Boozt AB (publ) (BOOZT) Earnings Call Transcript & Summary

Dear ladies and gentlemen, welcome to the Boozt Audio Call Teleconference Q4, 2021. Today, I'm pleased to present CEO, Hermann Haraldsson; and CFO, Sandra Gadd. [Operator Instructions] Speakers, please begin.

Thank you, and good morning all, and welcome to our Q4 presentation. So let's just jump right into it and go to the first slide, the key highlights. And just to mention that, over the last 2 years, our Nordic department store model has gained speed and momentum, especially in 2021. I believe that we've taken some important steps to further accelerate this development, at least being more vocal externally to investibility about our department store vision. And looking ahead over the next years, we will continue to launch several initiatives to further cement this position with the consumers of Nordic fashion and lifestyle, both through our marketing efforts online as well as offline and also through strengthening our categories even further. We can see that the consumers have already embraced the model. And if we look at the growth rates of our categories last year, I believe that the numbers speak for themselves. We have above average growth rates, and especially in the Kids and Home category we panned out. Our efforts have also contributed to an impressive growth in our active customer base with more than 500,000 more active customers, totaling around 3 million active customers across Boozt.com and Booztlet. We see -- also see that the value proposition of our business model is becoming increasingly attractive to brands, and we're actually extremely proud to welcome LEGO as a brand partner from 2022. Just the fact that we can attract one of the world's best known and loved brands is a further testament to prove that we are continuing our journey to become the preferred destination for Nordic fashion and lifestyle products, and that the categories are becoming destinations on their own. And this actually reminds me a bit about when we signed Ralph Lauren back in 2013 I believe, once we had signed them, the other fashion brands stopped having any reservations of our group as a partner, and I expect that the same will happen to the Kids category. Growth in fourth quarter came in strong at 30.1% compared to 2020 and with almost a doubling of net revenue since 2019, growing at 7.5%. Performance was ahead of expectations in all 3 months of the quarter, and we managed to deliver a solid performance in terms of growth as well as customer service throughout the peak of that week. For the full year, we managed growth of 33.4%, coming in ahead of our outlook for 2021. This was due to the better-than-expected performance in fourth quarter. As an organization, we are proud to see an acceleration from 2020, despite the unique circumstances that affected the market during the early days of the pandemic. An important part of this accelerated growth in '21 is the 2020 cohorts continuing to display the same buying patterns as the other cohorts, along with our strong ability to acquire new customers at an increased pace. Both business segments delivered solid growth in the quarter, with Booztlet continuing with very strong performance seen in the past quarters. For Booztlet, the quarter saw an acceleration from the slowdown in the third quarter, with 52.3% growth and an impressive 239% growth since 2019. If we look at the flow of the spring summer goods to our fulfillment center, it's running according to plan. We don't see any meaningful delays, and I believe that we have positioned ourselves well for strong growth. We are very confident of front buying for the first half of 2022. We have also continued to push for further capacity increases in our DC. The build-out of the next AutoStore phase is initiated, and we expect it to be operational in steps from March to May this year. The fact that we're growing much faster than we expected, despite of hard pressure on us to accommodate that growth, by accelerating investments into our warehouse infrastructure. Basically, we need to stay well ahead of the curve. Sandra will provide more information later in the presentation in terms of our expected CapEx for 2022, and what net revenue capacity these investments will enable us to handle. Moving on to the next slide, the most important KPI is customer satisfaction. If we look back at the -- which was a year where we challenged -- where there were challenges on capacity, and also in certain periods on delivery speed, it's very good to see that we succeeded in keeping customers happy. We even improved on the high historical notes. During the quarter, we have maintained our 5-star rating on Trustpilot, and we managed actually to deliver an NPS at unprecedented levels last year. This has been the key to our growth in the past, and this is also the key to our future growth, customers who like our selection, convenience and price and who are willing to recommend us to others. If we go to the next slide, order development, we can see that we've increased the number of orders with 26% in the fourth quarter and 2 years back, we were up 66.7% at Boozt.com. Back in 2016, which was the first year when we published official numbers, we handled approximately 1.8 million orders for the full year. 5 years down the line, we had more orders in a single quarter with close to 2 million in the fourth quarter of 2021. So this is something that we are really proud of. Year-to-date, we are up 25% and 50% on a 2 years back. The average order value has also developed strongly in the fourth quarter and is up more than 2% compared to last year. Also the full year number is up compared to both 2020 and 2019. I think it's worth to mention here that both Q4 '20 and Q4 '21 had a approximately focus on currency headwinds versus 2019. But in general, we believe that our department store strategy will support a sustainable high average order value. And this is -- we believe, is the key to continue to deliver best-in-class profitability. Moving on to the next slide, cohort development. We continue to grow our base of active customers on Boozt.com in the third quarter. In the fourth quarter, we had 29% more active customers compared to last year and 56% more than 2019. At the same time, our number of orders per active customers was slightly up compared to last year, but still slightly down compared to '19. This is basically as expected, as the individual person spent overall less on fashion and apparel due to the pandemic, but many more bought online. True frequency, which we also look quite closely on always has recovered since last quarter, and were in par with previous years. It's still encouraging to see that the course of 2020, which, for some parts were basically forced online, continue to behave in line with what we've seen from previous years. So this also tells us that the changed buying habits during 24 months of corona, meaning higher online increase in our Booztlet. Moving on to the next slide, the department store strategy. We are very excited to share some more insight into the development of our business and execution of our department store strategy. To keep it short, the department store strategy is working. Our category mix has changed significantly over the last 2 years. Our fashion category, women and men combined, is 17 percentage points down versus 2019, and the women's category on its own is in the very low 40%s, which is just great as our business risk is dramatically reduced. It actually provides some kind of financial hedging for us versus fashion trends as well as changes in buying habits than what we saw during the pandemic lockdowns. So we can conclude that the diversification of our business has benefited the return rate of the group, and ultimately, profitability. The main driver of this development is the increased focus on developing our adjacent categories to become destinations by themselves, through increased width and depth of this selection. So on top of the further diversification, we see also a steadily increasing average basket size in connection with customers adopting the department store model by shopping across categories. In '21, more than 40% of our orders contained 2 or more categories, a number that has also increased steadily over the last years. What we also see is that when customers place orders with multiple items across categories, the basket size is higher, and so is profitability. So you might say that we have been working on this for almost 11 years now. And backed by these strong data points, we will work even harder on building the leading Nordic department store in the years to come. Moving on to the next slide on the Nordic department store. As the headline indicates, we are very strong believers that the Nordic department store model at scale provides a clear differentiating factor towards our largest peers in the industry, in terms of long-term profitability potential. On average, our basket size is 78% higher than the average of our international peers. Due to a difference in business models with some focusing on marketplaces of partner programs, and some on selling private labels from old times, our peers typically have a higher gross margin percentage. However, ultimately, it's the absolute margin that matters, and we could compare against the same period our absolute gross margin in euros or kronas, it's still 58% higher than our peers. This is where the profits are. Which leads me to the financials, and Sandra Gadd, who will go through the financial performance. So over to you, Sandra.

Thank you. So if we look at the group results, we managed to grow net revenue with 38.1% in the fourth quarter. Portfolio of '21. Net revenue growth was 33.4%, while growth in local currencies was 35%. Return rates remained low during the fourth quarter, and benefited from the continued diversification of sales. Compared to last year, the return rate was around 3 percentage points lower for the full year. Compared to 2019, the sell rates are approximately 9 percentage points lower than '21. Our biggest categories, the women's and men's, the growth rates increased throughout the quarter. Demand in these categories strengthened as restrictions were limited for the first 2 months of the quarter in most Nordic countries. The Kids, Sports, new Stay at Home categories continued the outstanding performance and delivered strong revenue growth throughout the quarter, and further diversified our sales, with a benefit of a lower sustainable return rate for the group. For the full year, Denmark and Norway were the strongest growing countries in our Nordic markets. Growth in Rest of Europe continued the positive trend from last quarter, and we have seen an acceleration in the second half of the year. The gross margin came in solid at 41% in the fourth quarter. Compared to 2020 and 2019, it was roughly 2 percentage points lower because of a change in inventory mix towards more upfront buyers to be able to accommodate continued high growth. The sell-through of the autumn/winter inventory materialized slightly better than expected, freeing up storage capacity for the new season. For the full year, the gross margin was on par with 2020 and up around 0.7 percentage points compared to 2019, a significant achievement considering less availability of contained buys. Going forward, gross margin is expected in the level of 39% to 40%, depending on campaign activity and competitive pressure. The adjusted EBIT margin was 7.6% in the fourth quarter, a decrease of 2.3 percentage points compared to last year. Compared to '19, the adjusted EBIT margin is down 2 percentage points. For the full year, the adjusted EBIT margin was 5.9%, a decrease of 0.8 percentage points since last year. Compared to 2019, the adjusted EBIT margin improved with 2.7 percentage points, displaying the clear scale advantages that we have achieved over the last 24 months. We're very satisfied with the level of profitability in '21, considering that the growth -- that growth has accelerated further and along with the investments that we have made in infrastructure and people. So if we move to the next page, we can see that the revenue growth for Boozt.com was 36.1% in fourth quarter compared to 2020, and 75% compared to 2019. Impact from FX was more or less neutral in the quarter. Growth for the full year accelerated considerably to 30.6% compared to 19.5% in 2020, mainly driven by an exceptional performance in our categories. The continued execution of our department store strategy with a higher share of Kids, Sports, Beauty and Home, continued to result in lower return rates, which has a positive impact on the average order value. Average order value increased to SEK 837 from SEK 819 last year, partly driven by sales -- higher sales of occasion wear. The adjusted EBIT margin for the year was on par with 2020, and was supported by the acceleration in growth, but partly offset by our continued investments. So if we move on to the next slide, Booztlet grew 52.3% in the quarter, a significant improvement compared to the third quarter. Measuring on the 2 years back, we have managed to deliver growth of 239% compared to '19, amounting to a compounded annual growth rate of 84%. Growth was solid throughout all geographical markets. Average order value increased to an outstanding SEK 723, an increase of 12.9% compared to last year, with consumers continuing to adding more items in each basket. For the full year, the average order value also improved, providing a strong foundation for future profitability. The adjusted EBIT margin was 3.3% in the quarter and 4.4% for the full year. Profitability was mainly impacted by a lower product margin because of less availability of campaign goods. In addition, we have increased investments in the offline marketing to further build the Booztlet plan as well as strengthening the organizational setup. Moving on to the next page. We see the developments in the cost ratios for the fourth quarter. The fulfillment cost ratio was 12.1%, an increase of 1.1 percentage points in the quarter. The continued high growth provides certain operational challenges for operations, which impacted the cost ratio negatively due to the need of additional workforce to handle more cost assessment. We don't see these challenges as structural, and we believe that they are best described as growing pain. The lower productivity was partly offset by lower cost per hour for personnel working in the fulfillment center along with a lower return rate. The lower cost per hour for personnel is an effect of the insourcing of personnel in January '21, and our personnel in the BFC previously worked for a third-party provider. Year-to-date, fulfillment costs were in line with last year at 11.8%. Going forward, assuming growth and online penetration continues at a high pace, it is likely that fulfillment cost will be around 12%. Looking further ahead, we do expect the fulfillment cost ratio to come down as processes become more automated and investments more linear at a lower growth rate. The 40% capacity expansion of our automated storage and goods-to-person solution that was operational from the third quarter of '21, provided capacity to successfully handle the peak season during the fourth quarter. The marketing cost ratio was 10.2% for the fourth quarter and 10.5% for the full year. The increase for the full year compared to 2020 was expected as last year's marketing spend was impacted positively by lower cost of marketing services at the outbreak of the pandemic, due to the extraordinary increase in eyeballs and high conversion rates. Historically, our marketing spend has been around 10% on a full year basis, and this is also what we expect in the near future. The adjusted admin and other cost ratio decreased with 0.9 percentage points in the quarter to 8.8%. In 2020, the adjusted admin and other cost ratio was impacted by discretionary bonus of total SEK 10 million corresponding to SEK 20,000 per employee during the fourth quarter as well as the write-down of a part of the Norwegian customs receivable of around SEK 12 million. For the full year, the adjusted admin and other cost ratio was 9.4%, a decrease of 0.1 percentage points. We continue to invest to strengthen our organization. And the cost of personnel increased with 0.2 percentage points compared to last year, and that was partly offset by the strong growth in net revenue. The adjusted depreciation cost ratio increased with 0.1 percentage points to 2.4% in the quarter. For the full year, depreciation was on par with last year. As we will continue investing to secure more capacity in our fulfillment center, we expect this ratio to increase at the current growth rates, and we estimate that the ratio should be around 3% to 3.5% on a full year basis. So if we move on to the next page, we see that net working capital increased from 1.7% to 4.8% of last 12 months net revenue. The increase compared to last year is mainly due to larger upfront investments in inventory for the fourth quarter of '21 as well as for the first quarter of '22 to secure stock for continued high growth coming into the new year. Towards the end of 2020, we were low on inventory, which basically meant that we have to pass on the growth opportunities. Compared to 2019, the ratio is down 5.2 percentage points, and this benchmark is more relevant due to the relative size of upfront buys ahead of the AB season. We believe that the current level is healthy given our focus to hold the strong and attractive selection of inventory of our customers and the ability to continue to grow at high growth rates. Moving on to CapEx. The total SEK 76 million in this quarter versus SEK 26.2 million is related to intangible development costs. The level of intangible development CapEx increased as we continue to invest in our own developed IT infrastructure to support the rapid growth and continued ability to scale. Investments in the warehouse automation of SEK 294 million is related to the continued expansion of AutoStore and the surrounding facilities, to increase capacity and strengthen productivity. The free cash flow for the fourth quarter was positive with SEK 327.2 million, that is to be compared to a positive SEK 25.9 million last year, mainly impacted by the changes in net working capital. For the full year, free cash flow was negative with SEK 365.1 million compared to a positive inflow in 2020 of SEK 596.5 million. The outflow on '21 is partly related to the acquisition of Rosemunde and [ Natina ] totaling SEK 232 million. In addition, the increased investments in the further capacity and automation for our fulfillment operations totaled SEK 294 million to support our growth ambition. So if we move on to the next page. The last 3 years we have managed to grow significantly faster than anticipated, and providing us with a challenge of having readily available capacity. During this period, the organization has gone above and beyond to find temporary solutions to limit the effect of the tight capacity. As I mentioned earlier, this has taken a toll on our productivity, but most importantly, we have matured to deliver competitive and convenient service to our customers. Because of the focus of getting ahead of the curve in terms of capacity and productivity, we have decided to move forward additional investments in our fulfillment operations to continue our growth trajectory and market checking. During the first half of 2022, we will invest further in AutoStore capacity, internally referred to as Stage 7.1. In addition, we will secure further capacity with an installation in the second half of '22, Stage 7.2. Along with an increase of our warehouse footprint of 14,000 square meters at our local campus in [indiscernible], we expect these investments to enable storage capacity serving net revenues in the level of SEK 9 billion to SEK 10 billion depending on product mix. The increased investment will total capital expenditure in the range of SEK 500 million to SEK 600 million for 2022. This includes investments in intangibles, mainly software, of around SEK 100 million. And this concludes the financial update. And I would now like to hand back to Hermann for an update on the outlook for 2022.

Thank you, Sandra, and move on to the -- please to the next slide, the outlook for 2022. Coming into '22 and then on the back of 2 exceptional years, not least in terms of growth, we have set ourselves what we see as business targets. We want to continue to take significant market share, and we expect net revenue growth in the level of 20% to 25%. This means that we expect to deliver between SEK 1.2 billion and SEK 1.4 billion more in 2022 compared to '21. In terms of profitability, we set out to deliver adjusted EBIT in the level of SEK 265 million to SEK 425 million, indicating a margin between 5% to 6%, depending on growth opportunities and promotional activities in the markets we operate. This is within our midterm ambitions of an adjusted EBIT of between 5% and 7%. And as we've said before, adjusted EBIT would be close to 5% and 7% when we are growing considerably faster than the market. And finally, we reconfirm the medium-term ambitions which remain unchanged. So this concludes our presentation, and I would now like to hand over to the operator to get the Q&A session under way.

[Operator Instructions] The first question we've received is from Niklas Ekman, Carnegie.

Yes, a couple of questions, if I may. Firstly, is there anything you can say about the current trading development? If we look at statistics, they seem to have been quite weak in January, but now restrictions are going away. So I assume February is off to a much stronger start. Is that kind of a similar trend that you're seeing as well?

Yes. And Niklas, we don't want to comment on current trading on that. I think that's kind of what -- our guidance is kind of indicating what we are seeing. So it's early, basically without the year. So we think it's -- we don't really like to comment on trading other than we are confident in our guidance.

Okay. Fair enough. Let's put it differently. If you look at the -- there's been a lot of talk about pent-up demand as kind of the COVID effect phase. We didn't really see much of this during the autumn. Are you more optimistic now going into spring that the demand for fashion is going to pick up significantly? Or do you think that there's a kind of a structural change regarding the demand for fashion?

To be honest, I cannot -- I think it's -- I can't say because I think 2x, as Sandra said now, it's over and now it's coming. So it's restriction eased or went away in Sweden yesterday, Denmark last week. Now in Finland, I believe, in the coming 10 days. So of course, pent-up demand should materialize. But with inflation pressure, with tensions in Ukraine, you never know. But luckily, we're not so dependent on people buying occasion wear because we see our categories taking for share. So it will be nice, but our guidance is not depending on this huge pent-up demand to materialize.

And on this topic of occasional wear, I mean you've obviously benefited from selling much less of occasional wear. Do you see a risk that your gross margin will trend a lot lower when you see a return to more occasional wear, or your EBIT margin? I know you talked about kind of the department store structure and how this is structural. But looking -- as things normalize here, do you see any risk of margin pressure from this?

I think the good thing is that now, especially with the women's category, which is where we typically have the higher return, and then dresses, it's just becoming a much smaller part of the business than it was before, plus our fair use policy has also actually reduced our returns quite dramatically. So we don't expect to see return levels as we saw pre-pandemic. And as Sandra said, return rate being down 9 percentage points, there might be a slight increase, but not material. So we are actually quite confident that with the department store model, with our fair use policy, with better guidance of customers, that we will manage to keep return rates fairly low compared with -- compared to what we saw pre-pandemic.

Very good. And I'm curious, you mentioned LEGO here and expansion into the toys category. How significant an effort is this? Are you looking to expand your range to be kind of in line with what you find at the toy specialists, or is it more just an adjacent category with a limited assortment?

That actually remains to be seen. The fact that LEGO wants to join us is just for us a proof that our Kids category is getting stronger. And a lot of the parents, of course, when they now can see that they can buy LEGO on Boozt, and then they can further buy some Kids category, but of course, we expect that LEGO will be some kind of an accelerator for Kids category like we saw what happened when we got Ralph Lauren. So we definitely -- Kids is actually doing very, very well last year. And -- but we believe that LEGO is kind of an acceleration to the next step. And then we'll just see how far we can stress our categories. But so far, there's not that there are many limitations, but we don't want to take toys kind of at any cost. It still has to fit into our infrastructure. So -- but it's a -- for us it marks quite a big milestone that they want to join us.

And just a final question. The CapEx guidance here obviously very high for '22. Are you expecting this to be materially lower in '23? Or with the growth trajectory you see now do you expect further investment in AutoStore also in '23?

Well, if we look at it this way, the expansion that we're planning for this year is basically the sale of the current facilities we have in that campus area with the AutoStore that's sitting there. So of course, in '23, it should be lower. But then the question is when do we build the next campus and the timing of that? And of course, if there's something we learned along the way, we'd rather be ahead of the curve, but not behind the curve. But I think it's fair to assume that CapEx in 2023 will be significantly lower.

The next question is from Daniel Schmidt, Danske Bank.

Starting off with your guidance for the full year, and of course, I appreciate that we're only 1 month into this year. So anything could of course happen. But you're sort of opening the floor a little bit when it comes to the EBIT margin implicitly from 5.2% to 5.8%, and you did slightly above that this year. Is that coming back to a bit of a cautiousness more relating to the fulfillment costs and the build-out? Or what -- why do you want to sort of leave the downside a bit open -- more open than you delivered on last year?

It's -- I think it's kind of prudent because we don't know what to expect in the coming year, and we are, again, growing much faster than we expected 2 years ago and we were playing catch-up with regards to our fulfillment capacity. So we want to be prudent. We don't even know what is the promotional pressure and stuff like that. And plus, we would rather have some -- leave some upside for the revenue and take some revenue and then may be making less profit. So I think that's kind of, you might say, keeping a lot of doors open for us, and not focusing too much where -- we don't want to focus towards some profitability other than staying within the 5% to 7% and then take the growth we have. But we also acknowledge that when you're growing as we're growing, it's -- you have to keep kind of -- be aware that things don't always materialize as you expect. So we are keeping kind of a safety margin. I don't know if it makes sense, but to us it does.

Yes. All right. And it's not a reflection of what you feel is the start to this year in any way?

No. It would be -- you don't know because basically, January, February and part of March, are the ending of Q4, so kind of -- you can't conclude anything about '22 from beginning of the year.

No. Okay. And of course, we saw the weakness in terms of -- you had a very strong performance in Boozt.com, but in Booztlet it was the opposite, and you talked about mix and lower product margin. Is that also something that you're keeping in mind when you look into '22, coming back to the margin discussion, or is that now improving?

Here -- Booztlet -- and Booztlet is an amazing business, and of course, it's depending on availability of campaign goods. And if you remember, in 2020, all the brands actually cut down on the production of item because they were very cautious. So the amount of I'd say over production has been less than before. So we have not had kind of the same availability of goods as well as -- so -- but again, the industry is notoriously known for not being able to kind of plan demand very well. So we expect that once things normalize, there will be access to a lot of inventory. So in the meantime, we are doing investments -- price investments to keep the positioning. A number of markdowns -- the markdown potential is actually the same as before, but entry margin is lower. Then we're spending more marketing and costs that we are also improving on the organization. Buying for Booztlet is a much small manual task than for Boozt because you basically have to call the brands and see if they have any goods. So -- and this is just kind of the change that we're making it evident, and to get up to speed. But we are still very bullish on Booztlet, but we may be a bit more realistic about growth in '22.

Yes. And talking about growth in the more medium-term, as you close highlight on the last slide. You reiterate what you said when it comes to medium-term financial targets and to significantly outgrow the Nordic online market. But I also think that you've mentioned through the years, not that long ago, that you do expect to see plus 20% growth for the foreseeable future. Of course, you're guiding for 20% to 25% in '22, but has anything changed if you look a couple of years out in order to keep this growth above 20% you think?

No. That's a short answer, but no. Of course, we are -- I think -- if you may remember, when we came out of Q4 '19, we guided 50% growth. But now where we see that the penetration or increase in penetration, also now that the categories are actually performing considerably better than we expected just 2 years ago. So we are actually still quite confident that we can deliver our growth. We are -- our capacity expansion is taking a plus 20% growth into consideration. So that was kind of also why we said 20% back then. But of course, if all things being equal and being mindful that this is the little thing that we are -- we see some opportunities going forward, especially where the categories are getting stronger and stronger. And we see the -- kind of the department store where we don't -- not limited by kind of physical constraints, probably had a bigger upside. And then if people start looking good again and buying occasion wear and stuff like that, but also substitute -- so we are -- for us kind of the main thing is to make sure we have the capacity, and that we can grasp the opportunities going forward.

Coming back to that in terms of your category expansion, which has been terribly successful in the pandemic. You've shown that quite clearly. And looking at sort of scraping data comparing your performance with Zalando, for instance, in the Nordics, it looks like you're beating them quite a bit. But do you think that's all due to new categories? Or do you see better growth in your sort of old categories as well compared to competition?

The new categories, of course, contribute a lot, but our old categories are also growing as -- I think what we are seeing is kind of when I was starting in my younger years, called the penetration [indiscernible]. We're kind of -- our brand is just getting stronger across the countries. It's, of course, extremely strong in Denmark. It's getting stronger in [indiscernible] and also in Sweden, and also in Norway and Finland. So I think it's a combination of strategies, plus that we are getting more ambassadors. We are -- even though we had some challenges in the warehouse, we have actually managed to deliver best in class with regards to speed. And this is something that customers appreciate. And this is also why we show you this slide with customers buying more than 4 items in all. They are buying across categories. So kind of -- to us, like finally, it's a proof that this is something that is gaining momentum. And I think it's a combination of everything, but of course, the categories -- with Kids, Sports, Women also, especially Women's has been just amazing during the last year.

And just a final one. When will we see LEGO assortments being in -- on the website during the year? Do you know when?

In Norway, is that...

Yes. In Norway. All right. Okay.

Not the full cart, but gradual, no, gradual.

It will be filling up basically…

Yes.

Yes.

Throughout the year. But maybe just a final one as well, given -- you haven't been complaining about this at all, and maybe you won't, but sort of overall supply chain issues in the world and a super cost inflation when it comes to freight, is that indirectly affecting you as we go into '22?

Well, looking at the -- in delivering for the spring/summer season now, it's actually going according to plan. We don't have any major delays. And in the terms for the fall, of course, it's quite early, but we haven't had any indications for -- from our brands that something's happening. On the price, it is very different pictures depending on who you talk to, but we do expect some kind of price increases. And if -- there are some brands increasing a lot and some very little, but I guess on average, it would be around 5% to 10%.

The next question is from Daniel Ovin, Nordea.

Most of them has actually been asked already, but maybe a few. Just maybe on the risk-sharing agreements. So you talked about this for last year. How do you see that developing? Is it still growing year-over-year? And do you expect that to further benefit your margins also going forward?

Well, as we become larger, that is one of the scale benefits that we get when we're negotiating and discussing and having partnerships with our brands. So it's according to plan, and we are -- it's part of that negotiation and it's going as were expected to. So yes, it's growing.

And maybe -- do you give any numbers on what share of your suppliers do you have these kinds of agreements with? And how do you expect that to develop?

No, we'd rather keep that to ourselves actually. Sorry.

Okay. Fair enough. Then just a final question then on the competitive environment. So we also have seen a few new players emerge like Shane, About You, et cetera. How do you see the competitive environment overall in your markets? Do you see these new players coming? Do you see more tougher competition on price, marketing, et cetera? Perhaps you can just give us some overall comments around that.

Yes. The market is very, very competitive, and -- which means that we really like it, because we are extremely good when it's competitive, because we have probably the leanest cost structure of -- yes, if not all, there's most of this. If you look at the ones you mentioned, Shane and About You, we see them as being more of a fashion store for young women, so not directly competing in our kind of department store segment. So we haven't actually seen that big an impact directly for them. But I think it's for us kind of difficult to measure kind of slight impact because Booztlet has grown 25%, if they were up there, or less kind of -- where we're going this much as we were doing Q4 is just like deferred assets, whatever it has. Of course, they are buying, marketing, and they might impact the cosmetic, et cetera. But I think that we are quite good at kind of mitigating in that in a competitive and/or in a bidding environment. So I'm not concerned as always, but not mostly different at all.

The next question is from Michael Benedict, Berenberg.

First one is, you displayed your sort of normal chart around the NPS, which is showing obviously a very good momentum. I wondered if you could give a bit of color about the key initiatives you think are driving that improved customer satisfaction. And the second one is a quick one. Are you able to disclose what tailwinds the Home category provided for your FY '21 revenues, please?

If you look at the NPS, we are -- basically what we're doing is what we've always been doing. So it's extremely important to get soon or fast. And I think that with disruptions in supply chain, with large distributors, basically having progress in delivering on time, I think that we have been able to kind of navigate quite strong in that, and probably exceed expectations that might have been lower due to these guide gain issues on the one hand. And secondly, our customer service is just outstanding. We've managed to build quite strong internal customer service additives, meaning that when a customer calls or engages with us, they just get a very quick response in our standpoint. I think that the company is doing everything, plus, of course, offering this spreads and WIPs categories, and then finally, good prices, that has also contributed to a strong NPS. And Michael, to be honest, I can't really answer that last question, if you could repeat that.

Sorry. Yes, it was just on the tailwinds to FY '21 revenues that you received from the launch of the Home category, are you able to quantify that?

We don't kind of disclose exact numbers for the different categories. But Home is kind of very close to the level of the dual category. So it's in the -- yes, it's a single-digit number.

You really want to say a...

Would 5%-ish be sort of right ballpark-ish? Very roughly.

Yes, it's not total -- no. It's a bit silly guidance.

The next question is from Peter Testa.

I'd just like to focus a little bit on the return rate. Can you just give me a picture or a number of how many customers did you exclude last year? And how important these measures have been regarding your job to lower the return rate, please?

Yes. It's actually quite interesting. And when you look at those numbers, we -- it's actually quite breathtaking. But the number of blocked customers right now is around 25,000, where 9,000 were blocked during the last year. And the effect from this is massive. So they have a really high -- the basket size that they have and that they both order and return is normal. So looking at per customer, it's a lot, and we have saved many millions out in distribution costs and return costs by not doing this. And the reason that we can do it is that we have great data, and we have -- we're in really good control of that data. And it's not just that we block someone over 30%, but we look at the behavior. We look at do they have like -- how is their claim behavior, how do they behave. So it's quite sophisticated, and it's working really well for us, and we saved many millions. And in terms of the return rate, if we have 9 percentage points lower in '21 compared to '19, it's somewhere around 2 -- 1.5 to 2 percentage points is probably due to the prior year's policy.

And Sandra, I know that you have given us sort of a bigger picture of how this works, and it's sort of like almost like an addiction coming from some of the customers. Can you please elaborate on this? I mean, those customers you have excluded -- I mean what do you need to do for -- to get an exclusion, so to say? And how common would you say is that you welcome back customers who once have been blocked?

Well, we try to rather let them have enough chance than not. So we've been doing that. But unfortunately, many of them that have that behavior if we open them up again -- and we always want to have that open dialogue with the consumers, because if they change, that's good. But rarely, they do, unfortunately. So yes, it's -- that's the way it is. And looking at -- it is not only the number or the return rate. We -- it's consistency. So of course, if you're a first-time customer and you return a lot, and then the second time you also return a lot, that could happen to anyone basically, because you can -- but we look at it over a longer period of time. So we observe, and then after a certain number of transactions, you see the pattern. So that's when we go in.

Okay. I see. Just a final question. With the restrictions off the board here in Sweden as was in Denmark, how do you foresee the return rate? And are there any categories or products where you would estimate it could rise for the upcoming months?

Yes, of course. But we saw it already in Q4. Women were not as pre-pandemic level, but they were starting buying into these type of more formal wear categories, again. And their return rate is quite stable with -- we measure it down on a product level. So when we do measure the returns, we -- it's the product mix that's changing. So the return level on these categories, dresses and stuff, it's quite stable. It's just a little lower than before, but given the product mix change, we don't expect I guess a huge increase in any way. But of course, that's -- will probably fluctuate a little between quarters and what type of season it is.

The next question is a follow-up question from Daniel Schmidt, Danske Bank.

Just a follow-up on the topic that we just discussed when it came to -- when it comes to return rates and fair usage policy and -- has there never been any sort of possibility or any sort of thoughts about telling people that do return a lot, and have sort of a un-wishful behavior that they would have to pay for the return themselves, but they can still be a customer, is that not possible?

It's possible. We do have a conversation with the ones that are like on the border line. We do have a conversation of it. But we have not yet said that. And I'm not sure that it will actually do any difference.

It's basically asking them to pay for taking the goods home and returning them, and it still will be very bad business for everyone. So that -- basically they have no intention of buying anything. So we might as well exclude them, so...

Yes. But it's -- again, it seems to be working well. Just thinking about that as an opportunity. All right. That was all for me.

There are no further questions at this time. Please go ahead, speakers.

Okay. Thank you for good questions and your patience. So this concludes the call, and look forward to I guess talking to you over the next couple of weeks and seeing some of you in real life, finally. Thank you very much, and have a good day.

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.