DJ O'KEY Group S.A.: O'KEY Group announces operating results for Q4 and 12M 2018
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O'KEY Group S.A. (OKEY)
O'KEY Group S.A.: O'KEY Group announces operating results for Q4 and 12M
2018
29-Jan-2019 / 13:00 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
29 January 2019
O'KEY GROUP ANNOUNCES OPERATING RESULTS FOR Q4 AND 12M 2018
O'KEY Group S.A. (LSE: OKEY, the 'Group') announces its unaudited operating
results for the fourth quarter and twelve months of 2018.
All materials published by the Group are available on its website
www.okeyinvestors.ru [1].
Q4 2018 operating highlights
- Underlying Group net retail revenue, excluding the effect of the
supermarket business sale, increased by 0.7% YoY to RUB 45,684 mln;
- Underlying net retail revenue generated by O'KEY hypermarkets decreased
by 1.3% YoY to RUB 41 729 mln as a result of temporary closure of
hypermarket in Moscow (Pyatnitskoye highway, 7th km) in December[1] and
weaker than expected sales in October . Sequential pick up in sales in
November and December, driven by higher shelf inflation and growing number
of items per client, supported the revenue trend improvement;
- Net retail revenue generated by DA! grew by 28.8% YoY to RUB 3,954 mln,
supported by steady growth in traffic (up 22.1% YoY) and average ticket
(up 5.4% YoY);
- Like-for-like (LFL) net retail revenue of the Group decreased by 2.7%
YoY, mainly due to the reasons outlined above.
12M 2018 operating highlights
- Underlying Group net retail revenue, excluding the effect of the
supermarket business sale, fell by 1.1% YoY to RUB 159,380 mln;
- Underlying net retail revenue generated by O'KEY hypermarkets, excluding
the effect of the supermarket business sale, decreased by 3.4% YoY to RUB
145,821 mln;
- Net retail revenue generated by DA! grew by 31.9% YoY to RUB 13,559 mln;
- Like-for-like (LFL) Group net retail revenue decreased by 3.3% YoY, due
to a 2.6% YoY decrease in LFL traffic and a 0.6% YoY decrease in average
ticket;
- Two hypermarkets (in Moscow[2] and Novocherkassk) and nineteen new
discounters (in Moscow, Tver and Tula regions) were opened in 2018 while
four discounters (in Ryazan, Tula and Moscow regions) and one supermarket
in Omsk were closed.
Stores development of the Group
Indicator Q4 2018 Q4 2017 Net change Change (%)
Number of stores 160 145 15 10.3%
Number of net store 10 (23) n/a n/a
openings
Total selling space (sq. 584,914 577,804 7,110 1.2%
m)
Total selling space 6,485 (29,856) 36,341 n/a
added (sq. m)
Group key operating indicators for the twelve months of 2018
Segment 12M 2018 12M 2017
Net Traffic Average Net Traffic Average
retail ticket retail ticket
revenue revenue
LFL group (3.3%) (2.6%) (0.6%) (1.4%) (2.2%) 0.8%
Group key operating indicators for the quarter
Segment Q4 2018 Q4 2017
Net Traffic Average Net Traffic Average
retail ticket retail ticket
revenue revenue
LFL group (2.7%) (3.4%) 0.8% (0.5%) (0.7%) 0.2%
Underlying Group revenue dynamics by quarter, YoY
Parameter Q1 2018 Q4 2018 Q3 2018 Q4 2018
Underlying Group revenue (0.7%) (2.5%) (2.4%) 0.7%
O'KEY: Operating Review
Stores development
Indicator Q4 2018 Q4 2017 Net change Change (%)
Number of stores 78 78 0 0.0%
Number of net store (1) (31) 30 n/a
openings
Total selling space (sq. 528,124 531,589 (3,465) (0.7%)
m)[3]
Total selling space added (1,272) (35,667) 34,395 n/a
(sq. m)
In Q4 2018, one O'KEY supermarket was closed in Omsk in line with the
Group's strategic objectives. As of 31 December 2018, the total number of
stores stood at 78, while total selling space came to 528,124 sq. m.
Key operating indicators for the twelve months of 2018
Segment 12M 2018 12M 2017
Net Traffic Average Net Traffic Average
retail ticket retail ticket
revenue revenue
LFL O'KEY (4.3%) (4.8%) 0.4% (3.2%) (5.0%) 1.9%
Key operating indicators for the quarter
Segment Q4 2018 Q4 2017
Net Traffic Average Net Traffic Average
retail ticket retail ticket
revenue revenue
LFL O'KEY (3.7%) (5.6%) 2.0% (1.9%) (3.2%) 1.3%
Underlying O'KEY revenue dynamics by quarter, YoY
Parameter Q1 2018 Q4 2018 Q3 2018 Q4 2018
Underlying O'KEY revenue (2.7%) (5.1%) (4.8%) (1.3%)
The Company's performance in Q4 2018 was predominantly influenced by the
sale of its supermarkets business, which was initiated in December 2017.
Underlying O'KEY revenue, excluding the effect of the supermarket business
sale, demonstrated marginal improvement in Q4 2018. In the beginning of the
reporting quarter we initiated a number of initiatives aimed to improve
logistics operations and planning as well as overall quality of fresh and
ultra-fresh goods what along with a partial easing of the macroeconomic
environment resulted in sequential pick up of sales in November and
December. Growing competition in the retail sector with key competitors
adding as much as 15% net retail space on YoY basis remained the key growth
constraint resulting in underlying O'KEY revenue decrease by 1.3% YoY.
The effect of the gradual growth of food CPI in Q4 2018 was in part capped
by the soft consumption backdrop as real disposable income remained weak and
customers highly price sensitive. Smart promotional campaigns ahead of the
holiday season, along with improvements in assortment and marketing, helped
us slow down the decrease in items per client by 1p.p. QoQ. This
achievement, along with shelf inflation growth of 2.9% YoY, resulted in LFL
basket growth of 2.0% YoY.
During the quarter the Company continued to work on the enhancement of its
customer value proposition by revising the assortment matrix, focusing on
imported goods and further expansion of new private label brand 'O'KEY
Selection'. While upgrading of marketing campaigns remains one of the core
priorities we constantly strive to keep the share of promotions at healthy
stable levels with greater emphasis placed on promotions communicated
directly to customers (ca. 30%). The performance of promo campaigns in Q4
2018 was largely supported by successful launch of the customer relationship
system CRM Manzana, which helped to run the campaigns in a more efficient
way by providing customers special offers on goods based on their
preferences.
DA!: Operating Review
Store development
Indicator Q4 2018 Q4 2017 Net change Change (%)
Number of stores 82 67 15 22.4%
Number of net store 11 8 3 37.5%
openings
Total selling space (sq. 56,790 46,215 10,575 22.9%
m)
Total selling space added 7,757 5,811 1,946 33.5%
(sq. m)
In Q4 2018, the Company opened eleven new discounters in the Moscow, Tver
and Tula regions. Total selling space amounted to 56,790 sq. m as of 31
December 2018.
Key operating indicators for the twelve months of 2018
Segment 12M 2018 12M 2017
Net Traffic Average Net Traffic Average
retail ticket retail ticket
revenue revenue
Discounters 31.9% 27.8% 3.3% 81.8% 62.8% 11.7%
LFL 12.7% 9.5% 1.2% 52.0% 34.8% 12.7%
discounters
Key operating indicators for the quarter
Segment Q4 2018 Q4 2017
Net Traffic Average Net Traffic Average
retail ticket retail ticket
revenue revenue
Discounters 28.7% 22.1% 5.4% 55.6% 49.2% 4.3%
LFL 12.2% 9.5% 2.5% 33.3% 25.7% 6.1%
discounters
In Q4 2018 the Company demonstrated solid LFL net retail revenue growth of
12.2% YoY driven by stable LFL traffic growth of 9.5% YoY and LFL basket
increase by 2.5% YoY. While the former remains the result of growing
popularity of the customer value proposition, the latter was largely
influenced by the food CPI increase in Q4 2018. Average LFL price per item
increased by 3.8% in Q4 2018, primarily driven by price rises for flour,
vegetable oil and sugar - key traffic building categories, resulting in LFL
items per client decreasing by 1.2% YoY as the discounter format target
customer audience is usually more price sensitive.
In Q4 2018 the Company continued to enhance its customer value proposition
by improving the assortment mix and fine tuning in-store interiors to make
the customer shopping experience even better. During the last quarter the
Company rebranded several existing private label brands and introduced new
private label SKUs, while the total number of SKUs reached 2,571 (the share
of private label in revenue as of the end of Q4 is 48%). The regular promo
catalogues were expanded with additional pages dedicated to the private
label range. In order to make the in-store interior more comfortable and
customer friendly in Q4 2018 we installed additional shelves in the bakery,
beer/drinks and grocery sections, improved the lighting system in cosmetics,
fruit/vegetables and in-outs sections and installed new cash till equipment.
OVERVIEW
O'KEY Group S.A. (LSE: OKEY, RAEX - 'ruA-') operates under two main formats:
hypermarkets, under the 'O'KEY' brand and discounters, under the 'DA!'
brand.
As at 29 January 2019, the Group operates 160 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 Group 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.
The 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]
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[1] Hypermarket at trade center 'Otrada' (Pyatnitskoye highway, 7th km) was
temporary closed from 4th to 11th of December due to the reasons pertinent
to trade center operations.
[2] RIO hypermarket in Moscow was closed in July 2017 and reopened in May
2018.
[3] Total selling space net of 9,728 sq. m leased to Familia and other
strategic partners.
ISIN: US6708662019
Category Code: MSCH
TIDM: OKEY
LEI Code: 213800133YYU23T4L791
Sequence No.: 7280
EQS News ID: 770483
End of Announcement EQS News Service
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(END) Dow Jones Newswires
January 29, 2019 07:00 ET (12:00 GMT)
