DJ Magnit Reports 7.5% LFL Sales Growth and 7.0% EBITDA margin in 4Q 2020
MAGNIT PJSC (MGNT)
Magnit Reports 7.5% LFL Sales Growth and 7.0% EBITDA margin in 4Q 2020
04-Feb-2021 / 09:59 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.
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Magnit Reports 7.5% LFL Sales Growth and 7.0% EBITDA margin in 4Q 2020
Krasnodar, Russia (4 February, 2021): Magnit PJSC (MOEX and LSE: MGNT; the Company), one of Russia's leading retailers,
announces its 4Q and FY 2020 operating and unaudited financial results.
4Q 2020 key operating and financial highlights:
- Total revenue increased by 10.6% y-o-y to RUB 407.2 billion;
- Net retail sales reached RUB 395.2 billion representing 10.7% y-o-y growth;
- LFL[1] sales growth stood at 7.5% driven by 16.3% average ticket growth and 7.6% traffic decline;
- The Company opened 445 stores on gross basis (243 convenience stores, two supermarkets and 200 drogeries). As part
of the Company's ongoing efficiency improvement campaign, 35 stores were closed resulting in a net store addition
of 410 and the total store base as of December 31, 2020 of 21,564;
- Addition of selling space amounted to 126 thousand sq. m. bringing total selling space to 7,497 thousand sq. m.
(representing 3.6% y-o-y growth);
- The Company redesigned 55 convenience stores and 17 supermarkets. As at December 31, 2020, 72% of convenience
stores, 29% of supermarkets and 56% of drogeries are either new or refurbished;
- Gross profit margin stood at 23.3% - an increase of 168 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 28.6 billion with a 7.0% margin demonstrating the largest y-o-y improvement among all quarters of
2020 by 160 bps driven by strong gross margin dynamics and lower SG&A expenses;
- Net income almost tripled y-o-y and stood at RUB 11.1 billion. Net income margin increased from 1.1% in 4Q 2019 to
2.7% in 4Q 2020.
FY 2020 key operating and financial highlights:
- Total revenue increased by 13.5% y-o-y to RUB 1,553.8 billion;
- Net retail sales reached RUB 1,510.1 billion representing 13.3% y-o-y growth;
- LFL sales growth stood at 7.4% driven by 14.1% average ticket growth and 5.9% traffic decline;
- The Company opened 1,292 stores on gross basis (669 convenience stores, four supermarkets and 619 drogeries). As
part of the Company's ongoing efficiency improvement campaign, 453 stores were closed resulting in a net store
addition of 839 and the total store base as of December 31, 2020 of 21,564;
- Addition of selling space amounted to 258 thousand sq. m. bringing total selling space to 7,497 thousand sq. m.
(representing 3.6% y-o-y growth);
- The Company redesigned 280 convenience stores, 25 supermarkets and 80 drogeries. As at December 31, 2020, 72% of
convenience stores, 29% of supermarkets and 56% of drogeries are either new or refurbished;
- Gross profit margin stood at 23.5% - an increase of 74 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 109.4 billion with a 7.0% margin - an increase of 97 bps y-o-y driven by strong gross margin
dynamics and lower SG&A expenses;
- Net income increased by 120.8% y-o-y and stood at RUB 37.8 billion. Net income margin increased from 1.2% in 2019
to 2.4% in 2020.
Jan Dunning, President and CEO of Magnit, commented:
"2020 was an extraordinary year delivering both challenges and opportunities. We continued with our transformation and
optimization of the key business processes while facing the pandemic and managed to deliver strong operating and
financial results.
We set three main priorities and made good progress across all of them. We focused on operating efficiency of the
existing store base and delivered solid LFL results and sales density improvements. We achieved strong profitability
regain with EBITDA margin up 97 bps y-o-y. We put enormous efforts to improve working capital and got the ball rolling
with RUB 30.5 bn cash release. Finally, pandemic challenges made us reconsider our debt burden and reduce our leverage
significantly. The fact that we achieved almost twice higher returns on the whole business I consider as a dramatic
enhancement.
As a result, we are entering 2021 with completely different financial position having leverage of 1.1x, improved
working capital cycle and free cash flow position of Rub 85 billion. This provides opportunities for faster
return-driven expansion. We will continue with step-by-step improvements across all business areas and deliver further
profitability gains aimed at creating additional value to our shareholders".
Key events in 4Q 2020 and after the reported period:
- Magnit continued to clusterize its formats based on customer trends of different localities and has opened a
metropolitan convenience store and launched a pilot format of Magnit Cosmetic Mini;
- Magnit has signed long-term lease agreements for 77 retail facilities previously occupied by stores operated by TD
Intertorg in the North-West region;
- The Company has finalized the planning phase of its SAP-based ERP Transformation Program and started its
implementation;
- Magnit fully restored its distribution center in the Voronezh region, which was damaged by fire in late April 2019;
- The Company has launched its own online ordering and delivery service available in the new Magnit Dostavka
(Delivery - Ed.) application, and then expanded the pilot by launching the delivery from its hypermarkets and a
service for express delivery from Magnit Cosmetic stores in partnership with Delivery Club;
- Magnit has launched goods availability assessment system;
- The Company has launched the VMI (Vendor Managed Inventory) system and tested it in one of its distribution
centers. The system will allow Magnit to delegate inventory forecasting and replenishment in DCs to its vendors;
- Magnit has initiated development of its own super app. As the first stage, the Company launched the Magnit Pay
payment service;
- Magnit began large-scale supply chain transformation. It has started implementing a unified forecasting and
replenishment (F&R) system built upon a cloud-based platform from Relex Solutions;
- Magnit announced dividends for 9M 2020 in the total amount of c. RUB 25 billion or RUB 245.31 per one ordinary
share.
4Q and FY 2020 Operating Results
4Q 2020 4Q 2019 Change Change, % FY 2020 FY 2019 Change Change, %
Total Net Retail Sales, million RUB 395,160 356,953 38,208 10.7% 1,510,071 1,332,929 177,142 13.3%
Convenience Stores[2] 301,153 270,384 30,769 11.4% 1,161,295 1,020,400 140,895 13.8%
Supermarkets[3] 53,923 53,834 89 0.2% 203,541 200,096 3,445 1.7%
Drogerie Stores 36,997 31,193 5,804 18.6% 134,272 109,670 24,602 22.4%
Other Formats[4] 3,087 1,541 1,546 100.3% 10,963 2,763 8,200 296.8%
Number of Tickets, mln 1,155 1,218 -63 -5.2% 4,641 4,690 -49 -1.0%
Convenience stores 962 1,022 -60 -5.9% 3,890 3 963 -73 -1.8%
Supermarkets 84 95 -11 -11.6% 338 379 -41 -10.9%
Drogerie Stores 100 95 4 4.6% 380 339 42 12.3%
Other Formats 9 5 4 67.5% 33 10 24 238.9%
Average Ticket[5], RUB 342 293 49 16.8% 325 284 41 14.5%
Convenience stores 313 264 49 18.4% 299 258 41 15.9%
Supermarkets 643 567 76 13.4% 603 528 75 14.2%
Drogerie Stores 371 327 44 13.4% 353 324 29 9.0%
Other Formats 332 275 57 20.8% 322 271 51 18.8%
Number of Stores (EOP) 21,564 20,725 839 4.0% 21,564 20,725 839 4.0%
Convenience Stores 14,911 14,622 289 2.0% 14,911 14,622 289 2.0%
Supermarkets 470 473 -3 -0.6% 470 473 -3 -0.6%
Drogerie Stores 6,183 5,630 553 9.8% 6,183 5,630 553 9.8%
Store Openings (Gross) 445 321 124 38.6% 1,292 2,841 -1,549 -54.5%
Convenience Stores 243 204 39 19.1% 669 1,630 -961 -59.0%
Supermarkets 2 6 -4 -66.7% 4 9 -5 -55.6%
Drogerie Stores 200 111 89 80.2% 619 1,202 -583 -48.5%
Store Closures 35 93 -58 -62.4% 453 464 -11 -2.4%
Convenience Stores 31 89 -58 -65.2% 380 435 -55 -12.6%
Supermarkets 1 0 1 n/a 7 3 4 133.3%
Drogerie Stores 3 4 -1 -25.0% 66 26 40 153.8%
Store Openings (Net) 410 228 182 79.8% 839 2,377 -1,538 -64.7%
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