Page 103 - RusRPTSept20

second quarter results. Based on challenging 2Q20, Detsky delivered weak results under IFRS 6 that was partly expected. Declined gross margin was offset by lower selling, general and administrative expenses (SG&A) costs as percentage of revenue. Still EBITDA was down 7.6% y/y. Net income was at lower levels due to one-offs, including FX loss, higher tax rate.
● Revenue rose 2.9% y/y vs 11.2% in 1Q20, driven by 10% y/y growth in selling space and 0.8% increase in like-for-like (LFL) sales in Russian and Kazakhstan. Revenue in Kazakhstan decreased by 17.3% y/y to Rb634mn. The share of private labels in revenue increased by 5.7pp to 47.9% in 2Q20. Online revenue increased 3.2x y/y to Rb8.7bn with 31.1% share of revenue in Russia
● Gross profit declined 6.6% y/y with gross margin decreasing from 33.9% in 2Q19 to 30.8% in 2Q20 mainly due raised share of low- margin products (baby food, diapers) in sales and additional promos
● SG&A slightly decreased to 12.6% of revenue in 2Q20 from 13.4% in 2Q19 due to lower staff costs
● EBITDA is 3% below BCSe on IFRS 16, declining 7.6%
● EBITDA margin reduced from 20.2% in 2Q19 to 18.1% in 2Q20
● Net income was low at Rb737mn mainly due to decreased EBITDA, FX loss and higher tax rate
● Net debt was down 5% y/y to Rb24.9bn. Net debt /adj. EBITDA ratio stood at 1.6x as of 30 June 2020
The medium term guidance was provided. At least 300 stores will be opened in Russia, Kazakhstan and Belarus and 800 Detmir Pickup stores along with 500 Zoozavr pet supplies stores. Detsky Mir expects to maintain double-digit growth in total sales in the medium term by developing its omnichannel business model, with the share of online sales reaching 45% in the children’s goods category and 30% in the pet supplies category. In 2021-2024, Detsky Mir plans to launch 5 new DCs, while the level of investment required for each federal distribution centre should not exceed Rb2.5bn, CAPEX per regional warehouse Rb100mn. IT infrastructure CAPEX will not exceed Rb4bn in M-T. Also, Detsky plans to maintain its operational efficiency at double-digit on adjusted EBITDA margin under IAS 17 in the medium term.
Russian shoe shop Obuv Rossii (Shoes of Russia) sees a 56% drop in sales due to the lockdown. Obuv Rossii published 2Q20 Trading Update. Weak results included 56% drop in sales and +0.1% in LfL sales on the back of the lockdown related to the COVID-19. Expectedly weak results, driven by the lockdown related to the COVID-19. The stores were closed, so revenue dropped 56% y/y in 2Q20. Cash loan portfolio continued to grow y/y, but weakened q/q. Meanwhile, by the end of June 2020 most of the stores has been functioning in the normal mode, so recovery can be expected in 3Q20.
§ The Group’s revenue dropped 56% y/y vs +3.9% in 1Q20 due to the lockdown measures
Share of related products in retail sales was 36.6% vs 43.5% in 1Q20 Online sales dropped 57.7% y/y
§ The Group’s LfL sales increased by 0.1% y/y, decelerating from +0.3% in 1Q20 (vs 9.3% in 2Q19)
§ Total number of stores reached 859 (+2.6% y/y), including 175
103 RUSSIA Country Report September 2020 www.intellinews.com