Klas Balkow President & CEO Q2 Report 2016/17 7 December 2016 - PowerPoint PPT Presentation

Klas Balkow President & CEO Q2 Report 2016/17 7 December 2016

Agenda • Q2 2016/17 • Six months 2016/17 • Events after period-end • Strategic update • Q&A 2

High energy and strong position 212 stores in 76 million visitors 4,700 6 countries service-minded 39 million customers employees omni-channel structure One of the High focus on R12 sales strongest brands sustainability 7.7 billion SEK agenda in retail in the Nordics 3

Highlights • Good sales development • Operating profit negatively effected by currency • Further steps in international agenda − Additional stores and e-com in Germany − New franchise store in Dubai − Continued store optimisation in UK • Strong sales in November − Positive start in Q3 4

Q2 2016/17 August – October 5

Sales Q2 +6% MSEK 1,957 • Sales up 5% in local currencies 1,846 1,814 • LFL sales 3% 1,678 1,614 • Sales 1,957 MSEK, up 6% • 1 additional store net compared to end of period last year (3) − 3 store openings and 2 store closures in the quarter Q2 Q2 Q2 Q2 Q2 12/13 13/14 14/15 15/16 16/17 6

15 September 6 October 27 October Hamburg – Germany Oslo – Norway Stockholm – Sweden 7

36 Sales share per market stores 76 stores Outside Nordics 86 Finland stores 9 4% stores 11% 3 stores 46% Sweden 39% 2 stores Dubai Norway * Number of stores as of end of November 2016 8

Sweden Consumer Confidence 110 105 100 95 90 85 Source: www.konj.se 80 Sweden Retail Index 108 105 102 99 Source: www.hui.se 96 Source: HUI Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 12/13 13/14 14/15 15/16 16/17 9

Sweden Q2 MSEK • Sales up 4% to 879 MSEK (847) • Total 86 stores (82) +4% − 1 new store during Q2 879 847 803 − 4 additional stores net compared 771 742 to preceding Q2 • Solid position in a stable market Q2 Q2 Q2 Q2 Q2 12/13 13/14 14/15 15/16 16/17 10

Norway Consumer Confidence 9 6 3 0 -3 -6 -9 Source: www.opinion.no -12 Norway Retail Index 106 104 102 100 98 Source: www.ssb.no 96 Source: SSB Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 12/13 13/14 14/15 15/16 16/17 11

Norway Q2 MNOK • Sales up 6% in local currency • Sales 779 MSEK (716), up 9% +6% 746 704 • Total 76 stores (74) 674 629 − 1 new store during Q2 583 − 2 additional stores net compared to preceding Q2 • Increased market share in an improved market Q2 Q2 Q2 Q2 Q2 12/13 13/14 14/15 15/16 16/17 12

Finland Consumer Confidence 20 15 10 5 Source: www.tilastokeskus.fi 0 Finland Retail Index 108 106 104 102 100 98 Source: www.tilastokeskus.fi 96 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 12/13 13/14 14/15 15/16 16/17 13

Finland Q2 • Sales up 15% in local currency MEUR • Sales 223 MSEK (190), up 17% +15% • Total 34 stores (33) 23.3 − No new stores during Q2 20.2 19.3 18.1 − 1 additional store net compared 16.5 to preceding Q2 • Increased market share and strengthened brand position in a soft market Q2 Q2 Q2 Q2 Q2 12/13 13/14 14/15 15/16 16/17 14

UK DE Outside Nordic countries Q2 UAE • Sales down 8% in local currencies MSEK 93 • Sales 75 MSEK (93) 84 • Total 12 stores (13), whereof 1 franchise 75 − 1 new store during Q2 65 63 − 2 stores closed during Q2 • Soft development in UK influenced by restructuring and currency • Positive start in Hamburg Q2 Q2 Q2 Q2 Q2 12/13 13/14 14/15 15/16 16/17 15

Gross margin Q2 % 44.8 • Gross margin down 2.4 percentage 43.9 43.3 42.0 41.5 points to 41.5% • Negative currency impact (NOK) Q2 Q2 Q2 Q2 Q2 12/13 13/14 14/15 15/16 16/17 16

Negative hedging effects in NOK SEK/NOK 1.15 1.10 1.05 1.00 0.95 Jan July July Jan 2015 2015 2016 2016 17

Currency development SEK/USD 9.2 8.7 8.2 7.7 7.2 6.7 6.2 SEK/NOK 1.20 1.15 1.10 1.05 1.00 Source: Sveriges Riksbank 0.95 Jan Jan Jan Jan Jan 2012 2013 2014 2015 2016 18

Share of selling expenses % 33.7 33.4 • Share of selling expenses 32.4%, 32.9 32.9 32.4 down 1.0 p.p. in the quarter + Lower cost in UK – Partly offset by costs for establishment in Germany + Somewhat lower marketing spend to be balanced out during 2016/17 Q2 Q2 Q2 Q2 Q2 12/13 13/14 14/15 15/16 16/17 19

Profit Q2 Operating profit Operating margin MSEK % 10 • Operating profit amounted to 127 MSEK 151 145 − Effected by negative currency hedging NOK 127 8 126 • Operating margin amounted to 6.5% • Earnings per share 1.53 SEK 102 6 4 2 0 Q2 Q2 Q2 Q2 Q2 12/13 13/14 14/15 15/16 16/17 20

Six months 2016/17 May – October 21

Sales Q1-Q2 MSEK +3% • Sales up 4% in local currencies 3,720 • LFL sales 1% 3,616 3,457 3,184 • Sales 3,720 MSEK, up 3% 3,076 • 6 additional stores net compared to end of period last year (10) Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 12/13 13/14 14/15 15/16 16/17 22

Profit Q1-Q2 Operating profit, Operating margin MSEK R12, % 10 • Operating profit 202 MSEK 253 250 − Effected by negative currency hedging 218 − Impacted by start-up cost for Germany 8 203 202 • Operating margin 5.4% 6 • Earnings per share 2.44 SEK 4 2 0 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 12/13 13/14 14/15 15/16 16/17 23

Investments MSEK 126 • Total investments 126 MSEK (115) 115 107 • New stores and refurbishments 64 MSEK (40) 94 • IT-systems 44 MSEK (56) 68 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 12/13 13/14 14/15 15/16 16/17 24

Financial position • Cash flow from operating activities was 44 MSEK (322) − Inventory 1,989 MSEK (1,764) − Inventory turnover rate DC 6.4 (6.4) • Cash flow after investments and financing activities of -389 MSEK (-155) • Net cash holdings of 100 MSEK (354) after dividend payout in September 25

Events after period-end

November sales +12% 908 • Sales 908 MSEK, up 12% MSEK 809 • Sales up 9% in local currencies 746 702 − Sweden +10% 662 − Norway +10% − Finland +9% − Outside Nordic countries -20%* • 7 additional stores net compared to end of November last year (9) *Effected by store optimization in the UK Nov Nov Nov Nov Nov 12/13 13/14 14/15 15/16 16/17 27

3 November 10 November Helsinki – Finland Jyväskylä – Finland 15 November 24 November Hamburg – Germany Dubai – UAE 28

Christmas gift of the year • HUI Research assigned the VR headset the Christmas Gift of the Year Award • Clas Ohlson carries headsets from 29 SEK to 999 SEK • Sales boost the week of the announcement with 1,500 per cent 29

Christmas gift favourites • Broad range of gifts for the whole family • Products for the smart home a strong category this Christmas • Increasing interest in head phones with volume limiter • Best-selling stove fan popular in the Nordic markets …and much more 30

Strategic update 31

New store concept • The first smaller format store in Sweden opened in October in Stockholm − Retail space of approx. 300 square meters • New name Clas Ohlson Compact Store • Great reception by customers 32

New rental concept • New rental concept ”Rent at Clas Ohlson” under evaluation − 4 pilot stores in Sweden, 2 in Norway − Hand tools and power tools from the Cocraft PRO Edition series 33

New product initiative • Crowd sourcing of innovative products that support a more sustainable lifestyle − Directed towards inventors, entrepreneurs, start-ups and students • More than 120 sustainable product innovations submitted − Ten finalists announced mid December − Winning products announced end of January • The winning products will be sold and marketed in all our channels 34

Update UK development • New smaller store format cluster in London − Positive sales development month by month • Optimising store network − Norwich and Cardiff closed in Q1 − Doncaster and Leeds closed in Q2 − Watford to close in March 2017 at the latest − Croydon to close (date to be confirmed) − 1 additional store to close (date subject to negotiations) 35

Update Dubai expansion • New franchise store opened in Mercato shopping centre in November − 140 stores in shopping centre − 5 million visitors per year 36

Update German expansion • Three stores opened in Hamburg − Central Hamburg, Jungfernstieg, in May − Altona in September − Alstertal in November • E-com launched in October • Promising start − ATV and conversion rate − In-depth shopping of our range offer − Private label highly appreciated 37

Update new business system • Continued development and implementation of new ERP platform − Improved inventory planning − Benefits from true omnichannel platform − Scalable platform for future growth • Estimated annual investment of 50-70 MSEK during a five year period (year 2013/14 to 2018/19) − Updated estimate suggests outcome in the higher range • Scope of sCORE has expanded − Related to warehouse and transportation system − Related to customer data and e-com • Additional annual investment of approximately 75 MSEK during a two-year period 38