Boozt AB
STO:BOOZT
US |
Fubotv Inc
NYSE:FUBO
|
Media
|
|
US |
Bank of America Corp
NYSE:BAC
|
Banking
|
|
US |
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
|
US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
US |
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
|
CN |
NIO Inc
NYSE:NIO
|
Automobiles
|
|
US |
Fluor Corp
NYSE:FLR
|
Construction
|
|
US |
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
|
US |
TopBuild Corp
NYSE:BLD
|
Consumer products
|
|
US |
Abbott Laboratories
NYSE:ABT
|
Health Care
|
|
US |
Chevron Corp
NYSE:CVX
|
Energy
|
|
US |
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
|
US |
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
|
US |
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
|
US |
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
|
US |
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
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 |
100.6
140.5
|
Price Target |
|
We'll email you a reminder when the closing price reaches SEK.
Choose the stock you wish to monitor with a price alert.
Fubotv Inc
NYSE:FUBO
|
US | |
Bank of America Corp
NYSE:BAC
|
US | |
Palantir Technologies Inc
NYSE:PLTR
|
US | |
C
|
C3.ai Inc
NYSE:AI
|
US |
Uber Technologies Inc
NYSE:UBER
|
US | |
NIO Inc
NYSE:NIO
|
CN | |
Fluor Corp
NYSE:FLR
|
US | |
Jacobs Engineering Group Inc
NYSE:J
|
US | |
TopBuild Corp
NYSE:BLD
|
US | |
Abbott Laboratories
NYSE:ABT
|
US | |
Chevron Corp
NYSE:CVX
|
US | |
Occidental Petroleum Corp
NYSE:OXY
|
US | |
Matrix Service Co
NASDAQ:MTRX
|
US | |
Automatic Data Processing Inc
NASDAQ:ADP
|
US | |
Qualcomm Inc
NASDAQ:QCOM
|
US | |
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Ladies and gentlemen, welcome to the Boozt Q2 2019 report. Today, I'm pleased to present CEO, Hermann Haraldsson; and CFO, Allan Junge-Jensen. [Operator Instructions] Speaker, please begin.
Good morning all, and welcome to our Q2 presentation. If we go to the first slide, the key highlights. I would, yes, just like to mention that we believe that it's a solid Q2 that we finished. The market is challenging and -- but our customers are happy and happy to work with us. So we think it's quite solid with 26% in net revenue growth, which was supported by Boozt with 21% and then Booztlet, impressively 156% growth, a very strong growth by Booztlet.Another good thing is that the average order value was unchanged as we saw that return levels, they normalized in Q2 compared to Q1. And as expected, we have seen that the gross margin has declined, driven by quite a promotional-driven market. We have had high inventory levels in the industry and also the summer started quite late, which also meant that the end-of-season stage started very, very early this year. Adjusted EBIT margin improved to 5.2%. The early start of the sale drove customers to a site and there was no reason to pay for that. As we thought, we're able to attract new and old customers through our nonpaid marketing channels.For the first half of '19, we've had 27% revenue growth and an adjusted EBIT margin of 2.2%. And also, this is why we maintained the outlook for '19 with a net revenue growth of above 27%. And adjusted EBIT margin improved from 2018.We also announced that, last late night, that we have acquired Touchlogic app and mobile developer and will create Boozt Innovation Lab. As well as this morning, we announced that Allan, after 9 years being a co-founder and CFO, will leave the company by the end of '20 -- end of January 2020.If we go to the next slide and look at the KPI highlights. Customer satisfaction for Boozt.com, as always, these are the most important KPIs. And we can see that customers still are quite happy. With a high customer satisfaction, we get good ratings on Trustpilot with 5 stars rather than 2. And especially, the NPS goal is world-class high at 72. So we know that if the customers stay happy, they will come back. And this is also what we see, that both existing customers, old customers come back at the same time as we attract the new customers. Going to the next slide. On the order development in the quarter, the performance went up by 20% for Boozt.com, and the average order value was flat. For the first half, number of order was up with 26%, and the average order value was slightly down compared to first half last year. And as we have been saying this was due to the elevated return levels in each one, and they are now at a level that is more as expected. They are still going up as they've been for the last 5 years, but this is something that we expect and that we are in quite good control.Going to the next slide, which is the cohort development. If you look at the number of active customers, we now have had, for the last 12 months, 1.5 million active customers, which is up by 28%, which is to transform -- is from customer growth. They have maintained the buying frequency, but the true frequency has gone up from 7.2 to 7.7 showing us that we have a strong cohort of customers who are very, very loyal to us.Going to the next slide and looking at our Touchlogic acquisition. The rationale behind us acquiring Touchlogic is for us to accelerate our mobile app development. We can see that our current app users, they have above-average KPIs, just higher average order value. And we believe that this acquisition will strengthen our capabilities with an app and mobile web. And also, it will help us take our app usability and the functionality to the next level.Okay. We have known Touchlogic for quite some time and they have a quite strong track record of best-in-class app development. The team is based in Copenhagen, and will be based in Copenhagen, and they will be responsible for the app performance, app development and also in prototyping new cutting-edge technology. We find actually that there's quite good customer fit and then we have some test projects ongoing since early spring, which is why they would be basically operational from day 1.If we go to the next slide, I would like to explain a bit about our platform strategy. Now that we have acquired Touchlogic, we will create the Boozt Innovation Lab basically to try to keep us staying ahead. As you know, those of you who have known us for quite a while, we want to be in control, both with regards to everything that touches the consumer as well as our internal processes. This is why we have made proprietary tailor-made tech solutions to all of our core process. The entire platform is ours in terms of our business. We have cross-functional business teams to make sure that we're relevant and that with high productivity. And most of our developers are very close to daily business.The innovation lab in Copenhagen will be a detached from the daily business. They would be the ones pushing towards creating the online experience of tomorrow. They will be based out of the Copenhagen office. They will make sure that we are more kind of progressive in our thinking. They want to take some risk there to try something new, and they will be able, we believe, to bring new technology faster to our platform in what we call this fail-fast approach. So we're quite confident and looking quite forward to having this tech lab just from start.Going next to -- to go into the next slide with our new robot management system. When we initially invested in the AutoStore automation. It came with a warehouse manage system that was developed by the supplier of the robots. This is quite normal that you have a kind of what we call an eWMS developed by [ the client ]. We have experienced that it has reduced a bit our agility and flexibility, and this is also why we have developed our own mobile management system to basically to be able to handle the full warehouse management in our own systems. It's being developed internally, it's tailor-made and it will make sure that we have a very high degree of flexibility to make sure that we constantly improve the customer experience.It has been -- the new robot management system has been implemented through the new cube Phase 3 that we just installed. So it has been checked very vigorously live, and we can now see that it works very well. And this also means that the existing or old e-warehouse management system that has been placed for the AutoStore cube of Phase 1 and 2 will be replaced very soon through our new system. This means that everything that's in the warehouse is now a warehouse management system and fully aligned with the rest of our platform.We've obviously had some build-out costs by implementing both the new cube and new warehouse management system and the testing of the system. It's quite difficult for us to quantify what are the development costs and it's also why it's a part of the fulfillment costs in Q2.If we go to the next slide, the financial update, I would like to hand over to Allan Junge. But before I hand over to Allan, I would just like to comment on him leaving his position as CFO. I've known Allan since 1998 where we worked together as media planners in a media agency. Allan joined us back in 2011 to help build the new Boozt and also Boozt.com. Actually, back then, it was not really a part of Allan's career plans to do this, but he was actually [ glad ] to take on the challenge as long as we agreed that it was okay for him to leave when he felt that -- he was planning to move on. The time is now and he wants now to pursue a more [indiscernible] role. Allan leaves the company and our finance structure in a very good shape and he has also given good notice so that we will be able to do a transition to assist us. So I'm confident that we will manage that transition smoothly. So I know there is no one like him, but I'm quite confident that we will find a good replacement.And now I would like to hand over to Allan Junge.
Sure. Thank you. Thank you, Hermann, and also thank you for the nice words.Okay. As we turn to the next page, you can see that we grew the business 26% in the quarter and a little more than 27% for the first 6 months. Further, in the middle of the slide, you can see that it's evident that the gross margin is down in Q2 as well as for the first 6 months of 2019. Despite this decline in gross margin, we have managed to secure an adjusted EBIT margin which is slightly higher this quarter compared to the same quarter last year.For the first 6 months, the adjusted EBIT is SEK 5 million higher, about 0.2 percentage points down versus same period last year. But bear in mind here that the impact from the Beauty stores take down the adjusted EBIT margin with 0.3 percentage points for the first 6 months compared to last year.And if we turn to the next page. Here, you will see some of the KPIs for the Boozt.com segment. All in all, a very satisfying development with 21% growth. And actually, also very important, an average order value was unchanged from the same quarter last year. We have continued to see a very strong development in the Sports category and the Beauty category. And additionally, in this quarter, we have improved our offering with exclusive collaborations with some of our suppliers. And we're also very happy to welcoming the brand Ganni once again back on Boozt.com.And if we turn to the next page, here are some KPIs for the Booztlet.com segment. And here, the growth truly outperformed our actually own ambitious targets with more than 150% growth in the quarter. And once again, it demonstrated that the Booztlet offering has a great future potential in the Nordic area. Despite this steady growth, the profitability of Booztlet has not come down, showing that we benefited from very attractive customer acquisition costs in the second quarter of this year. Booztlet is our rising star and we will definitely strive to support this development in every way possible in the coming months and years.Okay. And if we turn to the next page. Here, you have the third segment, the Other segment, which now includes 2 physical stores, 1 Beauty store in Copenhagen and 1 Booztlet outlet in Taastrup, south of Copenhagen. In the same quarter, we closed down the Beauty store in Roskilde, realizing a closing cost of SEK 4.9 million. The like-for-like development, excluding these costs, are improving in terms of adjusted EBIT from minus SEK 4.9 million to minus SEK 3.7 million. In particular here, the outlet in Taastrup is progressing very positively. The total expected loss for this segment in 2019 is unchanged at SEK 20 million, including the closing cost of the Roskilde store.And if we turn to the next page, you see the cost ratio development for the quarter. But let me direct your attention to the bottom of the page where we have excluded only the IFRS 16 depreciation impact, and this is done to better compare the cost ratios versus last year. The first one, the fulfillment cost ratio is increasing as expected, Hermann mentioned it briefly, but it increases at a higher pace than we had anticipated. Of the 1.1 percentage points in deviation to last year, we estimate that approximately 0.5 of those can be explained by recurring expected increases in distribution and fulfillment; whereas the latter, 0.6 is more or less associated with what Hermann also referred to as onetime ramp-up costs of implementing the Phase 3 of our AutoStore, including the eWMS. The admin and other cost ratio is, in this quarter, highly affected by the FX exposure, which in our income statement is classified as other operating cost in this quarter. And in the previous quarter last year, it was other operating income. This, together with an increase in the rent for our new headquarter in Malmö and the increase in personnel costs can explain this deviation to last year. Remember here that our new headquarters can accommodate more than twice the amount of people that we have today.Marketing cost ratio is down 4 percentage points versus last year in the quarter. But despite this leverage, we have seen a growth in the amount of new customers in the quarter. For the first 6 months, the picture is almost similar for the different cost ratios, so I think that we should turn to the next page.Here, you see that our working capital to last 12-month sales more than doubled from 5.3% to 11.2%. Approximately 1.6 percentage points can be directly explained to the fact that the quarter this year ends on a Sunday, which traditionally is a very strong revenue day, as opposed to last year where it ended on a Saturday. In the graph to the right, we have split the growth in inventory and accounts payable versus same quarter previous year. As you can see, the growth in inventory levels end of Q2 2019 is approximately equal to the growth in the net revenue for the quarter. But at the same time, you could also see that the accounts payable dropped dramatically. This is primarily explained by the fact that we have deliberately decreased the purchases of campaign stock in the second quarter this year, but it also indicates that the maturity of our existing stock is slightly older than the same period last year. All in all, we still consider the stock composition healthy. But you can say that the inventory is, to a higher degree, financed by us and not our suppliers by end of Q2 '19. We strive to -- in the coming months, we aim to reduce the working capital exposure by increasing the inventory turnover also with the use of Booztlet.com. Okay. Let's turn to the next page, cash flow and investments. In this quarter, we have only realized a minor part of the total expected CapEx in relation to AutoStore Phase 3. The remaining amount is expected to be capitalized in Q3 this year. And you can also see that the CapEx for the intangible assets only increased slightly versus same period last year.If we look to the right, the cash flow for the quarter is lowered by the increase in accounts receivable from ending on a Sunday. And you can also see that for the first 6 months, we have not increased the cash flow compared to the same period last year, but this is closely related to the working capital explanation, which I mentioned at the slide just before.If we turn to the next page. And this is just to reaffirm that given the very strong development in Q2 this year, we maintained the outlook for the full year 2019, both on net revenue growth and on adjusted EBIT margin development.And that concludes our presentation and now back to the operator.
[Operator Instructions] Our first question comes from Daniel Schmidt from Danske Bank.
A couple of questions from me then, starting with the marketing spend, which was quite depressed in the quarter compared to previous quarters, being down I think it was SEK 14 million year-on-year or so. Should we still expect -- I assume that we should expect marketing spend to go up as a percentage in the coming quarters. And correct me if I'm wrong, but could we still expect a structural benefit, so to speak, when it comes to the off-line marketing spend, which you said at the start of the year that you would keep flat and that you've seen sort of a lot of brand building take place over the past couple of years, but then you can leverage off some of that going into the rest of '19, i.e., that we should see marketing spend come up but maybe not to the level that we have seen historically. Is that a good assumption going forward?
Yes. Daniel, this is Hermann. The short answer is yes. But obviously, I wouldn't call the marketing spend depressive because I think it's basically what happened at the end of Q2 where we said, okay, you have an early start of the sales season, then you actually saw the power of the brand and the power of the brand-building that has been taking place. But we're still able to attract both old customers but also new customers, meaning that when sales started early, a lot of customer came into the market and we've got a very -- more than our fair share of that. So that was actually quite positive that we could attract. We have the growth and attractive customers and reducing spend. This is how it should work and it proves that this is how it works. You should expect marketing spend to go up again because we, of course, expect that the situation would normalize. But it's early to say. Our ambition is always to keep the off-line spend fairly flat and use kind of the brand building to build up the brand and then reduce the overall marketing spend as a ratio of sales. So there's not much change. But of course, we believe it's -- we have a high flexibility and we will use that to act in accordance to the market. Was that the answer, Daniel?
Yes, yes. Okay. Good. And then secondly, the fulfillment costs and the robot management system that you've developed yourself and talked about, is it correct that those costs were also impacting the fulfillment line and that you will have to take additional costs also in Q3 for this? And if so, could you quantify if there's a meaningful difference between the quarter, how much it was? And when will it trade? Am I correct in assuming that impacted fulfillment?
Allan speaking here. Thank you for the question. I think that we have seen the majority of the ramp-up cost in Q2 explained by the 0.6 percentage points. There might be some in Q3, but it will not be at the same level. The 0.5, as I mentioned, is actually expected to continue on account of distribution inflation and also composition in terms of number of items in our basket. So you should expect the 0.5 to continue, but the 0.06 will be reduced dramatically.
Some of it will come in Q3, but not to the magnitude that we...
No, no. Yes, it's too early to say. It's still in process. But the indication is that it's normalizing.
Yes. All right. And then just looking at the market then, you've seen peers -- we've seen peers to you reporting or the closest peer with significantly improvements in inventory and comments like sort of a good leading to their sales season in July and so on. Would you care to comment anything on current trading July, August?
Yes. This is Hermann here. I will say that the sales, summer sales went as expected. And we're now -- the autumn/winter of '19 season starts now. So it's very early to say. It looks like the weather gods are with us this year. But it's like in September, October, they put up the designs for the year. So we are ready and in a good shape. But -- and so far, so good. But it's -- yes, we expect what we expect. I don't know how to quantify it even if [indiscernible].
But would you agree or would you say that if you look at the Nordic market, inventories in the market are a little bit more balanced than they were in second half of last year?
Yes. I would assume so. There is obviously, for Q2, a lot of excess of spring/summer inventory in the market. You won't -- you don't buy as much campaign goods for summer. It's because in the Nordics, it's actually quite short. And the value of that is that actually you would typically buy more campaign goods for the autumn/winter seasons, which is also why we've been holding back on the campaign back for the spring/summer. But in general, I believe that the autumn/winter inventory levels, they should be more normalized as last year was quite unusual.
Yes, yes. Absolutely. All right. Good. And any improvements? You said that other cohorts was improving by SEK 1.2 million, I think, in lower losses, and then you are closing down the Roskilde store going forward. But if you look at the Beauty store in Copenhagen, are you seeing any sequential improvements compared to the start of the year?
We are seeing small improvements in Copenhagen. We have also said the Copenhagen store is [ integrated ] into a Beauty segment, which is very attractive, where we have seen very encouraging growth rates and profitable online segments. The Copenhagen store is moving with quite a lot of stuff, but it's going slowly. So -- and we're quite impatient people, but we're monitoring it quite well and closely and are working on reducing the loss going forward.
All right. Okay. And Allan, good luck with your new ventures and sorry to see you leave.
Thank you, Daniel. Thank you.
The next question comes from Niklas Ekman from Carnegie.
Yes. Most of my questions were actually asked here by Daniel, but maybe a couple of follow-ups. Firstly, the increased markdown activity that we've seen here in the market, can you talk a little bit about what has been the main drivers here? Is it physical stores or is that the online retailers?
Niklas, this is Hermann. It's the entire market. You have a market that is very instable because you have the online who's taking a big market share. And obviously, the offline is fighting back. [ Empty space sales ] [indiscernible] shop even started end of May. So what we have learned is that you don't want to sit on too much inventory. So it's the entire market that is inherently unstable at the moment. And so it's difficult to distinguish because the physical stores, obviously, experience that. If you come in stores and, say, I can see there's a sale going on with some of the big e-tailers and vice versa. So I think it's very difficult to pinpoint that is -- any specific agent that is driving the market activity.
But can you say anything -- I mean, I guess, some of this was driven by the exceptional weather last year. Given that the weather this year seems to be a little bit more normal, are you seeing that the inventory levels are decreasing, that the campaign activities are being more normalized? Or is this kind of a structural shift where you are seeing continued increased campaigns?
Yes. It's -- I can't -- actually, I will hate to talk about the weather. But actually, we probably want to talk a bit. But some of this started quite late, and April and May were pretty miserable. So -- and of course, you just -- you don't want to be the last man standing. So it's also why we saw that, that sale started early. I believe that, in general, even with some levels, we are more in control in the industry. But at the same time, I'm pleased that the actors are quite aware that you need to get inventory moving if you have any extraordinary situations. So we expect that the competitive situation will continue. But at the same time, we expect for the last 6 months that gross margin will be around the 4% that we have been communicating all the time.
Okay. Okay. Excellent. And then a question also on the fulfillment cost ratio. It's a little bit difficult to follow this fulfillment cost ratio given that you had the mono brand business before and now the shift to IFRS 16. But in general, it looks this fulfillment cost ratio is not decreasing. It's this been fairly, fairly constant. Can you give us some background on it, apart from the investment that you've done with your own -- in your own robot system? But otherwise, when do you think that this -- the fulfillment cost ratio can start to come down?
Allan speaking here. Thank you for the question. We can actually elaborate a bit on the increase, which we think are recurring, the 0.5%. Approximately half of that is actually related directly to distribution inflation which is, of course, a matter of negotiations with our suppliers. And the other half, the 0.25%, is related to the fact that also expanding into new categories, in particular Beauty, you see an uplift in the number of items in each of these markets. And since a lot of the return handling at the warehouse is still very much manual labor intensive, you will see that the costs for returning a parcel is increasing slowly. So we don't think that this will go away also by the fact that we are expanding into the beauty category. So you should expect this at least to continue for the remainder of 2019. And then, of course, the distribution part is a matter of negotiation for 2020.And in the more longer run, as we also communicated when we started implementing the robots, we have taken the bigger chunk of the saving going from a manual warehouse to an automatic warehouse. But the next big chunk is, of course, if we can do something with the return handling and the efficiencies in the labor-intensive part of the fulfillment cost ratio.
The next question comes from Daniel Ovin from Nordea.
Yes. So first, starting on the gross margin. So it's obviously down year-over-year and we know there were some weather and markdown-related impact on this. But you also talked about campaign goods and that there were less buying this year. So I understand that the campaign goods is also helping your gross margin. So that decline, was that purely weather driven or is it also that you had less help from selling campaign goods? That's my first question.
It's Hermann here. Actually, it's a bit of both actually. So because the campaign goods might help you a bit in the procurement season because it's skewed towards the old winter items. But I think it's a mix. It's difficult to say what is seasonally weather-driven, what is campaign-driven there. So it's actually quite difficult for us to quantify.
Okay. Okay. Then also questions -- I know that in the meetings we had, you talked about that you chose the risk-sharing agreements with a number of the brands delivering to you. So can you explain a bit where you are on this? How many brands are now covered? And also, to what extent that could impact the operational performance going forward? That's my second question.
Yes. We have some agreements with the brands, where we ask them to kind of take part of the risk, especially now that we're growing and grow this fast in this tough environment. We actually -- we have increased the number of agreements. We don't want to disclose the actual number or the best percentage of our buy. But we are seeing growth. And obviously, this is a kind of a buffer. Ideally, we won't use them because that would mean that it's been a good season with a very high sell-through. But this is kind of caution if, for any reason, the season does not sell out as expected, then you have this as a -- kind of an emergency brake.
And just -- I mean, do you get the feeling that this is something that apparel brands are doing with most of their resellers? Or is this something that you've now gained the kind of scale where you start to work with them in this kind of way? So is this a benefit from becoming larger? What is your view on that?
I don't think I should comment on that. It's -- I don't know about others. Of course, being a strong partner of these brands, being probably -- if not the biggest top 3 partner of most the brands, obviously it helps that they want to promote their brand and we want to sell it. And we take the risk. And obviously, it helps being big, that goes without saying. So not that we are bullying, but of course if they want us to continue our growth trajectory, the risk can't be on our side.
Yes. Okay. And then also last question then on the Boozt less than the off-price market. So as you pointed out yourself, I mean, growth is even higher than what you expected. So how should we really look at this? I mean is this that the off-price market as such is growing very strongly overall? Or is this that you are basically taking a big chunk of that market now by putting some more emphasis on your Booztlet operations? How should we think about this going forward, basically?
I think it's a combination of both. We know that the off-price segment is quite big. And we believe that the off-price segment is not the very well-served online by peers in the region. We have -- I believe we launched Booztlet like 4 or 5 years ago and didn't kind of -- we didn't do it fully committed. Now we're committing because we see that customers like it, in which we have this huge opportunity. The synergies with Boozt.com are huge, so we are driving a -- we are pushing a lot on Boozt.com. Of course, it was higher than we expected and -- but we just see that there's an opportunity also. If some day you will have a downturn that -- which you probably will have, then we see also it's a very good hedging instrument for the group that we can offer our customers an option in going for that price probably in a situation where the market will be very heavily stocked. So we think it's actually very good combination, and we are extremely bullish on Booztlet.
[Operator Instructions] The next question comes from Michael Benedict from Berenberg.
I've got a couple, but I can go one at a time. Clearly, there's structural pressures on online players' average order values, but yours was quite impressively flat year-on-year. Can you speak about these sort of positive tailwinds you've seen on that metric in the period?
So why we're not seeing a decrease in average order value compared to the peers, is that the question, Michael?
Yes, yes. Why you're not seeing a decrease when peers are, yes.
It's a good mix. Of course, when you have an increased number of basket in the items, then the gross average order value goes up. And well, now that you had a return -- it's going back to the more normal levels, then you will see the average order being stable. Also Beauty, even though that it's quite small, it's actually adding on to the basket. And our net average basket for combined beauty and fashion market is actually some 10% higher than you've seen in the whole market. So Beauty is actually as beautiful, I want to say, as we expected. So this was why we're pushing for the Beauty. So it's a combination of -- that our customers are actually buying with us. We are adding categories that are out of the basket, so that actually works to our favor.
Great. And are you able to quantify the gross margin impact from, one, the mix; and two, from some market-wide discounting you see?
Yes. This is Hermann here. It's actually a good question. And obviously, we can see that, of course, the product mix of the Sports, typically with our margin, has an impact in the sales. But it's not something that -- we have some, of course, internal numbers that we look into, but this is actually not something that we would like to disclose. For us, it's going to be kind of a price follower beyond the market and we act accordingly. As I said before, we expect that the gross margin will maintain and stay around [ as before ] as announced. And that will be a combination of product mix and campaign goods and seasonal goods. And it can go up if there's a good season and down if it's a difficult season. I know it's not an answer, but I don't really want to quantify it in this moment.
Fair enough. And one more, if I may then. Just the acquisition of Touchlogic and the creation of the innovation lab. Would you be able to talk around sort of the tangible benefits you expect to see in the short to medium term, vis-Ă -vis the next couple of years?
Yes. Yes, this is Hermann. Since we launched the company in '11, we have been quite tight on our financial means, so meaning that we have always been kind of one too few and being extremely focused on -- being extremely efficient in work. Sometimes this can come at the expect (sic) [ expense ] of new initiatives, taking chances, doing moves [ not just thinking ]. And so we've been searching for kind of creating this lab where we could have those creative ideas, test those creative ideas using lab tests, et cetera. So this is contributing in raising that. But it's going through this, especially on the mobile and app arena, there's lots of opportunities within the mobile and app area. And we believe that it would be good to have someone that has strong experience, strong track record and that can maybe do some wide experiments in that way. So we -- short term, we will see some improvements in the app and mobile experience compared to today. And of course, long term, maybe some creative ideas. Again, everything aligned to make the customer experience better.
Right. And sorry, probably it's the last one. You mentioned in the presentation the mobile app users' average order value is greater than the group's average. Is that right? And if so, could you quantify that?
Yes. We can't -- we don't disclose that now. Of course, it's not dramatically higher and it's probably somewhere between 0% and 10% range. But it's high end and the customers, of course, also are more loyal. And -- but again, this also means that, typically, the conversion rate on the mobile, the total conversion rate is -- it's been down because people come and go from the app and the mobile during the day. So it's a kind of -- it's a better interaction and [ better figures ] with strong app and mobile experience.
Thank you. There appears to be no further questions. I'll return the conference back to the speakers.
Okay. Thank you all for a good and client call. So we look forward to deliver for the rest of the year and we'll see you again in 3 months' time. Thank you.
Thank you. This does conclude today's conference call. Thank you all for attending. You may now disconnect your lines.