DJ Fix Price Group PLC: Fix Price announces key operating and financial results for Q1 2024
Fix Price Group PLC (FIXP)
Fix Price Group PLC: Fix Price announces key operating and financial results for Q1 2024
26-Apr-2024 / 09:50 MSK
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Fix Price announces key operating and financial results for Q1 2024
Keeping focus on unlocking the long-term potential of the business despite market challenges
26 April 2024, Limassol, Cyprus - Fix Price Group PLC (LSE and MOEX: FIXP, AIX: FIXP.Y, "Fix Price", the
"Company" or the "Group"), one of the leading variety value retailers globally and the largest in Russia,
today announces its operating and IFRS financial results based on management accounts for the first
quarter (Q1 2024) ended 31 March 2024.
Operating AND FINANCIAL summary for Q1 2024
-- Revenue grew by 8.8% y-o-y and reached RUB 71.7 billion
-- Retail revenue increased by 9.0% to RUB 63.3 billion
-- Wholesale revenue was RUB 8.3 billion, up 6.9% y-o-y
-- LFL sales[1] dynamics turned positive increasing 0.4% y-o-y on the back of LFL average
ticket growth coupled with gradually recovering LFL traffic. Macroeconomic headwinds continue to put
pressure on consumer demand, however, LFL sales growth kept improving in Q2 and exceeded 2% for the
first 24 days of April 2024
-- During the reporting period, the Company opened 131 net new stores (including 6 franchise
stores). As of 31 March 2024, Fix Price was operating a total of 6,545 stores
-- In Q1 2024, 28.5 thous. sqm were added to the Company's total selling space, which reached
1,419.1 thous. sqm (+12.1% y-o-y) as of the end of the quarter
-- The total number of registered cardholders grew by 3.4 million[2] over the last 12 months
to 26.4 million (14.6% increase y-o-y), with loyalty-card transactions accounting for 61.0% of retail
sales. The average ticket for purchases made using a loyalty card was about 80% higher than the
average ticket for non-loyalty-card purchases
-- Gross profit was up 6.7% to RUB 23.4 billion supported by revenue growth. Gross margin
stood at 32.7% on the back of an increase in cost of goods sold due to devaluation of the rouble and
rising transportation costs, which were partially mitigated by a greater share of higher-margin
non-food items in retail sales
-- SG&A costs (excl. LTIP expense[3] and D&A) as a percentage of revenue was 19.0%, versus
16.2% in Q1 2023, due to growth in the shares of staff costs, advertising and other expenses coupled
with the negative operating leverage effect. Pressure on the cost base was partially mitigated by
efficiencies gained in rental expenses and security services as a percentage of revenue
-- Adjusted EBITDA[4] under IFRS 16 amounted to RUB 10.0 billion on the back of pressure on
gross margin and growth of SG&A costs. Adjusted EBITDA margin was 13.9%
-- EBITDA under IFRS 16 amounted to RUB 9.8 billion. The EBITDA margin stood at 13.6%
-- Fix Price recorded a net profit of RUB 3.3 billion for the period, with net profit margin
at the level of 4.6%
-- CAPEX as a percentage of revenue decreased to 1.9%, down from 3.2% in Q1 2023 due to the
completion of construction of distribution centres (DCs) in 2023 as planned
"Since the beginning of 2024, we have noted signs of a recovery in consumer confidence, driving our LFL sales into
positive territory. At the same time, amid high interest rates and inflation expectations, shoppers are still showing a
preference for savings and large non-food purchases, limiting their spending on inexpensive items.
"Heightened competition in the labour market continues to put pressure on our margins, and recruiting and retaining
line personnel remains the main challenge for the Company and for Russian retail as a whole. We expect this factor to
affect our financial performance in the medium term. For our part, we remain committed to a conservative financial
policy, maintaining high liquidity reserves and low leverage. We are incorporating digital solutions to improve our
operational efficiency, including artificial intelligence-based products that enable us to automate business processes,
reduce costs and increase our resilience to external challenges.
"In a challenging operating environment, we continue to take steps to bolster our long-standing leading position.
During the reporting period, we surpassed the 6,500-store mark and began operating in 29 new communities, where Fix
Price's arrival was a long-awaited event for local residents. I would also like to note the expansion of our
international presence: in Q1 2024, the share of international markets increased y-o-y to 10.3% of our total number of
stores.
"We are constantly focused on analysing trends in consumer preferences and searching for intriguing new products for
our customers. During the reporting period, we observed a gradual recovery in demand for items in non-food categories,
with kitchenware, DIY as well as party and celebration products leading the way.
"Our loyalty programme continues to offer tangible benefits to members, and their number increased by 15% over the past
year, reaching 26.4 million by the end of March 2024. The average ticket of loyalty cardholders continues to be nearly
double that of other shoppers, an indication of the programme's success.
"I am pleased to see that our team's efforts were reflected in the high rating that we received in a recent study by
the independent research company Romir. According to this research, we have consistently been among the top three
retail chains in Russia in terms of trust and visibility, and 2024 was no exception.
I would like to thank all of the Group's employees who have played a part in creating a quality customer experience,
and I have no doubt that together we will be able to achieve our most ambitious goals and ensure long-term growth in
the value of our business."
Dmitry Kirsanov, Fix Price CEO
Store base, geographical coverage and selling space
31 Mar 2024 31 Dec 2023 31 Mar 2023 Total number of stores 6,545 6,414 5,848 Russia 5,874 5,756 5,256 Belarus 299 292 273 Kazakhstan 287 280 246 Latvia 45 46 39 Uzbekistan 22 22 20 Georgia 7 7 6 Kyrgyzstan 6 6 6 Mongolia 3 3 2 Armenia 2 2 - Number of Company-operated stores 5,836 5,711 5,206 Russia 5,277 5,166 4,721 Belarus 289 282 263 Kazakhstan 270 263 222 Number of franchise stores 709 703 642 Russia 597 590 535 Latvia 45 46 39 Kazakhstan 17 17 24 Uzbekistan 22 22 20 Belarus 10 10 10 Georgia 7 7 6 Kyrgyzstan 6 6 6 Mongolia 3 3 2 Armenia 2 2 - Selling space (sqm) 1,419,120 1,390,611 1,266,268 Company-operated stores 1,261,559 1,234,312 1,123,997 Franchise stores 157,561 156,299 142,271
Development of Company-operated stores
Q1 2024 Q1 2023
Gross openings 164 198
Russia 143 169
Belarus 9 11
Kazakhstan 12 18
Closures 39 31
Russia 32 23
Belarus 2 1
Kazakhstan 5 7
Net openings 125 167
Russia 111 146
Belarus 7 10
Kazakhstan 7 11
Operating results
Store network expansion
-- The total number of stores increased by 11.9% y-o-y to 6,545; the share of franchise stores
amounted to 10.8% of the total store count (down 15 bps y-o-y)
-- In Q1 2024 Fix Price added 131 net new stores, including 125 Company-operated stores and 6
franchise stores, compared to 185 net new stores in Q1 2023, including 167 Company-operated stores
and 18 franchise stores
-- The Company closed 39 Company-operated stores in Q1 2024 (versus 31 stores in Q1 2023),
focusing on further improvement of lease terms
-- 9.9% of net openings in Q1 2024 took place outside of Russia, as Fix Price continued on its
growth path in Russia and internationally. The share of international geographies increased to 10.3%
of the total store base, compared to 10.1% as of 31 March 2023
-- Total selling space grew by 28.5 thous. sqm to 1,419.1 thous. sqm as of the end of the
quarter (a 12.1% increase y-o-y). The average Fix Price store selling space was 217 sqm as of 31
March 2024
-- In Q1 2024, the Company entered 29 new localities in its countries of operations
LFL sales growth
-- In Q1 2024, LFL sales turned positive, increasing 0.4% due to LFL average ticket growth of
3.7% offsetting a 3.2% contraction in LFL traffic, which was milder y-o-y on the back of gradually
recovering consumer sentiment. However, people still opted for food and big non-food purchases rather
than buying inexpensive items, or decided to save money in an environment of record deposit interest
rates
-- LFL sales of Company-operated stores in Russia were down 1.1% in Q1 2024. At the same time,
the Group's LFL performance was supported by rouble-denominated LFL sales dynamics in Kazakhstan and
Belarus, on the back of the currency conversion effect due to rouble depreciation
-- The positive LFL dynamics in national currencies for stores in Belarus and Kazakhstan were
a result of improved traffic thanks to a highly compelling value proposition, while the average
ticket in both countries was impacted by the high base of the previous year
-- LFL sales for the first 24 days of April 2024 grew by over 2%
Assortment and category mix[5]
-- In the reporting period the share of non-food in retail sales rose to 48.7%, compared to
44.5% in Q1 2023 due to the Company's strong LFL performance of various non-food categories, such as
kitchenware, DIY, household and party and celebration products. The share of food in retail sales
decreased to 25.9% versus 26.8% last year. The share of cosmetics, hygiene and household chemicals as
a percentage of retail sales declined to 25.5% in Q1 2024, compared to abnormally high level of 28.7%
in Q1 2023
-- The share of imported goods in retail sales increased slightly to 23.4% in Q1 2024, versus
22.8% in Q1 2023
-- The share of price points above RUB 100 in retail sales grew to 58.3% in Q1 2024, up from
40.1% in Q1 2023, which reflects the increased share of more expensive non-food items and the
introduction of trendy new products at fractional price points above RUB 100. The Company also
continued to gradually move its assortment mix to the mid- and higher price range. The share of price
points above RUB 200 in retail sales increased to 15.2% in Q1 2024, up from 14.2% in Q1 2023
-- Average ticket for all Company-operated stores increased by 4.2% y-o-y to RUB 344
Loyalty programme development[6]
-- During the quarter, the total number of registered loyalty cardholders grew by 14.6% y-o-y,
reaching 26.4 million. Advertising campaigns and perks for loyalty programme members helped attract
3.4 million new registered cardholders over the year. The share of active loyalty programme members
[7] among the total number of loyalty cardholders was 49%
-- Transactions using loyalty cards accounted for 61.0% of total retail sales for Q1 2024,
compared to 63.4% in Q1 2023
-- The average ticket of a loyalty cardholder was RUB 469, which was 80% higher than the
average ticket of RUB 255 for non-loyalty-card purchases
Financial results for Q1 2024
Statement of comprehensive income highlights
RUB million Q1 2024 Q1 2023 Change Revenue 71,684 65,895 8.8% Retail revenue 63,349 58,099 9.0% Wholesale revenue 8,335 7,796 6.9% Cost of sales (48,250) (43,929) 9.8% Gross profit 23,434 21,966 6.7% Gross margin, % 32.7% 33.3% (64) bps SG&A (excl. LTIP and D&A) (13,599) (10,690) 27.2% Other op. income and share of profit of associates 153 159 (3.8)% Adjusted EBITDA 9,988 11,435 (12.7)% Adjusted EBITDA margin, % 13.9% 17.4% (342) bps EBITDA 9,773 11,161 (12.4)% EBITDA margin, % 13.6% 16.9% (330) bps D&A (4,043) (3,574) 13.1% Operating profit 5,730 7,587 (24.5)% Operating profit margin, % 8.0% 11.5% (352) bps Net finance income/(costs) 21 (337) n/a FX gain, net 59 483 (87.8)% Profit before tax 5,810 7,733 (24.9)% Income tax expense (2,520) (1,880) 34.0% Profit for the period 3,290 5,853 (43.8)% Net profit margin, % 4.6% 8.9% (429) bps
Selling, general and administrative expenses[8]
RUB million Q1 2024 Q1 2023 Change
Staff costs (excl. LTIP) 10,519 8,022 31.1%
% of revenue 14.7% 12.2% 250 bps
Bank charges 892 797 11.9%
% of revenue 1.2% 1.2% 3 bps
Rental expense 353 372 (5.1)%
% of revenue 0.5% 0.6% (7) bps
Security services 506 504 0.4%
% of revenue 0.7% 0.8% (6) bps
Advertising costs 303 204 48.5%
% of revenue 0.4% 0.3% 11 bps
Repair and maintenance costs 268 223 20.2%
% of revenue 0.4% 0.3% 4 bps
Utilities 272 238 14.3%
% of revenue 0.4% 0.4% 2 bps
Other expenses 486 330 47.3%
% of revenue 0.7% 0.5% 18 bps
SG&A (excl. LTIP and D&A) 13,599 10,690 27.2%
% of revenue 19.0% 16.2% 275 bps
LTIP expense 215 274 (21.5)%
% of revenue 0.3% 0.4% (12) bps
Depreciation of right-of-use assets 3,082 2,718 13.4%
% of revenue 4.3% 4.1% 17 bps
Other depreciation and amortisation 961 856 12.3%
% of revenue 1.3% 1.3% 4 bps
Total SG&A 17,857 14,538 22.8%
% of revenue 24.9% 22.1% 285 bps
The Group's revenue was up 8.8% y-o-y and stood at RUB 71.7 billion in Q1 2024, thanks to 9.0% growth in
retail revenue and 6.9% growth in wholesale revenue.
In Q1 2024, the Company reported retail revenue of RUB 63.3 billion, mainly driven by store network
expansion. Wholesale revenue rose to RUB 8.3 billion as the Company continued to open new franchise
stores. Wholesale revenue accounted for 11.6% of total revenue (20 bps decrease) as a result of faster
growth of retail revenue.
Gross profit reached RUB 23.4 billion (up 6.7% y-o-y) in Q1 2024 supported by revenue growth. Gross
margin was down 64 bps y-o-y and stood at 32.7% on the back of an increase in the cost of goods sold due
to the devaluation of the rouble and rising transportation costs, which were partially mitigated by a
greater share of higher-margin non-food items in retail sales.
Transportation costs grew by 13 bps to 1.9% of revenue in Q1 2024 as a result of tariff hikes in Russia,
Kazakhstan and Belarus.
Inventory write-downs accounted for 0.8% of revenue, versus 1.1% in Q1 2023, on the back of lower
accruals based on the results of the FY 2023 inventory count.
Selling, general and administrative expenses (SG&A) excluding LTIP and D&A expenses increased by 275 bps
y-o-y to 19.0% of revenue mainly due to growth in the shares of staff costs, advertising and other
expenses coupled with the negative operating leverage effect. Pressure on the cost base was partially
mitigated by efficiencies gained in rental expenses and security services as a percentage of revenue.
Staff costs excluding LTIP grew by 250 bps y-o-y to 14.7% of revenue, mostly due to salary indexation for
store and DC employees caused by continued labour shortages and persistently growing competition in the
market, and due to an increase in the number of employees as a result of new DC openings.
LTIP expense was RUB 215 million in Q1 2024, versus RUB 274 million in Q1 2023.
Depreciation and amortisation (D&A) expenses grew by 22 bps y-o-y to 5.6% of revenue. Depreciation of
right-of-use assets increased by 17 bps y-o-y to 4.3% of revenue due to an increase in the amount of
right-of-use assets caused by the expansion of the store network. The share of other depreciation and
amortisation expenses was stable y-o-y at 1.3% of revenue.
Rental expense (under IFRS 16) decreased by 7 bps y-o-y to 0.5% of revenue (down 8 bps to 0.6% of retail
revenue), caused by a decline in the share of the variable component in the lease payment structure due
to slower revenue growth.
Rental expense (under IAS 17) was up 15 bps y-o-y to 5.3% of revenue (up 16 bps to 6.0% of retail
revenue), due to the growing influence of fixed-rate contracts (34% of the total contract base), which do
not depend on store revenue performance, and the fixed component of variable contracts. Increasing store
and DC rent rates also added to the y-o-y growth in rental expense.
Bank charges were generally flat at 1.2% of revenue, reflecting gradually slowing growth of the share of
bank card transactions in total client payments.
Security costs were down 6 bps y-o-y to 0.7% of revenue as a result of the Company's ongoing optimisation
efforts.
Repair and maintenance costs and utilities were generally stable y-o-y, accounting for 0.4% of revenue
each.
Advertising costs grew by 11 bps to 0.4% of revenue on the back of enhanced promotional campaigns, while
other expenses rose 18 bps to 0.7% of revenue.
The Group's total SG&A expenses amounted to 24.9% of revenue, up 285 bps y-o-y, attributable mostly to
250 bps growth in the share of staff costs and a 22 bps increase in the share of D&A expenses.
Other operating income and the share of profit of associates stayed flat y-o-y at the level of 0.2% of
revenue.
EBITDA IFRS 16 and IAS 17 reconciliation
RUB million Q1 2024 Q1 2023 Change
EBITDA (IFRS 16) 9,773 11,161 (12.4)%
EBITDA margin (IFRS 16), % 13.6% 16.9% (330) bps
LTIP expense 215 274 (21.5)%
Adjusted EBITDA (IFRS 16) 9,988 11,435 (12.7)%
Adjusted EBITDA margin (IFRS 16), % 13.9% 17.4% (342) bps
Rental expense (3,422) (2,999) 14.1%
Utilities (58) (53) 9.4%
Adjusted EBITDA (IAS 17) 6,508 8,383 (22.4)%
Adjusted EBITDA margin (IAS 17), % 9.1% 12.7% (364) bps
LTIP expense (215) (274) (21.5)%
EBITDA (IAS 17) 6,293 8,109 (22.4)%
EBITDA margin (IAS 17), % 8.8% 12.3% (353) bps
Adjusted EBITDA under IFRS 16 amounted to RUB 10.0 billion, versus RUB 11.4 billion for Q1 2023 on the
back of pressure on gross margin and growth of SG&A costs. Adjusted EBITDA margin was 13.9%.
EBITDA under IFRS 16 declined by 12.4% y-o-y to RUB 9.8 billion. The EBITDA margin was 13.6% versus 16.9%
in Q1 2023.
Adjusted EBITDA under IAS 17 was RUB 6.5 billion. The IAS 17-based adjusted EBITDA margin amounted to
9.1% in Q1 2024, while in Q1 2023 it stood at 12.7%.
Net finance income amounted to RUB 21 million, compared to net finance costs of RUB 337 million for Q1
2023. This growth was mainly driven by an increase in interest income on Group deposits, partially offset
by rising costs of funding and lease liabilities on the back of growing interest rates.
FX gain during the quarter amounted to RUB 59 million, as a result of the mitigating effect of several
FX-denominated balance-sheet factors. Q1 2023 FX gain stood at RUB 483 million.
Income tax expense amounted to RUB 2.5 billion in Q1 2024, up 34.0% y-o-y due to withholding tax accrued
on intra-group dividends.
The Group recorded profit for the period of RUB 3.3 billion, down 43.8% y-o-y. The net profit margin
stood at 4.6%.
Statement of financial position highlights
RUB million 31 Mar 2024 31 Dec 2023 31 Mar 2023
Current loans and borrowings 10,026 10,024 15,022
Non-current loans and borrowings 4,765 4,675 4,432
Current lease liabilities 9,069 8,800 8,279
Non-current lease liabilities 4,731 4,974 4,502
Cash and cash equivalents (27,994) (37,343) (21,576)
Net debt / (Net cash) 597 (8,870) 10,659
Net debt / (Net cash) to EBITDA (IFRS 16)[9] 0.01x (0.2)x 0.2x
Current lease liabilities (9,069) (8,800) (8,279)
Non-current lease liabilities (4,731) (4,974) (4,502)
IAS 17-based (net cash) (13,203) (22,644) (2,122)
IAS 17-based (net cash) to EBITDA (0.3)x (0.6)x (0.05)x
The Group's current and non-current loans and borrowings were generally stable compared to the beginning
of the year and amounted to RUB 10.0 billion and RUB 4.8 billion respectively. As a result, total loans
and borrowings stood at RUB 14.8 billion (versus RUB 14.7 billion as of 31 December 2023). Lease
liabilities also remained flat versus the start of the year and totalled RUB 13.8 billion. As a result,
total loans, borrowings and lease liabilities amounted to RUB 28.6 billion as of 31 March 2024.
In Q1 2024 the Company announced and paid an interim dividend of RUB 8.4 billion, or RUB 9.84 per share/
GDR, which resulted in a decrease in the Company's IAS 17-based net cash position to RUB 13.2 billion,
down from RUB 22.6 billion as of 31 December 2023. The IAS 17-based net cash to EBITDA ratio was 0.3x
versus 0.6x as of 31 December 2023.
Statement of cash flow highlights
RUB million Q1 2024 Q1 2023
Profit before tax 5,810 7,733
Cash from operating activities before changes in working capital 10,550 12,146
Changes in working capital (4,111) (4,283)
Net cash generated from operations 6,439 7,863
Net interest received/(paid) 114 (396)
Income tax paid (3,177) (2,270)
Net cash flows from operating activities 3,376 5,197
Net cash flows used in investing activities (1,364) (2,124)
Net cash flows used in financing activities (11,376) (5,276)
Effect of exchange rate fluctuations on cash and cash equivalents 15 195
Net decrease in cash and cash equivalents (9,349) (2,008)
Net trade working capital[10] reached RUB 16.0 billion (5.4% of revenue)[11] as of 31
March 2024 compared to RUB 14.5 billion (5.0% of revenue) as of 31 December 2023,
while still remaining on a comfortable and manageable level. The Company is ordering
and testing new assortment to gauge consumer sentiment and find products that
resonate with our customers the most. On top of that, an increase in inventories was
associated with uneven deliveries amid a reshuffling of logistics routes, while
revenue growth rates remained subdued.
CAPEX decreased to RUB 1.4 billion compared to RUB 2.1 billion in Q1 2023, when Fix
Price was investing in the construction of new distribution centres that started in
2022.
About the Company
Fix Price (LSE and MOEX: FIXP, AIX: FIXP.Y), one of the leading variety value retailers globally and the largest in
Russia, has been helping its customers save money every day since 2007. Fix Price offers its customers a unique and
constantly updated assortment of non-food goods, including personal care and household products, and food items at low
fixed price points.
As of 31 March 2024, Fix Price was operating 6,545 stores in Russia and neighbouring countries, all of them stocking
approximately 2,000 SKUs across around 20 product categories. As well as its own private brands, Fix Price sells
products from leading global names and smaller local suppliers. As of 31 March 2024, the Company was operating 13 DCs
covering 81 regions of Russia and 8 neighbouring countries.
In 2023, the Company recorded revenue of RUB 291.9 billion, EBITDA of RUB 53.1 billion and net profit of RUB 35.7
billion, in accordance with IFRS.
Fix Price Investor Relations Fix Price Media Relations
Contacts Elena Mironova Ekaterina Goncharova
ir@fix-price.com pr@fix-price.ru
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[1] Here and hereinafter, like-for-like (LFL) sales, average ticket and number of tickets are calculated based on the results of stores operated by Fix Price and that were open for at least 12 full calendar months preceding the reporting date. LFL sales and average ticket are calculated based on retail sales including VAT. LFL numbers exclude stores that were temporarily closed for seven or more consecutive days during the reporting period and/or comparable periods
[2] Here and hereinafter, loyalty programme data is calculated for Fix Price stores operating in Russia
[3] LTIP expense - expense related to the long-term incentive programme (LTIP)
[4] EBITDA adjusted for LTIP expense. EBITDA is calculated as profit for the respective period before income tax expense, net interest income / (expense), depreciation and amortisation expense, and foreign exchange gain / (loss)
[5] Unless stated otherwise, the data in this section refers to Company-operated stores in Russia
[6] Loyalty programme data is calculated for Fix Price stores operating in Russia
[7] Members of the loyalty programme who make at least one purchase per month
[8] Total may not equal the sum of the components due to rounding
[9] Here and hereinafter, the calculation of net debt / (net cash) to EBITDA is based on EBITDA for the last 12 months
[10] Net trade working capital is calculated as inventories plus receivables and other financial assets minus payables and other financial liabilities
[11] The calculation of the percentage of net trade working capital in revenue is based on revenue for the last 12 months
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ISIN: US33835G2057 Category Code: MSCU TIDM: FIXP LEI Code: 549300EXJV1RPGZNH608 OAM Categories: 2.2. Inside information Sequence No.: 318050 EQS News ID: 1890097 End of Announcement EQS News Service =------------------------------------------------------------------------------------
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