Boozt AB

STO:BOOZT

Earnings Call Transcript 2020-Q4

[Operator]

Ladies and gentlemen, welcome to the Boozt Q4 Report for 2020. Today, I am pleased to present CEO, Hermann Haraldsson; and CFO, Sandra Gadd. [Operator Instructions] Speakers, please begin.

[Hermann Haraldsson, Co]

Thank you, and good morning, and welcome to our Q4 2020 presentation.If you go to the first slide on the key highlights, I will just run quickly through as we go in details on all these items. But main, of course, we had strong growth throughout Q4, both from new as well as existing customers. And in local currency, a growth of around 40%, which was very good. We had a record number of new customers in 2020, more than 1 million new customers, which bodes quite well for the future. Our cash flow was strong and -- both by low net working capital as well as CapEx on the low side of -- basically too low in 2020.Our home category was launched during Q4 and is performing, at the moment, ahead of expectations. It's been very well received by our customers. And even though assortment is still quite low compared to what it will be, we think, shortly, it's been very well received. And you might almost say that it's about time that we did that. We did this dual-listing in November in Nasdaq Copenhagen, raising around SEK 800 million. And at the same time, in total, we've welcomed a lot of new shareholders. So that we have now more than 15,000 shareholders, which is very good because all of them are also customers in our shops. We did the in-sourcing of our fulfillment staff operations. And also, it's important to highlight that we -- the key focus is to grow the business at a very high pace, which is why we have updated our medium-term outlook. If we go to the next slide on the KPI highlights, if we look at the KPIs for Boozt.com, the very important highlights on customer satisfaction, we can see that our Trustpilot score is stable at 4.6, 5 star, and our NPS is 70, more or less the same as last year. So our customers are still very, very happy, which his good because we know that if they give us a high NPS score, there's a high likelihood that they would come back and buy at a later stage. If we go to the next slide on the average order value, we can see that the order value in Q4 was slightly down. And the main reason for that was currency effects. The Norwegian krone depreciated a lot towards the SEC during 2020, and then, of course, affected quite considerably. There was a big change in -- quite a dramatic change in product mix, but which -- but it was helped by the lower returns, which make sure that the net order value still is high. And you can see that also on the full year of order value, which is more or less on par with '19. And if we adjust for the cost effects, it would have gone up to SEK 827 million. So that's very good because, for us -- the key for us is maintaining a high average market size. If we go to the next slide on the cohort development, we had a 27% increase in active customers during 2020. So we had a bit more than 2 million customers in 2020. These customers, they bought on average less than in '19, which actually makes a good sense, partly because we have a lot of new customers at the end of the period as well as the old cohorts more or less due to corona. We expect that -- we have seen that the buying behavior has been that you are buying less occasion, wear, more basics. And yes, sweats, stuff like that. But the -- our ability to attract new cohorts, new customers has more than compensated for the decrease in frequency. So as we said before, when we go back to a more normal life, we expect the old cohorts to go back to the normal buying behavior.We can also see from our true frequency that it's down compared to Q4 '19. The only reason for the true frequency to be down is because of our values. They had an enormous amount of orders gross, but didn't really keep anything. And if we adjust for that or correct for that, exclude them, we can see that the true frequency is on the same level in Q4 as in Q4 '19, which is very good. If we go to the next slide on the fulfillment operations. We are now ready. We have taken over the fulfillment staff at the warehouse. This is actually something we've been waiting for, yes, almost for 9 years since we started the business and started by outsourcing the fulfillment operations. We took over as of January 1, and that means that now we are -- we control more than 400 employees. And even though we made a lot of improvements last year with regards to efficiencies, we still believe that we will have some benefits, of course, especially due to the fact that we will no longer be paying a margin to the staff provider.We have also taken over the new warehouse, which is next to the current one. It's a warehouse space of 23,000 square meters. When we signed the agreement, we expected to be in very good time because we want to make sure that you are -- have ample space and that you invest well ahead of the need. But having seen kind of the growth in 2020 and the expectations for '21, you can almost say that it's just in time because we can see that we have a strong need for a warehouse. We will do some reshuffling. We will use that new location to the processes surrounding the automated pick and pack. We will make space for even more automation in the core warehouse. This is something that we didn't expect initially, but we can see that we can fit even more automation in the old one, meaning that we can do some of the other processes in the new system and as well as we can also start to automate stuff that is outside the current warehouse, especially the [ hanged ] goods. So we expect to do some CapEx in a new building that makes it even easier for the items. But traditionally, it has been outside the automation. That means that we can be even more efficient.With regards to the automation of our order store, we are now in the middle of what we call Phase 4, meaning that we have built it and we have put around half the bins and robots in place. And we will probably put the rest during Q1, meaning that then we will have 500,000 bins and 500 robots. And we expect to initiate Phase 5 immediately thereafter. As we have mentioned before, we are probably slightly underinvested in warehouse automation and warehouse investments during 2020, which means that we expect to slightly increase our CapEx and expect that it will be around 45% in 2021 to allow for the -- both efficiency screens and making sure that we are invested ahead of the growth. If we go to the next slide on the financial update, I would like to hand over to Sandra Gadd.

[Sandra Gadd, Group Chief Financial Officer]

Thank you. So if we look at the group results, it concludes the net revenue growth of 35.8% for the group in the fourth quarter. In local currency, net revenue growth was around 40%. Lower return rates relating to the product mix as well as the general lower level of returns affected growth positively in the fourth quarter to an even higher extent than previous quarters. We continue to invest in new customer growth throughout the fourth quarter. And despite the declining demand for fashion and apparel in the general market, we managed to capture more than our fair share of the new customers shifting from offline to online shopping within our categories. For the full year, net revenue growth was 27.3% and 30% in local currencies. In addition to negative effects from currencies, the change to a consignment-like agreement with a large brand partner in '19 and the introduction of a fair use policy in November '19 had a further negative effect on the net revenue growth of around 2 percentage points.The gross margin was to 43% in the fourth quarter, 0.2 percentage points lower than last year. The positive impact from inventory risk-sharing agreement was lower compared to last year due to a change in the agreement structure when the credit is to be invoked. During 2020, has been in the end of season sales, meaning it impacts the fourth quarter negatively compared to last year, but it will then impact the first quarter in '21 positively compared to last year. This has been partly offset by a higher share of campaign goods positively affecting the gross margin.For the full year, the gross margin was 40.6% to last year's -- compared to last year's 39.7%. We believe that this increase is driven by the inventory composition where a higher share of the inventory was campaign buy demonstrates an outlier effect driven by the pandemic. The adjusted EBIT margin was 9.9% in the fourth quarter, an improvement of 0.3 percentage points. The adjusted EBIT includes a onetime bonus to all employees as well as a precautionary write-down of a receivable towards the Norwegian customs. These nonrecurring costs affected the adjusted EBIT negatively with 1.5 percentage points in the fourth quarter.For the full year, the adjusted EBIT margin was 6.7%, an increase of 3.5 percentage points. The adjusted EBIT margin increase was driven by the higher gross margin as well as the improvement in the operating cost ratios.2020 was an eventful year for us. The pandemic has been a driver both for growth and profitability, but we also went into 2020 expecting profitability improvements from the changes that we made in the fulfillment setup in late 2019.Our estimate is that out of the adjusted EBIT increase of a total 3.5 percentage points, approximately 1.5 percentage points are COVID-related. Out of the 1.5 percentage points, approximately 1 percentage point is related to the gross margin while the risk is related to lower fulfillment costs, as I will come back to. If we move to the next page, we can see that the revenue growth for Boozt.com was 28.7% and approximately 32.7% in local currencies. Lower return rates and stronger growth in Men, Kids, Sports and the Beauty category were the main growth drivers in the quarter. The average order value decreased with 3.1% to SEK 819 during the quarter, and that was driven by currency effects. Adjusted for these negative currency effects, the average order value was on par with last year.Change in sales mix towards Kids, Sports and Beauty, which has lower average price compared to occasion wear categories, affected the gross average order value negatively. But this effect was offset by the lower return rate. The Home category, which we soft launched during the quarter, had a positive impact, which was above our expectation. The adjusted EBIT margin of 9.6% corresponds to a decrease of 0.4 percentage points. The decrease was driven by a higher adjusted admin and other cost ratio, partly offset by an improved fulfillment cost ratio. The gross margin on Boozt.com was positively impacted by high share of campaign stock, offsetting negative impact on phasing of stock write-down agreements changed into Q1. So if we move to the next page. We can see that Booztlet grew 128% in the fourth quarter and 127% for the full year. For the full year, the net revenue was more than SEK 500 million, which was our internal target and something that we are very proud of. As we continue our growth path, we are expanding our Nordic focus for Booztlet.com, driving growth also in Germany and the Netherlands. Our Booztlet business model has strong profitability potential, which is given by the average order value of SEK 666. The average order value enables a high profitability in absolute numbers, especially as customers pay for distribution and returns. The adjusted EBIT margin increased from 9.9% to 12.8% in the fourth quarter, and that was driven by a higher gross margin. For the full year, the adjusted EBIT margin decreased from 10.8% to 9.2%, driven by the onetime write-down of stock performed in Q1, which was only partly recouped within the Booztlet segment during the year. Higher marketing costs also contributed to the lower profitability, but more importantly, it also enabled the high growth that we've seen in 2020. As we keep on repeating, we have very high ambitions for Booztlet. Growth is our main focus, and we will continue to invest as much as it makes sense to onboard many new customers in the coming years. And we continue to see high availability of stock. If we move to the next page, we see that the other segment had a net revenue of SEK 8.9 million in the quarter, corresponding to a net revenue growth of 19.9%. For the full year, net revenue decreased to SEK 25.2 million, driven by the Danish stores being closed during the spring as well as at the end of the year due to pandemic restrictions.The adjusted EBIT amounted to minus SEK 0.2 million in the quarter and minus SEK 8.1 million for the full year. The restriction due to the pandemic affected adjusted EBIT negatively in the quarter that, however, was improved significantly compared to last year due to the closing of the Beauty by Boozt store in Copenhagen.Please note that this is the last quarter where we will report the physical stores in a separate segment. As from '21, our Booztlet stores will be included in the Booztlet.com segment, while the Beauty by Boozt store will be included in the Boozt.com segment. Going forward, we expect our physical stores to deliver a breakeven result.If we move on to the next page. We see the development of the cost ratios in the fourth quarter. The fulfillment cost ratio decreased with 1.4 percentage points to 11% and with 2.1 percentage points to 11.6% for the full year. As mentioned before, at this time last year, we communicated that we expect to see savings in the fulfillment cost ratio of around 1 to 2 percentage points during 2020 and 2021 in comparison to the '19 ratio of 13.7%. At this point, we can conclude that we are ahead of the plan we set out since we've seen a 2.1 percentage point improvement already after 12 months. In the 2 percentage point target we set out, benefits from in-sourcing the fulfillment operations that is happening now in '21 was included.Looking at our fulfillment operations in 2020, we estimate that approximately 0.5 percentage points of the improvements are related to the lower returns triggered by the pandemic. For 2021, we estimate that the cost improvement potential for the in-sourcing is around 0.5 percentage points. However, as we expect return rates to increase at the point where pandemic restrictions are released, we expect the underlying cost ratio to stay around the same level in '21 compared to 2020. The marketing cost ratio was 10.1% in the fourth quarter, slightly higher than last year. For the full year, the marketing cost ratio was 9.9% compared to 10% in '19. With the current growth rates and the opportunities we see, we believe that this level of marketing investments are efficient and serves our purpose to grow our business as fast as it makes sense. The adjusted admin and other cost ratio increased with 1 percentage points in the quarter to 9.7%, driven by the onetime bonus to employees and precautionary reservation for our receivables. Excluding these costs, the adjusted admin and other costs was 8.1% in the quarter. For the full year, the adjusted admin and other cost ratio was 9.6%, corresponding to a decrease of 0.3 percentage points. The decrease in adjusted admin and other cost ratio was driven by general scale effects as well as the lower operating loss in the physical stores following the relocation of the Beauty by Boozt store. This was partly offset by the discretionary bonus, currency effects and write-down of the receivable. The adjusted -- depreciation decreased with 0.3 percentage points to 2.3% in the quarter, while it decreased with 0.1 percentage points to 2.9% for the full year. So if we move on to the next page, we see the significant improvement in the net working capital that decreased from 12.7% to 1.7% of last 12 months net revenue. The decrease was primarily driven by a higher increase of accounts payable compared to inventory, which is a consequence of the higher sell-through of the autumn/winter 2020 items and a higher share of campaign stock to keep up the stock level.Compared to the third quarter, net working capital increased slightly as we've been building up our inventory level so that we are in a position to capture the full growth potential we see in our market for 2021. We expect net working capital to continue to increase in '21 as we build up our inventory levels. Contrary to the situation we've been throughout the main part of 2020, we want to make sure that the inventory availability doesn't limit our growth. Hence, we expect net working capital to be in the mid-single-digit percentages of the revenues on a rolling basis. The operational cash flow for the fourth quarter was a positive SEK 100.3 million, that is to be compared to SEK 55.8 million last year. Improvement was driven by the improved operating profit on working capital.Cash flow from investing activities amounted to SEK 74.4 million, driven by the Phase 4 expansion of the AutoStore that is to be finalized during Q1. Cash flow from financing activities amounted to SEK 630.6 million, driven by proceeds from the new share issue in connection with the dual-listing on Nasdaq Copenhagen, whereby we obtained SEK 825.6 million before deduction of cost of the new share issue. Other cash flow from financing activities was mainly related to new loans related to AutoStore expansion as well as the loan repayment at the revolving credit facility of SEK 200 million was fully repaid during the quarter.At the end of December, our net cash position was SEK 1.7 billion. That is to be compared with SEK 340 million last year. The strengthening of the cash position is, of course, related to the strong operational cash flow from the year, but also from the new share issue. This concludes the financial update, and I will now like to hand back to Hermann.

[Hermann Haraldsson, Co]

Okay. If you go -- thank you. If we go to the next slide, updated medium-term financial ambitions. I just would like to spend a couple of minutes on goals and ambitions through 2023. So if you go to the next slide, changing market dynamics. We -- a lot of things changed in 2020. Of course, the pandemic caused a big change in consumer behavior, and some of the consultants talked about that. You saw kind of a step change in e-commerce penetration that you got 7 years of penetration in 7 months. And we can see that in our numbers, where we -- our kind of growth vector has been SEK 600 million to SEK 700 million per year in -- on Boozt.com and Booztlet combined. And we made a step change to SEK 900 million. And of course, this is a big change. At the same time, we have also been on a very, very steady path with regards to our profitability. And for the 2 shops combined, 6.9%. And if we exclude the COVID-19 impact of around 1.5 percentage points, it's down to 5.4%. So we believe that, over the last many years, we have a steady growth and a profit growth. If we go to the next slide. This means that we have actually exceeded our previous medium-term target of 6%, more than 6% adjusted EBIT margin. And most of you were on the call exactly 1 year ago, and you know that our ambitions back then were kind of to go and reach the 6%. And we tried to demonstrate how we would get there and -- through the gross margin fulfillment ratio, admin and other marketing, et cetera. So if you look at the gross margin, we have said we expected it to stay at 39% to 40%, and we can see in 2020 that it was 40.6%. And this is due to our strong mid- to pure market position. We've increased the in-season campaign buying and obviously, as we grow, with improved contracts.On the fulfillment side, we expect it within 2 years to get 1 to 2 percentage points. From efficiencies, we expect it to get 1 percentage point in 2020 and another 1 in '21 as we would take over the staff operations. And I think we can see through that because we've -- we said we would eliminate redundancy and slack. We did that, improved productivity, and then, of course, improve the contracts. And that's check on all factors. And of course, we've been helped by lower returns, meaning that our costs came down more than expected.At the other costs, we also expect to get up around 1 percentage points from scale effects and -- positive effect from reducing loss in the physical beauty in Copenhagen. And then also, we expect to have reduction in customs paid in Norway from the new law. That has not a check because that takes time, and there are some bureaucratic things, you must say, in Norway that is making it a bit difficult to get that through.And then marketing costs, we also said that we expect that to go down. We want to keep offline marketing stable in absolute terms and then growing the online as we grew the revenue. Having said that, we also said that we had underinvested in marketing in '19, and we would like to have a higher marketing cost ratio in 2020. We did not want to do that as it was 1 percentage point lower than in 2019, but that was partly due to lower marketing costs in Q2. So more or less, we also delivered on that part. If we go to the next slide. And I think that it's quite important to say that as we have realized our medium-term targets, basically 2 years ahead of plan, I think it's -- now it's the right time to set some new medium-term targets. We still want to grow, and we've seen throughout 2020 that growth is extremely important. Growth puts you in an extremely strong position towards both your scalability as well as delivering on the customer experience side. So we want to continue to invest in growth at the same time as we maintain a solid market-leading EBIT margin, which is driven by the market size and the local scale leadership in the Nordics. On the net revenue growth, we've said that, mid-term, we want to continue to outgrow the Nordics on that market significantly because we want to expand the market share. We expect that the Nordic online market will grow around 10%, and our ambition, of course, is to grow considerably more than that in the coming 3 years. We want to continue to invest in customer satisfaction. We want to keep leadership in the categories in the Beauty, in the Sports, in the Men's and also in the Home category as well as the Kids. So we're still young in some of the categories and see high growth potential.We want to still maintain aggressive new customer acquisitions. We stick to our customer lifetime value and how much we want to pay for the customers, and that's kind of almost viable with us. And as long as the economics are favorable, we will continue to invest in the growth. And finally, Booztlet has only started the growth journey, and we want to continue the hyper growth. On the adjusted EBIT margin, we want to guide a 5% to 7% EBIT margin during the period. This is still considerably higher than all our peers. And the key drivers will be -- for us to maintain the order value, we still expect gross margin to be around 39% to 40%, fulfillment costs still around 11% to 12%. So if we have operational gains or the gains that we expect to get, we will reinvest them in higher quality. There's no rush to kind of put that into the EBIT because we want to improve our customer position even further. The same goes with the admin and other cost ratio. If we get savings, we -- again, we want to improve the customer experience in making kind of one of a kind experience and built an even higher mode towards our peers and want to maintain a marketing cost ratio of around 10%. So if you go to the next slide and do an EBIT margin bridge. If you see -- we can see that, for us, the key thing is to keep the market size, the absolute value and the local scale leadership. And we think that's the key to the -- to growth and to the profitability. And as I said before, we expect the gross margin to be around 39% going forward. We said that when we did the IPO back in '17, and that seems to be the case. Fulfillment ratio around 11%, 12%. And if we exclude the COVID-19 impact in '20, the number would have been around 12.1%. Admin and other costs, around 8% to 10%. And the marketing cost, around 10%. You have seen the bar to the right, where we kind of go through the U.S. economics of our markets. And I think the main thing for us to see is that we have SEK 81 per order to invest in marketing and still make 5% to 7% in EBIT. And theoretically, that we could even give go higher, we could even go SEK 200 and still be minimum as profitable as our peers. And if you go to the next slide, you can see what we mean by that, that we are spending in SEK 81 per basket. And we've tried to make kind of a translation to what would that mean to our peers. If they were to spend the same amount, what would that mean to the customer? And you can see that, that will actually mean a huge increase in our peers' cost ratio. And so we believe that now that we have this local scale leadership, it's actually quite big, quite difficult for someone bigger than us to kind of out-invest us in huge basket economics, if they look at that. So even though some of our peers would invest more in marketing or even would drive the marketing cost down, our basket economics are still much more favorable than our peers. So it will still secure this, our growth and profitability. So we are quite confident and quite bullish on going forward and maintaining a cost of growth and maintaining an ability to fund growth.If you go to the next slide, on the outlook. And this is just to kind of reconfirm that we expect for 2021 our net revenue growth to be in the range of 20% to 25%, and we expect the adjusted EBIT margin for '21 to be above 5%. And you should compare that with what we would call kind of a non-COVID-19 EBIT margin of around at 5.2%. So we are very much focusing on continuing very high profitable growth. With this being the last slide, I would like to hand over to the operator for questions.

[Operator]

[Operator Instructions] And our first question comes from the line of Daniel Schmidt of Danske Bank.

[Daniel Schmidt, Research Analyst]

Can you hear me?

[Hermann Haraldsson, Co]

Yes.

[Daniel Schmidt, Research Analyst]

Just a couple of questions then, and starting with what you just finished off in terms of the medium-term outlook and also for '21 and the high ambitions, of course, on the growth rate and also may be reflected on what you say in terms of the EBIT margin being above 5%. And when you read the tables that you laid out, the SEK 49 looks like a 6% margin on that order value that I put out. Why do you want to sort of open the downside down to 5%? Could you give us some deeper explanation of that? You say that you have a starting point of 5.2%, excluding the COVID effects. But at the same time, you have the in-sourcing synergies that are going to come through this year of 0.5% and 0.6%. So it looks like the starting point should be around 5.8%. Am I right? Or am I missing something?

[Hermann Haraldsson, Co]

Of course, you are always right. But the thing is that we're actually going out of this pandemic, and we don't know -- that when society is open again. We've, of course, we've made an aggressive front buy expecting kind of this pent-up demand to materialize. And in 2020, we were probably chronically understocked, and we don't want to come into a situation. So I think that if demand for some reason would be lower than expected, we would probably have to make some write-downs on inventory, which, of course, drives gross margin down and also if marketing costs for some reasons will be higher. So I think this is kind of being cautious, making sure that, yes, we expect a pent-up demand. Yes, we are buying heavily into the stock, but we don't want to kind of be overambitious. I think that is better to kind of -- if things pan out as we hope, of course, surprise you positively. It probably will not be a surprise after all. But I don't know if that was an answer, Daniel, but...

[Daniel Schmidt, Research Analyst]

Yes. Absolutely. Absolutely. Makes sense. And then second question, you say that you have very high ambitions for Booztlet. And of course, Booztlet has been a tremendous success story in the past couple of years with continued very high growth also in Q4. And you also highlight that you see an expansion maybe a bit more when it comes to Booztlet versus Boozt when you look at Continental Europe. And you mentioned high growth in Germany and the Netherlands. Why do you think that Booztlet, if I'm right, could have a brighter future in Continental Europe than Boozt? And what are you sort of -- what's the reception? Apparently, quite good, and it doesn't -- is there any sort of characteristics of these markets that are more or less favorable versus the Nordics? One question.

[Hermann Haraldsson, Co]

Yes. Yes. We -- I think if you start with Boozt, Boozt is kind of rapidly becoming a very strong brand in Nordics and want to build this in Nordic. Retail focus on all brands. For Booztlet, I think the unique thing is that most of the stuff we have in Booztlet is difficult to find elsewhere. We have -- these are parties and items. These are Nordic brands -- Nordic designer brands that we're selling at a high discount, meaning that kind of -- the competition for the same items in South of the border is not the same. So we have something that is more unique. And the people living in Continental Europe, they're kind of -- they like having a good bargain as the Nordics. So I think that's kind of -- so its uniqueness, you don't find it on these competitor sites. And also, the reason why we're also quite more bullish on moving South with Booztlet is that we are profitable on the first order due to the basket size. So we -- with the paying for the shipping, so that's why we think it's kind of -- it's good for us to continue to expand in Europe.

[Daniel Schmidt, Research Analyst]

Right. And do you think that, that will be sort of a meaningful part of the growth rate in Booztlet in the coming year? Or is this still going to be very much the Nordics? It's sort of -- when you read what you write, it sounds like you have a little bit of a breakthrough in Germany and the Netherlands.

[Hermann Haraldsson, Co]

Focus is still on Nordics. That's kind of the main focus because we can see that, by introducing Booztlet, we more or less believe that we doubled the addressable market for us in the Nordics. But kind of -- it's an upside for us to grow in Continental Europe. And of course, we are -- in general, we've always been quite optimistic. So if we can -- growing faster by doing possible growth in Germany, in The Netherlands and other countries, we'll do that. But our main focus is still in the Nordics. But it's nice to see that it can travel. And we believe that kind of if this continues and we see the opportunities, of course, we would basically fuel Booztlet. And the good thing is that, that kind of the risk that we'd take on a Booztlet come with regards to the front buy in 2021. But if things don't pan out, that might be an opportunity for Booztlet on a later stage. So I think that's kind of -- Booztlet is a very good hedge for us, and also it's an added benefit that it turns out that we even have opportunities South of Scandinavia.

[Daniel Schmidt, Research Analyst]

Yes, yes. Good. And then just a final question. You write the positive sort of -- you had a less of a positive impact when it comes to risk-sharing agreements in Q4 affecting you negatively versus last year, but it's going to be a net positive in Q1. Could you give us any sort of indication of the size of the impact in Q4 and reversal of impact in Q1?

[Sandra Gadd, Group Chief Financial Officer]

It's approximately 1% on the gross margin that it impacted negatively in Q4.

[Daniel Schmidt, Research Analyst]

And is that going to be entirely reversed in Q1? Or is the impact going to be less in Q1?

[Sandra Gadd, Group Chief Financial Officer]

It should be around the same level that we've put in.

[Operator]

Our next question comes from the line of Niklas Ekman of Carnegie.

[Niklas Ekman]

A couple of questions, if I may. Firstly, curious about, if you could say anything about current trading given the very strong momentum you had here in Q4 and facing very easy comparisons in Q1. Is it safe to assume that your growth in the start of '21 is closer to the 40% local currency growth you did in Q4?

[Hermann Haraldsson, Co]

That's a very good assumption, Niklas. Of course, it's been very good -- it's been a very good start to the year. And we, of course, we are significantly ahead of -- above the full year guidance.

[Niklas Ekman]

Secondly, I'm curious, you're talking about significantly increased inventory buying. And yes, you are still guiding for 20% to 25% sales growth for the full year. Shouldn't this increase inventory buying enable accelerated sales growth rather than a slowdown? Or is this a reflection of your anticipation that campaign buys will be much less pronounced this year? Or how should we read this?

[Hermann Haraldsson, Co]

Yes. That's -- campaign buys, obviously, will be much less than last year as we basically present most of the second half of the year, just trying to get hold of campaign buys. So the upfront buy for 2021 is much higher than it was last year. Just to make sure that the cohorts that we received in 2020, that we can fulfill the needs of their kind of apparel needs.Obviously, we also kind of have put budget aside to campaign buys. And if things mature as we expect, then, of course, we will have a high amount of campaign buy. And then, of course -- you might probably see an explanation, but I think it's a bit too early to kind of conclude on that because we haven't really gotten out of the pandemic yet. So we are preparing for the customer to come back and buy more, and we are ready with a budget to -- and setup to do a strong campaign buys again.

[Niklas Ekman]

Very, very good. Also curious, the new categories where you're seeing good growth, Beauty, Sports, Home. Would it make sense to maybe quantify the share of sales, maybe not for these individually, but as a group to kind of separate the apparel business to these new verticals? That's the question.

[Hermann Haraldsson, Co]

Yes. Yes. We -- I don't really want to do that yet. But I think the closest thing I can tell is that women's share of our revenue is now below 50%, and I think that's a big milestone. And so meaning that it's Men, then Kids, Sports, Beauty, and Home, of course, women buy Beauty and Sports -- but it's a women's category. So women's dresses [indiscernible]. And this is -- and they have been driving the return rates. So I think that is moving towards a more or less return problem. So I think that's kind of the closest that I can tell you about how the mix is.

[Niklas Ekman]

And is this very much happened this year due to the pandemic? Or has that been a change you've seen over a number of years?

[Hermann Haraldsson, Co]

No, this is very much been driven this year. And if I don't remember wrong, I think that, in '19, women's part of the revenue was around 65%. So that's actually quite a dramatic change. And of course, men are buying much more, which we like because we return less. And then, of course -- and also not only Sports and Beauty, and especially also Kids has been growing a lot. So it's a very good mix and -- towards this online department store experience.

[Niklas Ekman]

Very, very good. Also curious about the CapEx. Your guidance, 4% to 5% of sales. You're talking about roughly SEK 250 million in CapEx. That's a fairly significant increase from previous years. What -- can you talk about the different components here? Why the -- such a big increase?

[Sandra Gadd, Group Chief Financial Officer]

Well, we will continue our expansion with the AutoStore. But then as we have a new building, we also need something in that building, and we're looking into other automation solutions for other parts of the stock. So this is the reason why we have a new building, and we will continue the AutoStore. And as we see the growth rates to continue to be high and we have maybe been on the slow side this year in terms of CapEx, we need to make sure that we're constantly before our growth so we have room to grow and have as much stock as we need. So this is the reason that we're investing quite a lot.

[Hermann Haraldsson, Co]

If I may add, when we entered '19 -- '20, we expect a growth of 15% to 20%. And so kind of the expansion in the warehouse and also, et cetera. So basically, the growth went ahead, and you should also look at it into the currency adjusted growth to a number of items, et cetera, going through the warehouse, has increased dramatically. And also as we're expecting growth in 2021, which was higher than what we expected back in '19, we are just slightly late with regards to our CapEx or warehouse investments. So we need to catch up and get ahead of the curve again. So this means that 2021 probably will be a slightly higher CapEx -- warehouse CapEx than you will see in a normal year.

[Niklas Ekman]

And is it safe to assume around half of that in that CapEx is AutoStore-related and the rest is more of the other issues you talked about with the warehouse expansion?

[Sandra Gadd, Group Chief Financial Officer]

Yes, that's a fair assumption.

[Operator]

Our next question comes from the line of Daniel Ovin of Nordea.

[Daniel Ovin, Senior Analyst]

Hermann and Sandra, can you hear me?

[Hermann Haraldsson, Co]

Yes.

[Sandra Gadd, Group Chief Financial Officer]

Yes.

[Daniel Ovin, Senior Analyst]

Okay, perfect. Okay. I was thinking a little bit about all the new customers that joined during 2020. And if I remember correctly, you've previously talked about that there is some increase over time the longer they have been customers with you. So can you give any indication of how much that has historically has improved during first year, for example? And is that something we also can expect for 2021, you think?

[Hermann Haraldsson, Co]

Yes. I think we talked earlier that in the first year after the purchase, we had kind of 65% of the cohort revenue and then it's increased from that. We haven't quantified how that -- how much is the increase over the years. And also, we've seen that kind of the '19 -- the older cohorts have obviously been buying less in '20 due to the need for clothing has been less. But kind of the repurchase rate or after 50 days, 60 days, 90 days is very similar to the old cohorts. So we expect the cohort that we received -- that we gained in 2020 to have a very similar behavior in 2021, at the same time, as we expect the old cohorts to resume their buying behavior, of course, assuming that society will go back to normal somewhat during Q2.

[Daniel Ovin, Senior Analyst]

Okay. And also when we discussed previously, I think there is an assumption here that the overall apparel market would come back after, I don't know, 15% or something in 2020. So of that growth guidance you have for 2021, how much is based on an assumption that the underlying market is coming back? And in that case, how much have you put into that bucket?

[Hermann Haraldsson, Co]

We are assuming that the underlying market is coming back to '19 levels in -- during Q2 2020. So -- and then, of course, you don't know what would happen because I think that people are just longing to get out and no longer wearing sweatpants and sweatshirts, et cetera, and looking good again. So if we're lucky, then you would have -- you will see an increase versus 2019. And then, of course, the big question is the penetration that you've seen from online, will that stay? Or will we go back to more physical retailing? And of course, if the penetration will be maintained at the level that we saw in June 2020, then obviously the underlying market will grow considerably more than 10%.

[Daniel Ovin, Senior Analyst]

Okay. And then just another question here on the Home category. So maybe if you can compare it to the kind of initial response when you launch the Beauty segment. And also maybe some comment on this segment, if you think that the longer-term potential is similar to what you see in the Beauty segment.

[Hermann Haraldsson, Co]

I think it's safe to say that it's been a completely different response from Beauty, a much better response. We probably also executed better on our Home loans than we did on the Beauty loans, Probably also less fierce competition on Home. We are competing against 2 to 3, et cetera, even though there was not much due to be in 2020. But we've seen both with the reception from our customers. Also, we've asked our customers, would you buy on Boozt if we were to launch Home? I think that more than 60% said that they would buy on Boozt. And we've seen that is -- even though it's actually quite a limited assortment we have on Boozt. But it looks like whenever we introduce new brands or new items, they just get sold. So the Home reception has been -- I think it's fair to say that it actually slightly exceeded our expectations.

[Sandra Gadd, Group Chief Financial Officer]

And also, if I may add, we have a target to sign around 200 brands in Q4, and we reached that goal now. So we have a good plan for the coming quarters as well.

[Daniel Ovin, Senior Analyst]

Sounds optimistic. And then also, I just wanted to check on the fulfillment side. So I got all the different pieces here. So it sounds like from efficiency, you expect a margin gain of about 100 basis points in 2021, but then you would also expect to give back some of the -- again, return levels going back to normal. You expect that 50 bps. So overall, it sounds like fulfillment cost perhaps down 50% in 2021. Is that correctly understood?

[Sandra Gadd, Group Chief Financial Officer]

No, we actually expect that fulfillment costs will remain on the same level as '20 -- in 2020 -- this year. We had a lot of decrease in returns. We expect some of it to come back. We expect some of that will remain due to fair use and shipping categories and such. But the improvements, we see improvements that we have taken so much in 2020. So we expect it to stay in the same level in '21.

[Operator]

Thank you. There are no further questions at this point. I will now hand back to the speakers for any final remarks.

[Hermann Haraldsson, Co]

Okay. But yes, that's nothing more from our side. So thank you very much. And I guess, we will talk to each other over the coming weeks, latest in around 3 months' time. Thank you very much.