one for me, and then I'll -- maybe I'll get back in the queue. But your balance sheet, I guess, you're going to have a lot of questions on this going forward. I mean we've seen a few companies now that come from private ownership with quite high gearing ambitions, which are then gradually dialed down following some years of public ownership. And then -- how do you feel about this gearing target? You've had the 1.5 to 2.5. Is that something that you really feel is set in stone? Or do you feel that a lower debt structure would perhaps be more suitable for you going forward? And if not, is there -- do you see a reasonably plausible scenario now going forward where you actually catch up with M&A to that extent that your pro forma gearing following acquisitions would be towards the midpoint of your gearing target?

[Adam Schatz, President, CEO & Head of Home Furnishing Segment]

Sure. So we -- as you know, we have maintained our midterm financial targets for now. And as we come closer to reaching some of them like the SEK 10 billion sales mark, of course, the point at which we will be updating those targets is approaching, but we're not quite there yet. And we really want to be within touching distance of the SEK 10 billion sales level before we update the financial targets. And then we'll update. We'll be revising all of them. I'm not saying that we will be changing all of them. And to be more specific on the net debt-to-EBITDA targets, we did mention in Q2 that we were a bit disappointed with the pipeline on the M&A side. So that was one of the few negative effects that we experienced as -- in the wake of the pandemic. We have seen it pick up quite significantly now. And our ambition definitely is to continue quite aggressively utilizing the M&A tool as part of our overall strategy toolkit. We have the experience, and we've proven over and over again that it's an accelerant of our trajectory and our strategy execution. So our intention and ambition is to continue doing M&A. We've seen somewhat of a lull recently, but we hope to be back up at our usual pace before too long.And secondly, as you know, Gustav, we also have contingent liabilities sitting on our balance sheet, which aren't included in the net debt metric, which will, however, result in payments over the years 2021 through 2023. So that's, I think, addressing at least partially your question.

[Operator]

There is one more question. It comes from Niklas Ekman from Carnegie.

[Niklas Ekman]

Yes. First, a question on kind of the sales growth during the quarter. And also, you talk about strong Q3 and then continued good current trading. I'm just curious if there's any material difference between the different months. If you compare July, August, September and October, if there's any meaningful difference between those 4 months, please. That's my first question.

[Adam Schatz, President, CEO & Head of Home Furnishing Segment]

We were a bit surprised in the first 2 weeks of August, where we saw a relatively rapid deceleration, actually. But if you recall, Niklas, those were the 2 sort of peak summer weeks. I think they were probably the last vacation weeks for many people. And it was also unusually warm and the sun was shining, et cetera. So we did see a deceleration there. But very rapidly thereafter, growth came back up again. And so other than that sort of deceleration spell, I would say no. We haven't seen any real material differences. And we're not that far into the fourth quarter. We've got 2/3 to go. But again, it's sort of more or less in line with what we've seen in the third quarter.

[Niklas Ekman]

Excellent. And secondly, when I compare your Slide 9 and 11, I'm just curious because you talk about presence in 19 markets. But when I look at the map on Slide 11, which you've shown in the past, it shows 13 markets. So I'm just curious about these other 6 markets. Are there any new markets here that you would care to share with us where you have recently expanded?

[Adam Schatz, President, CEO & Head of Home Furnishing Segment]

Thank you, Niklas. That's a great question, and we should have clarified that. The fact is that we are actually present in a number of mainland markets to a very small extent, I should stress, through some of the recent acquisitions, most notably the acquisition of LSBolagen that we did -- concluded in late in December 2019. And LSBolagen has a presence in the DACH markets as well as in the U.K., which is not really large from a total group perspective. But it's at least somewhat material for LSBolagen, and I think it's sort of -- it's an interesting position that has been built up, which substantiates as we stress that when it comes to our private label assortment, we do see opportunity selectively, organically to take those private label ranges into additional geographies. We've actively been doing that for a while in taking our private label offering pan-Nordic as a first step. We sort of look at the blueprint from LSBolagen and are inspired by what we can do following that strategy and doing things in a similar vein. So that's where we have the 19 markets from.

[Niklas Ekman]

Okay. But there is no -- there's been no deliberate move into a new market with your broader assortment during the quarter or year-to-date?

[Adam Schatz, President, CEO & Head of Home Furnishing Segment]

No. And no, will there be other than, again, the pan-Nordic approach, which is very much ingrained in what we do now. And we've mentioned before, when it comes to pan-Nordic expansion, at Bathlife, which is our single largest owned brand. And we've really successfully expanded into all the Nordic geographies out of its Sweden base, and it's growing really rapidly in those other Nordic geographies. But selectively taking our own brands like Bathlife, for instance, into additional geographies is a very feasible proposition rather than taking a broad swath of the DIY portfolio into Germany, for instance.

[Niklas Ekman]

Okay. Excellent. And also, I want to come back to the target before. I realize that you want to make a firm grip and update all targets at the same time. But I'm still curious, sticking to a SEK 10 billion sales target and sticking to a 7% margin target, even though you're actually above that 7% margin target on a rolling 12-month basis, is there any reason for being conservative here? I mean are you in any way worried that this exceptional year here could partly reverse next year? Or are you mainly just deliberately taking your time here to actually decide on what the new target is going to be? So kind of wondering if you're seeing this as a real step change in consumption or if you're a bit worried about the reversal post the pandemic.

[Adam Schatz, President, CEO & Head of Home Furnishing Segment]

So many angles there. And just taking a second to consider where I should start addressing your questions. But first, taking the targets, you know that we set those in conjunction with the IPO. And I would say that it's fair to say, and I understand the question from that perspective, that we're quite close to reaching the combination of them. We're, in fact, favorable both when it comes to the net debt and the EBIT margin targets today, but we're not quite yet at the sales level that we set, although I think we will reach it sort of before the 5-year horizon that it was set against.And when it comes to the current trading, there are several aspects to our great results. One is just the growth and some scale effects that go hand-in-hand with the growth. But the other aspect of that growth has been that there -- we've also mentioned this, but there have been actually even select shortages -- product shortages in the market in the Nordics, but I understand this to be a global phenomenon, which has led to our pricing power being unusually strong. So there is definitely an element of fewer campaigns than usual in the margin that we did achieve. And as we've also disclosed and Jesper commented on, there's also a favorable currency effect on the margin and on the EBIT line. Although it's negative 2 percentage points on the sales line, it's actually positive when it comes to the margin.So there are some elements in this fantastic margin that we delivered that are here to stay, and then there are some elements that is more questionable as to the darts of the sales campaigns where they will be able to see that again in the coming periods. That remains to be seen.When it comes to the growth and looking into the future, as you know, we really don't guide the market on future deliveries. But I think it's fair to say that the total Nordic market for DIY, so including the large off-line share, will not grow in 2021 is our expectation. It is even likely to contract against this exceptional year of 2020. But of course, the online penetration, we do expect will continue to increase. And it will be the combination of the shrinkage of the total market and the speed at which the online penetration continues to increase that will dictate how the online share, which is, of course, our market, how that will develop next year.

[Niklas Ekman]

That's a very clear answer. I'm also curious about your -- an update on your private label share of sales. Do you have an updated number there? You reached above 50% earlier this year. Where are you today? And how is that progressing?

[Adam Schatz, President, CEO & Head of Home Furnishing Segment]

Right. So back to mix effect. This is a different angle on mix effect. We are at around 50%. But as you know, Niklas, we're at roughly 90% in Home Furnishing, and we're at sort of 20% type level within DIY. So although we -- and we've said that within Home Furnishing, we're not actually striving to go above the 90%. We're quite happy with that level. And we're even prepared to go down some marginal percentage points as we go into some potential new categories for us like interior decoration and kitchenware, et cetera. But anyway, on the DIY side, which is really where we're focusing our efforts to grow the share of private label, we still see room for growth. And we have expanded the share of net sales from private label also in the third quarter within DIY. But the mix effect for DIY growing faster than Home Furnishing means that we're sort of still at around 20% for the group as a whole. But it really is the DIY segment that we're targeting for an increase, and there we continue gradually moving upwards.

[Operator]

Our next question comes from Fredrik Ivarsson from ABG.

[Fredrik Ivarsson, Research Analyst]

Congrats on the strong results. A few questions from me as well. Most of them already have been asked, but picking up on one thing. We saw a big global player entering the Swedish market yesterday. I'm curious, has your sort of discussions with suppliers changed in any way on the back of that? Or is it business as usual?

[Adam Schatz, President, CEO & Head of Home Furnishing Segment]

No, there hasn't been a big change in our discussions or relationships with suppliers. Of course, it's a big event to see Amazon.se being launched after so many years of speculation. I'm just commenting a little broader on that launch. From what we've seen so far, the offering is what we expected it to be. Even if the launch itself was passed with a few, to us, unexpected glitches like the poor and sometimes inadvertently funny machine translations or product descriptions. But of course, these are teething problems. And Amazon has entered, and they're here to stay. But at the same time, looking at evidence from other countries, Amazon has not consistently been able to create the sort of dominant position that it has in its own market. And select other markets -- like Germany is also a real Amazon stronghold, as you know. But in other markets where they've entered later into the game, they haven't necessarily been able to create that really dominant position. And also, there absolutely is a correlation between Amazon's presence in a country or a region and its ability to deliver its prime services, which, as you know, is not part of the offering initially in Sweden. So nothing really unexpected as a result of the launch. On the contrary, fully expected. And as we've said before, of course, we have the greatest respect for Amazon, and we'll be watching their developments really, really closely. But we do maintain that in our domain, like the specialist, complex, bulky, inspirational, we see also that specialists have been able to hold their position in an international perspective. Even in Amazon's home market, Wayfair actually surpassed Amazon in 2019 within the furnishing category. So again, no change in regards to your immediate question and nothing unexpected also on a broader perspective.

[Fredrik Ivarsson, Research Analyst]

Excellent. And one more, just coming back to those weeks you mentioned in August where you saw a deceleration of sales growth. Would you mind just giving us feeling for what kind of level you reached in those 2 weeks? Did you still grow above the 15% target? Or was it declining even below that?

[Adam Schatz, President, CEO & Head of Home Furnishing Segment]

It was sort of hovering around there. But again, it was 2 weeks and in-season. The weather actually does play a role and either sometimes pulling forward business or sometimes deferring it. And I think that was exactly what happened with -- as it was timed also with really the final, final vacation weeks for many people in this unusual year. So -- but it was sort of hovering around the level that we have communicated as our long-term expectation over the business cycle.

[Operator]

[Operator Instructions] Our next question comes from Gustav Hagéus from SEB.

[Gustav Sandström, Research Analyst]

Appreciate the 2 smaller follow-ups. Firstly, I didn't notice that you've stated the pro forma organic growth for respective segments. Maybe I missed it, but could you please fill that in for us? That would be helpful.

[Adam Schatz, President, CEO & Head of Home Furnishing Segment]

Sure. Actually, we did not. I'm sure Jesper has the numbers available there. I actually don't have the numbers in front of me, but we will get back to you.

[Gustav Sandström, Research Analyst]

Okay. That's fine. And I'm curious about...

[Adam Schatz, President, CEO & Head of Home Furnishing Segment]

Let me -- just to comment briefly. They were very, very similar to the organic levels for both segments as the bigger difference in previous quarters was due to the fact that some of our really fast-growing units were still counting as inorganic and they've fallen into now being organic since we've had them consolidated for over 12 months. So no material difference between organic and pro forma. And as we're speaking, I actually found them. So we have -- on a group level, we have 34.3%. In the Do-It-Yourself segment, it was 38%. And in the Home Furnishing segment, it was 28.4%.

[Gustav Sandström, Research Analyst]

Okay. I appreciate that. And then I'm curious about November is usually a big month for you and other online retails with Black Friday coming up. And I'm thinking, firstly, in terms of how you feel about your ability to supply demand in November. Your inventory levels were up, I think, 20% in Q3. Do you feel well-stocked into this high season? And secondly, campaign pressure, you referenced that they are down year-over-year. Now in Q3, do you feel that you have the -- potentially to have a much more profitable Black Friday event compared to previous years with this better campaigning momentum in the market?

[Adam Schatz, President, CEO & Head of Home Furnishing Segment]

Black Friday is a scary event for retailers because it's such a short period of time and so much is expected to happen, and one sort of never knows exactly how their competitors are. We had a good Black Friday last year -- or Black week really because it's really a full week now. And we're prepared to our teeth now for this time around again. I don't expect that there will be sort of the similar effects on Q3 with zero campaigns will be really in play now. It was -- many of the shortages that sort of helped the price picture in Q2, Q3 was for seasonal items. So this is a different season, and it's, of course, a different product mix as a result. And really very difficult to sort of meaningfully forecast with a crystal ball how this will play out. But I don't think it will be sort of materially different in terms of campaign pressures compared to last year.

[Operator]

Thank you. There appears to be no further questions so I'll hand back to the speakers for any further remarks.

[Adam Schatz, President, CEO & Head of Home Furnishing Segment]

Thank you, everyone, and looking forward to speaking to you all again before too long. Thank you.