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Kid ASA Earnings Release 2023

Nov 9, 2023

3642_rns_2023-11-09_d5f3f95d-e41e-443a-b45d-8c4266854e04.pdf

Earnings Release

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Q3 2023 presentation

Financial summary

Third quarter in brief

  • A strong quarter in terms of footfall and basket size, resulted in doubledigit growth and all-time high EBITDA for the Group in Q3
  • Group revenues increased by 13.1% (-2.1%). In constant currency:
    • Group revenues increased by 12.1% (+0.5%)
    • LFL revenues increased by 12.9% (-0.4%)
    • Online revenues increased by 26.8% (+39.4%)
  • Gross margin increased by 6.6 percentage points
  • EBITDA increased by MNOK 98.6 to MNOK 241.4
    • Strong cost control
  • EPS of NOK 2.23 (0.73)
  • Strong cash flow
  • Dividend payment of NOK 2.75 per share

Operational focus

  • Impactful "Hemtex 50 Years" campaign driving substantial customer traffic and revenues
  • Strong growth in established product categories as a result of product- and assortment development
  • "Atelier" by Camilla Pihl was successfully launched in May and contributed with revenues of ~MNOK 10 in Q3
  • Extended continue to drive profitable growth and will be expanded
    • Currently available online, in 5 pilot stores and in select larger stores in Norway
    • Revenues from the Extended assortment of MNOK 16.6 in Q3
    • Launch 3 new Extended stores in Sweden
    • Increase from 5 to 10 Extended stores in Norway
    • Extended assortment will be launched online and in selected larger stores in Hemtex during H1-24

Revenues

Group revenues Q3 increased by 13.1% (-2.1%)

  • In constant currency:
    • Group revenues increase of 12.1% (+0.5%)
    • Group like-for-like revenues increase of 12.9% (-0.4%) including online sales
    • Online growth of 26.8% (+39.4%), equivalent to an online share of 11.7%. Including click-and-collect, the online share was 16.5%
  • Kid Interior revenues growth of 13.1% (+1.4%)
    • Positive contribution from Extended assortment of MNOK 16.6 (MNOK 0)
    • Like-for-like growth of 12.7% (-1.0%) including online sales
    • Online sales increase of 45.5% (+37.0%)
  • Hemtex revenues growth of 13.1% (-7.4%). In constant currency:
    • Revenues growth of 10.5% (-1.0%)
    • Like-for-like growth of 13.3% (+0.8%) including online sales
    • Online sales increase of 11.2% (+41.7%)

2022 2023 2022 2023 2022 2023 2022 2023

Q1 Q2 Q3 Q4

REVENUES

Gross margin

Strong gross margin development

  • Group gross margin was 62.1% for the quarter, up by 6.6 pp compared to Q3-22
    • Kid Interior gross margin increased by 8.5 pp to 62.8% (54.3%)
    • Hemtex gross margin increased by 3.3 pp to 60.8% (57.5%)
  • Freight rates back to pre-Covid level during 2023, and combined with price adjustments implemented during Q1, we now see a gross margin in line with historical levels
  • Gross margin in Q3-22, Q4-22 and Q1-23 was unusually low as the high freight rates in 2022 were not sufficiently incorporated in our price calculation models

OPEX

OPEX-TO-SALES (excl. IFRS 16) of 43.6% (46.1%)

  • Employee benefit expenses increased by MNOK 17.0
    • Increased bonus provisions and general salary increase
    • Increased Logistics due to own employees in new Swedish warehouse of MNOK 4.2
    • Tight cost control in like-for-like stores
    • MNOK 1.3 due to changes in SEKNOK exchange rate
  • Other operating expenses decreased by MNOK -8.2
    • Reduced electricity costs by MNOK -2.8
    • Reduced logistics costs by MNOK -4.8 due to shift between other OPEX and employee expenses for the logistics operation in Sweden
    • MNOK 1.4 due to changes in SEKNOK exchange rate

OPEX MNOK

Personell Other Opex

EBITDA MNOK

Kid Interior Hemtex

Cash flow

MNOK

Satisfactory financial position and liquidity

  • Record high cash flow from operations in third quarter, due to increased profit and a constant working capital
  • Cash flow from investments reflects CAPEX in stores and online platform of MNOK 23.6, and investment in the new warehouse in Sweden of MNOK 2.2
  • Cash flow from financing influenced by reduction in overdraft facility and increased interest expenses
  • New RCF agreement signed with updated EBITDA covenants to include IFRS 16. No change to the definition of NIBD
  • Gearing ratio, excl. IFRS 16 effects, of 1.72x (1.62x)
  • Net interest-bearing debt excl. IFRS 16 leasing liabilities of MNOK 747.5 (MNOK 815.9)
  • Cash and available credit facilities of MNOK 271.1 (MNOK 132.8)

NUMBER OF STORES PER QUARTER END

Store portfolio activity

Per quarter end

Completed
2023		 Signed, but not yet completed
New stores NO:
Trondheim Torg
FI: Lippulaiva, Espoo		 NO:
Rørvik
(Q4-23)
NO:
Oslo City (Q1-24)
NO:
Grünerløkka
(Q2-25)
NO:
Fredrikstad
(Q4-24)
SE:
Burlöv
(Q4-23)
EST: Nautica Tallinn (Q4-23)
Closures NO:
1 store
SE:
1 store
FI:
2 stores		 NO:
2 stores
Relocations NO:
5 stores¹
SE:
7 stores		 NO:
7 stores
SE:
4 stores
Refurbishment/
expansion
¹of which three stores are Kid Extended		 NO:
7 stores²
SE:
2 store		 NO:
3 stores
EST:
1 store
FI:
1 store

²of which one store is Kid Extended

*Fully-owned stores. Hemtex has additional 11 franchise stores

Outlook

  • In Q4-23, a total of 3 stores will open in Norway, Sweden and Estonia. 1 store has opened (Rørvik), and the remaining 2 are scheduled to open at the end of November (Burlöv and Tallinn).
  • Additional 8 store projects will be carried out in Q4-23, with 4 projects in Kid Interior and 4 in Hemtex. All the projects involve refurbishment and enlargement, with a mix of relocation and others remaining in their current locations.
  • The launch of the Extended concept stores is considered successful. Based on this, we have decided to increase the number of Extended stores from the current 5 pilot stores to a total of 10 stores in Norway, and to open 3 new Extended stores in Sweden.
  • Well prepared for the Christmas shopping season.

Semi-annual dividend

Dividend of NOK 2.75 per share

  • The Board of Directors has decided to pay a half-year dividend of NOK 2.75 per share as a prepayment on the fiscal year 2023
  • Following the Q4 2023 results, the Board of Directors will propose the next half-year dividend to the annual general meeting in May 2024
  • The proposed pay-out details are:
    • Last day including right: 15 November 2023
    • Ex-date: 16 November 2023
    • Record date: 17 November 2023
    • Payment date: 29 November 2023
    • Date of approval: 8 November 2023 (Board Resolution according to proxy approved at the Annual General Meeting)

Segment: Kid Interior

KID Interior

(Amounts in NOK millions) Q3 2023 Q3 2022 Q1-Q3 2023 Q1-Q3 2022 FY 2022
Revenue 517,8 457,9 1 354,4 1 280,2 1 983,6
Revenue growth 13,1 % 1,4 % 5,8 % 7,0 % 5,3 %
LFL growth including online sales 12,7 % -1,0% 4,8 % 4,6 % 3,2 %
COGS -192,5 -209,3 -531,0 -533,3 -828,0
Gross profit 325,3 248,6 823,4 747,0 1 155,6
Gross margin (%) 62,8 % 54,3 % 60,8 % 58,3 % 58,3 %
Other operating revenue 0,0 0,0 0,1 0,1 0,1
Employee benefits expense -98,2 -89,2 -295,9 -277,4 -392,2
Other operating expense -109,9 -106,6 -330,5 -307,1 -434,4
Other operating expense -
IFRS 16 effect		 49,7 43,0 143,0 127,4 168,7
EBITDA 166,9 95,8 340,1 289,9 497,9
EBITDA margin (%) 32,2 % 20,9 % 25,1 % 22,6 % 25,1 %
No. of shopping days
No. of physical stores at period end		 79
156		 79
155		 227
156		 227
155		 308
156

Segment: Hemtex

Hemtex

(Amounts in NOK millions) Q3 2023 Q3 2022 Q1-Q3 2023 Q1-Q3 2022 FY 2022
Revenue 313,1 276,8 806,0 789,2 1 194,4
Revenue growth ¹ 10,5 % -1,0% -1,3% 3,9 % 3,2 %
LFL growth including online sales ¹ 13,3 % 0,8 % 1,0 % 2,7 % 2,8 %
COGS -122,7 -117,6 -324,1 -320,2 -503,6
Gross profit 190,4 159,2 481,9 469,0 690,8
Gross margin (%) 60,8 % 57,5 % 59,8 % 59,4 % 57,8 %
Other operating revenue 1,0 1,5 2,5 3,9 5,1
Employee benefits expense -63,3 -55,2 -188,8 -175,9 -237,6
Other operating expense -90,6 -87,7 -283,0 -258,0 -361,3
Other operating expense -
IFRS 16 effect		 36,9 29,0 112,0 91,9 122,6
EBITDA 74,5 46,9 124,5 130,9 219,7
EBITDA margin (%) 23,7 % 16,8 % 15,4 % 16,5 % 18,3 %
No. of shopping days
No. of physical stores at period end (excl.		 92 92 271 271 362
franchise)
¹
Calculated in local currency		 117 117 117 117 119

Income statement

(Amounts in NOK thousand) Q3 2023 Q3 2022 Q1-Q3 2023 Q1-Q3 2022
Revenue 830,9 734,7 2 160,4 2 069,4
COGS -315,1 -326,9 -855,2 -853,5
Gross profit 515,8 407,8 1 305,3 1 215,9
Gross margin (%) 62,1 % 55,5 % 60,4 % 58,8 %
Other operating revenue 1,0 1,5 2,6 4,0
OPEX -275,4 -266,6 -843,2 -799,2
EBITDA 241,4 142,7 464,6 420,8
EBITDA margin (%) 29,0 % 19,4 % 21,5 % 20,3 %
Depreciation and amortisation -101,8 -86,4 -298,4 -260,9
EBIT 139,6 56,3 166,2 159,9
EBIT margin (%) 16,8 % 7,6 % 7,7 % 7,7 %
Net finance -20,2 -12,4 -58,7 -34,7
Share of result from joint
ventures		 -1,3 -2,5 -1,6 -4,4
Profit before tax 118,0 41,3 105,9 120,7
Net profit 90,6 29,5 80,4 90,2

Statement of financial position

(Amounts in NOK thousand) Note 30.09.2023 30.09.2022 31.12.2022
Assets Unaudited Unaudited Audited
Goodwill 9 67 581 67 266 65 479
Trademark 9 1 511 858 1 511 606 1 510 224
Other intangible assets 9 42 635 24 518 35 326
Deferred tax asset 0 0 1 859
Total intangible assets 1 622 075 1 603 391 1 612 888
Right of use asset 9 1 039 539 795 465 760 734
Fixtures and fittings, tools, office machinery and
equipment		 9 299 657 202 190 237 245
Total tangible assets 1 339 196 997 655 997 979
Investments in associated companies and joint ventures 10 0 0 0
Loans to associated companies and joint ventures 8 37 591 23 158 23 795
Total financial fixed assets 37 591 23 158 23 795
Total fixed assets 2 998 862 2 624 204 2 634 663
Inventories 728 704 876 556 668 753
Trade receivables 10 135 16 153 12 094
Other receivables 27 013 32 963 35 241
Derivatives 61 783 148 448 59 449
Totalt receivables 98 931 197 564 106 784
Cash and bank deposits 0 6 482 75 721
Total currents assets 827 635 1 080 602 851 259
Total assets 3 826 500 3 704 809 3 485 922
(Amounts in NOK thousand) Note 30.09.2023 30.09.2022 31.12.2022
Equity and liabilities Unaudited Unaudited Audited
Share capital 48 770 48 770 48 770
Share premium 321 050 321 050 321 050
Other paid-in-equity 64 617 64 617 64 617
Total paid-in-equity 434 440 434 440 434 440
Other equity 812 384 860 279 838 940
Total equity 1 246 824 1 294 719 1 273 380
Deferred tax 322 902 346 100 322 723
Total provisions 322 902 346 100 322 723
Lease liabilities 767 079 553 919 523 528
Liabilities to financial institutions 6 671 658 621 642 521 646
Total long-term liabilities 1 438 737 1 175 561 1 045 175
Lease liabilities 302 320 259 201 258 257
Liabilities to financial institutions 6 75 853 200 695 30 000
Trade payable 152 038 113 496 122 459
Tax payable 0 14 314 57 745
Public duties payable 129 098 119 087 167 139
Other short-term liabilities 155 305 181 588 201 815
Derivatives 3 424 50 7 229
Total short-term liabilities 818 038 888 430 844 644
Total liabilities 2 579 676 2 410 091 2 212 542
Total equity and liabilities 3 826 500 3 704 809 3 485 922

Allocated segment costs

Total year
2023		 Total year
2022
(MNOK) Q1 2023 Q1 2022 Q2 2023 Q2 2022 Q3 2023 Q3 2022 Q4 2023 Q4 2022
Kid ASA and Kid Interior
Segment allocated employee benefits expense 4,2 3,3 4,0 4,0 4,0 4,0 3,9 12,3 15,2
Segment allocated other operating expense 0,5 0,6 0,5 0,6 0,5 0,5 0,5 1,4 2,1
Hemtex
Segment allocated employee benefits expense -4,2 -3,3 -4,0 -4,0 -4,0 -4,0 -3,9 -12,3 -15,2
Segment allocated other operating expense -0,5 -0,6 -0,5 -0,6 -0,5 -0,5 -0,5 -1,4 -2,1

17 Kid ASA – Q3 presentation

Quarterly revenue growth

Group
Total growth
Year Q1 Q2 Q3 Q4
2021 10,4 % 3,9 % 3,6 % 2,5 %
2022 9,3 % 8,8 % 0,5 % 2,1 %
2023 -1,3 % -2,5 % 12,1 %
Like-for-like growth
Year Q1 Q2 Q3 Q4
2021 9,3 % 2,9 % 0,1 % 0,2 %
2022 7,3 % 5,6 % -0,4 % 1,8 %
2023 -0,3 % -3,3 % 12,9 %
Kid Interior Hemtex
Total growth Total growth
Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4
2020 -3,6 % 28,0 % 22,1 % 15,3 % 2020 6,6 % 14,7 % -3,7 % -5,7 %
2021 13,6 % 1,7 % -3,9 % -1,0 % 2021 6,4 % 7,7 % 17,4 % 9,0 %
2022 12,5 % 8,9 % 1,4 % 2,3 % 2022 4,8 % 8,8 % -1,0 % 1,7 %
2023 5,2 % -1,1 % 13,1 % 2023 -10,9 % -4,8 % 10,5 %
Like-for-like growth Like-for-like growth
Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4
2020 -4,0 % 27,1 % 20,9 % 13,6 % 2020 7,9 % 18,0 % 9,2 % -1,9 %
2021 10,3 % -0,9 % -7,1 % -3,8 % 2021 7,8 % 9,8 % 14,6 % 7,8 %
2022 10,7 % 5,8 % -1,0 % 0,9 % 2022 2,0 % 5,2 % 0,8 % 3,5 %
2023 3,5 % -2,0 % 12,7 % 2023 -6,5 % -5,4 % 13,3 %
6,6 % 14,7 % -3,7 % -5,7 %
6,4 % 7,7 % 17,4 % 9,0 %
4,8 % 8,8 % -1,0 % 1,7 %
-10,9 % -4,8 % 10,5 %
rth
Q1 Q2 Q3 Q4
7,9 % 18,0 % 9,2 % -1,9 %
7,8 % 9,8 % 14,6 % 7,8 %
2,0 % 5,2 % 0,8 % 3,5 %
-6,5 % -5,4 % 13,3 %

Sales days and stores

Kid Interior Hemtex

Number of sales days Number of sales days

Year Q1 Q2 Q3 Q4 Total Year Q1 Q2 Q3 Q4 Total
2022 76 72 79 81 308 2022 89 90 92 91 362
2023 77 71 79 227 2023 89 90 92 271
Year Q1 Q2 Q3 Q4 Total Year Q1 Q2 Q3 Q4 Total
2022 76 72 79 81 308 2022 89 90 92 91 362
2023 77 71 79 227 2023 89 90 92 271

Number of store projects Number of store projects

2022 Q1 Q2 Q3 Q4 Total 2022 Q1 Q2 Q3 Q4
New stores 0 2 0 1 3 New stores 0 0 0 2
Closed stores 0 0 0 0 0 Closed stores 2 1 1 0
Relocated stores 0 1 2 3 6 Relocated stores 3 1 2 2
Refurbished stores 5 3 0 1 9 Refurbished stores 1 2 1 6
Total number of stores 153 155 155 156 Total number of stores* 130 129 128 130
2023 Q1 Q2 Q3 Q4 Total 2023 Q1 Q2 Q3 Q4
New stores 0 1 0 1 New stores 1 0 0
Closed stores 1 0 0 1 Closed stores 2 1 0
Relocated stores 2 1 0 3 Relocated stores 1 3 3
Refurbished stores 5 3 1 9 Refurbished stores 1 0 1
Total number of stores 155 156 156 Total number of stores* 129 128 128
Total number of LFL stores 152 152 152 Total number of LFL stores* 122 121 121
2022 Q1 Q2 Q3 Q4 Total 2022 Q1 Q2 Q3 Q4 Total
New stores 0 2 0 1 3 New stores 0 0 0 2 2
Closed stores 0 0 0 0 0 Closed stores 2 1 1 0 4
Relocated stores 0 1 2 3 6 Relocated stores 3 1 2 2 8
Refurbished stores 5 3 0 1 9 Refurbished stores 1 2 1 6 10
2023 Q1 Q2 Q3 Q4 Total 2023 Q1 Q2 Q3 Q4 Total
New stores 0 1 0 1 New stores 1 0 0 1
Closed stores 1 0 0 1 Closed stores 2 1 0 3
Relocated stores 2 1 0 3 Relocated stores 1 3 3 7
Refurbished stores 5 3 1 9 Refurbished stores 1 0 1 2
Total number of stores 155 156 156 Total number of stores* 129 128 128

*incl franchise stores

Logistic costs – Sweden

Logistic costs - Sweden

Total
year		 Total
year
(MSEK) Q1
2023		 Q1
2022		 Q2
2023		 Q2
2022		 Q3
2023		 Q3
2022		 Q4
2023		 Q4
2022		 2023 2022
Employee
benefits
expense		 2
2		 4
4		 6
5
Third-party
logistics
expense		 12
1		 10
5		 1
7		 10
9		 12
4		 15
4		 13
9		 49
1
Central
warehouse
expenses		 2
0		 1
7		 9
9		 2
0		 8
3		 1
6		 2
3		 20
2		 7
5
Total
incl
. non-recurring
items		 14
2		 12
1		 13
7		 12
8		 12
7		 14
0		 0
0		 17
7		 40
6		 56
6
Non-recurring
items
Employee
benefits
expense		 -0
8		 -0
6		 -1
4
Third-party
logistics
expense		 -2
2		 -1
7		 0
4		 -3
5
Central
warehouse
expenses		 -0
5		 -0
5
Total
excl
. non-recurring
items		 10
7		 12
1		 11
4		 12
8		 13
1		 14
0		 0
0		 17
7		 35
2		 56
6

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