Matas A/S (MATAS) Q3 FY2026 Earnings Call Transcript & Summary

Welcome to Matas Group Q3 2025/2026 Financial Presentation. Today's call is being recorded. [Operator Instructions] I would like to introduce Interim Group CEO, Per Johannesen Madsen. Please begin.

Thank you, and welcome to the Q3 reporting for Matas Group. It's really been a quarter with what we call some mixed results, a record sales in third quarter in Matas and some challenges in our KICKS markets, which I'll take you through in some more details. But let me just say to you, we grew the third quarter 1.8% year-on-year from a currency-neutral perspective, which is equivalent to 3.1% as we have reported in our Q3 report. That also equates to a 16.7% EBITDA margin adjusted for FX, 17.2%, which is slightly below last year, but still in a quarter where we were managing slightly challenging sales, but managed that with some good and strong cost control. So overall, a quarter coming out supporting the updated guidance we gave early in January, looking at 3% to 4% growth for the year, 14% to 14.5% EBITDA margin, and CapEx within our guidance between 3% to 4% of revenues. I also think it's been a quarter where we've seen, and I'll come back to some more details on that, where our 2 big investments, both the Matas and KICKS logistics centers really have shown the impact on our P&L. Going into the 2 different groups. Looking at Matas, 5.5% growth. That includes our subsidiaries, which also had a strong Q3, but Matas stand-alone 4.8% growth. A gross margin slightly below last year, which is also reflecting some of the dynamics in the quarter for Matas, which we'll come back to in a little while. KICKS, where we've been challenged this quarter, minus 3.8%, 3.2%, excluding Skincity. And I know we talked about Skincity, and that will soon be out of the comparables. On the gross margin in KICKS, you'll see an improvement compared to last year if we adjust for the FX headwinds, which we've had in the quarter and which we've had throughout the year. But that leads into the group numbers as I reported previously. Moving into our strategy. Really, I think one key thing to take away is the strategy we set out within the Nordics for the Matas Group remains intact. It's still our strategy, and it's still our focus as we move forward. And it is still focusing on the 3 different areas: more for you, closer to you and stronger for you. And we are keeping the momentum in these areas. With the results we saw coming out of Q3, we have now decided to accelerate our plans. And some of the details behind that acceleration, I'll come back to in a little while. But in terms of more for you, we are focusing on continuing providing more choices, more brands to our consumers, and we see especially strong performance within haircare, Sport & Wellness, and we'll continue our assortment expansion as we move forward. In terms of our in-house brand, I just want to highlight one thing is really the growth of our in-house brand for this quarter, 10.9%. But if we look specifically on Sweden, where we launched Nilens Jord in September, we relaunched BeautyAct, we're looking at more than 30% growth in the quarter, which is a very strong indication of the value of our in-house brands. It's also showing that providing different assortment with different prices, not within the high end, actually recognized with the consumers we have across Norway, Sweden and Finland. Our online business continued to grow 10% in Matas, struggling a little bit in KICKS with 2.5% growth, but I'll come back to some more details on that. We continue to open more stores and providing a better network for our consumers. And last but not least, and that is also coming through in the Q3 numbers is really around our 2 automated facilities and our track on our synergies. And as we announced earlier in the year, looking at the synergies for next year, which we're investing in right now, they are on track and will be materializing as we move forward. So just quickly on our new brands and the assortment. We continued with the launch of new brands and specifically. When we look at the different markets, you can see also in KICKS, launching the Body Shop, providing more choices also in the Mass Beauty area. And we launched 11 brands in KICKS, 22 new brands in Matas in the quarter. Our membership club continues to provide very strong momentum for our business. And as we mentioned last time we were together, we just launched the e-commerce platform across the Nordics, so we now are operating on the same platform for all markets, which has also allowed -- and it's not part of this presentation, but just as a last piece, also part of our acceleration. We now launched our KICKS app. It was just launched 2 days ago, now providing our consumers in Norway, Sweden and Finland with the opportunity to do their purchases on the app as well. So that's just an acceleration of the plans that we already put forward in our Win the Nordics. And then on stores, as we just said, 4 new stores in KICKS, 2 in Norway, one in Finland and one in Sweden, really providing a broader footprint also from our stores perspective. Our 2 logistics centers. This is really something we are very proud of. We launched KICKS 2 years ago, Matas almost a year ago or actually in April this year. So we now have the first year with 2 automated centers providing faster deliveries at a lower cost. And you will also see that reflected in the financial numbers. And we're very proud of getting to the second high season for KICKS and the first high season for Matas, and our new facility really providing a very strong performance. And that is also reflected the time from a Black Week, which when we had a tail of deliveries, we actually completed that very fast and also made sure that our customers got their purchases very fast. So very strong performance from our 2 logistics centers. Now coming back to the acceleration. And to provide a little context on that, if we look at our 2 banners, if we look at Matas, you'll see we have a split in terms of our product portfolio of roughly 1/3 in High-end. We have 1/3 in Mass Beauty and 1/3 in Health & Wellbeing. So a good split to provide choices for our consumers on all different elements. When we look at KICKS, we are a more High-end business. We've known that from the beginning, and that's part of the strategy to broaden our offering to the consumers in Norway, Sweden and Finland. Currently, we are still 76% and 24% Mass Beauty. So predominantly a High-end business. When we then have been through a quarter of a down trading from High-end. You can see basically last year, we grew the business around 10% in High-end. This year, High-end is declining. That has an impact on both Matas and on KICKS. But as KICKS is predominantly in the High-end, of course, the impact has been more severe, and that's the outcome basically our performance in Q3. So what we're doing right now, and that's really going into what we also mentioned earlier is the acceleration plan, specifically focusing on KICKS, but also has, of course, some impact as we share best knowledge and we share learnings across, it also will have an impact on Matas. And what we're looking at is basically marketing efficiency. This has a lot to do with our campaigns, how we go to market. the good offers we provide to our consumers. It's about pricing, making sure that we have the right pricing in the market. That doesn't mean that we need to go out and price fight. I think the discipline we had in Q3, focusing on delivering the right pricing to the market, delivering the right gift presence, our Christmas packages, et cetera, et cetera, to our consumers is the right strategy. We did not go into a price war, and this does not mean a price war either. We're looking at assortment. And of course, that will help us to balance the split in KICKS from a 75%-24% into a more balanced assortment and pricing. And last but not least, we are also looking at our in-store productivity. So basically sharing best practices from Matas to KICKS from KICKS to Matas in terms of how do we get more impact in our stores, how do we provide an even better service to our customers. We have very strong scores from our customers when they do business with us, when they shop online, when they shop in our stores and the way that we advise and give them the guidance in their choices. So very strong consumer acceptance of what we are doing. We just want to do even more, and that's what we're looking at. And we do all that. And I think Q3 also showed that we are doing all this, but still keeping a very clear look at our cost base and keeping a very strong cost discipline in our group. So that was more overall. So let's move into the more hardcore numbers. And when we look at the performance for this quarter, as already mentioned, we have 4.8% growth in Matas. KICKS a negative of 3.2%, excluding Skincity, and then we have others growing 12.4%. So very strong growth also coming from our subsidiaries. When we look at the channels, stores is flat. The growth we're getting is coming from e-com. This is also a reflection of the challenges that we just talked about in terms of our business in the KICKS markets. Wholesale growing very nicely, which is a reflection of our Web Sundhed business. So overall, as just mentioned, 1.8% growth for the group in the quarter, 3.1% reported. Going into the gross margin. And here, you will also see a little mixed outcome from the quarter. If we start with Matas, a gross margin going down. This has -- is basically linked into a couple of things. One thing is the product mix. As you saw, High-end was also impacted in Matas, and different margins in the different categories where High-end is declining. And in addition to that, a more centralized purchase around the Black Week, even higher purchases. And when we then have a very fast delivery, that means that every -- all orders, all revenues related to the Black Week in November is included in November, whereas last year, we did had a tail of deliveries coming into December and also impacting December. So a little bit of timing, but predominantly linked into the more concentrated purchases within the Black Week and in the month of November. When we look at Sweden, we have adjusted for FX, and I think that's the comparable number. we have an improvement of the gross margin. And that is linked in to the fact that a lot of the activities that we ran in Sweden and the campaigns were impacted by the pricing level that some of our competitors had in the market, meaning that our campaigns did not have the amount of sales as we would normally see. We instead had a good performance in terms of our ordinary sales. We had a Christmas where we delivered a lot of Christmas packages, gift packages, and had more normal sales in December, which basically ended up having a mix for the quarter with more normal sales and less impact from the campaigns, which drives the gross margin above last year. And I just wanted to emphasize that we had a very strong discipline in the way we went to market in terms of our campaigns, in terms of the way they were executed, and we did not -- we decided not to go into the very, very low pricing as we saw in the market. When we look at our cost, and this is really where we look at a business where we declined cost 0.5% compared to last year despite that we have reported sales growth of 3.1%. And what the key element there is really strong focusing on the way that we manage the business on an ongoing basis. This year, we had the 2 new facilities operating. So we had MLC, KLC fully automated in operation throughout the quarter. As I just mentioned, a very strong execution in those 2 facilities. In terms of our salary, overall, we are managing that with -- in our stores to make sure that we have the right level of personnel in place to make sure we provide very strong service, very good service to our consumers, but also taking into account the movements we see on revenues. So we managed to keep our costs in line with revenues, and actually, as you can see, declining, which shows the impact of having lower salary costs. Does that mean we didn't invest in the market? No. We invested and we invested more marketing costs versus previously, also supporting the customer traffic and to protect basically our competitiveness. Especially in a quarter where things went a little bit hard on pricing, we kept the focus, we kept the discipline. And I think that is reflected in our cost base and the way that we manage the result for the quarter. So net-net, we ended up in a quarter where we delivered 16.7% EBITDA compared to -- slightly down compared to last year, adjusting for the currency headwind. Core online growth, 5%, not to the levels we've seen in previous quarters, but taking into account also what happened in our KICKS markets. A mix in gross margin, as I just went through and then I think a cost base, which we managed throughout the quarter very successfully. Moving in from the P&L into our balance sheet. And I think we talked about this quarter, last quarter as well, is our inventories. And when we look at the right side, you'll compare the inventories to last year, and we started this year being in a higher place. We are still in a higher place. But if we look in the quarter, we actually decreased inventories with almost DKK 300 million in the quarter. So part of our plans on focusing on our inventories, getting the inventories down is progressing as planned. Although, comparing to last year, we're still above. We also have significantly higher sales, of course, when we look at the full year. Looking at our cash flow and also looking at our working capital, you'll see, in this quarter compared to last year, slightly higher working capital, which is, of course, linked into our inventories and payables. And as we lower our inventories, we're not buying that much and thereby we get less payables, and that is basically what is reflected in this quarter. We are spending less on CapEx as last year, we had the 2 MLC -- we had Matas MLC, the last payments, which basically generates a free cash flow of around DKK 400 million for the quarter. And we invested in the special items as announced earlier in the year, which is all linked to the synergies that will be released next year. And that brings me to the gearing for our group, which at the end of Q3 is 2.9x, of course, impacted by the movements in our working capital and also impacted by the fact that going into a quarter like this and not hitting full expectations on our top line, that will trickle down also in our working capital and so forth. Long term remains unchanged, between 2x to 3x. We're currently in the high end. And of course, we'll be focusing on this as we move forward, both from a gearing level, but also from a working capital perspective. And that brings me to the last piece. We announced, in the beginning of January, our guidance for this year, 3% to 4% and an EBITDA margin of 14% to 14.5%. And we are sticking to that. We feel comfortable in delivering inside that guidance as we have now announced the Q3 numbers. And with that, I would hand over to the operator for any questions.

[Operator Instructions] The first question is from the line of Sebastian Grave from Nordea.

First one is on the KICKS deceleration and your accelerated plans to broaden the KICKS offer. So, as you alluded to, fairly significant deceleration in the quarter in KICKS. And I mean, reading through peer reports, to be fair, this seems to be a general market issue and also seems to be impacted by a more aggressive pricing strategy from one of your peers in particular. Now you talked to the efforts to accelerate the mass market offering in KICKS. Can you just help me understand what are you exactly doing different from what you have been doing all the way since summer '24 when you launched the Win the Nordic strategy first time? Because to my knowledge this focus on mass market has been part of the strategy all the way along. That will be my first question.

I think the different approach that we're taking right now in terms of what we just announced in terms of acceleration, one of the elements is the assortment. I think the learnings that we're getting out of Q3 is, really that to be even more relevant to our consumers across the KICKS markets, we need to be able to provide a wider assortment. So we've already have that plan. And I think the acceleration is even more focused on the speed and how we can accelerate that introduction of new brands and different price levels within each of the categories. And that's basically what we're looking at. And as you also saw, another point of the acceleration was around in-store, so how do we make sure that we, from a store perspective, will also be able to provide an even wider assortment to our consumers. So when we say acceleration, it's actually taking the plans that we already have and then trying to push them even faster forward as we move into first quarter, but also moving into the next financial year.

Okay. That makes sense. I mean, following up on that, part of the efforts as you look to is around the pricing. And you said previously that -- earlier in the call here that your pricing was right in the quarter. That it was the right strategy to remain disciplined despite the fact that some of your peers are appearing very aggressive, and despite the fact that you are -- it appears from the growth levels here in the quarter that you are losing market shares. So what's the pricing? Or is the current pricing right in KICKS? Or I mean, is it also fair to assume that your pricing efforts are going to change? And so is your gross margin performance in the KICKS banner going forward?

I think I would put it this way, Sebastian, that a lot of things moved around in Q3. I think we were looking at all the activities in the market. Also looking at our own plans, looking at everything we've done in Q3, we had a pricing in the market, and I think a lot of subsequent announcements have proven that, that has been going too far in terms of providing too aggressive pricing. We did not follow. That was a deliberate choice. On the other hand, as you saw in Q3, from a KICKS perspective is really our share of normal sales, which have a good indication on the consumers is actually still connected to KICKS and is still -- have a preference for KICKS is that we had a higher normal sales than what we usually see. And I think that is what we would like to accelerate that connection we have with the consumers as we move forward into the next quarter and into the next financial year, that how do we then provide even more choices to our consumers under different categories and within both High-end and Mass Beauty. And to your point, does that mean lower prices? I think it means the right prices, the right products, and then we'll manage the margins and our cost base according to that.

Then another question, I'll jump back in the queue. Just on the balance sheet here, and on Slide 19, you alluded to increased near-term focus on deleveraging despite you being within the midterm range of 2x to 3x EBITDA. So I'm just wondering what number are we steering for here? And where does this leave the prospect of further near-term buybacks?

I think from an overall gearing perspective, we've set out the guideline between 2x and 3x. And during the year, we've been slightly above the 3x for a short period. I think our focus will continue to be at -- staying within that guideline. Having said that, we are completed with all the big investments in our logistics centers. And when you look at our cash flow also for the coming year, from the coming periods, that will eventually mean an improvement of our gearing as we continuously grow the business. In terms of share buyback and impact, that's something that will come out once we've closed the year, and we've had that discussion with our Board. So, not much more to say on the buyback for present.

The next question is from the line of Yiwei Zhou from SEB.

Its Yiwei from SEB. I have 2 follow-up questions here. Also on the KICKS, Per, I can understand your answers regarding sort of your strategy, want to grow the product assortments, want to go down to the Mass Beauty segments and more relevant in Sweden. But I also understand that the market and also the Mass Beauty segment is very -- the competition is very intense. What makes you confident that you can drive a profitable growth in this segment? And is it also fair to assume that, going forward the balance between sort of the price discipline and also -- and the profitability will be changing towards more growth focused than the margin? I'll do the next question later.

Okay. I think a lot of good questions in the same. But let me try and give you my perspective on it. I think when we look at our strategy within the Nordics, it's still the same strategy we have. Part of that strategy was to provide more choices in terms of brands, products in different categories, on different levels, so both within High-end and Mass. That's the journey we are still on. What we're doing right now is we are accelerating that. And then you can say, from Q3 where we see a lot of our loyal customers actually continuing to stay with our business in KICKS, in Matas and the huge loyalty club we have of more than 6 million members, by providing more choices to our membership club within the different categories and within High-end and Mass, we have a strong belief that that's the right way forward. We also believe that being able to provide the choices, being able to provide the big network of stores, and being able to provide the service and guidance to all our customers, as well as having our online business and that omni-channel, we have a strong belief that is what's going to be the winning formula as we move into next year as well. And then I also just want to say, we had a Q3 in so many ways was so different than what we've seen before. I think it's very important that we stay on the path, we stay on our strategy, and we stay focused on the plans that we have. Right now, we're trying to accelerate those to get even more impact in a faster speed, and that will be the focus as we move forward. Does this change the discipline in terms of margin versus growth? We are growth business. We'll continue to be looking at how do we grow the business, how do we take share in the market, and that will not change. We will also have a strong discipline in terms of how we manage our financials, how we manage our costs. But I see those 2 things go very well hand in hand.

And then next question, also a follow-up question on the pricing behaviors with your competitor in Sweden. Do you see this as a new norm in the market? Or you think this would be a temporary issue?

I don't -- well, it's not for me to make a conclusion on our competitors, I think. But I would be surprised if this is a new normal. I think this was a quarter that, for whatever reason, ended up as it did. I don't think we'll see the same impact as we move forward.

And if I may ask one more question here, a very quick question. In Slide 11, you showed this segment growth. And can you split and break down to Matas and KICKS? And what was the growth for the Mass Beauty segment -- for this business?

I think you will find all the details in the Q3 report where we have split by the different segments, both for Matas and KICKS. But what you're seeing is, on the Matas side, Mass Beauty and Health & Wellbeing is growing. You also see growth in KICKS on the Mass. And I just want to maybe draw the attention to what I talked about earlier on our in-house brands, Nilens Jord and BeautyAct, as we just launched those and relaunched BeautyAct, but launched Nilens Jord in September. Getting out of a quarter where a lot of challenges in the market, but still being able to grow our in-house brands with above 30%, I think it just shows the perception from our customers on brands, on different pricing, strong brands, strong products basically. And I think that's just an indication of the opportunities we have in the market.

Next up, we have a follow-up from Sebastian Grave from Nordea.

Per, its Sebastian again. I have a question regarding the FX margin adjustment that you allude to here. And you've done it for a while now. I'm just wondering what -- how should we think of this FX sensitivity going forward? And the fact that you continue to allude to an adjusted margin performance, is it that we are going to expect you to offset this FX headwind in the KICKS business going forward? Or is it more you forecasting on -- and expecting a reversal of the current FX movements? That was my question.

I think in terms of FX, I think what we are reflecting in our report is really the underlying or at least we're trying to demonstrate to you what's the underlying movements, because KICKS in this quarter is on an underlying basis, like-for-like, if there was no movement in the currencies, we would have been gaining on our gross margin. I think that's a very important message for everybody looking at our numbers. So that's just the importance of why we actually show the numbers. From an FX perspective, we're looking in options and evaluating how do we progress into the next financial year in terms of managing the FX and getting out of the impact we had this year. I think this year has been a very different year. It's been a year where we have very strong improvement on the Swedish krona and on the contrary on the Norwegian, and that is basically what is impacting us. If that moves forward, I think our task as managing the business is to find ways and how to mitigate that, and make sure it gets as least possible impact on our performance as we move forward. And that will be the focus we have also moving into the next financial year.

That's clear and completely fair to shed light on the underlying performance. Then my last question, I promise, just on the implied guidance for Q4. It appears, at least on my calculation, that you guide for roughly a percentage point margin uplift compared to Q4 last year. Could you just remind us why is it we should expect margins to go up year-over-year when you had several quarters with the opposite?

I think there's a couple of things to that, Sebastian. It is a little bit also with the timing between quarters. It's on the funding mechanics with our suppliers, and it has also to do with what's in the base last year and what are we looking into this year. And then you can say -- an important thing is also, when we look at last year's number in Q4, we did not have an automated facility as we have right now in MLC. And there's other moving parts. I think when we did the updated guidance, 14% to 14.5%, that's still where we believe we'll close the year.

Okay. That's fair. But no sort of clear signs of improving end market dynamics or more benign pricing environment or anything like that supporting this?

I think it's too early to say. We're just 1 month into the quarter and trying to -- still trying to analyze all the movements that we saw in last quarter, of course, moving forward into the last couple of months of this quarter.

Next question is from Poul Jessen from Danske Bank.

I think my question was on the last one that Sebastian had about what you've seen in this quarter. I think Apotea was out saying that they see continued tough competition into this year. But I don't know if you will comment. It doesn't seem so. But when you talk about that you, going forward, will have right prices, and we've seen that competition at least in this quarter and also commenting that the Christmas quarter next year, next financial year is not expected to see major differences. So when you say right prices, I must assume that you also want to be more competitive? Or are you sitting on the bench hoping that people getting more rational?

I think, Poul, when we look at the business, of course, we always evaluate what's the right pricing in the market on all our products. We look at our campaigns and the effectiveness of our campaigns, a little bit the marketing effectiveness, as I was referring to. And all these things combined with providing the right assortment, which basically also means products on different pricing levels in the market, I think we believe that we will be able to have the right plan, the right activities, and the right pricing in the market as we move forward. And then, of course, we will follow what the competition does as we move forward as well to make sure that we stay competitive in the market. And having said that, still what we are very much focused on is our omni-channel setup. We have more than 500 stores where we meet our customers every day. We provide the right service, the right guidance. And they -- from the feedback we get, they really enjoy doing business with us. And we'll continue to expand that and improve that. And as I also mentioned, launching the approximately in the KICKS market will definitely also provide an even closer link to our customers.

And when we talk about you pushing more on the mass market exposure in Sweden, what about the Wellbeing? Are you also taking that into the KICKS stores?

We are also looking at expanding inside with Wellbeing. I think we mentioned that earlier, and that's part of our plans. What we're looking at now, and that's also part of the acceleration, is timing. And when we will be able to put that into the market in our KICKS business. So yes, Wellness is also part of our plans.

Because there are no further questions, I will hand it back to you, Per, for any closing remarks.

Thank you for listening in. It's been a quarter with mixed results. A strong Matas, another record quarter; KICKS, where we were facing challenges. I'm very confident in the plans that we are now putting in place to accelerate our Win the Nordics, and then I'll be looking forward to coming back reporting once we get to the Q4 results. Thank you.