Boozt AB

STO:BOOZT

Earnings Call Transcript 2022-Q2

[Operator]

Good morning, and welcome to the Boozt Q2 2022 Earnings Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to CEO, Hermann Haraldsson. Please go ahead, sir.

[Hermann Haraldsson, executive]

Thank you and welcome all to our Q2 2022 webcast. So I think that we should just jump into the first slides, the key highlights and where we would like to say that the continued execution of our Nordic Department Store strategy has actually made it possible for us to continue growing the business profitably while taking market share in a quite challenging second quarter.

Growth in the quarter was 5.2% despite a challenging market where we can see that discretional spending is under pressure with consumers impacted by inflation and that is reflected in the historic low consumer sentiment. For the first half year, we managed to grow 13.9%.

Customer choosing costs increased meaningfully during the quarter, and we remain quite diligent in our approach to growing sustainably. It's quite important for us to underline that we stay committed to our long-term goal of a payback period on a customer within 6 to 8 months. And as a consequence of that, we did not chase the marginal customer on the day.

The underlying business drivers are all very encouraging. And this to me is the most important thing to note as this is the foundation of -- for future success of our business. [ Terrecovas ] from 2021, they continued the positive development compared to the 2020 cohort, leading to an increase in the true frequency. And then return rates, they have stabilized at a low level, and that's thanks to a diversification of categories and not least, our unique fair use concept that limits fraud and abusive return behavior.

And last and most important, the average order value has continued to increase, and we are now at a record high average order value. And this development is mainly supported by more items per basket.

Our inventory position is healthy, and we've managed a satisfactory sell-through of the SS22 season. For the autumn '22 season that we're going to now we expect to see delays and cancellations pretty much on par with the prior season.

As you are all aware of, we have to adjust our outlook for 2022 in early June to reflect the deceleration in consumer spending. Our performance still has been more or less in line with our expectations. And today, we reiterate a net revenue growth of 10% to 15% with an adjusted EBIT between SEK 235 million and SEK 285 million.

To make sure that our concession and cost base reflects the current environment and the growth opportunities, we carried out a rightsizing of our organization at the end of June. We reduced staff by approximately 5%, and this corresponds to an approximate annual saving of SEK 36 million with effect from 1 July 2022.

So going to the next slide. The most important one, as we always say, is the customer satisfaction KPIs. And if we look at that, we can see that during the quarter, we have maintained our 5-star rating on Trustpilot, and we have managed to deliver an NPS at a stable, very high level.

As I mentioned last time, our efforts to expand our fulfillment capacity have been successful, and we have seen an improvement in the delivery speed compared to last year. So I'm very pleased that we continue to meet and actually exceed the expectations of our customers in terms of selection price and convenience.

If we go to the next slide, we can see that the number of orders dropped by 10% in the second quarter for Boozt.com. So for the first half year, we are slightly down with 1.7%. The drop in number of orders is partly offset by the increase in average order value and a continued strong development of our additional revenue streams, be it Boozt Media Partnership and BooztPay.

The average order value continues to develop strongly in the second quarter and is up to a record high SEK 853 per basket. The main driver for that is actually customers adding more items in this basket due to the continuous expansion of our Nordic Department Store strategy. We -- as you know, we always use this opportunity to remind you that our 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 the volatile market environment.

So moving on to the next slide, the cohort development. We continue to grow our base of active customers at Boozt.com. In the first quarter, we had 10% more active customers compared to last year and 4% more than the second quarter in 2020. Due to the temporary higher customer acquisition costs, we are less aggressive in our pursuit for the marginal customer [indiscernible].

And then in comparison with fewer IPOs during the second quarter, we've seen a sequential drop in the number of active customers at Boozt.com. But for the group as a whole, we are still increasing the number of active customers compared to the previous quarter.

The number of orders for active customers is stable and in line with previous years. True frequencies developed positively compared to previous year. We are very encouraged to see that the cost from the pandemic years of '20 and '21 continue to behave in line with what we have seen from previous years. This also tells us that the changed buying habits during 24 months of corona, meaning higher online penetrations is most likely to stick.

So with this, I would now like to hand over to Sandra for some perspective on the financial performance.

[Sandra Gadd, executive]

Thank you. So if we look at the group results, and as Hermann concluded, net revenue increased with 5.2% for the growth during the second quarter with an FX tailwind of around 2 percentage points. This implies a year-to-date growth of 13.9%.

Return rates remain at the same low level as last year in the quarter as well as year-to-date. In the Nordics, the Swedish and Finnish markets were the strongest, while Denmark had the weakest performance. As we invested less in marketing in Germany during the quarter, sales declined compared to last year in Western Europe.

Even though our organization is very much driven and set up to drive growth at much higher rates than what materialized during the second quarter, we are satisfied to see that we're gaining market share and outgrowing competition on the online Nordic fashion market. We're confident that we can continue to take market share even though market proves to be more challenging. This provides an opportunity for a player of our size with a strong balance sheet.

The gross margin was 41.3% in the second quarter, which is 0.4 percentage points higher than last year, driven by the strong development in Boozt Media Partnership. Year-to-date, the gross margin increased with 0.4 percentage points to 40.4%.

The adjusted EBIT margin was 5.2% in the quarter, a decrease of 1.6 percentage points compared to last year. Year-to-date, the adjusted EBIT margin was 3%, which was 3.4 percentage points lower than last year. When we take a look at the cost ratios in a few minutes, I will come back to what's driving the adjusted EBIT margin. Profitable growth remains a key priority, and we are confident that we can continue to deliver best-in-industry margins.

So if we move on to the next page, we can see that the revenue growth for Boozt.com was 0.5% in the quarter and 9.4% for the first half of the year. The average order value increased with an impressive 6.2% to the all-time high SEK 853. The increase is driven by the pattern that we've seen for a while, where customers continue to put more items in each basket. As we expect in times of macroeconomic turbulence, male customers are the ones most hesitant to buy. And this is what we see in the development of our men's category, which was below expectations in the quarter.

Our women category performed relatively better. The beauty and home category had the best performance of our categories and developed well in the quarter, but with relatively lower impact on the group due to the size of this category. Trading has been increasingly volatile during the second quarter and promotional activity has been higher than normal. As the number of eyeballs have been pure, the customer acquisition cost was higher than last year.

The adjusted EBIT margin decreased from 6.7% to 4.9% in the quarter due to the slowdown in growth and lack of operational leverage on historical investments, which we expect to gradually grow in this year. The adjusted EBIT margin for the first 6 months of the year was 3.3%.

Moving on to the next slide. Booztlet continued its growth trajectory with 34.4% growth during the quarter and 38.6% for the first half of '22. The inventory mix on Booztlet was strong during the quarter, and this is key to drive growth. Growth in the Nordics totaled 36.4% where Finland and Sweden were the strongest country. Growth in rest of Europe was 16.5%.

Compared to last year, we have on top of online marketing spend, put more emphasis on offline marketing efforts, both inside and outside of the Nordic. Just as per Boozt.com, the average order value increased significantly in the quarter. The increase of 18.3% implies an [ AOB ] of SEK 791. Also for Booztlet, the increase was driven by customers putting more items into each basket. The adjusted EBIT margin was 6.5% in the quarter to be compared to 7.5% last year. Year-to-date, the adjusted EBIT margin was 1.3%.

As we have talked about before, we believe that during times of economic difficulties, the offering on Booztlet should be very attractive for consumers. Due to the relatively fast builds in consumer confidence that we've seen over the past months, high promotional activities of in-season goods in all channels, does, however, dampen that effect as businesses need to manage inventories.

If we move on to the next page, we see the development of the cost ratio. The fulfillment cost ratio was 11.4% in the second quarter, the same ratio as last year. For the first half of '22, the fulfillment cost ratio was 11.9%, which was 0.7 percentage points higher than the 6 months of 2021.

Over the last 12 months, we have been negatively impacted by shortage of capacity. This shortage had a negative impact on automated processes as well as added a significant number of man hours needed in order to maintain high customer service with fast delivery.

As we got access to the planned expansion of the warehouse automation continuously over the past 9 months, we've been improving productivity in the warehouse, and we expect this trend to continue. With the positive development of the AOB, we're more confident than ever that our internal target for the fulfillment cost ratio of around 11% that we operated on before we run into congesting issues is well within reach, despite higher cost for fuel that has a negative impact on distribution.

The marketing cost ratio was 11% in the quarter, 1.4 percentage points higher than last year due to higher customer acquisition costs in relation to new customers. Year-to-date, the marketing cost ratio of 11% was 1 percentage point higher than the last year.

However, we continue to stay true to our core principles that we have for years where a new customer has a payback time of around 16 to 18 months. This target designs that we're willing to pay for a new customer to ensure that we continue to build a sustainable and profitable business.

The admin and other cost ratio increased to 10.2% from 9.5% in the quarter. Year-to-date, the adjusted admin and other cost ratio increased from 10.5% to 11.7%. Increased cost base was impacted by the planned investments into strengthening the organizational structure and capacity during 2021.

With the reduction of staff that we performed in June, we believe that we have a lean organization that is set to take on the challenges and opportunities expected short-term. The adjustment affecting this ratio totaled SEK 16.3 million where SEK 9.5 million is related to the rightsizing of the organization that were made to reflect current environment and growth opportunities.

The effect from the rightsizing is approximately SEK 3 million per month and come into effect as from July, while the cost of the redundancy payments incurred in June. The depreciation cost ratio increased from 2.6% to 3.5% as expected and as a consequence of the recent investments that we made in warehouse automation.

Coming into this year, we expected that the investments we made during 2022 would serve the capacity needed until 2025. As we have improved the utilization of our warehouse footprint as well as the recent market development with lower growth rates, it is likely that this time is to be prolonged.

With already high, but also continued increasing average order value both on Boozt as well as Booztlet, we continue the path that we've been on since 2016 when we first became profitable. We have consistently improved our margins and delivered a [indiscernible] plan we set years ago and communicated at the time of our IPO in 2017. While adjusting to market conditions, we stick to our plan and we focus to deliver profitable growth.

So moving on to the next page. We see that the net working capital of 9.6% of the net revenue for the last 12 months was 2.1 percentage points higher than last year. The increase is driven by higher inventory levels, partly offset by increased accounts payables and other liabilities.

The inventory position remains healthy even if sell-through is behind last year, which was an exceptionally good season. Looking historically, the sell-through for this season is on par with what you would call a normal [indiscernible].

In delivery for the autumn/winter season of 2022, that is currently being happening is slightly behind last year, impacted by global market supply chain disruption. During the second quarter, we invested in the seventh expansion phase of AutoStore and investments that totaled SEK 220.4 million.

Year-to-date, the cash flow from investments amounted to SEK 580.6 million, that in addition to investments in warehouse automation consists of SEK 35.6 million in capital-light development costs and SEK 185.9 million that is related to the buyout of the remaining shares of Rosemunde that we executed in the first quarter.

We expect to finalize the investments in the warehouse automation during the second half of this year, meaning that warehouse CapEx for 2022 will be in the level of SEK 500 million. As we previously said, we expect significant lower levels of investments in 2023 and 2024 due to the expansion of the warehouse automation as well as the higher utilization of the warehouse footprint in [ AutoStore ].

And that concludes the financial update. And I will now like to hand back to Hermann.

[Hermann Haraldsson, executive]

Thank you, Sandra. And let's just move on to the next slide. Again, talking about our Nordic Department Store strategy. Unlock is happening this year and the uncertainty comes a lot of discussion around the short-term performance. Visibility is low and customer sentiment is ever changing. This prompts us to operate at a fast pace and make -- actually make daily changes to training plans and campaigns. But to be honest, this is actually an environment that we thrive in as an organization and we have tried it before.

So the short-term turmoil aside, and the long-term strategy and priorities are unchanged and we are confident that the current market provides significant opportunities for a company with our size and scale and basket use economics.

Since the listing of Boozt back in 2017, we have managed to establish one of the leading e-commerce businesses in the Nordics. So what started as a fashion store has now developed into the largest department store in our region with a unique curated selection across categories, categories that are well underway to establish as destinations on the road. So we have managed to establish a long track record of growing ahead of the market, taking shares from both offline and online players. So you must say that growth is a key part of our DNA and our organization is currently stronger than ever before with the scale with a highly automated infrastructure in place to cater for future growth.

So even though we and the e-commerce space in general have made a step change in recent years, online penetration is still in the early stages. The e-commerce space is still highly fragmented with a long tail of small and midsized players, but with a few large established players driving an ongoing consultation. And Boozt is and will continue to be one of those.

We founded Boozt on the belief that with strong use economics comes a superior profitability. And the assumption was that a strategic choice to cater to mid- to premium fashion and lifestyle customers would result in a high average order value that will allow the customers the convenience of free shipping and returns and still deliver profits.

So this has become our foundation for delivering profitable growth over several years and a significant step change in the margin since the early days of 2011. Our market size has been steadily increasing over the years, supported by our Nordic Department Store strategy. And this is a key differentiating factor towards most of our peers, and this is also what will continue to drive profitability as our industry matures and we gain further scale.

And as we have grown in scale, we have explored the e-commerce ecosystem to gain further control of the customer relationship and to add additional revenue streams. Boozt Media Partnership and BooztPay and BrandHub are already established parts of our business, providing additional income and value to our customers, partners and the business. So this business tool we'll continue to develop, and we see a strong earnings potential still to come.

So with that, I would like to move on to our final slide, the outlook. You might say that the first half of 2022 proved to be more challenging than what we believed when we set our targets for the year. So this prompted us to adjust our targets for the year for us to grow profitably while ensuring a healthy inventory position.

The outlook for 2022 was adjusted to reflect a deceleration in consumer spending driven by weakening consumer sentiment, external supply chain disruptions and rising inflation. We expect this to have a dampening effect on discretionary spending for the remainder of this year with limited visibility and a higher uncertainty than we normally see.

We reiterate the outlook for 2022, and we expect to achieve a net revenue growth of 10% to 15%. [indiscernible] growth is supported by market share gains, continued online penetration and a stable or improving consumer confidence compared to the historic low during the second quarter of 2022.

In terms of profitability, we set out to deliver an adjusted EBIT in the level of SEK 235 million and SEK 285 million, indicating a margin between 3.5% and 4.5%, of course, depending on growth opportunities and promotional activities in the markets that we operate in.

So this concludes our presentation, and I would like now to hand over to the operator and get the Q&A session on the way. Thank you.

[Operator]

[Operator Instructions] Your first question comes from Benjamin Wahlstedt from ABG Sundal Collier.

[Benjamin Wahlstedt, analyst]

Just a couple of short questions from my side today. The first question tries to get a sense of the momentum going into Q3. I know that the reported revenue is one of the sort of the lower end of the range given in the trading update. Could you talk us through or give a sense of the entry versus exit rates for the quarter in terms of revenue growth?

[Hermann Haraldsson, executive]

As we said before, we don't want to continue or talk about current trading because it kind of dilutes the picture. But also in general, July and August, they are at the end of the first half, so it doesn't really give you any sense of anything. So we don't really want to comment on going into Q3. But of course, us sticking to our guidance implies that we are still confident that we can meet our guidance.

[Benjamin Wahlstedt, analyst]

Sure. I also note exceptionally strong gross margins. Could you elaborate on what drives this compared to last year?

[Sandra Gadd, executive]

Yes. So it's been high promotional activities and normally, that has an impact on the product margin. And it has this year as well. But looking at the scale that we have now and the other revenue streams, we have get like a positive hedge in this quarter, the Boozt Media Partnership. So the marketing income has increased significantly. So that's contributing very well.

And I think this is a very good sign that we reached the scale and we have the -- we're talking about vertical integration and/or expanding the vertical businesses. It has a positive impact. So we can trade at quite low product margins. They haven't been super low. They're totally okay. But even at lower product margins, we can deliver a strong gross margin. And I think that is something that we're very happy with.

[Benjamin Wahlstedt, analyst]

Perfect. In the report, you also noted that the Home and Beauty segment support sort of the overall segment. Is it possible to get a sense of the difference in growth rates for the clothing assortment and beauty, for example?

[Sandra Gadd, executive]

No, not really. We don't want to disclose it. But of course, these are smaller categories so they grow, but also know that the home category, in general, looking at the home market, it has been quite stagnated. So that we are growing the way we are. I think we're quite happy about that. Beauty also continued to develop well. But of course, it has a lower impact on the Boozt, as the other categories are much bigger.

[Operator]

Our next question comes from Daniel Schmidt at Danske Bank.

[Daniel Schmidt, analyst]

A couple of questions. Coming back to what you did mention quite a lot in the presentation, the Boozt Media Partnership and BooztPay and BrandHub. Could you give us a sense of sort of -- well, first of all, can you give us the comparison figures for the coming 2 quarters, what you had in H2 last year?

[Hermann Haraldsson, executive]

Can you please elaborate, you want the comparison figure from...

[Daniel Schmidt, analyst]

I think you've given us that number now for 2 quarters. When it comes to Q1 and Q2 being SEK 59 million in Q2 and SEK 52 million in Q1 and you also gave us the numbers for H1 last year, but could you give us the numbers for H2 last year, so we just know how the progression has been during the second half of last year, running into the second half of this year?

[Sandra Gadd, executive]

I actually don't -- with that by hand right now, but we can get back to -- with that. I don't have the exact numbers, sorry.

[Daniel Schmidt, analyst]

Okay. But it does sound like this has been an important driver for the margin expansion on the gross margin. And you mentioned that product margins are lower, and that's sort of a thing that you can play with. Could you give us shed some light on the progression instead of sort of the Media Partnership going forward then? Sort of how many partners are now sort of actively using the service and sort of, I guess, the gross margin is, of course, completely different. Could you give us some more information on this?

[Sandra Gadd, executive]

I'm not going to give you all the details here. But it's -- the Boozt Media Partnership, we work with quite long. And from second half last year, we strengthened our agreements, and we have good number of brands that are aligned there. And we see continued opportunities in BNP. And as we talked about many times before, we haven't guided how much we think it should be, but we think that we could do just as much as some of our international peers, it doesn't that area and then, yes, I don't know if...

[Hermann Haraldsson, executive]

Yes. I think also, I think it's important to also note that developments in the other income is actually as we have expected for a long time because the Boozt Media Partnership product continues to be refined. So providing better data, better hiring opportunities whose pay is getting better by the day.

And also, we are also getting more freight income as consumers are opting into more qualitative freight options where we charge them. So it's actually cumbersome but that you would expect getting the scale that we are getting now. So I think that at the moment, development of other income is more or less by the marketing book, you might say.

[Daniel Schmidt, analyst]

Just we don't add the second half numbers last year. But given the progression that you've made in the first half of this year, is that a reasonable sort of pace also going into the second half? Or are you seeing any slowdown to sort of the pickup of the service?

[Sandra Gadd, executive]

No, we think that that's probably in line. Yes.

[Daniel Schmidt, analyst]

Okay. So moving on then, inventory to sales is actually down to its lowest level in 7 quarters. And you did mention that you had sort of a lower product margin. But looking into the second half of this year in Q3, maybe in particular, and you did mention that sort of discounting activity in the market has been high. Do you feel sort of a bit more at ease when it comes to the inventory situation, your own inventory situation going into this quarter compared to Q2 given that level of the inventory?

[Sandra Gadd, executive]

I think in a market like this, you should not be -- feel very comfortable with the inventory levels. We are totally focused to make sure that we will drive the sell-through. And we are a little paranoid. We should -- we don't -- we're quite confident, but I think we have to respect that it will be -- we expect a quite tough season. And that's also why we're putting emphasis that we are lean. We're ready to make sure that we can stay in the machine room and do what we need to do to trade because we believe that all eyes and ears is needed there.

But I think we have a very good inventory position. We don't have any old stock. We're according to plan, slightly behind sell-through compared to last year, but then we are more sold out. So we're confident, but we're also aware of that it can be very challenging.

[Daniel Schmidt, analyst]

Okay. And maybe sort of difficult to answer maybe, but you're in the middle of sort of sales season still and maybe in a week or 2 or back to school season and then to -- so the autumn season, we may have more full price sales, do you fear that sort of the consumer will be holding on even tied to their wallet as we enter September and you're supposed to sell more goods at full price than during the summer, if you see what I'm getting at?

[Hermann Haraldsson, executive]

Yes. But Dan, let's just say, this is a very difficult question because if the laws of gravity for economics still hold true then, of course, an all-time lower consumer companies in all Nordic countries should reflect in a [indiscernible] impact.

We believe that we're in a good position because historically, we have the tendency that -- we've seen that maybe the last acquisition that people move paying down to cheaper items because they might be sticking to quality. So may be buying a few items, but more quality, which is kind of more sustainable both financial and environmental.

But I think we are cautious and believe that the consumers holding back. But the simple thing is that you have also high on jobs as well. So as we calculate on the consumer confidence. So I think that -- I think the main message is, as Sandra is saying that visibility is actually extremely low, and we just have to be on our toes and make sure that we don't have any inventory issues. That's why we are focusing so much on making sure that we -- our inventory is moving.

And if you can move at a higher price, that's good, but if we need to move it on a low price you also do that because we are -- our gross margin is so strong. So I think that we are in a very strong shape to take the bumps that for sure would be in the last part of the year.

[Daniel Schmidt, analyst]

Yes. And then maybe the sort of final subject, I think, Sandra, you were the one mentioning the fulfillment ratio and you sounded fairly confident that sort of the efficiencies that you are seeing coming into 2022 on fulfillment will get you to the 11% despite higher fuel prices. Now we've actually seen fuel prices coming down as of late, yes, it hasn't moved that much, but it has been starting to come down. I guess that is not incorporated into your sort of expectation of reaching the 11%. But when do you think that is reasonable to get to that 11%?

[Sandra Gadd, executive]

Yes, I'm not going to give you an update, I think I need some time. But we are within which we -- what we see is that the trend is going in the right direction. We have increased productivity. I think that there are many good signs that we're getting there. And also with the average order value increasing, there is some leverage just on that.

So we're confident that we will get there soon. And it's 11.4% this quarter. So we're not that far off. But of course, the capacity issues we had it put a lot of man-hours needed. But now we -- the good thing with the crisis that we had in the fulfillment is that you evaluate everything you do and how you do it. So we've been looking at -- and that's also the utilization of the automation. We have reviewed that. We think we have some good initiatives on how to make that even more efficient. So everything is trending in the way that makes us confident that we will get back to those 11%.

[Daniel Schmidt, analyst]

Okay. Maybe just a final one also on the CapEx. You mentioned SEK 500 million for this year and substantially lower for the coming 2 years. Any indication of what substantially lower means?

[Sandra Gadd, executive]

Substantially lower is substantially lower. Now there...

[Daniel Schmidt, analyst]

Half the rate, though?

[Sandra Gadd, executive]

I don't know. To be honest, I don't know. Of course, there can be things coming up when we improve things or change things. And you're working in the warehouse and trying to do things smarter. So I'm not going to give you a number. Yes, we will do that after we've done our budget.

But warehouse automation is what's driving the investments. And since we're not going to need any of those in the coming years, which would be very well.

[Operator]

Our next question comes from Daniel Ovin from Nordea.

[Daniel Ovin, analyst]

I had one question also on the inventory side here because it seems like inventories are still up some 18% year-over-year and your growth rate at the moment is much lower. And you still mentioned that there has been a delay in inventories for the autumn and winter seasons.

So I just wonder what is the actual inventory position here? I mean how much more is that going to come up? And do you feel kind of confident that you will be able to sell this out at a level that will enable you to still meet your guidance? That's the first question.

[Hermann Haraldsson, executive]

Yes, of course, as Sandra said, our sell-through of SS20 was quite okay, it was lower than last year, but close to normal season. The autumn/winter items have been coming in now during July and August. And they are, of course, based on our revenue expectations. And so if we meet our targets, then we are in good shape, of course. But if we don't, then, of course, you will have still that.

But that's how it is when you make your orders well in advance, but we've tried that before. But this is why we are going into the acquired causes -- we know that there's a risk that there would be a heavy trading activity for the rest of the year.

[Daniel Ovin, analyst]

I guess I wonder what -- if you look at the inventory as of now at this time of reporting, is it up on a similar level like 18% like it was the end of June?

[Hermann Haraldsson, executive]

Yes, pretty much. Pretty much.

[Sandra Gadd, executive]

I don't think we want to come up on that. It is what it -- we're fine with inventory level.

[Hermann Haraldsson, executive]

Of course, in a business like ours, this is the main thing you look at all [indiscernible] was how inventory help faster return and is it healthy. So that's a key part of our business.

[Sandra Gadd, executive]

This is what we work with every day and put our focus on the -- every day.

[Daniel Ovin, analyst]

Yes. Okay. Perfect. Then I had another question on the -- and you had some layoffs there. And if I understood correctly, it was on a full year basis, SEK 36 million I should say. That's about SEK 9 million per quarter. And during Q2, how much of that did you see already? How much of that was helping Q2?

[Sandra Gadd, executive]

Nothing because we had the full cost in there. We also -- we executed in the end of June. And then we took the redundancy payments and those we have adjusted for, and then we have the effect from 1st of July this year.

[Daniel Ovin, analyst]

Okay. Perfect. And then just one question. I mean, I look at Q3 and I looked at Q3 operating profit before we came into the pandemic in 2020, then that was almost -- that was always actually a loss-making quarter. So if it's a loss-making cater also this year, would you still feel confident then that you will meet your full year guidance?

[Hermann Haraldsson, executive]

Our target-ish that we will not have any loss-making quarters in the future. And of course, basically, we don't guide on the quarter level, but we are in a target-ish like -- I think we said like a couple of years ago that all quarters should be positive, but some will be more positive than others. So we're not assuming a loss-making quarter for the rest of the year.

[Operator]

[Operator Instructions] Our next question comes from Michael Benedict from Berenberg.

[Michael Benedict, analyst]

First one I had was just on Boozt Media Partnership again. I guess some might have expected that could perhaps struggle in the prevailing environment, given many brands and retailers are pulling back on marketing. Can you just give us a bit more color on what has driven that strength in Q2, please?

[Hermann Haraldsson, executive]

Yes. Of course, when -- if you have a demanding market environment, you are probably scrutinizing your marketing dollars even more. And without being too boosting, now we can offer quite unique targeting opportunities, segmentation, brand adequacy et cetera. So by partnering with retailers like us and probably also our peers, we probably get the most bang for your dollars.

So I would assume that media partnerships or services like ours would be some of the last ones strategy we put down on. So because it's going to -- you have a quite visible return on investment, and we can provide very, very good data on segments and return on investments.

[Michael Benedict, analyst]

That's great. My second one was just on the autumn/winter product assortment. Are you planning any changes to that assortment, given the prevailing consumer environment, for example, any lower-priced brands added to the [indiscernible]?

[Hermann Haraldsson, executive]

You would say that the autumn/winter buy was done in February. So if you would want to do an adjustment, you would do that. But in general, we are quite happy with the assortment, with the brand mix. We stick to the mid premium position because we think that market size is the key to profitability. So you will not see us dropping down on key professions, et cetera. So we would stick to our strategy.

And also, when we have these discussions, we're always talking about fashion, but we have a big sports category kids overview. And so we are kind of -- we are not depending so much on even men or women buying alone because we have the other categories. So I think that the mix and the [indiscernible], that's the key, and we are sticking to our best. But then a second again, Michael, of course, you have Booztlet which can adjust to the market environment and which actually is probably benefiting from consumers being concerned.

[Michael Benedict, analyst]

That's great. And my last one was just -- yes, I appreciate how difficult it is forecasting and guiding in the current circumstances. But if things do go or turn out worse than expected, would you prioritize growth or margins over the back end of this year?

[Hermann Haraldsson, executive]

Margins, we always -- we have always said that we will grow more than the market, but we will grow profitably. So we will focus on growing in a faster way. But we see also with our strong use economics, we actually strongly believe that we are in a very strong position in most to grow profitably.

[Sandra Gadd, executive]

And that's also one of the reasons that we mentioned more than once during our presentation that we stick to -- when it comes to new customers, we stick to payback time of 16 to 18 months. We don't want to chase a marginal customer that is too expensive because then it won't help us our profitability. And this is nothing new. It's what we've been doing for years, and we stick to that, and we believe that that's the right way to do it also in this environment.

[Operator]

Our next question comes from Niklas Ekman from Carnegie.

[Niklas Ekman, analyst]

Just 2 questions here. Firstly, on the inventory, coming back to the inventory situation. You seem to be fairly content here that your inventory was adjusted to your targets. But these targets were set on the 9th of June, and you also talked about very long lead times for the winter season. So I'm just curious, did you see any risk here that you have bought too much considering the weaker consumer environment right now? Or have you been able to adjust your buying here during the early summer?

[Sandra Gadd, executive]

I think this is a constant risk that we have during what -- that this is what we do by 6 months in a month and then you have to take a bet on the season. So of course, it's something that we think about and make sure, but we also have flexibility in our buys. So we use the flexibility we have. We have these risk-sharing agreements with brands that also help with the risk. And we are quite confident. But we also think that with the marketing that we actually can invest and even if the market is tough, we can afford to invest quite a lot in marketing so that we can take the growth that is out there.

[Hermann Haraldsson, executive]

Yes. Then also -- of course, you can also -- if you want to do some consolidation, of course, to some extent, but of course, you try to adjust to the market.

[Niklas Ekman, analyst]

Okay. That's clear. And the second question is just to your view on the physical retail market. Obviously, here during the spring, we've seen a fairly strong revival of physical retail. And I guess this has been stronger than most had anticipated, at least during the peak of COVID. Can you elaborate a little bit just on how you see this and if you see this as very temporary?

It seems like recent signs indicate tangible slowdown again for physical retail and maybe a revival for online retail. I'd just be curious to hear your thoughts on this mix between online and physical retail.

[Hermann Haraldsson, executive]

Yes. I think a lot has to do with math. If the base is lower than percentages are high. And what we are looking at is that if we look at our numbers, we are up more than 70% versus Q2 last year -- not Q2, '19, I mean '19. And so there has been a shift, of course. The physical stores are probably selling more than they did last year, which was affected by COVID the first half.

Fundamentally, we don't see the physical stores becoming more competitive compared to previous years. But of course, we see that the online penetration has maybe paused a bit. But long term, we don't see any signs that online penetration on our ex-year stack will not continue to do what it's done. So we are still quite bullish on online, and we believe that our industry is providing a very competitive product to with the retailer. So -- and I think that -- I think it was yesterday that we saw in Sweden [indiscernible] which was quite disappointing also for the physical stores. So I wouldn't bet on the online shops to lose the battle.

[Niklas Ekman, analyst]

No, that's a fair conclusion I think. Just a quick follow-up also. Have you seen any change, any tangible change in the availability of campaign buys?

[Hermann Haraldsson, executive]

It's a difficult question.

[Sandra Gadd, executive]

Yes, there is -- you could assume that the availability would increase going forward.

[Hermann Haraldsson, executive]

Yes. There seems to be a lot of goods in the market. Obviously, when you are going into a season where you are just you don't dive into buying campaign booth because you want to make sure that your inventory position is healthy. So I think that it's kind of a waiting game at the moment.

[Niklas Ekman, analyst]

Okay. So you haven't seen it yet, but you think it's very likely to materialize?

[Hermann Haraldsson, executive]

Yes.

[Sandra Gadd, executive]

Yes.

[Operator]

That does conclude our question-and-answer session. I'll now hand it back for closing remarks.

[Hermann Haraldsson, executive]

Okay. Thank you for the call and for the very good questions. So this concludes our call and look forward to meeting you or see you again on the phone call in a few months' time. Thank you very much, and have a good day.

[Operator]

Thank you, everyone. That concludes our call for today. Thank you for participating. You may now disconnect.