Good day and welcome to the Shop Apotheke Europe full year 2021 guidance call. This call will be starting at 11:00 A.M. Eastern Time for the duration of 30 minutes. Today's conference is being recorded. At this time, I would like to turn the conference over to CEO, Stefan Feltens. Please go ahead, sir. Thank you very much for the introduction. Good morning everyone. Jasper, who is also on the call, and I, we welcome you to Shop Apotheke's conference call regarding our updated guidance for the current year for 2021. Following a short introduction, we will, of course, be available to answer any questions that you might have. I'm sure by now you've all read the ad hoc statement that was released last night, just to make sure that we're all on the same page, let me quickly walk you through the guidance changes. Originally, we had projected top line year-over-year growth of around 20%. Now we are guiding towards a year-over-year growth of 10%-15%. In terms of our bottom line, we are now projecting an adjusted EBITDA margin at around breakeven level. This compares to our original guidance of 2.3%-2.8% of sales. Lastly, we are now estimating a full-year CapEx spending of around EUR 45 million. The key driver behind the revised guidance for full year 2021 are capacity constraints in our logistics processes, especially in light of a very tight labor market in the greater Venlo area. You are following the news, so you are certainly aware that we are not the only company that is dealing with such issues. Lower sales result in a lower growth margin in absolute euros. In addition, we will incur some additional labor costs to address our staffing needs. Furthermore, we will increase our investments to re-accelerate our growth and to get back onto the Shop Apotheke growth trajectory. I want to emphasize and, really in the name of Shop Apotheke's management board, that we are very confident that we will be able to debottleneck our logistics processes to be ready for the market opportunities in front of us. Our IT and our marketing are ready today for the eRx mandate that will become effective in Germany next year, both with front and backend functionality. We see ourselves in a pole position to leverage the eRx opportunity. With this short introduction, we would like to open the call for questions. To be fair to everybody, please limit yourself to two questions. If we have time left at the end, we will, of course, answer additional questions. Operator, please go ahead. We will now take our first question from Alexander Thiel from Jefferies. Please go ahead. Hi. Good morning. Can you hear me? Yeah, you're very well. Thank you. Yes. Perfect. Hi, Stefan Feltens and Jasper Eenhorst. Thank you for doing the call. My first question would be on the logistic issue. Could you give us more insights since when this issue has basically started? What is the underlying problem with seasonal workers? Can you quantify the numbers of workers that you're needing? My second question would be on your profitability guidance, right? We have seen it at 2% in Q1, so basically on track. What has basically changed? Is it the sales mix? Are you spending more on marketing? I think that the employee cost effects cannot be around EUR 20 million, right? Could you maybe talk about that a little bit? Thank you. Alex, thanks for the two questions. I'll start with the first question, and Jasper, you'll address the second question. The labor shortages. They started to materialize over the course of the second quarter. Again, to be transparent, that hasn't been resolved yet. In July, we are still experiencing a shortage in staffing. Alexander, it's a combination of, number one, we are operating two facilities in parallel at this point of time, even though we're going to wind down the old facility towards the end of this quarter. Admittedly, that is something that we had not anticipated. There is indeed a labor shortage in the market, especially in the greater Venlo area, but not just in the greater Venlo area. There is a plethora of actions that we have and will continue to implement to address this labor shortage. They are not all monetary in nature, but certainly there's also a monetary component to this to make sure that we remain competitive and we can, again, address the capacity constraints that we have at this point of time. All of this is fully reflected in our updated guidance and in terms of the change in the bottom line. Jasper, please add some color. Yeah. Okay. Thanks, indeed. We're saying now around breakeven, while up to including Q1, we were well on track of our guidance indeed. There are three main elements in that, Alexander. First of all, it is the Q2 impact of the missed sales, the missed contribution margin we had in Q2. That's number one of the three. Number one is the extra costs that we expect in our logistics in order to get, as soon as possible, on a robust way to our desired capacity levels. Number three is also that as of that moment, we really want to, again, immediately take back our market-leading position. We will invest in stepping up our growth to the levels that you are used to seeing from us. The cost of that are also included in the 2021 guidance. Okay, understood. Maybe one follow-up, and I'll keep it short. Can you quantify the number of workers that you're needing? Is it like 50, 100, 150? Can you just give us a ballpark we can think about? On the marketing side, are you seeing now some pressure on marketing? We know that Google and Facebook, they changed some algorithms. I know that this marketing, specifically on your side, is like 15% of the marketing you're doing. Are you seeing an impact there as well, or what's the matter there? Alex, with the number of employees that you are referring to, you are in the right ballpark. I'll leave it at this. It's not too far off from what we're aiming for. Again, we are always looking at the net because there is also some fluctuation. We're losing some people, but in terms of the net workers that we're aiming for, that we need to gain, that we need to attract to Shop Apotheke, you are in the right ballpark with your assumption. Yeah, as of to your marketing question, just in general, with the lower capacity, we reduced certain marketing means of us the past weeks, specifically on our website, and also mentioning that it will take longer before products get delivered. Of course, we take into account to not lose our group positions, for example, at Google. Yeah. Okay, understood. Thank you very much. We will now take our next question from Benjamin Attali from Bank of America. Please go ahead. Hi. Thanks very much for taking my question. I've got two. First of all, I was just wondering if you could give us a bit more detail in terms of the cadence of growth going through the second quarter, i.e., where was April versus May versus June? In that context, what have you seen in July so far? Is it reasonable to assume July has basically been on the same pretty negative level as June? Going forward, what kind of assumptions have you made in terms of the recovery for August, September, and 4Q in terms of the new guidance? That would be very helpful. The second question is just on how you're thinking about the budget in terms of the profitability. I suppose you've already cut some A&P in the second quarter, where you didn't have the ability to fulfill orders anyway. How are you thinking about spending the A&P going forward in the third and fourth quarter? Should we think of that as being the main drag in terms of the profitability downgrade today? Okay. I'll start and then in terms of profitability, Jasper will jump in again. Ben, you're right. July is not yet where we wanted to be. We mentioned, you see the preliminary numbers for the 2nd quarter, May and June, the 2nd quarter in total, especially May and June, we experienced these capacity constraints that had an impact on the number of orders that we could process. I mentioned a minute ago, this issue has not been resolved yet, July will probably be at a similar level. All we can say at this point of time is that we have the plans in place to address these capacity constraints. That's the reason, because we cannot give a precise timing, when will the additional staffing needs be fully met. That's why we are providing a range in terms of our top-line guidance for this year from 10%-15%. At this point of time, again, I need to leave it at this. Jasper? Jasper, thanks. Only some additional color, Ben. Indeed, it was particularly, certainly in June, that our growth was minimized. The start of the second quarter was as positive as Q1 was, where you saw some headwinds in the paper Rx that we were able to fully offset with very strong non-Rx performance in all of our seven countries and also in Germany specific. That was the situation until the mid of the second quarter, and then specifically in June, we had to reduce our sales, and that continued into July. As to your assumption that a big part of what we updated in our guidance is related to our total proposition and marketing, as you're saying, that is a correct assumption, yeah. Sorry, can I just have one follow-up just on that? When you're thinking about the quarterly adjusted EBITDA contribution, do you think therefore that the third and fourth quarter will be more negative than the second? Is that the sort of cadence we should expect going through the year? First of all, we give only guidance on a full year base. To give some color on what you're saying, there is not significant clarity on giving a precise answer to what you're saying. We gave our best estimates. How the phasing is exactly, that depends on the three elements we just discussed. The sales shortfall, probably additional cost for the logistic capacity, and then when we can step up our investments in growth again. It depends on that phasing. Yeah, I cannot be more precise as to the quarters. Yeah. Okay, brilliant. Thank you very much for that. No, thank you very much. Thanks for the question, Ben. Yep. We will now take our next question from Gerhard Orgonas from Berenberg. Please go ahead. Hello, it's Gerhard Orgonas from Berenberg to Ben. I have the two questions. Maybe about the new logistics. Can you tell us what happened from a technical perspective? I don't think the solution is to just hire more people, which you didn't find. I think the underlying problem is something that went wrong maybe in the automation, etc, and you successfully moved the international business last year. Why has something happened with the DACH business now? The 2nd question is, you said that you still have this problem is still ongoing in July. How far do you have sufficient visibility that your current guidance is kind of the worst case that can happen? Is there a little bit of improvement already that you've got visibility when these problems will be sorted out? Well, yes, thanks for the questions. The issue that we're facing is a shortage of labor, to be clear about this. If we didn't have the shortage of labor, there wouldn't have been a need to adjust our guidance. In terms of the automation, you're right. Last year, we transferred the international business. Again, in terms of the magnitude and number of orders, that is, of course, a relatively small proportion of what we did now with the transfer of the DACH business in March and April. The automation, again, there are some normal hiccups that you would expect if you start up a new facility, this is not the major issue that we're facing. The major issue that we're facing is simply a shortage of labor. We are losing people, or we have lost people. We have, at this point of time, we have problems attracting people, but again, without getting into the specifics, there's a plethora of actions that we have and will implement, and we are confident that over the coming months, we'll be able to de-bottleneck our logistics processes. The key issue is the shortage of labor. Just to be clear, that, Gerhard Orgonas, as you well know, actually this new facility, the automation part of it is running smoothly as of July, stepping up in February, etc. That is on track and was designed already 2 years ago for the introduction of eRx. That is actually the reason we want to have this capacity before the big change. Yeah. That's not impacted by it. There was a second half of your question, which I forgot at this moment. Can you please repeat it? Yeah. Do you see the light at the end of the tunnel? Is that why you're very confident that it's not going to get worse than breakeven on EBITDA, and that your guidance now is you have the full visibility for the rest of this year? Gerhard Orgonas, based on everything that we know today, this is the guidance that we want to provide to the market. We are confident. Rest assured that there's no intent on our side, that in a few months, we have to revise our guidance again. We are confident based on everything that we know today, that the guidance is realistic and that we will be able to meet the guidance update that we're providing today. Thank you. We will now take our next question from Olivier Calvez from Kepler Cheuvreux. Please go ahead. Yeah. Thanks. Hi, good morning. I was just wondering if you could come back on the impact of your main competitor's current advertising campaign and general market trends on the OTC segment, or let's say, non-Rx, generally speaking. Is this having an impact on your market share, or what can you tell us on this? Hey. Hi, Olivier. Good morning. Hi. The reason for the call today is that we gave updated guidance, and it's only related to the capacity constraints, which is mainly manpower-related. If any impact of what you're just saying, then it's a not significant impact. In Q1 and Q2, there was in general, you could say in Germany, perhaps some increased competitive activity, but everything was in line with our guidance as to growth and also as to marketing. No significant things happening there, but not significant impact on our business. Okay. Second question- Just to add one data point there. Through the end of June, our market share in Germany, our non-Rx market share in Germany, developed very nicely and according to projections. Again, it changed, of course, in June, when we were simply not able to meet the customer demand. Until then, our market share non-Rx in Germany developed really as anticipated. Okay, fair enough. Second question, could you give us a number on the Rx developments in Q2? You published a number as part of the Q1 pre-release. I would expect you to have it. Yes. You remember that already in Q1, we saw a decline in our Rx business. When we look at the half-year number, the decline came in at 26% across the first six months of the year. After the 19% decline in the first quarter, we saw an additional decline, a stronger decline of our Rx business in the second quarter. Sorry, just to clarify, the number I have in mind is 17 for Q1. Maybe it's my memory, right? Can you clarify this? Yeah, mine is 17.7 for Q1. Mine is 17.7. Okay. Yeah. Okay. Yeah. 18%, and now for the first half of the year, we're looking at a decline of 26%. Okay. Thanks a lot. We will now take our next question from Michael Heider from Warburg Research. Please go ahead. Yes, good morning. Thanks for taking my questions. Since most of the questions have been answered on the short-term issue, I would like to raise the question more generally on your view on the eRx introduction in Germany next year. There has been a lot of talk on the delay of the gematik app and the ramp-up of the test periods for gematik. At the same time, I think there was news that you will be able to simply scan the QR code, which is given on an eRx, which most of the time will be printed out when you go to see a physician. Can you confirm this, that you still believe that it will be a very easy access to the Rx business from your side by simply scanning the QR code, which I think would be a very positive news? Michael, that is our understanding, and there is a certain level of confidence that goes along with our understanding based on everything, and some of these are public statements, what we're hearing from the decision-makers in Berlin. I have to acknowledge, we will only have certainty once the ordinance from the health ministry on this specific topic will have been published. We are expecting this any day because this ordinance will have to be notified to the European Commission. That hasn't happened yet. Based on everything that we know, it is our understanding that the eRx token can be scanned by third-party apps, and that means it could be easily transmitted to your pharmacy of choice. Now it gets a little bit technical. The token is not the e-prescription, because sometimes also in the media, there is some confusion. The token will simply allow the pharmacy to access the e-prescription data set on the server of the gematik in the cloud. Again, what you outlined, that is our understanding based on everything. Again, there were some reconfirmations just recently from Berlin. That is our understanding, yes. Well, I mean, since you are a pharmacy in Germany, clearly it should be possible also for you to access the eRx via the token. Am I understanding? Absolutely. That is a given. There have been test runs. That is a given. The question that sometimes is being asked is how can the token be transmitted to your pharmacy of choice? There are statements, but again, we're waiting for the ordinance that third-party apps that it will be able and will be permissible to transfer the eRx token through third-party apps. That is our assumption also going forward. Great. Thanks a lot. We will now take our next question from Miro Zuzak from JMS Invest AG. Please go ahead. Hello, gentlemen. Thank you for taking my question. You basically blame the problems to the labor market in Venlo. That basically means that you as the CEO and the top management have forgotten to recruit the necessary people for your logistics hardware that you have in place. Now, I appreciate that you take responsibility for that and blame yourselves basically. If I compare the development with you guys to other online pharmacies who do not experience the same problems at all, then I have to ask myself whether this is the full truth, basically, or whether there must be, from my point of view, some other issues going on because you delivered EUR 284 million of revenues in Q1, much less in Q2. There must be like a huge exodus of people with your facilities. Please clarify what really has happened there. I've also heard that delivery times basically went up massively in connection with that. The second question would be, how much of the damage of the EUR 20 million, basically, the additional cost is dedicated to vouchers for customers who experience the very bad UX in the sense of delivery times? Thank you. Yeah. Again, the situation that we're on is not the desirable situation. As I mentioned before, we had not anticipated the tightening of the labor market over such a short period of time. But again, I'm repeating myself. This is the key issue, the shortage of labor that we have experienced in connection, again, with operating two facilities in parallel, at least through the end of Q3, and an increase in customer demand that we simply could not satisfy. As Jasper already mentioned, in the later part of the second quarter, we actually reduced our marketing investments in order to reduce the number of incoming orders, so that we did not, in the second quarter, compensate by issuing vouchers or maps. The extended delivery times that you are referring to, they're also a result simply of the bottlenecks, the capacity constraints that we are experiencing today in our logistics processes. Besides the shortage of labor market, I think you have some normal issues that we had anticipated in terms of starting up a new facility, transferring the bulk of our orders, meaning the DACH business, from the old to the new facility and starting up the automation. Again, that is something that we had anticipated. That had been part of our original guidance. The reason for changing the guidance today is really the shortage of labor that we have experienced. If I can add some color to that, Jasper here. At the start of the year in Q1, there was still a rather good flexibility on the labor market. The other things I'm saying now, the statements are not all factual, but it is our belief. It was also a very bad timing in hindsight from us to do a second part of the move, because the moment we did it was beautiful weather for the first time in Europe, and there was a lot of loosening of COVID measures. You saw some of our staff for the first time since a year, staff that's coming from other parts of Europe, they could go back to their families at that moment. You saw some other businesses like restaurants, hotels, etc, looking for people because of the loosening of COVID measures and people also for the first time being able to travel again. That all came together at the moment we did the move when it was a holiday season in Germany with holiday seasons like Corpus Christi, et c. There was a lot of things at the same time that led to the situation where our customer demand continued. We were doing the move, we were needing more people, and at that moment, it turned out that we were not the only one looking for a lot more people, and there was less availability and more demand. That was the situation that we faced in the second quarter. I have a follow-up if I may on this. Thank you very much. Why do you write in your email that the situation is ongoing? I think we are now three months later, almost in the quarter or let's say two months later in the next quarter. Why haven't you still resolved the issue when this was due to holiday season and people returning to their families at home? I think they will be back now by now, right, after two months. Why do you still think the issue is ongoing? Again, the issue is ongoing. Again, in July, we'll be at a similar level as June. We are in the middle of the holiday season right now. We had a higher fluctuation as a result of this. Again, combine this with looking at the broader labor market with a larger demand. Restaurants are opening up, other businesses are opening up. All this is a perfect storm in terms of having a tight labor market. Again, what we need to do is we need to put some monetary measures in place, some non-monetary measures in place in order to ensure that we attract the resources that we need in order to get back on our growth trajectory. Okay, thank you. Thank you. We will now take our next question from Uwe Schopf from Deutsche Bank. Please go ahead. Yeah. Good morning, gentlemen. Sorry, I was slightly late on the call, so apologies if you already answered some of my questions. Firstly, I guess it would be also all as much easier if you could have provided an order intake figure. I know it's a figure that you usually do not provide, but I guess just in terms of additional color, it would be rather helpful if you could give us the order intake growth so that we can put it in comparison and give some context to the revenue number that you already provided. How did that trend over the last couple of months would be rather helpful? Jasper, you mentioned in your earlier answer to the question, what was the reason for the weaker margin? You gave a third point, if I recall correctly, where you say that you want to defend your leading market position. What do I read into that? Is that really an increase in marketing spending in the first place, or what does it really mean? Thank you. Thank you. The clearest question to your first one is actually if we would not have had a logistic constraint, then our growth in the second quarter would have been 10% point higher, 9%- 10% point higher. We published a 7% growth, and it would have been a 17% growth. That's only based upon the backlog we had in processing orders. Not like intangibles, what if we would have had more marketing or less marketing, etc. I think that's the best answer to your question. That means a continuation of Q1, slightly lower because Q1 was 22%. That's the first question. Number three, indeed, Your question on my remark number three, deliberately, I left it a little bit open, but indeed it means that we will there do what it takes in order to get back on the customary growth levels. An example of that could be marketing. Appreciate the color, Jasper. Isn't that slightly contradictory given where you are currently with regards to the hiring? Should we read into that it's really more a Q4 thing when basically you look to be back in shape as regards the logistics issue? Totally correct. This we will do at the moment we have the robust, desired levels of capacity again. Yeah, absolutely. That was not the case yesterday. Got it. When we have the desired level again, now already you see that the promised times to our customers, they have returned to good levels. Yeah. There we are now, there we are in a better shape than we were a couple of weeks ago. The customers get their parcels generally on time again. That's much better this week than it was before. We still limit the capacity, orders in, as you say, until the moment that we can produce more orders again. Understood. Thank you very much. Thank you. That concludes today's question and answer session. Mr. Feltens, at this time, I will turn the conference back to you for any additional or closing remarks. Okay. Again, thanks for your attendance. Again, there are more fun calls to have than a call when you need to reduce your guidance. Again, it is what it is. Again, our intent was to provide some color in terms of the drivers and what's going to happen till the end of the year. We'll be able to provide more color at our Q2 earnings release call on the 5th of August. Of course, you always know how to find Jasper and me if you have any further questions in the meantime. At this point of time, on behalf of Jasper and me, I want to thank you again for your time, and I'm looking forward to talking to you in the not too distant future. Thank you very much. Bye-bye. Have a great weekend. This concludes today's call. Thank you for your participation. You may now disconnect.