Byggmax Group AB (publ) (BMAX) Earnings Call Transcript & Summary

Welcome to the Byggmax conference call. [Operator Instructions] Just to remind you, this conference call is being recorded. I'll now hand the floor to Mattias Ankarberg, CEO. Please begin your meeting.

Thank you, and welcome, everybody, to this Byggmax Q3 conference call. With me is also, as usual, our CFO, Helena Nathhorst, and Helena and I will take turns to go through this conference call. As usual, we will open up for Q&A after the presentation. And also as usual, we will speak to the presentation that's available on our Byggmax IR website. And if we start to kick it off on Page 2. Q3 marks another strong quarter for us at Byggmax, of course, are very pleased with. It's the continued momentum from earlier quarters and a quite nice trend now. So highlights financially. Net sales was up 9% in the quarter, meeting quite tough comparable, so plus 21% from last year. So getting to SEK 2.4 billion. We continue, as in many quarters now, to take market share, although this time in a bit different market environment with a small decline, which we'll get back to. Like-for-like sales is up 2%, and e-commerce was 18% of the total group's sales in the quarter. We have also, quite importantly, another quarter with a continued increase in gross margin and also a little bit for the Byggmax whole mark very solid cost discipline. So in total, we get very strong scale effects. And then EBITA increased to SEK 406 million compared to SEK 335 million from last year, so up over 20%. And EBITA margin of almost 17%, and a rolling 12 EBITA margin now of 12.3%. So very pleased, of course, with the financial development. If we turn to the key events for the quarter specifically on Page 3, of course, we are still in the COVID-19 situation where we've done a lot of precautions during this entire pandemic period that we, to a large extent, continue to do also in the quarter. We continue to upgrade our store portfolio to what we call Store 3.0, and we also opened 2 more stores in the quarter. We completed the acquisition that was announced in July on the Norwegian company called Right Price Tiles has been completed by August 31. And we also launched a share buyback program during the second half of September during the quarter. And all these points, we will, of course, get back to you during this presentation. Turning to Page 4. I wanted to start off by highlighting, in some ways, another type of event that is really important to us, which is we continue to strengthen the sort of low price position that we have. And as you are aware, we are a discount retailer and we are really proud of being the discount leader in the markets that we're in, and we are also proud to be awarded by the several independent surveys as the leading price player in the market. And particularly in this environment, I think we were extra benefited by having this low-price position so strongly in our favor with e-commerce highlighting price transparency and higher cost, higher price environment than before. So we continue just to receive several awards also during the quarter, and I cannot think of probably any year where we've been so recognized for the discount position up in 2021. So very pleased with that. We continue to take market share to about the same extent that we have been doing for the last, I guess, 6, 7 quarters almost, highlighted on Page 5. So -- but we do that in a slightly different market environment than before. And we are, for those of you who followed us for some time, quite fortunate these days since the start of last year, start of 2020, there are 2 institutes providing us with public data on the B2C DIY market in the Nordics: 1 in Sweden and 1 in Norway. And we could see from those numbers as well as Byggmax consumer panels that there is a bit of a different market environment this time. We have, of course, a clear stay home effect or a boost throughout the pandemic, and that is now starting to ease with the easing of restrictions, particularly during the summer vacation period and then a bit stronger then in September. So in total, the market decreased by 2% to 4% during the third quarter of the year, which is still corresponding to 8% to 10% above the 2019 level, which is important to know. So -- and we do continue to see positive effect compared to last year from the higher consumer prices, about the same level as we saw in Q2. And perhaps a bit more importantly for the coming year or even years, we do see a continued very high activity on the housing market. So a record number of housing transactions, both in Sweden and in Norway, which is important for us as it is a driver of underlying demand for renovation and home improvement projects. Continued market share gains then. So mid-market is down 2% to 4%. And we, as mentioned at the beginning, increased by 9% in the quarter. And this increase versus last year and also versus the market is virtually fully driven by the growth initiatives that we are driving as a company. And these initiatives are the same as we've been driving for almost 3 years now, and we have seen good effects from them throughout the period. And on Page 6, we outlined the specific initiatives and the sort of high-level effect of them, and then I'll be back to the details on some of them on a few pages following this. But overall, there are 4. Firstly, we drive the store upgrade program ahead of us. So we now have 54% of our Byggmax store portfolio on the Store 3.0, which is a better performing store concept driving 6% sales increase store -- per store. Secondly, we continue to see good growth on e-commerce. We have very tough comparables on the Byggmax branded e-commerce from last year with plus 40%. And we have a small growth in total this year, which we're very pleased about, achieving growth versus those comps. But underlying that is actually super strong development in our core category still and some negative effects of supply chain disruptions in certain online exclusive categories. So we have been fortunate overall, to be very little impacted by the sort of overall global supply chain disruptions, but there are some spots in this. So still managing this, which we're quite pleased about. Store expansion continues to add sort of continuous growth for us, adding 3% sales in the quarter from 2 new stores. And on top of that, we extended store portfolio with the acquired Right Price Tiles stores, but the Byggmax stores drive 3% sales growth for us. And then the acquisitions and 4 percentage points of sales on top of that. So there are 2 acquisitions, there's the Danish acquisition that we made in January and then the Norwegian Right Price Tiles we closed on August 31. In total, those add 4% of the group's sales. So very good progress on all areas and positive growth contributions from all 4 areas. Moving from that into some details on a few of these growth drivers to provide transparency and hopefully a bit more insight to what we are trying to achieve. We can start on Page 7 with the e-com growth, where we do see continued growth, as just mentioned. We see very strong growth, continue to see very strong growth from sort of digitizing our store assortment offer and all the, basically, assortment continues with a very strong amount that we've seen for several quarters now, both the collect@store offer and the home delivery option for the customers. And then as mentioned, we do have a quite wide online exclusive assortments, where there's still mixed performance by category. Some really strong categories, for example, flooring, where we have continued very good momentum, but we have some supply chain disruptions or supply shortages on particularly around products connected to either electronic components, such as garden machines or some bigger supplier risk areas, for example, sheds and storage, et cetera, has been impacted by timber shortages in the market. So overall, positive to see the positive growth, and we have been very fortunate throughout a long period to have a manageable supply situation and not actually be impacted a lot by the disruption, but there are some spots in the online exclusive categories in the quarter. And we continue to see also the customers really appreciate this e-commerce offer that we are building, where we connect stores with e-commerce. So we continue to see the fastest growth coming from collect@store offer, which is order online, pickup in store, although we also see growth in home delivery. Collect@store is outperforming again, and we also continue to see that e-commerce in the geography increases when we open a new store in that area. So we clearly see benefits of connecting the 2 channels for Byggmax customers. On Page 8, I wanted to outline the importance and the continued focus on the upgrades of our stores to Store 3.0. We now, this day, since about 2 years, operate 3 formats. We have our smaller formats, which are format for smaller towns. We have a regular format, and we have a large format that increase, particularly also the large garden department, but also a larger offer of certain other categories. And all 3 of these formats now exist in what we call the Store 3.0 version, which includes more product categories and improved quality experience. So a new store design, a new customer [indiscernible] and better space management has made room for more categories, and particularly categories related to smaller home improvement projects. So things like storage, paint, tools, power tools, fastening, et cetera. And this has proven really successful for us. And we have now 2 years of growing this out, well, almost 3. And we continue to see that when we upgrade a store, that store increased their sales by about 6 percentage points compared to everything else. So 6 percentage points kick from the upgrades, which we're very pleased about. And on Page 9, we show the -- more details on the store portfolio, the Byggmax branded store portfolio that is. And we are now at 54% of that portfolio at Store 3.0, which means there is almost half the portfolio to continue to upgrade and continue to get this positive effect from, of course. Adding some more color to the store portfolio. We, as mentioned, opened 2 new stores in the quarter, both in Sweden. We closed 1 in Norway. We will continue to upgrade, as I said, and we now have 54% of the portfolio at Store 3.0. We have garden departments in 74 of the stores, and garden been a good driver for us, as you know, the last couple of years, of which 22 stores are the large formats, they have large garden departments. And we also have 20 stores now of this format for small towns. And on top of these Byggmax branded stores in the Byggmax segment, there is 12 new stores from the acquired Right Price Tiles added, but those are not included in the 181 store counts. We will open 1 more store before the year-end, and we will relocate 1 more store before the year-end. That is for the store portfolio. And then 2 more points before we move over to Helena and the financials. I wanted to highlight on Page 10 our start in Denmark. Some may remember that we entered Denmark in January of this year. We entered through an acquisition of a company called Næstved Lavpristræ. This was a founder-led discount concept, quite similar to Byggmax, maybe similar to Byggmax a few years ago, with a sale of -- sales of DKK 125 million last year and good profitability. And quite good on the e-commerce part with sort of 30% of sales coming from e-commerce. And we, of course, have quite positive and high expectations on the fit with Byggmax and how we could work together and develop the company. And we are now really pleased to see after Q3 that those expectations have come through or been realized. We have increasingly, throughout the year, shifted supply in the Danish operations to being sourced from the Byggmax supply chain. So we have an increase in share of the assortments sold in Denmark that is coming from Byggmax supply base and suppliers, which is, of course, driving both sales and gross margin development. And we, overall, see a very positive development in the Danish business in 2021, with very good performance on both growth and profitability, and particularly strong on the e-commerce part. So we are, of course, also continuing to make further expansion plans and really look forward to the coming adventure in Denmark. And also then mentioning on Page 11, a few points around Skånska Byggvaror, which is reported as our second segment. Of course, much, much smaller in the Byggmax segment, accounted for 8% of the total group sales in Q3. And Skånska Byggvaror's sales decreased 15% in the third quarter, which is a break in the trend that's been going on for a very long time. And we can add some color to that. But firstly say that it's been a really strong sales growth for the first half of the year, so probably some pull-forward effect. And then in line with the market development, with a bit of a dip during the vacation week. So that effect was also visible in Skånska Byggvaror sales, and that the order intake increased again at the end of the quarter above last year's level in September. Stepping back a bit, we are also quite pleased to see that still -- although sales decreased a little bit, profitability improved during the quarter compared to last year. And the 2 main growth drivers we were focusing on in Skånska Byggvaror following the completed cost restructuring in 2018, those 2 growth drivers have been digital sales and marketing model to fit the sort of big ticket, high configuration e-commerce model that Skånska Byggvaror is in, and that has proven quite quickly quite successful, to say the least. And then secondly, we've done a lot of work on product development and strengthening the portfolio of own products, our own design products, and that is a process that takes a bit more time. But now we clearly see this is giving very positive effect and in the quarter see very positive financial effect from that with a strong product portfolio of own brands with strong gross margin really helping Skånska Byggvaror deliver better financial result in the quarter despite decreased sales for the quarter specifically. So the trend of many, many quarters now in a row with continued profit increase at Skånska Byggvaror continues. And our focus forward also continues. We continue to drive improvement in product development in the product portfolio in digital sales and marketing and also further expansion of this offer into Norway and Finland. And with that, I hand over to Helena to go through financials in a bit more detail.

Yes, we are on Page 12. This is our sales development in the quarter, a little bit more in detail. Again, a very strong quarter. We are very pleased. Continued growth momentum, as mentioned, despite tough comparables and a declining market. If we start looking at the total, group sales reached SEK 2.4 billion in the quarter. It's a growth of 9.1% and like-for-like 2.3%. We have a small currency exposure mainly against the Norwegian kroner and has not had a material impact in the quarter. If we look into the sales of our 2 segments, we have Byggmax and Skånska Byggvaror. Byggmax is now including our acquisition in August of Right Price Tiles and the entering of Denmark by the acquisition of 4 stores in January. And in the segment, the acquisitions contributed with 4% of the sales growth in this quarter. And new stores, we have new -- 9 new stores year-to-date, 2 new stores in the quarter. New stores contributed with 3.4% of the quarter -- quarterly sales growth. Sales of 11.5% in the quarter is strongly contribution from the initiatives. As mentioned before, we have the e-com consisting with mainly collect@stores growing strongly. Store upgrades now at 54% of the portfolio, having a better product mix and sales growth. And then we have the new stores. Looking at Skånska Byggvaror, Mattias gave a little bit of flavor on the sales decrease in the quarter, and this is following a very strong sales development in the first half year. So looking at year-to-date, we have a sales growth of 12.4%, and the order intake increased again at the end of this quarter. Continue to the next page and Page 13, looking at the P&L. We have the sales of SEK 2.4 billion, as described on the last page. The gross margin increased. It is now all-time high at 34.8%. It has positively impacted by favorable mix effects and scale from the logistic and supply in both of our segments. Looking at the cost side, we continue to have strong cost control in the quarter. Comparable cost increased by SEK 2 million, and the cost increase is related to new and acquired stores of the other increase of SEK 32 million. So in all, we will not -- we realized big scale effects from increased sales. EBITA increased from SEK 335 million to SEK 406 million, and we have a strong margin at 16.9%. Both segments have scaling effects contributed from both improved gross margin and strong cost control converted into strengthened EBITDA margins. Moving on to Page 14 on cash flow and net debt. We have cash flow from operating activities increased with SEK 81 million compared to the same period last year. The change in our cash flow is attributable to the increase in EBIT in the period. We have movements within working capital that have compensated each other. Looking at the table to the right, we can see strong balance sheet with a new level of net debt. And comparable net debt at the end of the quarter versus the same quarter last year, it is at a similar level, but one has to take into account the acquisitions of the Norwegian Right Price Tiles and Danish NLT in the period. Continuing to next page, 15, we have, in the quarter, launched the buyback program. The Board of Directors decided to initiate the granted repurchase of own share. We have a maximum amount of SEK 200 million, max 5% of the outstanding shares. We've started out the repurchases from the 20th of September, and we communicate weekly on our website the volumes. And the intention of the repurchased shares are to withdrawn through a reduction of the share capital, as a decision on the next Annual General Meeting. At the time of the initiating the program, the max amount of SEK 200 million corresponds to SEK 3.28 per share.

Thank you, Helena. We then turn to summarizing and forward-looking. So we can start by summarizing on Page 16. If we step back and look at our performance compared to the financial targets we have set for ourselves, we are, of course, pleased with the development. We have a target of reaching SEK 10 billion in sales by 2025. We are rolling 12 on SEK 7.6 billion compared to SEK 6.5 billion a year ago, so very good progress. We continue to be clearly above the EBITA margin target now at 12.3% rolling 12. As Helena now mentioned, we have a strong balance sheet with not a lot of net debt despite the actions taken on dividend and acquisitions and investments in organic growth and also the launch of the buyback program, although it's early days. And dividend, we have a target of paying 50%. And the Board decided to distribute SEK 2.75 per share in dividend. And on the topic of transferring value to shareholders, then also SEK 200 million max in buybacks as mentioned. We also have a clear target for our sustainability work, where we focus on communicating the impact of our CO2 reductions. The target of reducing CO2 from goods transport by 70% 2030, and we are currently at minus 32%. So making good progress. So to look a bit ahead, we could start on Page 17 to understand where we're going, just first by understanding where we are, so to speak. So we are, of course, pleased in many ways that we are exiting, we hope, a pandemic period that, of course, has been beneficial for Byggmax financially. But it's also interesting to step back and say what are the learnings from these years. I think, of course, we have been benefiting from the market boost during the COVID pandemic, which has been transparent to everybody. But let's look a little bit beyond that a little bit deeper and see what else has happened because there are also, of course, other really interesting effects that could speak for the future. So 5 points. As mentioned, the market has been boosted. And according to public statistics now available and matching really well with our own panels. The rolling 12 market is 22% up compared to 2019. So the market is up 22% compared to before the pandemic. During this period, we, Byggmax Group, has increased sales by 43%, so almost double the sales, the market growth, which is, of course -- means we've taken a lot of market share during this period. And particularly, we see very good progress on the sort of modern approach we take to discount with the modern stores and e-commerce offer connected to that, driving the majority of this outperformance. Thirdly, we are quite pleased to also say that we are now successful in new categories, in e-commerce as mentioned, also in new countries. If we look at, for example, the Byggmax branded e-commerce, it has doubled in sales compared to 2019, or if we look at garden products, which has been the focus area for us, it's also doubled since before the pandemic. And we've also had very good progress with smaller project categories or sort of everyday DIY with -- around storage, fastening, electricity, tools, et cetera. In terms of geographic or countries, we turned around our Finnish operation in 2019, so just before the pandemic. This has been historically unprofitable since entry until 2019, which -- so we're really pleased about that. And we've also now successfully entered Denmark in 2021. So we are now successful in all the 4 countries where we are operating, measuring successes, financial success that is. So very pleased about that, too. We have also, during this period, become sort of even stronger in our leading discount position and -- or perhaps a little bit too proud of the sort of awards we get from independent service as a price leader in our markets. And also to the point of being a modern discounter, we are also really pleased that at the same time, consumers increasingly associate Byggmax with quality and relevant assortment and good service. So that's also a clear plus for us in terms of our consumer position. And lastly, point 5, as perhaps is evident, we get really big scale effects from increased sales, where our EBITA margin has more than doubled since 2019 with a good continuous development on the gross margin and also very strong leverage on OpEx. So yes, a clear benefit in all from the pandemic, but there's a lot of other things that happened in Byggmax as well, which also has boosted us a lot during this period and which will boost us in the coming period. If we then look ahead, we may not be in a pandemic anymore, we all hope, but we do have other trends that are favorable and provide tailwind for Byggmax going forward. So there are 3 we would like to highlight particularly. So first of all, the discount phenomenon is, by this stage, I think, evident that is winning retail position across categories and countries. And we see a further acceleration of discount as in other retail categories, particularly in the sort of higher price environment. Secondly, the home is a big trend for us, and we see the role of the home having sort of a new level in people's lives, with a home playing a larger role after the pandemic than before the pandemic. And I think the best example is probably that many consumers nowadays have already started to find a new everyday solution where they work partly from their home. So of course, the increased role of the home is really positive for Byggmax. And then the last trend is e-commerce, which also has been on the growth for several years, but also accelerated during the pandemic and which we also are benefiting from. So 3 strong favorable market trends that help Byggmax going forward. And in summary then on Page 19, our focus remains very clear to execute our path to the SEK 10 billion sales target in 2025. And we are really pleased that we have proven initiatives, organic growth initiatives that all have much more to give. So we will continue to focus on upgrading our stores to 3.0, to build out our e-commerce offer and also add new stores in the white spots, which remains in the Nordic countries, which are actually quite a few. We will also, during this coming period, evaluate add-on acquisitions and at the appropriate opportunity also consider adding business through acquisitions. So we are -- remain very focused on the targets we have set in the plan we've already communicated. And we are, again, pleased to see that there are macro trends that provide support. And in summary, that means that we are also reiterating the view on the market that we've communicated in the previous quarter, which is that we expect the DIY market, which is larger post the pandemic than before the pandemic, but not as large as during the pandemic. So that is our view. And we consider Q3 to be confirming that view and a step in that direction. In fall then, much more to give from Byggmax on initiatives and trends that support us going forward, although we will not be in pandemic anymore, we all hope. So with that, we conclude the presentation part of this conference call and turn to operator to handle questions.

[Operator Instructions] Our first question comes from the line of Carl Deijenberg of Carnegie.

So first, a question on the gross margin here. Quite an extensive expansion here year-on-year, 170 bps. Could you describe maybe -- or sort of splitting out the 3 factors, sort of the contribution of your mix versus scale versus price on the expansion? And maybe my second question also on the gross margin here going into Q4. You had a very strong gross margin in Q4 last year. I know that is partly due to seasonality. But were there any other drivers of the gross margin in Q4 last year that we should remember here going into Q4 this year?

Thank you, Carl. I'll start by the first question, and then we will begin -- and then we'll take the second one. No but, you're right, posting the 3 main drivers of gross margin expansion in the quarter. And now we'll get into details. But you may remember that in the previous quarter, in Q2, we had quite a big benefit from what we call price. So the consumer prices increased faster than soft of the input food prices, which helped us a lot. That effect is smaller in Q3 for the different trends and sort of caught up or the timing effect is now gone, so to speak. There is smaller positive effect from that factor. I would say it was probably 3 quarters of expansion in Q2, maybe it's 1 quarter now in Q3. And the other 2 factors are quite similar in size, I would say. And Helena, correct me on that. She's nodding her head. So there is a continued good product mix effect, which we've seen for many quarters in a row now. What's slightly different in specifically Q3 is that beyond sort of the Byggmax Store 3.0 build out, we also get really good contribution from Skånska Byggvaror's own product portfolio, which is starting to kick in nicely. So therefore adds to the product mix effect for the group. And then scale effects are significant. I mean we run our own logistics. We run import business, sort of [ internal ] wholesaler. We, of course, have suppliers where we, unfortunately, get a better conditions where we have high vol. So all that accounts to also a quite substantial part. The price one is the smaller, and the other 2 are roughly similar. And then you're right that Q4 was really strong also last year. And I cannot sort of on the spot think of any major one-off or any sort of thing that was really sticking out in terms of the quarter, except or continued good scale. But maybe Helena could guide if there is something else that you [indiscernible]. No? So it was a really strong quarter with the seasonality effect the last year in Q4, Carl, but no one-offs or no sort of single points that are worth to bring up at this stage.

Okay. Perfect. That's very helpful. And then a second question here on the disruptions that you're mentioning, primarily then on the e-commerce offering. Do you see the situation sort of improving here going into Q4? Or is it sort of worsen going into Q4? Or is it similar as in Q3? Or how do you see that sort of shortage situation developing here in the near term?

That's a good question. And for those of you who may not be [indiscernible], I mean, we sort of divided our assortment offering -- product offering into 2 main parts. First is the sort of the core offer, which we have in the stores, and that represents also half of the e-commerce sales. And then we have the online exclusive offer, which is a much, much wider range of categories that we only offer online. And it's really category specific to that part. We have continued very strong momentum from online exclusive categories like flooring, for example, whereas others have been hurt. And the ones that have been hurt now in the quarter from supply disruptions been mainly around sort of garden, garden machines sort of component issues and sheds and storage sort of timber [ supply shortage ] issues. The mix varies a bit into Q4. So we expect to have some types of disruption also in Q4, but the category mix is different. So supply issues in these categories in Q3 does not imply that there will be supply issues in Q4. There could be others, but not specifically these will carry forward in Q4.

Okay. Perfect. And then a final question here. If you could say anything on current trading here going into Q4, slightly tougher comparison sequentially from Q3 last year. And if you could just say anything on the maybe like-for-like or what you've seen here in the first 20 days in Q4.

Yes. No, we are entering the, as you say, Q4 is a smaller quarter. So it's slightly more sensitive and has really strong comparables from last year, as you say, accelerating. So we are entering, we think, is a really good level, which is a small -- quite very small negative like-for-like performance in the stages of October, which is then back to our point of the market being -- and us being much, much stronger than 2 years ago has, of course, been very strong compared to 2019. So a small negative like-for-like at the start of Q4.

Our next question comes from the line of Anna Danfors of ABG.

I just have a minor detailed question about the raw material prices. As you mentioned, there have been certain supply chain disruptions, and you have not been affected in a -- to a significant extent. But I just wonder a little bit on your view of the development of the raw price -- raw material prices ahead and to what extent this could further affect you in certain product categories. I assume that there are some categories that could be more affected than others. And what's your take on that going forward?

It's, of course, an important macro question. And I think it relates both to, as you say, on a supply situation and sort of price levels. And when it comes to supply situation, we have been really fortunate throughout this period to have what we call the fully manageable supply situation. There has been selected stocks and maybe now specifically in the online exclusive a few categories. But in general, we have very good supply and has not materially impacted us negatively. And we see -- except for some of the smaller categories or individual areas, we see supply situation which is continuing to be very manageable for us also going forward, which is positive. On the price side, I mean, if you look -- there is, of course, a lot of development. But we will say in -- during the third quarter, development has been or the level has been rather stable if you look at the total on the start of the quarter compared to the end of the quarter, with a lot of variations between product groups, to your point. We expect going forward that particularly timber prices, which are really important to us, should start to come down a little bit from a very high level, but there are also other product areas where we continue to see price increases in the markets around steel and plastics, for example. So that's the view we have. And then in terms of what that means for margin structure, I think this industry has, over time, pass on raw material increases to consumer prices. So the sort of margin structure pretty much remained as it was before any major price changes. So that is the best probably guidance or direction we could provide at the moment.

[Operator Instructions] The next is from the line of Lars Randstad, a private investor.

Lars Randstad, private investor. Could you just go through -- if you look at your targets for 2025 and you -- on a rolling 12 months, you're at SEK 7.6 billion of sales. And for '25 you got SEK 10 billion of target. And you're saying that it's a little bit of a COVID related extra turnover now. How should we think about sort of -- should top line go down and then go up because if you annualize it, you're just around SEK 7.6 billion. You were looking at something like 8% on an annualized turnover increase. And if you could also walk us through how to get the margin down from 12.3% to below 8% in the meantime?

Thank you, Lars. Happy to ask -- answer that question, sorry. And I would also say that we have more detail on this, if you would like to begin with, at the Capital Markets Day that we had in March. So you could dig through that for some more details. But a few different components there. So first of all, we expect the market to come down from the pandemic levels. It's up again about 22%. So maybe it comes down half, maybe a bit more, maybe a bit less, but that will have a negative impact, of course. And then we have taken a lot of market share during this period. And we, of course, have the ambition to continue to do so. If that means that sales will go slightly down before it goes up or if we are flat or if we continue to have a smaller plus next year, all that remains to be seen. But I think that the growth pace we've had for the last year or 2, of course, will be impacted by a market which is coming down overall. So there will be some kind of resetting, and let's see what that means for the total sales number. In terms of profitability margin, we are, as you say, clearly above the target at the moment. And we expect to see the market coming down, which will, of course, have a negative impact also on profitability leverage. We also expect to invest quite a lot in growth initiatives, and perhaps even set that up in the coming period to try to reach the SEK 10 billion, to a large extent, by own initiatives, which may hurt the margin a little bit also. And then on top of that, we will have to evaluate if there is still headroom to the EBITA margin target after that or not. But we are of the view that the SEK 10 billion is fully doable at a margin of 7% to 8%. And then the path there will probably be less of a growth part into '22 given the trends. But more concerned, to be honest, that the management view about the slightly longer-term target of 2025 than exactly the development into a couple of next quarters or even years.

Our next question comes from the line of [ Julian Baton ] of [indiscernible].

This is [ Julian Baton ] from [indiscernible]. Three questions for me. The first one would be on the price impact on the top line. If you could share a bit details and especially to Byggmax and Byggvaror. The second question would be on the inventory position. How much the M&A bring to the number because the number is very high compared to even Q2, while seasonally usually inventory position is lower? And also, obviously, the price impact on the inventory side. And the last question is on the share buyback. We are very happy, obviously, but the rhythm is pretty low. I was just calculating that if you continue at this level, you will be ended up in 9 to 10 months. So do you plan to step up a little bit the rhythm?

Thank you, Julian. I will take the first 2, and maybe Helena can take the third. On the, let's say, our pricing impact, well, it's been around the same level in total as in Q2. So we see about a sort of 15% price impact in total, which is a lot or up to 50%, I should maybe say. On the inventory side, you are right that the inventory is up a lot, and there are several effects into that price acquisition to your point. And also, we have to say given the situation with supply disruptions, we have earlier orders of certain products to have sort of in stock already in Q3, which we usually maybe not do. So there may be other effects that I'd really like to allude to as well. But I think those are the biggest ones, the big -- more stores, price and acquisitions are the big ones. Now on the buyback...

On the price, you say 15%, 1-5?

Yes.

Okay.

And on the buyback, Helena could maybe allude a little bit.

Yes. The levels, I agree they are a bit low. It's not monitored by us. We have an agreement, and potentially the speed will be a little bit higher going forward. But it's planned to be over a longer period. So...

What is the limitation for the mandate? Is it, what, 5% of daily volume, do you know?

No, the volume, yes, the volume is we should not exceed 5% and the maximum amount is SEK 200 million.

Yes, that I know. But -- my question is the people in charge of the dealings, I guess, they must have a limit in terms of how much they buy every day compared to daily volume.

Yes, there is a limit, and they're following the regulations.

That's -- you say that is 5%?

No, that is not the regulations. They are following the regulations on the buyback, and I have no limit on them. So...

The way this works, Julian, we can take it separately, if you like, but there are...

Yes, yes. it's just a minor detail.

We mandated market that maintains this within the regulatory environment, which we are obliged to follow, and that's the way that works.

[Operator Instructions] The next question comes from the line of Dennis Peterson, who is a private investor.

I have a question regarding the stock in trade, which if I have calculated it correctly, it's up about 15% Q-on-Q. Do you have any -- is it due to lesser sales in Q3? Or do you have an optimistic view on Q4? Or is it another reason? Can you elaborate something on that, please? And the expansion plan in Denmark, can you tell us something about that, please?

Yes, you're breaking up a little bit, but if we understood your question right, you're asking about stock in trade or inventory and then expansion in Denmark. And regarding the inventory, let's maybe quickly run through on the previous question. It is up partly due to price effects, partly due to acquired companies that, of course, have inventory and then some early orders on certain products. Those are the main drivers. And on Denmark, yes, we have further expansion plans, both with e-commerce initiatives, but also with new stores. And we follow a process where we announce specific new stores when we have all the agreements signed and all the conditions met and all the approvals met by different municipalities and authorities. So the details of the Danish expansion plans, we would have to get back to. But the plan is to continue to expand in Denmark.

And as there are no further questions in the queue at this time, I'll hand back to our speakers for the closing comments.

Thank you, everybody, for joining the call. Wish you a great day, and hope to speak to you again in one quarter's time.