Fourlis Holdings S.A. ($FOYRK)

Ladies and gentlemen, thank you for standing by. I'm Constantino, your Chorus Call operator. Welcome, and thank you for joining the Fourlis Group conference call and webcast to present and discuss the first quarter 2026 key financial figures. We have with us today Mr. Vassilios Fourlis, Chairman; Mr. John Vasilakos, CEO; and Ms. Elena Pappa, Investor Relations and Corporate Affairs Director. [Operator Instructions] the conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Fourlis. Mr. Fourlis, you may now proceed.

Thank you very much. Good evening, and thank you for attending our Q1 conference call. Market performance has been mixed among our different countries. Whereas Green Cyprus and Bulgaria are experiencing positive trends, especially in sports style category Romania is under serious headwinds. As we have announced since Q4 2025, our two main strategic pillars for 2026 are, one, a persistent growth in our store network, especially Foot Locker and small IKEA stores; two, a major technological and operations revamping of our model. The initiatives will revolutionize our way of operation and prepare the group for the challenges of the future. Obviously, the geolitical developments will play a significant role going forward. Our affiliate listed company [ traded ] the state one of the largest and most profitable real estate investment companies in Greece has been performing above expectations and is persistent in following the strategic focus on retail parts and apply chain logistics centers. I would like now to pass the floor to John Vasilakos, our CEO, for further analysis. John?

Good afternoon, everyone, and thank you for joining us for Fourlis Group Q1 2026 Results Presentation. Today, we will walk you through the key messages of the quarter, the trading and financial performance, the main business unit developments and the progress we are making on our strategic transformation plan. Let me start with the key messages for the quarter. Q1 confirms resilient demand and positive commercial momentum in most markets of the group. We delivered solid sales growth supported by positive like-for-like performance, higher visitorship and conversion, strong product capability and improved product mix, strengthened partnerships and targeted network expansion. Importantly, we presented growth across all our business units with positive performance in IKEA in the spot Foot Lockers and [ Holbeton ] group level. At the same time, 2026 should be viewed as a transition and investment year for the grou as Vassilios already said. As we accelerate our transformation and expansion plan, short-term profitability is being affected by platform drilling costs already budgeted Foot Locker expansion, investment in people and customer experience. And on those transformation and expansion-related costs are positive, some external [ impression ] pressures coming from the Iranian and Ukranian conflict in the volatility in the Romanian market, already mentioned, such as energy and transportation, [ panel ] and property related core put extra pressure on 2026, demanding further actions to offset this pressure. Our focus remains on disciplined execution, cost control, of course, and the acceleration of the transformation of the [ vines ] model with the objective of building a more scalable platform and stronger operating leverage from 2027 and onwards. Turning to group financial performance. Revenues increased by 13% year-on-year to EUR 133 million with like-for-like growth of 5%. Gross profit increased by 11% with gross [ great ] margin and 46%, reflecting product mix, category dynamics and targeted promotional activity. At the EBIT level, profitability was affected by the seasonality of the quarter, the planned stock optimization that we have already mentioned last quarter of 2025, the timing of operating expenses, expansion-related costs, mainly for Foot Locker continued investments in transformation and platform capabilities as well as external inflationary cost pressures and market-specific challenges in Romania. It is important to note that Q1 is typically a seasonally smaller quarter for retail and for our group as well. While profitability is weighting towards the second half of the year, particularly Q4, similar to last year. Profit before tax loss stood at minus EUR 5.5 million, broadly stable compared to last year, supported by the positive contribution from associates, which amounted to [ $1.7 ] million for the first Q. The key point is that commercial performance remained strong, while profitability in Q1 reflects seasonality and the cost of the transition and expansion phase we're [ calculating ] implementing. Now we will look at the performance by business unit, and I ask Ms. Pappa to run the presentation for the next slide.

Thank,s John. Well, in on turning, savings increased by 6%, with like-for-like growth of 3%. The performance was supported by resilient demand, market share gains, product availability and continued network development. Our home furnaces business unit continues to be amongst the top performers within the KL network. In sporting goods, [ set ] increased by 25% with like-for-like growth of 5% in the spot continue to deliver solid performance and strong market [ share ] gains, while [ Fotocasa ] is scale and strengthening our position in the naltrsegment. In Health & Witness, Holland Bare continued to report strong sales growth and positive a performance, while the strategic repositioning is progressing. Overall, we remain confident about the top line momentum [ costar ]. Moving to IKEA. Execution remains era. Over the [ aperiod ],we have continued to strengthen the care network through new openings, upgrades and new formats. Written investments such as a [ Rainstore ] and the upgrade of roads from a pickup and other point into a new K new generation store enhanced accessibility and bring the brand closer to consumers in important regional markets. At the same time, we continue to focus on customer experience, on salary capabilities and network optimization. Looking ahead, the pipeline remains clear including care in [ Clovis ] and [ Deason ] to new generation for banks, additional utilization of stores near smaller cities from 2027 onwards and the IKEA in [indiscernible] store, which remains an important future milestones for the milestone for the brand. So the IKEA strategy remains focused on targeted expansion, improved accessibility, stronger customer experience and accelerated network development. Moving to sporting goods excuse me, moving to sporting goods. We are progressing on two fronts. First, INTERSPORT continues to strengthen its position in sponsor performance supported by new retail concepts, stronger brand partnerships and category specialization. Tenders for football club store is a good example of how we are innovating the retail experience, support higher traffic, stronger engagement and a more specialized positioning in football. In addition and partnership with the Hellenic Football Federation as their exclusive merchandising partner of the Greek National team strengthens our connection with football fans and interest or positioning of the [indiscernible] vessels. Second, Foot Locker is expand the car presence in the laser segment. Since the acquisition, we have continued to develop the network, including new stores e-commerce platforms in mania and Bulgaria, the reman interpolation of new concept store in [ Galante ] and patrol and the relocation beam store to a prime occasion. Footlocker remains the ramp-up in expansion pace, but the line-for-line performance confirms the strength of the brand and the customer response. Profitability is expected to build gradually as the network matures. Scale increases and that home synergies are captured.

Let me now explain how we see profitability in 2026. Q1 profitability should be viewed in the context of our solid commercial momentum and the transformation and expansion. 2026, we are absorbing one-off costs related to transformation and platform building initiatives, including centralization, services platform buildup, system upgrades and new operating routines. We are also investing behind growth, particularly in Foot Locker, where we're expanding the network fast integrating operations and building scale. At the same time, we are taking targeted actions in employee and customer experience, including frontline salary adjustment that we had already discussed end of last year and headcount optimization aiming to support service levels and reduce employee turnover. Finally, we are facing external inflationary cost pressures, including energy, transportation, rents and FX-related costs as well as a more challenging macro and consumer environment in Romania. The transformation and platform building initiatives are expected to drive meaningful and recurring efficiencies from 2027 onwards. However, together with expansion-related costs and external cost pressures, they are expected to weigh on profitability during 2026. The objective is clear. 2026 carries the cost of building the platform, while from 2027 onwards, we expect to start capturing recurring efficiencies and stronger operating leverage. This is something that we already discussed last year, and it is according to our plan that 2026 will have to fit both the transformation, final cost of the legacy and new systems and of course, the cost of centralizing and building a platform-based operation that will have significant benefits in the future, both regarding the operating cost of the shared service per se, but also allow us to change significantly the operating model as the systems are coming through. In more detail, and just as a reminder of what we have discussed end of last year, this is the transformation road map that we introduced. And actually, this road map says the following. In 2026, we are in the foundation phase. So we are building the operating model, the governance, the shared services platform. We do the system architecture, and this phase is necessary in order to build a more scalable and future growth platform. We have already discussed that this platform includes functions such as finance, technology, HR, procurement, legal. And we have already discussed also that in modern retail across the globe, close to 70% of the overall operation is identical across concepts. It is concept and country agnostic. And that's why we are building this platform this year. 2027 and 2028 is about integration across supply chain, omnichannel, digital capabilities and processes. From 2027 and 2028 onwards, we expect the platform to support faster expansion, stronger productivity gains and higher margins given that the systems will allow for it. So one system per type of operation or per area of operation, lower maintenance lower licensing, lower cost of operation, but also lower cost of innovation and building new sustainable competitive advantages for all, lower cost of building capabilities that are concept and country agnostic. This is very important. With that context, let me move to what has already started under l226 foundation phase. The operational transformation is progressing, as already said, across 3 main areas, and we'll try to accelerate this transformation. First, on the operating model and shared services, we are moving fast towards the centralization of the functions already mentioned and teams, the design of agile working groups and the introduction of new more efficient operating routines across the organization. Agile here is very important, and we run the first 2 product teams, order management and supply chain optimization, given that the transformation is huge, and we cannot do it on a waterfall way. We have to do it in different sprints and manage to deliver fast and consume this transformation as soon as possible. The objective is to simplify the way we operate, reduce applications and create a more efficient structure that can support multiple brands and markets at a lower cost of operation. Second, on the unified data and system architecture, we are progressing with the key enabled projects. The EPM project is under development. Already the treasury system, a global one is already in place. The ERP S/4HANA that will take care of the financial planning consolidation, but also supply chain and MSD modules are in the analysis stage, and we plan to roll out to start developing beginning of mid-September. And the commerce platform has also been decided. Commerce platform will take care all the commercial capabilities of the organization, both on the online but also offline. So it is not an e-commerce platform. It's a commerce platform that will allow us to operate in a more competitive way in the near future, and it is one platform for all concepts. These are important building blocks for a more integrated operating model for advanced customer service capabilities and for enhanced visibility, planning and decision-making across the group. Third, on an enterprise resilience and cybersecurity, we have established a dedicated information security and cybersecurity functions since last year at the group level. And we have also introduced a group-wide information security and cybersecurity framework and embedded security by design methodology in all our PMO and technology initiatives. This is very important because as the group becomes more digital and more integrated, resilience and security need to be built into the operating model from the beginning. And although these initiatives create some short-term one-off costs during the foundation phase, so 2026, but also 2027, -- they are expected to support productivity, scalability through the execution and margin improvements from 2027 and onwards. The aim is to build this platform and allow the group to operate, as I said, more efficiently and scale current and future retail concept faster across margins. Of course, the systems is -- actually have started the journey of changing the systems and transforming the operating model started. Systems will be ready to deliver efficiencies after the second half of 2027. But before that and within 2026, we have to conclude with the architecture and the RFPs and the analysis phase and proceed, but also undertake all the organizational part of the transformation, this platform-based organizational chart that is not so much related to the system. Of course, it is enabled by the system, but we have to do in 2026, all the human and operating model and organizational related change. Looking at the trading after Q1, the positive start of the year on a group level has continued, mainly driven by the sporting goods market. Up to May 9, group sales are up approximately 8% year-to-date. Home furnishing sales are up around 4%, following a softer demand in Q2 and actually a softer demand in April. May is getting better and Q1 and especially January was very strong. But all the big ticket retail market was softer this period. And May, I think we recovered. We are at the better stage, but a 4% year-to-date is the number for home furnishing. On the other hand, sporting goods sales are approximately 16%, continuing the strong performance. The weather was not easy. It was not good and also the timing of holidays and Easter, along with the very difficult weather was not there, but still through market share gains and strong performance, sporting goods market is growing fast. We remain focused on disciplined execution. commercial discipline and cost control while maintaining flexibility in this volatile macroeconomic and geopolitical environment. The broader environment remains uncertain with inflationary pressures, energy and fuel cost, rents and market-specific challenges, particularly Romania being very hard. And as Mr. Fourlis said, it is a big headwind for this year. However, our commercial performance remained positive and our priorities remain unchanged, protect top line momentum, protect gross margin, manage costs carefully and accelerate investment in transformation and growth. This is the plan, and this is the trading until today. We are -- we have finished with the presentation and feel free to proceed with Q&A.

[Operator Instructions] The first question comes from the line of Stamatios with Eurobank Equities.

A couple from my side, please, mainly related to the cost. So firstly, on the phasing. I mean you talked quite a lot about costs and the fact that you are absorbing some one-offs relating to centralization system upgrades, et cetera. I'm just wondering because there was about 14% increase in OpEx year-on-year in Q1. Could you maybe help us understand the phasing, of course, through the rest of the year, I mean, should we think of this [ 61 ], I think it was OpEx base as broadly representative of the quarterly run rate -- run rate, sorry, for '26? Or do you expect a more normalized trajectory towards the end of the year as the effect from these one-offs wins. So that's the first question. And secondly, I guess a related question on profitability. You talked about the inflationary [ actors ] energy, transportation, labor alongside the ongoing platform building initiatives. I'm just wondering, should we expect any operating leverage at all to come through this year? Or does your current budget effectively assume that the any incremental gross profit generation will basically be absorbed by transformation and capability-building investments.

First of all, regarding cost and what we expect -- what we have as a headwind, because let me put it the other way. First of all, we don't have any concern around the top line and gross margin. So we have the growth that we have already budgeted. Even with a small hiccup for 1 month in Foot Locker, we will recover fully within the year with opening of new stores and like-for-like growth in the rest of -- in the current ones. The same holds for INTERSPORT and Foot Locker. In all markets, except Romania, I will say it differently. So top line is fully secured. And what we have said is that we're going to reach numbers close to EUR 645 million. And I think that although we are not at the point that we provide a guidance, I can reassure you that the numbers that we're going to go is pretty close to what. And if we run faster, we may go even higher. On the other hand, gross margin. gross margin is quite resilient. And we have -- we don't have big concerns around there, even when Romania is at a different stage. And we don't have concerns because we had already budgeted a small drop in percentage of gross margin, and we had assumed it in the budget, and it was driven mainly because we had a more aggressive promotional plan in order to reduce stocks and especially long tails and stocks and old stock, let's say, based on our definitions. And we had already assumed close to EUR 5 million or EUR 6 million decline in such type of stocks and reduce the working capital. So this is fully under budget. The big discussion and the reason why we avoided to provide a guidance now, and we are planning to come closer and most probably we will be able to do it during the general assembly in the mid of June is the following. First of all, inflationary pressures. We have 2 very important or 3 very important elements. The one has to do with the energy. And let's become more specific here. When we budgeted in 2027, the cost of the kilowatt per hour was close to 0.9 -- now the -- yesterday, the spot price was close to EUR 1.3 and the average is year-to-date 10.5. This is close to 10%. If we assume that this will continue and to be honest, I don't see a significant drop there. This is this 10% can be translated close to EUR 700,000 cost EUR 0.5 million. On the other hand, the diesel prices, when we did the budget, it was end of December, EUR 1.55, and the budget was done close to the price when we did the budget was close to EUR 145 on average, and we budgeted EUR 1.5. The price today is close to EUR 1 within the subsidy of the EUR 0.20 at the gas station level. So this is a 25% increase, which if we assume that the prices will continue to be at the current level, which, to be honest, I don't have really any idea what's going to happen in the near future. This is close to this 25% growth, if we stay at that level, is another EUR 1.5 million. So EUR 2-plus million are coming from energy and diesel. R on the other hand, are directly related to inflation. We had assumed that the indexation will be close to 3%, but Romania is going above 7%. And last year, we have actual annualization numbers of 10% last year in the market because inflation is going like crazy. And in Greece, although we were assuming 3% last month, the inflation percentage was close to 4%. So we have also an uplift close to EUR 1 million from rent expenses versus the most pessimistic scenario of 2025. On the other hand, we have -- and this is inflation. If we remain like this, it is close to EUR 3 million to EUR 3.5 million impact. That's why I said we will not, at the moment, guide because this can be lower, but this can be a number of that side. Regarding the Romanian market, Romania is at a very difficult and volatile period. The uncertainty in the market coming from the situation happening in the government, the inability to form a government there and the mix of the political parties make it even more difficult, has created big pressure in footfall, but also in average daily ticket that we sell. The market has turned to a huge promotional market, selling only extreme promotional activities, including liquidation that we had assumed there with liquidation constituted a big part of the business, to be honest, in the year-to-date numbers. And if I see the Romanian market, let me give you an idea of what's happening there. Although the Romanian market year-to-date, performs in minus 14% regarding sales and even worse regarding EBIT because we have inflationary pressure and also lower gross margin. In Q1, the trend was minus 4%, and I was relatively optimistic in January because things are becoming better. But in Q2, the trend has come close to minus 30%, it's minus 28%. So I have a market that it is year-to-date minus 14% and this and it's getting worse and worse, so minus 30. It reminds me the crisis in Greece. And the EBIT effect coming from Romania at the end of the year versus budget can reach numbers close to 3.5 hit over budget. What we are doing there is actually control the margin because you cannot control the sales, the elasticity is very problematic and market responds only to huge promotion. So protect as much as possible the margin. And on the other hand, reduce significantly the operating cost. And that's why we have given first priority in Romania to see what is going to happen with the operating cost and most probably proceed fast with the centralization there as a huge priority. So if you have the numbers, we have come from Romania and inflation numbers close to EUR 6 million, EUR 7 million. And this poses the big question around the transformation. The pace of the centralization of the -- and creation of the platform that we had proceeded in -- we have planned for 2027 was close to another EUR 6 million or EUR 7 million one-off cost because you have many things that you centralize. But also you have, as we have already discussed in 2026, a duplication of systems, you are running the legacy along with the new systems, you're paying licenses and maintenance, you have development costs, and you have to keep both of them until the time you decommission the old one. But the question is, and that's why we wait to see because in order to decide the pace of the centralization and one-off cost, you have to see how the market is going also on the rest of the business, which is relating to Romania and inflation. And that's why we didn't give a guidance because the size of the hit that we will decide to yet within 2026 over and above the inflationary pressures and Romanian market offset by whatever we will do in cost management internally has to be seen when we are ready and we were -- we know exactly where we're going. So this is a very tough question that we are asking. And the size of the one-off for 2026, it has to be decided along with the results of 2026 going forward as the market gives us a better view in the following months. I hope I answered. But to be honest, in some of these areas, you either go on the worst-case scenario and you guide based on the worst-case scenario or you wait a little bit and you try to give the best and closest to reality scenario for the year.

Mr. Stamatios, have you finished with your questions?

Yes. I think I am.

The next question comes from the line of Iakovos Kourtesis with Piraeus Securities.

What I would like to ask as a follow-up on Stamatios question, you said that the size of the one-off related to the investments you are doing this year will depend on how the market will go throughout 2026? Or this is what I understood -- so as far as I understand, you plan to complete this one-off investment costs in 2026 or you may transfer part of the total investment depending on market conditions in 2027. So we would expect another hit there. Sorry if I didn't understand correctly, if you could clarify some of it.

Exactly what you are saying. The discussion is if we will take it one-off in 2026. And this -- look, and this actually relates to the centralization, building the organization and the centralization of the business. Of course, we are going to have -- and this is where I'm referring to. Of course, in 2027 and 2028, other things will happen as well that will have some one-off hits, but these are going to be smaller and they will be triggered by the new systems and the new capabilities. What I'm discussing about 2026 and the decision if this will fit it within the year or bring some part of it in 2027 has to do with the platform, the organizational part of the platform and the functions and the countries that we are mainly and have nothing to do with the systems, but they do -- they have to do with the organization. Yes, the discussion is -- what I said is exactly what you said. We are -- have to decide if we will fit it within 2026 and get all the benefit from the beginning of 2027, January 1, 2027, or we will split part of it to, I don't know, 70% this year and go the rest or 60% this year and go next year -- beginning of next year. Anyhow, if we do it, we'll have to do it first Q of 2027, if we split it because you need to maximize the benefit coming from it within the year.

Of course. Yes. I would like to add something. Of course, the whole reorganization program is, as John explained, but keep in mind that the next 3 years will be very heavy in terms of growth and new store development, including the new small IKEA stores foot locker, the big project of [ Ellinikon ], where we will be preparing our southern Artica IKEA store, INTERSPORT, et cetera, et cetera, we will have a total of or stores operated by us. So this means that in addition to the extraordinary one-off expenses we might have this year plus a small part next year, a big part of our operation will produce new gross profit through the Greece network, at least should be taken into account when one is thinking about this one-off program.

Okay. And as far as I understand in your budget, you're budgeting for top line sales of EUR 645 million for fiscal year 2026. I was wondering because you have obviously a much better view of the market and especially in the home furnishing segment, -- wouldn't you be worried that as a larger and larger part of the disposable income is directed towards gas stations and supermarkets for basic needs, would you be worried that in the second part of the year or even from now, do you see any signs of decreased demand in the home furnishing in IKEA across all your markets? Would this be able to change the current situation of your current budget, especially for the home furnishing business? Do you see any real dangers from this?

Look, of course, disposable income reduction is not something that is new. We face it when inflation is there and energy costs are rising across the families. To be honest, it is not a big concern on my side. First of all, because IKEA is well positioned on this price-sensitive positioning and addresses quite well the needs of customers when the market is getting softer. I do not say that the market is going to be -- it's not going to be softer, but it's going to be within the budget, and we can mitigate any pressure from a softer market within our costs. So this is something very logical to happen. We are well positioned for this, and we are getting significant market share along with our main competitor from a market that actually may be soft enough, but we are growing better than the market. So it's not my concern. Also, to be honest, having seen the stores that we are opening, especially in the provincial areas and we do a good job now with the smaller format concept that we have introduced, Sea Roads, for example, that we opened close to 1,000 square meters more there and a bigger warehouse. The numbers that we see at least in the beginning, not only becoirao store is performing and Pata is also growing, we see that as soon as we close the geographic gaps and we build the correct format of the concept, not only we gain significant market share and we hit the budget, in many cases, we overperformed versus budget. So it's not my concern. That's why you see me quite confident around the top line. If we manage to deliver also the expansion plan of the concepts, which means that we're going to deliver close to 12 -- 10 to 12 Foot Locker stores, close to 3 new 3, 4 new INTERSPORT stores and also proceed faster with the IKEA smaller format expansion plan, which we were given the green light last year, and we try to find the properties and we do also a transformation of the small pickup stores to the roads like IKEA across the provinces, I'm confident that we can deliver. Also, by building local proximity and capabilities there, the margin also is quite good. Such stores producers have already said very fast are getting profitable and support the overall profitability, providing also strong capabilities at the local level and the omnichannel operation like collected store, from the local store, having local availability to increase conversion and things like that. So I'm confident we're going there even with a softer market and the pressure on disposable income. We are prepared for it. Ring now sporting goods, to be honest, this was a better -- it was a bigger concern in the beginning there, but the market for us for many reasons, I have explained that one reason is that the big brands have turned and have moved from the direct strategy and going to the big retailers, but also Foot Locker building up for the first year, our access to the sports fashion and athleisure area, the market there and the growth is secured, both like-for-like because the market is turning towards us, but also through our expansion plan. So also there, the budget is quite safe.

Okay. And last question from my side. If you have specific market data that how do you see the home furnishing market as a total? I understand you are gaining market share, but the home furnishing market as a total, how do you see this evolving in 2026? Is it growing, stable, decreasing? And CapEx number, even a range for 2026.

Yes. First of all, the number is growing. It is growing with a very small hectic single-digit number. So in the beginning, we had assumed close to 3%. It can go 2.5% or 2% as a market. But the market, as I said, is -- and also the market in sporting goods, it's around 3%, 3.5%, but we us and the main competitor mainly of us are getting the big part of the growth. So we're growing faster than the market, and the market is consolidated to the big players. So the market is -- the market growth is relatively hectic and reconfirms what we're describing about the spend on big tickets. Of course, this is coming in surplus, but we're getting -- we're performing better than the market, and we're getting market share, taking advantage of the brand name, the brand equity, the brand positioning, but also the consolidation of the market to the big players. Regarding the CapEx, we said that our CapEx is going to be close to EUR 25 million in the retail operation, and it is split close to EUR 4 million in maintenance, EUR 6 million in digital transportation and the rest in growth. And we have also an over, which is another EUR 2 million, EUR 2.1 million, EUR 2.2 million, which is the last part of the IDC, the Inter IKEA warehouse that we are very, very close to finalize all the CapEx investment there. We are almost ready to -- we have also hired a lot of people, and that's why you see also inflated cost in the first Q and we're going to see also in Q2, but this is budgeted, 100%. The operation starts for the inbound for the inbound operation, meaning coming -- bringing the stock in, in June from IKEA. And the outbound operation, meaning shipping to the countries, starting from Greece, then Cyprus, Bulgaria and then proceeding to Jordan, Israel and in the future in Egypt start in September. Of course, as we have already described, this project will peak most probably regarding volumes mid of 2027. And there, we will have all the full potential of the synergies and the income coming from operation. But till then, of course, we will be paid all the operating costs and whatever and the relative cost of handling the IKEA volumes starting from June. So some preopening cost is already there, personnel, licensing and everything, but already budgeted, affecting Q1 results as well.

Next question comes from the line of Russell Pointon with Edison Group.

Hi, everyone. Thanks for the presentation. Just one question for me. The net debt position at the end of Q1, there was a good increase versus the end of '25 position. So could you just give some -- I appreciate profit was a bit lower. Could you just give some indication of what the other key moving parts were in getting the net debt position a bit higher?

Okay. I will say one thing and then Elena will do the presentation. The net debt evolution and the expectations for full year are under -- within our budget and expectations. But because it's quite technical because of the trade states during last year. Elena will give you a good answer.

Last year, we had EUR 29 million approximately from the placement of trade estate. So if you take that into account, the difference between last year's Q1 and this year's Q1 is approximately EUR 10 million. And this -- the majority of that comes from inventory, and this is planned and budgeted, and it has to do with store expansion. And of course, we are doing some adjustments in terms of risk management to have product availability in the context of the current situation.

[Operator Instructions]

So we have two questions.

Operator, if there are no further questions in the audio, I will proceed with the web questions.

We do have one more audio question the next your question comes from Dimitris Giannoulis with ResearchGreece.

It's a quick one. Can you tell us what were the one-off costs that you took in Q1? And what amount of this relates to expansion?

Yes. Expansion was close to EUR 3 million. If I remember correctly, it was EUR 3.1 million, EUR 3.2 million, mainly Foot Locker and roads and other things that we did in Q1 annualized. Relating to the one-off, it was close to EUR 0.8 million for this. and has to do with centralization already done in Q1, HR, for example, that we already have proceeded faster and some finance. Yes. And we have also the IDC, which is another 0.8, but I don't know if it is one-off given that this will actually not having next year given that it will be fully covered by operation and this year, it is not. But we have already assumed it in the budget. So if you want to see the one-off relative to the transformation, I will say that for the first Q, it was 0.8 overall.

I'm moving on to the web questions. The first one, from Mr. [ Petra ], what's the progress with the new small IKEA in [ Caroma ] and [ Kekura ], Will they open in '26?

Good question. No. [ Keira ], we had a plan to open it end of the year, but we redistributed CapEx and will start as soon as possible in 2027. We don't want to invest and do get all the preopening costs in 2026. We will proceed fast beginning toward the preparation, have the property end of the year and open as soon as possible in 2027, given that the property is not built from scratch. It's not -- it is already there. Regarding Kalamata, we reevaluate the area. We have the property there, but we paused for a period, and we see their options. I cannot say more, but for Kalamata, it was worth it to wait and see if we can fit it in a bigger plan. Anyhow, we have all the plant coming. So Lima is under construction. The road is already there. We will proceed yes, in it very fast. And we are -- the effort now, to be honest, given we have the format that we want, which is the current format of Road, hopefully, in one level close overall with the support functions close to 2,500. The effort is to speed up and bring more properties for the beginning of the first half of 2027.

I'm moving on to the next one from Mr. [ Barone ]. We have answered part of it, but there is a part -- the second part, which we can have some comments on. So the question is, what is the combined one-off costs in 2026? Will there be a tail in '27? Is this cost all the cash cost how much of the cost will be accounted as investments? To be clear, I would want to know the cash cost and the costs affecting the P&L. What percentage increase of margins do you expect in '27 and '28?

Yes. We are not certain about it. It is what we discussed around the timing of '26 or '27, it is already covered. The one-off cost, of course, we do not treat it as investment. So it is an OpEx line related cost. And the initial plan altogether was if we had the first cut, we were expecting close to EUR 3 million or 4 million recurring impact revenues, profits from 2027 and onwards. Of course, the one-off is going to be bigger because there is extra cost relating to this, and you can understand in most cases. But the recurring revenue, we target to be close from EUR 3.5 million to EUR 4 million for 2027 and onwards, which is very close to what we have promised 0.5% EBIT margin. And that's the effort. It can be -- if we see that there is space to provide solid and bigger recurring profits for next year, we will reconsider. And this is part of the exercise around the timing of the implementation plan, given that we want to have a solid number for the years to come.

From [indiscernible] wondering if you could give us some color on how the world in Middle East is affecting your business and what you expect for the rest of the year? Secondly, I was wondering to site the next of [indiscernible], finally have ATL Logistics Center in[indiscernible] is progressing.

Yes. Middle East, we have covered it mainly is inflationary effect. We see on the OpEx lines. To be honest, we have not seen yet, and we do not expect heavy changes in the product and cost of goods, given that we have already ordered this sporting good grains and we know the prices. And we don't see inflationary pressures there at the moment, most probably if these forces, we're going to see for the range of 2027 -- spring 2027. But regarding IKEA, we don't have, at the moment, any idea, but at the moment, we don't have any increase in costs given that IKEA has absorbed was probably some of the transportation costs, but we will wait and see for the second half if there is something there. Thank god the IDC project is a huge offsetting cost of adding engine because the proximity of the products the less shipment dates coming for the pallets from Middle East and also from Asia and also the significant synergies that we're going to see from 2020 end of 2026 and 2027, both in the inventory levels and the just-in-time approach that we're going to have, given that the stock is going to be there and the lower class portation cost that will reduce actually what we are paying today shipping from Romania truck shipments or Italy will offset this press. So regarding cost of goods, we don't see. And last but not least, the only thing that we cannot also size is what we are stay optimistic there and quite confident is the disposable income effect having to fee income of people all this inflationary pressure. For the second question, the opening for IKEA, I think that the opening in [indiscernible] blocked if the two big the expansions and the stores are per -- and the next store coming is not yet fully if it's going to be a course or something earlier, but we will give you a hint as we move forward. Regarding to longer, there are many, so at Metaxa is under construction at the moment. Volos will have Lumia, we have [ Eritrea ], which is also a very big market there, and we proceed fast and we're going faster and faster. The only concern there, as you understand, is because the risk tenant needs AAA locations, high traffic, usually within the fashion area, the availability is easy in most cases, easy to find, but you have to find also the correct cost because we needed to be quite profitable and support the profitability of the business and don't roll out and open new stores on the market. in June, and we fully operate the outbound on September.

Okay. So moving to the next one for and following the breakout of the world, have you seen any reduction in the dissipation of stores as well as sales, especially in India.

Yes. The mix, as we already said, which has -- relates to the pressure in big ticket numbers that we see not only in this industry, but also in the mixed electrical industry, and I believe I have a good idea of what's going there, actually has created pressure both on visitation, but also the average ticket price. So it is a mix. It is not big. That's why we have the numbers -- the growing numbers in the business. But still, there is pressure both on ticket price but also visitation.

Going on to the next one and a follow up from Mr. [indiscernible]. What is the total planned investment, again, specifying how much goes to the P&L and how much is investments to depreciate?

We said it's around 25 plus 2%. And depreciation yes.

Next one from [indiscernible] The Sporting Goods division is clearly in investment mode with 6 new Foot Locker stores since the acquisition, new e-com platforms in Romania and Bulgaria in the center relocation. Could you share how Foot Locker is tracking against your original acquisition case? And at what point do you expect the depletion unit economics to turn positive? Is that a 2027 story or further out?

Very good question. First of all, Foot Locker is within our budget. There was a small, as I said, hiccup because based on the initial plan last year, we actually managed to conclude the deal and acquired the store mid of last year. So we had to move faster. You remember also that Foot Locker was under a big transformation, this transition point that year at that point, and it was acquired by DICK'S Sports forming the biggest retail chain in the world at the moment. So since then, and after this small hiccup in store development versus the plan, we have accelerated fast, and we're going faster and faster. And the concept, especially the remargin one that you see in Hero is a winning concept, better than expectations. So the plan is there, and we're performing fast. Regarding profitability, these stores have started immediately producing numbers, good numbers. We have assumed that they breakeven at the first year. They continue with the store profitability 6% to 7%. And then on the maturity point, most probably they will go for a double-digit profitability. And they are quite promising. So there, we have to expand, continue with the expansion plan, support the concept and the like-for-like sales with good, better and better and better concept and better range. And the only thing that it has to concern us is the correct property at the correct cost. This is the idea. So it is moving fast. It is quite profitable after the first year within our assumptions when we did the business case.

The final question from Mr. [indiscernible] Are we going to see any kind of commercial or other synergies between you and Quest Group given the recent investment by acquiring more or less about 10% of...

Thank you about this question. Both West Group and our group are strong commercial groups with affiliates also in the real estate sector. And we believe going forward, we will find synergies in various sectors to operate by reducing costs and also boring our commercial strength. So it's too early to talk about this, but definitely the opportunities are there.

There are no more written questions. Operator, can you check the audio, please?

Ladies and gentlemen, there are no further questions at this time. I'll turn the conference back over to management for any closing comments. Thank you.

Yes. Thank you for the long and detailed Q&A session. The only thing that I want to say is that close with the positive part of the business. We are growing as planned with a very solid like-for-like, but also very strong expansion plan. The gross margin is sustainable, healthy and of course, well protected across the countries. We are here to do the transformation and continue our plan in taking up the business and building a platform-based retail operation platform that actually will future-proof the numbers and secure that Fourlis Group is going to be ready to deliver better productivity on the current state, but also be ready to carry further growth through new concepts or expansion across countries in the near future. And we are here through heavy cost control and management of the transformation cost to mitigate any headwind around markets or macroeconomic pressures. Thank you very much. Stay with us within this quarter and the general assembly coming in June. We will keep you updated both regarding the market and performance, but also the transformation plan. Thank you very much.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling. Have a pleasant evening.