DJ O'KEY Group S.A.: O'KEY Group announces operating results for Q1 2019
O'KEY Group S.A. (OKEY)
O'KEY Group S.A.: O'KEY Group announces operating results for Q1 2019
16-May-2019 / 12:29 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
16 May 2019
O'KEY GROUP ANNOUNCES OPERATING RESULTS FOR Q1 2019
O'KEY Group S.A. (LSE: OKEY, the 'Group') announces its unaudited operating
results for the first quarter of 2019.
All materials published by the Group are available on its website
www.okeyinvestors.ru [1].
Q1 2019 operating highlights
- Underlying Group net retail revenue, excluding the effect of the
supermarket business sale, increased by 0.7% YoY to RUB 39,421 mln
- Underlying net retail revenue generated by O'KEY hypermarkets decreased
by 2.2% YoY in Q1 2019 to RUB 35,437 mln as a result of weaker than
expected sales in January . Sequential improvement in sales in February,
March and April, driven by significant traffic improvements and higher
shelf inflation, supported the revenue dynamics YTD
- Net retail revenue generated by DA! grew by 36.0% YoY to RUB 3,985 mln
in Q1 2019, supported by a steady growth in traffic (up 25.9% YoY) and the
average ticket (up 8.6% YoY). During the first four months of 2019,
discounters demonstrated solid growth dynamics consistently improving the
top line on YoY basis
- Like-for-like (LFL) net retail revenue of the Group decreased by 1.3%
YoY in Q1 2019 due to a 3.4% YoY decrease in LFL traffic and a 2.2% YoY
increase in the LFL average ticket
- Like-for-like (LFL) net retail revenue generated by O'KEY hypermarkets
decreased by 3.7% YoY in Q1 2019 as a result of a 6.0% YoY decrease in LFL
traffic and a 3.3% YoY increase in the LFL average ticket. The Q1 2019
performance was affected by weaker January sales. The LFL net retail
revenue trend moved into positive territory in April (+2.1% YoY)
- Like-for-like (LFL) net retail revenue generated by DA! increased by
21.4% YoY in Q1 2019, driven by a 9.5% YoY increase in LFL traffic and a
7.4% YoY increase in the LFL average ticket
- Two discounters (in the Moscow and Kaluga regions) were opened in Q1
2019
Guidance 2019
- We expect hypermarkets' top line growth to be around zero for the whole
year
- We expect double digit LFL growth for DA! and we plan to open up to 30
discounters by the year end
Stores development of the Group
Indicator Q1 2019 Q1 2018 Net change Change (%)
Number of stores 162 145 17 11.7%
Number of net store 2 0 2 n/a
openings
Total selling space (sq. 586,357 571,881 14,476 2.5%
m)
Total selling space added 1,443 164 1,279 n/a
(sq. m)
Group key operating indicators for the quarter
Segment Q1 2019 Q1 2018
Net Traffic Average Net Traffic Average
retail ticket retail ticket
revenue revenue
LFL group (1.3%) (3.4%) 2.2% (0.7%) (0.8%) 0.1%
Underlying Group net retail revenue dynamics by quarter, YoY
Parameter Q2 2018 Q3 Q4 2018 Q1 2019
2018
Underlying Group net retail (2.5%) (2.4%) 0.8% 0.7%
revenue
Key operating indicators by month
Indicator January February March April
Net retail revenue (4.4%) 1.7% 1.6% 5.9%
LFL net retail revenue (3.7%) 0.2% (0.2%) 3.6%
Customer traffic (10.2%) (1.4%) 1.1% 5.3%
LFL customer traffic (7.1%) (2.5%) (0.7%) 2.5%
Average ticket 6.5% 3.1% 0.5% 0.6%
LFL average ticket 3.6% 2.7% 0.5% 1.1%
Underlying Group net retail revenue dynamics by month
Parameter January February March April
Underlying Group net retail revenue (2.0%) 2.0% 1.8% 5.9%
O'KEY: Operating Review
Stores development
Indicator Q1 2019 Q1 2018 Net change Change (%)
Number of stores 78 78 0 0.0%
Number of net store 0 0 0 n/a
openings
Total selling space (sq. 528,124 525,502 2,622 0.5%
m)[1]
Total selling space added 0 0 0 n/a
(sq. m)
In Q1 2019, O'KEY did not open any new hypermarkets. As at 31 March 2019,
the total number of stores stood at 78, while total selling space came to
528,124 sq. m.
Key operating indicators for the quarter
Segment Q1 2019 Q1 2018
Net Traffic Average Net Traffic Average
retail ticket retail ticket
revenue revenue
LFL O'KEY (3.7%) (6.0%) 2.5% (1.6%) (2.5%) 0.9%
Underlying O'KEY net retail revenue dynamics by quarter, YoY
Parameter Q2 2018 Q3 2018 Q4 2018 Q1 2019
Underlying O'KEY net retail (5.1%) (4.8%) (1.3%) (2.2%)
revenue
Key operating indicators by month
Indicator January February March April
Net retail revenue (7.8%) (2.0%) (2.4%) 2.1%
LFL net retail revenue (6.0%) (2.3%) (2.8%) 1.4%
Customer traffic (14.7%) (6.5%) (4.1%) 0.1%
LFL customer traffic (9.4%) (5.6%) (3.3%) 0.3%
Average ticket 8.1% 4.7% 1.8% 2.0%
LFL average ticket 3.8% 3.4% 0.5% 1.1%
Underlying O'KEY net retail revenue dynamics by month
Parameter January February March April
Underlying O'KEY net retail (4.6%) (0.9%) (1.4%) 2.1%
revenue
The Company's performance in Q1 2019 was mostly influenced by the sale of
its supermarket business, which was initiated in December 2017. Initiatives
launched at the end of 2018, aimed at improving logistics operations and the
overall quality of fresh and ultra-fresh goods, led to a gradual traffic
recovery in February, March and April, which, along with higher shelf
inflation supported the revenue dynamics during the first quarter of 2019.
As a result, underlying O'KEY revenue decreased in Q1 2019 by 2.2% YoY.
The macroeconomic environment remained mixed in Q1 2019. The consumer price
index (CPI) for food jumped to 5.8% during the reported quarter, largely
driven by a tighter supply-demand balance on the sugar market, rapid growth
in meat and poultry prices, and higher prices for grains - all of which led
to a significant increase in shelf inflation to 5.7%. At the same time,
consumer sentiment remained weak in Q1 2019 as real disposable income
decreased by 2.3% YoY, leading to a marginal decline in items purchased per
customer. According to the Central Bank of Russia, customers remained highly
price-sensitive during the reported quarter. The percentage of customers
buying cheaper staples rose on average to 35% in Q1 2019 from 27% a year
ago, while the percentage of customers buying less frequently or giving up
buying some products averaged 25% in Q1 2019 from 21% a year ago. These
developments in the macroeconomic environment were the predominant factors
defining the Companies performance in Q1 2019, leading to a LFL basket
growth of 2.5% YoY.
During the quarter, the Company continued to work on enhancing its customer
value proposition by revising its product mix and further developing the
middle and premium ranges. In efforts to broaden the imported goods
category, the wine and spirits section at the Litvinovo distribution centre
was expanded.
DA!: Operating Review
Stores development
Indicator Q1 2019 Q1 2018 Net change Change (%)
Number of stores 84 67 17 25.4%
Number of net store 2 0 2 n/a
openings
Total selling space (sq. 58,233 46,379 11,854 25.6%
m)
Total selling space added 1,443 164 1,279 n/a
(sq. m)
In Q1 2019, the Company opened two new discounters in the Moscow and Kaluga
regions. Total selling space amounted to 58,233 sq. m as at 31 March 2019.
Key operating indicators for the quarter
Segment Q1 2019 Q1 2018
Net Traffic Average Net Traffic Average
retail ticket retail ticket
revenue revenue
Discounters 36.0% 25.9% 8.6% 36.0% 32.1% 3.0%
LFL 21.4% 9.5% 7.4% 15.9% 12.7% 2.9%
discounters
Key operating indicators by month
Indicator January February March April
Net retail revenue 31.8% 38.5% 39.4% 38.7%
LFL net retail revenue 16.3% 23.6% 20.4% 19.0%
Customer traffic 18.1% 28.4% 30.8% 32.1%
LFL customer traffic 6.7% 16.0% 13.5% 13.6%
Average ticket 11.6% 7.9% 6.6% 5.0%
LFL average ticket 9.0% 6.6% 6.1% 4.8%
In Q1 2019, the Company demonstrated a strong LFL net retail revenue growth
of 21.4% YoY, driven by a combination of customers' growing appreciation of
the discounter business model and continuing growth of inflation. Further
food CPI increasing during the reporting quarter resulted in a LFL shelf
inflation growth of 9.5% YoY. The solid shelf inflation increase is largely
attributable to the assortment mix structure at discounters (46% private
labels) and sales structure (characterised by a higher share of essential
goods such as bread, sugar, and eggs, etc.), and was partially offset by a
LFL decline in items per customer by 2.1% YoY - a natural result of
inflation. At the same time, prices for essential goods at the Group's
discounters remained among the most competitive in the industry, which was
reflected in a strong LFL traffic growth of 9.5% YoY.
In Q1 2019, the Company continued to improve its customer value proposition
by improving the assortment mix and fine-tuning in-store interiors to make
the customer journey more enjoyable. Paying high attention to the quality
and appeal of our private label (PL) products, we rebrand and enhance the
recipes of our existing PL brands on an ongoing basis. During the last
quarter, the Company expanded the SKU range of its private label brand,
'Farm Collection'. As customer demand for private label products
strengthened during Q1 2019, we performed remerchandising of our PL products
across the discounter chain to provide our customers an even more seamless
shopping experience. In order to make the in-store interior more comfortable
and ready for the summer season, additional drinks chillers were installed
in Q1 2019.
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 16 May 2019, the Group operates 162 stores across Russia (78
hypermarkets and 84 discounters). 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 six e-commerce
pick-up points in Moscow and six e-commerce pick-up points in St.
Petersburg. The Group operates four distribution centres across the Russian
Federation - two in Moscow and two in St. Petersburg. As at 31 December 2018
the Group employs more than 20,000 people.
For the full year 2018, revenue totalled RUB 161,303,411 thousand, EBITDA
reached RUB 8,644,008 thousand, and net loss for the period amounted to RUB
599,755 thousand.
The O'KEY shareholder structure is as follows: NISEMAX Co Ltd - 44.79%, GSU
Ltd - 29.52%, free float - 25.69%.
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] Total selling space net of 9,728 sq. m leased to Familia and other
strategic partners.
ISIN: US6708662019
Category Code: QRF
TIDM: OKEY
LEI Code: 213800133YYU23T4L791
Sequence No.: 8660
EQS News ID: 812385
End of Announcement EQS News Service
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May 16, 2019 06:29 ET (10:29 GMT)
