MATAS A/S (MATAS) Q3 2026 Earnings Call Transcript

Welcome to Metas Group Q3 2025-2026 financial presentation. Today's call is being recorded. All participants will be in a listen-only mode throughout the presentation, and afterwards, there will be a question and answer session. To ask a question, please press 5 star on your telephone keypad. I would like to introduce Interim Group CEO, Pierre-Johannissen Massen. Please begin.

Thank you, and welcome to the Q3 reporting for Metas Group. It's really been a quarter with what we call some mixed results, a record sales in third quarter in Metas and some challenges in our kicks markets, which I'll take you through in some more details. But let me just tell 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% EBDA 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% EBDA margin, and CAPEX within our guidings 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 two big investments, both the METAS and Kix Logistics Centers, really have shown the impact on our P&L. So going into the two different groups, looking at Meta's 5.5% growth, that includes our subsidiaries, which also had a strong Q3, but Meta's standalone 4.8% growth. A growth margin slightly below last year, which is also reflecting some of the dynamics in the quarter for Meta's, which we'll come back to in a little while. So Kix, 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 Kix, 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 to the group numbers as i as i reported uh previously uh moving into into our strategy uh really i think one key key thing to take away is the strategy we set out when the nordics for the meters 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 three different areas more for you closer to you and stronger for you and we are keeping the momentum in these in these areas with the 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 hair care, sport, and wellness, and will 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 Neatland Shore in September, we relaunched Beauty Act, we're looking at more than 30 percent 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 uh recognized with the with the consumers we have across norway sweden and finland uh our online business continued to grow uh 10 percent in in metas struggling a little bit in in kicks with 2.5 percent growth but i'll come back to some more details on that we continue to open more stores and providing you know a better network for for our consumers last but not least and that is also coming true in in the q3 numbers is really around our two automated facilities and and our track on on our synergies and as we announced earlier in the year uh looking at the synergies for next year uh which we're investing in right now they are on track and and we'll be materializing as we move forward so just quickly on on our new brands and and and the assortment and you know we continued uh with the launch of new brands and and specifically when we look at at the different markets you can see also in in kicks uh you know launching the the body shop you know providing more choices also in the mass beauty area and we launched 11 brands in kicks 22 new brands in in majors in in the quarter our membership club continues to provide a very strong momentum for our business and as as as we mentioned last time we're together you know we just launched the e-commerce platform across the nordic so we now are operating on the same platform for all markets which is also allowed and and it's not part of this presentation but just as the last piece also part of our acceleration we we now launched our kicks app it was just launched two days ago now providing our consumers in norway sweden and finland with the opportunity to to do their purchases on the app as well so that's just a a an acceleration of the plans that we already put forward in in our win the Nordics and then on stores as we just said you know four new stores and kicks two in Norway one in Finland and one in Sweden really providing a broader footprint also from our stores perspective our two logistics centers this is really something we are very proud of we launched kicks two years ago made us almost a year ago or actually in April this year. So we now had the first year with two automatic 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 through the second high season for kicks and the first high season for for meters and our new facility really providing a very strong performance uh and that is also reflected you know the the time from a black week which one will have a tail of of deliveries we actually completed that very fast and also we made sure that our our customers got their their purchases very fast so very strong performance from our dual logistics centers now coming back to the acceleration. To provide a little context on that, if we look at our two banners, if we look at Metas, you'll see we have a split in terms of our product portfolio of roughly one-third in high-end, we have one-third in mass beauty, and one-third in health and well-being. So a good split to provide choices for our consumers on all different elements. When When we look at KICS, 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 duty, 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 uh we grew the business around 10 in high end this year high end is declining that has an impact on both meters and on kicks but as kick is is predominantly in the high end of course the impact has been more severe and that's that's the outcome basically our performance in q3 so what we're doing right now and that's really going into to what we also mentioned earlier is the acceleration plan uh specifically focusing on kicks but also has of course some impact as as we share best knowledge and we share learnings across uh it also will have an impact on on meters and what we're looking at is basically marketing efficiency this is a lot to do with our campaigns how we go to market the the good offers we provide to our 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 presents, 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 majors to kicks, from kicks to majors in terms of how we get more impact in our stores, how 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're 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're 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 let's move into to the more hardcore numbers and when we look at the performance for this for this quarter as I already mentioned we have 4.8% growth in Maytas, Kicks a negative of 3.2 excluding SkinCity and 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 Sundance 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 metas a gross margin going down this has is basically linked into to a couple of things one thing is the the product mix as you saw high-end was also impacted in in meters and in different margins on 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 is included in november whereas last year we did have a a tale of deliveries coming into december and also impacting december so a little bit of timing uh but predominantly linked into to the more concentrated purchases within within the in 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 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 decline cost half a percent 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. We have this year, we had the two 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 two facilities. In terms of our salary overall, we are managing that in our stores to make sure that we have the right level of personnel in place to make sure we provide the 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 we kept the focus we kept the discipline and I think you know that is reflected in our cost base and the way that we managed to resolve for the quarter so net net we ended up in a quarter where we delivered 16.7% EBDA compared to slide it down compared to last year adjusting for the for the currency headwind core online growth 5% not to the levels we've seen in previous quarters but taking into the account also what happened in in our kicks markets and make some 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 pnl into our balance sheet and and i think we talked about this quarter last quarter as well uh is our inventories um and when we look at the right side you'll compare the inventories to last year and we started this year being in in a in a higher place we are still in a higher place um but if we look In the quarter, we actually decreased the inventories with almost $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're spending less on CapEx, as last year we had the two MLCs, or we had Metast MLCs, last payments which basically generates a free cash flow around 400 million for the quarter. Then 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 NWQ3 is 2.9. Of course impacted by the movements in our working capital and also impacted by the fact that, you know, 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 two to three. 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 EBDA 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.

If you do wish to ask a question, please press 5 star on your telephone keypad. To withdraw your question, you may do so by pressing 5 star again. The first question is from the line of Sebastian Grave from Nordea. Please go ahead. Your line will now be unmuted.

Hi, Peter. Good morning, and thank you for taking my question. First one is on the KICS deceleration and your accelerated plans to broaden the KICS offer. So, as you alluded to, fairly significant deceleration in the quarter in KICS. 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 KICS. Can you just help me understand what are you exactly doing different from what you have been doing, you know, all the way since summer through 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 would be my first question.

Hi, Sebastian. 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 Kix markets, we need to be able to provide a wider assortment. So we've already had 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 in 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 in to first quarter, but also moving into the next financial year.

Okay, that makes sense. I mean, following up on that, part of the efforts I should look to is around the pricing. And you said previously that, or 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, you know, 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 announcement have have proven that that that has been going too 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 uh from a kicks perspective is really you know our share of normal sales uh which which have a good indication on the consumers is actually still um still connected to kicks and is still uh you know have a preference for kicks is that we we had a higher normal sales than than what we usually see and i think that is what we would like to you know accelerate you know that connection we have with the consumers as me 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 on the different categories and within both high-end and mass beauty uh and 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 the margins and our cost base according to that okay super clear um then another question i'll jump back in the queue just on on the the the the balance sheet here and on slide 19 you allude to to you know increased near-term focus on on deleveraging uh despite you being you know within the the midterm range of two to three times uh EBITDA so so i'm just wondering what what what number are we steering for here and and and where 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 two and And during the year, we've been slightly above the three for a short period. I think our focus will continue to be at staying within that guideline. Having said that, you know, 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, you know, that's something that will come out once we've closed the year and we've had that discussion with our board uh so not not much more to say on the buyback for for for present that's very clear thank you so much pair thank you the next question is from the line of eway joe from seb please go ahead your line will now be unmuted hi it's away from seb thank you for taking my question i i have two follow-up questions here um also on the kicks I can understand your answers regarding sort of the your strategy want to grow the product solvents I 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 the profitability will be changing towards more growth focused than the margin? so i'll do the next question later um okay i think uh um a lot of good questions in the same uh but but let me try and and and give you my perspective on it i think when we look at our strategy um win the nordics it's it's still the same strategy we have part of that strategy was to provide more choices in terms of brands uh products in different uh 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 a q3 where we see a lot of our loyal customers actually continuing to stay with our business in kicks in meters and the huge loyalty club we have of more than six 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 right way forward we also believe that you know being able to provide the choices being able to provide the big network of stalls 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 in to next year as well. And then I also just want to say, you know, 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? uh the discipline in terms of you know margin versus growth uh we we are growth business we'll continue to be looking at 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 two things go very well hand in hand Okay, great, very clear.

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 do 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 these segment growth. and can you split and break down to metas and kicks and what was the growth for the mass beauty segment?

I think you will find all the details in the Q3 report where we have split by the different segments, both for metas and kicks. But what you're seeing is on the meta side, mass beauty and health and well-being 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, Neal Insure and Beauty Act, as we just launched those and relaunched Beauty Act, but launched Neal Insure in September. You know, 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.

Great. Thank you. I jump back to the queue.

Next up, we have a follow-up from Sebastian Carver from Nordea. Please go ahead. Your line will now be unmuted.

Hi, Pierre. It's Sebastian again. I have a question regarding the FX margin adjustment that you allude to here. You've done it for a while now. I'm just wondering, 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 Kix business going forward? Or is it more you forecasting and expecting a reversal of the current FX movement?

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, you know, 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, you know, the importance of why we actually show the numbers. From an FX perspective, We're looking at options and evaluating, you know, 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 corona 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 would be the focus we have also moving into the next financial year.

Okay. Well, that's clear and I'm 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 in my calculation, that you guide for roughly a percentage point margin uplift compared to Q4 last year. Just remind us, you know, why is it we should expect margins to go up year over year when you have several quarters with the opposite?

I think there is a couple of things to that, Sebastian. It's 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, you know, we did not have an automated facility as we have right now in MLC. And there's other moving parts. I think, you know, when we did the updated guidance, 14 to 14 and a half, that's still where we believe we'll close the year. Okay.

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

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

Completely fair. Good luck, Pierre. Thank you so much for taking my questions.

Next question is from Paul Jessen from Danske Bank. Please go ahead. Your line will now be unmuted.

Yes, thank you. I think my question was on the last one that Sebastian had about what you've seen in this quarter. I think Apatia 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 the new going forward we'll have right prices and we've seen that competition at least in this quarter and also commenting at 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 paul when we 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 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, you're launching the app in the Kix market. We'll definitely also provide an even closer link to our customers.

And when we talk about you're pushing more on the mass market exposure in Sweden, what about the well-being? Are you also taking that into the Kix stores?

We are also looking at expanding inside with well-being. 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 Kix business. So yes, wellness is also part of our plans.

Thank you.

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

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