DJ Showroomprive.com: 2018 ANNUAL RESULTS - SHOWROOMPRIVE CONFIRMS ITS GROWTH AND RECOVERS ITS PROFITABILITY
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Showroomprive.com
Showroomprive.com: 2018 ANNUAL RESULTS - SHOWROOMPRIVE CONFIRMS ITS GROWTH
AND RECOVERS ITS PROFITABILITY
18-March-2019 / 23:30 CET/CEST
Dissemination of a French Regulatory News, transmitted by EQS Group.
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2018 ANNUAL RESULTS
SHOWROOMPRIVE confirmS ITS GROWTH AND RECOVERS ITS PROFITABILITY
La Plaine Saint Denis, 13th March 2019 - Showroomprivé, a leading European
online retailer specializing in fashion for the Digital Woman, publishes its
annual results for the fiscal year ending 31 December 2018.
· *By means of a more selective approach, Showroomprivé pursues its
strategy of sustainable growth. *
· *Continued growth since the 2ndquarter, with revenues increasing
year-on-year by 3% (+3% in the 4th quarter).*
· *5% growth over the year in internet activity, its core business (+8% in
the 4thquarter).*
· *Net recovery of profitability in the 2ndsemester, led by a gross margin
that increased by 1.7 points to 37.4% and a strengthened control on
operational expenditures. *
· *The Group is focused on the execution of the "Performance 2018-2020"
plan, the first effects of which are materializing one quarter after the
other, this notwithstanding a year-end that exhibits a lacklustre consumer
climate. *
· *These actions all fall within a context of increasing loyalty of the
members and of the partner brands of the Group, which confirm the
relevance of the model. *
· *Speedy and important progress has been achieved in the framework of the
development of the partnership with Carrefour and will ambitiously
continue onward in 2019.*
· *In 2019, the priority of the Group remains that of pursuing its
strategy of selective growth and renewal with profitability more in line
with historical levels. *
KEY FIGURES 2018
(EUR millions) 2017 2018 % Growth H2 2017 H2 2018 % Growth
Net revenues 655.0 672.2 2.6% 348.8 356.8 2.3%
Total Internet 629.9 658.5 4.5% 332.3 351.5 5.8%
revenues
EBITDA 13.1 5.1 -60.8% 2.2 5.9 172.1%
EBITDA as % of 2.0% 0.8% -1.2 pt 0.6% 1.7% 1.1 pt
revenues
Net income -5.2 -4.4 16.8% -5.0 2.1
When commenting on these results, Thierry Petit and David Dayan, Co-founders
and Co-CEO's of Showroomprivé have declared:
"The year 2018 has been a pivotal year for Showroomprivé, since, in line
with our strategic plan launched in the first half of the year, we have
decided to clearly refocus our expansion around two main areas: a selective
growth that is strengthened by focusing on an improved operational
efficiency and the long-term reinforcement of our profitability, with an
overall control of our cost structure and the significant upturn of our
gross margin. Being henceforth backed up by enhanced capital, thanks to the
complete success of the increase in capital supported by the reference
shareholders, amongst which Carrefour, and completed at year end,
Showroomprivé takes on 2019 with confidence and ambition. A new chapter is
being written. We are very determined to carry the business to the utmost of
its wonderful potential".
2018 HIGHLIGHTS
The year 2018 has been fully dedicated to a refocusing on operational
priorities through the execution of the "Performance 2018-2020" plan, the
effects of which, ongoing since the 2nd quarter, confirm the diagnosis
carried out by the management of the Group.
1) Some first effects of the "Performance 2018-2020" plan which are
already visible over the year:
· The business has been able to move forward, in parallel, along two major
axes:
· Improvement of its margin, and
· Pursuit of a solid and lasting growth since the end of the first
quarter of 2018
· The improvement of the margin has been ongoing notwithstanding a higher
degree of commercial selectivity, a reduction in firm sales, and a
financial context at year end disrupted by social unrest which affected
the French economic performance of the last quarter.
· The SRP Group has nonetheless maintained an overall growth over the
year of close to 3%, and even 5% for its internet business, its core
business, thanks to the dynamics launched in the second quarter of 2018.
· Net rebound of the gross margin in the 2nd semester, with an increase of
1.7 points when compared to the same period of last year and of 2.4 points
when compared to the 1st semester.
· Control of operating expenses with general and administrative expenses
declining by close to half a million euros in the 2nd semester compared to
the 1st semester.
· Almost 6 million euros in EBITDA generated in the 2nd semester.
2) Confirmation of the attractiveness of the value of the Group
· The community of Showroomprivé members is ever more numerous and loyal:
· Continuation of good recruitment dynamics with 1.1 million new buyers
for 2018
· Ever stronger commitment of our members, with 82% of revenue generated
by regular buyers (+4 points vs. 2017) and a revenue per buyer increasing
by close to 4%
· Sustained satisfaction with a repeat purchase intention rate of close to
90%
· A long-term relationship with partner brands:
· 89% of revenues generated by the loyal brands of the Group
· A distribution channel which is growing, borne by the satisfaction of
our partners (revenues generated by the Top 20 increasing by 59% in
2018)
3) Major progress in the framework of the partnership with Carrefour
· Click-and-collect: confirmation of a preferential rate of EUR1.99 for
the year; close to 2000 points were open at year-end 2018; with an
objective of 3000 points for year-end 2019
· Progress in the advancement of our cross-marketing initiatives
· Launch of the first common data campaigns are foreseen in the first
half-year of 2019, in the framework of the increase in power of SRP Media
· Continuation of consideration relating to sourcing (development of the
offering of wines & spirits using drop shipments, considerations
surrounding Carrefour's own brands)
4) The success of the share capital increase, by a net amount of 39.5
million euros, confirms the renewed confidence of the shareholders, in
particular of Carrefour, and allows for the increase in the financial
flexibility of the Group in the framework of implementation of the
"Performance 2018-2020" plan.
· The increase in capital has also permitted financing of the purchase of
40% of the capital of the company Beautéprivée which is not yet held by
Showroomprivé, in view of reinforcing the leadership position of the Group
in the beauty and well-being field, with a strong potential for growth and
complementary to the fashion sector which is the traditional mooring of
the Group.
· This increase has moreover allowed the financing of the remaining part
of the logistics investment announced in March 2018, allowing for the
partial insourcing of logistics and thus the generation of gains in
productivity. The appreciation expected of this logistics plan is
estimated at approximately 4 million euros in EBITDA in 2020.
PERSPECTIVES FOR 2019
The Group reaffirms its desire to prioritise the pursuit of solid growth
that is both sustainable and profitable, particularly by leveraging its
partnerships with brands and its members. This rests on the pursuit for
reinforcement of operational efficiency and the development of new growth
opportunities, initiated within the framework of the "Performance 2018 -
2020" plan.
1) Strong levers for improvement of profitability
The Group thereby confirms the priority given to a speedy renewal with
levels of profitability more in line with historic levels, by acting on the
following levers:
· Improvement of gross margin
· Selectivity and maintained requirements as regards purchase conditions
· Operational improvement of the processing of returns
· Development of SRP Media
· Optimisation of firm purchases
· Concentration of efforts on key geographic areas
· Closing of B2C business in Germany, Poland and multi-currency sites
· Plan for savings and productivity gains of between 8 and 10 million
euros by 2020.
· Strict control of operating expenses
· Simplification of the organisation and productivity gains
· Optimisation of the marketing expenditures
· Finalisation of the logistics investment (allowing for the partial
insourcing of logistics and to thus generate productivity gains and cost
savings, with a positive impact on the EBITDA of approximately 4 million
euros by 2020)
2) New opportunities for growth and margin in the medium term, supported
by the strategic priorities of the Group
The Group will pursue the development of its three strategic medium term
axes which were divulged in the framework of the "Performance 2018-2020"
plan
· Continuation of SRP Media development and strong acceleration of Data
monetisation
· Partnership with Carrefour that is rich in future achievements and
projects
· On-time start-up of the mechanised warehouse in Q3 2019 allowing for the
insourcing of a part of the logistics flows of the Group.
Thomas Kienzi, CFO, has shared his decision to pursue other projects and to
leave the business following the publication of 2018 annual results. SRP
Group and its founders thank him for the quality of the work accomplished
and for his total commitment over the last four years. A recruitment process
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is presently underway for the position of Chief Financial Officer. Arnaud
Delmotte, Director of Group Management Control, will guarantee the
transition.
DETAILED commentS PER indicator TYPE
Revenues
(EUR millions) 2017 2018 % Growth
Internet revenue
France 518.7 546.2 5.3%
International 111.2 112.3 1.0%
Total Internet revenues 629.9 658.5 4.5%
Other revenues 25.1 13.7 -45.4%
Net revenues 655.0 672.2 2.6%
(EUR millions) Q4 2017 Q4 2018 % Growth
Net revenues 214.5 220.0 2.6%
The revenue of the Group has progressed by close to 3%, to 672 million
euros, borne by France, where sales have increased by 5%, and in a lesser
measure by the business of the Group internationally, which shows a growth
of 1%. The revenue on a like for like basis, results in a growth of 1.3%
when compared to 2017.
Annual growth is rising despite a difficult consumer environment in November
and December. In the fourth quarter, the Group posted growth of 2.6%.
Key performance indicators1
2017 2018 % Growth
Cumulative buyers (in millions) 7.9 9.0 13.6%
Buyers (in millions) 3.6 3.5 -2.1%
Number of orders (in millions) 15.7 15.1 -3.8%
Revenue per buyer 169.9 176.0 3.6%
Average number of orders per buyer 4.4 4.3 -1.8%
Average basket size 38.5 40.6 5.5%
Share of Revenues from Mobile 62% 68% 6 pts
1 Excluding Beautéprivée
The growth of the revenue in 2018 is stimulated by the increase in the
average revenue per buyer, which itself is borne by an increase in the
average basket size.
The Group has continued to expand its base of single buyers, with the
recruiting of 1.1 million new buyers in 2018, and registered 3.5 million
buyers over the year (vs 3.6 million in 2017).
The average revenue per buyer has continued to grow (+4%), reaching EUR176,
proving the growing commitment of the buyers of the Group. It was borne by a
growth of the average basket size of close to 6%, which largely compensates
for the slight reduction in the number of orders per buyer (-2%).
The growth of the Group is still supported by Mobile, which now generates
85% of the traffic and more than two thirds of the net revenue (68%), which
is to say an increase of 6 points in comparison to last year (62%).
EBITDA
(EUR 2017 2018 %Growth H2 H2 %Growth
millions) 2017 2018
France 25.7 15.7 -38.8% 8.6 12.1 40.1%
EBITDA France 4.7% 2.8% -1.9 pt 3.0% 4.0% 1.1pt
as % of
revenues
International -12.7 -10.6 16.1% -6.4 -6.2 -4.3%
EBITDA -11.4% -9.5% 1.9pts -11.3% -10.5% 0.8pt
International
in %
of revenues
Total EBITDA 13.1 5.1 -60.8% 2.2 5.9 172.1%
Total EBITDA 2.0% 0.8% -1.2pt 0.6% 1.7% 1.1pt
as % of
revenues
The EBITDA of the Group for fiscal year 2018 amounts to 5.1 million euros,
despite an EBITDA of -0.8 million euros in the first half, driven by the
rebound in profitability in the second half with an EBITDA of 5.9 million
euros up nearly 4 million euros compared to the second half 2017. This
rebound in profitability attests to the positive effects of the 2018-2019
performance plan that are beginning to materialize.
The EBITDA margin reaches 0.8% over the year, a drop of 1.2 points when
compared to 2017, but 1.7% over the second half of the year increasing by
1.1 point in comparison with the same period last year.
The improvement that has been observed can be explained by the joint effect
of an improvement of the gross margin, as well as a more measured increase
of the costs of logistics and order processing, and of overhead (see
paragraph below for more details).
The EBITDA margin in France amounts to 15.7 million euros, which is to say a
margin of 2.8%, declining by 1.9 point, substantially impacted in the first
quarter by the start of the year drop in business and the disposal of old
and obsolete remainders from firm purchases made in 2017, as well as the
investments announced in the framework of the "Performance 2018-2020" plan.
In the second half of 2018, the margin in France amounted to 12.1 million
euros.
The international business posts a drop in the losses of more than 2 million
euros, down to a loss of 10.6 million euros.
Cost structure
(EURmillions) 2017 2018 %Growth H2 2017 H2 2018 %Growth
Net revenues 655.0 672.2 2.6% 348.8 356.8 2.3%
Cost of goods -416.0 -428.5 3.0% -224,2 -223.4 -0.4%
sold
Gross margin 239.0 243.8 2.0% 124.6 133.4 7.1%
Gross margin as % 36.5% 36.3% -2.4 pts 35.7% 37.4% 1.7 pt
of revenues
Marketing[1] -34.4 -34.6 0.4% -21.4 -21.2 -0.6%
as % of revenues 5.3% 5.1% 6.1% 5.9%
Logistics and -150.5 -157.9 4.9% -79.6 -83.2 4.5%
order processing
as % of revenues 23.0% 23.5% 22.8% 23.3%
General and -50.8 -57.0 12.2% -26.2 -28.3 7.9%
administrative
expenses
as % of revenues 7.8% 8.5% 7.5% 7.9%
Total of current -235.7 -249.4 5.8% -127.2 -132.8 4.3%
operational
expenses
as % of revenues 36.0% 37.1% 36.5% 37.2%
Current operating 3.2 -5.7 -2.7 0.6
income
The gross margin reached 243.8 million euros (+2%) and represents 36.3% of
the revenue, presenting a slight drop of 0.2 point when compared to 2017.
The trend of the rate of the gross margin observed can be explained by the
combined effect of a drop of 2.4 points in the first semester to 35%,
impacted by the disposal of firm purchases made in 2017 at less favourable
sales conditions, and a net improvement in the second semester (+1.7 point
to 37.4%). The progress made in the second half was made possible thanks to
a higher level of commercial discipline, greater selectivity, reduction of
the weight of firm sales (25% of turnover down 4 points), and the ramp-up of
SRP Media.
Operating costs increased by 110 base points, passing from 36% to 37.1% of
revenue, mainly impacted by the logistics costs of Saldi Privati and the
effect of the full year of growth investments carried out in the 2nd
semester of 2017.
· Marketing expenses remain stable as far as value, at 5.1% of the revenue
(-0.2 point)
· Expenses for logistics and order processing pass from 23% of the
revenues in 2017 to 23.5% in 2018, impacted by the logistics contract of
Saldi Privati, with unfavourable financial conditions, which came to an
end in 2018. If the results were restated without these elements, they
would have remained stable as a percentage of the revenue.
· Lastly, the general and administrative expenses have increased 6 million
euros over the year, borne by the effect of the full year of the
investments carried out in the 2nd semester of 2017 (reinforcement of the
sales, IT and international teams as well as the creation of a SRP Media
team). But the primary effects of planned savings are already
materialising in the 2nd semester of 2018, with a decline of close to half
a million euros in overhead when compared to the 1st semester of the year.
Other financial elements
(EUR millions) 2017 2018 % Growth
Current operating income 3.2 -5.7
Other operating income and expenses -10.6 -0.7 -93.6%
Operating income -7.3 -6.3 13.7%
Cost of financial debt -0.2 -0.2 25.8%
Other financial income and expenses -0.4 -0.1 -81.1%
Profit before tax -7.9 -6.6 16.3%
Income tax 2.7 2.3 -15.2%
Net income -5.2 -4.4 16.8%
The Other operating income and expenses (loss of EUR0.7 million) are mainly
made up of:
· 5.4 million euros of proceeds associated with a global agreement
formalized in June 2018 with ePrice as part of the acquisition of Saldi
Privati. This agreement covers:
· the recovery of part of the purchase price for non-achievement of
performance criteria (2.5 million euros),
· the early unwinding as at 30 June 2018 of a logistics contract signed
with ePrice at the time of the acquisition of Saldi Privati ??which
generated the reversal of a provision for an expensive contract for 4.9
million euros, and the payment of an allowance of 2 million euros.
· 3.0 million euros of non-recurring expenses mainly related to internal
reorganization costs and consulting fees
· 1.8 million euros of expenses related to the allocation of bonus shares,
essentially at the time of the Group's IPO at the end of 2015.
· 1.3 million euros in litigation provisions.
The Group's tax benefit decreased by 15% to 2.3 million euros.
As a result, the Group's net profit came to -4.4 million euros, impacted by
the losses posted in the first half. In the second half of the year, net
profit amounted to 2.1 million euros.
Cash flow elements
(millions EUR) 2017 2018 H1 2018 H2 2018
Cash flows related to -38.2 6.7 -18.7 25.4
operating activities
Cash flows related to -20.8 -17.9 -9.9 -8.0
investment activities
Cash flows related to 12.9 40.7 -0.2 40.9
financing activities
Net change in cash and cash -46.1 29.5 -28.9 58.4
equivalents
The net change in cash and cash equivalents increases by 30 million euros
over the year.
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