Europris ASA (EPR) Earnings Call Transcript & Summary

Good morning, everyone. It's a true pleasure to see so many people actually present at today's event. So a special welcome to you. And to the rest of the audience, which are watching online, welcome to you, even if you're watching right now or if you are tuning in to the webcast later on. It's been 4 years since Europris went on stage for a capital markets update, and we have to admit a lot has happened since then, both for the company but also in the retail sector in general. Of course, COVID-19 obviously boosted volume and demand in the retail sector, but it also created some difficulties with shortage of production capacity and also putting pressure on freight costs from Far East. And of course, this year, we see that consumers are concerned with -- they see that higher inflation and also high interest rates are putting pressure on their disposable income. And with that backdrop, I have to admit that I'm really pleased with the development of Europris since our last Capital Markets Day 4 years ago. And going forward, I called my presentation From good to great. But before I jump into those details, I would like to briefly take you through the agenda of the day. And after my first presentation of the Europris Group and the present situation, I will let Andreas Skalleberg join me on stage. He's the CEO of Lekekassen, which we acquired 67% from -- in the summer of last year. And he will be followed by Vice President, Strategy and Sustainability, Renate Spernes, who will talk more about our pure-play concepts, the digital customer, the customer club and also the stainability agenda and how Europris will work more locally. After a short break, CFO, Stina Byre will take you through the financials before we conclude the formal part with a brief summary and the Q&A session. The web audience, you feel -- please feel free to send in questions as we speak, and we will take all the questions from the audience here in the room after the presentation. And we are lucky to have some external guests here today. We have Jeroen van Dorp from Goldman Sachs, Who will give the international perspectives on variety of retail. And after that, we will have a so-called fireside chat or in Norwegian [Foreign Language] which will be managed by [ Peter Isoforge ] market investor from [ Denver ] and we -- in the panel, we have Harald Jackwitz Andersen from Virke, we have Britt Otterdal Myrset from Deloitte, and we have Derya Incedursun from Nordea. I think that will be an interesting part where we discussed the developments in the retail sector, but also the overall consumers and their behavior during this actually quite difficult period. And that debate will be held in Norwegian language and will not be part of the webcast. So ,Going from good to great. I actually think we should start by defining what good looks like. And looking at Europris, we are a clear market leader in the discount variety retail segment in Norway. We are the #1, we have a very strong brand with increasingly positive customer feedback. We are viewed as the price leaders in the market. And we have a very powerful marketing and campaign engine to drive traffic to the stores. We also use category upgrades and destination categories and the assortment to drive traffic, and we have a very well proven category management model to create growth and increase the satisfaction of the customers in the stores. And finally, of course, we have physical stores. We have a unique network of 276 stores across all Norway. So a clear market position defined, that is important. But the more important is that actually the customers come to our stores. And over the past years, we have built a customer club. That customer club was not established when we had our last capital markets update in 2018. But over the past 3, 4 years, we've actually built a club with more than 1.2 million members. And of course, these customers are important to us because on average, they have a much higher shopping frequency than the rest of the customers, and they have a higher basket value. That is important but equally important is that we actually know these customers. We know where they live. We know their shopping history. We know their age, we know the gender. And all this data, that gives us an opportunity to start to communicate with these customers more and more frequent, but also we can be more personalized in our offerings. That journey has started, and Renate will talk more about this opportunity later today. But that's an important asset of Europris going forward, the membership club and also the information we have on these customers. So the digital part is important, but still the power of this leaflet is never going to die. Well, of course, at one point, we will, but it's still last and it still works. And this is the most important marketing tool we have in Europris, and it's distributed to almost 1 million households every week, and prices on this front page should be unbeatable. And our customers, they know it. And you don't fool the out of these customers. They are price conscious. And when you ask consumers, they say that Europris is the place where you can find the bargain. We carried out the brand tracker survey, the same survey for almost 16 years. And once again, this year, Europris comes out on top when we ask the consumers where do you think you can make a bargain. And unlike many other retailers, we actually really want to sell these products. So we don't hide them away. They should be easy to find in the stores, and we should actually never sell out. And every week, we measure each sales point on this front page, sales per customer per store. And we actually get quite upset if we sell out or if you see big differences in sales per customer across the chain. So this is an extremely tight follow-up from our side, an extremely important tool for us because this is the reason to go. And if you come to the store to get this product, you should find them. And sales from this front page has actually increased over the past years. That is, of course, because we have put more focus on it. We want to sell these products, and we actually do sell these products. Now a total of 13% to 15% of total sales come from this from front page alone. And another 15% to 17% comes from the rest of the pages in the leaflet. So this is actually a very good proof that these campaigns, they work and they drive traffic to the stores, and they also the increase shopping frequency. And when we ask the customers, where have you shopped in the last month, Europris comes out on top. We are the chain that customers have been most likely to visit over the past month. And of course, customers, they also recognize the price leadership position we have taken. And they place us on top when they asked who has, in general, the lowest prices. Europris comes out on top again. And the low-price concept is, of course, very important in today's economy. We see that consumers have pressure on the disposable income. The market is getting tougher and then being in the low price -- having the low price position, being in the discount sector is a very nice spot in the market to be. And during this year, we have actually sharpened the focus even more on the front page and on the marketing campaign towards more consumables. We see that, that is what's selling the most, and we use these leaflet to drive traffic to stores. We use these offers. We tweak what we put on the front page to drive traffic because we know as soon as the customers are in the stores, they will buy what they need at low prices to their homes. And another important traffic driver is, of course, the season we're in at the moment. It's the Christmas season. And Europris is clearly the champions of the seasons in Norwegian retail. It's an important traffic driver for us, and we put a lot of effort into arranging the stores according to the different seasons. If it's for Christmas, if it's for the summery season, if it's for Easter or Halloween, you should really get that fielding in the stores. And each store has a dedicated sales area for the seasonal articles, both inside the store and of course, where we can also outside the store and especially for larger seasons like Christmas. These days, you should really have the Christmas fielding long before you enter the store, actually. You should see the lights, everything before you come. So creating this is extremely important for us to drive traffic. And we are recognized by the customers as the chain with the best seasonal assortment in Norway. So our efforts, they pay off and the customers, they see it. We're having campaigns, having a strong front page, having a good season is not alone. We also need the broad assortment of products. So we have a variety of assortment and that is extremely important for us to drive traffic as well. You should find everything you need for your home at Europris. And overall, you see now that consumables account for around 50% of total sales in the chain, while specialty retail and general merchandise split the remainder pretty evenly. And we're not going to share the margin and sales for each of these subcategories. But to give you the broad idea we have indicated the gross margin level for each of the 3 key groups. And as I said, we see now in the market that the consumers are actually behaving a little bit differently than what we did in the past. And that is especially recognized when we look at sales for the various articles we have. And we see now sales are holding up for low-priced consumables in the market, and we see that sales points below NOK 200, which accounts for 84% of total sales in the chain for the last 12 months. That has increased by 1.4% points so far this year for November. So low price is selling, consumables are selling. The medium price points from NOK 200 to NOK 1,000. We see that has declined by 0.7% year-to-date. That accounts for 13% of our total sales. But when we look at articles priced more than NOK 1,000, we see a decline in sales of 23% year-to-date. And that is a significant change. And we started to see this already before the summer that consumers were spending their money differently. They were holding back on investment purchases and we also see that they are trending down. We've seen also a small increase in the private label share. So the consumers are changing their behavior during this economic situation. But of course, that market will come back. It's not like we have stopped buying garden furniture and Christmas trees forever. But if it will take one season or 2 seasons, I don't know, but that market is coming back compared to the situation we had a year ago, the market is much tougher this year than it was last year. We also, when we look at these high-priced items, it accounts for a rather small share of our total sales, but it's an important indicator that we see that the consumers are behaving differently. And of course, we have adapted. That's why we put more focus on the consumables on the front page because that's what the consumers want at the moment. And I mentioned very quickly the private label share a couple of minutes ago. And the growth in private label has continued. And since the last capital market update, we have actually grown the share of private label sales of total sales from 35% to 40%. And that has been done in a growing market. And that development, of course, also adds to not only the sales growth, but it's also a very positive contributor to the overall gross margin of the company. And I think it's strong that we have been able to implement new private labels. We have added also sustainable private label products in our portfolio and that is making it very attractive for the consumers. And especially in today's environment where we see that the consumers are willing to trade down in order to get more value for money. And I think if we try to sum up these first slides, showing the customer impressions of Europris. I think I view Europris as a campaign-driven, low-price retailer with a broad assortment. And that is exactly how the customers view us. If you look at the word cloud summarizing the impressions the customers have without the Europris brand, you will see Billig or cheap in English, as well as low prices varied assortment and large selection. And that's all what we want to be. If you compare that to the word cloud we had in 2015, you would see, of course, still Billig and wide assortment. But you also saw low quality and messy stores. And I'm extremely happy that our core strengths are being even stronger this year. But seeing also that the negative comments from the customers are becoming less of an issue, that is also very, very important. And I think that is very strong testament to the stores that we have been able to develop and lift the quality level in the chain. And if we turn to the store network. We have continued to expand the network over time. We have added new stores. And we also invested into modernizations, relocations and upgrades of the store base. In fact, I think in total, we have upgraded, relocated, modernized opened a total of 86 stores since December -- since 2019 until this day. And that's a quite significant number in terms of the 276 stores we have. So we are still investing into the store base and the average store size is now around 1,200 square meters. And we also see that the revenue per store has increased significantly over the past years. It's now NOK 32 million in 2021 and that showed that we have excess capacity to take on additional sales in the chain. And I still believe that we have capacity to take on more sales in the current store network. So we can continue to grow like-for-like with the current stores we have. If we look at profitability, we have managed to raise the performance on all stores over the past years. All our stores were profitable last year. And we see that the EBITDA margin per store has increased significantly over the past years. Of course, that is due to scale benefits. We've seen that revenues has increased sharply. That gives us, of course, a better EBITDA margin as well. But I also like to think we see that we have had the biggest increase in the lowest-performing stores. And I think that is a testament to good retail craftsmanship because we have done a lot of work on how we have our processes right in order to get things done the right way. And over the past years, during COVID, actually, the management started off by -- when the Norway closed down, and we couldn't have a lot of meetings. We actually started having internal meetings working on the rules of business in Europris. So we have actually been through all the working processes we have internally. We have mapped them. We have fixed the bugs we have and making sure that we are working smarter than before. We are simply just doing less mistakes than we used to. And of course, if you look back, you always do some mistakes, still we do some mistakes, but we learn from them, and that's a good thing. But mapping all the processes we have means that we take out waste in the processes. And we do less mistakes. And of course, if you do a mistake at Europris head office and you send it out to the stores, you certainly have 276 mistakes. And that's hard to manage. So by doing less mistakes, doing things right before you implement and send it out, you actually create a lot of capacity out in the stores to work on sales and customer service. And that's what we've done. We've not done this to save costs necessarily. We've done this to reinvest that into customer service and experience and sales in the stores. But of course, you also save some costs because you get more capacity at the head office as well because they do not spend all the time fixing mistakes. And now we see products are there at the right time, in the right amount, and they've been presented in the right way in the store. And I think that generates both higher sales and also profitability. And this is actually one of the slides that I'm most proud of, and it shows the development pereived by our customers on how they actually feel welcome in our stores. And we see that this year's score in the customer service is that this is the single most best positive development we've had. It's the all-time high score for almost all parameters from hygienic stores which is, of course, good that the customers perceive us as hygienic, especially after COVID-19, where we worked extremely hard on this. It's recognized by the customers. The stores are more appealing. It's well arranged, it's tidy, friendly staff and inspiring. We're making progress on all areas when it comes to the store impression. And this picture is from the store at Nittedal, which we opened back in November. It's a great story. I was there just 2 weeks ago on a store visit. And recently, we opened quite a few new stores in the Astoloria . And with [ Vianitadal ] we refurbished also some stores. And the Oslo area is actually underpenetrated in terms of Europris stores. And we realized that during the pandemic when Norway closed down and half of the population went into lockdown, we actually only closed 1/3 of our stores. And it's still room to have more out Europris stores in the Astoloria. And this is a very good example, a great start to the team in Nittedal. So it's a good location for Europris and they are also a good ambassador for what we see that the customers gives us our feedback. And as I said earlier on, we conducted the same customer survey and market survey for the past 16 years. And the overall score we get from our customers have actually increased more or less continuously over that period. If you look back to 2007 when we started, it was 1/3 of the customers had a positive impression of Europris and 25% or 1/4 had a negative impression. Now in 2022, it's 2/3 almost that has a positive impression of Europris with only 6% on the negative side. In my opinion, I think we have taken many steps on the road to good, and we are ready to continue forward. So we called the presentation from good to great. I tried to tell you a little bit what good looks like. And what is it that really makes us good? What are we doing differently? Or what are we doing right? Firstly, I think we have a very strong retail culture and also execution power. I'm working with together, you will see my management team here today. It's a very strong and competent management team were all of them has more than 10 years of experience from retail and many has been with the company for quite a lot of time. And that is a big asset in today's market. And a bit later, you will hear from Vice President, Strategy and Sustainability, Renate, and you will also meet the CFO, Stina, who are the new team members that I have brought in after I took the position as CEO close to 3 years ago. It's a team that is willing to learn. It's a team that is willing to look at new IPs, and they are really innovative. But however, this management team, they cannot do anything by themselves. And of course, they have to lean on a very strong organization. And the Europris team is a true strong organization, and they pull us all in the right direction. I think that the people in Europris are truly living the values of the company. They are proactive. They have extremely high business sense, I have to admit. Quite direct, and they won't do want to do things simple. And if we look at the feedback we get from the job satisfaction service, it's very high. And 2020 was the year with the highest job satisfaction in the company's history only exceeded by 2021 and then 2022. So people are actually quite happy working in Europris. They are very positive to the company, and we also see that they stay on for a long period like you also see with the management team. And of course, I'm sure all companies are standing up here saying that our company is so unique. Our culture is something special. But truly, the out of this culture is something special. And what makes us special -- I think it's extremely sales-oriented and flexible. And we always strive to be better, and we keep focused on what we can impact ourselves. And in Europris, you should never let us be distracted by external factors that we cannot impact. Rather, we try to change and adapt, like we do now, putting more consumables on, if you don't sell those more high-ticket items, you sell something else. You just have to adapt and that's how the organization works. And I think that has been a very important success factor for us over the past few years. The way the organization is adapting, changing and also driving sales forward. So the big question, what are -- where are we going from here? What are we going to do differently? What will make us great. And for the most part, it's a quite boring answer. It will be more of the same, which I believe has been good, but we can always do better. So that can also be great. And we will continue to chase improvements in upgrade categories, be better on the campaigns, do everything we can to improve the customer experience and also drive customer growth. And I will go come back a little bit more to those details of the next few slides when I talk about growth in the core of the business, which is the category upgrades and how we drive customer growth. And later on, you will hear Renate take you through the more exciting new part, which is the new growth initiatives. And that is the [ pupil ] acquisitions, it's the customer club and development of the digital customer. But Renate will also talk about our commitment to sustainability and also how we will act responsibly and we have a more sharp focus on our impact on local communities. So there's a lot of things coming on besides working with the core. And finally, I left it to Stina, to discuss the financials, the investments we're going to make how we are going to work on the cost side in order to maintain and develop a competitive price and cost position. So that is the key strategy. And to sum it a little bit up. Our main focus will be to create growth in the core. It will be to ensure efficient operations to safeguard our position as a market leader and our profitability. And of course, we will also explore new opportunities for both growth and innovation with a very often active mindset and that we have trained the whole organization in innovation and sustainability over the past year. I think it's a lot of exciting going on, and I'm sure that we will continue on our journey. As I said, I will talk about growth in the core, and that will, of course, mean that we are going to talk about our categories. And our ambition is to develop our store concept to deliver a unique and even better customer experience for those who are coming for the everyday products, for the seasons or for the special occasions, we want to be a destination for the consumers when they go shopping. And to do that, we have some destination categories. And the destination categories in Europris is washing and cleaning. It's the pet foods and accessories, it's storage, chocolate and candy and it's also cans and interior. So these are categories where we should be top of mind of the consumers when they think about where should they go to shop what they need. In addition to that, we use seasons to drive traffic. We should be top of mind when it comes to seasonal assortment in Norway. If you need something for Christmas, you go to Europris. If you need something for [ constitution ] you go to Europris. If you need something for Easter, of course, you go to Europris. We should be the first choice for the consumers for these occasions. And we continue to develop those occasions, also new traditions like Halloween, but of course, the biggest seasons will be Christmas and the summer season. And it's for us, it's all about creating a reason to go. That should be the categories, but we also talked in the past about the campaigns and how all this work together. And we have a very good proven category management model. It's very detailed. It starts with us defining which role should this category and this product play in Europris. Then we do a very detailed analysis of the situation and we set some goals and we create some actions and then we implement. This category management tool is extremely important for Europris. This is how we work all category management projects. And it's -- then when you fix that, you have to implement all of this with and align it with the campaign engine, so you know that your in-store communication is right, the leaflets, everything is working. So it's a big process, almost too complicated for a guy like me. So I think maybe we should have a look at on Boye Oigation Vice President, Commercial. He's going to present a little bit more detail about how we actually work with our concept and the categories. It's in Norwegian. We're going to show a video clip. It's in Norwegian, but we have subtitle for the international audience today. It will take around 7 minutes, so you have sit tight and enjoy.

[Foreign Language]

Thank you to Boye . You heard Boye talk about the fastest-growing category, which was pet food,and we talked about that at the last capital markets update as well. And for those who remember, we said it was a high-growing category, and we still looked at margins and expansion in that. And we have since then grown by more than 50%. So it's a strong category growth and a good story for Europris, and we continue to see possibilities in the pet food category. I think you also understood that doing this category upgrades, it's not something that you easily copy or it's not something you're easy to do it. It's a lot of work. It's a lot of details. And we have actually -- with 30 years of experience, we are actually becoming quite good at this. And over the past year, we have upgraded in total 8 different categories, and Boye talked you through all these categories and also mentioned a few that are for upgrade in the coming year. And that is, of course, the beauty of this. With a lot of categories when soon you have done them all, you just can start over again. So it's a never-ending story. And you will just keep repeating and doing over and over again and continue to find new ways of improving your concepts. But of course, this category development needs to be aligned with the rest of the machinery in the system. And the campaign engine is, of course, extremely important for Europris, but putting this together with the category management how we work on the cost side, how we work with the retail culture and implement all these changes? Because doing so many changes like we've done over the past couple of years in the stores. That's actually quite demanding. But our organization, they like it to see that it improves sales, it improves the impression of the stores, and it drives us forward. And retail might, from the outside, we looked at as quite simple. But retail management is actually all about the details. It's about putting all these small pieces together. And that demands competence, it demands an organization with a very flexible mindset like we have in Europris. It's not something that comes easy. All this working is actually quite detailed and takes a lot of competence and experience and a very powerful execution throughout the whole organization you have. I would like to -- I have a short back look to the CMD we had in 2018. Back then, we promised you basically 4 things. We said that we will continue to have growth above the markets on like-for-likes. We said that we should open around 5 new stores every year. We said that we should increase EBITDA margin over time and we said that we should pay out 50% to 60% net profits in dividends. And looking back, we have delivered on all these accounts. We have a growth that is clearly above the market, we have opened new stores on time and on budget. We have doubled the EBITDA results and the margin from 18% to 24% from 2019 to 2022 and we have paid out 63% of net profits in the period. I believe that more of the same will actually make us great and we will continue to generate value in Europris and for the shareholders by keeping that focus. And we celebrated 30 years this year, and that has been 30 years of continued growth and success for the company. And over the past year, it's not only been boosted by COVID-19. It's a hard work. It's a good retail craftsmanship in the organization, but also we've done some interesting acquisitions. In the summer of last year, we acquired 67% of Lekekassen. And now I'll leave the floor to Andreas Skalleberg, the CEO of Lekekassen and he will be followed on stage by Vice President, Strategy and Sustainability, Renate Spernes later on. But before you take the word on us -- I know you will take the room. But I'd just like to give a short story of the first time we met. It was down at the warehouse in [ Grimstad ]. I was meeting you and your father and we actually spent 2 hours walking around in that warehouse. We did not talk a single word about revenue growth. We only talked about how we should optimize the warehouse, the product placement and picking efficiency in order to be a profitable retailer. And Andreas is a true entrepreneur. He knows that what counts is actually the one you make in the end of the day. And Europris would never buy a company just to get growth. We want to buy a solid company with a very good and skilled management team. So Andreas, the room is yours.

Hello? Yes. Can you hear me? Everyone. It's really nice to be here. You guys know a lot about Europris. I don't think you know a lot about us. We're a very small compared to Europris. And we're an online company, e-commerce company, not retail. But I think we're kind of cool. So I want to want to present our company today and sort of give you guys more information about what we do, how we think about the future and how we think about operations. And the key takeaways for me would be -- hopefully, you guys see that we're not like the others. We want to be the special ones. We like the Marina, we want to be the special ones. We're not like the other onliners talking about what's your market share? What do you sell for in 2035? We don't care about that stuff. We care about what we give to our shareholders now and in 5 years. So it's a big differentiator for us because our peers, they don't talk about profits. They never talk about profits because that's just -- you don't want to talk about profit if you're an e-commerce company, but it's much more fun to talk about market share. That's not us. So we've changed quite a lot over the last year. We were acquired by Europris, we'll talk about that. It's also -- I want to cover a little bit how we make me look bad. We have new management, and they make me look bad every day because they do a better job than I have done. And that's really cool. We get new people and skilled people, and they prove me wrong. So my ego is going to hurt, but that's good and I think that's a good thing. And I always start presentations with -- to be honest with you, with our warehouse because it's – I'm really proud every morning when I drive to the warehouse because it's ours. We own it. It's our warehouse. So it's sort of like a physical monument that we drive through every day -- past every day when we get to work. And it's a big warehouse, it's 21,000 square meters. And it gives us an edge, we own the warehouse. We control the cost, and we'll also cover that how we think about operations and the whole scheme. I still consider our company to be a family company. We're not a family company anymore, but we keep the tradition. We keep the culture. I'm the third-generation owner of the family company, and it was started just after the war by my grandfather. And it's the same principles that we have today that we had before. I remember when I was a kid, I was always working -- I hated stores, trust me I hated stores, but I was working in the store, giftwrapping something, and my grandfather came along and he said, "What use so much tape that's quite expensive. You should do this technique, so you use less tape." It's kind of the same principle today. We keep that mindset of like, how can we cut costs? How can we cut costs? How can we cut costs, all the time. So it's the same mindset. But what's changed is that when I moved back, I was in Boston, I was -- long story short, I called my father and I said, you know what, do you have any contacts in Oslo. I want to go back to Oslo, maybe some consulting or whatever. And he said, "Why don't you try to guide the family company." And I was like, no, no, no, no. The retail is not for me. But at that point in time, in 2010, e-commerce was booming in the U.S., and we saw underdeveloped situations in Scandinavia. And we grabbed a few beers, my brother and I, and we talked about like, why don't we just do e-commerce in Norway? And that was sort of where it all started, but it was a huge change because we had a family company. I was the third generation, so when I moved back and I said to my father that we have to do a transformational change. It's very easy to talk about it now, like we know the success story right now. Like we've done pretty well. But at that point in time, we did something really cool that I'm proud of at least. We made the change before we made actually 1 single kroner in profits. We shut down all the stores before we had opened the online store. So we made a huge change to the company to make it digital, to make it like IT-driven. And that was really crazy because my father was getting closer to retirement age. And in 2013, when we launched Lekekassen, I managed to do something that we'd never done before. We lost NOK 2.5 million. And that's a lot of money because we have never made big profits. So I remember my grandmother summoned my father and she said, "He's not the right fit. You have to get rid of him. He's crazy. This is his American mindset, get rid of him," but it's true. And he had my back because he saw like, yes, we lost money. But he loved the fact that this product, we sold 100 pieces in 1 day and in the stores where we need 3 weeks, 4 weeks, 7 weeks to sell the same amount of quantities. He saw an upside. So what we did -- this is the stupidest thing I've done in my life, we put our houses on the line, everything we had on the line, and we got more loan in a bank. We did not want outside investments. We put all our money on the line. I just had a new baby, but this is the stupidest thing I've done, but I love it. It was so much fun. And this is the brag slide. Now you're supposed to clap and it's just the way it is. But we're now the #1 online retailer. We're proud of that, we're the toy specialists in Scandinavia, we're just moving into Denmark and Sweden, and there's a huge growth potential in Denmark and Sweden for us. But as investors, as shareholders, you have to understand that, in Norway, we have sort of a milking cow. We have the market position. We believe our dominance is 40% to 50% of the online toy market space in Norway. In Denmark and Sweden, we have untapped potential. We have almost nothing compared to what we have in Norway. So for the years to come, we want to focus on growing in Norway and keeping core strong, but we want to invest in growth in Sweden and Denmark. So it's a little bit sort of contradicting itself, but we have different strategies from different markets. So Norway is just core, core, core profits. We are making profits in Denmark and Sweden as well, but we know that volume is key to be even more profitable in 2026. And last but not least, and this is kind of cryptic, but who said we only have to do toys? I didn't. We're really considering new categories. And the toy market in Norway is about NOK 3 billion. And if you look at NorgesGruppen, Kiwi, Europris and others, they have -- they play around with much bigger numbers, and we want to get into the game but in the right manner in the right way. We want to make sure we find the correct categories where we can actually make a profit, make a splash, but it has to be the right way. It's also important for me to say that we're an online value company since the get-go. It's easy to say just put all your money, invest in growth, don't care if you have a profit or not. But if you have the house on the line, it's different. For people that actually bet their house, they know that it's kind of -- it's not a good feeling when you know if it goes really bad right now, I will lose my house. And then you have an angry wife. And yes, it's just not a good feeling. So we have been obsessed with always making profits, all along. And the great thing about having that mindset is that it adds on like if you have the mindset of making profits, you get that all in your departments. In our IT department, we talk about profits, show me the IT department that talk about profits. I don't think that many companies have IT departments talking about profits, but we do. We have the courage to talk about profits in all departments. And that's also very similar to Europris, I think, where profits-first mentality is also in our company, and it separates us from the other online companies in my opinion. So we're a family company, the problem was in 2020, plan was all along, I was going to take over this company. I have 2 brothers. And we sighted one big problem that we were getting too profitable and it would not be fair for me to just take over the company and my brothers to get nothing. And to be honest with you guys, it would be hard for me to go to the bank and ask for a few hundred million kroners and do another round. I think my wife would be pretty angry. So it's -- we had to think differently. We had to go out and seek investors. So in the start of 2021, we went and started talking to people and we got several offers for the company. But the problem was that the first time Espen and [indiscernible] was kind of in love with Europris. It's -- my advisers, I don't think they liked what happened because I was sort of stuck with -- these conversations we had were so different. Like when you talk to private equities, it's more financials and spreadsheets. When you talk to Europris, they don't care about -- they care about it, but it's take care about operations. And to me, that was just like, I can work in this system. I can be an entrepreneurial system, I can continue to deliver profits in this system, but I don't want to report to someone who's just obsessed with numbers and not the story. So the story is more important to me than the numbers. Obviously, numbers matter, of course. But you don't get good numbers if you don't have good operations. So we sold the company in '21. Europris and yes, it's been -- I'm really happy. We made the right choice. We made the right -- it was the right choice for us to make to sell to Europris, and I'll try to get into a little bit how we operate as sort of 1 unit, 2 units now and give you guys more feedback on sort of like information about how we work. The most annoying part, to be honest with you, they released numbers today. It's kind of annoying when you think you're a good negotiator, and you get bought up by Europris and they prove you wrong in all aspects of your business. So it's kind of annoying, we have better terms for everything right now than we had before. So I thought we were pretty good, but we obviously were not. So our financing is better, utilities bills are crazy low compared to the market. Just right after they purchased the company, we took over the master [ service ] agreement, and we saved so much money on sort of the logistics from Asia. But I think what we learned the most from is actually the operation know-how, how to hedge risk, how to think about risk in a different way. And it's really where we try to steal from more mature companies because we're a very, very small company, we got not a lot of employees. So we try to sort of steal the best from the big companies, but we don't want to be like Europris. We want to be special. We want to be [indiscernible] the special ones. We want to be small and agile. We're not trying to copy Europris. We're trying to steal what -- the best practice from their companies. So I think that's important. It's a separator. We do not want to copy paste, but we really want to make sure we take -- we leverage all the synergies that we can take and make sure that that can make us more profitable. And that was seen in this year that when times are tough, our OpEx is really going in the right direction, and we have the correct focus, in my opinion. And it's also fun to give something back. I'm proud that we have opened up our books, our data, and our head buyers have spent a lot of time with Europris to make sure that we give our top SKUs to Europris. And now they have -- the stores are with fully branded toys and kids want branded toys, let's face it. They care about if it's Pokemon or they don't want to get a copy. So now it's like more of a brand focused when you go into Europris and I think it's great for the brand Europris, I think it's great for us, and I think it's great for consumers. And yes, I truly believe in their toy departments, I think we have to be a little bit patient. I'm not very patient, but I think in 3 to 4 years, I think they will take massive shares of the toy sales in Norway. I think it would be similar to the toy -- to the pets' segment that they just presented, I think we will see massive market share in the next -- the Capital Markets Day, we will present that hopefully. Also, I briefly mentioned this, but we have to operate as separate entities. We cannot be the same, it's so important. And I think Europris, Espen who's the Chair of the Board, they are really smart about this. They don't try to implement all their strategies to us. They don't try to force any ideas on us. They want us to be different. They want us to be a separate entity. And in that -- there's a lot of trust in that, and that's really important to me as the founder, is to stay on and to be here because we need to have trust, but we also -- we're not afraid to learn, we're not afraid to be proven wrong, we're not afraid to be a challenged. But on the other hand, we also want to operate our business as an e-commerce business, we're e-commerce first, it's very different. I compare e-commerce to Formula 1. I'm not saying retail is easy, but retail is different because if you have 276 stores, that's 276 attack points. We have 1 attack point in Norway. You can go now to the customer right now, you could check pricing. You can see everything we're doing. It's just completely up in like -- it's open. It's so easy to copy us. You can copy us in 2 seconds. It takes you NOK 20,000 to set up a shop and copy parts of what we do. So our focus is in operations, on cost, on IT efficiencies. It's not on always being great at the storefront, but it's everything in the back that's different. But you cannot work -- I made a mistake in 2015, I remember one of our big suppliers asked me. So what's the difference between e-commerce and retail. And I said, no, it's the same thing, same thing. We had an example. We sold 40,000 soap bubbles, small kids in one season in November. It was a great success. We had 80% margins or 82% margins. And we laugh about it today because at that point in time, we didn't have a really good focus on what's the picking cost of that product. So the margin was 82%, yes, but the picking cost killed the profits. So when Europris talks about margins as a percentage, we talk about margins as a nominal figure because we know that we can make a lot of money on a 17% profit item. Because if the picking cost is 1% and logistics cost is 3%, then that leaves a lot of room for profits. So e-commerce is different. You cannot think of like -- on trampolines, if we make 40% profits on trampolines, it's not good business for us because the logistics cost kills us in online space. So it's a very, very different mindset in e-commerce compared to stores. So that's why we cannot be the same. We have to be different. There's one slide that sort of sums up our company. It's this one. And it's really, really important to me. In 2016, we made a conscious choice, we do not outsource, nothing. Everything is in-house. We control the service. I showed you the warehouse. We're proud of that. It's ours. It's physical. It's ours. I think it's a really, really good investment. But also, we have in-house developers. We've built proprietary technology. It's there in the books, but it's not in the balance, but we spent it. We have -- our technologies, 0 kroners in the balance, but it's worth a lot more. We have our own technology. We have our own warehouse system that's built up on open-source technology. We don't pay a license to SAP or whatever. It's ours. We control the service. We have EDI connections to our logistics partners. So that when we ship to Denmark and Sweden, it's by the click of a button, it's automatic. It's ours. We developed it. The only thing where we pay a license is actually storefront where we would use Magento because that's just the best practice in e-commerce. You cannot get around it. You have to use it, but everything that happens in the background, in the back office, in the company, it's ours, we control the service. And as a cost-focused, profit-focused company, I think that's really important that you guys understand. No one can come to us and say now your license fees are NOK 10 million per year, we control the service. So our time to market is really fast. And most interesting is that when -- this year, we spent a lot of money. Our new COO came in with new ideas, how we pick, what we should do to increase picking efficiency. I'll get to it a little bit later. But we spent a lot of money. But the thing is before we start a big job with our IT department, the question is always, always, is it going to make us more profitable? It's always that question. It's not -- we don't want to be cool, we don't want to be fancy, we don't want to have some cool gadgets on the website. It was is it going to make us more profitable? Yes, okay, we'll take the investment, no matter how much it costs. But that's mentality. And trust me, I see numbers, everything is public in Scandinavia. I think other e-commerce players, they don't have that mentality. They want to be cool. We don't want to be cool. So our focus is since last year, we know that COVID was just a really good thing for us, it's always been to reduce cost. Our operations has to be 20%, 30% better every year, not 2%. In retail, 2% is great. In e-commerce, everything is copying, everything is fast, everything is just so booming. So we live under the constraint like -- our thesis is always margins will go down next year. That's how we work. So in order to maintain our profits, in order to maintain a solid dominance in the market, we need to be better. So that's where I see a biggest difference in the company now with new people, with new skill sets is that we're so much more process-oriented than we've been in the past. In the past, it was a big weakness of the company. It was more like the founder just randomly making a decision and 5 minutes later, it was executed, but now it's more process-oriented, more structured. It's maybe an area where we look a little bit more like Europris, we adapt from a more mature company. That -- we learned that -- maybe it's better for us to have a process that is a little bit more planned. So we invest in people, and we invest in data-driven processes. And it's made us so much better, in my opinion. And that continuous investment in people, technology, processes are -- is really helpful because we think the winter is coming. Espen showed a slide where high price point was down 23.1% in Europris stores. We're seeing the same thing, not the same numbers, but it's a complete trainwreck for our competition and us and like everyone, like we had to fight so much more for our money this year. I'm really proud of what we are delivering, but it has really been so important for us to have control over our operations this year compared to other years because it's been really tough online compared to other years. It's my last slide. It's also a very important slide to understand the business. I don't think we've talked about this before, but we -- our number 1 cost in our company is our logistics cost, outbound logistics cost. And we signed a new agreement in December 2021, a 5-year agreement with a 2% inflated -- fee inflation. It's very good for us right now. It's -- we save 20% plus 20% year-to-date year-over-year in logistics costs in Norway, major for us. It really helps us when times are tougher. This has helped us a lot this year. And we think that that's just great news for the years to come. We have up until 2027 with 3% inflation costs. So it's really big for us. And it was maybe lucky, but it was also good timing of when to sign a 5-year agreement with your logistics partner because we would never get the same terms today because year-to-date, they have increased prices with about 11% with [indiscernible] so I think we're pretty lucky. What I'm most proud of is our warehouse efficiency program. It was launched by our COO Severin, he's here today. He came in and asked all the right questions. And I thought in the beginning, like how can you come in, you never worked in this warehouse, how can you come in and ask all these questions. But it really has changed the mindset of the warehouse. We now have -- we have stats for everything. Like we're crazy about stats. We have stats for everything. But we see that now we're able to put those stats in a system. We're able to put heat zone mapping of where we walk in the system. We're so analytical compared to how it was -- how we were 1 year ago. And I think this is just the beginning. Not to put pressure on Severin, but it's -- I think in 5 years, I think our warehouses will just be insane. But they have to be because e-commerce is like Formula 1. You cannot be the same. You cannot have the same car the next year. You have to improve, and you have to improve fast. So if you really wanted an assumption that we know good is good enough. Like it's copy paste the next year. So we need to be much better. And last, the famous last words is that we're also learning from our new owners. We launched our own loyalty program this year. It's -- we're super happy we don't have 1.2 million members, but we have 40,000 members, today, we launched it in September. And I think that's pretty good for us. And we also see the same trend. They spent a lot more with us. And I think that's for the years to come, I think we would spend a lot of our time on making sure that we have a good loyalty setup for e-commerce shops. And we will launch it in Denmark and Sweden. Also it was launched in Norway this year as a test, but it's going to be launched in Denmark and Sweden for next year. So yes, that was all that I had. I'll leave the word to Renate Spernes, and thank you.

Thank you, Andreas. Lekekassen is a great example of one of the companies that we have invested in as part of our pure-play strategy, which is one of the topics that I will cover in this next section. My name is Renate Spernes, and I'm responsible for strategy and sustainability in Europris. And today, I would like to talk to you about Europris new growth strategies and sustainability that goes on top of growth in the core covered by Espen. Our key strategic focus areas are to strengthen our price and cost position, to improve the customer experience, to drive customer growth and also to act responsibly. On all of these 4 focus areas are, of course, also guiding principles when it comes to new initiatives. In the following section, I will start by presenting our pure-play strategy, and then I will go through an introduction on how we will create growth and improve the customer experience through our digital platforms using customer insights. And finally, I will talk about our sustainable profile and explain however it is will increase our position as a responsible company going forward. Now let's start by looking at e-commerce and our pure-play strategy as an additional growth lever for Europris. Like most retailers, we have seen the growing prominence of the online market in the recent years, and we recognize it is important for us to capture our fair share of this market. And while still only representing 8% of the total Norwegian retail market totaling NOK 542 billion. The online market is growing rapidly with over 20% annual growth from 2018 to 2021. But bear in mind, it will still be our physical store network that is our core sales channel. We experienced that the demand for our concept, which is low-cost products, wide product selections and targeted campaigns is not as significant online as it is in store. And most of our online sales are made through click & collect. As such, we must adapt our strategy to capture our fair share of this rapidly growing online market. We started building our pure-play portfolio in March 2021 by acquiring the interior concept Lunehjem, followed by the toy concept Lekekassen in the same year. This summer, we made our third acquisition, which is the Strikkemekka Group, consisting of Strikkemekka, which is the second largest online store for yarn in Norway and the direct-to-consumer interior concept Designhandel. When selecting these pure-play concepts, we have a targeted approach to ensure they have a good fit with Europris. First of all, the concepts must be profitable and have a strong position within the segment they operate. We look for specialists with stand-alone concepts with target segments that fit with Europris profile to enable synergies. And last but not least, we want to invest in concepts that have strong organizational structure and also competence with entrepreneurs that we believe in. As you can see, we have 67% share in all of our pure-play concepts. And the reason for this is that we want to ensure that the entrepreneurs continue their successful path as stand-alone businesses and to keep them invested and maintain the independent and entrepreneurial culture that built the company in the first place. So in sum, this portfolio has strengthened our e-commerce offering, enabling new growth through concepts and more specialized and better suited for the online marketplace. Then the big question, why pure-play? By building pure-play concepts, we accomplish 3 main things. First, we expand our online offering. Customers, they show different behavior online than they do in the physical stores. The core of Europris concept is that the customers enter our stores with 1 product in mind and pick up additional products as they walk through the stores. While the online customer is more targeted. So with specialized concept, we reached key customer segments and tend to select more specialized online retailers with a single shopping purpose. Secondly, we can also realize a range of synergies such as cost reductions through operational synergies and a 2-way knowledge sharing about the category and also customer needs. And also, we gain insights and best practice from e-commerce that can be implemented across the pure-play portfolio as it grows. Thirdly, the pure-play concepts are customized for a single category. And this enables also a higher level of inspiration and a more customized customer journey, that improves the shopper experience, which we have experienced is more difficult to do in a one-stop shop with a wide range of categories. As you can see from our e-commerce sales in the recent years, pure-play is the key driver for increased revenues. Lekekassen, Lunehjem and Strikkemekka have contributed with NOK 689 million over 12 months since of September with Strikkemekka only included from July. When we look back to 2019, e-commerce only represented around half a percent of Europris total sales. But this has now grown to 9%. As such, the pure-play has enabled us to capture a significantly larger share of the online marketplace. When it comes to Europris e-commerce, it represents a modest share of total revenue with some growth through the pandemic. It is important to note that Europris website is mainly a marketing channel. Its main purpose is to introduce our stores, products and offerings to drive traffic to our physical stores. As such, the website is a very important platform for Europris, even though it's not a significant revenue driver for e-commerce. So far, we have built our Pure-play portfolio within the categories, fun, home and hobby across Norway, Sweden and Denmark. This enables us not only to improve our offering in Norway but also to penetrate new international markets. We see also a lot of potential for expanding our pure-play portfolio further. Expansion can be done in 3 ways. We can add new concepts within existing categories where we can also develop a concept that cover new target categories, and third, we can roll out existing concepts into new countries and increase our international presence. And of course, we will continue to look for good companies and opportunities for pure-play concepts, and we'll evaluate them in line with our targeted pure-play approach. That was our pure-play strategy. Now let's look at another way to drive growth through the digital customer where we use digital tools and platforms to gain insights about our customers, enabling us to better meet customer needs. By doing so, we can increase customer loyalty and value created per customer, where our 3 main targets are to grow the number of customers and shopping frequency to increase the basket value and also to give a more personalized shopping experience. When you look at our MER customer club, the number of members have grown rapidly over the last 3 years, now reaching more than 1.2 million members. And these customers, they have significantly higher customer value and loyalty than the nonmembers, and they stand for around half of all our revenue. The key driver for this is that they have a higher shopping frequency. On average, our MER members make 16 transactions per year compared to 7 from nonmembers. Not only do they shop more often, but the average basket value is also higher showing NOK 267 compared to NOK 234 for the nonmembers. So building loyalty and increased shopping frequency is, therefore, a high priority for us. But how can we use this customer insight to drive customer value? We start by identifying target demographics. Then through data collected over time, we develop customer profiles with shopping patterns and preferences, enabling us to customize our outreach, especially for each group. We are still in the early stages, but we are starting to gain really good control over our firsthand customer data, and we are already seeing increased conversion rates through more personalized outreach. As a member of the MER club, you receive unique offers and more personalized outreach, and we use life cycle dialogues. We are in the beginning of this journey, but we have developed a structured approach for building loyalty. We're using detailed insight about the customers. We do this by segmenting our customers based on their shopping frequency and whether this is growing or declining. For instance, for new customers, we attract them by onboarding them to the MER club and also by introducing relevant offers and product recommendations in order to spike their interest. While for customers who tend to shop less often than they have done before, we try to win them back through more personalized offers. We also reach out to our customers based on the recent purchases. This type of communication is mainly done through newsletters, e-mails and text messages today, but we are also expanding into additional channels such as digital advertising and also social media. Here are some of our examples on how we distribute newsletters to specific customer groups such as families with young children, flat owners, home and cabin owners, or nearby residents. All of these customer profiles, they have distinct needs and preferences. And we see that by using more personalized outreach, we gained 40% to 60% higher click rates compared to generic newsletters. As mentioned earlier, Europris.no is also an important communication platform towards our customers. Europris.no is a key marketing channel, providing information about our products, offers and campaigns. When we look at monthly visits to our web page, it has increased from 1.3 million in 2018 to 2.2 million over the last 12 months. Monthly visits have naturally declined somewhat since 2020 and 2021 as people spent more time online with being at home during the pandemic. Overall, we see that Europris.no continues to be a strong driver of traffic to our stores. But in order to fully utilize the digital customer, enabling future innovation, we have identified a need to upgrade and modernize our internal ecosystems and build a stronger digital foundation for Europris. We will never be a front runner for technology. But over the years, we have built up some technical depth with updated ERP systems, cashier systems and also reporting systems. This upgrade started in 2021 and is expected to be fully completed early in 2025. And the project will give us better internal control, but it will also benefit our customers, for instance, by enabling us for setting up self-checkout systems. And these selected solutions, they are tried and tested and is implemented in cooperation with solid partners. And I'm happy to tell you that as a result of strong project management, the project is so far both on track and on budget. Now let's move from the digital customer and look at how we will curate growth by increasing our position as a responsible company. To act responsibly is, of course, not something new to us. This has always been important for Europris. But as we strive towards sustainability and see an opportunity to improve our position by contribute positively in local communities, we have included this as a fourth key strategic focus area, and sustainability is an integrated part of our strategy and value chain. And what we mean by this is that, we don't see sustainability as a separate focus area. It is an integrated part of our core strategy and in everything we do. We strive to reduce our impact on the environment and to give everyone the opportunity to make sustainable choices through sustainable products. But sustainability is, however, not just about reduced emissions. It's also our people, which is what makes Europris great and being an attractive place to work is essential for us as a company. Equally, we want to contribute positively to the people and the environment in the many local communities that we are a part of. And to achieve this sustainability shall naturally be a part of our governance and all the decision-making processes throughout the organization. And I'm also happy to announce that Europris has decided to commit to reach net-zero emissions by 2050, which is in line with the Paris Agreement and science-based targets. For Europris, our biggest footprint lies in indirect emissions in the value chain, also referred to as Scope 3. This goal requires a joint effort from the whole industry, and Europris wants to contribute to this. Not only is this expected of us as a company, but we also believe that this will help strengthen our position in a competitive retail and labor market. While we are still working on specifying our action plan, we have identified some key focus areas for improvements, which is to make our products more sustainable and facilitate more circular operations, for instance, through the use of recycled and recyclable materials. Also, we will work on becoming more energy efficient and increase the use of green energy, where one example is that we plan to install solar panels on the roof of our central warehouse. Green supply chains will also be a focus, key focus for us. And to illustrate how we approach this, we have prepared a video showing recent project in collaboration with ASKO and NorgesGruppen. Let's have a look. [Presentation]

And as you can see, committing to zero emissions by 2050 is something we do as a society together. We have to collaborate across industries and form alliances to drive real change. This is not something we can do by ourselves. And it has been wonderful working with ASKO and NorgesGruppen, and we are very happy that they allowed us to take part of this project. But as a retailer selling products, an important step towards sustainability is to give our customers access to sustainable choices. And we will do this by increasing the share of certified products in our assortment and also the use of recycled and recyclable materials. And we will also improve quality and reduce product returns. However, paving the way for sustainable choices is not just about making sustainable products, they also need to be available to everyone and not be premium priced compared to less sustainable alternatives. So as a low-priced concept, we want to take a position by being a pioneer within affordable, sustainable products and make it easy for all our customers to select green options. Furthermore, we also believe that Europris can take a position in local communities, with 276 stores, Europris is part of many communities around the country. Where we are present, we want to contribute positively and establish Europris as the local hero. We want to do this by launching a range of initiatives across the country, adapted and implemented according to local needs. One example is that, currently, we rolled out an All We Want For Christmas campaign, where the stores, among other things, donate products to those in need in their communities. We believe that this can make Europris stand out from our competitors and create a more personal connection with our customers and communities and also generate increased loyalty and attract customers to our stores. And we have great employees in our stores across the country who are really dedicated to their communities. And we want to support them where we, based on experience and best practice, develop toolbox for the stores that can help them implement local initiatives and build local trust, reputation and loyalty. While launching Europris as a local hero is a new initiative, we are already building from a strong position as a positive local contributor. In our annual Europris Brand Tracker, we asked the Norwegian population, whether they agree that Europris contributes actively and positively in local communities, and as the results show, 46% of the respondents either agreed or strongly agreed to this statement, which we think is a very good starting point. And this was the first time this question was featured in the Tracker. And we look forward to monitor this and monitor our progress in the years to come. So in order to summarize, we are exploring several ways of adding to Europris core growth. First of all, we are developing a promising pure-play portfolio, allowing us to address the high-growth online growth marketplace from a new angle with high potential, both from our existing concepts, but also many new opportunities for the future; and second, Europris is beginning to uncover the potential of utilizing the digital customer to drive customer loyalty and generate growth through a more personalized customer experience; third, sustainability is an integrated part of our strategy and will continue to be central for Europris as we grow our business. And finally, we will continue to act responsibly and become the local hero in our communities through local initiatives. And we are looking forward to get that project up running. That was all for me. Now we will have a 15-minutes break, and then we will gather back here and Stina will go through the financials. So thank you so much for listening so far. [Break]

Hello, and welcome back. My name is Stina Byre. I am the CFO of Europris, a position that I've held for the past 2 years. And as Espen has communicated, we have delivered on the ambitions that were set on the Capital Markets Day back in 2018. And this includes the ambition to have higher growth than the overall market. And if we look over at the past decade, you can see that the Europris chain has outperformed the variety retail market. You might also notice that 2020 stands out. And following COVID-19 also came a sharp increase in retail demand in general. And this has made year-on-year comparisons challenging, as different companies have been differently affected by infection control measures. And for this reason, we have looked at staffed growth since the previous pre-pandemic period of 2019 and until today. And as we showed you in the third quarter by stacking the growth for the first 9 months of the last 3 years, you can see that total retail has had a growth of 12%. Variety retail has had a growth of 19%, and the Europris chain has had a growth of 28%. Espen and Boye have gone through the reasons for this outperformance, and I will also dig a little bit into this shortly. But before I do that, I would like to share with you a trading update for the first 2 months of the fourth quarter. As you can see, it has been a strong development with almost 8% growth for the Europris chain. We have seen higher sales of consumables and lower sales of seasonal items. And this fits with the outline that Espen gave for the current retail environment. And it also shows that consumers are more cautious. Our pure players have combined also had growth, and this is especially driven by Lekekassen that had north of 5% growth for these 2 months. I would like to remind you that we still have the Grand Finale December to go, that is the biggest month of the fourth quarter. And around this date last year, again, COVID implementations were implemented. So we are facing tough comparables, but we are very pleased with the start so far. Turning to our consolidated group sales. You can see that we have grown from a little over NOK 6 billion in 2019 to close to NOK 9 billion now for the last 12 months. And over the next pages, I will go a little deeper into explaining the drivers behind this growth. But to sum up, we have a higher number of customer transactions. We have a higher average basket value. We have done category upgrades, affecting -- contributing positively. We have added new stores, and we have upgraded our store portfolio. In addition, we have also acquired some pure-play companies. And as Renate said, for the past 12 months, they have contributed with revenues of close to NOK 700 million. As both Espen and Renate have talked about, we have a solid customer base with more than 1.2 million members in our customer club. We estimate that we have south of 3 million unique customers. And they have come and shopped with us 35 million times over the past 12 months. This is a growth of 8% comparing to 2019. The last 12 months, the average shopping basket has had a value of NOK 242 and this is an increase of 19% when comparing to 2019. And this is both from more items in the basket and also from higher average in value per item. And the latter is affected both by changes to the product mix and by inflation. As Espen and Boye again, have talked about is how the category upgrades have contributed to the sales development. And to demonstrate this, I've taken out 3 examples I would like to share with you. What you can see from these graphs is that categories that we have upgraded have outperformed the performance of the total chain for the following year or more. And the green line, that is the sales development for the upgraded category, and the red line is the development for the chain. And as you see in the green line above the red, that's the outperformance for those categories. And we saw this when we upgraded the kitchen category in the first quarter of 2020. We saw it again when we upgraded the home category in the first quarter of 2021. And now the same pattern is playing out for the pets category that we upgraded in the first quarter of this year. And now we're not saying that all category upgrades play out exactly like this, but it is mostly the case. And these upgrades are also important to stay relevant and in order to deliver on our strategy to improve the customer experience. From 2019 and until this date, we have added 20 new stores to our portfolio. And with this, we have delivered on our ambition to open on average 5 new stores a year. And I'm also happy to share that these stores have more than delivered on the strict investment criteria that we have set. If we look at the direct CapEx to the EBITDA, they've had a payback of around 1 year. In addition to this, we have also modernized, expanded and relocated a total of 66 stores over the same time period. And we also added revenue and expanded our scope with the pure-play acquisitions. Lekekassen is the largest acquisition. And as you can see, the fourth quarter is their main quarter. And even though we still have December to go, as I said, we are pleased with the development so far. Turning to our margins. We saw a solid jump in 2021 and in 2022. Favorable freight rates have played a big role without a doubt. But in addition to this, we have seen positive effects from category initiatives and other operational initiatives, and we also had positive effects from a higher share of private labels. And even though the advantage we have had on freight will disappear, for these reasons, we still believe that the margins will stabilize at a level somewhat above where they were before the pandemic. Looking a bit more into container freight. I'm here trying to illustrate our rates compared to that of the spot market rate for container freight. And please keep in mind that our rates are not exactly comparable as our rates include more with, for instance, shipping all the way through to Norway and guaranteed capacity. But what you can see is that up until the end of 2020, we had rates around the market level. And then in 2021, the freight rates skyrocketed. Well, we have a fixed agreement. And this, of course, gave us a huge cost advantage. And even though in 2022, we had to accept a large cost increase, we still had a very competitive agreement in place. This agreement was supposed to last for the full year of 2022 and 2023. But we have been able to negotiate a new 2-year agreement, starting already first of January 2023. And with this rate, we will have -- with this agreement, we will have rates around 50% lower than the current rates. But please note that the P&L effects will be delayed as we, of course, need to turn the inventory we already have in stock. But even though we have lost our cost advantage from this, with this new agreement, we still have a competitive agreement in place. Turning to operating costs. With the high volume growth we have seen through the pandemic, we saw a sharp decline in the OpEx to sales ratio. And these scale benefits are not possible to fully uphold, but we have high attention to keeping costs under control and to maintaining a strong cost discipline. Around 60% of our OpEx is from salaries and other employee benefits. And for this part of the cost base, we follow collective agreements, meaning that we will be impacted in the same manner as our competitors. On the Capital Markets Day in 2018, we also shared our investment plan for the logistical setup and how to become more cost efficient throughout the value chain. Now from that situation until today, the world is different and we are no longer in the same reality that the business case was built upon. But what I can say is that when it comes to warehouse consolidation, we will not be operating from one warehouse until the second half of 2024. So the consolidation to just one warehouse is delayed, but we have realized savings as we have already gone from 5 warehouses to 2. And when it comes to the automation of the warehouse, as previously communicated, this was delayed due to software issues, but these have been resolved and we are seeing efficiency gains. So to sum up, it's a different situation than what we had. Full savings are delayed, but they are intact. Another topic that many people have top of mind these days is the electricity prices. We hedged our electricity prices. And because of this, we have avoided costs for the full year of 2022 of NOK 80 million compared to if we had gone in the spot market. Next year, we will have an OpEx increase from this of NOK 20 million. But again, from the prices we now have in the electricity market, we -- with this, we still avoid a significant cost increase also next year. Now there's one more thing I would like to mention. It's not part of the OpEx, but it's still good to note, and that is our rent. Our rent is CPI adjusted, but we are booking this after IFRS 16 leases. So this will impact our lease depreciation next year. And also with higher interest rates, the lease finance costs and finance costs in general will, of course, also be impacted. So to sum up the P&L development over the last years, we have seen high volume growth. We have seen improved gross margins and strong cost discipline, and this has given a higher earnings growth. And with the operational leverage that we have had, you can see that on average, the annual average growth for revenues has been 13% over this time period while for net profit, it has been 49%. Cash loans from operations increased significantly in 2020 and remained at a high level also in 2021. Over the past year, we have had an increase in net working capital of NOK 600 million. And this is mainly due to inflation and also from higher volume. I guess nobody will be very surprised when I say that they will remain in stock until the next time we have that season. We invest in growth and to improve our cost position. And here, you can see a split of our investments into normal maintenance investments, into investments in new stores and upgrade of the store portfolio, investments in the new and expanded warehouse and also investments to upgrade our IT platform, including ERP and point of sale that Renate mentioned. And these additional investments in the warehouse and the IT platform are expected to conclude in 2024. And with current plans, we expect a more normalized CapEx level from 2025 onwards. We are committed to maintaining an efficient balance sheet and to distribute excess cash to our shareholders. And in the period from 2019 to 2021, we have purchased pure players for NOK 600 million. We have repaid debt of NOK 700 million. We have repurchased shares for NOK 240 million, and we have distributed a dividend of NOK 1.1 billion. As a solid and well-run company, we strive to have financial flexibility, and this has served us well. As I mentioned, we have had NOK 600 million increase in net working capital. And we have also paid out a record dividend of NOK 644 million this year. Our financial position remains solid with good flexibility for seasonal fluctuations throughout the year. If we look at our bank loan, we have a term loan of NOK 1 billion. Of this, we have hedged 60%. Over the past 3 years, this has given us a financial gain of NOK 85 million. Of this, NOK 48 million as of September this year. We also have an RCF of NOK 1.2 billion and an overdraft facility of NOK 200 million. We have ample financial headroom within current covenants. EBITDA to net interest-bearing debt is 1x compared to the covenant of 3.25x. Both the term loan and the RCF is up for -- or is maturing in January 2024. And we are already in dialogue with our banks about the refinancing. With strong earnings and cash flow and a sound financial structure, we have been returning excess cash to our shareholders. Every year, we have had an increase in our ordinary dividend. And on top of this, we have also paid out extraordinary dividends when the results have been extraordinary. Overall, we have distributed 63% of net profit over these 4 years. And this is somewhat above the dividend policy range of 50% to 60%, but it is in line with that part of the policy that says that when we evaluate dividends, we also look at the efficiency of the total balance sheet. We are maintaining our financial and operational goals or ambitions. And we aim to deliver like-for-like growth above the market. We aim to open on average 5 new stores net a year. We aim to increase our EBITDA margin over time, and we also aim to maintain a dividend payout of 50% to 60% of net profit while maintaining an efficient balance sheet. And this might not seem that interesting at first glance. But if we look at what has happened since the last Capital Markets Day, I would argue to say that this strategy has served us well. And with that, I will leave the floor to Espen for some final conclusions. Thank you.

Thank you, Stina. And also thank you to Andreas and Renate for excellent presentations. Yes. I think it's fun to summarize and have a full look at our journey from good to great. The Europris strategy remains for the large part, the same, which I still believe that is quite good and will make us great. And we have a clear strategy on what we're going to do forward. We will strengthen the price and cost position. As you saw from Stina's presentation, we are hedging all costs beyond our control, and we will continue to chase improvements in everything we do in the ways we are working. So working with cost effectiveness will be extremely important going forward. And of course, we continue the sourcing partnership we have with Tokmanni and Obeya to ensure that we have the lowest possible purchase price on the goods we buy. And to be honest, I truly believe that the winners in future retail that will not necessarily be those who has the lowest selling price, but I believe it will be those who have the lowest costs. So I think what you heard from Andreas that is music to me that working operational efficiency, work on how you use your cost, make sure that you are profitable. That is one of the most important assets of Europris, and we will continue to be focused on the cost side and the profitability. And improving customer experience, of course, that's why the customer should come to us. And you saw Boye presenting every little tweak of what we are doing. And -- when you walk into the store, you might think that it's a little bit surprising chaos what's happening here, but it's a thought behind everything you see. Nothing is left to itself. It's all planned, and it's all in the details. And we will continue to drive growth, drive traffic by working on the categories. And of course, execution in the stores and the staff we have, that will be key to the success also going forward, that we maintain a high standard in the stores, making sure it's attractive to come there to implement the concept and work hard like they have done over the past years. And on driving customer growth, we will continue to open new stores, but we will also continue to work on the digital space, like Renate talked about with the digital customer, working with the customer club and using all the data and the insights we now get to make us more interesting for the customers, make it more personalized for them. So they actually have a good reason to go. And that is going to be important. And as Renate said, we will act responsibly. Of course, that goes without saying that's something we have done. But we are putting more focus on this and actually put things out as a stand-alone strategic objective. And we are committed now to science-based sustainability targets. That was actually quite a large step for Europris to make that commitment. But we are doing this as part of society, and we're doing this in collaboration with others. And that, I think, is a tremendous job that is done and you see how we work together with ASKO. Of course, they are a competitor when it comes to the stores. We're competing. But we have agreed that -- on the distribution of goods, we should actually collaborate to make sure that we give a sustainable transport of the goods to the stores. So this is a joint effort from the society. It's not something we as a company do alone. And as Renate said, I think sustainability is also an opportunity. We always seek opportunities in Europris. And of course, I want us to take a position as the retailer that makes sustainable products affordable for everyone. And I think that positions up for grabs, and we have to work hard in order to take it right away. And yes, moving too fast. The local hero -- that is, in my terms, the hidden gem in the road from good to great. We want to be a positive contributor in the local communities. And that is something that can really differentiate us from other retailers especially the old liners with the network we have with stores, how we can connect and interact with the communities. I think that is a big asset that's going to drive growth going forward. Of course, when it comes to concept, the commercial offering, the sourcing, how we work with the concept, there we will be one strong national chain. But when it comes to execution and the people, there, I want the customers to meet 276 local stores in their own community. And that's how we can make a difference. And I truly believe that we can locally engage with the communities. And we can hire locally. We will collaborate locally with different organizations and making sure that our stores that will be a place where the customers will come and meet, and the customers will be welcome. And going to stores might be for the audience today, not be something you do with a great pleasure and you're not to spend too much time in the stores. There's a lot of people out there that actually this is an important part of everyday life, and part of the social life, and that is something you cannot get online. You actually have to do that in physical stores. And I see it, we actually have some time. I'll share a very short story at the end. On Black Friday this week, all the management in Europris went out to work in the stores. And I went to a store in Teresa. And I was there working there together with store manager Miya and they're standing in the handyman section, and suddenly a customer approaches there, " Hi, Miya, how are you? I see that you have a new employee today." Yes. And yes, of course, we've ended up standing there talking for like 10 minutes because that customer has seen you and all the staff in the store. That store manager, she knows her customers. If you want to know what's going on in the store, talk to the people. That's how you find out what's going on. And that kind of feeling being that part of that is quite important. And I was well best new employees, that was great. I truly enjoyed that. Okay. I hope you have enjoyed today's presentations. And for the final wrap-up, I would like to give you just 5 key takeaways. So if you take this with you, I think we have accomplished our mission with the meetings today. Europris is a clear market leader in a growing market segment. We have a strong track record with 30 years consecutive growth. We are a well-managed company, with a proven ability to adapt to changing market conditions. We have presented today a clear operational and financial strategy, and we are truly committed to profitable growth and excess cash distribution or excess cash. And with those final remarks, I think I will invite Renate and Stina to join me on stage for the Q&A session. The Q&A session will be moderated by Trine, our ER Officer. We will take questions from the audience here in the room first, and then we will take questions from the web listeners, if someone has very detailed questions about Lekekassen and to Andreas, we will note them down, and we will get in contact with you later on. I think that with that, we will open up for questions.

Markus Heiberg from Kepler Cheuvreux. So one question for me, and it's maybe several parts, but -- how do you think about the traffic versus the basket size in a down trading environment? Obviously, you benefit somewhat from it. But can you also shed some light on gross profit per product in your consumables and in private labels compared with other kind of products. Could this be an opportunity? Or is it a headwind for you?

I think it's always an opportunity. But of course, you point out something right. And the basket in the current environment, the growth in the basket is driven by inflation. That's the fact for everyone. That's the way it is. But I think trading downwards that you see higher share of private labels, we -- private label has a higher margin period, but also a lower sales value. So it's just the purpose, it gives the consumers more value for money. So I think you shouldn't see that as a guiding either one or the other way in terms of how the margin will be impacted. But of course, the sales now is driven by lower priced items. And of course, the growth in the basket will be driven by inflation.

So just a short follow-up. So your assumption of higher gross margins going forward than pre-COVID, does that account for this effect that you will have more consumables, presumably going forward?

I think you have to look everything over time. And of course, if you look at -- I think the first quarter of next year quite tough for consumers. And maybe in that quarter, you could see a somewhat different gross margin development. But you have to look at this a little bit more long term. And long term, I am sure that we will deliver gross margin above the pre-pandemic levels. And we will continue to work on the product development with the private label products. And of course, that the sales of high-ticket items will come back as well at one point. So -- we are in this for the long run. And currently, we see a good margin, how it will be going forward. It's a little bit difficult to say for the short term.

Thank you for a good presentation. Europris, as you stated, more than 30 years of revenue growth. And looking at consensus next year, there is marginal growth. How do you see your strategy sort of fits with the market landscape that you see for 2023? Should you be doing a lot better? Or how can you reflect on that?

I think we are very well positioned in today's market. Economy is getting tougher. They are getting more price conscious. And of course, being in the low price segment is positive for us. We've seen that in the start of the fourth quarter. We are becoming more important for the consumers. We see that we are selling more private label products. We see that our campaign still works. So I think in the current environment, that should be positive for a company like Europris.

And then the very strong Q4 sales or October and November sales that you had this quarter. Was that your sort of expectations? And how do you see that here relative to what you should expect going into next year?

Like we said when we presented the third quarter, we had the positive development throughout the quarter. It was starting with negative numbers in July, which was heavily impacted by lower sales of summer seasonal items. And we saw growth throughout the quarter, and that continued now into the fourth quarter. So in that terms, it was expected. And I think what will happen next year, we'll wait and see. I think we are well positioned and -- what we have tried to explain is that we are working with these tools. When we see that the market is shifting, we try to adapt when we take the opportunity and we look at what can we do. And we have shifted the focus towards more consumables, towards more low price points, and that's exactly what we will continue. If you see that the demand changes, the market is changing, we will try to adapt and find a way to benefit.

Final question for me. Since the last Capital Markets Day, you're growing your private label share from 35% to 40%. Where do you see the sort of level ending up in 3 years from now? Have you reached a sort of maximum potential there? Or should you be expecting more from that?

We don't have a target of this sort of that percentage. We work with these products. And if the consumers are -- the demand is there and for our products as well. Of course, we don't mind selling those products. But it's important to have the mix of the brands and our private labels and no concrete target to increase to this or that level. That we will work to deliver good private level that people want.

Petter from ABG. A follow-up on Markus' question here on the gross margin. We see that many retailers are seeing higher inventory levels. And it also seems that campaign activity has been picking up. Can you share some lights on how you see the inventory level in the value chain and also the campaign activity?

If I start with the inventory level, as we said, we have had higher inventories. And this is largely impacted by inflation, but also from volumes of seasonal items. -- but inflation affects both seasonal items and the overall assortment. But what we have been very careful to do is to sell out any seasonal items that are not to be continued for the next year. So our inventory is healthy, and it is products that are still very much sellable for the next season. So we're not concerned about that short-term increase there. And your next question, sorry, it was about.

Yes. That was just overall on the campaign activity. And how do you see that in the market now versus, let's say, a couple of years ago or a normalized situation back in 2019?

We have seen that the share of sales from the front page of this leaflet has increased since the last Capital Markets Day. And of course, people are more price conscious, and they are coming for the campaigns. But what we also, of course, have focused on is to use this as a way to get people into the stores and then to also shop more. So I can't predict if it will go even further up or if it will stabilize or go down again. But we try to use to get at least the traffic and then hopefully, they pick a lot more than just what's on the front page.

I think it's also fair to say that the campaign intensity in the market in general, this Christmas has been crazy. I've never seen Christmas season starting so early with 40% to 50% discount on basically everything. And I think what Stina presented earlier, with the financial flexibility we have, the storage capacity we have, we actually take those sales decisions based on what we think is business sense for us long term. Obviously, currently in the market that a lot of retailers are taking the decisions on the sales activities based on the covenant demand from the banks or the physical storage capacity we have at the warehouse. So of course, many are overstocked at the moment, and that takes another season to clear out. Yes, more questions, yes?

Inflation has been quite high this year. And then how do you see inflation going into next year for your selling prices?

I think we still have some inflation ahead of us. We've seen that in negotiations with supplier this autumn that there still, there are price increases to come. But we are also, at the same time, seeing that some prices have started to come down, especially those from the Far East, reflect, first of all, in the freight agreements. And of course, that also reflects that it's more capacity available in China for production. So it's -- it's a little bit mixed. I think you will see still inflation on locally sourced European products, but you might see a different picture for products from Far East.

I have 2 questions. One, the situation on China and the COVID lockdown. How is that affecting your value chain into Europris?

So far, I think we have managed quite well. We have close to 30 people on ground in China working there. Of course, they have had limited flexibility to travel over the past years. But they are working digital and that has served us well, and we have actually got all the goods we need during this period. But for those employees, it has been extremely tough, and we follow up their situation very closely in -- I think they have been in lockdown for more than less than 1/3 of the year so far, and it's still a difficult situation in the Shanghai area. So for those employees, we care a lot and that situation is difficult. But product-wise, we've got the products we need, and we have been able to also do all these category upgrades and tweaks despite this situation with us actually not being able to go to China for 2 years.

And my second question also partly alludes to inflation. And that has to do with the growth, right? If you inflation adjust your growth, it's actually -- I can't remember exactly the figures. But it seems that in real terms are decreasing. So how do you think your real results will be affected? I mean, you're really not growing in real terms, you're actually declining going forward.

I think it's -- you have to look at this a little bit long term. If you look back from 2019, of course, we've had volume growth, not only inflated growth. And -- but if you compare with last year, I totally agree with you. The growth we have so far this year is limited and, of course, inflation driven. So volume-wise, it's a decline. And that is a natural effect, I think, of the fact that consumers getting less money to spend. So the banks want more for their interest. It's more taxes for many people, and at the same time, electricity prices and food prices are increasing, then you have less to spend and you will spend your money differently. If you compare it to last year, people could not travel abroad could not go to restaurants. There were no parties, no fun. And this year, they are spending all the money that way. And of course, it's a big fight for the consumers' wallet.

Again, how will it affect the rail growth going forward? You are quite the politician. you all know that as well.

It was a good answer. I think it's -- of course, what we are working on is what we are trying to explain here today. It's all about the cost, how we work on that. But obviously, we've said with the higher freight costs, that will impact the margin. We have said that the margin you should expect it to go a little bit down. If you look at the estimates out there, it's all reflected in those numbers. So everybody is expecting that. So I think it's no news to what we have already communicated to the market.

Just a follow-up for me sort of bundling a couple of questions here. With the inflationary environment you're seeing, I mean, you commented that products from Far East is becoming cheaper at the same time i see our freight rates coming down. On your inventory of items from the Far East, do you see that the items that you have purchased or have better prices than what you currently see in the market? Combining both the price element and the cost?

Obviously, the goods we have purchased this year will have a higher cost than what it will be to buy those goods next year. So that goes without saying. So I think it takes an inventory churn, like Stina said, to get the benefits of the new agreements. But luckily, we are not the only company that source products from the Far East. Our competitors do the same. And we see from the sales activities that they have the same issues like us with the inventory. So we are not alone. And usually, we see that prices going up, tends to be a little bit more sticky than prices going down. So I think the market will actually moderate this quite well. We've seen that in the past, and I believe that to be the case now as well so.

[indiscernible] in the storage.

No, no, not necessary for that. Okay. Trine, any questions from the web? One question from the web. Actually two.

Yes. Just a follow-up because we haven't talked too much about the OpEx ratio. Obviously, it's very difficult to know because you don't know the revenue for next year and you don't -- but you have a better visibility for cost growth, right? because it's not as easy, potentially to increase prices next year. What kind of cost ratio should we be looking at? Will you do initiatives to take down your cost if you see that revenue growth is below budget because you see a lot of retailers now are cutting costs. How should we think about this?

Well, we always work to have a cost-efficient base. A lot of our cost base is kind of already fixed, as we said, with the 60% going to salaries and other employee benefits, and we also have the rent to which is, what it is. But for everything we do, also with the inventory and the warehouse, I mean, sorry, we are working all the way to be more flexible. Of course, if we need to take additional actions, we will look into that. But we also hope and as we have shown at least so far, that we are a very relevant player in this environment. So we haven't any plans to initiate anything extraordinary unless we need -- are in a situation where we need to do that.

Kristoffer Pedersen, Nordea. You mentioned that it will take some time until the new freight agreement comes into effect fully on the P&L. Are you able to give an estimate on how long it will take? It's like 1 or 2 quarters or?

I don't want to be exactly specific on it. But we have -- as we also said, we have higher volumes left from the season that has been and that obviously has to turn. So I'm not going to give you an exact answer, but everything that is shipped that we -- after the first of January has that new rate. But again, we have to turn what we already have. So a little bit of time you should expect.

Trine?

Yes. One question from the web here. Alexander for Baird asks on an update on the Baird transaction?

We have not given an update at this time. We gave an update on the -- when we did the Q3 numbers, a little bit more than a month ago, and that is that we are still not agreeing on the 2019 EBITDA, which will settle the purchase price. We need to settle that and that is scheduled for an arbitration to be held in the third quarter next year. So it's still pushed ahead of us. But I think, obviously, the strategic reasoning behind the transaction is still there, but we have no reason to settle it before we -- and know the price.

Last question from the web so.

Okay. Thank you very much for your questions. I think now we will actually leave the floor to Jerome to give us some international perspectives on the discount retail market. So please, the stage is yours.