Ceconomy AG (CEC) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to our Capital Markets Day. My name is Fabienne Caron. I'm running the Investor Relations team and will be your guide today. But before we start, let me go through some formalities. First, today's presentation is available online for download, and it may contain some forward-looking statements. So please check the disclaimer. Second, we meet in an omnichannel setting today, and this event is being recorded with a replay available later on. Today's presentation should last circa 2 hours until noon. No worries, we will have a short coffee breaks around 11. At the end of the presentation, before the Q&A session, we will have a 15-minute technical break. This break will enable those of you online who register to the event to dial in. We will then take questions both from the telephone and from the room. For those of you with us today, in person, the event will end with the lunch, where you will have the opportunities to meet CECONOMY leaders, followed by a store tour. But let me now come to the exciting part. We are today in our Xperion store in Cologne. Xperion is a gaming location where you can have a look at the latest technology, but also try it and it's completely free. I personally recommend the virtual reality game in collaboration with Vodafone. This is amazing. But if you prefer to play football with Mbappe, we have the new FIFA game too. Xperion is as well a place we set up for swimming and equipment for podcasting for anyone who is looking for a place to create content. We meet today in the so-called arena, where almost every week, an exciting events take place. We could then not think of a better location to share with you, what we have achieved so far and our plan for the future. So let's not wait any longer and let me welcome Karsten our CEO on stage. Karsten, let's go. [Presentation]

Yes. Good morning. Hello, and welcome, everyone. First of all, here at the Xperion store and also to everyone tuning online this morning. Welcome to CECONOMY's Capital Markets Day 2023, and we are very pleased to have you with us. In the coming hours, our CFO, Kai Deissner, along with some of our top management will join me in guiding you through our journey. And we are looking forward to discussing our robust progress, our encouraging improvements in our largest market, Germany, and our strategic advancements in other areas, including supply chain, category management and technology. And looking back at our last Capital Markets Day in 2020, it's obvious that we have faced an array of challenges transforming our landscape dramatically from what we had originally planned. And comparing to the year 2020, it's difficult due to the intensity of the crisis we have mastered. Despite the turbulence of the COVID-19 pandemic, the global supply chain crisis and the distressing conflict in Ukraine impacting the global economy, we stand here today resilient and forward looking. And we are ready to reveal our updated strategy anchored by clear milestones and commitments that allow you to clearly measure our progress. And today, we plan to share our midterm goals and our financial commitment, offering hopefully, valuable insights to our current shareholders and potential investors. And we want to assure you the discussions for today will not change the financial guidance we provided earlier this year during our Q2 results presentation. And before I kick us off, I want to stress one key issue. During our Capital Markets Day presentation, we will present our mid- to long-term vision for successfully transitioning our business. And this will involve a deep dive into our strategic plans. However, rest assured, while we keep our eyes on the horizon, our current operations and immediate business requirements are always in sharp focus and handled with relentless determination and execution. Because the art of the successful transformation lies in striking the right balance between keeping a long-term perspective and staying nimble in daily operations without compromising short-term effectiveness. So let's go and let's explore what the future holds for CECONOMY. Today's focus is on our commitments to shareholders and potential investors. But let's not forget the core of our strategy, our customers. Everything we do revolves around them. And at the heart of our new strategy is the customer experience, made even stronger by our commitment to sustainability. This shift isn't small. We're moving from CECONOMY and MediaMarktSaturn, being primarily about selling consumer electronics. Instead, we are focused on becoming a customer-centric service platform. And sustainability isn't just an add-on. We are weaving it into everything we do. So we can provide top-notch customer service in a way that's mindful of the environment. And MediaMarktSaturn is ideally positioned to make our strategy work because we connect with our customers over 2 billion times each year through various channels. And these interactions include everything from app usage, online shopping, in-store visits, phone conversations and home installations. And this highlights just how important our platform is to our customers. And our goal is to keep improving these touch points, making the customer experience better and boosting our service levels to build customer loyalty to make our customers stick with us. And the feedback we've been getting from our customers along with a strong Net Promoter Score, NPS, above plus 50, shows that we are actually on the right track. That's actually 8 points higher than 2 years ago. And more than 35 million customers have signed up for our loyalty program. And that's 7 million more than 2 years ago, which clearly shows their trust in us. Let's turn to Page 7, please. What's so exciting about the business we're in? Well, we are not just part of any industry. We're in an industry that's underlying, growing and thriving, and let me tell you why. We are right in the middle of the tech revolution where we're always surrounded by digitization and innovation. This is a relentless force that we are part of. Every month, there are something new, new products, gadgets, advancements. And we are seeing a bigger push for sustainability through things like repairs, recycling and the circular economy. Our customers aren't just looking for a basic product purchase, they need guidance in a complex world. They also want better services, sustainable solutions, more convenience. In short, they are seeking better value for their money. And this speedy progress touches all areas of human life. Technology can enhance, simplify and amplify our experiences. But as the world speeds up, customers often need help keeping up with all these new tech developments. And that's where we come in. We guide customers through this increasingly complex world. And here's how. We provide a smooth shopping experience across different channels, making sure customers find the right product in our retail stores or online. We offer services beyond just selling products like financing, insurance, repairs, delivery, installation and more, and sustainability is at the core of what we offer. With our BetterWay label, we guide customers towards sustainable solutions. And our goal is to increase the BetterWay sales share by 17 points to 20% by financial year '25, '26. And we are aiming to lead in sustainability, focusing on energy efficiency, re-use of products and circular economy practices. We are a reliable partner not just for our customers, but also for our international suppliers. We are seen as a major gateway to the European consumer electronics market, with the largest customer base, a strong retail platform and a wide product range. And our strength comes from our powerful popular brands, MediaMarkt, MediaWorld and Saturn. We hold actually a unique spot in this competitive industry, all set to deliver an outstanding experience across all channels. First off, our well-known brand [ lead the pack ] with brand awareness over 70% at the group level. We're the first place, consumers think of for electronics goods. We don't just have a broad reach with over 2 billion customer interactions each year and over 35 million loyalty members, we are also continuously improving our shopping experience and our Net Promoter Score currently at a record high of plus 53. Secondly, we've got an extensive network of stores and service hubs. Over 1,000 stores across 11 countries. In 9 out of 11 markets, we are in leading positions. And with a strong online presence centered around a mobile-first approach, we are the second biggest online consumer electronics player in Europe. Thirdly, our position lets us offer great experience, no matter how customers interact with us. We aim to be present where our customers are, whether that's starting their journey online or preferring the in-store experience where they can explore products, get advice and connect with real people, our 40,000 in-store experts. Lastly, we've developed significant partnerships with industry leaders. For decades, we've worked closely with big global brands, not just selling their products, but also serving as brand ambassadors on our platform. We've also been key partners for younger brands helping them grow and scale successfully. It's our teamwork approach that sets us apart, creating experiences and value for our partners' brands, and most importantly, our customers. On Slide 10, you will see the 4 strategic pillars, providing direction for everything we do. Our customer-focused strategy revolves around the experiences we create. We're taking consumer electronics to the next level, shifting to what we call experience electronics. And this comes alive through 4 key pillars. We call them experienced pillars. The employee experience, the shopping experience, the usage experience and the impact experience. Let's briefly go through. So let's start with the employee experience. Our staff are vital to us. For great customer service, they need training, motivation and inspiration. We've launched new training programs and digital tools to up their customer service game. And we've set higher leadership expectations. A great employee experience leads to a great customer experience. Let's turn to the shopping experience. We're improving all our channels to make shopping with us even better. With a mobile-first approach, we're enhancing our online experience. Our stores are getting a fresh look with more flexible formats to offer more engaging in-person experiences, seamlessly linked to the online world. Thirdly, the Usage experience. This is all about growing our Services & Solutions business. These not only adds to our product offering, but also build customer value and loyalty while growing profitability. And finally, the Impact experience. This is our sustainability commitment. We are promoting products that are energy efficient, safe water and can be repaired and recycled. We're aiming to be a leader in sustainable retail and help our customers contribute too. For us, sustainability isn't just a commitment. It's a huge market opportunity. The backbone of great customer experience is an outstanding employee experience. We've made big strides here, putting our frontline staff first. We're an attractive employer, thanks to a great work environment, inclusive culture and solid career opportunities. And this commitment shows in our staff. Net Promoter People, NPP, a measure of employee satisfaction has jumped 31 points in two years, plus we're investing heavily in skills training with 14,000 colleagues already trained through our new program in just 4 months. And by the end of fiscal 2024, we aim to train all 40,000 store colleagues. Let's shift our attention to a vital topic, a topic that underpins our discussion today. Anchored in our strong omnichannel experience electronics platform, we operate and create various business models to grow sales and profitability. Yearly, we generate over 2.2 billion customer interactions across various touch points. And the goal is to leverage these interactions to boost our business and nurture customer loyalty. Our blend of businesses is seamlessly interconnected for customers, but the businesses follow a distinct commercial logic with different growth trajectories. So our traditional retail business, the core of our omnichannel platform involves the products we sell with and for our industry partners. And here, we foresee excellent opportunities for category expansion in areas such as gaming, health and e-mobility. Our Services & Solutions business adds value and profitability, and it enhances the customer experience with a growing portfolio of attractive services. We aim to launch subscription services, including repair services to secure attractive recurring income. And our Marketplace offers customers an extensive portfolio beyond our own selected product range. This is our approach to answer the long-tail question. Our Marketplace seamlessly integrates offers from sellers that complement our core assortment. We benefit financially from commissions without inventory risks thus stabilizing our net working capital position. And our Private Labels provide value for money products, ensuring higher margins. And our portfolio includes white and brown goods, small domestic appliances, computers, monitors and accessories. While past performance has fallen short of expectations, we are focused on rejuvenating our Private Label business with a more integrated approach and better execution. We are also rethinking our retail space utilization. Let's take the lighthouse concept that offers industry partners, physical display spaces, benefiting from our high footfall and providing unique brand presentation opportunities. Customers gain firsthand access to top brands while we leverage our space to generate recurring revenue and increase the value of our physical retail space. And Retail Media utilizes our extensive digital customer reach, allowing other brands to advertise on our digital channels. And all these initiatives are supported by a robust omnichannel supply chain and technology stack, crucial for delivering excellent customer experiences and maintaining our appeal as a retail platform. We prioritize our employees and integrate sustainability into our core values. So in summary, we are transforming from a consumer electronics retailer into an omnichannel service platform, integrating various business models that together deliver a seamless experience and enhance customer engagement while yielding attractive financial returns. And as a result, we anticipate a significant increase in income contributions from our platform business model. Let me conclude the unveiling of our new strategy with our revitalized purpose. Let's talk about what drives us, our reason why. The purpose is we create experienced electronics to enrich people's lives. With CECONOMY, especially our well-respected retail brands, MediaMarkt and Saturn. We've been instrumental in making consumer electronics accessible to all. We appreciate our strong legacy. But equally, we're aware of the changing dynamics in our industry. The customers at the heart of everything we do and rapid innovation is pushing us forward. Technology is now deeply integrated into everyone's daily lives. Recognizing these changes, our goal is to go beyond the usual concept of consumer electronics and step into the exciting realm of experience electronics. Our ambition is about more than just selling products. We aim to create memorable experiences, build strong relationships with our customers and act as their trusted guide in this ever-changing complex world of technology. This renewed purpose is the driving force behind our actions and decisions, and it creates a solid foundation for our strategy. As we look ahead to deliver our strategy and fulfill our purpose, let's take a brief detour to acknowledge our past journey. On Slide 15, let me address some ongoing discussions and misconceptions about CECONOMY and MediaMarktSaturn. It's essential to clear the air. There's a perception that our business is complex and difficult due to historical reasons. And today, my goal is to eliminate any uncertainty and provide clarity. Here are some key facts. Firstly, is shareholder conflict still a problem? No, it is not. The Convergenta transaction has effectively resolved these issues. We've established strong governance enabling us to focus on improving and growing the business together. Second, are we still dealing with complex store level ownership? No, we are not. We've brought out store owners transitioning to a centralized business model per country that maximize synergies. Next one, are we simply a brick-and-mortar retailer? Absolutely not. We are now the second largest e-commerce player in consumer electronics in Europe, with 1/4 of our sales being online. We shifted from traditional retail to an omnichannel model with a digital-first approach. Next one, do we have a clear strategy? Yes, absolutely, we do. And today, we are giving you a transparent look at our strategic path, complete with measurable milestones for tracking our progress. And another one, do we have a plan for our country portfolio? Yes, we do. We follow a lead or leave approach, holding market-leading positions in 9 out of 11 countries. And over the past 6 months, we have made significant progress. In a nutshell, we've successfully increased our efficiency, agility and transparency. And these enhancements will enable us to accelerate our transformation. Despite significant unexpected challenges in recent years, we've maintained strong operational performance and have strengthened our resilience and adaptability. Looking back at the key commitments from our Capital Markets Day in 2020, we have made solid progress in increasing our net sales and decreasing our operational expenditure, OpEx. We've brought our performance closer to our initial goals in areas like online share, services and solutions and category management. The first half of this year shows encouraging results with service sales uplift projected to exceed 20%. Additionally, we have achieved an SKU reduction of 27%, which surpasses last year's target of 20%. Our adjusted EBIT margin was only 0.9% last year. Despite the numerous challenges we faced, I want to stress that this level of profitability isn't up to our standards. We're on it. We've got a solid plan to improve profitability. We are confident that the initiatives we've undertaken will enable us to improve and meet our commitments. Our attention is set on growing our business profitably, staying disciplined with costs and managing margins effectively. And Kai will provide more details later on. Let's take a closer look at our country portfolio on Slide 17. Our growth strategy success is based on robust national market positions. Over the past two years, we have implemented our lead or leave strategy effectively, optimizing our international portfolio. We divested our operations in Sweden to Power Sweden, resolving a long-standing market concern. Also, we sold our 2 small Portuguese business to Fnac Darty, ensuring a good future for our team. We hold a leading position, either first or second in 9 out of the 11 countries we operate in. And this allows us to concentrate our management efforts and resources on strengthening our market position. We are actively exploring strategic consolidation opportunities within individual countries. As demonstrated by successfully acquiring 17 Worten stores in Spain in 2021. We currently don't see substantial value potential in large-scale cross-country consolidation. However, we are continually evaluating opportunities to expand our value chain and capabilities and improve our category coverage, particularly in the circular economy. Our brands MediaMarkt, MediaWorld and Saturn are amongst Europe's most valuable brands. They play a crucial role in our retail success. We are making relevant investments to boost our brand image and perception, aligned with the customer-centric strategy we present today, we've launched a dynamic unified global brand campaign across all our markets. The theme, Let's go! reflects the benefits technology brings to enriching people's lives. More than just showcasing products, the campaign promotes experiences from solutions to services and sustainability. Our employer branding campaign under the same theme aims at attracting talent. And I'm especially proud that the staff of our campaigns are our own employees. The brand launch has been very successful, and it has also had a very positive impact within our organization with, Let's go! becoming a short and crisp theme for our transformation. Let me sum up my part. Our initiatives are set to put CECONOMY back on a path of considerable growth, enhancing our financial performance. We will continue to grow our reach to over 2 billion customer contacts and target 50 million customers in our loyalty programs. We are working to strengthen our strong e-commerce position, intending to grow our online share to 30%. We are committed to grow our service income share to 5.5% through portfolio expansion, fostering innovation partnerships and promoting subscription models. This will translate into a significant margin contribution as Kai will explain further. We'll scale our marketplace internationally, onboarding more sellers and more products. We expect our gross merchandise value to surpass EUR 750 million. We aim for our Private Label share to grow to 5% with an optimized product assortment and efficient logistics. We are set to expand our Lighthouse stores to around 20 by the end of fiscal 2026, offering unique omnichannel experiences. And we aim to scale up our Retail Media business, generating about EUR 45 million by offering top-tier media products for our partners. This mix of measures with clear business models is set to significantly boost our financial performance, and this results in an attractive growth case. We are aiming to more than double last year's EBIT to over EUR 500 million. As I said in my introduction, our CFO, Kai, will speak about the underlying financial metrics in the final part of today's presentation. But before that, I would like to introduce our full management team that will guide you through more details of the strategy, which I've just laid out. Our senior management team consists of individuals with extensive experience. They bring a wealth of knowledge from retail and other dynamic customer-focused industries. Crucially, our executive team has a strong track record of driving successful changes and transformations. Sascha, Remko and Andy will join the stage today providing a deeper look into our strategy and progress so far. And our CFO, Kai, will explain our financial plan and commitments and furnish you with the assurances you need to track our progress. And now I would like to share a very few personal impressions of my colleagues. Kai, a highly experienced CFO on an international scale has successfully led and transformed businesses. Since joining us from Deutsche Telekom, Kai has quickly become an integral part of CECONOMY and MediaMarktSaturn. Kai, I am extremely glad to have you as my trusted co-pilot. Our operational business and country portfolio are in the capable hands of our Chief Commercial Officers, starting with Sascha, who spearheads our largest market, Germany. With an extensive background in digital transformations and building strong teams, Sascha and his newly formed German team have created significant momentum in our German business and I'm delighted to have you on the team, Sascha. Remko Rijnders. Remko overseas, Spain, Turkey, Poland and serves as our COO of the Benelux. Remko is a very seasoned leader in MediaMarktSaturn, boasting 15 years in various senior roles. His leadership brought our Benelux business back to success. It's great to have you onboard, Remko. And Guido Monferrini, Guido is responsible for Austria, Hungary, Switzerland, Sweden and also serves as our COO for our important Italian operations. Moreover, Guido overseas our store portfolio evolution from a group perspective. And prior to MediaMarktSaturn, Guido spent many successful years at Decathlon in senior roles. It's wonderful to have you Guido. And Iris Pruefer, Iris, our CHRO is a respected authority in cultural transformation, people and change management. And prior to MediaMarktSaturn, Iris served as Chief People Officer at Tengelmann Group. She has implemented significant structural changes here at MediaMarktSaturn to enhance our employee experience. Iris, it's an absolute pleasure working with you. And Michael Schuld. Michael, our Chief Commercial & Marketing Officer, carries a vast array of experience in sales, marketing, brand building, category management and procurement. And he previously handled Deutsche Telekom's Magenta TV business. He spearheaded our successful Let's go! campaign. I'm glad to have you on our team, Michael. And finally, let me introduce you to Andy Wolfe, a very experienced CTO with an impressive history of managing technology transformations in retail. Coming from Kingfisher, where he led their omnichannel transformation successfully as their CTO, Andy is a fantastic addition to our team. And to top it all, we share our support for Liverpool Football Club. Great to have you at CECONOMY, Andy. So handing over to Sascha now, who will start to guide you through more detailed building blocks of our strategy and progress in implementation before Remko and Andy take over later on. Sascha, the stage is yours.

Thank you, Karsten, and good morning, everyone. In the following, Remko, Andy and myself will guide you through our strategic framework. I will navigate you through 4 building blocks of it, customer loyalty, retail core, Private Label and Marketplace, before I then hand over to Remko to follow them. We all will outline the strategic significance of each block, evaluate the progress we have made so far and introduce our strategic agenda for the planning period. At the heart of our strategy, sits the customer. Our aim is to cultivate over the 2 billion annual touch points into lifelong valuable relationships. With more than 35 million customers enrolled already in our loyalty program, we are benefiting today and how did we manage to activate our customers? In Germany, last October, we launched our new loyalty program, myMediaMarkt, and recently also mySaturn. This program offers customers the chance to collect and redeem points with every purchase and extended right to return products and exclusive offers among other benefits. And our customer must love it. In comparison to our previous membership program, we experienced more members signing up, an increase in basket size and more members shopping more frequently. And all this leads to an uplift of about 20% in German loyalty member sales. So if you haven't signed up for myMediaMarkt, or mySaturn so far, take this event today to take advantage of this opportunity. Now given the success, we will roll out the concept to 8 further countries until fiscal year '25. The increased activation of our customers also allows us to gather data on their behavior and preferences. And to give you an example, we noticed that [ baby phone ] customers are 9x more likely to purchase coffee machines than other customers or maybe not that surprisingly, virtual reality goggles sell much better in areas with high divorce rates. But it's essential to emphasize that this data is done in full consent, adhering to compliance regulations and maintaining complete transparency. This data has become an increasingly valuable asset, particularly in the post-cookie era. And to leverage the data effectively, we have put an omnichannel communication platform enabling personalized messaging. Our e-mail marketing already operates on this platform, and we'll introduce additional features and channels across all countries in the coming financial year. When combining these measures, with all other retention activities, we anticipate to achieve an increase of 60%, in the loyalty customer sales until fiscal year '26. This effectively will reach up to 50 million loyal member then. And all these measures underline our strong ambition to further increase customer engagement and foster the main value of our platform, and that is customer stickiness. Moving to the next block on Page 26. Our retail business remains at the center of our platform. It also includes our Space-as-a-service business, meaning our partner spaces in the Lighthouse stores. Combining online and off-line channels in a unique way is the key factor that sets us apart, as Karsten mentioned earlier, and with over 70% of customers beginning their journey in digital channels, we strive to provide a source of inspiration by consistently generating and harvesting rich content. Throughout the entire customer journey, and you can see an example on this chart, we enable a seamless transition between online and offline. We offer the best of both worlds. For instance, our 50% -- 50,000 knowledgeable employees are available not only in the stores, but also through our digital channels by video to give expert advice. Additionally, our endless aisle concept grants customers full access to marketplace and our online assortment while shopping in stores and we continuously enhance our omnichannel capabilities, reinforcing our competitive edge here. Our online share has nearly doubled compared to fiscal year 2019, reaching almost 25%. This positions us as a prominent player in e-commerce with our brands operating the third largest web shop in the entire retail industry in Germany. Our customers benefit from an increased focus on content, enhanced functionalities and recommendation engines. Overall, this leads to an increased conversion and attach rate. Our omnichannel proposition resonates well with our customers. Over 40% of them make use of our offer to pick up their orders directly from the stores. On the tech side, we have reached another important milestone. Over 80% of online sales are now generated on our new web platform. This allows us to harvest synergies and scale improvements much faster now across the countries going forward. Over the next years, we will intensify our efforts in feature, content and user experience development. And our strategy revolves around elevating our consumer app to a comprehensive experience hub. This involves personalized communication, fostering and connecting content-driven channels like social media and integrating various service offers. As we shift to an app-first mindset, we remain committed to maintaining an omnichannel approach in all our future developments. Our goal is to further increase our digital in-house share aiming for 30% by fiscal year '26. And now to our bricks-and-mortar presence, which is equally important. And here, we also need to adapt to evolving customer behavior. Our store portfolio is undergoing rapid transformation in response to these changes. Our Lighthouse format provides not only inspiration, but also integrated innovation experiences through our partner boutiques. We pride ourselves on delivering a truly unique experience to our customers. Those tech villages are a place for customers to experience innovation firsthand and engage in communities of like-minded people. And to cater specifically the gaming community, we've introduced the Xperion brand. These specialized gaming destinations can be found here in Cologne and in Berlin, and the Xperion customers can discover immersive elements like VR stations, engage with their community at bars and feel the action in impressive gaming arenas. The core format remains the foundation of our portfolio, featuring a thoughtfully curated assortment and a focus on personalized advice and service capabilities. We are progressively incorporating experimental elements and refreshing the look and feel of our stores. In neighborhood shopping malls, you'll find our Xpress format. These locations benefit from foot traffic generated by other stores offering a tailored assortment, services and a convenient set of pickup options. Our smallest format called SMART is strategically located in city centers. This concept places emphasis on services and building personal relationships as we strive to be even closer to where existing and new customers spend their time. To conclude, let's take a glimpse at a short video of our Lighthouse, for instance, in Vienna or Rotterdam, please. [Presentation]

So let's turn to Page 30 and take a look at our store portfolio development plan. We will develop a diversified footprint with complementary store formats across different regions. This approach not only ensures optimized customer centricity but also enhances the efficiency of our logistics operations. The success of our Lighthouse concept has inspired us to expand it to up to 20 store locations in major cities throughout Germany. Additionally, we will continue to roll out our smaller formats, Xpress and Smart. Xpress has already achieved remarkable success in Hungary. And we have recently introduced the first stores in Germany, Turkey, Spain, Italy and Austria. And the Smart formats will enable us to target white spots in the city centers and they are positively influencing our brand perception. At the same time, we're placing increased focus on our core formats. We have already modernized over 30% of our stores and are determined to reach at least 90% by the end of fiscal year '26. Despite significant inflationary pressure, we have managed to decrease our allocation cost, the cost ratio as a percentage of sales by 30 basis points with plans to reduce by another 20 basis points by '26. Our store portfolio measures such as the expansion of new formats, rightsizing our stores, increased space utilization and service offerings are designed to increase the area of productivity. We set ourselves a target to further increase by another 10% until the end of fiscal year '26. The next building block is about Private Label. Private Label is a great way to offer our customers attractive alternatives with high value for money and at the same time, stabilizes our margin. So let's take a closer look. Our customers value price, quality and design when considering Private Label and with a well-balanced portfolio to meet these demands across categories. KOENIC is known for large and small household appliances. PEAQ for consumer electronics. ISY covers electronic lifestyle products. And finally, okay, for functional everyday appliances. This allows us to offer an affordable and high-quality alternative to more expensive branded products in almost every customer situation. While we have not reached our overall Private Label ambition, we see very encouraging growth in key categories. We were able to grow our share to as much as 15% in accessories for Telecom, driven by display protection and smartphone covers. And accessories for brown goods especially TV wall mounts, boosted our share to 14%. Building on these successes, we are convinced to gradually grow our overall share to 5% by fiscal year '26. This will be enabled by integrating Private Labels into our category management approach much, much closer. For each category, we are using data to determine the optimized portfolio of our own brand SKUs and continuous product innovation, enhanced marketing in all channels and the improved logistics will be enabling factors. With this, many more of our customers will include our 4 attractive private labels into their very own shopping experience. And the last building block that I will share with you now is about Marketplace. Our Marketplace holds significant strategic value for us. From a customer standpoint, it allows us to expand assortment while also serving as an income stream and a means to optimize our working capital. To reiterate the role of marketplace, you can see the evolution of our assortment breadth over time on Page 35. And as you see over the last years, we reduced the number of our SKUs in both stores and our own online assortment. And through effective data utilization, again, we developed a customer-centric assortment that caters to the needs and preferences of our customers in both our physical and online stores. And at the same time, the total breadth of our assortment increased. And this is thanks to the marketplace, which extends our own and the private label assortment by the various offers of our sellers. It allows our customers to have full access to the supplier ranges, to additional suppliers and to new categories. And all of this is fully embedded in our own web shop, offering a seamless experience with our own product and services. Superior online and off-line experiences also depend on an attractive and customer-centric product offering. As Karsten pointed out earlier, the underlying market is attractive and highly dynamic. And approximately 80% of our product mix is growing. This growth includes telecom, IT, major domestic appliances like washing machines and small domestic appliances, such as hair dryers. These categories are represented by the green bubbles in this regionalization. And among our sales dominant categories only consumer electronics and [ here ] primary TVs is showing stagnation. Categories such as office equipment, photo, which declined constitute only a small portion of our overall category mix. And we are really pleased to operate an industry that is fueled by innovation. And categories like e-mobility, coffee, augmented virtual reality, gaming and smart home present very promising growth opportunities that will not only offset the decline in other categories, but also offer attractive growth opportunities beyond. And with every category, we have started to implement holistic concepts to increase our traction in those growth areas. And we call this holistic category perspective, a 360-degree approach. And an excellent example of this is our successful implementation of the coffee category with our BaristaClub. Across the entire journey, we offer a seamless experience in stores. Customers can engage with trained coffee experts explore a variety of coffee types, including our own branded coffee and of course, the coffee machines and access proprietary content across all our channels. We also over an extensive service portfolio, including insurance options and soon Arista-branded coffee capsule subscriptions by focusing on these types of holistic experiences rather than mere transactions, we are well positioned to make significant advancements in those new categories. Today, our marketplace is already live in Germany, Austria and Spain. We have grown the gross merchandise value to EUR 65 million, with about 1 million SKUs offered by 1,000 sellers and offering this offering resonates with our customers. The average product rating is at 4.5 out of 5, and the average shipping time is below 9 hours. Lastly, we are happy to share that the operations are profitable from year 1, proving a very attractive business model. And looking ahead, we are committed to rolling out this proven concept to at least 2 additional countries in the near future. We will continue to onboard at the same time, additional sellers and increase the number of SKUs. As part of this process, we aim to cover 100% of the product catalog of all major suppliers and thus offering our customers industry-leading choice. And with those measures, we will gradually establish the marketplace as a core pillar of our offering with 10% of digital sales in fiscal year '26 generated on the marketplace. This translates into gross merchandise value of EUR 750 million. To sum up, -- our marketplace creates a win-win-win situation. Customers benefit from a wider product selection and a seamless shopping experience. Sellers profit from our large customer base and our traffic, while at the same time, increasing availability of the products. And thirdly, we increased our net working capital position, reduce our stock risk and generate a new income stream. As I'm personally responsible for our largest market, Germany, as the CEO, I want to use this as an example of how our transformation efforts are already paying off. Despite the challenging market environment, we have achieved notable market share growth in the first half of this financial year, resulting in a commendable 22% market share. Moreover, our EBIT has seen a substantial surge of 132% compared to the previous year, driven by a clear focus on cost management, margin improvement and inventory optimization. Additionally, we have successfully raised our NPS by 3 percentage points, now standing at 53%. And furthermore, we have significantly expanded our service and solutions income, which now serves as a key earnings pillar. And lastly, we have streamed that our organization optimized our structures and showing greater efficiency in our operations. With that glimpse into our German efforts, I conclude my section. We'll take now a 10 minutes break, allowing you to take a coffee. And following that break, Remko will take over and continue guiding you through the remaining building block of our strategy framework. Thank you. [Break]

Good morning, everybody, and welcome back to the second part of the Capital Markets Day. I'm here to show you how we are becoming a platform business through services and solutions and retail media, where we are today, but also how we are going to achieve our ambition in the future. Services & Solutions are of paramount importance to our business. Services are essential for our customers as they address various needs, enhancing our physical products and offering a comprehensive end-to-end experience. Still, it's important to notice that we currently only offer a fraction of the services available, leaving a significant untapped potential for growth for the future. When you look at our service and solutions business today, in order of importance, you can rank them. At the top, we have our insurance and warranties, then the telecom contracts and power service. Power services are including a range of services, like trainer, delivery, installation as well as aftersales support and repairs. To go together, please free services contain 70% of our income on services. On this slide, you see our illustration of the service and solutions based on a customer perspective. We provide services along the entire product life cycle. This is what we call as made marked a lifetime promise. Customers can buy a product or even rented at Media market, get it repaired or use the trading to that proposition, I will come back later or by refurbished products. This enables us, at the same time, to create a circular economy value chain, which we are, as MediaMarkt extremely proud of. But first, let me remind you what we have done so far. As you can see, from year '18, '19 to '21, '22, the penetration of Services & Solutions income increased by 0.5 point, coming to 4.5% of group net sales. I have 2 important technical remarks on this slide. Firstly, we are talking here about income contribution. That means gross profit and not sales. Secondly, -- our operational service and solutions offering follow a slightly different definition from the one that you're used to for clarity. This includes all our services, but excludes mainly retail media, GMV for marketplace commissions and delivery fees. Now back on the slide. Over this period, our online sales increased strongly, which impacted our Service & Solution attachment rate. But as Sascha already explained earlier on, our new webshop now enables us to sell more services online with a better customer experience. We've also done a lot over those years. Let me give you a few examples. As we care about our planet, we have introduced a trade-in proposition in 2022 with our strategic partner, Fox way. This initiative promotes a circular business value chain by allowing our customers to trade in used devices in exchange of gift cards for a direct discount. We are very proud to see that since its launch, the number of trade-in products has more than doubled compared to 3 years ago. This program not only benefits the environment, but also offers a value and incentive to our customers. Together with our partner, we aim to continue promoting responsible consumption and reducing electronic waste. But we also offer new and innovative services. The best example is screen calibration. -- customers purchasing a premium TV or those seeking and personalized screen experience can avail themselves of this particular service, either at MediaMarkt in the store or at their own homes. Whenever you're an avid football or soccer watcher, like discussed before, Liverpool, for example, or a viewer of dedicated series, our expert will tailor the screen setting to your specific preference. Currently, we are already doing the calibration of 30,000 TVs every month, and this number is still increasing. Finally, and more importantly, our employees have a key role to play in the development of service and solutions. We have launched a training program aimed at enhancing the sale of services for our customer-facing employees. Currently, we have successfully trained already 14,000 of employees, which accounts for approximately 30% of our overall staff. We have initiated this program in our core countries, namely Germany, Italy, Austria and Spain. Talking about Spain. Within our country portfolio, Spain is one of our key markets. The Spanish market is still holding well when you look at the 2-year stack growth with a 5% growth in Q2 2023. And we, as MediaMarkt's are the clear market leader with 70.5% market share in the first half of fiscal year '23. Spain is one of our best countries for service and solutions with a penetration above group average. There, we are particularly strong in warranties and power services. When it comes to repair, we can also handle up to 400,000 repairs per year in our service center, Pinto, just south of Spain of Madrid, sorry. Going forward, we plan to further develop our warranty business, particularly for smartphone IT in Spain as well as our power service to increase our profitability. Going forward, we have a clear vision of experienced electronics and target to at least EUR 200 million increase of our share in services income coming up to a 5.5% share of group sales. Therefore, we are aiming accelerating our training program with the target to have 100% of our employees trained on services solutions by the end of 2024. At the same time, we continue to develop new and innovative services. For example, we now offer subscription on services online and off-line for extended warranty, but as well for software licenses. This is today already available in 4 countries: naming Germany, Austria, Spain and the Netherlands. With 2 more countries to come, Belgium and Turkey this summer. This will enable us to increase the share of recurring revenue and to increase loyalty. But that's not all. We are also focused on building a service ecosystem, allowing our customers to access services without the obligation to purchase the products. This initiative aims to provide flexibility and convenience catering the device customer needs. At the same time, we expect further strong performance with our trading proposition and expect 160,000 trade-in products this year and 250,000 trade-in products in 2024, 2.5x more already than last year. Finally, we have launched a very comprehensive and customer-friendly proposition this autumn in Germany. We are extremely excited about this proposition. However, Karsten will come later in his presentation back on the details. As you can see, we strongly believe that services makes the difference for consumers, offering both customer loyalty and high profitability. Services is deeply ingrained in our DNA, reflecting our commitment to providing exceptional experiences for our customers. In addition to service, retail media is also growing in significance and playing, therefore, an increasingly important role in our overall strategy. Combining offline, online and data can be extremely powerful. As an omnichannel retailer, we want to harness our customer data so as to take a significant share of this fast-growing media segment called Retail Media. Retail Media of its brands, the unique opportunity to engage with customers at the point of purchase, unlocking greater advertisement performance and delivering higher returns on investment compared to other media. By capitalizing on this trend, we strive to maximize our impact in the advertisement landscape. This market alone is in Europe this year, already estimated on EUR 10 billion and expected at least to double by the end of 2026. And of course, we, as MediaMarktSaturn wants to have our fair share. Today, brands have moved their advertisement to the digital landscape. This trend have, of course, accelerated post to the pandemic. Those brands are eager to measure the efficiency of their advertising spending. And for that, they need first-party data, our data. We have been building up our retail media expertise over the last 2 years. And let's have a look together at our current product offering. Currently, we have 4 products live, and we plan to introduce a fifth one sponsored brand at later this year. So on the left, our sponsored tools enhance the visibility of products and as mentioned before, [ Saturn ] brands, leading to an increasing market share and sales. These products are powered by our own data analysis and are available at the moment in 9 of our countries with the potential for expansion to all our countries by 2024. We -- these tools are simple, yet highly effective, leveraging personalization and an automated ad delivery algorithm to deliver optimum results for our suppliers. We are strongly gaining momentum with suppliers. And after having multiplied by 4 our number on sponsored product adds last year, we tripled again this number of campaigns in the first 4 months of this calendar year. And for that, there are 2 main reasons. Firstly, our partnership with Criteo, the global ad-tech company since November 2022. The expansion to 9 countries since the beginning of 2023. As you can understand, brands are very keen to understand the customer behavior online, we are compiling 2 interesting customer reports as well, the consideration and the action report. Thanks to those analyzers, brands are able to understand how customers interact with their brands and products on our different web store environments. We also help them to benchmark the performance of each product within the average of the concerned product category. This enables our industry partners to access whether their products outperform competitors or not. As you can imagine, the appetite of the industry and our key brands is very important. They are very much interested. We have already onboarded most of our big brands and we target to onboard all our brands at the end of 2026. Lastly, our A+ content empower suppliers to adversely upload engaging content on our web store, transforming maintained product detail descriptions into captivating an emotional customer experience. Just one example. One of our big suppliers experienced a remarkable 20% increase in conversion by providing A+ content to his and our customers. There is well more to come. And this summer, we will launch self-service marketing platform for SBA sponsored product ads with the help of our partner, Criteo. Combining our data with their technology, we will enable suppliers to tailor-make their marketing efforts on our web store and at the same time, immediately measure their performance. As you can see, we, as MediaMarkt, are moving fast on retail media and expect to multiply our income with response in regards to gross profit by nearly 10x by the end of fiscal year '26 to a EUR 45 million. This will be, as you can understand, strongly margin enhancing for the group, but are the main drivers behind this. First of all, the rollout of our product offerings, as just explained, building strong media sales power to penetrate the market, taking our fair share as well as further innovation like our self-service marketing platform. We are as well working hard to be able to merge our online with us off-line customer data going forward. Now we talked a lot about improving our potential that we see at MediaMarktSaturn. But clearly, this would not be feasible without a very strong supply chain and IT. So let me now welcome Andy, who will walk you through these 2 enablers. Thank you very much.

Hello, everyone, and thank you, Remko. Thank you, Sascha. We hear a lot about omnichannel excellence, growing our service platform, scaling retail media and also our marketplace. The question is how do we enable this? And the answer is with our technology and our supply chain transformation programs. So let's have a closer look at the engine we are building. Transforming a retail company like MediaMarktSaturn with a rich heritage of being decentralized and a single channel approach to a market into a centralized and omnichannel player takes time. And although I haven't been here with the company for long, I can tell you that 3 years ago, our cloud-based technology and digital capability wasn't that well established. However, we have been working hard to change that. And over the next 3 years, we will continue to decommission our outdated bricks-and-mortar IT systems in our key markets and replace them with new digital commerce and tech-enabled supply chain. In the Netherlands, our pilot country, we have developed a clear technology blueprint underpinned by a flexible and modular architecture. So think LEGO bricks, which can be put together in different ways to create new features and experiences for our customers. And I'll talk about that in a moment on the next slide. Moving forward, our new IT capabilities open up opportunities for expanding into new business areas. For example, we can now leverage our data lake in the Google Cloud to monetize our customer data. That was really brought to life with Remko and the retail media example. It's worth noting that about 50% of our IT landscape is already deployed in the cloud. And we have deployed new digital commerce platforms in several of our markets, indicating our commitment to cloud adoption and to leveraging tech to enable richer customer experiences in-store and online. In summary, we are creating a modern technology stack. We are leveraging the cloud. It is API-driven, it's headless, and this platform underpins our omnichannel vision of the future. It's also worth mentioning that we're already receiving recognition for our efforts such as the Google Award for outstanding omnichannel shopping experience in 2022 for our German business. As I mentioned earlier on, -- we have established a very clear blueprint for our next evolution of technology in the Netherlands. So what did we do exactly to provide that new seamless customer experience? Well, first of all, we uplifted the availability for our customers. We consolidated our national distribution center and the online warehouse to create one omni distribution center. Secondly, we implemented a new order management system that is fully integrated in-store and online in the cloud. Third, we replaced previous online goods, our management system with a cloud-based ERP system, which enables us to efficiently manage and improve availability of our products. And fourth, we rolled out a modern online digital commerce platform to enhance the overall online experience and drive higher conversion rates. And finally, for our physical stores, we have just successfully tested a new checkout platform in a pilot store in Mastic, which will further strengthen the links between our online and our off-line customer experience. We measure success through 3 main KPIs, improved sales in online conversion, higher availability and reduced stock reach. And all of these measures, we have seen a clear improvement over the last year in the Netherlands. This gives us real confidence for the future. And the Netherlands is just the beginning. We will continue to roll out with Germany next year, followed by all of the markets. Again, it's a journey, and we are confident that we are on the right path. So I've talked a little bit about technology, but I now want to talk about our supply chain. Supply chain is the backbone of our omnichannel vision. If we're going to create seamless experiences and improve efficiency, supply chain is the answer. In the simplified illustration shown on this slide, it's clear that we are reducing complexity, simplifying the lives of our suppliers, our business and most importantly, our customers through our multilevel omnichannel networks. We have transitioned from a model of channel dependent fulfillment where stores were at our core to integrated omnichannel fulfillment, allowing customers to get the products they want from us seamlessly from anywhere at any time. One of the most significant changes despite appearing trivial is the crucial merging of the online distribution center and store warehouse into one omni distribution center, as I explained in the Netherlands example before. As a result, suppliers now only need to deliver to one central location instead of having to deliver to numerous individual stores. This streamlines the process, eliminates complexity and it goes without saying that the integrated omnichannel logistics network increases efficiency and helps us to reduce emissions. Moreover, this consolidation enables a pull-based replenishment model for ensuring that our products are available in the right locations at the right times. So where do we stand today in terms of reaching that target picture of 80% of our inbound logistics being processed centrally in '25, '26. In short, we're almost halfway there, 40%, which actually means we've still got huge opportunity and potential over the next 3 years. So let's turn to the next slide. What does this transformation mean in terms of KPIs that we track regularly. Overall, our supply chain investments are driving improvements in 3 key areas: high availability. Our aim is to have 95% product availability across our business by '25, '26. Our customer experience is critical, and our objective is to drive up our Net Promoter Score for delivery excellence to 70 through providing more flexible delivery options and keeping our delivery promises. And finally, driving higher profitability, as per the previous slide, we aim to reach that 80% centralization of inbound logistics, which will reduce our supply chain costs on one side and increase our supply chain income on the other. To bring this to life quickly, I'd like to just do a deep dive on a perfect example, our new national distribution center in Göttingen, Germany. As I explained earlier, we have moved from a store-centric approach to an integrated omnichannel approach. And since September 2020, the NDC has commenced operations, supplying all MediaMarkt and Saturn stores across Germany as well as online with a selected one-man handling assortment. The maximum storage capacity of 10,000 SKUs or individual product lines on 70,000 square meters of floor is pretty impressive. And our investment is paying off. The centralized unit volume will be ramped up in the financial year '24 where we expect to process more than 20 million products through the NDC. And this will enable us to break even on our investment. To sum it up, our NBC and our omnichannel approach is the right answer to becoming fully omnichannel and providing our customers with an excellent delivery from us. Now I'll hand over to Karsten, who will delve deeper into how sustainability is ingrained in our company's DNA. Thank you...

Thank you, Andy. I will take you through the 2 final building blocks of our strategy, sustainability and people. And sustainability is not just a word to us. It's an essential part of who we are. We're in an industry known for consuming a lot of resources. And as the leading player in Europe, we know we have a unique responsibility here. We do not shy away from it. Instead, we embrace it. Not only do we see sustainability as our duty, but we also see it as a rare business opportunity. We've already started seeding this opportunity and are dedicated to broadening its impact in the years to come. Our sustainability commitment is so strong that we are working to weave it right into our DNA. And that at a corporate level, this means we are targeting a climate-neutral shopping experience. We set ambitious goals across all our operations. We strive to provide the most sustainable consumer electronics range in Europe. We are also trailblazers in the circular economy, offering services from trade-ins to refurbished products. We are committed to social responsibility, not just for our own employees and communities, we also actively work with our suppliers to advance sustainability. We are committed to sustainable operations, prioritizing transparency and accountability. We are part of the European Union's sustainable consumption pledge and to working towards joining the science-based target initiative. Our immediate aim is net zero emissions for our stores, company cars and purchase energy. And by 2030, we'll be 100% renewable across all sites. And we are looking at a 33% reduction in our third-party emissions by 2033. We'll also push 80% of our suppliers to set climate targets. Importantly, our top management's compensation is also linked to reaching these ESG targets. And with respect to our customer business, we've set ourselves ambitious sustainability goals. We are committed to accelerate our transition towards sustainable products. Our sustainability labor better way guides customers towards products that are energy efficient, long-lasting and recyclable. The sustainability of these products is verified by highly recognized independent third-party organizations and only then does a product receive our better way label. Last year, we grew the share of BetterWay products to 3%. And we aim to increase this to 20% by fiscal year 2026. This means we will also substantially enhance the share of energy saving products. Furthermore, we are dedicated to expanding our offering of refurbished products. We sold 8,000 units last year, and we project to sell more than 200,000 refurbished units by the end of fiscal year 2026. Let's now talk about repairs and trade-in on Page 62. We are committed to extending product life cycles with our comprehensive repair service offering. As authorized service partners for numerous brands, we provide expert advice, remote services and spare parts sales. By 2026, we are looking at 3.5 million annual repairs across our group. Additionally, customers can return us devices through any of our channels for refurbishment, recycling or trading. And we are currently ramping up our trade-in program in multiple countries, aiming for over 600,000 trade-ins by 2026. Not only do customers receive substantial financial value, but it also fosters a deeper connection with them. Additionally, we are broadening our services to include rental models and future trade and price guarantees for products that the customer has just purchased. In a nutshell, we set clear is [ GND ] carbonization targets and are seizing the opportunity to enable a more sustainable lifestyle for our customers. And now let's shift our focus to the heart of MediaMarktSaturn, our people. They add the human touch that distinguishes us from others. Being at the forefront of our business, they bring in the essence of a people's business. Up next, we'll see how we are investing in the development to ensure they deliver an exceptional customer experience. So let's dive into our 3 focus areas: people experience, business performance and customer experience, starting with people experience. We've launched our Let's Go! employer branding campaign as part of the broader let's go initiative. You saw that one at the beginning. And the results, a 36% increase in job applications. We're aiming to attract tech passionate, open-minded talents who value also diversity, equality and inclusion. And we've introduced training programs across the group like diversity awareness and unconscious bias to cultivate an inclusive environment. And when it comes to business performance, we are running a consistent performance management process and are on our second wave of an international leadership program. We are committed to providing opportunities for our employees to grow. And finally, the customer experience. We've initiated a store employee upskilling program. It's all about boosting the skills of our frontline employees, especially in our service and solutions business. And we've so far trained around 14,000 participants through a train -- the trainer approach. And this directly impacts our critical people KPI, the Net Promoter Score for our people. We call it NPP, Net Promoter people. And the key question is whether our people would recommend MediaMarktSaturn to their friends and family as a place to work. And we've boosted NPP by 31 points in the last 2 years. So let's have a look at our employee experience campaign, please start the video. [Presentation]

Well, and as I said, the stars of all campaign, our own people. So Wrapping up my part of the presentation, I hope you're eager to see now how everything we've discussed translates into numbers and financials. So without further ado, I'd like to pass the baton to Kai, and Kai will walk us through the financial plan and road map for our company. The floor is yours, Kai.

Thank you, Karsten. Thank you, Sascha. Thank you, Remko. Thank you, Andy. And finally, after almost 2 hours, good morning to all of you here in Cologne. Good morning to all of you joining us virtually on the screen today. You've now seen more than 60 pages and listen to us for almost 2 hours before we know go finally to the meat of today's discussion to the financials. So let me say thank you to you, too. Thank you for your patience. Actually, personally, I'm not a very patient person, I need results quickly. But for today, I really wanted to go on stage at the very end. Not because I'm afraid, after all, there have been quite a few CFOs in our company recently or because I'm nervous -- but rather because I think you needed to see the business first. I wanted you to see what we're tackling and how we are making progress step by step by step. Not enough steps yet and not steps far enough, but steps there are and there are steps that prove that we're making progress. Progress to think of the customer first front and center, progress, how we transform our retail core business, including Space-as-a-Service, and how we strengthen the new growth business model, Service and Solutions, Marketplace Retail Media. This is measurable progress, and it is the first tangible sign that we do actually change, change towards a significantly better operating model with higher profitability and cash. So once again, thanks for your patience. And now finally, let me walk you how those steps materialize in the financials. In the course of our presentation, we have explained and committed to many, many different KPIs. Each one of them is key to a very, very specific aspect of our transformation. And we track them in a very disciplined way to stay on course. On the left of the slide, let me highlight those 9 key pledges that are most important for the fiscal year '26. Now for our retail core, we want to win 50 million loyalty card members. That's roughly 50% more than current members. We target above 90% of our stores to be modernized from 30% at the end of the last fiscal year. We target an online share of 30% of our sales and a 10% decline in stock reach compared to fiscal '21, '22 measured in days inventories outstanding DIO. Finally, we expect to have up to 20 lighthouse stores, more than double the number that we have today. That's for the core. Now for the growth businesses, we look to achieve the following: EUR 200 million additional income from Services & Solutions. That would lead to a sales share of 5.5%. And Remko explained a bit earlier, this means our operational Service & Solutions business. So excluding retail media, excluding marketplace GMV and delivery fees. And please also keep in mind we are here measuring our income, not our sales, gross profit income, not sales. Next, 5% penetration of private brands, more than doubling our current share. Thirdly, EUR 750 million gross merchandise value from the marketplace across our footprint. Factor X compared to the end of last year. And finally, EUR 45 million income from Retail Media. It's with the 9 key pledges. On the right-hand side, you can now see 16 additional KPIs, which we discussed in the course of our presentation today. Each one of them to remind you, measures a very, very specific aspect of our transformation. By way of example, let me just pick out a few to illustrate our approach and to recall some parts of the presentation. Fourth from the top on the left, we plan to decline our location costs in percentage of sales by 20 basis points, which, if you think about current inflation trends is a pretty strong commitment. What makes us feel confident is our approach to different store formats. -- and to continuous cost management, and I'll come back to cost management in a minute. On the bottom of the left, we commit to more than 600,000 trade-ins. That's up from 80,000 last year. Third example. Now on the right, our supply chain transformation, as Andy explained, is on a path towards an availability of 90%, which should then translate into an NPS, so effectively into customer satisfaction of 70 plus 70 for delivery and pickup. In the interest of overall transparency, we plan to update all of you on all of our KPIs. I mean the top 9 plus the 16 listed on the right, once a year when we publish our annual financial results. In addition, we will share with you progress and comments about the top 9, every quarter with our earnings release. Now having said all that, let me come back to what Karsten said already in his introduction very early on today. Any successful transformation will combine both a long-term strategic perspective, but we presented it to you today. And at the same time, we will keep focus on our current operations on our immediate business requirements. If necessary, we will always react tactically and very, very disciplined to safeguard our objectives even while keeping the course towards the long-term purpose and target picture. As Karsten said, and let me quote that the art of a successful transformation lies in striking the right balance between keeping a long-term perspective and staying very, very nimble in daily operations without compromising short-term effectiveness. For the moment, however, let me come back to the long-term commitments. All the levers which we presented in the last 2 hours and the key KPIs I just showed you, will translate into more than EUR 500 million adjusted EBIT by 25% 26. That's an increase of 150% compared to '21/'22. So profitability and cash really are the key ultimate objective of what we're doing in. I'll start with the EBIT growth. This EBIT growth will be based on 3 pillars: -- the first is an increase of our gross margin towards 20%. That's mainly driven by our growth business models, Service & Solutions, marketplace and retail media and by a recovery of our goods margin in the retail core. Now we already spoke about margin stabilization in our Q2 release, but we have now taken many, many measures in order to push margin up again. Here are a few examples. We adjust our product mix and grow new margin-accretive categories based on our data analysis. We pushed the attach rate of accessories for popular products. And of course, we also rebalanced conditions with our industry partners in order to recover some conditions lost during COVID and the inflation crisis. Not the least, it is our private labels that will contribute to margin improvements. Remember that we pointed out that we will now manage private labels no longer separately from the main retail business, but rather in an integrated way from one team and one organization. That's the first pillar. The second EBIT pillar will be strict cost discipline to keep our adjusted OpEx ratio stable. And thirdly, sales growth slightly above the market. We expect low single-digit numbers here. All of this, coupled with discipline on CapEx, will transform CECONOMY into a much, much more profitable and cash-generative business. On CapEx and cash investments. We will invest roughly EUR 300 million per year. of which approximately 40% for our store portfolio. Think about the refresh of the core of modularization and of shrinking space and 30% of what Andy explained, IT and logistics. Our commitment with all of that is to generate EUR 200 million free cash flow in '25/'26 million. That will be based on a steady increase from today. In summary, if you sum all of that up, this free cash flow will be driven by a significant EBIT improvement. And this mainly comes, as you've just seen from a margin increase, strict cost discipline and all of that coupled with sales growth slightly above the market. Let me dissect that profitability booster for you on the slide that you now see. You can here see the building blocks behind our ambition to reach more than EUR 500 million EBIT, which translates roughly into the 2.5% EBIT margin, which you can see on the right-hand side. The main driving force -- the main key message of today our purpose to create experienced electronics to enrich people's lives. That purpose motivates especially the growth of Services & Solutions which will be the strongest contributor to our operating profit. From Retail Core and the other growth areas, Marketplace, Retail Media, we also expect a contribution, but it will be rather evenly spread. One step further. On the next slide, let me look into the heart of our P&L. You see OpEx on the left, you see gross profit on the right-hand side of the slide. First of all, main message, we anticipate that all business areas will have a positive contribution to our gross profit. Then if we go through gross profit from left to right, we expect our retail core to remain rather stable. Actually, there is a small increase behind those numbers. But on the slide, this is covered and running. For private label, however, we expect to double our gross profit, Marketplace contribution should be multiplied by 8 and retail media by 9, so pretty significant. In Services & Solutions, with that 30% increase in gross profit, once again, this is the central pillar to improve our profitability in the future. At the same time, we have to stay super, super focused on cost management, the second driver behind our EBIT growth over the next 3 years. In line with the whole sector and actually with many companies in other industries, we do see cost inflation in several areas, significant cost inflation, energy cost, location, personnel. Still, we anticipate and commit a stable OpEx ratio and that will be supported by very, very disciplined efficiency programs. This is what you can see on the next slide. Essentially, there are 2 main initiatives. The first one focuses on making our structures and processes more effective and thus more efficient. It includes, for example, streamlining our headquarter functions on the level of the holding and the central functions here in Germany, and then also on the level of the country holdings across Europe. It also means we optimize our global shared service unit, which handles transactional processes, primarily in HR and finance. And thirdly, digitization of our processes throughout will be a key driver behind this first program. Now you may remember that we officially announced this first program already at the end of April this year. We are now, as we speak, implementing the relevant measures in good collaborations with workers' counters in all of our markets. The second program is on advertising cost. Especially our joint efforts between MediaMarkt and Saturn in Germany lead to significant synergies. And going forward, marketing efforts across Europe will then be in focus. Overall, for all of this together, we expect to book approximately EUR 100 million restructuring costs. This year and next year. The main part of that, some EUR 60 million to EUR 80 million should already be there, this financial year. On the one hand side, this will lead to a cash outflow over the next years. On the other hand, these programs will deliver roughly EUR 130 million savings run rate from fiscal year '23/'24. And if you do the numbers, that's a pretty attractive payback of less than 2 years. Now let me wrap up with our financial framework behind all of this. We've always had a very prudent and conservative financial policy. But now we want to underpin this approach with clear measurable metrics. Our commitment is to keep our leverage ratio below 2.5. That's measured as net debt including leases to adjusted EBITDA. For the current financial year, we expect 2.3 that would be stable versus the previous year. And going forward, we expect our growth plan to actually even offer us some headroom with this leverage ratio. Secondly, we will always keep sufficient liquidity reserves to protect us against any macroeconomic volatility. For those reserves, we will build on a wide set of different funding sources. That's currently including our bond, commercial papers, promissory notes and especially our RCF, our rolling credit facility. This currently stands at EUR 1.1 billion, which we have never drawn and have full access to. These 2 pillars a conservative leverage ratio and sufficient liquidity reserves. These 2 are the backbone of our financial policy. And finally, please keep in mind, there is no major repayment of debt until '25, '26. So that means we actually have a clear path in front of us to take step by step by step by step, towards our growth strategy, as I've just laid it out with a strong focus on EBIT to grow to more than EUR 500 million and free cash flow to reach EUR 200 million. Karsten. Back to you.

Thank you, Kai. And before I wrap up and we move to Q&A with the full management team. There is actually a little more and I'd like to share an exciting development with you all. Over the last period, we've sharpened our skills at innovating to create more value for both our customers and our business. And in the second half of this calendar year, we are set to launch a crucial new proposition, our myMediaMarkt Plus offering. And myMediaMarkt Plus is designed to provide our customers with important extra value and peace of mind, all for a monthly fee. And with this service, customers can repair all their electronic devices at MediaMarkt irrespective of where they purchase them. And in addition, myMediaMarkt Plus members will have access to 24/7 tech support and expert consultation. So as our customers can enjoy the technology worry-free. We will enhance the experience and deep more relationship with our customers. That in essence is what experienced electronics is all about. So stay tuned for more details in the near future. As we wrap up this comprehensive presentation, one thing brings loud and clear. The CECONOMY is not just ready for the future, but truly eager. Our strategy is clear. Our execution plan is robust. And our financial targets are set at the core of our strategy is the customer. We are progressing from consumer electronics to experience electronics with a goal to foster customer loyalty through an experience-based omnichannel platform, multiple business models, from enhancing our core retail business, to growing our Services & Solutions, capitalizing on our Private Labels, expanding our Marketplace making the most of our physical store space to monetizing our digital reach through Retail Media. We project our EBIT to more than double to over EUR 500 million by fiscal year '25/'26. And we project to significantly bolster our free cash flow annually to reach EUR 200 million. I firmly believe we will sustain the momentum we are creating and deliver on our strategy to create experienced electronics to enrich people's lives. And on that note, I'd like to extend my heartfelt gratitude to all of you, whether you've joined us here at the experience in Cologne or are tuning in online. We value your interest and are grateful for the opportunity to guide you through our promising journey, which we believe will create value for our investors in the years to come. We will now have a 15 minutes technical break for online guests to register for the Q&A, and we will do this together with the entire management team. We look forward to addressing any questions you may have. Thank you very much. [Break]

So what we will do is I will basically try to orchestrate the questions and distribute them amongst the team, and we've just -- I've just decided that first 2 questions, actually, Kai will give it a go and if there's anything that I will give it -- pass it on.

I appreciate that. Thank you. And thank you for the good questions. So let's start with marketplace first and commissions. Commission level varies, of course, by product You should assume a high single-digit percentage of commissions roughly once again varying by product, but roughly that order of magnitude. And as was mentioned, we did say that our marketplace is profitable from day one. My point being, you can roughly assume the level of percentage of commissions that I've just given to be straightforward EBIT more or less, a lot more than less. And on Services & Solutions, it's different, of course. It varies dramatically, significantly by the category. Think of insurances on the one hand side or sustainability products and services on the other hand side. So here, I cannot give you one number, I would -- we spoke about EUR 200 million income, right? That's the number that we cited EUR 200 million income trends or deriving from one percentage point increase in percentage of sales, 4.5% to 5.5%. Translation into EBIT 2/3 roughly speaking. But the level of -- we cannot disclose the level of profitability of the different services behind this. This is just a calculatory answer that I would give you. I hope that answers your questions.

There's nothing, I think, to add. We will update you anyway, as Kai said, on a regular basis. And also, of course, also because in services for us, we will focus more on recurring revenues, and we will also explain them later on how this is working out for us.

[Operator Instructions] Do we have another question from you, Andreas.

Andreas Riemann from ODDO BHF. Thanks for the very comprehensive presentation and for all the financial details, which allows us to measure the performance in the next 2 years. Two topics. First, the goods margin. I think you stated that you lost 100, 150 basis points goods margin in the last few years during the lockdowns. Is the guidance basically implying that you want to recover all that until '25, '26. First question. The second one on Services & Solutions again. it's probably about increasing the attachment rate, right? So in the end, you need to alert the customers to the store to sell them whatever the service might be. So the question is, in the end, have to subsidize Click & Collect? Or what is the trick despite a rising online contribution to lure the customer to the store to sell them S&S?

Yes. Thank you for the 2 questions. Maybe for the benefit everyone online, I'm not sure how well this can be heard. One question is on the goods margin. If we are going to recover from the margin lost in the past, especially during COVID. And the other question is on services, specifically on attach rate. I think Kai will kick us off with the goods margin. I will say a few words, say, on the service side and then also ask Remko, maybe on the technical side, how this works because I think that's important to understand for me, it's attached, but it's not just attached. Maybe you start?

Sure, I do. And just to make sure that we're all talking about the same number. So we spoke about a 20% gross margin. That consists of product margin, the question about commissions that I've just been answer and all of these things. So now we're talking about one element of that, the product margin. You're absolutely right in saying that in the COVID years or compared to pre-COVID times, we've lost product margin. And it's right to assume that it's around 120 and 150 basis points that we've loss there. That's the number I'm now citing is last fiscal year. So pre-COVID times than last fiscal year. From that stage last fiscal year, going forward, we expect to recover some, but by no means all of what we've lost. I would assume 20, 30 basis points to be recovered, so 1/4 of what we've lost. Only. I would emphasize that this margin assumption, as many others that you've seen underlying my presentation is on the very cautious site. And we'll be happy for any 1-basis-point above our assumption, but we've assumed cautiously to recover only what I've just cited. That would be the answer to the first.

Good. So on the service side, let me kick that one off and then invite Remko to add to this. So there are a few things to note. First, in the online business, obviously, we are also improving a lot the attach rate. So we are also making services online much more prominent. When you -- for instance, a lot of our trade-ins actually, the journeys start online, often they are obviously completed in the store because that's convenient. That's one area. The other big area is that we train and that's the program also led by Iris or people to do a much better job by the customers to guide the customer through to understand what they actually need. And that, of course, also say drives attach rate. Let's also not forget that at the moment, again, luckily, we see a stronger footfall again in our stores. That, of course, also drives very important traffic. And notwithstanding the fact that some of the services are also a key initial driver increasingly so to come to us. So it's not just an add-on. It's actually -- and that's also, I think, what we are trying to achieve with that, and we see some very positive signs to be a core driver why to come to a MediaMarktSaturn. Maybe Remko, you can?

Yes. Let me elaborate on that. Good question, how you basically move from an online to offline. So we are working very hard on a couple of things. So first of all, training all our employees indeed till the end of '24 and that includes also the employees behind the checkouts and also behind the pickup counters. That means, at the moment, we have an extremely high NPS already on our pickup and it means that all customers, when they buy online, they can pick up within 30 minutes their products. That means that we are on the high-level of 30s pickup rate in our organization. That's one. Secondly, we can actually track, of course, which kind of products customers are buying online. And we will make sure that the services that we can attach to these products are basically in the focus of the people behind the pickup counters. That's one. The other one is we are doing a lot, like I mentioned in the presentation, for example, in Pinto, also to prepare already bundle sales and bundle sales can be with foils on the phone, but also in the store itself, we have all our smart bars where basically we guide the customer to the smart bar to explain the full package of the services that we have available in our multichannel, omnichannel environment.

[Operator Instructions] I'd like to take the first question online from Nicolas Champ, Barclays Capital.

I have 3. The first 1 is you have set quite ambitious medium-term target. Could you tell us what are the main headwinds or the main risk factors you have identified that could prevent you from reaching these targets? Second question is about your target of free cash flow. You said that improvement of free cash flow will be mainly driven by EBIT. But could you please be a bit more explicit about as a component of free cash flow generation and especially the working capital, how do you see working capital evolve over the coming years? And how do you see the different levels of your strategic plan, so the higher private label penetration, higher online share impacting your working capital over the coming years. And third question, and sorry, maybe it's not really new, but -- could you please tell us your latest view regarding your participation in a Fnac Darty with regard to this new strategic plan, where the rationale to keep this participation. And if you plan to keep your this take in Fnac, why don't you reactivate the buying agreement you have previously initially found with Fnac Darty. Thank you.

Yes. Fabienne, you can help, I'm sure with the first question because we couldn't hear it very well.

No, Nicolas, can you repeat the first question, please? We got #2 and 3, but can you repeat the first one?

Sorry, the first one was about, could you tell us the main headwinds the main risk factors you have identified that could prevent you from reaching your medium-term target, please?

Okay. We start with the free cash flow question and working capital. Kai will do this. Then I will continue with your question regarding Fnac Darty and our shareholding there. And then I will comment a bit on potential, say, headwinds, what I think is important. But maybe, Kai, you start with the cash flow and the working capital.

Yes. So allow me to be a bit more detailed on this so that you can perhaps understand the dynamics behind this a bit better. So what are the key drivers of coming from EBIT to free cash flow. There is one thing that we've been very transparent about, and that's more or less stable over this period, and that's cash CapEx, right? We've said on our slide, roughly EUR 300 million. So that's one thing, and it's not going to change. If anything, assume we're not specifically guiding on this year today, but assume slightly less CapEx this year underneath EUR 300 million and a bit more going forward. So that's one. The second big impact on free cash flow coming from EBIT is restructuring. And I did mention that there would be a pretty significant cash outflow for restructuring costs this year. That's both for our efficiency programs and some impact from our Sweden consolidation and next year. So you should assume this negative cash impact to disappear by '25, '26 will be positive. CapEx, if anything, perhaps a little more negative because we will increase CapEx again around EUR 300 million. On restructuring, it will be a positive effect. Now your question about net working capital. We assume for this year, I've been asked that more than once, and I can reconfirm for this year, we've -- we are public with the fact that in Q1 and in Q2, we've had significant positive working capital movements compared to prior year. We expect towards the end of the year, 30th of May, also a positive net working capital impact. Not just double digit, not just double digit. So it's a significant positive, in fact, this year. This positive impact from working capital will continue but not in the order of magnitude of 3 digits that I've just said. This is an especially positive impact this year. And then there is a final element that we need to mention, and that's taxes. You are aware of the deferred tax asset created by the Convergenta transaction. Now this has an unusual effect in terms of seasonality. This year, it will be extremely positive on a cash level. Why is that? We prepaid taxes last year, not assuming a deferred tax asset. So effectively, on a cash level, it's super, super positive, what you will see in the tax line at the end of the year. Going forward, the deferred tax asset will lead to lower taxes, but not so significantly positive on a cash level as in this particular year because last year, we prepaid. Next year, we will still have to pay taxes, just less than initially. So to summarize, you should assume CapEx to be stable, but if anything, in the years going forward, perhaps a bit more than you will have in this year. You should assume restructuring costs to dominate this year and next year and then to dwindle out. You should assume net working capital to have a very, very significant positive effect this year and positive impact, but not significant positive impact in the years to come. And you should think of the tax asset to influence cash in the sense that this year, it's a hugely positive impact. In the next years, we will again have to pay taxes only less than without the tax assets. I hope that -- and I know that I interpreted the question very widely, but I've heard also in the break here a few questions about free cash flow. So I thought hopefully, that helps you a bit to understand better how to walk from EBIT to free cash flow. And I will hand back to...

The second question was regarding the Fnac Darty stake and if you would think about doing a buying agreement again, we activate the buying agreement.

Good. For the benefit of all, let me just make maybe just a few -- 2 or 3 statements generally so that everyone is on the same page. We are one of the major shareholders of Fnac Darty. And we do have in that capacity, very good and constructive dialogues generally, yes, just normal. I actually personally think there is a lot of value to learn from each other, like best practice sharing, wherever that's possible. And it's difficult for me to go into any speculative area like buying group. I would just say that generally, I'm open in the best practice sharing to do potentially do what makes sense. But again, this is currently not our key focus area, but I do not rule this out. And let me be very clear because there is often speculation beyond best practice sharing or doing things on a smart way functionally potentially to better the business on both sides, that's a possibility. Beyond that, there is no further conversation. And if then the next question is, what do you do with the shareholding, I can only say, we are happy the way it is right now. And we look at it from time to time, but then there is not more to say. That is my comment, my answer to Fnac Darty. Then you asked around about the main headwinds in the plan that could potentially stand in a way to deliver against the clear and ambitious targets. First of all, we have to it's very important to point that out again. With all the details that we tried to show to you with the clear commitments business area, also by business area. The way we have now set up the business to also operationally steer the business. We feel we have a very clear plan to deliver against the pledges. Second point I'd like to make, we as an organization coming through multiple crises, we have become more resilient, more robust, more adaptable. And in that sense, actually, I take confidence that we are fast and we can adapt. Now obviously, the uncertainty generally for every single industry, not just for retail, remains high. And the biggest risk, I would say, and it's not a specific CECONOMY risk, but think of a geopolitical -- another geopolitical crisis that impacts eventually supply chain. No one knows. Obviously, supply chain has become also more resilient, but that could eventually lead to a problem, again, purely speculative. Inflation now we see it coming down in several European markets. That, of course, is important that generally, for all industries that this, over time, gets back to more normal levels. That's also clear. But beyond that, we have done all preparations to make sure we can deliver on the plan and the pledges we presented today. That's how I would say. Is there anything that you think I have forgotten.

So let us take the next question online from Clement Genelot, Bryan Garnier.

Yes, I have 3 questions on my side, if I may. So the first one is on Retail Media. Your Retail Media revenue target seems quite low in terms of percentage of sales, [ compared to over with the other food retailers ambitions ]. So is it just cautiousness on your side? Or maybe is it the only because of some internal payers or by that. My second question is was on the OpEx. Why you are only expecting OpEx cost ratio to remain flat and the remaining cost-cutting hedge room and the lower rents only match [ or this should cross ] that inflation. And my third point is on the capital allocation. So what's your capital allocation for your plan? Will be weighted cash only be used to lower the debt? Or should we also expect some small M&A or maybe all the returns?

Okay. Thank you, Clement. So first question was Retail Media. Your numbers look low in percentage of sales compared to other food retailers? Are you cautious? Or what's your view?

So thank you. So 3 questions. Thank you, Clement. Just to confirm that I got it right, maybe for the benefit of everyone. So the first question is Retail Media. Is this more on the cautious side of things? Is there not more possible? That's the question, I'll take that one. The second one is around OpEx, that OpEx is flat. But does that mean that everything we do is basically just offsetting inflation. I think, Kai, you are the man for that one. And on capital allocation, the question is, let's say, we if we had more, say, free cash flow at hand, what would we do with that one? I'll take that one. So let me start with the first. On Retail Media, the first thing I would say, Clement absolutely spot on, this is actually a very attractive area. And you can actually create a lot of value from this, and that's why we're actually entering this. But you're also right in your assumption that I'd say, first of all, a 9x tenfold increase, that's just from an increase perspective pretty big. And I would say, let us first deliver on that pledge. First deliver on that pledge. And in that sense, we are -- yes, we are, in that sense, more on the cautious side. But when we build momentum, rest assured, we will look into the plans and see how we take it from there. But we are indeed even though it's tenfold, a bit more on the cautious side. And I think for me, that's the right approach. OpEx?

OpEx. Yes, Clement, thank you for the question. Look, it depends on how you emphasize that sentence, right? We said we would keep OpEx ratio stable. Let me give you a different emphasis. Whatever happens we will keep OpEx ratio stable, okay? There is a plan behind this of cost savings, which I just made transparent. There are certain inflation assumptions behind this. I believe these are very -- these inflation assumptions offer some potential. Let's hope that the world doesn't turn so negatively as we've assumed it, in which case, there is an upside. However, given current uncertainty, we feel required to plan on a conservative level. So that if inflation kicks in, we can make it go away. I guess my answer to your question is we've assumed to make inflation go away. If inflation comes in less than we've assumed, and I think we've assumed a lot. There is an upside, which we believe is a good prudent planning assumption.

Yes. Thank you. And the third question, capital allocation, assuming there is more free cash flow at hand, what do we do with that? My answer is we have an ambitious plan. Let us first deliver on that plan. So to drive that cash flow improvement to drive that EBIT, Kai explained the mechanics? Should we be in a position that cash, free cash flow is higher, and we have that, sorry, champagne problem. Then we will definitely have to decide what we will do this, and we will then update you. But first, and that's very important for me, let us first deliver on what we have presented, which is an ambitious achievable and clear plan. That's I would say. So let's first do this one.

Let me go back to the room. Any questions from the room? Don't be so shy. So let me go back to online then. The next question comes from Volker Bosse, Baader Bank.

I would also have 3. First one is on the sales growth forecast, which you provided low single digit. The market growth, you expect to grow faster than the market but there have already a mid-single-digit inflation, which also drives growth. So what are the components of growth which you have included in your model, which price inflation and how much growth driven by volumes and higher number of units so if you have baked into your assumption, that would be a first question on the sales growth permits. And second, I think would be. Yes. I mean, given that we have a midterm guidance of what's about dividend policy, you didn't mention dividends at all also EPS program, you did not mention dividend, perhaps an update on your dividend policy here. And the last question I would have on the current trading, how the top line develops in third quarter by nature is that a loss-making quarter, but perhaps you can give us a level of growth and losses, which we can expect in order to have some more color on the -- for the projections on the third quarter.

Yes. Thank you very much, Volker, for the 3 questions. Question 1 and 3, Kai will take. I will comment, and I will make it very short on the dividend question. The first question, again, for the benefit of everyone and just double check Fabienne, me know if I got it. The first question is around sales. If we can comment on the sales assumptions and how much of that is driven, what's the role of inflation in that number, Kai will deal with that one. And the third question that was basically the current trading situation and Kai will basically go back what we said in Q2 and give you a bit of color there. So on the dividend side, it's actually really what I said earlier, Volker, I think Kai has explained how much we invest the CapEx in our business, the ratio between the stores and tech, what Andy talked about and supply chain with the contribution from EBIT all the things we do on stock management, stock turn, the role that marketplace builds and to improve the cash flow situation. So substantially. And on dividends, we will decide, as I said, when we get to that point that we say we have excess cash. So there is nothing we can update you at this stage on. And with that, Kai, you will comment on sales and on current trading.

Yes, I will. Volker, thank you for those questions. And let me try to answer them together. So we've said going forward, we expect sales to grow single-digit numbers, small single-digit numbers. That's what I just said, just to recalibrate. Of that percentage increase, our assumption is roughly 50-50 volume-driven and inflation-driven. Across the markets, there will be huge differences in our footprint, but assume roughly 50% of the sales increase to come from additional volume, 50% that to come from inflation. Over a 3-year period. And once again, I find it personally very difficult to assume inflation going forward, but that's the underlying assumption. Now let me take that pattern also to comment on current trading. And while we are in no position to comment on current trading in our fiscal quarter 3, let me reiterate our messages from the end of Q2 from just 4 weeks ago. We did see sales growing more than 5%, 6.4% was the number in our Q2. More significantly, from my personal perspective and more in line, the message is that we hope we have underlined for today, we saw a very different dynamics in EBIT. While in our Q1, EBIT was still below the first quarter of the last fiscal year. In our Q2, the EBIT was significantly above the second quarter of the previous year. Rough figures, EUR 50 million worse in Q1, EUR 35 million better in Q2. So that dynamic of a growing market and sales and of EBIT dynamics turning around, so of EBIT being better than in the previous year, which is in line with our guidance scenario one. There is -- in current trading, nothing to let us doubt that this dynamic sales growth and EBIT turnaround will change. More details on current trading, we can only give you with Q3. But at the moment, there is nothing to let us doubt that this dynamic continues. And I hope I've answered the question, Volker. Sorry.

So the next question from the telephone line, the question from [ Ulrich Dawa for Dow Jones ].

One has almost been answered already. The ability to pay a dividend and maybe set a midterm targets by when CECONOMY wants to be able to pay a regular dividend. And the second one would be restructuring costs, if I did I understand it correctly that restructuring costs, the EUR 100 million will be for each year like this year and next, the total will be EUR 200 million?

I don't think I need to repeat the second question.

Thank you for the questions again. I would say on the dividend question, I will ask Kai to try it this time. And maybe you just continue with the second one.

Yes. Okay. First of all, let me start with the second question, if I may, because if your understanding is that the EUR 100 million restructuring cost is per year and repeat itself, then I'm sorry, I have expressed myself in the wrong way. It's EUR 100 million restructuring cost full stop, and that will distribute roughly EUR 60 million to EUR 80 million this fiscal year, for next -- sorry, the rest next fiscal year. After that, we do -- we will always have a bit of restructuring costs. So please don't be surprised if you find smaller numbers in our actual figures. But the significant restructuring of EUR 100 million will not be a repeat itself. Otherwise, it would have been strange for me to say, look at the attractive payback. Okay. So I hope that's clarified. Now on dividend. As Karsten Wildberger said, we have -- we're out with the statement that says if there is free cash flow is available, then dividend is one of the options that we can ask the Annual General Meeting to deal with. However, at the moment, and that statement is still true. However, we are not saying next year, the year after or the year after that, this is how we will then spend that money. We want to take that decision once we have that challenge to take that decision. Once we have achieved generating that cash flow. There are other options like M&A that we will then look at. So unfortunately, Dawa for now, we're sorry, we cannot be specific on dividend policy, but it remains one of the options that we have in, of course.

Let me repeat for the online people. [Operator Instructions] So it's the last opportunity for you in the room to raise your hand.

I'm [indiscernible] of [ Street Alpha ]. I have one question concerning your E&T for '25, '26. So the average interest rate and the whole amount of interest payments and maybe the tax rate for '25, '26. And more strategic question, you have a very nice room here and showroom. Is there an opportunity on the long term, get more tech-oriented margin like 5% or 5%-plus EBIT margin.

Yes. Thank you for the 2 questions. I have already lined with Kai, that he is -- that he will take the questions. Of course, they involve quite some detail if there is anything and by the way, that holds generally. If there's anything on detail left in you have further questions, our IR team, led by Fabienne, is readily available. So don't hesitate. And with that, Kai, how is it going?

Perfect. Thank you, Karsten, and thank you for the questions. Now first of all, let me repeat what Karsten said, I will try to give a general answer. I'm very happy to come back with detail. Now on tax rate, I've already mentioned that there is a positive impact from the deferred tax asset stemming from the Convergenta transaction. This will influence our tax rate positively. You should think of a 3x underlying tax rate and happy to follow up with details. But that's 3x is the order of magnitude that I think it would be fair to assume on that. Now on interest and financial income, we do recognize the negative trend on the market in our numbers as well, but we cannot be more specific with the onset stage. But we do see the negative impact from that. The rest I would hand to the IR team at a later stage.

And the second question was regarding being more tech-driven and potential, when do we reach 5% EBIT margin.

Look, fair question. I think we've given a clear path to increase to 2.5 percentage points with a very with all the different things Kai has shown the latter. And let us again first deliver on this one. do I then believe, of course, that you could take it to another level. Obviously, we'll always look into it. But let's really first create the momentum, stick to what we said, deliver on our pledges. That's for me most important. And as we said, the big contribution obviously comes from Services & Solutions with 0.9% increase. A lot of also improvement is actually happening in the core should also growth in new categories go faster. We will, of course, report back, but this is the current plan, which is ambitious, achievable and let us first deliver and then we take it from there. That's what I would say.

Our next question is online. It's from Jean Teissier from Allianz Global Investors.

Yes. I have one question. I'm working with Allianz Global Investors. Just to clarify. My question is regarding your leverage target you mentioned 2.5, including leases. It doesn't seem that low regarding your past performance and given your short-term guidance of optimistic scenario for 2023. So given your free cash flow target of EUR 200 million, why is this so high? It doesn't seem that ambitious given your medium-term guidance target for the free cash flow and EBIT.

Okay. Thank you very much for the question. So the question is your net debt-to-EBITDA ratio, so net debt, including lease of 2.5x doesn't seem really ambitious when you look at your free cash flow target or your EBIT growth.

You're right. That is so. And I did say that there would be headroom in that ratio if we build our growth plan. The 2.5 set is a threshold that we commit never to transgress. I didn't say we would end up on 2.5x. My message was, this is a red line, and we will always stay clear of the red line. I've made quite transparent that in the past, we were at much more attractive leverage ratios than the 2.5. So please do not understand this figure as the target. It is the dead zone where we will never go. And of course, I would expect our growth plan to eventually deliver figures that are much better than 2.5. That's my answer to the question.

Thank you. So let me ask again to the room. Do we have further questions? No, I don't see any further questions online either. So I think we are done for the Q&A. So I'm handing back to Karsten for the closing remarks.

Well, look, thank you very much again for being here with us today for following 3 hours and 11 minutes. Our presentation and that we were able to present to you, hopefully, in a very comprehensive way, our strategy to create experienced electronics. It's a great journey for us. We are very confident that we have a strong plan, a strong team in place to deliver against our pledges. What the questions have also shown, this is an ambitious plan but also underpinned with clear actions and deliverables. At the same time, yes, there is also here and there some caution in this plan because we are committed to deliver this plan, and that is, I think, prudent and important because for me, this is very important, whatever we say, the milestones that we deliver step by step by step by step to quote Kai. That's very important. So thank you very much for all your being here present at the experience in Cologne, tuning in online and we look very much forward to continuing the conversation. The IR team is ready to take any further questions you may have. And obviously, as we said, we will update you on all the KPIs once a year and on the 9 important KPIs every single quarter. So thank you very much for being with us. All the best, and see you and speak to you very soon. Thank you.