Boozt AB

STO:BOOZT

Earnings Call Analysis

Operational efficiencies drive margin improvement and growth outlook.

In the latest earnings call, the company projected a fourth-quarter adjusted EBIT margin of approximately 8.9%, reflecting a year-on-year increase of over 1 percentage point. This anticipated improvement is attributed to operational efficiencies, including advancements in warehouse processes, which are expected to significantly reduce manual labor hours. Additionally, adjusted personnel costs dipped, showcasing better operational leverage while supporting a 20% growth in revenue. The management expresses confidence in achieving these targets, emphasizing their commitment to boosting productivity without proportional increases in staffing.

Growth Amidst Consumer Caution

In the third quarter of 2024, the company reported a revenue increase of 6%. However, when accounting for currency fluctuations, the underlying growth stood at 9%, keeping in line with the previous six months' performance. This growth can largely be attributed to a significant uptick in active customers, as approximately 250,000 new customers shopped across their platforms, leading to an overall increase in active customers by 12%. Notably, consumer behavior reflects a cautious spending approach, particularly in the face of economic uncertainties.

Impact of Weather on Sales

Consumer demand fluctuated throughout the quarter due to weather conditions, notably a poor August contrasted by a strong September, which saw a return to double-digit growth. This seasonal variance emphasizes the role of external factors on sales performance; when temperatures dropped, consumer spending in their autumn/winter lines improved significantly.

Positive Customer Engagement Indicators

The company's department store model proved effective, with over 100,000 new customers engaging with more than one product category over the past year. Consumer satisfaction remains high, supported by strong Net Promoter Scores (NPS) and Trustpilot ratings, affirming their competitive edge in customer experience.

Margin Pressures and Future Guidance

Adjusted EBIT margins for the quarter decreased to 3.3%, down from 4.3% year-over-year. This decline was attributed to several factors, including reduced gross margins and increased fulfillment costs driven by manual labor. Moving forward, the company has set its margin guidance between 5.2% and 5.7% for the year, with a target for the fourth quarter expecting a margin of around 8.5%, which would represent the highest quarterly margin to date.

Operational Efficiency Improvements

The implementation of transfer cells at the company's warehouse is anticipated to dramatically enhance operational efficiency and reduce labor needs in coming quarters. Although specific efficiency gains have not been quantified yet, management expressed confidence that these enhancements will be reflected positively in the operational metrics.

Market Position and Future Prospects

While the retail environment remains competitive, there are promising signs of growth potential in their international markets, especially given a staggering 52% revenue increase outside the Nordics (driven by Germany and the Netherlands). The company maintains a cautious optimism due to ongoing market opportunities and an expanding customer base. Additionally, savings from the recent Norwegian customs ruling could yield SEK 50 million annually, providing a boost to profitability moving forward.

Share Buybacks and Financial Stability

The firm continued its share buyback program, returning value to shareholders while maintaining a robust cash position of SEK 641 million at the end of the quarter. Their proactive liquidity management amidst rising inventory levels ahead of the holiday season highlights a balance between growth efforts and financial prudence.

Key Takeaways

Overall, while the third quarter displayed signs of both growth and pressure, the company navigates a complex retail landscape with strategic initiatives aimed at enhancing productivity and customer engagement. Investors may view the proactive measures in inventory management and operational efficiency as positive signals for long-term stability and growth amid fluctuating consumer sentiment.

Earnings Call Transcript 2024-Q3

[Hermann Haraldsson, executive]

Thank you, and good morning all, and welcome to our Q3 2024 financial presentation.

Let's go to the first slide, our highlights. The market trends observed in the first half of the year have, as expected, continued into the second half, where consumers are cost conscious as well as holding back. That said, revenue growth in the third quarter was 6%. And excluding currency [ FX, ] growth was 3% higher at 9% and in line with what we delivered in the first 6 months of 2024. The quarter was quite bumpy with regards to consumer demand, especially August, which was impacted by the very warm weather. September compensated somewhat for a poor August with a return to double-digit growth. Even though we don't like to talk too much about weather, we saw an immediate effect in September when it got colder in the region and customers started to buy into the autumn/winter collection.

Overall, growth was driven by a solid increase in active customers across region, while average order value was slightly down due to currency. And as in prior quarters, limited access to campaign goods once again had an adverse effect on our growth. Our department store model remains a key selling point and more than 100,000 new customers are now shopping from more than one category. And to illustrate the importance of the shift, sales to these plus 100,000 customers in the last 12 months has more than tripled compared to when they are buying -- when buying from only one category. Customer satisfaction remains high with an NPS of 73 and a Trustpilot score of 4.4. They remain well above industry average and an important differentiator versus competition. The adjusted EBIT margin was 3.3%, down from 4.3% in Q3 last year.

First of all, FX had a negative impact on the margin of around 1 percentage point in the quarter. Underlying, there are, of course, other moving parts, but in theory, our margin would have been unchanged, assuming constant currency. Sandra will go through the different building blocks later in the presentation, but I would like to highlight one thing. During the quarter, we have introduced more competitive prices on Booztlet. This has been done to clear some of the older products from prior seasons to keep our inventory fresh. As you know, the most important thing for us is always to make sure that we do not carry old stock forward.

Booztlet now has the size to be able to handle excess stock, which has always been our ambition. So basically, the intention with Booztlet was always to be able to hedge our inventory risk when doing the upfront buying for Boozt.com. This has come into play during the quarter as consumers' sentiment has not come back to positive territory as we had expected. The additional markdowns are temporary and something that we're able to do without compromising the Boozt.com brand due to Booztlet being a separate sales channel.

We also do this to some degree in Q4. In the quarter, we continued our share buyback program. So far this year, we have repurchased shares equal to almost 1.5% of the share capital. Despite this and the fact that we have increased our inventories ahead of the holiday season, we still ended the quarter with a cash position of SEK 641 million. Based on the performance so far in the year, we maintain our guidance, which I will come back to later in the presentation.

Last but not least, we were notified yesterday that the High Court in Norway has rejected the appeal from the Norwegian tax authorities, and we have now officially won the case we had with the authorities. This means that we can now apply for a simplified registration in Norway, which in turn means that we will not be paying import duties in Norway looking ahead. This is great news, not least because we will save some SEK 50 million in duties each year as this was the customs paid in 2023, but also because we will now allow ourselves to be more active in Norway given the improved profitability. It is too early to say exactly how it will impact our business in Norway, both operationally and profitability-wise, but we can say that a fair share of the saved amount will find its way to the bottom line.

Now please turn to the next slide. As in the previous quarter, we had a very solid quarter in terms of new active customers. In the quarter, we welcomed around 250,000 new customers. And in total, the number of active customers during the last 12 months increased by 12%. The growth was 10% for Boozt.com and 17% for Booztlet.com.

In the Nordics, which is where we are most established, the number of active customers in the 2 shops increased by 7% for Boozt.com and 12% for Booztlet. And in an environment with a quite muted consumer sentiment, it is quite encouraging for us to see that the consumers that are in the market continue to go online and continue to go to our 2 shops. Active customers increased by more than 40% in rest of Europe. This was mainly driven by Germany and the Netherlands. These are both markets where we are being a bit opportunistic while keeping focus on being profitable on every order. As I've mentioned on previous calls, we have, for example, introduced return fees in Germany for Boozt.com.

Finally, the Baltics continue to perform well and active customers in the region were up 35% and 49% for the 2 sites in the quarter. This is obviously still from low levels, but with a continued high average order value on par with the Group, we see decent profitability as well as strong growth opportunities in the Baltics.

Let's go to the next slide. As mentioned earlier, we continue to see a healthy increase in the number of customers shopping for more than one product category on Boozt.com. This is one of the most strategically important goals of our department store model and is also one that is easily measured in our financial performance. As I have mentioned on more than one occasion, the customers that shop from more than one category, they spend more on our sites, they stay more loyal to our brand and they return less. In other words, the more categories a customer buys, the higher the customer lifetime value.

In the quarter and as illustrated in the slide, we saw an increase of between 5% and 15% on all group of customers shopping from 2 to 6 categories on Boozt.com. This amounts to a total of just above 100,000 customers. The share of customers shopping from more than one category is now at 51% for the last 12 months. This is slightly down compared with the previous 12 months where it was 52%. It is important to note, though, that this is a number which continues to be impacted by the fact that new customers typically shop from one category to begin with. And in the last 12 months, we have gained close to 200,000 new customers on Boozt.com. This is very good.

Even though we put a lot of effort into getting our customers to buy into more categories, we still want to increase our customer base. We know that we're able to make customers come back, and we know that we're able to get them to try new categories. And we believe that when consumers' propensity to spend goes up again, we will be able to get them to use some of the spending on our categories. So please turn to the next slide on our Club Boozt.

Before handing over to Sandra for the financials, I would like to give you a few highlights on our members' club, Club Boozt. Club Boozt has now been live for a bit more than a year. And in the quarter, it reached 1.7 million members. This means that more than 50% of our active customers are now club members. This makes the customers easier to reach and to engage with. And while it is too early to make any solid conclusions, initial data on how our members shop indicated a quite encouraging shopping behavior by our Club Boozt members. For starters, even though the customers that joined the club are already some of the better customers, we see that they increased their shopping frequency after joining the club. On average, club members buy from Boozt.com around 6x a year compared with around 4x before they joined the club.

On top of that, initial data shows that average order value for members is roughly 15% higher than for nonmembers. And finally, we can see that members on average spend roughly twice the amount on our site compared with nonmembers. So Club Boozt provides us with more tools in our toolbox where we can use clever tactics to get them to try our categories as well as use our markdown spend more efficiently. So while it's still early days, the Club was launched in June last year, I believe that we're off to a really good start, and it's clearly something that will benefit Boozt as we look ahead.

So with this, I would like to hand it over to you, Sandra.

[Sandra Gadd, executive]

Thank you, Hermann. So please turn to the next slide. As we talked about, revenue increased 6% in the quarter. But as Hermann mentioned, FX had a negative impact of 3 percentage points. So underlying, we continued the momentum from the first half, growing top line with 9%. The development through the quarter was mixed with a decent July followed by a weak August; and finally, a solid September, probably driven by the weather shift, which led to a good start for the autumn/winter collection.

Growth was driven by an improvement in all markets. Revenue in Sweden continued the solid development from Q2, growing 8% in the quarter, while Denmark grew only 1%, however, significantly impacted by currency. Growth in local currency was 4%. Rest of Europe increased 46%. In the quarter, most categories continued the good development seen in the first half of '24 with Sports and Kids being the best performers. Across markets, consumers remain very price sensitive and promotional levels are still very high. However, we have decided to be a little bit more aggressive on prices on Booztlet compared with earlier, mainly to clear inventory ahead of the busy season.

On the other hand, we have been a bit less promotional on Boozt.com, mainly to protect our margin, which, as I will come back to later, is impacted by currency. For the first 9 months of '24, net revenue growth was 8% or 9% in local currencies. The gross margin was 38.6% in the third quarter and decreased 1.2 percentage points compared to last year. The decline was driven by the lower level of campaign stock as well as the just mentioned decision to lower prices on Booztlet. Finally, currency fluctuations had a negative impact of roughly 0.5 percentage points. The adjusted EBIT margin was 3.3%, down from 4.3%. This was driven mainly by the lower gross margin as well as a slight increase in the fulfillment cost ratio, both, of course, impacted by currency in the quarter, and I will come back to the underlying development in a minute.

So if we turn to the next slide, please. If we look at the segments, we see that the revenue in the quarter on Boozt.com increased 5% or 8% in local currency. As in the first half, we saw a significant increase in active customers on Boozt. And in the quarter isolated, close to 200,000 new customers shopped on Boozt. Active customers in the last 12 months increased by 10%, which was a broad-based improvement. Actually, we saw an increase in all active -- in active customers in each and every market that we operate in.

In the Nordics, revenue on Boozt.com increased with 2%, which was held back by negative growth in Denmark. However, in local currency, revenue from Denmark increased 2%. Growth outside of the Nordics was 52%, driven by Germany and the Netherlands, but we also saw a continued good development in the Baltics. The adjusted EBIT margin for Boozt.com decreased with 0.4 percentage points to 3.5%. The decline was mainly related to currency as the underlying development was encouraging and supported by operational leverage on costs.

If we look at Booztlet, revenue increased 13%, in line with the development we saw in the first half of the year. Growth in local currency was 15% in the quarter. Just as in the first half, growth was held back by a lower level of campaign stock, while the number of new customers fueled growth. The number of active customers on Booztlet was up 17% in the quarter.

Revenue from the Nordics increased 9%, while rest of Europe was up 33%. Growth in all markets was, of course, supported by the previously mentioned price initiatives that we launched on the site. The average order value was down 2% on Booztlet, which was all due to currency. Finally, the adjusted EBIT margin for the quarter was 2.6% compared to 6.3% last year. The decline was mainly due to the temporarily lower prices on the site as well as the limited access to campaign goods.

So if we move on to the next page, we see the development of the cost ratios in the third quarter. Initially, it is worth highlighting that all cost lines in the quarter were impacted by currency. Our operational costs are tilted towards the Swedish krona, where our top line, as you know, is primarily in foreign currencies. Consequently, the operational cost ratios were negatively affected by FX with around 0.5 percentage points in total. That said, let's go through the different cost lines.

So if we start with the fulfillment cost, we continue to see an impact from the installment of transfer cells at our warehouse and the fulfillment cost ratio in the quarter, therefore, increased to 11% versus 10.7% in the third quarter last year. The transfer cells are now fully operational, and we expect this to bring material productivity improvements already from Q4. So you should expect to see a lower fulfillment cost ratio in the next quarter. The marketing cost ratio for the quarter was 10.2% and slightly down compared to last year. While we still experience high competition for cost per click, we continue to gain benefits from a large base of loyal customers, of which many are joining our members club that we talk -- that Hermann talked about, Club Boozt. The loyal customers tend to come as direct traffic to a higher degree than prior periods where our new customers are recruited through performance [ media. ]

The adjusted admin and other cost ratio was 9.9% in the quarter, down from 10.2%. The improvement was driven mostly by leverage on costs. It is worth highlighting that the lower cost ratio was achieved despite last year being positively impacted with roughly 50 basis points related to a reevaluation of accounts payables in foreign currencies. The non-adjusted admin ratio increased from 11.1% to 11.6%, and this was all driven by an increase in the share-based payments. Finally, the depreciation cost was 4.2% compared to 4.1% last year.

So if we move on to the next one, we see -- have an overview of cash-related KPIs for the quarter. Net working capital as a percentage of revenue increased slightly to 13.2% from 12.9%, mainly driven by the higher inventory levels. Inventory as a percentage of revenue increased to 43.2% versus 42.7% last year. This was driven by a decision to build up additional inventory ahead of the busy holiday season as well as for Q1 next year. We were hugely successful with the decision to increase inventory ahead of the busy season last year. And also, we found ourselves slightly undersupplied in the first quarter this year, which we try to avoid for next year.

Free cash flow in the quarter improved to a negative SEK 17 million compared to a negative SEK 94 million last year. The improvement was mainly driven by a more favorable development in operating working capital compared to Q3 '23. For the first 9 months of '24, free cash flow was a negative SEK 612 million compared to a negative SEK 829 million last year. Cash flow from investing activities was SEK 41 million in the quarter versus SEK 33 million last year. The increase is mainly related to the investment in transfer cells at our fulfillment center. Our net cash position was SEK 237 million at the end of the quarter, down SEK 20 million compared to last year. Our cash position continues to be impacted by our share buyback program. And in the last 12 months, we have repurchased own shares for SEK 147 million.

So this ends the financial overview, and back to you, Hermann.

[Hermann Haraldsson, executive]

Thank you, Sandra. And going to the outlook for 2024. As mentioned initially, we maintain our guidance for the full year. This means that we aim for revenue growth between 7% and 11% and an adjusted EBIT margin of 5.2% to 5.7%. For the top line, this indicates growth in the fourth quarter of 6% to 16%. This is a broad [ spend, ] but given the current consumer sentiment, we believe it makes sense to be cautious and maintain the range. Our best estimate is still the midpoint of 9%. We are quite certain that consumers will come to our store in huge numbers, both for the Black Friday events as well as to buy Christmas presents later in the quarter.

November and December are by far the biggest months of the year and close to 30% of our full year revenue. So if the consumers have been holding back, they are waiting for Black Friday deals and Christmas for them to spend or if they will hold back in November and December as before, that will have a significant impact on our final full year revenue growth numbers, for the year.

The same goes with the margin. To reach our margin target, we have to deliver a margin of around 8.5% in the last quarter, and this will then be our highest quarterly margin to-date. We do expect a tailwind from an increasing top line as well as the now finalized installment of our transfer cells. Additionally, the currency headwind that we saw in Q3 this year is not expected in the fourth quarter. However, there is a risk that we need to clear excess inventory through increased markdowns if the consumer is holding back, potentially putting a pressure on the margin. Finally, we changed our CapEx guidance to around SEK 225 million from previously SEK 150 million to SEK 250 million.

Now please turn to my next and last slide. It has been some turbulent years for online retail following COVID. After a significant increase in online penetration during the pandemic, we have seen a more modest, if any, increase in online penetration. Some have even claimed that what we have seen is the return of the physical store, a kind of a big comeback for the physical store. To be honest, we've been somewhat skeptical of the claim that physical stores are getting grounds at the expense of online. And therefore, in times like these, it can be good to take a step back and look at the bigger picture.

We are very pleased to see that we again have a double-digit growth in our active customer base. The graph shows that despite tough times, we've been able to continuously attract new customers to Boozt.com while successfully retaining most of our loyal customers. Following many years with double-digit growth in active customers, we experienced a slowdown in 2022 and 2023, I guess, kind of expected since the surge during COVID. However, since the fourth quarter last year, we've seen an acceleration of growth. We believe this is driven by a combination of a gradual increase in the online penetration, but likely also a starting consolidation in the online retail market.

The online market has been and still is very fragmented, but difficult times tend to shake the tree and make the stronger market participants even stronger. In the last 12 months, we have increased our active customer base on Boozt.com with 10%, and we find it likely that these trends will continue -- that we will continue to drive further increases in our customer base.

This concludes our presentation. So operator, please, will you open up for questions? Thank you.

[Operator]

[Operator Instructions] The next question comes from Kristian Godiksen from SEB.

[Kristian Godiksen, analyst]

So a couple of questions from my side initially. So first of all, maybe could you comment a bit on the impact of the Norwegian high case court that it's -- what are your plans now to reinvest in growth initiatives going forward? That would be the first question. And then maybe on that, could you maybe also just comment on this? We should not have -- we should not expect this to have any impact on your prices as I assume you have been competitive already? So that was the first question.

Then the second question would be on the pricing environment. So have you seen any initiatives from competitors after you're doing these clearance sales in Booztlet? And you also mentioned, Sandra, in your commentary that the promotion level was high. So on the margin part, Hermann, you mentioned that there was a potential risk on the margin side if you needed to do further markdowns to attract customers to buy. Could you please comment on what kind of impact would that have on your guidance ranges? Would that mean you would be, a, we should aim towards the lower end of the guidance range? Or would it be, if that were to happen, would that mean you would end below the margin guidance range?

And then just lastly on -- if you could comment a bit on the breakdown on the marketing cost on how much the cost-per-click has increased?

[Hermann Haraldsson, executive]

Okay. Thank you, Kristian. I tried to remember all the questions. I'll start with the margin guidance. I think when we started the year, we had a very broad margin guidance. And the reason why was that, we were anticipating that the consumers will come back and that we would have an increasing consumer sentiment more -- or positive consumer sentiment during the year. Our top line of our revenue guidance was 15%. And of course, we buy into that target.

At the same time, we said that if consumers are holding back and we have brought into the target, there is a risk that we will come in at the lower end of our margin guidance, meaning the 5.2%. So this is why we have kind of have this still relatively broad range. Also as we said, November, December is 30% of our sales for the full year. And if consumers are holding back for some reason, we might need to increase our markdowns to make sure that we don't go out of the year with old stock. We don't expect it, which is why we still kind of keep the range. But of course, there is a risk if consumers are holding very much back at the end of the year that we will come in at the low end of the range. But so far, there's nothing that indicates that, that would be -- could be the case.

For the Norway, I'm trying to remember, our prices in Norway have been competitive. Otherwise, we will not sell anything. So we have taken the hit on the customs that we have paid. And the amount in 2023 was around SEK 50 million. We are not planning to reinvest SEK 50 million in Norway. That would be crazy. So we are expecting large parts of the savings to hit our bottom line as we have been investing in Norway anticipating that either the customs would be kind of abandoned by the government or that we will win the [ ROIC ] case. It just took a bit longer than we expected.

And was there a third question? I can't remember that.

[Sandra Gadd, executive]

Yes.

[Hermann Haraldsson, executive]

Pricing from...

[Kristian Godiksen, analyst]

Price environment.

[Hermann Haraldsson, executive]

Price environment, yes, Booztlet. As you saw, of course, the Booztlet margin went down. Going out of the first half of the year, we just want to make sure that we don't have old stock, this -- which is why we use Booztlet to clear. As I said, we were hoping for -- our ambitious target was a 50% growth for the full year, which is not realistic. And we are very religious about not having old stock, which is why we basically use Booztlet for clearance. So this is why we've kind of been aggressive on the pricing on Booztlet. Regarding...

[Sandra Gadd, executive]

In addition, if I just want to -- the campaign -- the access to campaign goods have been quite low. So it's also an ability to actually give Booztlet some more attractability despite that.

[Hermann Haraldsson, executive]

Yes. But this was always the plan with Booztlet that make sure that we would never go out of a season in a year with old stock. So instead of having a huge write-down, we just do it as we go.

[Kristian Godiksen, analyst]

Yes. Yes. That makes sense. And how -- the 2 other questions was how -- sorry, how cost -- how competitors had reacted on this initiative and then also on the marketing cost? That was the last one.

[Hermann Haraldsson, executive]

Okay. On Booztlet, it's -- there is a price in the market, and it's a relatively kind of competitive market. And this is what it is. On click prices, they are more or less stable. We saw when [ team ] was very aggressive that click prices went up, but we're not really competing for the same spend, and we see kind of relatively stable click prices, I believe, at the moment. So it's not that marketing costs are going up.

[Operator]

The next question comes from Benjamin Wahlstedt from ABG Sundal Collier.

[Benjamin Wahlstedt, analyst]

So firstly, I would like to ask a bit about last night's announcement regarding Norwegian import duties. When do you expect to see the full impact of the SEK 50 million roughly savings first of all?

[Sandra Gadd, executive]

Yes. Well, now we need to get to work and get the registration going. So we expect that we will get it in '25, not this year, but we will do it as fast as possible. Obviously, it's in our interest to do it so.

[Benjamin Wahlstedt, analyst]

So are we talking like late-2025 or rather [indiscernible]?

[Sandra Gadd, executive]

No, hopefully not. Hopefully, very early.

[Benjamin Wahlstedt, analyst]

Hopefully, very early.

[Sandra Gadd, executive]

Yes, it's not in our control and that we need to get into the administrative processes, but we will do it as fast as possible, and we hope that it's early '25, obviously.

[Benjamin Wahlstedt, analyst]

All right. Perfect. I was wondering as well about the ongoing work with transfer cells in the warehouse. You commented on large efficiency improvements from these initiatives. I was wondering if you could put a number on that or sort of try to quantify the magnitude of those efficiency improvements?

[Sandra Gadd, executive]

We actually want to see it before, but we were actually up there yesterday and everything seems to be working very smoothly. Nothing was stuck. So we have high hopes for it, but we really want to see the efficiency before we put a number on it. But we are -- it is the consolidation. It's been a totally manual process. So we will decrease the number of manual hours significantly. So it should have impact.

[Hermann Haraldsson, executive]

But no number yet.

[Benjamin Wahlstedt, analyst]

No number. Okay.

[Sandra Gadd, executive]

No. Not by anything.

[Benjamin Wahlstedt, analyst]

Let me ask the question in a different way then. The midpoint of your full year guidance implies a Q4 adjusted EBIT margin of some 8.9%. That's a bit more than 1 percentage point year-on-year. Would you say efficiency improvements from this -- like warehouse consolidation or however you would like to call it, would you say those efficiency improvements are a material part of this 1 percentage point improvement?

[Sandra Gadd, executive]

We still don't give you a number.

[Benjamin Wahlstedt, analyst]

All right.

[Sandra Gadd, executive]

But obviously, it's included in our anticipations. But since we haven't seen the full effect of it, it's not like we're totally relying on that for our results to go through. But it is a significant impact on the manpower cost [ and income. ]

[Benjamin Wahlstedt, analyst]

Yes. And sort of following on that discussion on manual labor. I note your adjusted personnel costs were actually slightly lower year-on-year despite continued growth. Could you talk about that observation a bit and perhaps also discuss what sort of staffing increase you need, if any, for the next, say, 20% top line growth?

[Sandra Gadd, executive]

Yes. So we do get operational leverage on our cost. That is correct. And I think we're well equipped. And as we talked about -- and when talking about longer-term margin, we said that this is the time when we expect to get more productive. We work a lot with making manual processes more less manual also in the headquarters, and we expect to see efficiencies from that going forward. So we expect to see continued operational leverage.

[Hermann Haraldsson, executive]

And if I can add, as you know, Benjamin, we have a policy or a kind of vision of being one too few staff-wise. So -- and we actually see that with the development in technology and AI, there's a lot of opportunities to grow without having to add staff. So I think that's kind of a good opportunity going forward that we will be able to maintain a number of people, and then just grow. Yes.

[Operator]

The next question comes from Niklas Ekman from Carnegie.

[Niklas Ekman, analyst]

Firstly, I just want to come back to this, the full year guidance and just how confident you are, particularly about the margin. It looks like sales growth, at least the low end should definitely be within reach. But margins, given on my estimates, at least, we have a 4.8% margin now for the last 12 months. So quite a significant improvement and you're facing very tough comparisons. You're talking about markdowns and lack of campaign buys.

So just can you remind us, were there any drags on the Q4 margin last year that you won't have this year? Or what gives you the confidence of seeing clear margin expansion in Q4 year-over-year? That's my first question.

[Hermann Haraldsson, executive]

Yes, Niklas, the confidence, of course, comes from the -- we know that if we manage to reach our revenue numbers, we have operational leverage. So that in itself kind of gives a lot -- investments in our warehouse -- transfer cells also provides that. So that's why we are kind of -- in that respect, we're confident. But of course, I'm never confident going into Q4 or November, December because kind of it's such big months. So it's just like going into a football match. If you're not slightly nervous before you enter the match, you would probably lose. So we are committed, and there's nothing that indicates that we would not reach our midpoint numbers so far, but kind of there's so much that can happen during the 2 months that always will make you sweat a bit before you go into. But again -- again, nothing indicates that we will not reach our numbers.

[Niklas Ekman, analyst]

Okay. Very clear. Secondly, can you tell us a little bit about -- if there have been any changes in the overall market? I mean, I get the impression that last year, particularly in H2, you -- one reason for your strong performance was that many of your peers were holding back. And now, for instance, we see Zalando coming out with the results this morning, they have seen a reversal back to sales growth, for instance, and improved profitability. Are you seeing peers being generally more aggressive again in the market? Or is the competitive environment, would you say, similar now to what it was a year ago?

[Hermann Haraldsson, executive]

I think it's very similar to what it was a year ago. What we -- I think it's -- statistics on this market are notoriously difficult to find. And kind of if we look at our numbers, we can see that our cohorts have been holding back. So meaning that consumers, they are kind of looking after the money. That has been compensated by a high number of new customers. So if anything, what we can see is that consumers, the ones that are in the market, they are going online. So actually, we are quite happy that our peers, both Zalando and as well as ASOS are kind of more confident, especially Zalando is growing because kind of we need some confidence in the market.

And we think this is a proof that online is back in the game, but also what we've talked about basically at the IPO that we also see kind of the beginning of the consolidation in the market, meaning that smaller players are struggling. They can't invest or they might even go out of business, while the bigger players are getting the operational leverage. So I think actually, the current market conditions they are not tougher than anything. So if anything, it's kind of consumer sentiment that is holding back. But in general, I think that we and the big players in general are gaining ground. So it's not because of increased competition.

[Niklas Ekman, analyst]

Okay. Very clear. And just a final question on Norway. Can you remind us how specific was this issue to Boozt? I seem to remember that you've said in the past that Zalando was in a similar situation, but are you seeing the same situation as you? And I guess they should also benefit from this verdict. But are you seeing other players in the other big players in the market that already were exempt from paying taxes, for instance?

[Hermann Haraldsson, executive]

I expect Zalando to send me a case of beers thinking for us to take the case because we know that they've been waiting in court to have their case. So I think it's -- Boozt and Zalando have been the biggest players waiting and the rest have actually been exempt from paying duties. So this has been a pending issue where kind of we and then also Zalando have been waiting for the verdict. So yes -- so that we have kind of had a -- we have had a disadvantage in the market for quite some time. Basically, I think it's like 3 or 4 years since the ROIC thing was implemented.

[Operator]

The next question comes from Daniel Schmidt from Danske.

[Daniel Schmidt, analyst]

A couple of questions from me. And maybe finishing off with the Norway issue and the import duties that you will be relieved of. And you mentioned that Zalando and Boozt are the main ones that have been sort of forced to pay the import duties and others have not. How big of a market share do you think that you 2 have in Norway on the online clothing sort of segment?

[Sandra Gadd, executive]

Well, I think Norway is one of our smaller markets, I would say that in general, it's lower than our average. And so it's -- I expect it to be quite fragmented. So I would believe that Zalando is the biggest one, and we're #2 just as in the rest of Nordic, but how big it is exactly in Norway, I don't know. But I think there are great opportunities to continue to grow. And we haven't invested as much as we would have if we wouldn't have had this temporary issue.

[Daniel Schmidt, analyst]

Yes. No, I think that it will, of course, open an opportunity for you to be more aggressive, like you've said for some time, and that is actually now happening. But some of the savings will also likely disappear in market dynamics. And I think that's also what you're saying basically that not all of the SEK 50 million will drop down to EBIT, but part of it will go into a different market dynamic and given that Zalando is also benefiting from this, they will use that as well, I guess. But I guess it's hard to see how it's really going to play out, but you're very confident that it's going to be a saving at least?

[Hermann Haraldsson, executive]

Yes, Daniel, I'm not sure whether I understand what you mean by market dynamics. Until now, we have paid for the duties, and we have taken the investments, basically meaning that Norway has more or less not been profitable for us because we have been expecting either customs to go away. And then when the ROIC was implemented that we will be kind of allowed to use that. It took us 3 years. So -- and yes, we might invest more in marketing kind of to grow our customer base. But I don't see any reason why we should use it to -- for more markdowns to cut costs because we are already competitive on the prices. We just have not made as much money as the local players.

[Daniel Schmidt, analyst]

Yes. No, but I'm just speculating that Zalando might take that decision, and that would force you to take that decision as well to some degree, but we'll see.

[Hermann Haraldsson, executive]

Yes. But their [ base is like that ] -- like us, why would they kind of continue to be loss-making? No, it wouldn't really make sense.

[Daniel Schmidt, analyst]

No, no. Okay. Sure, sure. I don't have any sort of insight into their Norwegian numbers, of course, and maybe you do. Some others have said a little bit when it comes to the start of the autumn/winter season that it's been an early start instead of a good start. Do you agree with that, i.e., that you had better sort of more favorable weather conditions in September than last September? But that you don't really buy 2 autumn jackets, you only buy one.

[Hermann Haraldsson, executive]

That was almost a philosophical question. Yes, obviously, September was a cold month and October is a warm month. So that will, of course, influence how fast and when people will buy into the autumn/winter collection. But again, as we said, there's nothing that indicates that we will not meet our kind of revenue targets. And so I think it's kind of -- it's very early to speculate that consumers spent or bought all their autumn/winter clothing in September. So I don't think that was the case.

[Sandra Gadd, executive]

And last year, we were -- like we were surprised by how people were shopping during Black Friday and December, and we don't see why it shouldn't have the same pattern this year that people have been very price sensitive, but making sure that they buy what they want and what they need during this period. And we need to make sure that we have inventory to support that, and that's what we're prepared for.

[Operator]

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

[Hermann Haraldsson, executive]

Okay. Thank you, guys, for some very good questions. And so, this concludes our presentation. And I guess I will -- or we will see you in the coming days. Thank you very much, and bye-bye.