O'KEY Group S.A. (OKEY)
O'KEY GROUP ANNOUNCES OPERATING RESULTS FOR Q2 AND 1H 2019
29-Jul-2019 / 18:43 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 July 2019
O'KEY GROUP ANNOUNCES OPERATING RESULTS FOR Q2 AND 1H 2019
O'KEY Group S.A. (LSE: OKEY, the 'Group') announces its unaudited operating
results for the second quarter and first half of 2019.
All materials published by the Group are available on its website
www.okeyinvestors.ru [1].
Q2 2019 operating highlights
- Underlying Group net retail revenue, excluding the effect of the
supermarket business sale, increased by 6.1% YoY to RUB 39,510 mln.
- Underlying net retail revenue generated by O'KEY hypermarkets increased
by 3.0% YoY in Q2 2019 to RUB 34,911 mln resulting from traffic growth and
increased basket size.
- Net retail revenue generated by DA! grew by 37.8% YoY to RUB 4,599 mln
in Q2 2019, supported by a steady growth in traffic (up 30.9% YoY) and the
average ticket (up 5.3% YoY).
- Like-for-like (LFL) net retail revenue of the Group increased by 3.3%
YoY in Q2 2019 due to a 1.7% YoY increase in LFL traffic and a 1.5% YoY
increase in the LFL average ticket.
- Like-for-like (LFL) net retail revenue generated by O'KEY hypermarkets
increased by 1.8% YoY in Q2 2019 as a result of a 0.3% YoY decrease in LFL
traffic and a 2.1% YoY increase in the LFL average ticket. The Group's
hypermarkets achieved an ongoing gradual improvement in LFL performance.
- Like-for-like (LFL) net retail revenue generated by DA! increased by
17.9% YoY in Q2 2019, driven by a 11.4% YoY increase in LFL traffic and a
5.8% YoY increase in the LFL average ticket. The Group's discounters saw
an ongoing gradual improvement in LFL traffic.
- Two discounters were opened in Q2 2019.
1H 2019 operating highlights
- Underlying Group net retail revenue, excluding the effect of the
supermarket business sale, increased by 3.4% YoY to RUB 78,926 mln.
- Underlying net retail revenue generated by O'KEY hypermarkets increased
by 0.4% YoY in 1H 2019 to RUB 70,342 mln as a result of increased traffic
and higher shelf inflation.
- Net retail revenue generated by DA! grew by 37.0% YoY to RUB 8,583 mln
in 1H 2019, supported by a steady growth in traffic (up 28.6% YoY) and the
average ticket (up 6.5% YoY).
- Like-for-like (LFL) net retail revenue of the Group increased by 0.6%
YoY in 1H 2019 due to a 0.8% YoY decrease in LFL traffic and a 1.4% YoY
increase in the LFL average ticket.
- Like-for-like (LFL) net retail revenue generated by O'KEY hypermarkets
decreased by 1.0% YoY in 1H 2019 as a result of a 3.2% YoY decrease in LFL
traffic and a 2.3% YoY increase in the LFL average ticket.
- Like-for-like (LFL) net retail revenue generated by DA! increased by
18.7% YoY in 1H 2019, driven by a 11.8% YoY increase in LFL traffic and a
6.2% YoY increase in the LFL average ticket.
- Four discounters were opened in 1H 2019.
Guidance 2019
- We expect our hypermarkets' top line growth to be around zero for the
full year.
- We expect double-digit LFL growth for DA! and plan to open up to 30 new
discounters by year end.
Stores development of the Group
Indicator Q2 2019 Q2 2018 Net change Change (%)
Number of stores 164 147 17 11.6%
Number of net store 2 2 0 0.0%
openings
Total selling space (sq. 587,778 577,248 10,530 1.8%
m)
Total selling space added 1,421 1,314 107 8.1%
(sq. m)
Group key operating indicators for the first half of 2019
Segment 1H 2019 1H 2018
Net Traffic Average Net Traffic Average
retail ticket retail ticket
revenue revenue
Group 2.2% 0.8% 1.4% (8.7%) (12.4%) 4.2%
Group LFL 0.6% (0.8%) 1.4% (2.3%) (1.5%) (0.8%)
Group key operating indicators for the quarter
Segment Q2 2019 Q2 2018
Net Traffic Average Net Traffic Average
retail ticket retail ticket
revenue revenue
Group 5.7% 5.2% 0.5% (10.6%) (13.8%) 3.8%
Group LFL 3.3% 1.7% 1.5% (4.0%) (2.2%) (1.8%)
Underlying Group net retail revenue dynamics by quarter, YoY
Parameter Q3 2018 Q4 2018 Q1 2019 Q2 2019 1H 2019
Underlying Group net (2.4%) 0.8% 0.7% 6.1% 3.4%
retail revenue
Key operating indicators by month
Indicator April May June
Net retail revenue 5.2% 7.9% 4.2%
LFL net retail revenue 2.8% 4.9% 2.1%
Customer traffic 5.3% 4.2% 6.2%
LFL customer traffic 2.5% 0.1% 2.6%
Average ticket (0.1%) 3.5% (1.9%)
LFL average ticket 0.4% 4.8% (0.5%)
Underlying Group net retail revenue dynamics by month
Parameter April May June
Underlying Group net retail revenue 5.9% 8.1% 4.4%
O'KEY: Operating review
Stores development
Indicator Q2 2019 Q2 2018 Net change Change (%)
Number of stores 78 78 - 0.0%
Number of net store - - - 0.0%
openings
Total selling space (sq. 528,124 529,555 (1,431) (0.3%)
m)[1]
Total selling space added - - - 0
(sq. m)
In Q2 2019, O'KEY did not open any new hypermarkets. As at 31 July 2019, the
total number of stores was 78, while total selling space came to 528,124 sq.
m.
Key operating indicators for the first half of 2019
Segment 1H 2019 1H 2018
Net Traffic Average Net Traffic Average
retail ticket retail ticket
revenue revenue
O'KEY (0.8%) (4.4%) 3.7% (11.3%) (17.6%) 7.6%
O'KEY LFL (1.0%) (3.2%) 2.3% (3.4%) (3.6%) 0.2%
Key operating indicators for the quarter
Segment Q2 2019 Q2 2018
Net Traffic Average Net Traffic Average
retail ticket retail ticket
revenue revenue
O'KEY 2.6% 0.0% 2.6% (13.4%) (19.6%) 7.7%
O'KEY LFL 1.8% (0.3%) 2.1% (5.4%) (4.8%) (0.6%)
Underlying O'KEY net retail revenue dynamics by quarter, YoY
Parameter Q3 2018 Q4 2018 Q1 2019 Q2 2019 1H 2019
Underlying O'KEY net (4.8%) (1.3%) (2.2%) 3.0% 0.4%
retail revenue
Key operating indicators by month
Indicator April May June
Net retail revenue 2.2% 4.8% 0.8%
LFL net retail revenue 1.4% 3.6% 0.5%
Customer traffic 0.1% (0.7%) 0.5%
LFL customer traffic 0.3% (1.6%) 0.4%
Average ticket 2.1% 5.5% 0.3%
LFL average ticket 1.1% 5.3% 0.1%
Underlying O'KEY net retail revenue dynamics by month
Parameter April May June
Underlying O'KEY net retail revenue 3.0% 5.0% 1.0%
Initiatives launched at the end of 2018 aimed at improving on-shelf
availability and the overall quality of fresh and ultra-fresh goods led to a
gradual recovery in traffic.
In Q2 2019, we finished rolling out Axapta 12 (Microsoft Dynamics) for
distribution centres, which will allow a boost in our operational efficiency
going forward.
During the quarter, we continued to work on enhancing our customer value
proposition by revising the product mix and further developing our middle
and premium ranges.
DA!: Operating review
Stores development
Indicator Q2 2019 Q2 2018 Net change Change (%)
Number of stores 86 69 17 24.6%
Number of net store 2 2 0 0.0%
openings
Total selling space (sq. 59,654 47,693 11,961 25.1%
m)
Total selling space added 1,421 1,314 107 8.1%
(sq. m)
In Q2 2019, the Company opened two new discounters in Klin and Kaluga.
Key operating indicators for the first half of 2019
Segment 1H 2019 1H 2018
Net Traffic Average Net Traffic Average
retail ticket retail ticket
revenue revenue
Discounters 37.0% 28.6% 6.5% 35.6% 32.7% 2.2%
LFL 18.7% 11.8% 6.2% 15.8% 14.3% 1.3%
discounters
Key operating indicators for the quarter
Segment Q2 2019 Q2 2018
Net Traffic Average Net Traffic Average
retail ticket retail ticket
revenue revenue
Discounters 37.8% 30.9% 5.3% 35.2% 33.2% 1.6%
LFL 17.9% 11.4% 5.8% 15.7% 15.8% 0.0%
discounters
Key operating indicators by month
Indicator April May June
Net retail revenue 37.8% 38.0% 37.7%
LFL net retail revenue 18.3% 17.6% 17.8%
Customer traffic 32.1% 27.6% 33.1%
LFL customer traffic 13.6% 8.1% 12.9%
Average ticket 4.3% 8.2% 3.5%
LFL average ticket 4.2% 8.8% 4.4%
In Q2 2019, the Company demonstrated a strong LFL net retail revenue growth
of 17.9% YoY, driven by a combination of continued growth in inflation and
customers' growing appreciation for discounters. Further food CPI increases
during the reporting quarter resulted in a LFL shelf inflation growth of
7.7% YoY. The solid increase in shelf inflation is largely attributable to
the assortment mix structure at discounters and sales structure
(characterised by a higher share of essential goods such as bread, sugar,
eggs, etc.), and was partially offset by a LFL decline in items per customer
by 1.8% 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 11.4% YoY.
In Q2 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 close 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. To further enhance
the customer experience, we also finished our check-out redesign project in
Q2.
We plan to disclose our financial results on 27 August 2019 and hold a
conference call on the same day to discuss our performance in greater
detail. Details of the conference call will be disclosed soon.
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 July 2019, the Group operates 164 stores across Russia (78
hypermarkets and 86 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:
Anton Farlenkov
Corporate Development Director
+7 919 777 0220
Anton.farlenkov@okmarket.ru
www.okeyinvestors.ru [1]
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[1] Total selling space net of the 9,728 sq. m leased to strategic partners.
ISIN: US6708662019
Category Code: IR
TIDM: OKEY
LEI Code: 213800133YYU23T4L791
OAM Categories: 1.2. Half yearly financial reports and audit reports/limited
reviews
Sequence No.: 14978
EQS News ID: 848393
End of Announcement EQS News Service
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July 29, 2019 12:44 ET (16:44 GMT)
