DJ Magnit Reports 6.9% LFL Sales Growth and 7.2% EBITDA margin
MAGNIT PJSC (MGNT)
Magnit Reports 6.9% LFL Sales Growth and 7.2% EBITDA margin
29-Oct-2020 / 10:00 MSK
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.
Magnit Reports 6.9% LFL Sales Growth and 7.2% EBITDA margin
Krasnodar, Russia (29 October, 2020): Magnit PJSC (MOEX and LSE: MGNT; the
Company), one of Russia's leading retailers, announces its 3Q and 9M 2020
operating and unaudited financial results.
3Q 2020 key operating and financial highlights:
- Total revenue increased by 11.9% y-o-y to RUB 383.2 billion;
- Net retail sales reached RUB 371.0 billion representing 11.4% y-o-y
growth;
- LFL[1] sales growth stood at 6.9% driven by 12.4% average ticket growth
and 4.9% traffic decline;
- The Company opened 349 stores on gross basis (187 convenience stores,
one supermarket and 161 drogeries). As part of the Company's ongoing
efficiency improvement campaign, 89 stores were closed resulting in a net
store addition of 260 and the total store base as of September 30, 2020 of
21,154;
- Addition of selling space amounted to 80 thousand sq. m. bringing total
selling space to 7,371 thousand sq. m. (representing 3.2% y-o-y growth);
- The Company redesigned three convenience stores and three supermarkets.
As at September 30, 2020, 71% of convenience stores, 25% of supermarkets
and 55% of drogeries are either new or refurbished;
- Gross profit margin stood at 23.8% - an increase of 134 bps y-o-y on
improved commercial terms, lower promo activity in a combination with
better promo coverage and higher promo margin, lower shrinkage and supply
chain costs partially offset by ongoing cost of the loyalty program;
- EBITDA was RUB 27.6 billion with 7.2% margin demonstrating the largest
y-o-y improvement among three quarters of this year by 133 bps driven by
strong gross margin dynamics and lower SG&A expenses;
- Net income increased by 174.1% y-o-y and stood at RUB 9.6 billion. Net
income margin increased from 1.0% in 3Q 2019 to 2.5% in 3Q 2020.
Jan Dunning, President and CEO of Magnit, commented:
"In the environment of unprecedented challenges, we continued being
absolutely committed to key business priorities, while making customers'
safety and satisfaction a centric one.
We are pleased with the third quarter results that came above our
expectations despite macro headwinds. We see gradual normalization of
consumer shopping behaviour with traffic recovery and stabilization of the
basket growth. We have again delivered strong LFL sales growth thanks to
consistent qualitative improvements in the stores. Strong momentum continues
in October with some acceleration of LFL sales growth boding well for the
fourth quarter.
We observe further progress in efficiency improvement of our stores - strong
returns across all out formats and regions. We are gradually resuming our
expansion and redesign programs and expect further acceleration in the next
periods with continued focus on returns.
Even though direct positive impact of pandemic on top-line is diminishing,
but we still bear COVID-related expenses, our sales remains solid and
profitability continues gaining traction with the largest y-o-y expansion
among three quarters of this year. Strong sales and EBITDA coupled with the
first working capital improvements bodes well for higher cash flow
generation and further deleveraging. With that we will jump into the next
year with completely different financial position and ambitions".
Key events in 3Q 2020 and after the reported period:
- The Company's commercial function was restructured, including the launch
of a dedicated commercial procurement unit. Jan Dunning, Magnit CEO has
assumed the additional role of acting Commercial Director and is leading
the critical initiatives in the Company's reorganization process;
- Magnit's Board of Directors approved the Program and the Prospectus of
RUB bonds for a total amount of up to RUB 100 billion, enabling future
bond issuance under a simplified procedure;
- Magnit expanded its discounter format pilot and opened a further two new
stores under the My Price banner. The pilot now includes five discounters.
By the end of 2020, Magnit plans to open another five stores under the new
concept;
- The Company has updated the Magnit City store concept, and as part of
the pilot, plans to open a further 30 Magnit City stores by the end of
2020;
- Magnit launched express delivery service for customers in a partnership
with Delivery Club and Yandex.Eda;
- Magnit launched an online pharmacy pilot scheme that enables customers
to order products from over 100 pharmacies throughout Moscow and the
Moscow region;
- Magnit opened a new distribution center in Novosibirsk;
- Magnit joined the UN Global Compact strengthening the Company's Retail
with Purpose strategy for long-term sustainable transformation.
3Q and 9M 2020 Operating Results
3Q 3Q Change Change, 9M 9M Change Change,
2020 201 % 202 2019 %
9 0
Total Net 370, 332 37,987 11.4% 1,1 975, 138,93 14.2%
Retail Sales, 952 ,96 14, 976 4
million RUB 5 910
Convenience 284, 254 30,313 11.9% 860 750, 110,12 14.7%
Stores[2] 552 ,23 ,14 016 6
9 2
Supermarkets[3] 48,6 49, -600 -1.2% 149 146, 3,356 2.3%
63 263 ,61 262
8
Drogerie Stores 34,9 28, 6,274 21.8% 97, 78,4 18,798 24.0%
93 719 275 77
Other 2,74 745 2,000 268.5% 7,8 1,22 6,654 544.7%
Formats[4] 4 76 2
Number of 1,20 1,2 -17 -1.4% 3,4 3,47 14 0.4%
Tickets, mln 0 17 86 2
Convenience 1,00 1,0 -22 -2.1% 2,9 2,94 -13 -0.4%
stores 6 28 28 0
Supermarkets 86 96 -10 -10.7% 254 284 -30 -10.6%
Drogerie Stores 99 90 10 10.8% 281 243 37 15.4%
Other Formats 8 3 6 205.7% 24 4 20 450.2%
Average 309 274 36 13.0% 320 281 39 13.8%
Ticket[5], RUB
Convenience 283 247 36 14.4% 294 255 39 15.2%
stores
Supermarkets 566 512 55 10.7% 590 515 75 14.5%
Drogerie Stores 353 321 32 10.0% 347 323 24 7.4%
Other Formats 325 259 65 25.1% 318 266 52 19.6%
Number of 21,1 20, 657 3.2% 21, 20,4 657 3.2%
Stores (EOP) 54 497 154 97
Convenience 14,6 14, 192 1.3% 14, 14,5 192 1.3%
Stores 99 507 699 07
Supermarkets 469 467 2 0.4% 469 467 2 0.4%
Drogerie Stores 5,98 5,5 463 8.4% 5,9 5,52 463 8.4%
6 23 86 3
Store Openings 349 742 -393 -53.0% 847 2,52 -1,673 -66.4%
(Gross) 0
Convenience 187 396 -209 -52.8% 426 1,42 -1,000 -70.1%
Stores 6
Supermarkets 1 3 -2 -66.7% 2 3 -1 -33.3%
Drogerie Stores 161 343 -182 -53.1% 419 1,09 -672 -61.6%
1
Store Closures 89 129 -40 -31.0% 418 371 47 12.7%
Convenience 69 120 -51 -42.5% 349 346 3 0.9%
Stores
Supermarkets 4 2 2 100.0% 6 3 3 100.0%
Drogerie Stores 16 7 9 128.6% 63 22 41 186.4%
Store Openings 260 613 -353 -57.6% 429 2,14 -1,720 -80.0%
(Net) 9
Convenience 118 276 -158 -57.2% 77 1,08 -1,003 -92.9%
Stores 0
Supermarkets -3 1 -4 -400.0% -4 0 -4 n/a
Drogerie Stores 145 336 -191 -56.8% 356 1,06 -713 -66.7%
9
Total Selling 7,37 7,1 228 3.2% 7,3 7,14 228 3.2%
Space (EOP), 1 43 71 3
th. sq.m
Convenience 5,00 4,9 105 2.1% 5,0 4,90 105 2.1%
Stores 5 00 05 0
Supermarkets 940 941 0 0.0% 940 941 0 0.0%
Drogerie Stores 1,38 1,2 104 8.1% 1,3 1,28 104 8.1%
4 80 84 0
Other Formats 42 22 19 85.7% 42 22 19 85.7%
Selling Space 80 207 -127 n/a 132 718 -586 n/a
Addition (Net),
th. sq.m
Convenience 49 123 -74 n/a 53 456 -403 n/a
Stores
Supermarkets -3 2 -5 n/a -8 -1 -7 n/a
Drogerie Stores 34 72 -38 n/a 81 244 -163 n/a
Other Formats 1 11 -10 n/a 6 19 -14 n/a
3Q and 9? 2020 LFL results
3Q 2020
LFL composition, % Average Ticket Traffic Sales
Total 12.4% -4.9% 6.9%
Convenience stores 13.6% -5.0% 7.8%
Supermarkets 10.6% -11.3% -1.9%
Drogerie Stores 9.8% 2.5% 12.6%
9? 2020[6]
LFL composition, % Average Ticket Traffic Sales
Total 13.4% -5.3% 7.3%
Convenience stores 14.4% -5.5% 8.2%
Supermarkets 14.1% -11.5% 1.0%
Drogerie Stores 7.3% 2.8% 10.3%
Trading performance
Total sales in 3Q 2020 grew by 11.9% y-o-y to RUB 383.2 billion.
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