DJ O'KEY Group S.A.: O'KEY Group announces operating results for Q1 2018
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O'KEY Group S.A. (OKEY)
O'KEY Group S.A.: O'KEY Group announces operating results for Q1 2018
17-Apr-2018 / 13:30 CET/CEST
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Press Release
17 Apr 2018
O'KEY GROUP ANNOUNCES OPERATING RESULTS FOR Q1 2018
O'KEY Group S.A. (LSE: OKEY, the 'Group'), one of the leading Russian food
retailers, announces its unaudited operating results for the first quarter
of 2018.
All materials published by the Group are available on its website
www.okeyinvestors.ru [1].
Q1 2018 operating highlights
- Group net retail revenue decreased by 6.9% YoY to RUB 39,840 mln from
RUB 42,797 mln. The revenue decline was primarily influenced by the
unwinding of the supermarket business in December 2017 and January 2018.
Group net retail revenue, adjusted for the sale of the supermarket
business, decreased by 0.7% YoY;
- Net retail revenue generated by O'KEY decreased by 9.1% YoY to RUB
36,909 mln. Adjusted for the sale of the supermarkets business, net retail
revenue decreased by 2.7% YoY as a result of the closure of hypermarkets
in Cherepovets and Sterlitamak in Q2 2017, the temporary closure of a
hypermarket in Moscow in Q3 2017 and growing competitive pressures;
- Net retail revenue generated by DA! grew by 35.9% YoY to RUB 2,931 mln,
supported by stable dynamics in traffic (up 32.1% YoY) and average ticket
(up 3.0% YoY);
- Like-for-like (LFL) net retail revenue of the Group marginally decreased
by 0.7% YoY, mainly driven by weaker than expected results in January,
while February and March saw sequential improvement, driven by better
promotional campaigns;
- Like-for-like (LFL) net retail revenue generated by O'KEY decreased by
1.6% YoY, on the back of a 2.5% YoY decline in LFL traffic and a 0.9% YoY
increase in LFL average ticket;
- Like-for-like (LFL) net retail revenue generated by DA! increased by
15.9% YoY, bolstered by a 12.7% YoY increase in LFL traffic and a 2.9% YoY
increase in LFL average ticket.
Guidance
- We expect net retail revenue generated by our hypermarkets business
(excluding the supermarkets business) to grow by low single digits in
2018, with new stores openings limited to two. We anticipate the EBITDA
margin will be within a range of 7-8% in 2018-2020. In 2020 we expect
growth to accelerate as a consequence of improved sales density and new
store additions;
- We forecast net retail revenue generated by our discounters business to
grow by approximately 50% YoY in 2018, driven by the opening of up to 30
new stores and improved sales density. EBITDA loss is expected to decline
by up to 50% YoY.
Stores development of the Group
Indicator Q1 2018 Q1 2017 Net change Change (%)
Number of stores 145 165 (20) (12.1%)
Number of net store 0 1 (1) (100.0%)
openings
Total selling space (sq. 577,968 623,611 (45,643) (7.3%)
m.)
Total selling space added 164 720 (556) (77.2%)
(sq. m.)
Group key operating indicators for the quarter
Segment Q1 2018 Q1 2017
Net Traffic Average Net Traffic Average
retail ticket retail ticket
revenue revenue
LFL group (0.7%) (0.8%) 0.1% (4.9%) (3.7%) (1.2%)
Group key operating indicators for the first three months of 2018
Indicator January February March
LFL net retail revenue (4.8%) (0.9%) 3.5%
LFL customer traffic 0.5% (1.2%) (1.7%)
LFL average ticket (5.2%) 0.3% 5.3%
O'KEY: Operating Review
Stores development
Indicator Q1 2018 Q1 2017 Net change Change (%)
Number of stores 78 110 (32) (29.1%)
Number of net store 0 0 0 n/a
openings
Total selling space (sq. 531,589 586,001 (54,412) (9.3%)
m.)
Total selling space added 0 0 0 n/a
(sq. m.)
In Q1 2018, O'KEY did not open any new hypermarkets. Under the framework
agreement on the sale of the supermarket business, 28 supermarkets were
closed by the end of the first quarter of 2018. The closure of the remaining
part of the supermarket business, which consists of four supermarket stores,
is expected within the next 12 months. As of 31 March 2018, our total number
of stores stood at 78, while total selling space came to 531,589 sq. m.
Key operating indicators for the quarter
Segment Q1 2018 Q1 2017
Net Traffic Average Net Traffic Average
retail ticket retail ticket
revenue revenue
LFL (1.6%) (2.5%) 0.9% (6.4%) (6.1%) (0.4%)
hypermar
kets and
supermar
kets
Key operating indicators for the first three months of 2018
Indicator January February March
LFL net retail revenue (6.0%) (1.7%) 2.9%
LFL customer traffic (1.7%) (2.6%) (3.0%)
LFL average ticket (4.4%) 0.9% 6.0%
The unwinding of the supermarkets business, effective from the beginning of
December 2017 and continuing into January 2018, weighed most heavily on the
Company's revenue dynamic in Q1 2018. Adjusted for the sale of the
supermarket business, net retail revenue dynamics remained largely unchanged
from the corresponding period last year, primarily influenced by growing
competitive pressures, the temporary closure of a hypermarket in Moscow and
the closure of hypermarkets in Cherepovets and Sterlitamak. The poor
performance in January 2018 was for the most part attributable to a decline
in average price per item on the back of slowdown in food inflation and less
effective marketing campaigns throughout the month. However, in February and
March 2018, the Company's like-for-like performance demonstrated the first
signs of recovery, underpinned by the catch-up in average ticket which was
driven by an increase in items purchased per client as a result of efficient
promotional activities. Remaining focused on the improvement of the
hypermarkets price perception in Q1 2018, the Company continued to enhance
the quality of marketing initiatives and promotional assortment zoning. The
share of announced promotions increased by almost 10% YoY to 27% as at the
end of Q1 2018, attributable to more proactive communication with customers.
The Company continues to put considerable effort into enhancing the customer
value proposition in line with the 'best value for money' concept and
increasing the overall efficiency of business processes.
DA!: Operating Review
Store development
Indicator Q1 2018 Q1 2017 Net change Change (%)
Number of stores 67 55 12 21.8%
Number of net store 0 1 (1) (100.0%)
openings
Total selling space (sq. 46,379 37,610 8,769 23.3%
m.)
Total selling space added 164 720 (556) (77.2%)
(sq. m.)
In the first quarter of 2018, the Company opened three new discounters in
the Moscow region and closed three discounters in Ryazan, Tula and Moscow
regions. Total selling space amounted to 46,379 sq. m, as of 31 March 2018.
Key operating indicators for the quarter
Segment Q1 2018 Q1 2017
Net Traffic Average Net Traffic Average
retail ticket retail ticket
revenue revenue
Discounters 35.9% 32.1% 3.0% 126.1% 96.6% 16.3%
LFL 15.9% 12.7% 2.9% 63.8% 41.6% 15.7%
discounters
Key operating indicators for the first three months of 2018
Indicator January February March
Net retail revenue 41.0% 32.9% 34.8%
LFL net retail revenue 20.3% 12.3% 15.5%
Customer traffic 41.3% 30.4% 26.2%
LFL customer traffic 19.4% 10.4% 8.8%
Average ticket (0.2%) 1.9% 6.8%
LFL average ticket 0.7% 1.7% 6.1%
Total sales amounted to RUB 2.9 bn in the first quarter, compared to RUB 2.2
bn for the same period last year. Stable and consistent growth in traffic
and average ticket, driven by increasing customer loyalty, supported revenue
this quarter. During the quarter, the Company continued to enhance the
commercial model by fine-tuning the private label assortment, implementing
various marketing initiatives and improving the overall customer experience.
New discounter openings are expected to accelerate from Q2 2018 onwards.
OVERVIEW
O'KEY Group S.A. (LSE: OKEY, Fitch - 'B+') is one of the largest retail
chains in Russia. The Company operates under two main formats: hypermarkets,
under the 'O'KEY' brand and discounters, under the 'DA!' brand.
As at April 17, 2018, the Group operates 145 stores across Russia. The Group
opened its first hypermarket in St. Petersburg in 2002 and has since
demonstrated continuous growth. O'KEY is the first among Russian food
retailers to launch and actively develop e-commerce operations in St.
Petersburg and Moscow, offering a full range of hypermarket products for
home delivery. The Company operates four distribution centres across the
Russian Federation.
For the full year 2017, revenue totalled RUB 177,454,848 thousand, EBITDA
reached RUB 9,334,993 thousand, and the net income for the period amounted
to RUB 3,166,913 thousand.
O'KEY shareholder structure is as follows: NISEMAX Co Ltd - 50.95%, GSU Ltd
- 29.52%, free float - 19.53%.
DISCLAIMER
These materials contain statements about future events and expectations that
are forward-looking statements. These statements typically contain words
such as 'expects' and 'anticipates' and words of similar import. Any
statement in these materials that is not a statement of historical fact is a
forward-looking statement that involves known and unknown risks,
uncertainties and other factors which may cause our actual results,
performance or achievements to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements.
None of the future projections, expectations, estimates or prospects in this
announcement should be taken as forecasts or promises nor should they be
taken as implying any indication, assurance or guarantee that the
assumptions on which such future projections, expectations, estimates or
prospects have been prepared are correct or exhaustive or, in the case of
the assumptions, fully stated in this announcement. We assume no obligations
to update the forward-looking statements contained herein to reflect actual
results, changes in assumptions or changes in factors affecting these
statements.
For further information please contact:
Veronika Kryachko
Head of Investor Relations
+7 495 663 6677 ext. 404
Veronika.Kryachko@okmarket.ru
www.okeyinvestors.ru [1]
ISIN: US6708662019
Category Code: QRF
TIDM: OKEY
Sequence No.: 5422
End of Announcement EQS News Service
675365 17-Apr-2018
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(END) Dow Jones Newswires
April 17, 2018 07:30 ET (11:30 GMT)
