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Thank you, and welcome to our Q1 2022 conference call on this beautiful sunny morning here in Malmö, Sweden. So if we move on to the first slide, the key highlights. And just to start with, we'll say that we are very encouraged to see that the execution of our Nordic Department Store strategy continues the very positive momentum. Our categories are getting stronger for each season. And we believe that we are well underway to create the preferred destination for customers of Nordic fashion lifestyle.
The underlying business drivers are all showing improvements with the cohorts from 2021 increasing the true frequency compared to the 2020 cohort. Our return rates have stabilized at a low level, and this is thanks to a diversification of categories and not least our unique fair use concept to limp fraud and abusive return behavior. And last but not least, the average order value has continued to increase, supported by more items per baskets. Growth in the quarter was 25.2% despite quite challenging market in the wake of the Russian invasion of Ukraine, increasing inflation. And as a consequence of that, a sharp drop in consumer sentiment.
The year got off to a quite solid start in January, but we saw the aforementioned effects had quite a meaningful impact in February. But during March, however, we saw a gradual improvement and customers engaging more. Our inventory position is quite healthy, and this provides us with a good opportunity to be more opportunistic in terms of campaign buys. And this is backed by a strong balance sheet with ample cash, along with a very good and sufficient capacity at our warehouse. We predict that there will be more campaign stock available this year than in 2021. And therefore, we are ready to support the growth in both Boozt and Booztlet with further inventory to secure market share gains with a very attractive stock composition. So backed by our strong performance in the first quarter, we reiterate our outlook for 2022.
With that said, we also acknowledge a more challenging external environment. This introduces a higher degree of risk and uncertainties than normal. Therefore, with the current market conditions, we see a higher likelihood of achieving the bottom end of our outlook for '22 in terms of net revenue growth as well as adjusted EBIT. So -- but going to the next slide, the most important ones, the customer satisfaction KPIs. If you look at the customer satisfaction highlights, you can see that during the quarter, we have maintained our 5-star rating on Trustpilot and we've managed to deliver an NPS rate at a stable, very high level.
We have improved the delivery speed to customers during the quarter as our efforts to expand our fulfillment capacity have been successful, and they have provided us enough capacity and throughput to handle the high growth. We've also secured what we believe to be the strongest selection for the Nordic consumers for 2022 with some attractive price points. And this is, we believe, a good foundation for customer satisfaction in the time to come.
If we go to the next slide, order development, we can see that we have increased the number of orders by 10% in the first quarter for Boozt.com. And in combination with the increase in average order value, [Indiscernible] and a strong development of our additional revenue streams, the Boozt media partnership and BooztPay, we've managed to secure a significant net revenue growth.
The average order value continues to develop strongly in the first quarter and is up to now SEK 838 per basket. So we are actually quite confident that our continued execution of the department store strategy will support a sustainable high average order value. And high average order value is what we consider to be the single most important thing to continue to deliver best-in-class profitability and even more so in volatile market conditions.
So moving on to the next slide, the cohort development. We continue to grow our base of active customers in Boozt.com. So in the first quarter, we had 17% more active customers compared to last year and 56% more than the first quarter in 2020. At the same time, our number of orders per active customers was slightly up compared to last year, but still slightly down compared to 2020. This is kind of as expected as people spent overall less on fashion apparel during the pandemic, but many more bought online.
The true frequency developed positively compared to previous year. We are quite encouraged to see that the cohorts from the pandemic years of '20 and '21 continue to behave in line with what we've seen from previous years. This also tells us that the change to buying habits during 24 months of corona, meaning higher online penetration, is quite likely to stick.
So with that said, I will now hand it over to Sandra for some perspective on the financial performance.
Thank you. So if we look at the group results, net revenue increased with 25.2% for the group in the first quarter with an FX tailwind of around 3 percentage points. Considering the market development for fashion and apparel in the Nordics, both online and off-line, we can conclude that we gained significant market share with these high growth rates in the first quarter.
Return rates for the group remained on the same low level as last year. As we continuously develop our unique fair use algorithm, we are well in control of unnecessary returns and continue to be front runners on advanced fraud management, which is an increasing problem in the industry.
The diversification of sales is a clear benefit from our department store strategy. Not only do we offer a convenient and relevant shopping experience for our existing and new customers, but we also hedge our own financial risk for specific categories in a market environment that is a bit hesitant due to the overall economic development in our region. Our categories continued to develop well during the quarter. Growth was especially good in Norway and Finland, while market sentiment in Denmark was relatively depressed, which impacted our growth negatively.
The gross margin was 39.3% in the first quarter, which is 1 percentage point lower than last year. The lower gross margin relates to planned and intentional price investments in the first quarter of the quarter to ensure capacity for the incoming spring and summer collection in our [ BFC ]. The variance in gross margin is also partly an effect from a different inventory mix than last year.
The adjusted EBIT margin was 0.6% in the first quarter, a decrease of 5.4 percentage points compared to last year. Q1 2021 was an extraordinary quarter. The first Q1 in our history where we made a profit. Seasonality in our industry is usually demonstrated by high profits in Q4 and Q2, while profits, if all existing, in Q1 and Q3 are significantly lower. If we can make a profit of 0.6% in the first quarter under the existing market conditions shows the strength of our business model.
As I will get to in short, when we look at the development of our cost ratios, our profitability was negatively impacted by both intentional and unintentional developments in our cost structure.
If we move to the next page, we can see that the revenue growth for Boozt.com was 21.4% in the first quarter, positively impacted by currency. Our home, beauty and sports category contributed especially well to the growth development. Return rates decreased compared to last year. Average order value increased 2.9% to SEK 838 from SEK 815 last year. All historic cohorts, including the ones from the COVID years, continued to develop well and with the same patterns as historically, while customer satisfaction remains at very high levels. The adjusted EBIT margin decreased from 5.7% to 1.4% in the quarter, due to lower gross margin, planned investment in personnel to accommodate future growth and market share gains as well as temporary higher costs in our fulfillment operations.
Moving on to the next slide. Booztlet grew 42.8% in the quarter, mainly driven by growth in Norway and Finland. Growth in the Nordics was 40.7%, while growth rates in the rest of Europe was 53.5%. We are especially happy to see that the average order value continues to increase as it has been for quite some time. In the first quarter, the average order value was 15% higher than last year with SEK 820 (sic) [SEK 810]. The adjusted EBIT margin decreased to a negative 2.4% from last year's positive 7.6%. The decrease is mainly related to an intentional price investment, which impacted the gross margin negatively.
Coming into the first quarter, we wanted to make sure that we had enough space in our fulfillment operations. At the same time, as we believe that this time of economic uncertainty is the time where we will be able to gain market share in the off-price segment, why it makes sense to do investments in growth for [ group ]. Therefore, we decided to favor our balance sheet and long-term goal for Booztlet to become the off-price destination in the Nordics despite the trade-off on the profitability. These actions also serve to mitigate the temporary slowdown in sales we saw when the war in Ukraine broke out and uncertainties regarding this season were the highest.
Booztlet is set out to generate strong profits, both this year as well as in the future, even though the development in the market may lead to higher price investments due to a slower development of overall demand.
Moving on to the next page. We see the development of the cost ratios in the first quarter. The fulfillment cost ratio was 12.6%, an increase of 1.5 percentage points compared to last year and 0.5 percentage points higher than the fourth quarter of 2021. Our fulfillment costs were negatively impacted by significantly higher sick leave because of the pandemic, both in January and February, while in March, sick leave was back to normal levels. The negative impact from high sick leave being in low season and a few temporary inefficiencies in our fulfillment operations was around 1 percentage point compared to last year.
In addition, the increase in fuel prices and a different country mix impacting distribution costs negatively in the quarter with around 0.5 percentage points. The marketing cost ratio increased slightly to 11% from last year's 10.6% with the continued high spend to attract new customers along with building Boozt and Booztlet as household names in the Nordics and gain market share.
The admin and other cost ratio increased to 12.2% from 10.1% last year. The increased cost base was impacted by the planned investments into strengthening the organizational structure and capacity during 2021 to support present and future market share gains. We will go into these investments within the short term.
The depreciation cost ratio increased to 3.8%, that is to be compared to 3.3% last year. The development was expected as we made heavy investments to increase our automated fulfillment capacity in 2021 to support further growth.
Looking at our cost ratios overall, we are confident that our business model has a lean setup that enables us to run a cost-efficient model that sets us apart from competition. As we continue to invest in growth, there will be -- there will continue to be temporary fluctuations in cost ratios, especially in the fulfillment costs where investments and changes in the setup don't come in perfect alignment with the growth. External factors such as increased fuel charges do have an impact on our operations.
However, given our high average order value, both on Boozt.com, but also on Booztlet, we are much more resilient than businesses with weaker unit economics. We believe that this is a time that we now operate in is the time where business models that are able to generate profitable growth will show their strength, and we believe that we will be one of those winners.
Moving on to the next page. We see that the net working capital of 7.7% of the net revenue over the last 12 months was on par with last year when the same ratio was 7.8%. Our inventory position has grown in line with the business and delivery of the SS '22 season has proceeded as we expected.
[ CapEx ] totaled SEK 360.1 million in the quarter and was driven by the acquisition of the remaining shares of the minority owner -- from the minority owner of Rosemunde of SEK 164 million. As of now, we own 100% of this company.
During the first quarter, we also finalized the combined fit and fixed expansion phase of the AutoStore and invested further into the seventh expansion phase. These investments totaled SEK 175 million. The free cash flow from the first quarter was a negative SEK 502 million, that is to be compared to a negative SEK 236 million last year, mainly impacted by the heavy investing activities.
Coming into the second quarter, we have a super strong balance sheet with a fresh and relevant inventory position and a cash position of SEK 1.1 billion that will enable us to be opportunistic, invest in available campaign stock, as well as further investing in CapEx as we set out coming into this year.
As we do expect this year to continue to be challenging from a market perspective, we believe that our balance sheet and the strong competitive mindset of our organization gives us the opportunity to turn these challenges into opportunities while thinking long term and acting fast.
Before I hand back to Hermann, I would like to highlight that from this quarter, we have a dedicated section in our quarterly report where you can follow our ESG development on a continuous basis. As we believe that ESG KPIs and development are as important as financial and operational KPIs, this is an important step to increase transparency on our developments in this area. The setup of the KPIs and the information that we provide in this section will develop over time, and we're happy to be able to start this journey as of now.
Okay. Thank you, Sandra. And let's move on to the next page. And before we head into the outlook for 2022, I just would like to put a few words on the long-term perspective of our business. We've always been focusing on long-term value creation by investing our free cash flow and balance sheet. The situation we're seeing now with high volatility in the markets and no visibility will not change our priorities. We act fast to changes in the market, but we stay very true to our business model and our strategy.
So focus for the long term as well as the immediate future will be on gaining market share and to further increase the scale benefits of our business. We've seen very clear advantages from this increase in size and scale in the Nordics in recent years. And actually, we believe that the current situation provides opportunities as one of the largest players and the largest department store in the Nordic region. And personally, I believe that the Boozt organization is stronger than ever before. And I believe that we've made the right investments into securing a very strong foundation. And especially so, during the last 12 months, as we saw a need to expand our capabilities.
A key focus of ours has been to build a stronger and a more localized set up, both through our category and country teams to become even more focused on getting all the growth opportunities and providing the best possible shopping experience for our customers. Most of this strength in organization is already in place, and it will be fully finalized and operational during this year.
Going forward, we will continue to invest as needed to further develop our core business but also be opportunistic in terms of creating additional revenue streams to gain increased control of the e-commerce ecosystem.
Recently, as you might know, we acquired a 30% stake in Liveshopper. This will provide us with a platform to create tailored content and inspiration for our global customer base, while we are using and leveraging our good relationships with brands to build a strong platform for live shopping. We see that in other parts of the world that live shopping is gaining momentum, and we see a clear opportunity to be a part of this growing trend in Europe.
So moving on to our final slide, the outlook. Coming into '22 and on the back of 2 exceptional years, not least in terms of growth, we set ourselves ambitious targets to continue to take significant market share and targeted a net revenue growth in the level of 20% to 25%. In terms of profitability, we set out to deliver adjusted EBIT in the level of SEK 365 million to SEK 420 million, which indicates a growth between 6% and 20% and a margin between 5% and 6%, depending on growth opportunities and promotional activities in the market that we operate in.
We see that the start of the year has been more challenging than we initially expected with the Russian invasion of Ukraine, a steep increase in inflation and consequently, a significant drop in consumer sentiment. But on the back of our strong execution and rapid response to the change in the market, we managed to deliver significant growth in the first quarter. Performance was strongest in January, prior to the impact of the events that I just mentioned. February was quite tough, but we saw a recovery in March. So the outlook for 2022 remains unchanged, although the challenging external environment introduces a greater degree of risk than normal.
Considering the market conditions in Q1, there is currently a higher likelihood of achieving the bottom end of the guidance in terms of [Indiscernible] as well as adjusted EBIT if we don't see a gradual improvement for the remainder of the year.
So with this, I -- we conclude the presentation, and I would like to hand over to the operator to get the Q&A session going.
[Operator Instructions] Our first question comes from Niklas Ekman, Carnegie.
Just a couple of questions from my end. Firstly, can you tell us a little bit more about the development here during the quarter? I think you indicated around the Q4 results that sales growth started at similar levels as Q4, so around 35%-plus. And then they fell sharply and then now you say they gradually recovered. Can you give any indication where the growth rate was towards the end of the quarter and kind of going into Q2?
Well, we -- as we said, January started well, February was quite weak and March was rebound. But we don't like to give monthly [ revenue ] numbers because there's so much seasonality. So we stick to kind of saying that what we said is that the growth was some 5%. And in Q2, it's still early days. And what we've seen so far has made us kind of stick to our guidance, but with the uncertainties that we see. So we thought we want to leverage further on a month-to-month basis, Niklas.
Can you say if the run rate is in line with the full year guidance?
We don't -- again, we don't -- we think it's far too early to speculate on ups and down. The only thing that we're focused on is basically to make sure that every day is -- has a higher revenue than the previous year. And that's the main focus. And then basically, we close the books at the end of the quarter. So this is what I can tell you. But we can't tell you kind of -- I don't want to tell if the growth is above or below the run rate.
Fair enough. Fair enough. I just have to try. Another question. Question on campaign buys. You mentioned now that you see an opportunity for higher campaign buys than in 2021. Can you elaborate on this then? What kind of levels are we talking about? If you look at the different years here, 2020, 2021 and now '22, what kind of magnitude are we talking about if you compare those 3 years?
We don't know yet because that depends what will end up in the market. But what we see is that our inventory position, that is 25% up compared to last year, which is in line with our growth. That enables us -- usually, we try to be a little more stock than our revenue growth, so we have room there. We have physical room in our warehouse, looking at other players in the market. We see that they have much higher inventory levels, indicating that they're buying might not be as high. So we believe that we're in a good position.
We know that there are delayed goods that, at some point, will come to Europe. So we just think that there's a lot of opportunities, and we are ready with our cash position, with our inventory position, where we are in the market and given what we want to do with Booztlet, we think that this is a great opportunity. But then what is available and how much that will be, we don't know yet.
Okay. And can I ask about markdowns? It sounds like markdowns did not increase materially here. You talk about planned campaigns in the beginning of the quarter. So before the slowdown, so you haven't seen any increased markdowns as a result of the slowdown in the latter half of the quarter, is that right? And is that kind of what you're assuming going forward as well, you don't see a tangible risk of increased markdowns going forward?
I would say like this, like coming into the year, we plan to do like heavy growth in January and to make sure that we have room enough. And that, of course, impacts the markdowns we want to give. Looking further ahead, things -- it was quite tough in February, it was. So maybe we continue a little longer than we would have -- if it wouldn't have happened. But apart from that, we...
This wasn't planned, so -- but it's difficult to see, of course, if the market has excess stock, there might be some pressure. But again, we are I think we're quite good in the headwinds, so we can deal with that.
Okay. And final question from my end. Personnel costs almost double year-over-year. Are these -- are there a lot of one-offs in this? Or is this kind of the run rate you're looking at going forward?
Well, our cost, of course, is partly with the warehouse where we have start up, taking some consultants in. Of course, we're also increasing the -- our staff in Boozt because we are kind of want to grow and to continue to grow, and we've been running behind for almost 2 years with the [Indiscernible] So we need to make sure that we have the right competencies in place to continue our strong growth.
There are some one-offs there that we don't adjust.
Our next question comes from Daniel Ovin, Nordea.
I wanted to start with asking about the other revenues that you highlighted now in the report. And you mentioned here a media partnership, et cetera, and it seems to have been growing quite fast versus last year. So I wonder, can you just remind us what is the margin on these revenues? And also, what level of sales do you think these type of revenues could end up this and next year?
Yes. The margin, obviously, is close to 100% because you don't have [Indiscernible]because you don't have a lot of costs in dealing. But of course, what we're selling is data. So it's a theoretical margin because, of course, it's delivering all these data that has some tight costs, but it's a part of kind of a business model. And we offer brands that they can use our data to market their brand. So it's the marketing partnership. We don't disclose how big this can be for some of our peers that we have disclosed historically. How large it can be and that could be a [indiscernible] and who I think we have a target of how big this would be. So while we don't disclose it, but of course, it's is with us gathering more and more data as we grow. And this is quite unique that we can offer this to our brands.
Okay. And then another question here on the adjusted Admin cost, that was up quite significantly, then I think it was the highest I could see going many quarters back. And you mentioned here talked to us about personnel costs being up, et cetera. But really, can you highlight a bit more what's in this group? Because I guess that the automation and warehouse probably and the fulfillment cost. So perhaps, can you highlight a little bit more what is exactly in that cost line? And also, what should we expect here going forward?
Well, the admin cost, a significant part of that is the cost of personnel. The other cost is normal stuff, how to run a business. But in that part, we -- it's growing a line what it should be so there is nothing extraordinary in that. It is the personnel. It is the investment in personnel that we've made and we hired a lot of people last year, and of course, that impacted costs in a lower quarter as this one. But we will, as I said during the presentation as well, we will grow into this, and this was according to our plan.
All right. Perfect. Then just one final question also on the marketing costs. I know you've been talking about having it around 10% for the full year, and I see it's a bit higher here in Q1. Is that according to plan? And it's a smaller quarter in sales? Or is there anything else behind that, perhaps cost per click, et cetera, has been edging up here? Perhaps you can share some more color around that.
There's no secret that cost to click is going up. I think all players see that. So we -- our target is to be around 10%, but we are very much driven by the cost of [ after ] value and the cost of acquisition costs. So -- so that's why it can -- it will fluctuate around 10%.
And also in market conditions where the consumer might be a bit more hesitant, you should expect it to be maybe slightly elevated, but we still get the return on our marketing investment as we want. So that's why it is [indiscernible] . And again, we are protected by a very high market size compared to all our peers, which makes us more resilient towards an increase in click prices.
Our next question comes from Michael Benedict, Berenberg Bank.
Just 2 or 3 for me. First one is on CapEx, and apologies if I missed this in the statement. But any color on where CapEx is likely to land in FY '22, first of all, please?
Sorry about this, it's difficult to hear. So you're asking if -- where CapEx will land in 2022, total?
Yes, yes. Yes, that's right.
Yes. So it's around SEK 500 million to SEK 600 million.
Great. And then I guess given the uncertain outlook for consumer sentiment, how are you going about, planning your inventory buys for the upcoming seasons? Are you pulling back on that and looking to order more within season? Or are you going to stay aggressive?
Well, for us, when we look at our inventory, we always make sure that we don't end up with an iceberg behind us. So it's really, really relevant to make sure that we are fresh. That makes our life easier because in that way, we can be opportunistic when we can. So that's the way we plan to continue to be.
Coming into the AV season, we are well in control of the stock. The rejection rates in orders we order, but don't get, that has increased. We have included that in our projections on what we will receive in the warehouse. We have enough space in the warehouse to be opportunistic. So we will continue -- growth is our main priority, but we will always do it with profitability.
So we will continue to be very tough on our inventory position, making sure we have a clean and fresh inventory and buy as much as we can and need. And also to make sure -- and this is where the department store strategy is really working for us because we can hedge different categories. We see what's happening and if there's a slowdown in one, we can push the other. So I think we -- in that part, we stand in a very interesting time right now.
[Operator Instructions] The next question comes from [ Nicolas Koffman ].
Two questions for me, please. First of all, on the return rates, which you said were down year-on-year. If we only look at the fashion sales, has that return rate changed compared to last year given that I assume that the product mix has changed a bit while the department store strategy is selling more of a low-return beauty products as soon is offsetting this?
If you look at the most kind of interesting return rates from a negative point, of course, is the women's category, and it's at the same level as last year and lower than prepandemic and that's probably 100% due to our fair use policy. So we've managed to avoid a lot of unnecessary returns and the fair use policy plays an important part in that. So we don't see kind of returns inflation in the numbers.
Okay. Perfect. And then the second question is, I think you said that reaching the guidance as it stands now requires things to pick up. And do you mean then pick up from Q1 to sort of Q1 as a whole development? Or pick up from where you sort of exited March?
What we mean is that the [ Denmark ] came out with the lowest consumer sentiment in 40 years last week, and I don't think that the Swedish consumers are much more happy. So we're just hoping that the doom and gloom that we've seen is kind of returns. So if people kind of stop shopping, of course, that ultimately will influence us.
But again, as we said in the guidance, we are assuming that things don't get worse and hoping, of course, that things might get better. And that's kind of the best way I can [Indiscernible].
Okay. And maybe one more then. Have you seen any shift in sort of how consumers shop in terms of trading down to cheaper price point at all?
Not really, of course. Booztlet is growing. And this is kind of -- that was always our assumption that when the next economic crisis would hit, that would benefit an outlet. And I think we will see that is happening. But actually, we don't really see that people are trading down. But obviously, we are mainly focusing on the mid- to premium higher priced. If you look at garments, it's higher priced. It's not throw away easy fast fashion. But we haven't really seen this trading down yet.
We have no further questions. Speakers, back to you.
Okay. Thank you. As there are no further questions, I just want to say thank you and wish you all a good day. Thank you very much.
Thank you.