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

Welcome to Matas' Financial Report for the Full Year of 2024. [Operator Instructions] Today's call is being recorded. I would like to present Gregers Wedell-Wedellsborg and Per Johannesen Madsen. Please begin.

Thank you, operator, and welcome, everyone, to the call covering our financial year. It's a landmark year for us, the first full year of being a Nordic Group. It is also a landmark year because we have seen growth in all markets and all channels, and we have seen an improvement of earnings as well. So today, I will start out by covering what is it that we have seen in the year, but also what is it that we have seen in the first -- fourth quarter and give you an update on the progress of our strategy. And then I'll hand over to Per to cover the financial results in more details before we open up for Q&A. So highlights for the year. We had a slightly softer Q4 than we had expected going into Q4 and guiding for Q4. Nevertheless, we did deliver 7.2% growth for the business, so a higher growth rate than for the year in total. So in that sense, not that soft, and we sustained -- maintained the EBITDA margin that we had from last year. So we didn't see the same kind of EBITDA margin improvement in the first quarter. And why is that? We did see healthy growth in Matas. We saw less growth in KICKS. We did see strong online growth, 24.3% online growth when we exclude Skincity in the quarter. The big thing for the quarter was the gross margin. It dropped against last year. Some of it was expected because last year was very, very high in KICKS due to the fact that we were opening our Rosersberg, our KICKS Logistics Center facility, and we held back on campaigning to not overload the new facility. So some of it was expected, but we saw a bit more effects, both from consumers being more price sensitive in the quarter and from a delisting of in-house brands. This was something we've done open eyes, but we saw a slightly bigger effect from that. We closed down Skincity in the quarter that had some -- a little bit of margin impact as well because KICKS was high gross margin, even though it was a loss-making business. And then -- so that's really the big thing about Q4. On a happier note, we opened the MLC Matas logistics center ahead of plan. That actually had a little bit of an impact as well in the quarter that we managed to open that and ramp up earlier than planned, and it actually has gone really, really well. That transition has been a lot smoother than what we could have feared. So really happy with our colleagues in that regard. Looking at the financial year, we came in, in line with our own expectations, right at the midpoint of our upgraded guidance, 7% growth year-over-year. That is clearly a market share gain for our business, driving 7% growth. We raised the -- or lifted the margin slightly from 14.3% last year to 14.5% of this year, the lower end of our guidance for reasons I just covered. But still, underlying top line growth and underlying margin improvements as synergies trickled in, and we became better at operating our Nordic business. So the key thing, looking at how we run the business, the execution of our Win the Nordics strategy is going according to plan. The initiatives that we are launching, they are working out. They're being executed with skill in both KICKS and Matas. So we are seeing the kind of progress that we are hoping for when it comes down to strategy. And as I mentioned, the fact that we now have both the Rosersberg KICKS Logistics Center automated and also our Matas Logistics Center fully operational, that makes us ready for growth looking forward. We have also been able to deliver on our promise when we acquired KICKS to take out DKK 140 million in stand loan improvements and synergies from the deal. And today, we announced that we see another DKK 50 million of synergies coming through in the next financial year, out of having Nordics scale, out of being able to operate the business more effectively. So our overall view is that nothing has really changed when it comes to our long-term ambitions. Nothing has changed when it comes to our strategy. We, of course, see a more uncertain market as does everyone. But we are well on track. We are very confident about our long-term trajectory for the business and our long-term targets. As for next year, and of course, guiding in these times is really an interesting discipline because one week might be full of pessimism and the other week might be full of optimism. So a quite broad range for what we see in the market, and I will get back to that in a moment. So we guide for revenue growth between 3% and 7%. And what is important to take into account is that we have now shut down Skincity completely. We had around DKK 80 million of sales on Skincity in the past financial year. We are not going to see those sales next year. And we had some migration of those sales into the KICKS business. We will not see any migration because the business is now gone. It's closed, no people, no web shop anymore. So underlying, actually around 4% or 3.9% to 7.9%. And of course, this reflects an uncertainty, and I will give some more flavor to the uncertainty in a moment. We also expect to improve our EBITDA margin as we see synergies flowing in fully in this financial year, as we have talked about before and expected. So we see margin improvement going to around 15% for the year. As for CapEx, on plan, so down to the -- what we think of as the run rate CapEx that we need to execute on our strategy and keep the lights on, a CapEx of 3% to 4% of revenue equaling DKK 330 million, including DKK 30 million for the completion of our Matas Logistics Center. That fact that we are now normalizing our cash flow. We have acquired KICKS. We've made 2 automated facilities, and now our cash flow is normalizing. So we're able to change our capital allocation policy from distributing at least 20% of adjusted net profit after tax to at least 40%. We proposed a dividend of DKK 2 in line with our historical practice, and the Board will carry out a share buyback of up to DKK 100 million, subject to AGM approval of buying back shares. So looking at the total year and just to do the numbers, Matas, the biggest growth driver with 8% growth, which we find really stellar performance that a stable business in a mature market is able to drive 8% growth in this kind of environment. So a testament to the strength of the Matas business. And as you can tell, that kind of growth and also getting gross margin improvement in the Danish business, primarily as a result of synergies flowing from being a Nordic business. So the acquisition of KICKS has actually made the Matas business better -- the Danish Matas business better. As for the KICKS business, lower growth, looking at just the beer numbers, 5.3%, but taking into account that Skincity has been on a wind-down route for the entire year. So 10.9% for the KICKS business for the full financial year. There is some flow across from Skincity into KICKS. So you can't take the numbers fully at face value, but it just indicates that the fundamental KICKS business is growing healthily and the initiatives that we're taking are working in the KICKS business. As for gross margin, we are investing in becoming more competitive on price. And therefore, you do see the gross profit margin go down as a result of those decisions despite the fact that we are also getting synergies. KICKS is perceived to be expensive, and we want to change that over the coming years. So this is not a performance slip. This is a conscious decision to make KICKS more competitive in the markets where we operate and the big reason for why we are gaining market share in KICKS. So altogether, almost DKK 8.4 billion in revenues, 7% growth, currency-neutral growth and 14.5% EBITDA margin before special items. As for our strategy, and this is really, of course, we measure our success on the numbers and on customer satisfaction, but really our ability to execute in a Nordic setup is something we take great pride in and that we really drive hard from a leadership perspective. And on all accounts, on all the pillars of our strategy, we have made inroads and made good progress, both in Matas and in KICKS. So we are launching new brands, widening our assortment and giving consumers more choice. We are investing, as I just mentioned, in improving our price competitiveness. We are sharing our in-house brands across the different banners. We have taken out in-house brands that we don't believe have a future, to be more focused around those that we think have a bright and brilliant future. So on the offer that meets the customer a lot of new stuff for customers to experience and greater value. As for channels, e-commerce is our great growth driver and expect it to be our growth driver over the coming years. We have seen membership go up. So we crossed 2 million members in Denmark, again, saying that this is actually strengthening the Danish business, and more than 6 million members across the Nordics. 30% growth for online for the core of KICKS, 18.5% growth for Matas, which is more mature on the online business. And customer satisfaction, and this should not just be a side note. This is absolutely key that despite all the changes we are making to the business and the internal focus you can sometimes have when you buy a company, we are seeing customer satisfaction maintained at a very high level in all banners and all markets. We do invest moderately, carefully in stores if we can find the right location at the right terms. We do like to expand and improve our store network. It's not the big growth driver, but measured cases, good cases, we take them when they -- as they appear. And of course, the Helsinki flagship would be one for the history books that we now have a really, really strong presence in Helsinki with the flagship store we opened. Also in Aarhus, looking back 7 years, our stores in Aarhus were really old and depleted. Now we have a full suite of state-of-the-art stores in Aarhus and opened a new one, which is performing really, really well in Aarhus as well. And then finally, the idea that we could become a stronger company, then we could create value from becoming one group. We're also seeing that primarily with the realization of the planned synergies and the further synergies I just talked about, with the migration and closure of Skincity into KICKS to really focus on the core brand of KICKS. And then on the 2 big investments, the Matas Logistics Center, the KICKS Logistics Center. And I just want to highlight that we are also being ranked more highly as an attractive employer. And this is actually really key, war for talent is key. And the Matas Group has become a more attractive place to work, helping us acquire talent. Our strategy, the big growth driver, the big thing that will allow us to grow faster than the market is the expansion of assortment online, our ability to bring in cool, hot brands that are trending on social media, bring them into the business really fast, launch online. If they work online, bring them on to the stores. And we're seeing some good wins. And I won't go into any names here, but we're just seeing some good wins, and we have seen some really good wins through the year. And the thesis that if there is a cool provision brand that wants to launch in the Nordics, we should be their first choice because we can bring them out in front of the most attractive consumer with just one phone call across all the different markets, both in stores and online. So that key point in our strategy has really proven to be true in the year gone. And we've also seen it in the numbers. We've seen the biggest brand launches that we have ever seen in the year past and our ability to attract brands that we could not get before as separate companies, we can now get them together. The club. The club is the core of our business. We think about it this way. We are really a relationship retailer. Everything starts with the relationship to our club members and flows from the insights and the data and the communication relationship we have with members online. So the fact that we are now more than 2 million members, all-time high for Matas, crossed 1 million members in Norway as well and 4 million members almost in -- well, actually, we have passed the 4 million member mark for KICKS. Customer satisfaction and member satisfaction continuing to grow, and we are attracting younger demographics. So we don't have this aging problem. We are attracting younger demographics on the back of having the cool brands, but also communicating very effectively, especially on social media. And the thesis that once we have the customer in and once we have acquired the customer to shop in one category, we can inspire or teach or motivate the customer to shop across more categories. That is also one of the things driving growth in the financial year. That gives us comfort that we are on to the right track with our strategy. Two big boxes. One outside of Stockholm in Rosersberg came into life last year, is operating, and we are just seeing the efficiencies that we were hoping for. They came in a bit later than expected. So we didn't get the efficiencies as fast as we thought, but we are now very close to the levels that we had anticipated when we opened the center, and it's really running a tight ship and with no disruption. So one functioning logistics center outside of Stockholm. And then the new one where we got the ribbon just a few months ago, our automated logistics sensors serving e-commerce in Lynge, outside our headquarters, fully operational, serving e-com. Of course, we are in those early days of learning and becoming more efficient, but it's actually -- we were able to open faster than expected and with fewer disruptions than what we thought. Two major investments, foundation for growth, foundation for executing the strategy over the coming years. So the fact that these 2 facilities are actually open and running according to plans now allows us to both spend our cash flow and investments and other stuff, but also execute on our strategy as we hoped for and planned for. Synergies, we targeted and promised DKK 40 million in stand-alone improvements in KICKS. We have gotten those benefits. And we promised and aim for DKK 100 million of EBITDA improvements rolling into this financial year, and that's confirmed as well. We are seeing those tangible benefits from being a Nordic Group. And of course, some of that we take to the bottom line, some of that we reinvest in being more competitive. And today, we announced that we see another DKK 50 million of synergies from being a Nordic Group, both on our organization, but also on what we call goods not for resale. So everything that's not cost of goods sold or organization, we do see a potential there that we hadn't spotted when we made the deal and merged with KICKS. Consumer, on everyone's mind, how is world events, how is that flowing into the consumers' mindset. We are all following consumer confidence numbers very, very closely, and they are just trending down. So I wanted to remark on how are we seeing that play out in the numbers. We are not directly affected by tariffs. We have very few brands and products that are affected by tariffs because most is produced in Europe and sourced from Europe. So we don't see any material impacts if there is a high tariff scenario coming in. So for us, this is all about what it does to the consumer and the mindset of the consumer. And in Denmark, we see little to no impact. There might be -- if there are big events in the world and big announcements, people might be a little bit spooked for a day or 2, but we see no material impact in our Danish business. And of course, the Matas banner is even more robust from the fact that if you want to save a little bit of money on the high end, you can always straight down into more mass market products. In Norway, we see a little bit of impact. It's very hard to judge whether that's just seasonal because Easter is moving around or whether this is something in -- that has to do with consumer confidence. So very limited impact in Norway. And of course, a very strong economy over all in Norway. In Finland, absolutely no impact. What they tell us is the world you live in now is the world we have been living in for years with geopolitical uncertainty. So this is really just welcome to our world. No impact and a young market for us, structural growth and for us growth as a result of going for penetration in Finland. So the one place where we see a little bit of science that we follow closely is in Sweden. We did see both some market data and some signals in our own numbers that made us wonder whether this is a sign of a slowdown. And there is no conclusion to be made from this. It could be temporary, it could be V-shaped, it could be something that goes on for a little longer. It's very, very hard to say at this point. But we are seeing a few signs and that, of course, flows a little bit into our discussion on the guidance. And with that, I will hand over to Per to cover the numbers.

Thank you, Gregers. And yes, I will take you through the numbers. Quickly go to Q4, but then focus on the first full year together with KICKS. So just going into Q4, really a strong growth or a good growth, as Gregers has already alluded to, of 7.2% currency neutral. The big change in the quarter or the impact of the quarter is really around gross margin, as most of you already noticed. And the factors that we put into the change of our gross margin in the quarter is really, as Gregers alluded to in the beginning, it is the high comps from last year with Rosersberg, not being that operational and hence, less activities in the market. But it is also around the investments we're doing, especially around price competitiveness in our KICKS markets. Then we have a high level of e-com sales. And then as Gregers said, we closed down Skincity, and that is high-margin products also, which is also impacting the fourth quarter. So fourth quarter gross profit growing 3.2% compared to the 7% growth. Of course, that has an impact when we then look at the EBITDA. In terms of cost from a group perspective, of course, that is impacted by the performance in our strong e-com business, the variable part of our costs, but overall, growing 1.8% comparing to our growth rates on the top line. That basically sums up to an EBITDA margin of 11.5% and growing compared to last year with 2.4%. But let's move into the full year numbers, and I'll give you a little bit more details. So when we look at the full year numbers, 7% growth overall. And when we look at the different elements in that growth, really strong growth for Matas, 7.5%. But KICKS, looking at that overall 5.3% growth, excluding the Skincity, that was a choice we made to benefit our performance longer term, really looking at that as a 10.9% growth. So really a strong year also for KICKS from a growth perspective. When we look at the channels, stores growing 3.8%. So again, we have the fundamentals of our stores growing, whilst when we look at the e-com, of course, that is the key driver for the growth with 22% growth, excluding the Skincity. And when we then go into a little bit more details, you can see e-commerce in KICKS really growing, 30% for the year. It is also applying the playbook from Matas, whilst Matas growth has been, of course, driven by the continuous development of the assortment and providing more choices to our consumers. Like-for-like growth in all markets, both in Matas and KICKS and we have 6 more stores as already shown. Let me move into the gross margin. So when we look at the gross margin for the full year, Matas have actually shown an improvement of the gross margin, which is linked to 2 things: a little bit of synergies coming in place as we join forces together with KICKS. But more importantly, actually, the improved margin from our assortment. As you recall, when we started the whole journey on assortments, the margins was softer, to put it that way. As we become more mature and we grow the different categories, we get better margin, and that is also reflected in the Danish numbers now or in Matas gross margin. KICKS, as already talked about, we are investing in KICKS. We have a price perception that we need to improve, and we've launched nice pricing across the KICKS banner. And we are focusing on those elements to make sure that we get the right perception in the market. We reset our in-house brands with fewer but stronger brands. And then as already mentioned, we've closed down Skincity. So we're getting ready for the years to come basically. From a cost perspective, cost is growing 6.7%, just below our growth on top line and a range of factors coming into that. I think I'll just focus on a few. We are building the capabilities we need to have to grow the business, especially around pricing excellence. We need to really understand the market, and we have been investing in that together with assortment specialists. And then, of course, we're heavily investing in our e-commerce business to make sure that we can continue the growth rates in front of us. In terms of our logistics centers, Gregers has already been mentioning that. We completed KICKS last year, that is coming into the business. Now the following year is really where we need to get the benefit from the KICKS Logistics Center whilst we then start getting all the learnings and getting the efficiency out of the Matas Logistics Center. Having said that, when you look at the cost, just remind that our online business is growing above 20%, that also has an impact because the variable part of our group cost is impacted by the strong growth, of course. Last but not least, marketing investments. We are making discretionary decisions to grow the business. We talked about that in Q4. We are also getting support from our suppliers in that. But it is really a choice to make sure that we capture the market shares, and we continuously focus on growing the business. So that's the other element you need to take into account when we look at the overall cost base. So a lot of investments in the business basically, which basically takes us to the gross margin or EBITDA margin and the growth on our profitability. As you recall, overall business growth this year is 7% on a currency neutral, and we're growing the bottom line 9%, so ahead of the top line and that is really what we would like to see also going forward. And we are increasing the growth or the EBITDA margin basically from 14.3% to 14.5%. Moving into the balance sheet and our working capital inventories, as you will see also from the report, we have invested in inventories this year. Two elements on that is really the assortment expansion in Matas combined with the MLC ramp-up. We actually did a lot of ramp-up in the last part of fourth quarter, also impacting the inventories as we're moving from one e-com center to another. And then as you've seen throughout the years, the inventories levels at KICKS with the new logistics center and improved availabilities in stores, of course, also have had an impact on the overall inventory levels. Moving into our cash flow and our working capital. Of course, the working capital, we just talked about, the inventories is, of course, impacted by that, which is basically reflecting the whole new setup we have in KICKS. Our investments in CapEx, as we already talked about, of course, impacted this year by the Matas Logistics Center, and so significantly higher compared to previous years. And what we're looking at, of course, going forward is a more normalized CapEx around 3% to 4%. That turns out at the end with a gearing at the end of the year of 3.1. It is a little bit of timing, and we expect that to be adjusted as we move forward. But it is impacted by what I just talked about, the inventories, the ramp-up for MLC, the KICKS new logistics center. And then, of course, all the adjustments we do every year in terms of the IFRS 16 and the leases of the stores. I just want to highlight one thing, and you might have read that also, but we just closed a very successful, in our mind, refinancing on very competitive terms with our 4 banks -- 3 banks, sorry, which basically mean that we have now a full financing package available, which will support the growth going forward, and that has significant headroom also for the activities that we are looking at as we move forward to Win the Nordics. And with that, I just want to close on the guidance. Gregers has already mentioned that in terms of the uncertainties we're seeing in the market, leaving us to put a guidance of 3% to 7%. But more importantly, that actually reflects an underlying growth of our business in the range of 4% to 8% or 3.9% to 7.9%, which is the adjustment of the Skincity, which we no longer have in our business. EBITDA around 15%, and then we'll continue the investment level of around 3% to 4% of revenues in CapEx as coming back to a normal level. So what does this then look like from a capital allocation perspective? Basically, we have changed our allocation principles. This is the -- we laid out earlier. So we have the cash flow -- the very positive cash flow from our business, of which we'll invest 3% to 4% in CapEx. Then we will make sure that we, on a longer-term basis, stays within the gearing of 2 to 3. We can be slightly out of that as we were in this quarter, but the guidance is to be around 2 to 3x our EBITDA. And then we've changed the dividend and share buyback to be above 40%, as Gregers has already alluded to. And then when we look at our proposed allocation this year, we are looking at the DKK 2 in dividend, which we're going to propose to the AGM, and then the share buyback of the DKK 100 million. So that's a total of around DKK 177 million, reflecting -- or calculated to be around 53% of our adjusted net profit, so slightly above our long term. The 40% that we are now putting forward is our future distribution levels, which you then can take into account when you look at the business also going forward that you should expect more than 40%. And with that, I will hand over for Q&A.

[Operator Instructions] And first up, we have Sebastian Grave from Nordea.

Starting on the DKK 50 million synergies or further synergies that you identified here, so yet to keep your midterm guidance unchanged, how does that work? And could you be specific, how much of these DKK 50 million synergies are baked into this year's guidance?

Yes. So on the last part, not a lot for this year, it will take some time to get those synergies out. They are earmarked. We know where we are getting them. That's why we can communicate so clearly today. But it will take some time to get them because there will be a lot of renegotiations going on to capture those synergies. On the org side, we have made some changes already. So that is very much on plan. And as for the long-term guidance, we don't think that right now where we are in the world and what's happening in the world, it would be wise to start to discuss our long-term financial ambitions. So what I would take away from today's numbers and today's guidance is that we have taken out a bit of risk by identifying more synergies. And we have absolutely maintained our strategy and the investments that we're putting behind our strategy. So a confirmation of the long-term ambitions despite slight more uncertainty and some risk off by targeting and getting out more synergies flowing into next year.

Sure, sure. No, no, that's completely fair, I guess. My second question is on the MLC, which as you say, is now fully operational. And as I recall, you've previously guided a positive EBITDA margin impact to the tune of 1 percentage point. Is this still the case? And how much of this benefit is baked into this year's guidance as well?

Yes. So remember that it's 1% on the Matas base, not on the total Nordic base. So that matters quite a lot, as you can imagine. And we don't see the full impact coming into this year. We see maybe around half of the case for the first year. And remember the case for the first year is not necessarily the full 1% because there's always, as we also learned with the Rosersberg facility, there is always a learning curve that you have to go through. So you don't see the full 1% flowing into this financial year. We think of it as half of the benefits coming -- or for the first half year, probably no benefits, but then something flowing into the second half of the year. But I think the very key thing to take away is it's opened, it's running, no disruptions. We now have the capacity to support our growth, and that's really what's important. And I think many of us have tried being places where logistics product -- projects don't go according to plan, and that is, frankly, a nightmare. And we're not in that nightmare. We're in a really good place with both facilities.

Got it. That's very clear. And then just my last question is on to the capital distribution policy or the change to your policy here. So just trying to figure out what's really changed your gearing? At this point, it's still fairly high. And you've previously also indicated that you're keen to pursue more M&A. So why -- I mean, why not keeping the 20% and maintaining sort of the same flexibility and then you can always add up with more buybacks? So why the decision to sort of update the policy rate?

So it's a policy for total payout, a combination of dividend and share buyback. So it's not a commitment to double the dividend or anything like that. It is the Board signal to the market that we believe, with the normalization of the cash flow and the completion of the 2 logistics facilities and the way we look at the business going forward, we can afford to both drive the investments into the business that are needed to realize the strategy, keep our gearing levels at responsible levels and dial up the capital allocation or capital distribution policy to above 40%, subject to M&A. And this is important, of course, if we see attractive M&A that fits into the strategy, there is an ability, of course, to execute on that and deviate from the policy. And also, I should say, subject to keeping the gearing range, the long-term gearing range within 2% to 3% or change.

And next in line, we have Poul Jessen from Danske Bank.

I will start out by the categories. If you look at the high-end beauty, could you put a little more color on what's behind the sharp decline on the growth rates here? You've been in some quarters up on nearly 2 digits, and now you got down to low single-digit growth. Is that the macro hitting the different markets as we've seen in other countries as well on high-end beauty? Or is there any technicalities here?

No. It's actually -- I mean the one word is Easter for us. And the other word is timing of campaigns. So if you have a big campaign on, let's say, fragrance, that was in the first -- or in the fourth quarter, that is now in the first quarter of this year, then you actually see quite a big flow over between the 2. Having said that, of course, high end is more exposed to consumer confidence, to consumer spending. That's pretty clear. We see that from peers as well. It is not the main explanation. But clearly, when there is a short-term shock to the economy and the newspapers are full of stories about the world falling apart, that's where consumers hold back. We don't see it as something structural or something that has fundamentally changed. And we do see that, particularly within Matas, we -- if there is trading down, they trade in within our 4 walls. And of course, that is the position we want KICKS in as well. So I think you could compare KICKS to some of our European peers. And you can see that KICKS is still performing, still delivering growth despite what's going on in the world and with macro. So clearly, KICKS is more exposed, high end is more exposed, but our strategy is really, with the combination of investments in price and the widening of assortment to always give consumers a cheaper choice or a more affordable choice, that's really mitigating what we're seeing there. And you've followed us for a long time. So you know this is the story of Matas as well that there is this internal hedge effect between the high end and the mass business with a very high private label share in the mass business in Matas. And obviously, we want to get that in KICKS as well. So -- and the hedge as well between the beauty business, which can be more cyclical on the high end and our health and well-being, which we have in Matas to also support stability in Matas, and that we haven't gotten going on in KICKS at this point.

So it's in line. But what you gave on for markets that it's more or less business as usual overall...

Overall, for Sweden, slightly more signs. And frankly, this is something that we looked into. It is the case that the Swedish consumer reacts more sharply and more quickly to changes in macro maybe because they have these flexible loan rates. There might be other explanations as well. But we are seeing that across different businesses, that the Swedish consumers react a bit more quickly and sharply, but they also come back quite quickly and sharply if it turns out to only be a scare. And that's why we don't want to rock the boat on our confidence that beauty is on a structural growth journey for all the reasons we have discussed, the demography as well as social media as well as a very high degree of innovation on product. So we do see that long-term structural growth opportunity, it's right there in front of us. It's still there. There's no -- we don't shake our hands in our belief that, that's there. But of course, short term, with everything that's happening, consumer dealers are to be expected, and we're doing stuff to mitigate that.

Yes. And just to be clear, what you commented on the 4 countries on current trading, that's as far as also including what you can see in this quarter?

Yes. So it's not a comment on current trading. It's more broadly on sort of the, you could say, after liberation day signs that we are seeing. And there is this timing of Easter, which is very, very important, and it's not always predictable what the timing of Easter. Even with 75 years of experience, it might change a little bit from year-to-year how that works out. So we don't want to overdo it. But clearly, consumers are more cost conscious, more looking for deals. Therefore, our pricing initiatives are important. Therefore, our assortment initiatives are important. But a firm belief that this doesn't rock the boat on the long-term growth for beauty.

Two technical question. Skincity, when should we expect that it will no longer have an impact on the year-on-year comparisons?

Yes. Very good. And of course, that has been making noise in the numbers. So around DKK 80 million of sales in the past financial year that will not be there in the future the year, hence, almost 1 percentage point higher impact on the guidance. The majority of that in the first 2 quarters. There's a little bit of a tail into quarter 3 and 4, but the majority of that is flowing into this quarter and the next quarter.

So it's clean numbers from Q3?

Yes, yes.

Almost clean.

You'll see, but insignificantly dirty, if you will. Yes.

Okay. Final question, depreciation. You guide down to EBITDA. How should we -- what should we expect depreciation to go up by now that you start depreciating the facility in Lynge?

Yes. Well, I think we talked about that also in last quarter, Poul. And I think when you take that facility, it consists of 2 things: the buildings, which is a very long depreciation period. And then we have the out of store, which is going to be a 10-year depreciation period, 10 to 15 years. And when you then take that into account, overall, what we have, you should be looking at around the DKK 15 million to DKK 20 million of incremental depreciations on those facilities.

[Operator Instructions] At this moment, we do not have any further questions on the telephone, so I'll hand it back to the speakers.

Thank you very much. A strong year in terms of execution and progress on results. A slightly softer quarter Q4 than expected, mostly due to in-quarter effects on the gross margin. An ambition to grow next year in a more uncertain world with margin improvements as well to follow, and a firm belief in our long-term strategy and the investments that we're putting behind those long-term strategies. And then added room in our cash flow to also increase payout to our investors. So thank you so much for joining, and thank you, operator.