Europris

Earnings Release • Oct 31, 2024

Steady growth for Europris and ÖoB integration proceeding according to plan

Steady growth for Europris and ÖoB integration proceeding according to plan

The group had higher sales with an organic sales growth of 4.4 per cent in the

third quarter. In an economy posing challenges to many consumers, the group is

pleased to have witnessed higher footfall as customers continued to value

Europris' attractive campaigns, and its broad and relevant product range offered

at low prices. The main sales growth drivers were campaigns and consumables

while higher costs for inbound freight and the impact from a continued weak

Norwegian krone put pressure on the gross margin. Europris delivered a lower

cost increase than previously anticipated for the quarter as the group remains

highly attentive to its operating costs.

The transformation of ÖoB and the integration process with Europris progressed

according to plan. Like-for-like sales and footfall in ÖoB were flat in the

third quarter, which was an improvement from the development in the first half

of the year. A revival of top-line growth and an improvement of the gross margin

for the existing store portfolio are the main value drivers for ÖoB going

forward.

Financial highlights for the third quarter 2024:

Please note that financials for the new segment Sweden have been included with

effect from 1 May 2024. Comparisons on an organic level exclude the acquisition

of ÖoB, meaning that organic figures this year are comparable to last year's

group figures.

· Group sales of NOK 3,238 million, up 50.4 per cent

·  Sales growth of 4.4 per cent excluding the acquisition of ÖoB (organic)

· Gross margin of 39.7 per cent (45.3 per cent)

· Organic gross margin of 43.7 per cent (45.3 per cent)

· Opex-to-sales ratio of 26.5 per cent (26.5 per cent)

· Organic opex-to-sales ratio of 26.6 per cent (26.5 per cent)

· EBIT of NOK 168 million (NOK 234 million) and EBIT margin of 5.2 per cent

(10.9 per cent)

· Organic EBIT of NOK 212 million (NOK 234 million) and organic EBIT margin

of 9.5 per cent (10.9 per cent)

· Net profit of NOK 84 million (NOK 144 million) attributable to parent

· Negative EBIT from ÖoB of NOK 45 million

· Negative impact from interest rate swaps of NOK 12 million this year

compared to a positive impact of NOK 2 million last year

"As we navigate in a tough retail environment, we're confident that Europris is

well-positioned for long-term growth and value creation. Integrating ÖoB into

our operations represents a significant opportunity for us to expand our

footprint in the Nordic market. While the turnaround in ÖoB will take time,

we're taking deliberate steps to modernise stores, improve the product mix, and

drive operational efficiencies.

Our core business remains robust and as inflation slows down and consumer

confidence strengthens, we're optimistic about our mid-term growth prospects.

Our commitment to delivering long-term shareholder value remains unwavering, and

we look forward to realising the full potential of Europris with ÖoB onboard",

comments CEO Espen Eldal.

Total operating income amounted to NOK 3,238 million in the third quarter (NOK

2,152 million), up 50.4 per cent year-on-year. Organic sales, excluding the

acquisition of ÖoB, increased by 4.4 per cent.

Gross profit amounted to NOK 1,286 million (NOK 975 million), with a gross

margin of 39.7 per cent (45.3 per cent). Organic gross margin was 43.7 per cent,

down 1.6 percentage points. The group recognised a net unrealised loss of NOK 7

million on hedging contracts and accounts payable, compared to a net unrealised

gain of NOK 2 million in the same period last year - impacting the gross margin

change negatively by 0.3 percentage points.

Operating expenditure (Opex) was NOK 859 million (NOK 571 million). Organic opex

was NOK 597 million, up 4.6 per cent, partly explained by the increase from 255

to 259 directly operated stores. The opex-to-sales ratio was 26.5 per cent (26.5

per cent), with an organic opex-to-sales ratio of 26.6 per cent.

EBIT amounted to NOK 168 million (NOK 234 million). The organic EBIT was NOK 212

million, a decline of NOK 22 million or 9.3 per cent. The EBIT margin was 5.2

per cent (10.9 per cent), while the organic EBIT margin was 9.5 per cent.

Net debt amounted to NOK 5,091 million at 30 September 2024 (NOK 3,852 million).

Adjusted for lease liabilities, net debt was NOK 1,614 million (NOK 1,256

million).  Cash and liquidity reserves for the group amounted to NOK 1,360

million at 30 September 2024 (NOK 1,363 million).

Outlook

Many consumers are in a tough financial situation after a longer period with

high inflation and higher interest rates and have become more price conscious

and cautious about their spending. Europris sees this trend being reflected in

an increasing share of sales from campaigns and a higher share of sales from

consumables, while consumers are holding back on investment purchases. Campaigns

and consumables help drive sales, but these trends also put pressure on the

gross margin.

Inflation is now coming down in both Sweden and Norway. Interest rates have

already been lowered in Sweden, and the Norwegian central bank expects to reduce

rates during 2025. In combination with higher wage increases, this offers an

improving outlook for the consumer sentiment in both countries, although it will

likely take some time until higher purchasing power translates into higher sales

volumes. Both Europris and ÖoB are well positioned and their relevant concepts

continue to attract customers in these market conditions.

The group is looking forward to the important upcoming Christmas season and has

secured sufficient inventory of seasonal items.

Europris has started the process to turn around ÖoB and is progressing according

to plan. While it will take time to harmonise categories and product range and

improve the customer experience, the group is confident in its long-term

ambitions for ÖoB to reach a top line of SEK 5 billion by the end of 2028 and an

EBIT margin of 5 per cent for the existing store portfolio.

Practical details:

The quarterly report, presentation materials and spreadsheet with key figures

will also be available on the website https://investor.europris.no.

CEO Espen Eldal and CFO Stina C Byre will present the group's results at 08:30

CET at ABG Sundal Collier's, Ruseløkkveien 26, 8th floor in Oslo. The

presentation will be held in English and transferred via live webcast and will

be made available through the website at https://investor.europris.no. It will

be possible to ask questions via the web.

For further information please contact:

Espen Eldal, CEO, +47 48 29 24 24, espen.eldal@europris.no

Stina C Byre, CFO, +47 41 10 58 08, stina.byre@europris.no

About Europris:

Europris is Norway's largest discount variety retailer by sales. The group

offers its customers a broad range of quality owned brands and brand name

merchandise. Its merchandise is sold through the Europris chain, which consists

of a network of 282 stores throughout Norway. Of these, 259 are directly owned

by the group and 23 operate as franchise stores. In May 2024, the group took

full ownership of the Swedish discount variety retailer ÖoB, which consists of a

network of 94 stores in Sweden. In addition, Europris is full or partial owner

of the e-commerce companies Lekekassen, Strikkemekka, Designhandel and Lunehjem.

The group's head office is located in Fredrikstad, Norway.

This information is considered to be inside information pursuant to the EU

Market Abuse Regulation and is subject to the disclosure requirements pursuant

to section 5-12 the Norwegian Securities Trading Act.

This stock exchange announcement was published by Trine Engløkken, head of

investor relations at Europris ASA, on 31 October 2024 at 07:00 CET.