REG-O'KEY Group S.A. O'KEY GROUP ANNOUNCES 6.1% REVENUE GROWTH IN Q2 2020
28/07/2020 09:00
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O'KEY Group S.A. (OKEY)
O'KEY GROUP ANNOUNCES 6.1% REVENUE GROWTH IN Q2 2020
28-Jul-2020 / 10:00 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.
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Press release
28 July 2020
O'KEY GROUP ANNOUNCES 6.1% REVENUE GROWTH IN Q2 2020
O'KEY Group S.A. (LSE: OKEY, the 'Group') has announced its unaudited
operating results for the second quarter and the first six months of 2020.
All materials published by the Group are available at 1 www.okeygroup.lu.
Q2 2020 operating highlights
• Group net retail revenue 2 1 increased by 6.1% YoY to RUB 41,909 mln
in Q2 2020.
• The Group like-for-like (LFL) net retail revenue grew by 7.4% YoY in
Q2 2020, driven by a 40.4% increase in the average LFL ticket.
• DA! discounters net retail revenue jumped by 50.8% YoY to
RUB 6,935 mln in Q2 2020, driven primarily by a 34.7% LFL net retail
revenue growth, and supported by the expanded selling space.
• O'KEY hypermarkets net retail revenue showed a 0.2% YoY increase to
RUB 34,973 mln in Q2 2020 on the back of a 3.7% LFL net retail revenue
growth.
H1 2020 operating highlights
• Group net retail revenue rose by 6.9% YoY to RUB 84,335 mln in H1
2020.
• The Group delivered a 7.3% LFL net retail revenue growth in H1 2020,
driven by a 19.4% increase in the average LFL ticket.
• DA! discounters net retail revenue grew by 47.0% YoY to RUB 12,617 mln
in H1 2020, as a result of a 31.3% LFL net retail revenue growth and
expanded selling space.
• O'KEY hypermarkets net retail revenue increased by 2.0% YoY to
RUB 71,718 mln, owing to O'KEY hypermarkets LFL net retail revenue
improving by 4.3% YoY in H1 2020.
Key events in Q2 2020 and after the reporting date
• In May 2020, O'KEY Group acquired a Karusel hypermarket in Saint
Petersburg from X5 Retail Group, and has rebranded and relaunched it
under the O'KEY brand. The new hypermarket is the region's 24th
O'KEY store. Through this deal, the company has further strengthened
its foothold in its strategic market, and brought the North-West
region's total selling space to in excess of 185,000 sq. m.
• In July 2020, Expert RA affirmed O'KEY LLC, the main operating
subsidiary of O'KEY Group S.A., the credit rating of 'ruA-' with a
Stable outlook. The rating agency noted the improvement in the Group's
revenue and profitability indicators for 2019, as well as the decrease
in the total debt level and the debt portfolio optimisation.
COVID-19 situation response
In the beginning of 2020, the Group promptly addressed the situation with
the spread of COVID-19 and undertook the necessary measures to maintain
the safe and smooth operations of its stores and supply chain. These
measures allowed the company to overcome the challenges the market faced
in the first half of 2020, and fully satisfy consumer demand by creating a
safe, convenient, and pleasurable shopping experience across all its
formats and sales channels.
Safety of customers and employees Supply chain and store
replenishment
• Disinfection of store surfaces, hand • Timely increase in stock
sanitiser dispensers, masks and levels to meet the
gloves, plastic screens at cash desks anticipated rise in demand
to protect customers and employees • Ensuring sufficient safety
• Strict sanitary control in own stock of high-demand,
production areas, including entry-level products in
germicidal lamps for air disinfection distribution centres
in the deli and bakery • Optimising interactions with
• Strict monitoring of store, suppliers and increasing the
warehouses and office staff with efficiency of logistics
mandatory temperature checks and operations
remote work for most office employees
E-commerce and online orders Social responsibility
• The social initiative Stay
• Online delivery okeydostavka.ru healthy with us, we'll take
showed a 77% YoY growth in sales care of the rest with zero
during the reporting period mark-up for a wide range of
• The company started piloting delivery product categories
of internet orders in the regions • The social initiative Older
through partnership with specialised People Hour, providing
delivery operators priority service in the
morning hours for elderly
customers
Operating review
Group Net Retail Revenue in Q2 and H1 2020
Net Retail Revenue, RUB Q2 2020 Q2 2019 YoY, % H1 2020 H1 2019 YoY, %
mln (excl. VAT)
O'KEY Group 41 39 6.1% 84 78 6.9%
909 504 335 926
O'KEY hypermarkets 34 34 906 0.2% 71 718 70 2.0%
973 342
DA! discounters 6 4 50.8% 12 8 47.0%
935 599 617 583
Group Like-for-like Net Retail Revenue dynamics in Q2 and H1 2020
Q2 2020 vs. Q2 2019 H1 2020 vs. H1 2019
LFL Net Retail Revenue, Net Average Net Average
% retail Traffic ticket retail Traffic ticket
revenue revenue
O'KEY Group 7.4% (23.5%) 40.4% 7.3% (10.2%) 19.4%
O'KEY hypermarkets 3.7% (27.6%) 43.3% 4.3% (13.4%) 20.5%
DA! discounters 34.7% (8.5%) 47.2% 31.3% 2.6% 28.0%
Note: Q2 2020 LFL metrics calculated based on 74 O'KEY and 84 DA! stores.
Group Net Retail Revenue Monthly Metrics for Q2 2020
April May June Q2 2020 H1 2020
Net retail revenue, % YoY
O'KEY Group 1.6% 8.0% 8.8% 6.1% 6.9%
O'KEY hypermarkets (4.7%) 2.0% 3.4% 0.2% 2.0%
DA! discounters 52.1% 52.6% 47.9% 50.8% 47.0%
Customer traffic, % YoY
O'KEY Group (31.7%) (23.8%) (14.9%) (23.5%) (9.4%)
O'KEY hypermarkets (38.2%) (30.1%) (22.2%) (30.2%) (15.4%)
DA! discounters (6.7%) (0.1%) 11.5% 1.7% 14.5%
Average ticket, % YoY
O'KEY Group 48.8% 41.6% 27.8% 38.7% 18.0%
O'KEY hypermarkets 54.2% 46.0% 32.9% 43.6% 20.5%
DA! discounters 63.0% 52.8% 32.6% 48.3% 28.4%
O'KEY Group
Group net retail revenue increased by 6.1% YoY to RUB 41,909 mln in Q2
2020, and by 6.9% YoY to RUB 84,335 mln in H1 2020.
Group like-for-like (LFL) net retail revenue grew by 7.4% YoY in Q2 2020,
and by 7.3% YoY in H1 2020, driven by an increase in the average LFL
ticket.
O'KEY hypermarkets
O'KEY hypermarkets net retail revenue demonstrated a 0.2% YoY increase to
RUB 34,973 mln in Q2 2020, driven by a 3.7% YoY LFL net retail revenue
growth.
During the second quarter, we evidenced a change in customer behaviour
related to COVID-19 lockdown. The customers visited stores less
frequently, but tended to stockpile while shopping in order to minimise
visits.
The revenue growth was supported by the company's ongoing efforts to
ensure on-the-shelf availability and timely preparation for the peak
demand, a broader range of fresh, ultra-fresh, own production and non-food
products, as well as its commitment to offering customers a safe, one-stop
shopping experience.
Additionally, O'KEY hypermarkets benefited from their selection of
non-food items, such as goods for home and garden, clothes and shoes,
sports goods, consumer electronics and home appliances, which showed the
fastest revenue growth in Q2 2020. Of all food products, frozen and canned
food; fresh fish and meat; fruit and vegetables; cheese, deli and the wine
selection were the top-performing categories in Q2 2020.
The average LFL ticket increased by 43.3% YoY, while LFL traffic fell by
27.6% YoY in Q2 2020.
The traffic was affected by the change in customer behaviour and closure
of shopping malls during self-isolation in April and May, although this
started to recover in June when the lockdown was eased. In contrast, the
average ticket soared in Q2 due mainly to the higher number of items per
basket.
During the quarter, O'KEY hypermarkets continued to develop its shopping
experience by rezoning and modernising stores, and improving the quality
of its own production, deli, bakery, private labels, fruit and vegetable
range and so on. The share of private labels increased by 0.8 pp YoY,
amounting to 7.9% of O'KEY sales in Q2 2020.
For customers who preferred to remain at home during lockdown,
okeydostavka.ru delivery service ramped up its operations to guarantee
meeting the demand in orders. Online sales through O'KEY's e-commerce
platform rose by 77% YoY, with an 86% YoY growth in Moscow during Q2 2020.
DA! discounters
As stores with a well-balanced, high-quality assortment at competitive
prices, DA! discounters were the main growth drivers for the Group in Q2
2020. During the pandemic months, the customers greatly appreciated both
the shopping experience and selection of products on offer.
The ongoing efforts to improve customer value proposition and the quality
of its products and services, while aiming to continue offering
competitive prices for essential goods, resulted in higher customer
loyalty and impressive top-line growth. Compared to the sustainable
average growth of over 30%, the DA! stores showed a significant
acceleration in revenue growth during Q2 2020. DA! discounters net retail
revenue soared by 50.8% YoY to RUB 6,935 mln, driven mainly by LFL net
retail revenue growth and supported by expanded selling space.
The DA! stores delivered a 34.7% LFL net retail revenue increase during Q2
2020. The growth is attributable to a 47.2% increase in the average LFL
ticket, while LFL traffic was down by 8.5% in Q2 2020.
Customer traffic fell year-on-year in April and May as a result of less
frequent store visits due to the COVID-19 restrictions. However, this
accelerated to a growth of 11.5% YoY in June, as the self-isolation was
eased. The average ticket growth, conversely, peaked in April-May due for
the most part to the higher number of items per basket.
Thanks to the balanced selection on offer, the brand showed an impressive
growth in sales across all product categories without any substantial
changes in the sales mix during Q2 2020. The share of private labels
totalled 50% of all DA! sales in Q2 2020.
Group's Stores Expansion
Stores and Selling Space Q2 2020 Q2 2019 Net change Change (%)
Number of stores, EoP 177 164 13 7.9%
O'KEY hypermarkets 77 78 (1) (1.3%)
DA! discounters 100 86 14 16.3%
Number of net store (1) 2 (3) na
openings
O'KEY hypermarkets (1) 0 (1) na
DA! discounters 0 2 (2) na
Total selling space (sq. 589 894 587 778 2 116 0.4%
m.), EoP
O'KEY hypermarkets 520 581 528 124 (7 543) (1.4%)
DA! discounters 69 313 59 9 659 16.2%
654
Total selling space added (8 414) 1 421 (9 835) na
(sq. m.)
O'KEY hypermarkets (8 474) 0 (8 474) na
DA! discounters 60 1 421 (1 361) na
In Q2 2020, the company opened one O'KEY hypermarket in Saint Petersburg
and closed two in Stavropol and Volgograd, and operates 77 O'KEY stores
with 520,581 sq. m. selling space as of June 30, 2020.
The Group opened three and closed three DA! Discounters in Q2 2020, and
operates 100 discounters with 69,313 sq. m. of selling space as of 30 June
2020.
OVERVIEW
O'KEY Group S.A. (LSE: OKEY, RAEX - 'ruA-') is one of the leading grocery
retailers in Russia, operating hypermarkets under the O'KEY brand and
discounters under the DA! brand.
As of June 30, 2020, the Group operates 177 stores across Russia (77
hypermarkets and 100 discounters) with a total selling area of 589,894
square meters. The company opened its first hypermarket in St. Petersburg
in 2002 and has since demonstrated continuous growth. O'KEY is the first
Russian food retailer to launch e-commerce operations in St. Petersburg
and Moscow, offering a full range of hypermarket products for home
delivery. The Group has six e-commerce pick-up points in Moscow and six
e-commerce pick-up points in St. Petersburg. In 2015, the Group launched
the first discount chain in Russia under the DA! brand. The Group operates
four distribution centres throughout the Russian Federation - two in
Moscow and two in St. Petersburg. The company employs 20,000+ people.
In 2019, Group's revenue totalled RUB 165.1 billion, while EBITDA reached
RUB 14.1 billion and net income climbed to RUB 747 million.
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:
Natalya Belyavskaya
Head of Investor Relations
+7 495 663 6677 ext. 266
3 Natalya.Belyavskaya@okmarket.ru
Alla Golovatenko
Public Relations Manager
+7 926 169 9117
4 alla.golovatenko@okmarket.ru
5 www.okeygroup.lu
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6 1 Hereinafter, net retail revenue, LFL net retail revenue, and the
average ticket metrics are provided net of VAT.
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ISIN: US6708662019
Category Code: IR
TIDM: OKEY
LEI Code: 213800133YYU23T4L791
Sequence No.: 78329
EQS News ID: 1103577
End of Announcement EQS News Service
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