Release Date: March 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rusta AB (publ) (OSTO:RUSTA, Financial) reported a net sales growth of 7.3% for the third quarter, with a like-for-like growth of 4.3% in local currencies.
- The company successfully opened new stores, expanding its network to 220 stores, with plans to open 50 to 80 more stores in the next three years.
- Rusta AB (publ) (OSTO:RUSTA) experienced a significant increase in customer footfall and higher ticket item purchases, particularly in Sweden, indicating regained consumer confidence.
- The company has a strong balance sheet with a low net debt, allowing it to finance its growth internally without the need for bank loans.
- Rusta AB (publ) (OSTO:RUSTA) is launching an updated store concept across all its stores, expected to boost like-for-like sales by 1.5% to 2%.
Negative Points
- The company faced currency headwinds due to the strengthening of the Swedish crown against key trading currencies, impacting sales and gross margins.
- Rusta AB (publ) (OSTO:RUSTA) reported a lower gross margin of 43.5% in Q3, down by 0.9 percentage points from the previous year, due to negative currency effects and planned campaigning.
- The German market remains challenging, with underperforming stores and a hesitant market development affecting sales.
- Freight costs presented headwinds in the third quarter and are expected to continue into the fourth quarter before potentially decreasing.
- The company anticipates a delay in reaching its gross margin target range of 44% to 45% due to current exchange rate volatility.
Q & A Highlights
Q: Is the current gross margin level an indication that it won't reach the previously mentioned 44-45% interval?
A: Göran Westerberg, CEO, explained that while there is short-term pressure from currency headwinds, the long-term direction remains clear, and they expect to reach the target interval eventually.
Q: When will the recent EUR and USD exchange rate changes positively impact financials?
A: Göran Westerberg, CEO, stated that if exchange rates stabilize, it could take 6 to 9 months for the positive effects to appear in financials due to the time needed for purchasing, transporting, and selling goods.
Q: Have you applied learnings from your study to underperforming German stores, and have you seen improvements?
A: Göran Westerberg, CEO, confirmed that they are applying learnings to all stores, including those underperforming, and have seen some improvements, which builds confidence in their strategy.
Q: Can you quantify the improvement in current trading compared to Q3's 4.3% like-for-like growth?
A: Göran Westerberg, CEO, noted that February sales showed a step up from Q3, indicating a measurable improvement across all markets.
Q: How far are you from profitability in Germany, and what is driving your optimism?
A: Göran Westerberg, CEO, mentioned that profitability in Germany is still years away, but new store openings will provide insights into market response. Optimism is driven by positive developments in current trading and strategic adjustments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
