Page 132 - RusRPTAug21

our absolute 2021E EBITDA projection.
Detsky Mir reported an expectedly strong trading update for 2Q21. Revenue was up 29.6% y/y in 2Q21, which is broadly in line with our forecast of c. 30%, and the retailer’s GMV grew 32.2% y/y. The growth in LfL sales accelerated from 7.9% in 1Q21 to 13.5% in 2Q21, as the strong recovery in traffic (+24.9%) offset the 9.1% drop in ticket. Online revenue was up 20.6% y/y, and its share was at c. 28% vs. 31% a year ago (due to the high base effect of lockdowns in 2Q20).
The retailer’s marketplace generated RUB592mn in sales (including VAT) and accounted for 5% of total online sales (vs. 0.8% in 2Q20). The assortment range expanded 3.7x y/y to 422,000 SKUs. As a reminder, the retailer targets 1mn SKUs by YE21 and 2.4mn SKUs by 2024, which should help Detsky Mir’s marketplace GMV reach a double-digit share in total online sales.
The retailer opened no new Detsky Mir supermarkets, three Zoozavr stores and 27 Detmir Pickups on a net basis in 2Q21. As a result, the retailer’s total selling space amounted to 922,000 square meters (+8.5% y/y). The retailer aims to roll out 70 Detsky Mir supermarkets, 70 Zoozavr stores and 100 Detmir Pickups in 2021, and we expect Detsky Mir to step up its openings during the rest of the year.
Importantly, DSKY’s CEO mentioned that management expects an adjusted EBITDA growth of at least 25% y/y in 1H21. Management remains committed to further consolidating the children’s goods market, although it also plans to accelerate the development of Zoozavr stores and explore new verticals for growth.
Detsky Mir has held an analyst meeting with management, providing an update on its operations and financials.
The key highlights are as follows, including the reiterated strategy guidance:
· The company has 22% of the children goods market and 90% in
specialised retail, as core competitors continue to close stores and
lose revenue.
· The 1H21 gross margin was comparable y/y, due to the shift to
higher margin categories in the mix. Detsky Mir is to invest in prices in 2H21 and try to mitigate them by having a higher share of private labels.
· In 2021, the gross margin is to be comparable y/y, but with the EBITDA margin slightly lower y/y.
· Target to double GMV by 2024, with the share of online at 45% by same year.
· The company is to open 230 Detsky Mir stores in the next two-three years, 500 Zoozavr outlets and 800 Detmir pick-up locations, with the latter rolled out in cities with less than 50k people.
· Aim to increase the share of private labels in revenues to 60% by 2024 (from 45% at present).
· Marketplace is to reach 10% of revenues by 2024. It currently has 1mn SKU (target of 2mn by 2024) and made RUB1bn sales in 2020.
· There are 1,200 suppliers and 2,000 brands in marketplace. 60% of
132 RUSSIA Country Report August 2021 www.intellinews.com