Q1 2027 Clas Ohlson AB Earnings Call

September 3, 2026

Speaker #1: Welcome to the Clas Ohlson Q1 2026-2027 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the Q&A session, participants are able to ask questions by dialing #5 on their telephone keypad.

Operator: Welcome to the Clas Ohlson Q1 2026/2027 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing hash 5 on their telephone keypad. Now I will hand the conference over to CEO Kristofer Tonström and CFO Pernilla Walfridsson. Please go ahead.

Speaker #1: Now I will hand the conference over to CEO Christopher Tonström and CFO Pernilla Walfordson. Please go ahead.

Speaker #2: Good morning, and welcome to the Clas Ohlson Q1 report presentation. My name is Christopher Tonström, and I'm the CEO. I'm here together with Pernilla Walfordson, our CFO.

Kristofer Tonström: Good morning, and welcome to the Clas Ohlson Q1 report presentation. My name is Kristofer Tonström, and I am CEO, and I am here together with Pernilla Walfridsson, CFO. Looking at today's agenda, we will cover the general business updates, move into financial developments, go through events after the reporting period, and then I will summarize before we will move into a Q&A. First of all, highlighting the first quarter of 2026/2027. We have had a strong start to our new year. We continue to grow, we grow profitably, and we also continue to create value. Looking at total sales, organically, we were up 11%, and our operating profit amounted to SEK 339 million, resulting in an operating margin of 12% and a profit increase of approximately a bit more than 40% versus last year. Operating cash flow came in at SEK 663 and return on capital employed came in at 34.9.

Speaker #2: Looking at today's agenda, we'll cover the general business update, move into financial development, go through events after the reporting period, and then I'll summarize before we move into a Q&A.

Speaker #2: So, first of all, highlighting the first quarter of 2026/2027: we have had a strong start to our new year. We continue to grow, we grow profitably, and we also continue to create value.

Kristofer Tonström: We continue to grow, we grow profitably, and we also continue to create value. Looking at total sales, organically, we were up 11%, and our operating profit amounted to SEK 339 million, resulting in an operating margin of 12% and a profit increase of approximately a bit more than 40% versus last year. Operating cash flow came in at SEK 663 and return on capital employed came in at 34.9. All in all, this is resulting into an earnings per share of SEK 4.75 versus SEK 3.27 last year.

Speaker #2: Looking at total sales organically, we were up 11%, and our operating profit amounted to $339 million, resulting in an operating margin of 12% and a profit increase of a bit more than 40% versus last year.

Speaker #2: Operating cash flow came in at $663, and return on capital employed came in at 34.9%. So, all in all, this is resulting in earnings per share of 4.75 versus 3.27 last year.

Kristofer Tonström: All in all, this is resulting into an earnings per share of SEK 4.75 versus SEK 3.27 last year. Today, we also reported August, which is then the start to our second quarter, and here we saw an 8% organic growth. Then moving into the business update and starting with our financial targets that we updated back in June when we had our capital markets day. The ambition is to, over the next three years, every year, to grow at 5% organic every year, deliver around 12% operating margin and around 30% return on capital employed. These targets, they define the level of performance that we believe Clas Ohlson should be able to sustain over time. They are not a forecast for a year or quarter and it is certainly not a ceiling.

Speaker #2: Today we also reported August, which is then the start of our second quarter, and here we saw 8% organic growth. Then, moving into the business update and starting with our financial targets that we updated back in June, when we had our Capital Markets Day.

Kristofer Tonström: Today, we also reported August, which is then the start to our second quarter, and here we saw an 8% organic growth. Then moving into the business update and starting with our financial targets that we updated back in June when we had our capital markets day. The ambition is to, over the next 3 years, every year, to grow at 5% organic every year, deliver around 12% operating margin and around 30% return on capital employed. These targets, they define the level of performance that we believe Clas Ohlson should be able to sustain over time. They are not a forecast for a year or quarter and it is certainly not a ceiling.

Speaker #2: The ambition is to, over the next three years, grow organically by 5% each year, deliver around a 12% operating margin, and achieve approximately 30% return on capital employed.

Speaker #2: And these targets define the level of performance that we believe Clas Ohlson should be able to sustain over time. They are not a forecast for a year or a quarter.

Speaker #2: And it's certainly not just a feeling. And our ambition is not simply to reach the targets. It's really to prove that strong growth, profitability, and efficiency can coexist over several years.

Kristofer Tonström: Our ambition is not simply to reach the targets, it is really to prove that strong growth, profitability, and efficiency can coexist over several years. Next area is just an overview of our competitive strengths. I think the results coming out of the first quarter are really driven by those strengths and the combination of, first of all, our assortment, where we do have our multi-niche assortment that we reinvent at a very high degree every year. In the first quarter, we saw lots of new products being launched while we, of course, have really focused also on the core assortment. We have our integrated omni-channel with our store network at attractive and accessible locations, combined with a strong, growing and profitable e-com business. Those two in combination really drives customer convenience and also it drives profitable growth.

Kristofer Tonström: Our ambition is not simply to reach the targets, it is really to prove that strong growth, profitability, and efficiency can coexist over several years. Next area is just an overview of our competitive strengths. I think the results coming out of the first quarter are really driven by those strengths and the combination of, first of all, our assortment, where we do have our multi-niche assortment that we reinvent at a very high degree every year. In the first quarter, we saw lots of new products being launched while we, of course, have really focused also on the core assortment. We have our integrated omni-channel with our store network at attractive and accessible locations, combined with a strong, growing and profitable e-com business. Those 2 in combination really drives customer convenience and also it drives profitable growth.

Speaker #2: The next area is just an overview of our competitive strengths. And I think the results coming out of the first quarter are really driven by those strengths and the combination.

Speaker #2: First of all, our assortment: we have our multi-niche assortment that we reinvent to a very high degree every year. In the first quarter, we saw lots of new products being launched, while of course we have also really focused on the core assortment.

Speaker #2: We have our integrated omnichannel, with our store network at attractive and accessible locations, combined with a strong, growing, and profitable e-commerce business. And those two in combination really drive customer convenience and also drive profitable growth.

Speaker #2: And then the last area is that when it comes to the customer meeting, of course, the ambition is to always deliver qualified service across the board.

Kristofer Tonström: The last area is when it comes to the customer meeting, of course, the ambition is to always deliver qualified service across the board. We could see in the quarter that we had an NPS of 56, which is really continued strong levels. As a foundation of everything, we have our strong brand where we do have a very broad appeal across multiple target audiences. As one example of recent product launches and big bets that we have gone after now in Q1, I think the robotic lawn mowers assortment is a good example. Here we have scaled up the business from 5 to 12 different brands, and we have seen really strong sales growth. We also see a range ranging from very affordable private label products on robotic lawn mowers up to the most premium A brands.

Speaker #2: And we could see in the quarter that we had an NPS of 56, which is really continuing at strong levels. And then, as a foundation of everything, we have our strong brand, where we do have a very broad appeal across multiple target audiences.

Speaker #2: And as one example of recent product launches and big bets that we have gone after now in the first quarter, I think the robotic lawnmowers assortment is a good example.

Speaker #2: Here we have scaled up the business from 5 to 12 different brands, and we have seen really strong sales growth. We also see a range, from very affordable private-label products on robotic lawnmowers, up to the most premium A-brands.

Speaker #2: And I think that combination really gives customers the opportunity to find the right product according to their needs and wallet. Also, looking at the online business, organic online sales growth was 18% in the quarter, and our online sales now represent 22% of total sales.

Kristofer Tonström: I think that combination really gives customers the opportunity to find the right product according to their need and wallet. Also looking at the online business, the online sales growth organically was 18% in the quarter, and our online sales now represents 22% of total sales. Again, I think it's a good example of the robotic lawn mowers. Most of that assortment has only been available online and obviously also then been a driver of the sales growth. Then moving into some of the key indicators that we constantly track and look at when it comes to customer relevance and satisfaction. Starting with product reviews, we do get a lot of reviews from our customers when it comes to their satisfaction with our products, quality, et cetera. We can see also this quarter that we continue to deliver on very solid levels.

Speaker #2: And again, I think it's a good example—the robotic lawnmowers. Most of that assortment has only been available online, and obviously that's also been a driver of the sales growth.

Speaker #2: Then moving into some of the key indicators that we constantly track and look at when it comes to customer relevance and satisfaction. Starting with product reviews, we do get a lot of reviews from our customers when it comes to their satisfaction with our products, quality, etc.

Speaker #2: And we can see also this quarter that we continue to deliver at very solid levels. Second, we also deliver when it comes to affordability.

Kristofer Tonström: Second, we also deliver when it comes to affordability. We're not pushing growth at the expense of the customer experience. However, we are able to deliver a strong affordability versus customer expectations. Last but not least, when it comes to the service and the customer experience, again, Net Promoter Score coming in at 56. We're basically growing because customers continue to find relevant products at great value and with best-in-class service. Last point from my end, outlining also our consumer missions. We did a few adjustments to these categories as we presented our future plan during the capital markets day in June. As we can see on the slide, you have the 5 consumer missions, and they are all growing profitably now during the last quarter. So it's the breadth of that growth that is important.

Speaker #2: We're not pushing growth at the expense of the customer experience. However, we are able to deliver strong affordability versus customer expectations. And then, last but not least, when it comes to the service and the customer experience again, Net Promoter Score coming in at 56.

Speaker #2: So, we're basically growing because customers continue to find relevant products at great value and with best-in-class service. So, last point from my end: outlining also our consumer missions.

Speaker #2: We made a few adjustments to these categories as we presented our future plan during the Capital Markets Day in June. As we can see on the slide, you have the five consumer missions, and they are all growing profitably now during the last quarter. So it's the breadth of that growth that is important.

Speaker #2: And then we have the adjacent product segments and spare parts contributing to both growth and profitability. So with that, I'll hand over to Pernilla to take us through the financial developments.

Kristofer Tonström: Then we have the adjacent product segment from spare parts contributing to both growth and profitability. With that, I'll hand over to Pernilla to take us through the financial development.

Speaker #1: Thanks, Yusuf. And good morning, everyone. Yes, like Christopher mentioned, we have closed a strong Q1, and now let's take a closer look at the figures.

Pernilla Walfridsson: Thanks, Kristofer, and good morning, everyone. Just like Kristofer mentioned, we have closed a strong Q1, and now let's take a closer look at figures. The sales momentum continues, and net sales were up 16% in the quarter, of which 11% relates to organic sales increase, 3% relates to our recently acquired subsidiaries, and currency effect 2%. Like-for-like growth accounted for 9% of growth in the quarter and 1% relate to expansion of the store network. Online sales grew by 35% in total, of which acquisitions stood for 15%. Compared to the end of Q1 last year, we have increased the store network by 9 stores. Looking at the home market, we saw great performance throughout the quarter with strong organic growth across the board. Sweden grew by 11%, Norway 10%, and Finland 9% organically. The macro environment is still volatile.

Speaker #1: The sales momentum continues, and net sales were up 16% in the quarter, of which 11% relates to organic sales increase, 3% relates to our recently acquired subsidiaries, and currency effect 2%.

Speaker #1: Like-for-like growth accounted for 9% of growth in the quarter, and 1% related to expansion of the store network. Online sales grew by 35% in total, of which acquisitions accounted for 15%.

Speaker #1: Compared to the end of Q1 last year, we have increased the store network by nine stores. Looking at the whole market, we saw great performance throughout the quarter, with strong organic growth across the board.

Speaker #1: Sweden grew by 11%, Norway by 10%, and Finland by 9% organically. The macro environment is still volatile. During the Q4 report presentation, we mentioned that we expected freight costs to increase, and as we can see, spot prices for transportation from Asia to Europe have increased sharply in recent months.

Pernilla Walfridsson: We said during the Q4 report presentation that we expected freight costs to increase, and as we can see, spot prices for transportation from Asia to Europe has increased sharply in recent months. We see no impact from the increase in the first quarter, but there should be effects starting in Q3, Q4. Regarding currencies, we mentioned the negative effect of currency hedging in the report, and the background is visible here on the slide with a rapid and significant strengthen of the NOK versus the SEK. The flip side is obviously the positive impact on total sales as we have a large share of our sales in Norway. Regarding currency hedging, we have decided to discontinue currency hedging as from now. After thorough analysis, we assessed that it does not create sufficient long-term value. Hedging has primarily shifted the timing of the impact rather than removing the underlying exposure.

Speaker #1: We see no impact from the increase in the first quarter, but there should be effects starting in Q3 and Q4. Regarding currencies, we mentioned the negative effect of currency hedging in the report, and the background is visible here on the slide with a rapid and significant strengthening of the NOK versus the SEK.

Speaker #1: The flip side is, obviously, the positive impact on total sales, as we have a large share of our sales in Norway. Regarding currency hedging, we have decided to discontinue currency hedging as from now.

Speaker #1: After thorough analysis, we assessed that it does not create sufficient long-term value. Hedging has primarily shifted the timing of the impact, rather than removing the underlying exposure.

Speaker #1: With more efficient pricing practices, a higher proportion of e-commerce sales, and a strong financial position, we believe that short-term currency risk can be managed.

Pernilla Walfridsson: With more efficient pricing practice, a higher proportion of e-com sales, and a strong financial position, we believe that short-term currency risk can be managed without forward hedging. The last forward hedging will mature in Q4, 2026/2027. With regards to purchasing prices, the maintained relatively low level of US dollar versus SEK continues to help us during the quarter. The gross margin increased by 1.8 percentage point in the quarter up to 47.5%. Key explanations are the currency effect that I mentioned earlier, both the strong NOK and the weak US dollar, and also that we have been able to get more favorable purchasing prices from our suppliers. Then over to the income statement. Operating profit increased to 393 million SEK compared to 278 million SEK a year ago. Operating margin landed at 12%.

Speaker #1: Without forward hedging. The last forward hedging will be in 2027. With regards to purchasing prices, the maintained relatively low level of the US dollar versus SEK continues to help us during the quarter.

Speaker #1: The gross margin increased by 1.8 percentage points in the quarter, up to 47.5%. Key explanations are the currency effect that I mentioned earlier—both the strong krona and the weaker US dollar—and also that we have been able to get more favorable purchasing prices from our suppliers.

Speaker #1: And then, over to the income statement. Operating profit increased to 393 million SEK, compared to 278 million SEK a year ago. Operating margin landed at 12%.

Speaker #1: The increase in personal expenses is, just as in the last quarters, related to a higher volume in our logistic chain, wage increases, new stores, and acquired businesses.

Pernilla Walfridsson: The increase in personal expenses is just as in the last quarters related to higher volume in our logistic chain, wage increases, new stores, and acquired businesses. Also other external expenses follow the same pattern as in Q4 with higher cost related to increased investment in marketing and due to the addition of the acquired businesses. The EPS for the quarter was 4.75 SEK. The inventory is slightly up compared with the same period last year. We are content with the stock in trade, and the slight increase should be seen in the light of new stores, increased assortment, and adding acquired businesses since last year. Cash flow from operating activities totaled 663 million SEK compared to 468 million SEK last year, mainly thanks to improved profit and improved working capital. Free cash flow for the period amounted to 363 million SEK.

Speaker #1: Other external expenses also follow the same pattern as in Q4, with higher costs related to increased investment in marketing and due to the addition of the acquired businesses.

Speaker #1: The EPS for the quarter was SEK 4.75. The inventory is slightly up compared with the same period last year. We are content with the stock in trade, and the slight increase should be seen in light of new stores, increased appointments, and adding acquired businesses since last year.

Speaker #1: Cash flow from operating activities totaled SEK 663 million, compared to SEK 468 million last year, mainly thanks to improved profit and improved working capital.

Speaker #1: Free cash flow for the period amounted to SEK 363 million. Return on capital employed was, at the end of Q1, 34.9%. And with that, I'm handing back the presentation to you, Christopher.

Pernilla Walfridsson: The return on capital employed was at the end of Q1, 34.9%. With that, I am handing back the presentation to you, Kristofer.

Speaker #2: Thank you, Pernilla. Moving into the events after the reporting period, today we reported our sales for August. We saw 8% organic growth, with total sales at a bit more than SEK 1.1 billion.

Kristofer Tonström: Thank you, Pernilla. Moving into the events after the reporting period. Today we also reported our sales for August and saw an 8% organic growth totaling sales at a bit more than SEK 1.1 billion. 3% comes from acquisitions, 3% from currency effect. All in all, the total sales was up 13%. Again, we could see a fairly broad development with both Sweden and Norway growing at 8% organically and Finland at 7%. Also other markets grew at 9% organically. Net, fairly solid across the countries. Also as recent months, we saw a broad development across the five consumer missions. Looking at store network in August this year versus last, we were up by nine stores. So we now have a store network of 250 stores. Summarizing, looking ahead, we see a continued clear path to continued growth and value creation.

Speaker #2: Three percent comes from acquisitions, and three percent from currency effect, so all in all, total sales were up 13%. And again, we could see a fairly broad development, with both Sweden and Norway growing at 8% organically, and Finland at 7%.

Speaker #2: Also, other markets grew at 9% organically. So, net-net, fairly solid across the countries. And also, in recent months, we saw a broad development across the five consumer missions.

Speaker #2: Looking at the store network in August this year versus last, we were up by nine stores. So we now have a store network of 250 stores.

Speaker #2: To summarize and look ahead, we see a clear path to continued growth and value creation. We believe we are well positioned. In our large and growing product niches, represented via the five consumer missions, the addressable market is SEK 350 billion, which means we are still fairly small in relation to that potential.

Kristofer Tonström: We believe that we are well positioned in our large and growing product niches, represented via the five consumer missions. The addressable market is SEK 350 billion, which means we are still fairly small in relation to that potential. We are focusing a lot on the needs-driven assortment and with a very high degree of assortment renewal, which is a key driver of constant relevance, but also customer satisfaction. Then we have our store locations and the store network, which is very available to our customers, combined with our full-scale e-com and also effective marketing. Net, I think we have seen over the last few years now a solid development and the ambition is, of course, now to continue to deliver on these levels also over the next few years.

Speaker #2: We are focusing a lot on the needs-driven assortment, and with a very high degree of assortment renewal, which is a key driver of constant relevance but also customer satisfaction.

Speaker #2: Then we have the centrality of our store locations and the store network, which is very available to our customers. This is combined with our full-scale e-commerce and also effective marketing.

Speaker #2: So, net-net, I think we've seen, over the last few years now, solid development, and the ambition is, of course, now to continue to deliver on these levels also over the next few years.

Speaker #2: So, looking at the plan ahead, which we also talked a little bit more in detail about during the Capital Markets Day, I think the key point is that we do have multiple levers to pull when it comes to continuing to drive this profitable sales growth moving forward.

Kristofer Tonström: Looking at the plan ahead, that we also talked a little bit more in detail about during the capital markets day. I think the key point is that we do have multiple levers to pull when it comes to continue driving this profitable sales growth moving forward. It is not that we have one silver bullet or one big bet that has to materialize. It is really about the constant hard work to work across our assortments, around and our customer meeting, then supported by a strong foundation of operational efficiency and then also selective M&A that can really help us evolve. With that, we will now open up for questions.

Speaker #2: It's not that we have one silver bullet or one big bet that has to materialize. It's really about the constant hard work to work across our assortments, around our customer meeting, then supported by a strong foundation of operational efficiency, and also selective M&A that can really help us evolve.

Speaker #2: With that, we will now open up for questions.

Speaker #3: If you wish to ask a question, please dial the pound key and 5 on your telephone keypad to enter the queue. The next question comes from Nicholas Ekman from DNB Carnegie.

Operator: If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. The next question comes from Niklas Ekman, from DNB Carnegie. Please go ahead.

Speaker #3: Please go ahead.

Speaker #4: Thank you very much, and congratulations on another set of very strong results. Can I just start by asking about the sales development during the months here?

Niklas Ekman: Thank you very much, and congratulations on another set of very strong results. Can I just start asking about the sales development during the months here? You had exceptionally strong growth in June and also July and a little bit of slowdown in August here. Can you elaborate a little bit on the weather component or anything like that, or comparisons or anything else that impacts the sales growth between the different months?

Speaker #4: You had exceptionally strong growth in June and also July, and a little bit of a slowdown in August here. Can you elaborate a little bit on the weather component or anything like that, or comparisons, or anything else that impacts the sales growth between the different months?

Speaker #2: Good morning, Nicholas. Looking at the summer months—obviously, the summer is always a little bit more volatile than other parts of the year.

Kristofer Tonström: Yeah. Good morning, Niklas. Looking at the summer months, obviously the summer is always a little bit more volatile than other parts of the year, and there are external factors influencing us. Obviously, we never like to blame the weather for anything, but of course, we can explain development by changes in weather conditions, et cetera. What we could see now during the full quarter, so May, June, July, was that in May, we had a big peak of selling lots of air cooling fans, air conditioning, et cetera. It was a very solid month. Then combined, of course, with the strong base assortment, and also driven a lot by what I explained earlier on in terms of garden machinery, et cetera. Then looking at July, if I look at the comparison, last year, July was a very hot month.

Speaker #2: And there are external factors influencing us. Obviously, we never like to blame the weather for anything, but of course, we can explain development by changes in weather conditions, et cetera.

Speaker #2: So what we could see now during the full quarter—so May, June, July—was that in May we had a big peak of selling lots of air cooling fans, air conditioning, et cetera.

Speaker #2: So, it was a very solid, solid month. Then, combined, of course, with the strong base assortment, and also driven a lot by what I explained earlier on in terms of garden machinery, et cetera.

Speaker #2: Then, looking at July, if I look at the comparison, last year July was a very hot month. We had lots of sales related to heating.

Kristofer Tonström: We had lots of sales related to heating or air conditioners, fans, et cetera. This year, that part of the business was much slower, and we had a bigger effect of that in June. June was again, a strong month on everything weather-related, and then July was a bit slower there. So there we relied a lot on the base assortment, but also on the big bets across garden machinery, et cetera. A little bit ups and downs during the summer, and I think the key message is that we were able to stay relevant despite things moving a little bit up and down. Looking at August, slightly lower level than the summer months, but again, a very solid base delivery. Again, relating a little bit to external conditions, last year it was very wet August.

Speaker #2: Or air conditioners, fans, et cetera. This year, that part of the business was much lower, and we had a bigger effect from that in June.

Speaker #2: So, June was again a strong month in everything weather-related. And then July was a bit slower there, so we relied a lot on the base assortment.

Speaker #2: But also on the big bets across garden machinery, etcetera. So, a little bit of ups and downs during the summer, and I think the key message is that we were able to stay relevant despite things moving a little bit up and down.

Speaker #2: Looking at August, it's a slightly lower level than the summer months, but again, a very solid base delivery. And again, relating a little bit to external conditions—last year was a very wet August.

Speaker #2: We sold lots of products related to flooding, et cetera, whereas this year it's been a hot, dry August. So again, external factors influence, but I think across the board we've been able to really play from the all-weather portfolio that we have developed.

Kristofer Tonström: We sold lots of products related to flooding and et cetera, whereas this year it has been a hot, dry August. Again, external factors influence, but I think across the board, we have been able to really play from the all-weather portfolio that we have developed.

Speaker #4: Very clear. Very clear. And then, moving to the gross margin, you mentioned here the hedges impacting the gross margin negatively. Is there any way you can quantify that?

Niklas Ekman: Very clear. Moving to the gross margin. You mentioned here the hedges impacting the gross margin negatively. Is there any way you can quantify that? I also note that the NOK has continued higher here in August. Is there a risk of a negative effect also in Q2?

Speaker #4: And I also note that the NOC has continued higher here in August. Is there a risk of a negative effect also in Q2?

Speaker #1: We can find a hedging—I mean, the hedging effect we report in the quarterly reports. It's approximately a year-on-year, SEK 50 million negative effect from NOC hedges.

Pernilla Walfridsson: You can find the hedging effect we report in the quarterly report. It is approximately year-on-year SEK 50 million negative effect from NOK hedges. Going forward for the next quarter, what has happened is that the NOK has strengthened against the SEK during the year. We enter hedges six to nine months ahead, so to say. If you look at the development of the NOK/SEK, you can see approximately that. We expect a bit of this effect also to continue into Q2.

Speaker #1: And going forward for the next quarter, I mean, what has happened is that the NOK has strengthened against the SEK during the year.

Speaker #1: And I mean, we enter hedges six to nine months ahead, so to say. So we expect—I mean, if you look at the development of the NOC SEC, you can see approximately that—and so we expect a bit of this effect also to continue into Q2.

Speaker #4: Okay. And the decision now to discontinue hedging—I assume that when you look at historical figures, you see that the volatility in earnings is immaterially impacted by these hedges.

Niklas Ekman: Okay. The decision now to discontinue hedging. I assume that when you look at historical figures, you see that the volatility in earnings is immaterially impacted by these hedges. Is that the correct assumption?

Speaker #4: Is that the correct assumption?

Speaker #1: It's more than hedging. I mean, it's more about shifting the timing of the impact; it's not removing the underlying exposure. And nowadays, with the way we work with pricing practices, a higher portion of e-commerce sales, and our strong financial position, we believe that we can manage a bit more short-term volatility.

Pernilla Walfridsson: It's more that hedging, it's more shift the timing of the impact. It's not removing the underlying exposure. Nowadays, the way we work with pricing practice, a higher portion of e-com sales, and our strong financial position, we believe that we can manage a bit more short-term volatility.

Speaker #4: Very clear.

Niklas Ekman: Very clear.

Kristofer Tonström: Also, just to compliment that, I think we always strive to be simple and not creating too many distractions, neither internally nor externally. So exactly as Pernilla outlined, I think this is just one other example of things that we try to, unless it really creates value, we don't want to continue doing it. So, I think that's the conclusion.

Speaker #2: Sorry, just to complement that. I think we always strive to be simple. And not creating too many distractions neither internally nor also externally. So exactly as Pernilla outlined, I think this is just one other example of things that we try to, unless it really creates value, we don't want to continue doing it.

Speaker #2: So, I think that's the conclusion.

Speaker #4: Great. Can I also ask about the competitive environment? Have you noticed any changes in competition? And I'm thinking specifically of the Asian online discounters that have been met with significant import duties.

Niklas Ekman: Great. Can I also ask about the competitive environment? Have you noticed any changes in competition? I'm thinking specifically of the Asian online discounters that have been met with significant import duties. I know these may be not direct competitors, but has that had any impact in your experience, on demand?

Speaker #4: I know these may not be direct competitors, but has that had any impact, in your experience, on demand?

Speaker #2: I think the general before I get to the Chinese platforms, I think the general competitive environment is that, you know, I think it's been a pretty strong consumption summer.

Kristofer Tonström: Before I get to the Chinese platforms, I think the general competitive environment is that, I think it has been a pretty strong consumption summer. That is what most numbers indicate. Also, the GDP development in Sweden. There are a lot of indications that things are going in the right direction, and we have seen others reporting strong numbers. So I think in general, it has been a high consumption summer. I think we have also seen some, as always, a lot of price discounting on the seasonal assortment, et cetera. But all in all, a positive environment, I would say, in general. Looking then at the Chinese platforms, we do not see an immediate impact on the Clas Ohlson part of the business since the new tariffs were introduced in July. We do see some positive effect on our online businesses.

Speaker #2: That's what most numbers indicate. Also, the GDP development in Sweden—I mean, there are a lot of indications that things are going in the right direction.

Speaker #2: And we have seen others reporting strong numbers. I think in general, it's been a high consumption summer. I also I think we've also seen some as always, a lot of, you know, price discounting on the seasonal assortment, et cetera.

Speaker #2: But all in all, you know, a generally positive environment, I would say in general. Looking then at the Chinese platforms, we do not see an immediate impact on the Clas Ohlson part of the business since the new tariffs were introduced in July.

Speaker #2: We do see some positive effect on our online businesses, and that is more, I would say, related maybe to the fact that the platforms have invested less in marketing and traffic.

Kristofer Tonström: That is more, I would say, related maybe to that the platforms have invested less in marketing and traffic. So we have seen a little bit of positivity on the online businesses, but on Clas Ohlson, we have not really seen any impact that we can correlate with that tariff change.

Speaker #2: So, we have seen a little bit of positivity in the online businesses, but for Clas Ohlson, we haven't really seen any impact that we can correlate with that tariff change.

Niklas Ekman: Super clear. Thanks for taking my questions.

Speaker #4: Super clear. Thanks for taking my questions.

Speaker #2: Thank you.

Kristofer Tonström: Thank you.

Speaker #3: The next question comes from Eric Sandstedt from Kepler Cheuvreux. Please go ahead.

Operator: The next question comes from Erik Sandstedt from Kepler Cheuvreux. Please go ahead.

Speaker #4: Hi there. Thanks. Yeah, just a few questions from me as well here. In terms of organic growth, you did 11% organic growth in Q1.

Erik Sandstedt: Hi there. Thanks. Just a few questions from me as well here. In terms of organic growth, you did 11% organic growth in Q1. You mentioned in the presentation that online you did 18% organically. Could you give us a corresponding number for the physical store network in terms of organic growth?

Speaker #4: And you mentioned now in the presentation that online you did 18% organically. Could you give us a corresponding number for the physical store network in terms of organic growth?

Kristofer Tonström: Let's see. I think the like-for-like in Q1 was 9%, I think. So the overall like-for-like development was 9%. But that includes the online like-for-like. So it's impacted by the We don't separately report the store network. But based on those numbers, I think we can confirm that the like-for-like on the store side isolated is also positive. That really links back to our key strategy of constantly driving like-for-like growth in the store network. That's one of the most important priorities. For us, new stores is not the single biggest growth driver. It's an aspect, but the key is driving like-for-like. I think we've seen that in the quarter as well.

Speaker #2: Let's see. I think that like for like in Q1, it was 9, I think. So the overall like for like development was 9. But then, of course, that includes the online like for like.

Speaker #2: So it's impacted by the 18. And we don't separately report the store network, but I, you know, based on those numbers, I think we can confirm that the like-for-like on the store side, isolated, is also positive.

Speaker #2: And that really links back to our key strategy of constantly driving like-for-like growth in the store network. That's one of the most important priorities.

Speaker #2: For us, new stores are not the single biggest growth driver. It's an aspect, but the key is driving like-for-like. So, I think we have seen that in the quarter as well.

Speaker #4: Yeah, perfect. That's helpful. And in terms of the strong online growth here in the quarter, could you maybe give some more comments on what's driving that?

Erik Sandstedt: Yeah, perfect. That's helpful. In terms of the strong online growth here in the quarter, could you maybe give some more comments on what's driving that? Is it simply more traffic and customer acquisitions, or what are you seeing in terms of conversion rates, basket sizes, and so forth?

Speaker #4: Is it simply more traffic and customer acquisitions, or what are you seeing in terms of conversion rates, basket sizes, and so forth?

Speaker #2: Yeah, I think that we have seen all aspects of the online business are going in the right direction, with higher traffic, higher basket, and strong conversion in general.

Kristofer Tonström: Yeah, I think we have seen all aspects of the online business are going in the right direction with higher traffic, higher basket, and a strong conversion in general. I would say the key driver of the online growth is again, assortment related. We have done a lot of work over the last few years to also define and design more of an online, pure online assortment. I had one example of the robotic lawn mowers, but we have others where we have a big assortment that we do not want to distribute to 250 stores available online. So that has driven both sales and traffic to the online site. Again, assortment, and then second, we continue to work with performance marketing across the different parts of the business, both Clas Ohlson and others.

Speaker #2: I would say the key driver of the online growth is, again, assortment-related. We have done a lot of work over the last few years to also define and design more of a pure online assortment.

Speaker #2: I had one example of the robotic lawn mowers, but we have others where we have a large assortment that we do not want to distribute to 250 stores, but instead make available online.

Speaker #2: So that has driven both sales and traffic to the online side. So again, assortment. And then second, we continue to work with performance marketing.

Speaker #2: Across the different parts of the business, both Clas Ohlson and the others, we've also seen that the increase in marketing has really given a strong return on investment.

Kristofer Tonström: Here we have also seen that the increase in marketing has really given also a strong return on investment. Performance marketing combined with a strong assortment at the right prices has really helped the online development.

Speaker #2: So, performance marketing combined with a strong assortment at the right prices has really helped the online development.

Speaker #4: Perfect, thanks. Maybe coming back a little bit to my first question here, because I'm thinking a little bit about the store growth. Obviously, you're still seeing positive like-for-like sales, also in the store network.

Erik Sandstedt: Perfect. Thanks. Maybe coming back a little bit to my first question here, because I am thinking a little bit about the store growth. Obviously, you are still doing positive like-for-like sales also in the store network. Could you say anything about if you see any sort of risks for cannibalization when the network becomes more dense, or are you simply opening up in areas where you do not have a lot of stores and so forth? So a little bit interested in that dynamic.

Speaker #4: But could you say anything about whether you see any sort of risks for cannibalization when the network becomes more dense, or are you simply opening up in areas where you don't have a lot of stores, and so forth?

Speaker #4: So I'm a little bit interested in that dynamic.

Speaker #2: Yeah. Now, when it comes to the store network, obviously every new store decision relates back to, of course, delivering on our return on investment demands, longer-term growth, and longer-term availability to customers.

Kristofer Tonström: Yeah. Now, when it comes to the store network, obviously every new store decision relates back to, of course, delivering on our return on investment demands, longer term growth, longer term availability to customers. Of course, a key aspect of that are risks of cannibalization. The good thing is we have 250 stores. We have opened a lot of stores in the start of the last 3 years. So we have a very strong set of insights and data to make fairly good assumptions and conclusions before we decide on a new store. So I would rather say that for every new store we open, it needs to stand on its own 2 feet when it comes to store P&L. But the other thing is that it also drives the positive development on the e-com business. So, I am not worried about cannibalization driven by the new stores.

Speaker #2: And of course, a key aspect of that is the risk of cannibalization. The good thing is, we have 250 stores. We've opened a lot of stores—almost 30 over the last three years.

Speaker #2: So, we have a very strong set of insights and data to make fairly good assumptions and conclusions before we decide on a new store.

Speaker #2: So, I would rather say that for every new store we open, it needs to stand on its own two feet when it comes to store P&L.

Speaker #2: But the other thing is that it also drives positive development in the e-com business. So I'm not worried about cannibalization driven by the new stores.

Speaker #2: And that's also another reason why we do a lot of store upgrades in the base network, to ensure that every store is competitive.

Kristofer Tonström: And that is also another reason why we do a lot of store upgrades in the base network to ensure that every store is competitive.

Speaker #4: Perfect, thanks. Maybe finally, if I may—in terms of the gross margin here—if we look beyond FX and hedging, could you say anything about the current purchasing conditions?

Erik Sandstedt: Perfect. Thanks. Maybe finally, if I may, in terms of the gross margin here, if we look beyond FX and hedging, could you say anything about the current purchasing conditions? Are you still seeing improvements to the product margins through better sourcing setups? Or have that largely sort of come through and annualized now? Where are you in that process?

Speaker #4: Are you still seeing improvements to the product margins through better sourcing setups, or has that largely sort of come through and annualized now? Where are you in that process?

Speaker #2: Yeah, so we always, of course, work on improving purchasing prices. I think, as you say, there are a lot of external factors helping us now with currencies, et cetera.

Kristofer Tonström: Yes. So we always, of course, work with improving purchasing prices. I think, as you say, of course, there are a lot of external factors helping us now with currencies, et cetera. There is still a little bit of an effect on the purchasing prices. But it is not the biggest driver as it has been over the last year. So of course, our job now moving forward is to continue to be effectively working with our sourcing network to always have competitive prices. At the same time, we have seen the producer price index in China, for example, now going up over the last few quarters. So, we cannot rely solely on that aspect, and it is also a smaller driver of the improvement than what we have seen in the last year.

Speaker #2: There's still a little bit of an effect on the purchasing prices, but it's not the biggest driver as it has been over the last year.

Speaker #2: So, of course, our job now, moving forward, is to continue to work effectively with our sourcing network to always have competitive prices. At the same time, we have seen the producer price index in China, for example, going up over the last few quarters.

Speaker #2: So we cannot rely solely on that aspect, and it's also a smaller driver of the improvement than what we have seen in the last year.

Speaker #4: Perfect. Thank you so much.

Erik Sandstedt: Perfect. Thank you so much.

Speaker #2: Thank you.

Kristofer Tonström: Thank you.

Speaker #1: The next question comes from Magnus Raman from SB1 Markets. Please go ahead.

Operator: The next question comes from Magnus Råman from SB1 Markets. Please go ahead.

Speaker #4: Thank you very much, guys. I think I'll just follow up on that last question first. You mentioned the increase in the producer price index in China.

Magnus Råman: Thank you very much, guys. I think I would just follow on that last question. Firstly, you mentioned the increase in producer price index in China. Is it fair at least to assume that these should be quite neutral in terms of passing through since most of your competitors are sourcing these goods from the same sort of supplier base in one way or another and would be impacted in the same way?

Speaker #4: But is it fair, at least, to assume that these should be quite neutral in terms of passing through, since most of your competitors are sourcing these goods from the same sort of supplier base in one way or another and will be impacted in the same way?

Speaker #2: Yeah, I think in general it's fair to conclude now. I use the Producer Price Index in China as kind of a proxy for what's happened over the last few quarters.

Kristofer Tonström: Well, I think in general, I think it is fair to conclude. I use the producer price index in China as kind of a proxy for what has happened over the last few quarters, and it is obviously driven by some of the raw material increases that we have seen, driven by oil price increase, driven by the shortages of chips and tech products, et cetera. So I use that as a proxy, and I think it is fair to conclude, as you say, that this is something impacting most companies that are importing products from other geographies. Then the other thing is, of course, now we are much less dependent on China with our broader sourcing network, but obviously these increases are mostly driven by raw material increases, oil price increases, et cetera.

Speaker #2: And it's obviously driven by some of the raw material increases that we have seen—driven by oil price increases, driven by the shortages of chips and tech products, et cetera.

Speaker #2: So I use that as a proxy. And I think it's fair to conclude, as you say, that this is something impacting most companies that are importing products from other geographies.

Speaker #2: Then the other thing is, of course, now we are much less dependent on China with our broader sourcing network. But obviously, these increases are mostly driven by raw material increases, oil price increases, etc.

Speaker #4: Yeah, sure. And that should also be impacting other sourcing destinations or geographies, right? And then, yeah, sure, thanks. I also wanted to ask about the increase in marketing spending that you alluded to when you spoke about the increase in cost.

Magnus Råman: Yeah, sure. Thereby should be also impacting other-

Kristofer Tonström: Yeah

Magnus Råman: sourcing destination or geography.

Kristofer Tonström: Yeah.

Magnus Råman: Right. Yeah, sure. Thanks. I also wanted to ask about the increase in marketing spending that you alluded to when you spoke about the increase in costs. You also mentioned here in one question about your online businesses in particular, that they, if anything, might have seen a little relief on the performance marketing costs, if I got it correctly. This overall increase in marketing spending, is it that the core Clas Ohlson has been increasing its performance marketing spending, or is it more the traditional marketing costs? How should we view it going forward?

Speaker #4: And you also mentioned here in one question about your online businesses in particular—that they, if anything, might have seen a little bit of relief on the performance marketing cost, if I got it correctly.

Speaker #4: So, this overall increase in marketing spending—is it that the core costs have also been increasing its performance marketing spending, or is it more the traditional marketing costs?

Speaker #4: And how should we view it going forward?

Speaker #2: Yeah, so looking at the increase, it's driven by, first of all, that we have consolidated the acquired companies. And they obviously have high gross margins, and then a higher degree of performance spend.

Kristofer Tonström: Well, looking at the increase, it is driven by, first of all, that we have consolidated the acquired companies, and they obviously have high gross margins and then higher degree of performance spend. That is one kind of structural part because it was not part of the base. To be clear, also on the Clas Ohlson side, we are increasing absolute amounts when it comes to spending. This is obviously correlated with the growth that we are seeing, and we are only buying traffic that we judge to be profitable. We are measuring this on return on ad spend, return on investment, et cetera. The Clas Ohlson part has gone up over the last quarter. We expect that to continue to be a key lever for us also moving forward. Of course, the online growth and the spend growth should go hand in hand.

Speaker #2: So, that is one kind of structural part, because it was not part of the base. But then, to be clear, also on the Clas Ohlson side, we are increasing absolute amounts when it comes to spending.

Speaker #2: And this is obviously correlated with the growth that we're seeing. And we're only buying traffic that we judge to be profitable. So we're measuring this on return on ad spend, return on investment, et cetera.

Speaker #2: But also, the Clas Ohlson part has gone up over the last quarter, and we expect that to continue to be a key lever for us moving forward.

Speaker #2: But of course, the online growth and the spending growth should go hand in hand. And as long as there is profitable traffic to be had, we will continue that.

Kristofer Tonström: As long as there is profitable traffic to be had, we will continue that. I think it is fair to assume that this development will continue.

Speaker #2: So, I think it's fair to assume that this development will continue.

Speaker #4: Great, that's very clear. And then maybe one final question for Pernilla—if you could remind us of the timing of initiating depreciation of the Incheon automation investment.

Magnus Råman: Great. That is very clear. Then maybe one final to Pernilla, if you could remind us of the timing of initiating depreciation of the Insjön automation investment. Thank you.

Speaker #4: Thank you.

Speaker #3: Oh, let me finalize the investment. I mean, we will start to depreciate. Let me check what we have communicated regarding the end date for—.

Pernilla Walfridsson: When we finalize the investment, we will start to depreciate when we take it into What have we communicated regarding the end date for?

Kristofer Tonström: It is the Q1 where we now have significant investment above SEK 130 million. That immediately, of course, is an investment that has been done during the quarter. Then what I think we have said is that the investment will be finalized by the fall of 2027.

Speaker #2: Yeah, no, I think we—I mean, so first, now it's the first quarter where we have significant investment above SEK 130 million. So that immediately, of course, is an investment that has been made during the quarter.

Speaker #2: And then what I think we've said is that the investment will be finalized by the fall of 2027.

Pernilla Walfridsson: And then we will start

Speaker #3: And then we will start to depreciate.

Kristofer Tonström: And then we will start

Pernilla Walfridsson: to depreciate

Speaker #2: Yeah.

Kristofer Tonström: Yeah

Pernilla Walfridsson: that investment.

Speaker #3: That investment.

Magnus Råman: In total, it's not these batches, so to speak, quarterly, but there will be no D&A from this until that finalization?

Speaker #4: In total, so it's not these batches, so to speak, quarterly, but there will be no DNA from this until that finalization.

Speaker #2: I think we start to use it, yeah.

Kristofer Tonström: Not that we're starting this yet, no.

Speaker #4: Okay, great. Thank you very much.

Magnus Råman: Okay, great. Thank you very much.

Kristofer Tonström: Thank you. Since we have no more questions from the telco, but we do have one question from Anders Molander from the webcast. It's two questions. One about which products that you believe will continue driving growth and if you have any outlook for the coming year as well? Starting with the first question, of course, there is a part of the Clas Ohlson sales that is seasonally dependent, and of course, that is one of the drivers of the high assortment renewal. As we move into the fall and then soon into the Christmas and then winter season, of course, we're shifting focus on the seasonal side, both into Christmas related products, gifts, but also, again, back to air quality in terms of, but now we turn from air conditioners to heaters, et cetera. I think that's one example.

Speaker #2: Thank you. Since we have no more questions from the telco, we do have one question from Anders Montas from the webcast. It's two questions.

Speaker #2: One is about which products you believe will continue driving growth, and if you have any outlook for the coming year as well. Yeah, so starting with the first question, of course, there is a part of the Clas Ohlson sales that is seasonally dependent.

Speaker #2: And of course, that is one of the drivers of the high assortment renewal. So as we move into the fall and then soon into the Christmas and then winter season, of course, we're shifting focus on the seasonal side, both into Christmas-related products and gifts, but also again back to air quality. In terms of that, now we turn from air conditioners to heaters, et cetera.

Speaker #2: So I think that's one example. And it's, of course, our job to ensure that we have an all-weather portfolio that performs in any season. Then I think the second key thing is we have a base assortment that is always on, always relevant.

Kristofer Tonström: It is, of course, our job to ensure that we have all of the portfolio that performs any season. Then I think the second key thing is we have a base assortment that is always on, always relevant, everything related to tech accessories, fixing products, cleaning products, et cetera. So it is that combination that constitutes the relevant assortment. Then looking at the coming years, I think I do not want to guide over the coming years more specifically than I think the financial framework does. So of course, the job for us now is to continue balancing strong organic growth with strong profitability and strong return on capital. So the financial targets and that framework, I think, gives a good guidance on what we want to achieve over the next 3 years, every year. With that, we have no further questions from the webcast or the telco. Okay.

Speaker #2: Everything related to tech, tech accessories, fixing products, cleaning products, et cetera. So it's that combination that constitutes the relevant assortment. And then looking at the coming years, I think I don't want to guide on the coming years more specifically than I think the financial framework does.

Speaker #2: So of course, the job for us now is to continue balancing strong organic growth with strong profitability and strong return on capital. So those are the financial targets, and that framework I think gives good guidance on what we want to achieve over the next three years, every year.

Speaker #1: And with that, we have no further questions from the webcast or the telco.

Speaker #2: Okay, thank you very much for calling in this morning and for all the great questions. We are now shifting focus from summer to fall, and soon we will also be entering the big peak season that is, of course, important to us at Clas Ohlson.

Kristofer Tonström: Thank you very much for calling in this morning and for all the great questions. We are now shifting focus from summer to fall, and then soon we will then bring also the big peak season that is, of course, important to us at Clas Ohlson. So look forward to seeing you all again in early December when we report our Q2. So thank you very much.

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Q1 2027 Clas Ohlson AB Earnings Call

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