Matas A/S (MATAS) Earnings Call Transcript & Summary

Welcome to Matas Annual Report 2021/'22. [Operator Instructions] Today, I am pleased to present Gregers Wedell-Wedellsborg, CEO; and Mathias Juhl-Hansen, Interim CFO. Please begin your meeting.

Thank you, operator, and welcome all to the call and webcast covering the financial year 2021/2022. I'm joined by Mathias who's acting CFO. In daily life, he's Head of Strategy, M&A and IR. We have an agenda. I will start out by making some comments about the highlights of the year. I will dig into the progress that we have made on strategy we announced in August of '21. Then I will hand over to Mathias, who will cover the financial results in more detail. I will return with remarks on the guidance for the financial year of '22/'23, and then we will open up for questions. It's really been a year of continued progress for Matas, both in terms of the numbers, but also and even more importantly in terms of our strategy. We launched in August of '21 a new strategy, a more growth-oriented strategy to build on the momentum that we have gained both from COVID, but also from the massive digital transformation that we have made over the last 4 years. And we decided already going into the year to invest around 1% of our EBITDA margin to execute on that new strategy and also to accelerate that strategy as we went through the year. So what are the highlights from what we have learned? One is that we have seen the early indications of proof that our strategy to expand our assortment online is working. We introduced Professional Hair Care, a new category for Matas, and to sell that to our existing customers and customers readily took that upon them to buy those kinds of products at Matas as well. Second of all, health is a main area of focus for us. This is an area where customers really showed us that they use Matas for health purposes maybe even to a bigger degree than what we thought ourselves. So in the year, we have acquired Web Sundhed, which is a platform delivering logistics and marketing services, sourcing for an online pharmacy. We also introduced dermatological skincare, which, until now, has been only in pharmacies. And we built up a team of health advisers to really duplicate the business model that we have in Health to be able to not only offer product, but also professional advice on how to use the products, what products to use. As the year went and we saw a strong performance on sales and earnings, we decided to accelerate our strategy and build awareness of those new categories to speed up the acceptance and the penetration of those new categories. So we decided in the year to ramp up marketing to create awareness for our new categories and also to keep our Matas mother brand sharp. In the year, we also took the first steps to create what we call a house of brands, looking at how we can build a separate business out of the house brands that we already have and house brands we have acquired and house brands that we might develop over time. We built a small organization. We hired an international director. And we're very happy to announce today that we have landed the first 3 listings in Germany to sell some of our iconic products in Germany. Also we have been planning and -- progressing in the planning of our logistics automation, I will return to that in detail because we've made a reassessment of our road map towards that automation. And then finally, this was a year -- a step-change year for our CSR, ESG efforts. We have published for the first time a separate ESG report with all the baselining and the target setting that's needed to get us going and really get us moving on that agenda. And we also staffed up on that area to make sure that we stay in the lead of the ESG in our sector. So the big question to all of us going into the year was really that last year we saw spectacular growth in Matas, of course, buoyed by COVID and the demand that we had from COVID and the special position we were in as an essential retailer that was allowed to keep the stores open during COVID. So we saw spectacular growth of 13% of last year. And going into the year, we had some doubts whether we could sustain that growth and I'm happy to confirm that we have been able to grow the business both organically and through acquisitions with 4% going into -- or in the financial year. What we also saw was that we have internal hedge in our product mix. So when Denmark was locked down, people were buying health products. When Denmark reopened, people were flocking towards the beauty products. And that kind of hedge has served us really well and continues to serve us well as we look ahead. Also COVID and the COVID years, in a perhaps paradoxical way, have been proof that the physical store is not dead. There was a lot of talk whether we would all have -- go digital forever after COVID, after having learned to shop online, live online, meet online. And what we have seen is that the customer, she wants stores and she wants online and she wants to shift between those 2 channels as she pleases. So it's been a very clear confirmation that the business model that we believe in, namely, having strong stores and a strong online offering supporting one another, that is really what the customer wants and that is also what gives us of competitive edge. So looking at the numbers. It's, of course, the highest revenue number we have ever reported of DKK 4,344 million. That corresponds to revenue growth of 4.3%. On the EBITDA before special items, we delivered DKK 803 million, that's the highest EBITDA number in 5 years and that corresponds to an EBITDA margin of 18.5% and that, of course, includes that we have invested in, as I said, heavily in accelerating our new strategy. That has led the Board to propose to the general assembly that we pay out DKK 77 million corresponding to a DKK 2 dividend per share. And with that, the highlights, I will dig deeper into the strategy and the specific progress that we have made on the strategy. We announced in August of '21 that we would raise the bar for growth in Matas and that we would use COVID and the new fact that we are a digital company to grow Matas to above DKK 5 billion in the year '25/'26 with an EBITDA margin of 17% to 18%. And that we would invest in this period in CapEx between DKK 1 billion and DKK 1.3 billion, including a new automated warehouse, but excluding M&A... So these are the targets that we have set. These are the targets that we maintain. We have listed a number of areas where we want to lead the market, both commercially in online, with our physical stores, with the brands we carry, the way we operate our logistics and within the ESG area. On all those counts, we have made concrete steps. We have made concrete progress in the past financial year, and we go into the new year with good momentum on all those counts. And let me dig deeper into some of them. On the commercial front, what was really our task is that the boom we got from COVID, which was also a boom in sales of stuff like hand sanitizer, face masks, self-test for COVID that gave us revenue, revenue that we knew would go away once the world turned normal, if it ever turns normal, and that our task was to make sure that we have new initiatives to make up for that and even more than make up for that so that we can sustain growth. So in the year, we have built competence on health by hiring pharmaconomists to help us provide that adviser -- to play that role as advisers to the customer on a professional basis, on a sound basis. We have built shop-in-shops for health. And we have acquired Web Sundhed as I mentioned. The key thing really for the strategy going forward is the idea that we can expand assortment online and make that assortment available to everyone online, but also make it available to the customers that come to the physical stores. So in the year, we launched dermatological skin care. We launched Professional Hair Care, a new category for us. And we've made ongoing expansions with new ranges, new brands, new kinds of products within the areas where we already operate. And finally, we have invested in some of our key assets and invested in building awareness. This is both true for our Club Matas. Our core Club Matas are one of our really important strategic assets, 1.7 million members. It's really been a focus to get app downloads. We've seen a significant number of growth in apps as well. And we launched Club Matas Plus, a paid-for concept, and we reached a milestone of 50,000 paying club members who would get extra benefits from being Club Matas Plus members. And then finally, as I mentioned, we invested in building awareness of the new categories. For e-comm, it's really been 4, 5 years of continued innovation and continued effort to stay ahead of the curve in terms of how we create the online shopping experience and how it works out. So online video counseling, live shopping events, either here from where we're standing right now or from the individual stores. The Club Matas app continuing to roll out new features and now turning 900,000 downloads for the app. Improving everything that has to do with a seamless customer experience, so you can return in store, you can pick up in store, you can order in store or online, all those things, and you can get the same kind of good advice online that you're used to in the stores. And then finally, continually pushing to deliver faster and faster to the customer. And we've actually reached in the financial year a milestone in the sense that 10% of customers ordering online in Q4, they got what they ordered on the same day, which is quite a number that creates a lot of joy with us, but even more with the customers. The stores, as I mentioned, COVID has really been a confirmation that the stores have a future. Not the same kind of stores that we had in the past, but stores that are connected at that interlink with our digital offerings. So we've made an effort to educate our colleagues in the stores to use the broad range of assortment we have online and really sell customers stuff that we don't have on the shelves in the individual stores. And our colleagues in the stores, they really like that because that is sales on top of what they can do on their own. So that helps them actually grow their local business using the online proposition that we have. Pick up in store continues to be an edge for us. Around 50% of all orders placed online, they are picked up in store and provide an opportunity for our colleagues to upsell when the customer comes to pick up the package. And it's actually also, from an economic point of view, an attractive competitive advantage because it's cheaper for us to ship, there is lower environmental impact and so on. Click and collect. So this is really the idea that we can fulfill from the individual stores. So if someone orders a product from our online shop and we have it on the shelf online, we can actually send them a text and say it's already there for you if you want to pick it up. We tested it in 20 stores, it's working really well and this is something that we will roll out to more stores. Also enabling our colleagues in the stores to take payments, not at the till or the cash register, but on the shop floor because being on the shop floor is where our colleagues are productive and where they help customers, where they create customer satisfaction. Being at the till doesn't do any of that. So equipping our associates with the ability to take payments on the shop floor in the situation where they provide advice is something that we have made the technological advances, we've trained and we are rolling that out quite fast. It's good for customer satisfaction. It's good for employee satisfaction. It's good for sales productivity. And then finally, we -- at the end of the year, we launched an online booking system. So as a customer, you can go to our website and you can book an individual consultation. And we know that once customers book an individual consultation, this is very conducive, very supportive of sales and of customer satisfaction. For our brands division that we established in the year, we are very happy to announce that we have signed the first contract to list some of our -- we call them iconic because this is something that every Dane will know to take the Stripes, which is as part of our heritage, but also Matas Natur and My Moments, which is our home spa series to take that to Germany via a partnership with local retailers. So this is an exciting new area. It's not big business. In the first year actually, it's an area where we will be investing in the first year to build the branch and launch them in a professional way and test whether there is demand not only from the retailers, but also from the German consumers. We will launch in the summer of '22. So just around the corner, you will be able to buy Stripes in Germany, which will be a big day, at least for our little company. On logistics, we think that we will be able to get a better deal on our logistics facility by waiting at least 12 months. We are not in any kind of rush. We have the capacity to deliver on our promises and to deliver on our long-term targets. We do want to make the investment in automation. We think it's one of those things that -- a generational shift in how we fulfill. And everything is progressing according to plan. But this may be the worst time to enter into any kind of contract with the construction market that is totally overheated, and at the same time, all our sources are telling us that what's actually happening out there's a lot of cancellations of construction contracts. So we think the capacity situation and therefore the cost of building will be more attractive down the road and we're in no rush. So we decided to postpone that investment. We go forward with the planning and the detailed planning of how we do it. And we might make a few modifications to how we are going to build it. But for now, we have decided to postpone for at least 12 months. And finally, for ESG, something that has always been a hallmark of Matas' brand, and we are recognized in the industry for being the leader on social responsibility. I think we took another step this year by publishing a comprehensive ESG report with the full baselining of our climate footprint with target setting and with the assessment, the materiality assessment, and of course, what is our strategy and our overall idea for the ESG area going forward. So I urge you to consult that report. And with that strategic overview, I will hand over to Mathias to cover the financial results.

Thank you, Gregers. Now I will take you through the financial results in a bit more detail. As Gregers already revealed, we had a 4.3% growth this financial year to reach DKK 4.3 billion, driven by -- partly by the acquisition of Web Sundhed, but also through like-for-like growth of 2%, which was driven by an increase in transactions, reaching 22 million transactions last year. On top of this growth, we expanded the gross margin to 44.8% before special items. And we increased the EBITDA of -- or to DKK 803 million I'll go back with a deep dive into the cost and the free cash flow development in just a minute. But first of all, I'd like to just present to you the long-term trends of the financials. We have seen a normalization of the revenue growth this year on top of an abnormally high like-for-like growth in Q4 of last year. We are now returning to a more normalized level. If you're looking in the top right corner of the gross margin before special items, we see a spike in the gross margin in Q4 to reach 48.2%. This should be viewed in the light of Q3 where we had 43% and overall 44.8% during the year. This gross margin has been driven by a more favorable product mix, more favorable channel mix, a bit better shrinkage during the year, and finally, the addition of Club Matas with 50,000 members now. Finally, I want to just highlight the LTM revenue growth in the bottom here where we just continuously see a steady growth in the LTM revenues. And now as promised, I will take you through a bit more detail on the cost development. I will start with the other external costs and how we have reallocated cost savings to invest in our strategy while keeping the underlying cost at around 7% of revenue. So on the chart on the left-hand side, let me take you through it from left to right. Last year, we had DKK 295 million in other external costs, excluding special items. This was equivalent to 7.1% of revenue. During the year, as we have in our strategy, we are continuously optimizing our cost structures, which has impacted that we have released DKK 40 million in other external costs, which we have reinvested in growth. We have reinvested them in the digital growth, which has driven DKK 25 million in variable IT, marketing and shipping costs. We have added the cost of Web Sundhed, which we acquired in April of last year. We have a post-COVID normalization of training and meeting activities, which drive DKK 8 million cost. This is both a normalization of a very COVID impacted, lockdown-impacted financial year last year and also some catch-up on these trainings. And finally, as everyone else, we are seeing increasing energy prices, which impacted with approximately DKK 7 million during the year. This leads us to a normalized cost level of DKK 308 million, equivalent to 7.1% of revenue, just as last year. Comparing to the reported cost of DKK 329 million, as you see in the final bar of this chart, the reported cost included these DKK 20 million in the one-off discretionary marketing costs that we decided to invest in our strategy upfront given the decision on the Club Matas VAT case during the fall, where we received DKK 20 million from tax authorities. On the staff cost on the right-hand side, we have invested to add capabilities to deliver on our strategy while retaining the underlying staff costs around 18.5%. I'll take you through the chart in a similar way from left to right. Last year, we had DKK 750 million in reported staff costs. This included a net effect of COVID-19 bonuses and trainee subsidies of DKK 20 million. If we normalize for this DKK 20 million, we had last year a normalized cost level of DKK 770 million or 18.5% of revenue. So when we are looking at the cost level, this is the normalized cost level that we are running our business from. Then during the year, we have invested in our digital growth. We have added capabilities to the e-commerce team. We have hired pharmaconomists, as Gregers just said. And we have an increase in the variable logistics cost. Then we have invested another DKK 20 million in the strategic initiatives. This includes the international initiative. And finally, we have added DKK 3 million from the acquisition of Web Sundhed. All of this leads us to DKK 814 million staff cost, equivalent to 18.7% of revenue. I hope this deep dive into the cost has given you a better understanding of our normalized cost development during the year. A brief look at the inventories development during Q4. We increased the inventories with DKK 23 million, but this should also be looked in the light of an increase in revenue. So when we are looking at the percentage of revenue, we see that inventories has come down from 20.8% to 20.5% during the year. Then finally, I will take you through a deep dive on the cash flow as promised. During the year, we generated cash from operations of DKK 615 million. This was a decline of DKK 400 million and this should be also -- please have a look at the 2019/2020 numbers because all of this is mainly driven by a negative net working capital development, which was very positive last year. The negative net working capital development was driven by an increase in inventories, as I just went through, but also that we increased the inventories early in the quarter to combat these supply chain issues that everyone has seen, which led to a relatively lower trade payables at the end of the quarter basically because we paid the suppliers. Second of all, we have lower payables from a normalization of the payroll taxes and the VAT debt from last year, which was postponed due to COVID-19. And then finally, we decided to pay out the frozen holiday pay, leading also to lower debt levels. On top of this, we had a CapEx increase of DKK 35 million to implement the strategy and to continue our digital transformation. I hope all of this has given you a good overview of our financials during the year. And I'll now hand it back to Gregers.

Thank you, Mathias. I will dig into the guidance for the coming financial year. Obviously, looking at the macro picture, it's easy to be concerned about where the world is going overall. For beauty -- for health and beauty, the picture is a bit more positive. This is a category that has historically not been hit so hard by recessions or crisis. So even in a crisis, people need health products. Even in a crisis, people will go shopping for beauty products. So while we might be quite concerned about the macro environment, we're a bit less concerned for the business that we are in and the category that we operate in. That leads us to guide for revenue growth between 1% and 4%, corresponding to DKK 4,390 million up to DKK 4,520 million. So we believe we can deliver growth. We believe it will be based on an inflation level that is lower and significantly lower than general inflation in the market. We guide for an EBITDA margin of 17% to 18% and that includes continued investment in our strategy to grow the business and also, of course, covering our international expansion into Germany. Finally, for CapEx, we guide DKK 225 million to DKK 250 million and that includes around DKK 100 million to what we call nonrecurring projects. So that is the next phase of our ERP upgrade significantly and the acquisition of the land where we want to build our Matas Logistics Center. And with that guidance, I will now close the presentation and open up for questions. So operator, we are open for questions.

[Operator Instructions] Our first question comes from the line of Claus Almer of Nordea.

A few questions from my side. But before that, first of all, congratulations with a solid year, Gregers. The first question goes to the international expansion. So what is actually the sales strategy? Is it price? Is it brand? And secondly, when should we expect a decent magnitude of effect in the revenue? That will be the first question.

Absolutely. And thank you for that. So our strategy is really quite conventional because we think what can distinguish Matas in the German market is not being the price leader. That is in no way what we're set up to do. What we should sell in Germany is the Scandinavia and the Danish dream and the fact that Danish products, and especially the products that we have in our portfolio, they are way ahead of the curve in terms of consumer preferences. So they are sustainable by design. They are clean by design. They are locally produced, all things that customers demand and where Denmark has been ahead of the curve. So we hope to join the Scandi wave of design and architecture in food and TV series and really sell Scandinavia outside of Scandinavia. And that points directly to your question. So what we are selling, Claus, is brands. We are not selling the cheapest product. We are selling a great story, a great product. And that is why we have teamed up with conventional retailers because, just as we experienced in our home market, using stores to educate the customer on new brands is really second to none. It is much harder to do online where you compete with every product in the world. But if you meet a sales representative, a beauty adviser who will tell you the story about the brand, we can sell something special. So that's why we teamed up with members of the beauty alliance, which is a big buying alliance with more than 1,000 stores in Germany. And we have listed with the 3 independent small regional chains, some of them bigger chains, mainly in Northern Germany to introduce 3 of our brands. And we think this is the right way to go. This is testing demand, testing if the customer wants it together with a partner that is really long term. And if that turns out to be a success, then they are part of a family of more than 1,000 stores, which we'll be looking to how we are performing in the 75 stores. To your second question, when is this going to be a material part of revenues? I would say not next year. Next year, we will be spending money to explore this opportunity. We will be seeing the sales come in and seeing if the customer response is in line with what the customers are saying, if they're actually buying the product. And based on that experience, we will decide whether to roll out broader or whether we will maintain it at that level. So right now, it's not material to our annual guidance.

And the DKK 20 million of extra costs, is that branding or is it converting the product to the German market? Or where is this DKK 20 million going to.

So it's a combination of different things. It's some product development, packaging localization of the brand to the German market. It is some regulatory, but it is mainly marketing in collaboration with our retail partners and the underground organization in Germany because -- and we know this from Matas, this is the great thing about being a retailer and a brand owner, we know that the success of the brand depends on us being present in the stores in contact with the beauty adviser constantly telling the story about the product, making sure that it is presented nicely in the stores. So it's really doing it right, not in a massive scale, but doing it -- getting that retail execution right, that's where the majority of the money goes.

Okay. That makes a lot of sense. Then about cost inflation, you just mentioned it briefly, I think, but how is it? Will salary increase? Where -- what -- is it CPI or who are driving the salary increase?

Yes. So in Denmark, and you know this, Claus, but in Denmark, we have 3-year wage negotiations. We're in the final year of the ongoing accords with the unions. And given that most of our cost base, most of our employees are covered by those accords, we pretty much know the wage inflation in the stores for next years. Is there added pressure on staff? Yes. Is it significant? Not at this point? And of course, there's been a change -- just from 3 months ago, there's been a change in the overall mood of the greater economy. So for now, we think that we can expect for the coming year wage moderation. We know that we are a really attractive place to work in retail, both in the stores and we know we're able to attract talent to our headquarters, not only based on salary, but also on just being an exciting place to work. So yes, it's an area where we shine a light and we spend extra attention on making sure our employees are having -- enjoying their work. But from an economic point of view, it's not going to impact us significantly.

Okay. Then your like-for-like growth -- or revenue growth, if you try to compare that with market data, it seems like that there's a negative gap versus market growth in Q4, at least. How do you read into this? And how should we think about that into the current financial year?

So my take on Q4, forget it, not because we've been bad performers, just forget the fact of our comparables in Q4 because of last year. Q4 of last year was a complete anomaly. It was an oddity. It was -- most of physical retail shut down, tons of people sitting at home having to shop online, not because they wanted to, because they couldn't do anything else. So comparing our Q4 with Q4 of last year will just lead you astray. I would rather look to Q4 of '19/'20. And on that basis, you can see that we have actually maintained the spectacular growth from last year. So we don't make any conclusions about the year ahead or our performance in Q4 based on the Q4 numbers, it is an anomaly. So the only thing we're happy to see is the profitability in Q4 due to the changes that Mathias mentioned, the change in product mix from hand sanitizers and face masks and COVID tests to some of our more high-margin beauty areas. I think that is the one thing that we take away from the quarter. In terms of market share, we follow market share diligently. We believe that online, which is really what we follow most closely because the online market really came to a halt in Q4, we have been able to maintain and even in some areas grow our market share. So that's what we're following.

So does that also mean that in this year, you expect more or less a flattish market share?

I think we don't guide on market share, for one. Two, our market is not constant. So the basis for growth, if you look back over the last few years, it has really been to grow our digital business without sacrificing our off-line business or store-based business. Looking ahead, it is all about increasing the assortment online. And of course, that is attractive because we are selling new products. We are meeting new consumer needs. We can add revenue on top of both the stores and online. So it's not that simple. But I can tell you that we are diligently looking at every kind of market data we can get on market shares online. And our continued ambition is to outpace the market online, which we have done consistently for the last 4 years and our ambition is, for sure, to continue with that kind of philosophy.

Okay. That makes sense. And just as a final, it's a small question, that's to the shareholder distribution. You are offering a DKK 2 per share dividend. But as I see, you haven't said anything about the share buyback program. So what are you thinking about how to spend your free cash flow this year?

I think this is -- the payout is in line with our payout policy of paying out more than 20% of our net adjusted profit after tax. But we also believe that this is a good time to have dry powder. We know that, at some point, we're going to build the MLC and being in a position of having a good balance sheet as well might be an attractive financial position to be in looking into the market ahead. So it's not that we have any specific plans. It's just we think it's due diligence. We think it's the right stance looking into the next year to have dry powder.

We currently have one further question or one further person in the queue. [Operator Instructions] And the next person in the queue is Poul Jessen of Danske Bank.

I have few ones coming back to the international expansion now you have a German partner. Do you expect more to come during this year? Or is this the trial base that you build on and that's set for this year?

Yes. So right now, I think gaining a listing with a strong partner is not an easy feat. So it is actually -- we consider it a quite big win to find a serious partner with long-term ambitions to build a brand together with us. And I think the best thing we can do is just to execute with perfection. So that is going to be our absolute #1 priority for this year: execute on the deals that we have now with perfection because we know, and this is from running our own retail business, if we can gain a position in those new stores as a very good executor, if we can gain the trust of the customer, the trust of the store advisers, then getting more stores on board is a lot easier than if you just go bullishly into a market and overpromise and under-deliver. So our philosophy, step-by-step, not risking too much, making sure we execute with diligence and quality.

Okay. And then a follow-up on your comment of the importance, from your own experience, of being in store and being local operation. I was wondering if the product line, number of brands that you're going to Germany are now broad or large enough to cover the cost of having local presence there? I was just thinking the majority of your competitors in this business is having multiple brands and large presence. So do you need more broad-based presence measured by a number of brands and products you go to the market with?

For the coming year, as I said, it is an OpEx investment, but obviously we have made a business case and we think we can build an attractive business if we gain traction in Germany. Three products, it will be a full back wall. So it won't be just one shelf. It will be a nice presence in the store, significant presence in the store. So we think we have what's needed to succeed in terms of store presence. And then we want to add -- as I mentioned, we want to add the local staff to make sure that there is interest and focus and attention of our retail partners on building our brands. And then -- and we know this again from being a retailer, once you have proof that you can run a couple of brands, then getting the next brand on board is easier. And I didn't actually mention that, but Nilens Jord, which we acquired a couple of years ago, is actually also being trialed with the same partners, but at a much smaller scale because makeup is just harder to execute. We don't want to make a big risk but just to see if the market is there, just to give you one indication.

And then on the inflation side, inflation now is 6% or something in Denmark. I think personal care products are much lower. But giving a guidance of 1% to 4% growth, is it more or less price increases only that's going to drive revenue growth next year?

No. Obviously, in any guidance, there are big moving parts. And I think especially in the year that we are looking at, there will be big moving parts, both in terms of consumer confidence, trading up and down effects, pricing effects. But I think the key thing to take away is that the overall 6% inflation that we're seeing broadly is not what we're seeing in our market. It's not what we're expecting in our market because, frankly, raw materials is not as big as part of the overall value chain as it is in other businesses. So we do see some unusual price increases on some very specific products. We think that the best way we can address that is really not by just passing on the bill to the consumer in every case, but rather working on the assortment and making sure that as a customer of Matas, you can find products that meet your needs at every price level. And that is really, I think, what sets Matas apart from some of our European peers. We're not just High-End Beauty or not just Mass Beauty or not just Health, we are a combination of all those things and that gives us some resilience in the event of an adverse turn in consumer sentiment.

And can you say something about historical experience or include some on how you have been impacted from recession. So larger market changes, I think, High-End Beauty versus Mass Beauty and so on.

Yes. So first of all, I think it's impossible for us or for the macroeconomists to find a historical precedent for what we're seeing right now. We're seeing some good things as well. We're seeing high employment. We are seeing a lot of savings. So there are factors that work against the burden of core inflation. What we have seen historically, if there is an economic crisis, it does impact our High-End business in the single digits. But then historically, we have been able to make up for some of that selling more Mass Beauty. And I think significantly compared to the last crisis, our Health proposition, which is, to a very limited degree, exposed to recessionary pressures is a bigger part of our business. It's a part of our business we've been growing the most over the last 4 years. So in that sense, from a product mix, from a category mix point of view, I think we are fairly robust and also taking into account that the growth we hope to deliver will come in large part from adding new products and new categories to our offering to the consumer.

Okay. The last question from my side. I can't remember how much you said on the logistics setup, but you write in the report that the postponement by 12 months should also include a reevaluation of the size and the level of automization. Does that mean you consider making it smaller or less automated? Or is it the difference larger or more automated?

I don't think this is the time to comment. It's just that we've decided purely on the basis of the capacity constraints and the ensuing pricing that we're seeing in the construction market, it's not a good deal to enter into any kind of agreement now, therefore, we postpone. I think based on what we have learned over the last few years, this is also an opportunity to reassess details, choices that we've made in the original design to see should we size it differently? Is there -- are there new technologies that have come into place or matured more fastly? There's quite a big difference in how prices are developing between different technologies and different parts of the process. There is an increased ESG agenda. So maybe there are areas where we don't want to lock in on a certain solution, but maintain the freedom to do -- to be more flexible. So therefore, we use these 12 months to just have a look at how should the project be scoped without giving you any direction, I know. But just looking at other things that we know now that we can do smarter, that we didn't know 2 years ago when we designed the project at first.

And we have one further question in the queue. That's from Mads Quistgaard of Carnegie.

I have 2 questions. Coming back to this logistics and the postponement of 12 months. So is there any risk on your 5-year growth strategy and your financial ambitions coming from this 12-month postponement?

There is no risk. We have set up -- we have the capacity to deliver on those targets with what we have now, with the decision we made to first establish Humlebæk for e-commerce and then enlarge our Humlebæk facility. We have learned a lot about how to operate it efficiently. We've seen some changes in consumer behavior that allows us to be smarter about peak levels as well. So we basically have both the capacity and the space to deliver on those long-term targets. And that's also why we maintain the long-term targets at this point.

Got it. Great. And then I just wanted to make sure I got it right on this new click and collect concept, which has been rolled out in 20 stores. So the feedback has been good and you risk to roll out the concept in more stores, right? And if yes, how many stores?

So we haven't -- it won't be all stores because, as you know, our stores are very different in terms of size and staffing and how much we have on the shelves. So this is really a concept that's mostly relevant to bigger stores. And frankly, what happens is the customer places an order online, we can route that order to any of our different fulfillment models. If we know that the product is on shelf in the local store, we can pick that product in the store and send a text to the customer within 30 minutes of her having placed the order. That's a spectacular customer's experience to place the order, get texted within 30 minutes, you can pick it up, it's there for you. And as I said, it's been a good trial and we will roll out to some of the bigger stores. It's not a new paradigm. It's a supplement to what we're already doing, but it's a nice supplement. Just the way same-day delivery is not the future of everything, but it is a very nice supplement to what we're doing in addition to customer satisfaction.

And as there are currently no further questions in the queue at this time, I'll hand the floor back to our speakers for their closing comments.

Thank you, operator, and thank you, everyone, for the questions and participation today. With this, we will close our call. Thanks for joining.