H & M Hennes & Mauritz AB (publ) (HMB) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the 9 months report for 2021. [Operator Instructions] Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Helena Helmersson, CEO. Please go ahead.

Thank you so much. Hi, everyone, and thank you all for joining us today. Welcome to this telephone conference about the H&M Group's 9 months results 2021. With me today is our CFO, Adam Karlsson; and Head of Investor Relations, Nils Vinge. I will start with a short summary of the third quarter, followed by current developments. And after that, we will be happy to answer your questions. You will find the 9-month report on hmgroup.com investor relations. Today's numbers show that the H&M Group's strong recovery continues. The results are explained by much-appreciated collections, lower markdowns and good cost control combined with the initiatives implemented in areas such as tech and supply chain. As restrictions have been eased in many markets, store sales have started to pick up again and online sales have continued to grow. We can clearly see that our customers appreciate our offering when they have the opportunity to shop. Our well-received collections, combined with our ongoing transformation, are all contributing to the strong recovery. During the pandemic, we have quickly adapted by prioritizing cash flow, cost control and flexibility. I am proud of all our colleagues' commitment and engagement. We have worked together and taken fast actions showing both resilience and agility. Despite sales being partly affected by restrictions and delays associated with the pandemic, sales were up 14% in local currencies in the quarter. Combined with the continued strong cost control in the operations, this resulted in a profit before tax of SEK 6.1 billion compared to SEK 2.4 billion in the corresponding quarter last year. Continued focus on working capital and cash flow led to a very strong cash generation. Cash flow from operating activities increased to over SEK 37 billion for the 9-month period, up from SEK 16 billion last year. Based on the significantly improved financial position, more stable market conditions and a good outlook, the Board of Directors proposes a cash dividend of SEK 6.50 per share to be paid in November 2021. Looking ahead, our transformation continues at full speed in order to meet customers' ever-increasing expectations and to strengthen our competitiveness further. We are developing our existing business and brands as well as creating new complementary revenue stream. Our digital initiatives are continuing along with our store optimization. Our customer-centric omni model, with a combination of a profitable online growth, together with a well-executed store optimization, leads to both improved top line as well as better profitability. Our customer offering makes it possible for many to access sustainable fashion and express their own personal style. Our financial strength and long-term approach gives us the ability to invest in innovations with tech development, materials and sustainable initiatives with an ambition to lead the change in the fashion industry towards becoming circular and renewable. This was recognized recently when the H&M Group was named as the only retail company in the world to live up to the UN Global Compact sustainability principles. The pandemic and its consequences are not yet over. We are humbled by the many challenges in the world around us that affect our business, which call for a high level of flexibility and drive. With our continued transformation and well-positioned customer offerings to meet customers' ever-increasing expectations of good value and sustainable fashion, we are optimistic that we will see a long-term profitable and sustainable growth for the H&M Group. Thank you so much for listening, and we are now happy to take your questions.

[Operator Instructions] Your first question comes from the line of Daniel Schmidt of Danske Bank.

A couple of questions from me then. And first of all, very strong numbers. I have to say that. But then jumping on to maybe a slightly more negative question. You guide for higher markdowns in Q4, while at the same time, you're saying that the autumn collection has been well received. Could you just give the rationale for that, and what you're seeing in the sort of the last part of this year?

Yes. No, you're right. I mean we're coming out of the third quarter here where we have managed our markdowns really, really well based on a good reception of the collections and also the whole supply chain and the inventory management. And of course, that will continue. But as also mentioned in the report, there are also some slight imbalances in the supply chain. So we account for that and have a little bit of a conservative outlook on the fourth quarter here. And that it's a smaller quarter when it looks at markdown, of course, then the percentages are not so easy to maneuver as it is during the third quarter, so to say. So no drama, but it's just a -- yes, our outlook connected to the continuing of the autumn gives us that kind of read on the situation.

Okay. Would you say that so far into this last quarter, you're sort of flat on markdowns versus last year?

We don't indicate on that level. We are pleased to see how the collections are received, and we are continuously managing the situation, but was more to guide how we view the situation at.

Okay. And then secondly, if I don't read it wrong, you're saying that you will close net 215 stores by the end of this year. And you guided for 250 at the start of the year, but you also said, of course, that it could vary. Is there any sort of -- is this an indication that you think that you will close less stores than you planned? Or is this just sort of the way it happened?

Well, as you know from before, this is a living target. In this case, it means that, to some extent, we could -- we found opportunities together with partners to open a bit more stores than we thought. And on the other hand, we also saw opportunities not to close as many in those dialogues as well. And that is, of course, also linked to the fact that we see a great kind of potential for physical stores and integrate digital into that and looking at different store formats and profiles. We ended up with minus 215 instead.

Is it also an indication of sort of some sort of renegotiations on rents that became more favorable than you expected?

Absolutely.

All right. And then just finally, I saw that China dropped out of the top 10 markets, and there was no sort of roster at the end of the report showing all the countries. To me, that suggests that sales are at least down 40% year-over-year. Is that a fair assessment?

When it comes to China, we are still in a complex situation. And we -- unfortunately, we won't be able to answer more questions on that. [indiscernible] we have said before.

Just to add, Daniel, you're absolutely right. I mean there is a reason why China is not among top 10 anymore in this quarter.

Your next question comes from the line of Elena Mariani of Morgan Stanley.

A couple of questions from me as well. The first question is about your gross margin in the third quarter. So you talk a lot about the moving parts. So positive progression in full price sales, some initiatives related to the supply chain, good cost control also related to your cost of goods also and the moving parts also in FX. Would it be possible to isolate the different moving parts and quantify them? And perhaps also give a view on how this will develop into the fourth quarter given the slightly more cautious outlook. And then my second question is on your OpEx and on the meaningful beat that you just [indiscernible] level, yes.

Helena, please, for the listeners, could you please restart with one question at a time. Is that okay?

Yes. Absolutely. So I'll stop here.

So the first question, if I start, and then Adam can fill in. As you say, absolutely right. The gross margin is driven by lots of different factors. I talk about 20 to 30 different parameters perhaps. And of course, in this quarter, the main driver of the improvement has been the reduced markdowns as we have quantified. That's, by far, the biggest driver, of course. And then -- and the reason for that, of course, we can explain in detail -- but that was already taken up by Adam in the first question. And then when it comes to the remaining part, it's a combination of all sorts of different things. One is, of course, the [ winding ] of the deleverage of the semi-fixed costs in the COGS as you referred to. And then there are bits and pieces here and there, many of them referring to efficiencies in the supply chain. That's what I can say about Q3. But moving forward, Adam, would you like to add something about how they should think going forward? Or...

Yes. I think those parameters, obviously, some of them are known and some of them are more difficult to quantify. But as we mentioned in the report and some of these positive FX effect, for example, is likely to become less favorable throughout the autumn, but still on the positive side.

Okay. That's great. And then my second question is practically the same question but related to OpEx, so the moving parts in Q3 and into Q4. I am particularly interested in any more detailed comments around your rent reductions because some other retailers recently have talked about very significant rent reductions even in recent weeks. So if you could elaborate on that, it would be fantastic.

We've had a period of a number of different aspects of rent reductions. And throughout the last 18 months, it has been a combination of both short term, more temporary agreements with our partners. But to generalize and look forward, I think the biggest change for us is the level of flexibility that we now have, both when it comes to terms and the length of the leases, but also that we are at a higher level of turnover-based rents. So it's difficult to quantify the effect as it's then pegged to the turnover. But that, of course, will help us to maneuver.

Perfect. And then any other items to highlight within the OpEx that are helping you to achieve such meaningful savings on a year-on-year basis besides rentals, of course.

I think we spoke about it before as well. With us growing in the digital channel and a lot of the investments that we've previously done are now sort of growing into the size needed, so to say. So we get, of course, economies of scales of the previous investments. So on the supply chain side and the logistical network, we can also see improved efficiencies.

Your next question comes from the line of Fredrik Ivarsson of ABG SC.

So few questions. If we start with the imbalance, as you mentioned, Adam, is this just a short-term issue? Or is it something larger like we saw a few years back, which will imply higher markdowns for a few quarters ahead?

The disruptions that the industry as a whole see today is something that we do manage because of our partnerships that we have. We have a bit of a challenging situation as all others right now so that we can meet the demand to 100% from our customers even though we see that the collections we bring in are very well received. It's going in the right direction. And we do see that this will, of course, stay with us for a bit, which Adam said before, also linked to next quarter. But overall, it's definitely going in the right direction. And together with our partners, we believe this -- we have this in a pretty good control.

Okay. And second question on the external factors impacting the gross margin with higher freight rates and raw materials as well. But it still sounds like you expect a positive impact on a net level in Q4. But how should we think about in 2022 because it's obviously quite a significant time lag in your inventories, et cetera?

Yes. If I start with the short term, you're right that all in all, we still have positive effects from the U.S. dollar. So that should still -- all things equal, be slightly positive. But then again, that doesn't mean -- that's not a guidance for SG&A or gross margin because, I mean, we can decide to invest in the offering or in the business, as you know. But this is just to help you to understand. Going forward, it's way -- so many things are moving, but we feel confident that we will be able to navigate in a good way.

And do you see that you can offset parts of the higher cost through pricing?

For us, price is a very important part of our offering. So we would never be the first ones to raise prices to our customers. It's about a combination of fashion and quality, price and sustainability. So when others raise prices, we have an opportunity, of course, and gives us an even stronger competitive advantage.

Your next question comes from the line of Magnus Raman of Kepler Cheuvreux.

I have a question regarding comparison within the tech. They have gained a lot of online sales from its full integration of store inventory with its online platform. What is your view on H&M's progress in this area?

Well, looking at competition, we have some really good competitors out there to get inspiration from. And of course, we focus on our plans and our business idea going forward. And as we have discussed quite a lot before, one of our priorities is omni, meaning to integrate the different channels, and that goes for the whole customer experience whether you choose to meet us in a digital channel or in a physical channel, and that obviously also goes for the whole supply chain. So this is part of our transformation, and we are doing great progress. As a matter of fact, this is also one of the reasons why we have been able to manage the pandemic in the way that we have.

Right. So in terms of IT planning, you are planning to integrate all of your 4,000, 5,000 stores into -- all that inventory should be integrated into the online platform. Is that correct?

But it's -- to give a fairly short answer, availability is key here. So we should offer our customers to meet us where they want. So that is the ambition. And then the solution can look very different in some markets with long distances. For example, we have one type of solution. And in more dense areas, we have other types of solutions. So we're really looking at it from a customer perspective, a case by case, region by region.

But you're right, Magnus, I mean the channels -- this is exactly what we're saying. Helena said very much that the customers, they want both. And we clearly see that the channels, they strengthen and complement each other. And of course, our IT platforms and systems support this omni model.

Right. Then just a second question for me regarding balance sheet and dividend. In relation to your balance sheet and gearing target that you previously set, you have stated that you want to utilize the benefits of very low interest rates out there, i.e., not having net cash, rather some net debt. Is this reasoning still as valid for you as before?

We have, throughout this year, of course, have to handle situations more as they have raised. And we have a very strong balance sheet. We have very favorable terms on our debt and also with the sustainably-linked bond that is further sort of strengthened. So we haven't revised that, but we're in a very positive position right now. So we will continuously develop and follow this situation as we're looking ahead. So no revision, but we've managed the situation and done it in a proactive and we think a long-term way.

Right. But provided where you are and what you also stated and reported, it should not be -- it should be reasonable to expect that you come back to ordinary dividend announcement by Q4.

That's too early to say. It's up to the Board to look into that question.

Your next question comes from the line of Rebecca McClellan of Santander.

A couple of questions from me, please. Firstly, in terms of your store base, I think you said there's still 50 stores which are closed. Of the other stores, are they all working on 100% sort of trading hours? Or are there still restrictions on -- despite them being opened? And then my second question, could you give us an update on how many [indiscernible].

Please, put it one question at a time. Start with...

So you clearly see it's going in the right direction with only 50 stores closed. We have some restrictions. They are gradually being lifted, but that can mean opening hours or closed fitting rooms just to give a few concrete examples in some of them.

I see. Can you sort of give an idea as to the number vis-a-vis the trading hours with -- how that might compare to 2019, for example?

I don't have that top of mind. There are, as Helena said, different types of restrictions that are gradually moving in the right direction. So I don't have the date comparison.

All right. And my second question is just about sort of the integration. How many markets enjoy click and collect with -- and return to store now?

We have to find out and come back to that question where we are at the moment. But of course, this is something we are implementing across the group. But of course, during the pandemic, yes, some markets have been on pause. Simply for the reason that we haven't -- stores have been closed. But it's definitely something customers appreciate even though it's more or less -- it varies from market to market. And it's just one of many omni features that we look into.

And just perhaps finally, are you actually experiencing stock outs and sort of stock flow shortages at present? Or is it just building sort of a bottleneck?

We are experiencing, in some cases, some product delays, absolutely.

Can you give any detail on that or...

No. We can't give -- be more granular. But we think, as Adam said, that this is temporary. And we are -- as Helena said, also, we are -- it's going in the right direction.

Your next question comes from the line of Richard Chamberlain of RBC.

Just I wondered if you could talk about the outlook for staff costs, please, within the group, in particular, what efficiencies you've made in Q3. And also, what level of government support you would still expect to get in Q4. I presume that's now not much at all. But yes, just a question on staff costs, please?

To start on the government support, you can see in the report that it's gradually being phased out. We are, right now, at a much lower level than the last year. And as Q4 last year was -- a second wave came, so that will be a difference looking into fourth quarter as well then. We are expected this year to be lower, obviously. On the other question, I think we learned a lot throughout this year in how do we best cater to the customer demand. And some parts we spoke about before that we have automated some of the tasks in the store, and that will obviously continue. And gradually shift then our focus towards more focused on taking care of the customer in the best possible way. So I think we are introducing quite a lot of different aspects, everything from automating checkout and other things that we really see that the customer appreciates. And then we can spend more time giving a strong customer experience.

Your next question comes from the line of Georgina Johanan of JPMorgan.

I have 2, please. The first one is just following on from Rebecca's question. May I just clarify, are you expecting an impact on sales performance in Q4 and indeed in Q1 as a result of the stock delays that you're experiencing, please?

Yes. As we wrote in the September comment, it has been impacted by delays, yes.

So the situation of the industry will -- I mean, that is a situation that we are trying to deal with together with our partners. We believe we have really good collaboration with them. It's gradually becoming better for us and exactly when we will be completely back is difficult to say. But as Adam said before, we will probably handle some of this also in next quarter. But it's going in the right direction, so we believe that we have it in fairly good control.

Okay. And my second question was just on external factors on the gross margin. Just to make sure I understand, are you saying that the FX tailwind is reducing in the final quarter? And that's why the positive impact from external factors is reducing? Or is there sort of incremental freight inflation that you are experiencing just due to when you perhaps locked in on certain contracts and so on?

It's mainly due to the U.S. dollar effect rewinding.

Your next question comes from James Grzinic of Jefferies International.

I have follow-ups related to -- along those veins, again, as Regina mentioned. I guess the first one, Adam, can I just clarify on that markdown comment. Are you basically saying it's reflecting the quality of the current closing inventories composition? Or is it something that you're anticipating in the future given the supply chain dislocations you have to deal with right now?

It's more to the second, yes. We see that the third quarter is a strong receipt that our inventory is strong as it's well received by our customers. So that obviously hasn't changed just because we entered the fourth quarter. But as we just said then, with the slight delays that we see, we are managing it very actively. We think it will gradually decrease. But just to give our assessment of that, it will affect fourth quarter in some way. And as I also talked about before, the fourth quarter is not a clearance quarter. So that's why it's -- from an increasing reductions perspective might sound a lot, but it's no drama from our end. It's a low-clearance quarter, and we just share our view on how we manage the situation.

And just spawning up on that, sorry, Adam. Does that mean that it emanates more of a bearing into Q1 next year as you go into winter clearance?

No. I think -- and also the whole inventory level, I think, is a strong receipt that we managed this situation really, really well with the flexibility that Helena spoke about before. So we are executing on our plan to move towards an improved sales-to-stock ratio. And that we believe holds still. So it's about navigating the short-term effects right now.

Understood. And Helena, just a quick one for you. So it sounds like you won't be proactively trying to protect [ bulking ] gross margin, I presume from spring/summer next year. Is that right, you won't be looking to price up to recover that less favorable import dynamic, and you'll be waiting for others to move and maybe start changing in mid-season? Is that how we should be thinking about it?

Sorry, can you repeat the core of the question?

Yes. I mean if you add more pressure in the [ bulking ] gross margin, given imports, it sounds like you won't be moving on pricing in spring/summer to recover those pressures. Is that right that you'd be holding pricing...

Well, looking at the inventory right now, we see that we have a good composition. And of course, we will continue to deal with that and also work with reductions moving forward on that.

What we work with and a little bit connected to my previous answer here is that with the strong focus on supply chain and the inventory management, of course, we believe also that reductions can be a part of this equation into 2022. So we can work with that component of the gross margin.

And continued efficiencies throughout the supply chain.

The next question comes from the line of Anne Critchlow of Societe Generale.

I have 2 questions, please. So the first question is about the store online integration. Just wondered if you're prepared to let us know what the percentage of online orders collected from store are. And what percentage of any returns you have go back through the stores now.

It's not a number that we disclose. But it's -- we are -- as Helena said, we are using -- we're looking at the stores as a part of the supply chain, of course, because we have a strength here compared to many other fewer retailers that we are meeting our customers every day in real life. And of course, it's been obvious during the pandemic how important this is. And we're very glad that we're now able to open up again and customers tell us that they appreciate it. And of course, one of the advantages about having the omni model is that you can click online and pick up in store, return in store and so on. And this is something we are continuously developing. This is part of the integration. We don't have specific KPIs to share at the moment where we are. But we have good progress and a lot of potential in front of us.

Okay. And then my second question is really about the September trading because it sounds as if local currency sales are still down on 2 years ago. You talked about supply chain delays. I just wondered if there were some other reasons as well, apart from, say, store closures. For example, the weather was very warm in the first half of September through Europe. So I just wondered if you had some other explanations, and how we should think about the fourth quarter sales. And is it sensible to assume they could be down on a 2-year view in local currencies?

So first question about September. Again, it's a short period. And if you look back historically, it's always volatile September, October, depending on how the weather is and so on. Of course, this is something we experienced here again. I'm not -- we're not going to bring it up as a reason for it. But of course, it's volatile, if you go on such a short period. And the same in the spring, we want to have a warm weather in the spring. If it's cold, you have -- it's challenging. But it's -- I mean, the main reason is, as we wrote in the comment, there are some delays. But the customers appreciate definitely what we see, but we cannot -- unfortunately, we haven't been able to meet the demand 100%. And then there are, of course, other challenges. The pandemic is still -- we're not through the pandemic fully yet as we stated. It's not just about the 50 stores. There are other challenges as well, of course, with restrictions and so on.

Your next question comes from the line of Anton Wilen of Bloomberg News.

I have 2 questions. I'd like to start with if you have any comments on the -- your plans for store closures next year or openings.

Yes.

Yes, it's still a moving target. So not ready to give an exact number on that. But moving forward on following the customer behavior when they want to go more digital than before, and also looking at the different locations we have, we will, of course, continue to open some stores and to close some. So the net will still be on minus but not as much as this year. That's what we can say at the moment.

All right. And also, it would be really interesting to hear more details on what kind of supply disruptions you had in September. Was it shipping issues? Or...

Yes. So -- and this is causing, as you probably know, delays in the industry as a whole. So it's been due to the pandemic, both when it comes to the pure production with suppliers, which is the situation that has improved quite a lot. And it's also linked to transport and consequences from the pandemic, for example, around the ports.

Your next question comes from the line of Adam Cochrane of Deutsche Bank.

A couple of questions. The first question, if I can. On this markdown in the fourth quarter, am I right in thinking your inventory is lower year-on-year, your supply is constrained and it's constrained across the market, but you're expecting to mark down the product that you do have to a greater degree?

Yes. It's to indicate that some of the autumn products as -- I mean, Helena indicated, we see the positive signals that we are moving in the right direction. But some of the autumn products may have shorter sales period. So to account for that, we predict that we could activate potentially a bit more during the fourth quarter. I think also to remind ourselves that last year was a fourth quarter heavily impacted towards the end of the quarter of the second wave and a lot of sort of commercial plan changes. So it's a little bit to go back to, hopefully, a more normal autumn.

Okay, fine. And when we look at the sales through the fourth quarter last year, would you be able to indicate roughly how strong September was compared to October and November, just to help us plan the forecast for the fourth quarter?

As Nils said, there are factors. And the start of the autumn 2 years back was a very strong start of the autumn from a weather and external factor perspective. So it was a strong start of the quarter than the end of the quarter, so to say.

Okay. That's useful. And then the final one for me. In terms of your ongoing logistics rollout, can you give any update on where you are in terms of maybe percentage complete of the global logistics rollout, please?

Not sure if you mean rollout of kind of omni capabilities. Did I get -- understand that right?

Possibly. It's more of the -- I know that you've been building a large number of warehouses and distribution centers in different places, how many you've got left to go?

Yes. So if you're referring to the platform change that we've done, we've done most markets now. We've done Eastern Europe, very successfully recently, and we still have Asia and some other markets to go. But on top of that, of course, we are developing a lot of other capabilities and developing distribution centers. And as we announced today, we have just started the construction of a new logistics center in Canada, which would help a lot in North America to add more capacity. And that's just one of many examples that we have in the pipeline going forward.

This is an ongoing work. It's hard to say that we will be complete if you see what I mean because it's constantly being developed. But a lot of exciting plans in the pipe.

And then one final -- actually, this just sprung to mind. In terms of the dividend that you're announcing now, is this in addition to any potential dividends that you may announce for FY '21 in January? Or is it part of the FY '21 potential dividend? Is it a special or an ordinary dividend? I can't quite work out what it is.

It's not up to us to -- we've been advised not to -- I mean, to simply call it a dividend, period. it's not up to us to decide whether it's extraordinary or not. So it's -- yes, that's all I can say really.

Your next question comes from the line of Daniel Schmidt of Danske Bank.

Just a follow-up or a question on the cash flow on -- Helena, which was terribly strong, of course. But I think you wrote in the Q1 and Q2 report how much you had sort of in terms of cash release on payables. I don't see that in this report. Does that mean that you've sort of -- you're done with the SEK 10 billion? Or where are we in terms of that cash release?

Yes. It has been a very successful implementation throughout the year. And we have now completed the program, and we are very close to the indicated levels for the full year. So it's not mentioned here, but of course, it's part of the cash flow.

And it's not going to be -- you don't see it's going to be exceeding the SEK 10 billion?

No. We think it's not substantially different than SEK 10 billion, so to say. Obviously, as suppliers are on board and then depending on how much we buy, that will of course -- yes, we have a slight difference, but SEK 10 billion is our best estimate still.

And your next question comes from Fredrik Ivarsson of ABG SC.

A short follow-up from me as well. Just visiting Germany, which saw a very positive trend from Q2 to Q3. I think Q2, if we compare it to 2019 levels, was down around 25%. And now you're almost back at 2019 levels, it seems like. Is it fair to assume that the exit rate in Q3 was actually positive?

You mean compared to '19 or what?

Yes. Yes, compared to '19.

I think it's -- we don't want to talk about exit rates because you're going to extrapolate. I would say that we are pleased with our performance in Germany in general, absolutely.

Your next question comes from the line of Nicklas Skogman of Handelsbanken.

In the report, you mentioned initiatives particularly within tech helping to reduce the amount of markdowns. Could you give some details on these initiatives, specifically, how they are helping?

Tech is obviously integrated in more or less the whole value chain. So let me give a few examples. First, linked to supply chain. Both tech is used as a way to, obviously, decrease the timing from ID to a product getting to a customer since we can use, for example, tech tools in product development, and that simply makes us faster and more responsive than to customer demand. So also AI is used in supply chain with helping us to kind of forecast demand. And also, obviously, tech is integrated in different ways within logistics to make us have the right availability at the right time and at the right place. So tech is truly something that is integrated both when it comes to the whole customer experience and then also in the back end, if that makes sense.

Your next question comes from Andreas Lundberg of SEB.

Back on the cash flow, which has been outstanding in the last year, where do you see the working capital levels going forward?

I think we've done quite substantial changes and improvements over this last year. And I think the biggest difference is, of course, the more normalized payment terms then. So that is an effect that we will see for this year. But then obviously, more long term, we also have the full effect of the improvements to the stock composition and the stock level. So we see positive effects but not as extreme as this year as we introduced the adjusted payment terms.

Okay. Cool. And do we have any CapEx guidance for next year?

Not yet. We are seeing that we are increasing investments sequentially third quarter to second quarter. So it's fair to expect a continued increase from very low levels in 2020 and 2021. But the exact level is not yet set.

Okay. And also a final one on cash. Are there any materials or payment delays that you have sort of seen in the last year that you need to pay going forward?

No. [indiscernible].

Okay. And the other one, the last question on staffing. I think you're right, you have some 150,000 employees, down from 180,000 or so last year. What level of number of employees do you see, well, in a more normalized situation, if you will?

That is not really any type of target that we have. But of course, we are shifting a bit due to the change of customer behavior and the digitalization. I think that when it comes to digital, we are employing, also linked to, for example, logistics, but we are then, as we optimize the store portfolio, some part is decreasing. So of course, it's a type of shift, yes.

And what kind of net effect do you see, let's say, in 2022 versus 2019?

No numbers that we communicate. That is not our target. Our target is linked to meeting customer demands and meet them wherever they want to meet us and follow the digitalization trend.

And we have next question from Anton Wilen of Bloomberg News.

Just a follow-up question for me. When you say that you see some delays in next quarter also, do you mean 1Q or 4Q?

No. The current quarter then to be clear, that, as Helena said, we had some disturbances over the summer in some of the production markets, and we're now gradually improving that. And then also -- there has been some congestions in some of the ports, but we're also managing that looking into the fourth quarter. So it's related to fourth quarter.

I think we have a great advantage here by having a global network and supply chain so we can adjust better than many smaller players.

[Operator Instructions] There are no further questions coming through on the line. Please continue.

So thank you then very much for participating in this conference call, and we wish you a nice day.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.