Clas Ohlson AB (publ) (CLASB) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to the Clas Ohlson Q2 Report Presentation. My name is Kristofer Tonstrom, I'm the President and CEO, and with me, I have Par Christiansen, our CFO. So I'll start with a short business update, Par will take us through the financial development and events after the reporting period. Then I'll wrap it up before we move into Q&A. So headlining the second quarter. It's another quarter where we deliver strong profitability, excluding IFRS, but also excluding onetime payment from Fora of SEK 25 million. We're delivering SEK 160 million operating profit. So on a rolling 12-month basis that gives us a margin of 6.6% versus our range and the commitment of 6% to 8%. Looking at the quarter, we've been growing total sales 4%, of which online is 36%. In terms of customer acquisition, we are growing our customer base, most notably in Norway. We have now more than 1 million members in our Club Clas program, just 1 year after launch, which is encouraging. And looking at the November sales that we're also reporting today, we are growing in total 6% and delivering a little bit more than SEK 1 billion in November. Digging a little bit more into the details of the second quarter, organic sales and like-for-like was up 3%, and our total sales plus 4%. So traffic has continuously been a little bit lower to our stores, but we've been able to drive higher conversion and meeting the customers better and better. Also looking at online, we've delivered 36% sales growth, and our gross margin is also improving to 43.1%. And obviously, we have some -- it's the currency effect helping us, but also mix and other things and Par will come back to that. Looking at the EBIT margin for the quarter is 9.6%, and again, we'll come back to this, but we received this onetime payment from Fora of SEK 25 million that a lot of companies like us have received over the last few months. And our cash position remains strong with a net debt/EBITDA ratio of minus 0.8. So net-net, looking at the quarter, it's obviously been a quarter where very much the Clas Ohlson team have done a tremendous job from everybody working in transports in terms of getting -- fighting for containers, getting chartered boats, getting the products to us, an amazing team in our distribution center in Insjon that have done everything and beaten records every week in terms of getting products in and out in quick speed. And last but not least, everybody in-store being agile and rebuilding stores as much as needed to compensate with there a few shortages of products to show others. So all in all, a solid quarter, very much based on the focus from the highly [ engaged in ]. So looking a little bit at the year then versus our focus areas that we've been talking about for a few quarters. The first focus area, strengthening our key product categories. And as I said earlier, we see conversion increasing, but also in terms of our average ticket value. And the good thing is that the destination categories that we are focusing on disproportionately are growing disproportionately. We've talked about organize many times before, but it keeps on growing double digits. And also looking at this -- this season now leading up to Christmas, it's also encouraging to see our lighting assortment with everything from solar lights to garden lighting showing strong growth. So we've been able to really have the right assortment in place for the quarter. Looking at the second focus area, capturing traffic. Again, here we see in terms of brand that our strength in Norway is proven by the fact that as I said earlier, we've added 1 million members over the last year. And also we were awarded the #1 brand across Norwegian retail. So that shows the strength there. Also, we've had approximately 30 million visits to our online in the second quarter, and we, for the first time in November this year, see a slight increase in physical store traffic. Then looking at the third focus area, which is about growing e-com. Obviously, these 3 things work very much in synchronization, but looking and double-clicking a bit more on e-com, we have been able to increase the capacity for really handling high amounts of orders, and again, we've been driving conversion rates effectively in the second quarter. So double-clicking a little bit on the ability to sell online, I would say we now have a very robust customer-centric logistics structure in place. A great combination of our distribution center in Insjon where we've done investments on automation and other things, we've increased the capacity and we have increased also speed of delivery. So what you see on the slide here is 2 to 5 days on average. But looking at Sweden, which is obviously close by, we've been able to deliver within 1 to 2 days, and then, Norway, Finland, for obvious reasons that take -- takes a little bit more time. That's why it's great that we have the combination of our store network with distribution centers basically spread across Sweden, Norway and Finland. So both feeder store is growing, i.e., where we ship product directly home to consumers from a few physical stores, and here we have same day to next day delivery. But also the click and/or pick in store, the click and collect service is still popular among customers. So with this robustness in terms of customer-centric logistics, it gives us an ability to deliver on our customer promises and we see that in our customer satisfaction. Looking at the NPS, we are on a solid level versus all retail average benchmarks. The dotted line is the ambition. So we're still -- have a way to go in terms of pushing this upwards. We're measuring this every day across customer care, all stores and e-com. And obviously within our physical stores and on customer care, we're on very high levels, and on e-com, we are constantly improving. Looking then at the second point, which is the product reviews. This is really the quality of our consumers basically rating our products. Here we see that we are above target and we are improving, which is encouraging, and again links back to the whole focus on strengthening the assortment of what we sell to drive conversion [ in Italy ]. And then last but not least, we are progressing on our sustainability agenda. And we have lots of examples from across categories, one that for the season is particularly relevant is the shift we did a few years ago from paraffin to stearin in all the candles that we sell. And just in the last 12 months, we've been able to actually sell, saved 350 tonnes of fossil fuels just because of that shift. So that's one small example. But it's those examples that are relevant for our customers. So they know how they can act in order to make a positive difference for themselves while also a positive impact on the planet. We've also signed an agreement to install solar panels across the roof of our distribution center in Insjon, and we keep working hard in terms of our audits of suppliers, both environmental audits, but also in terms of ensuring everybody we work with delivers on our Code of Conduct principles. And last but not least, we've been ranked now the seventh most sustainable consumer goods company on the Nasdaq Stockholm exchange. So with that short intro, I'll hand over to Par to take us through a bit more details on the financial development and the events after the reporting period. So Par?

Thank you, Kristofer. Good morning, everyone. Looking at sales in the second quarter, we grew 4%. Like-for-like was up 3% and organic sales was up 3%. The store network was unchanged compared to last year. If we take a look back 2 years, we can see that sales per country have a little bit different development. Looking at Sweden, we have had a flattish growth over 2 years, but last year, we then had 6% growth. Looking at Norway, we still have a decline, looking back 2 years of 1%, but the last year we have grown 3%. And then, at last Finland, we have grown 2% last year, but over 2 years, we have still a decline of 13%. If we then look at online channel in the second quarter, looking back 2 years, we have grown 70% over 2 years and 36% as Kristofer said in the last quarter. So that is encouraging. If we look at the sales development for the first half year, total sales is up 2%, organic sales is up 1%, and like-for-like sales is unchanged. And we have online sales up 27% and unchanged number of stores. The gross margin in the second quarter grew to 43.1%. It was positively impacted by the weaker purchasing currency, the U.S. dollar, and little bit reduced sourcing cost and also much stronger sales currency in the NOK. On the negative side, we were impacted by the currency hedges then that little bit offset the sales currency and also from future hedgings and exchange rate effects from inventory delays. But net-net, we had a positive impact on the gross margin as you see. The share of selling expenses was little bit flattish. It increased by 0.1% to 32.1%. The administrative expenses grew by SEK 1 million to SEK 51 million. We will still have a continuous cost focus on our agenda to maintain, and mainly also a slightly decrease the cost. Looking then at the operating profit in the second quarter, it increased to SEK 204 million compared to SEK 148 million the year before. If we look at the EBIT margin, including IFRS, it was 9.6%, and excluding IFRS, it was 8.7%. The earnings per share in the quarter was SEK 2.34. And including this, we have the SEK 25 million non-recurring payment from Fora as mentioned by Kristofer. Looking at the first half year, operating profit increased to SEK 351 million compared to SEK 314 million the year before and EBIT margin increased to 8.4%. Looking at the EBIT margin excluding IFRS, it was 7.5%. And earnings per share for the first half year is SEK 3.97. Investments for the first half year amounted to SEK 83 million compared to SEK 115 million the year before. And investments was mainly into new stores and refurbishment, IT systems and also investments related to our distribution system. The inventory level in the second quarter grew to SEK 2.114 billion at the end of the period, and that is should be seen as preparation for the important November and December sales period. Looking at cash flow, we had a very strong cash flow in the quarter amounted to SEK 412 million compared to SEK 368 million the year before. And we have, as Kristofer said, net cash position in the quarter. So net debt-to-EBITDA amounted to minus 0.8, and we, right now, have approved credit facilities of SEK 650 million of which we used 0. Then moving on to the events after reporting period. Today we've also announced November sales. Strong sales with 6% up to SEK 1.021 billion. Organic sales was up 4% and like-for-like 4%. We have growth in online by 9%, and the store network was unchanged compared to November last year. And also we have a encouraging trend now with increasing store traffic in November for the first time in -- yes, in a long period. Looking a little bit at macro trends, we can see that the container freight prices and shipping cost are a bit flattening and out, and that is encouraging going forward that we hopefully have reached the peak. Looking at the currencies, we have got a little bit strengthened NOK/SEK relationship and U.S. dollar has improved. In the latest period, it has then little bit got worse, but looking closer to that, we need to look at what we need to do to then offset these things. The cost for the freight cost will probably hit third and fourth quarter more strongly than it did in the second quarter. And as we said before, we will take the counteractive measures in pricing, looking at sourcing and of course, optimizing sales mix and look at products and packaging to keep or improve the gross margin going forward. Handing back to Kristofer.

Thank you very much, Par. So a short summary and outlook before we move into the Q&A. So basically we will continue to build on our strengths. As we've talked about before, only 20 out of the million companies actually survive for more than 100 years, and we are one of those few companies. So we have a lot of strengths, but also obviously a lot of things we want to do to move forward. First of all, we are playing in a very attractive market valued at approximately SEK 90 billion in terms of home improvement. We have shown this quarter, but also previous quarters that we have a strong financial and solid base and a strong track record. We are becoming more and more of a leader in terms of sustainability across our industry, and we see that that is extremely important to our customers moving forward, apart from just being the right thing to do as a company. We also have an incredibly strong brand. We saw examples of being the #1 brand in Norway, but apart from that, we have actually 200 million customer visits every single year with the mix of our online and offline channels, and we have enormous household penetration above 90% across the market. So we have a strong solid position also from a brand customer point of view. So then, of course, our job is to then capture value and go for compelling growth opportunities within that attractive markets, and we believe that we are equipped with the relevant capabilities now to take the next big step. And we are guided by our strategy, the blue heart strategy, the blue heart in the middle, which really signals the high engagement and the passion for Clas Ohlson as a company, both within our coworkers, and I think as I said earlier, we have really proven that in this quarter and in November, a team that really does everything to deliver on our customer promises to make Clas Ohlson better and better. And then the second thing, our customer satisfaction that we also show that that's moving in the right direction. And we believe that if we can focus on our purpose of simplifying life in all kinds of homes and work across building a winning team and driving customer satisfaction, we will translate that into sustainable profitable growth and long-term shareholder value. And the financial targets remains the 5% top line growth and delivering 6% to 8% in terms of EBIT margin moving forward. And to reiterate this focus areas that -- that we've been talking about over the last few quarters, it's really about strengthening our key product categories, to find more ways to simplify life for our customers across categories. Seasons will always be important, but we need to have more reasons to visit Clas Ohlson and that's really about the destinations. You should come to us when you want to organize your home, when -- as I said earlier, if you want lighting, whatever type of support in terms of lighting up your home, that's 2 examples of that. And it's all about solving the customers' most relevant problems and thereby growing destination -- destination categories. The second point is capturing traffic, and that's very much linked into leveraging our strong brand, but also keep working on strengthening and not taking that for relevance -- taking that for granted, and that's very much linked into optimizing our marketing efforts, but also of course capturing and leveraging the traffic that we get and ensure we can create value and be commercial in everything that we do versus our customer base. The Club Clas membership program is and will be one of the most important cornerstones for us, because that's where we collect first-hand customer data, and it's really about building long-term relevance versus our customers. And again, we have seen growth in that area. Last but not least, if we do the first 2 well, we will also continuously grow e-com and then we need to keep working on the things that have improved e-com over the last couple of years, and that's lead times, working on the digital customer meeting and integrating the edge that we have of 230 physical touch points via our stores as both logistics hubs, but also to drive customer satisfaction on a personal level. We believe that's important and it's a strength. So looking forward, we have now preparedness to take on also the future and our job is now to ensure that we've become better and better, and growth is very much a focus for us while, of course, ensuring that we deliver on our profitability targets. And then, of course, we need to be as always very agile and closely monitor what's going on now with the pandemic across our countries. So just in the last few weeks, we now have restrictions again across our sales markets and it's all about focusing on the things that we can influence. But I must say that I feel confident in the team. There are so many blue hearts out there and we have learned over the last 2 years that it's all about adapting to what happens to us. We can't change that. It's about working on the things we can influence and ensure that we meet the customer and give great service, no matter what happens in terms of restrictions, but we need to monitor that closely. So with that, we summarized the presentation part, and then we will move into our Q&A. So Niklas?

Thank you and good morning. So let's start by asking if we have any questions from the telephone conference.

Yes. [Operator Instructions] Our first question comes from Carl Deijenberg with Carnegie.

Par and Kristofer, so first, a question here on current trading and also going into sort of the seasonally most in period here. You already said sort of development seems to be doing well here in November and also positive development in the traffic to stores, but could you say anything or sort of elaborate a bit on potential COVID restrictions here, what kind of risks do you see maybe particularly in Norway? And could you share anything what you've seen here in the first week of December, this positive trend that you saw in November also continued or have consumers started being a bit more cautious here in the early days of December?

So yes. So on that, as said, we saw in November for the first time a slight increase on traffic to stores. That said, we started to see the first restrictions coming both in Norway and Finland already at the end of November, and we could see a little bit of an impact there. Relating to December, it's still little bit too early to tell. And obviously, here it's about optimizing the impact between channels and quickly adapting if things changes. There are no stores closed today, but obviously, the restrictions over the last few days have increased, and we do see some consumers being a little bit more careful in terms of moving around city centers, et cetera. But too early to tell on December. So again, the focus is working on the things that we can influence. And the good thing is, as you could see from Par's inventory numbers that we have products to sell. Now it's about to welcome customers, no matter what channel they choose to support, but still a bit early to tell on December.

Okay. Very well. And then my second question is on the gross margin here. I mean, we're talking about a quite substantial gross margin expansion here of 130 basis points year-on-year. Is there any way you could sort of quantify the different effect a bit here, just to understand sort of the mix here on the gross margin expansion? That will be very helpful.

Par, do you want to take that?

Yes, I can take that. I mean, as we rightly report there are some different factors influencing the gross margin. But if you want to take out one of the positive things is the currency, the U.S. dollar that for us products has been purchased way back, and then now go into the inventory into the sales has a positive effect and also the NOK sales is impacting us positively. And we have not yet seen the big impacts of the freight cost that will probably hit us in Q3 and Q4, and how we will offset that will still remain a discussion within the company, in terms of pricing and other means, but I think the currency effect is probably the biggest one. The other thing is a mix effect from the channels where you see some of the cost taken in the gross margin if we sell it through stores, the gross margin then includes everything from taking the cost to the shelf, but in the e-com, the actual transportation cost to the customer goes into the selling cost. So that could be a little bit different where you see, probably expected a better selling cost may be and the worsen gross margin. So that could be a little bit of the -- where the cost actually hit the P&L in the way we distributed. So that's the short answer.

Yes. Very well. And a follow-up on that, I mean, going into Q3 now on the topic of freight cost, will that sort of the lagging effect you were talking about, that is starting from sort of the beginning of Q3 or will there be a sort of a ladder effect coming in from, for example, the middle of Q3 and onwards or when do you anticipate that effect to sort of have the full power so to say?

Affecting in the second quarter, but it was not that big that it was not [ biggest second ] I think given that the sales period, I mean, it's percentage of sales. So, of course, the third quarter in millions will be probably hit most in -- for us and then the fourth quarter is a weaker sales quarter. So maybe that will be a higher impacting percent -- percentage points, but not in millions. So it depends a little bit how you phrase the question, but I think it will then a little bit even out. Of course, this new restrictions right now, but if we look at the freight cost we get, if we want price one year from now, 2 years from now, it goes down quite quick. So we perceive that we have reached the peak of the freight cost period now, and everything then will go down from here.

Yes, yes. Very well. And then a follow-up on that, I mean, mitigation strategies on that topic, could you discuss a bit on your pricing strategy here in Q2. Have you been forced to sort of raise prices substantially starting within certain product categories? Is it more tilted towards your private label assortment? Would you start still -- you're expecting that to be sort of later on going into Q3 instead or has that already sort of started to happen?

So looking at pricing in our pricing strategy, we are obviously working extremely, you know actively with our pricing on a going basis every month and week basically. And looking at -- the pricing is obviously driven by a lot of -- lots of different things. So higher price in will of course also be one variable. The way we look at pricing is across key categories and across key product groups. We always want to ensure that we deliver great customer value. So we need to be competitive, very competitive on some areas and we can allow ourselves to be less competitive on others. So it's really about playing the accurate mix. So there has been some pricing effects already and we keep working actively on that. The key thing is, ensuring that we do with customer-centric, so we don't run off and do pricing just to offset short-term price increases in. So it's working actively with that, but I think we've proven at least across this quarter that as part of everything else, we've done a fairly good job there and we will continue to monitor that and market price is obviously one of those factors.

For our next question, we have Andreas Lundberg with SEB.

Some of the questions were already asked, but you mentioned more -- a more efficient logistics as a positive on gross margin. Can you explain what that means and how do you see that going forward?

I mean, logistics network as Kristofer described is everything from where we buy the product to the end customer, and I think now we have created the ability to be more customer-centric. Of course, at the end of the day, it's a customer that picks the last mile or the way they want to purchase it. But now when we have invested both in the more closely feeder store network and also the distribution center with more automated picking and packing, we have more resilient system if volumes increased like they do in November, very much more efficient in -- with a low cost and deliver on the customer promise, short lead times. And I guess, in the past, it most -- more linear or even worse than linear. If the volumes increased, it was very hard to handle those volume and then come back with a good lead time. So now we have a more efficient and more resilient system that can handle the volume increases and decreases much better because the demand is going up and down now by dependent on campaigns and when the customer choose to buy, which means that you need to be resilient in high and lower volumes.

Got it. And could you also say how much of your online volumes in some way goes through your store network, either click and collect or feeder stores, et cetera?

Yes, it's -- I think, approximately half of the volumes go via the store network in one way or the other and the other half from this, but also that fluctuates a little bit, but we do see as shown in the graphs earlier that feeder stores increasing fast and we also see that consumers are becoming more and more, not demanding, but they're used to actually getting more and more home deliveries, et cetera, and they're, of course, both DC and our feeder stores help with that. That said, still a big part of the sales comes from click and collect and that's again the central nature of a lot of our stores is a benefit there where a lot of consumers still prefer that even when our other alternatives are now -- have improved significantly. Still a lot of customers choose to go and pick it up themselves.

Okay, cool. And lastly on your cash position, yes, you won't comment on it, but what's you plan to do or what do you think is a reasonable level of net cash for Clas Ohlson?

Yes. Thanks, Andreas. So obviously it's a good thing that we are strong and stable especially as things changed, and we have the second part of this year's dividend going out now in Jan, and then any alternatives after that will be something the Board will look at. So -- but no news on that today.

[Operator Instructions] Our next question comes from Nicklas Skogman with Handelsbanken.

I thought I heard you say that you expect the gross margin to be flat or increasing slightly going forward. I don't know if it was a guidance or more of an ambition, because I mean considering the higher freight costs, the raw material price inflation and the dollar strengthening recently as well as maybe more of the growth will come from your stores, which we do not see that sort of accounting technical impact that you see when you sell online versus in-store, is that more of an ambition or sort of target, I guess, the question is holding the gross margin flat or increasing in the quarters ahead?

I think from the position, it is of course an ambition that we want to have a flattish or increased gross margin. It's fundamental for our business model to have a good gross margin. Short-term, of course, there are factors as you mentioned in the freight cost or the cost for purchasing product that are tougher and tougher and maybe the dollar will go the wrong way. But having said that, of course, our ambition is to -- with other means try to offset that to keep the gross margin as high as we can, because that is fundamental for creating a sustainable, growing and also profitable business. So it depends on the timescale here, I guess. The short-term will probably have a tougher time to defend it, but over time, I guess it's our ambition to always keep or increasing the gross margin.

All right. Good. And then, you said you made some price increases already. What has been the customer reception to those? Is it notable in your sales or have customers been accepting them?

So again, it's obviously very category dependent. So during this time, we have done some increases, we have actually taken a few prices down and it's really about working on the right category and product combinations. But all in all, looking at the sales numbers across November, we saw a little bit of growth and same thing for the quarter. We have not seen that impacting the customer satisfaction or sales. And that's of course, the objective to always ensure that we balance optimal volume with optimal price. And then of course, apart from just the Black prices, we also have promotions, and the Club Clas offers and other things to work with to find optimal mix. But our -- the key job is always to ensure that we do not harm the customer value proposition, because again, as with margin, that's the long-term most important thing. You should always feel that you get a great offer when you visit Clas Ohlson. So that's the balance act. So we haven't seen anything on that.

All right. And then finally, I think your Club days shifted from October to November this year where you normally see more promotions. So did that have an impact on the gross margin for Q2, a positive impact?

So as you said, yes, we moved the Club days, but we also didn't do the [ D&D ] days that we have done in the past in Norway, which have been pretty big. So net-net, the Club days -- the Club days were supporting sales, et cetera, but -- and of course, that's part of the margin development as well. So -- but I don't know whether we want to comment specifically on the impact on the margin during the quarter on Club days. I don't know, Par, whether you want to say anything.

As we said, we moved some of the sales to November obviously from October as you see in the numbers. And of course, if we have a Club day there, the margin is somewhat lower than it is on a normal day. So of course, there is effect from that.

But then also the reason we are doing more Club days rather than other types of activities is, of course, for the longer-term customer lifetime value, i.e., there might be again a month and month and transaction-by-transaction margin impacting, but then we only do that if we believe it's going to build the longer-term value of that customer group. That's of course the benefit with the Club Clas days that we actually sit on the firsthand data ourselves to monitor that.

And one could mention that one of the reasons we did not have the Club days in October, you know, and we could change it is of course, there is a decision now that little bit independent on the supply chain in the past where we're more dependent to look at the supply chain whether we can manage to have a campaign day in terms of deliveries and lead time. That chain is much more resilient now. So it's more a commercial decision when to have a Club Day than a system decision. In the past, we had to little bit balance whether we have the capacity to really keep the customer promise and that is moving towards more and more customer-driven and club-driven campaign system.

Next up we have a follow question from Carl Deijenberg with Carnegie.

I just had a follow-up here on these one-off payment that you had here in the quarter. If I understood correctly that is a total of SEK 27 million if we include the sort of COVID -- the COVID support, but also the insurance payout here. I'm just thinking about going into Q3 here, are you expecting any other sort of one-off payment, negative or positive of that size that we should be aware of going into Q3?

No.

We have no further questions. I hand back to you, Niklas.

Thank you. We also have a couple of questions from the -- from the webcast. Some of them might overlap a bit with the questions we heard earlier because these arrived before the telephone conference questions, but I'll ask them anyway. First one from Stefan Stjernholm, Nordea. He is also asking about the cash position with the CapEx need in coming years or any larger investments that we see going forward?

Yes. Yes, I think we've commented on that. So nothing else to add unless you want to say anything more about investments, Par?

But the investment, as we usually comment we expect them to be around 300, 350 as to be in the past sometimes going up little bit and sometimes going down dependent on -- when some of the IT investments or store investments actually happen, but that's the level we look at.

He is also asking about any potential to increase dividend?

Yes, I mean, now we have the dividend going out in Jan, and then any other -- any other considerations and discussions the Board will look at later. So no, nothing on that.

And the final question from Stefan Stjernholm is, what's the logic to own MatHem long-term?

Yes, so the decision to invest in MatHem a few years back was very much closely linked to the commercial collaboration. And as we have said before, now there is no real link between the investment and the commercial. We have a good commercial collaboration with that every fifth bag of MatHem products also contain a Clas Ohlson product. So they are not tied longer term. And then -- and there is no news though on the investment side. We haven't participated in the last couple of rounds of -- from MatHem, but we still remain an owner and I haven't had any -- don't have any plans to change that here.

And that was it from Stefan Stjernholm. We have another couple of questions from [ Jaan Fantom ] from Investor AM. Also about the cash position and plans for capital allocation, so and if buybacks is an option going forward?

Yes, no. So yes, versus -- I think we've said everything on that topic for today and then, yes, we will come back if any news on that.

Also talking about -- asking about the number of stores. Will that be the same going forward? Do you see any changes there?

So all in all, I mean, right now, we have around -- we have 230 stores. And as we see every quarter, there is some openings, there is some closures, there is some movements. And our job is of course to ensure we optimize the network going forward. For us, the store needs to serve many more purposes than just the transaction in the store. And I think we proved that with the feeder store capability, et cetera. So we do see the store network has a huge strength for Clas Ohlson. That said, every store needs to carry its own cost and be contributing to the business and the company, which means we will continue to see changes. And we're not expecting dramatic increases of new stores, but also not dramatic changes of decrease in closed stores. So there is always going to be an optimization and it's the balance act between the financial acumen of each store versus also the value delivers in the customer journey.

Next one is, how do you see the balance between online and offline going forward?

Yes. So looking at our online business today, it's been around 10% -- we took a leap up to 10% and now rolling 12 months online sales is approximately 12% of total sales. We believe that that balance is not the most useful number to look at. Our objective is to grow Clas Ohlson and grow the total business with our customers. Within that, of course, online plays a crucial part, and more and more so as the customer behavior keeps changing in that direction. So that's why I think we've shown here today that we have done a great job in terms of logistics having a very customer-centric model working well on fulfillment, but looking at the focus areas for us as a company in terms of what we're selling are key destination categories and keep leveraging our strong brand and our customer base that is of course very relevant for online. So we believe and expect that to continue to grow and that's what we work on, but the exact balance, we're more -- we focus more on growing the total than optimizing the percent of sales of online versus physical.

Are there any other remarkable trends that you see in the retail landscape?

And I think we have looked at a few of them. I think one big trend that, of course, we have looked a lot is, is the kind of home nesting, i.e., there has been a lot of discussions of course during the pandemic that people have spent much more time in their homes during the last couple of years, and the question is what will happen forward. I mean, our belief also based on the data we see is that the home is going to continuously be a very crucial part of people's lives over the next few years, and we see a lot of report showing that on average, people across Europe might work 2.5 days a week from home, which means that you're almost doubling the amount of time spent at home versus pre-pandemic. So looking at trends, for us, the home is more important than ever, and that gives us a lot of opportunities to evolve, because our purposes to help people simplifying the life at home and that spans across so many categories. So I think that's one very relevant trend for us and our hypothesis is that that's not going to just go back after the pandemic.

And finally then, who do you consider to be your biggest competitor?

Yes. And I think that's also looking at benchmarks, I think we are playing a little bit in our own universe and Clas Ohlson cosmos if you like. And the good news is that we have a breadth of categories and offers, which means that we don't have one single competitor. You have to break it down on our destination categories and then find a range of competitors. And we believe that's a strength and we have seen that over the last month and the last quarter where we can adapt if we see outages on some products, we can focus on something else. But again, the key is focusing on our destination categories, and for each of the destinations, we have very clear competitors. And of course, we always want to serve our customers better than anyone else to win, but it's hard to pinpoint one and I think that's actually a strength for us and it forces us to focus on our customers.

And by that, we don't have any more questions from the webcast. So I think by that we also close the Q&A session.

Okay. So that concludes then this morning's presentation. So thank you very much for taking the time to tune in and for the great questions. And we look forward to seeing you again during the next presentation. And until then, very -- Merry Christmas, happy holidays and see you all of you again soon.