Showroomprive.com
Showroomprive.com: First half 2019 results - DECREASING EBITDA IN ACCORDANCE
WITH end of June ESTIMATES
25-Jul-2019 / 17:49 CET/CEST
Dissemination of a French Regulatory News, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
First half 2019 results
DECREASING EBITDA IN ACCORDANCE WITH end of June ESTIMATES
La Plaine Saint Denis, 25 July 2019 - Showroomprivé, a leading European
online retailer specialising in fashion for the Digital Woman, has published
its results for the first half of 2019, ended 30 June.
Results significantly impacted by non-recurring items
Revenues down -4.3% (-3.0% for Internet activities)
· -2.7 points from identified and non-recurring causes:
· 0.7 point due to the announced international
rationalisation
· 0.8 point from consequence of a non-renewed SRP media
operation in the first half despite a favourable underlying
trend
· 1.2 point due to physical wholesale impact on a weak
overall market
· -1.6 point related to a sluggish economic environment and
the optimization of marketing expenses, partially offset by
the resilience of our repeat buyers' base
EBITDA loss of -23.2 million euros, in line with expectations at
the end of June
· -12 million euros EBITDA, essentially impacted by revenues
decline, additional logistical costs and non-recurring mainly
non-cash items, masking gross margin improvement (+1.6 million
euros) and the progress of the cost optimization plan of
around 3 million euros
· -1 3 million euros of stocks depreciation with no impact on
cash
· +1,6 million euros from the entry into force of IFRS 16 on
January 1, 2019
Net result of -41.4 million euros including:
· -12.8 million euros of non-recurring expenses including
restructuring charges, discontinuation of a project that has
ceased to be of strategic value, consulting fees and
provisions for risks, and various other expenses, mainly
without cash impact in the first half
· +2.6 million of tax income
A solid financial structure
· Gross cash and cash equivalents: 41 million euros
· Net cash of 0.5 million euros[1] and shareholders' equity of
181 million euros
· Unused credit lines of more than 10 million euros
Return to profit expected in the second half of 2019
· Seasonality of the main activity
· More favorable financial position (inventories in
particular)
· Positive impact of cost optimisation efforts (decrease in
headcount, even if logistics costs will still weigh on the
profitability of the period)
· Opening of our new logistics warehouse (internalisation,
growth and better control over commercial flows)
New members of management
François de Castelnau has joined the Group as Chief Financial
Officer, bringing with him extensive financial experience in the
distribution sector.
Showroomprivé co-founders and co-CEOs Thierry Petit and David Dayan
commented: "The first half clearly didn't live up to our expectations - we
faced logistics issues and difficulties managing surplus inventories, in an
increasingly demanding environment. However, this disappointing performance,
composed of endogenous and exogenous elements, doesn't jeopardise the
strategic focus of our 2018-2020 performance plan, nor the suitability of
the value proposition for our clients. We plan to continue our actions by
first building on the resilience of orders placed by our loyal buyers' base,
who continue to demonstrate their strong attachment to the brand. Genuine
advances in operational optimisation have been made under our transformation
plan, with already positive effects at gross margin and cost savings levels.
We will continue to reap the benefits in the second half. We intend also to
step up and extend our logistics optimisation efforts, which present a major
challenge for the coming months. Our sights remain set on our goal to turn
our performance around".
KEY FIGURES
(EUR million) H1 2018 H1 2019 Growth
Net revenues 315.5 302.0 -4.3%
Total Internet revenues 307.0 298.0 -3.0%
Gross margin 110.4 88.7 -19.6%
as % of revenues 35.0% 29.4% -5.6pts
Current operating expenses -116.7 -119.8 2.7%
as % of revenues 37.0% 39.7% 2.7pts
EBITDA -0.8 -23.2
Net results -6.5 -41.4
The first half of 2019 was marked by a deviation of the Group's economic
performance from the trajectory of the "Performance 2018-2020" plan. The
Group has been impacted by economic factors affecting its business,
significant logistics overruns - particularly relating to returns handling -
and by a more challenging surplus inventory rundown, which led the Group to
record significant impairment on inventories.
These factors have masked the tangible results obtained under the
"Performance 2018-2020" plan. The Group is however starting the second half
of 2019 on more solid footing and intends to return to profitability during
the second half.
Decline in revenue in an unfavourable environment
(EUR million) H1 2018 H1 2019 Growth (%)
Internet revenues
France 253.4 248.9 -1.8%
International 53.6 49.1 -8.5%
International (like-for-like1)
Total Internet revenues 307.0 298.0 -3.0%
Other revenues 8.5 4.1 -51.7%
Net revenues 315.5 302.0 -4.3%
1 Retreated from closures of Polish,
German and multicurrency websites
First half revenues were down 4.3% to 302 million euros, due to a sluggish
global economic environment over the first six months of the year, and the
mechanical decline in revenues expected in International business.
Internet sales in France held up well, posting an economic decline of just
1.8%, in a context of optimisation of around a third of marketing
investments. These costs have been redirected towards promoting loyalty
amongst repeat buyers, rather than recruiting new ones. Nevertheless, the
appeal of the Showroomprivé brand has attracted 360,000 new buyers over the
first half. SRP Media, one of the key pillars of the Group's strategy,
suffered from an unfavourable comparison base with the lack of one major
advertising campaign, such as the one realised in H1 2018 which contributed
over EUR2.5 million. Adjusted for this operation, SRP Media's business was
up 8% in line with the strategy, which aims to more effectively monetise the
Group's assets.
Internationally, the decline in revenues can be attributed in equal part to
i) closures in certain countries and ii) a refocusing of the offer,
particularly at Saldi Privati in Italy, in order to concentrate on the most
profitable business opportunities and return to profitability in the first
half. The second quarter shows a better dynamic and marks a rebound which
nevertheless was unable to offset the decline of sales in the first quarter.
Other revenues, including non-internet sales, fell sharply. The Group
offered considerable discounts in an attempt to run down surplus inventories
via its non-internet sales channel, due to a sluggish inventory clearance
physical market over the first six months of the year. Logistics
difficulties in the handling of returns also weighed on business.
Key performance indicators*
H1 2018 H1 2019 Growth
buyers (in millions)** 2.3 2.2 -4.4%
of which loyal buyers 78.3% 83.2% 4.9pts
Revenue per buyer (EUR) 126.7 126.3 -0.3%
Number of orders (in millions) 7.0 6.7 -4.2%
Average Number of orders** 3.1 3.1 0.2%
Average Basket size (EUR)** 41.0 40.8 -0.6%
31/12/2018 30/06/2019 Growth
Cumulative buyers*** (millions) 9.0 9.4 0.4
* Excluding Beauteprivee
** IFRS
*** "Cumulative buyers" are all buyers who have made at
least one purchase on the Group platform since its launch
The Group's performance indicators are resilient in the context of a
downturn in activity in the first half of the year and the optimization of
marketing investments, confirming the solidity of the model.
Revenue per buyer is thus almost at equilibrium given the decline in the
number of buyers (particularly new ones), a change directly linked to the
optimisation of marketing costs, which have been redirected towards
engagement, loyalty and brand preference.
The number of repeat buyers has thus increased over the first half,
representing 83% of buyers and generating 88% of revenues, up three points
over the previous year. This increase reflects the efforts made to
reactivate its customer base and is in line with its strategy to reduce
acquisition expenses, while boosting revenues from repeat buyers.
However, Showroomprivé continued to attract more than 360,000 new buyers
during the first half, while drastically reducing the related marketing
costs.
The mobile continues its rise with a contribution that continues to strongly
support the activity. It represents 84% ??of the traffic and 69% of the
revenues, up by 3 and 7 points respectively.
Operational performance
(EUR million) H1 2018 H1 2019 Growth
Net revenues 315.5 302.0 -4.3%
Cost of goods sold -205.1 -213.3 4.0%
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