REG-O'KEY Group S.A. O'KEY Group S.A.: O'KEY Group announces operating results for Q3 and 9M 2019
18/10/2019 17:05
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O'KEY Group S.A. (OKEY)
O'KEY Group S.A.: O'KEY Group announces operating results for Q3 and 9M
2019
18-Oct-2019 / 18:01 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
18 October 2019
O'KEY GROUP ANNOUNCES OPERATING RESULTS FOR Q3 AND 9M 2019
O'KEY Group S.A. (LSE: OKEY, the 'Group') announces its unaudited
operating results for the third quarter and first nine months of 2019.
All materials published by the Group are available on its website
1 www.okeygroup.lu.
9M 2019 operating highlights
• Underlying Group net retail revenue, excluding the effect of the
supermarket business sale, increased by 3.6% YoY. Group net retail
revenue increased by 2.9% YoY, from RUB 113,697 mln to RUB 117,003 mln
• Underlying net retail revenue generated by O'KEY hypermarkets
increased by 0.8% YoY. Net retail revenue generated by O'KEY
hypermarkets increased by 0.1% YoY, from RUB 104,092 mln to
RUB 104,162 mln
• Net retail revenue generated by DA! grew by 33.7% YoY to
RUB 12,840 mln
• Like-for-like (LFL) net retail revenue of the Group increased by
1.3% YoY in 9M 2019, supported by continued growth of 1.9% in the
LFL average ticket despite modest LFL traffic decline of 0.6% YoY
• Like-for-like (LFL) net retail revenue generated by O'KEY hypermarkets
was flat YoY as stable LFL average ticket growth of 2.6% YoY fully
offset the decline in LFL traffic
• Like-for-like (LFL) net retail revenue generated by DA! increased by
16.4% YoY in 9M 2019, driven by a 9.0% YoY increase in LFL traffic and
a 6.8% YoY increase in the LFL average ticket
• Five discounters (in the Moscow and Kaluga regions) were opened during
the first nine months of 2019
Q3 2019 operating highlights
• Underlying Group net retail revenue, excluding the effect of the
supermarket business sale, increased by 4.4% YoY to RUB 38,077 mln, up
from RUB 36,484 mln in Q3 2019. The revenue increase was supported by
ongoing average ticket growth and moderate traffic uptrend
• Underlying net retail revenue generated by O'KEY hypermarkets
increased by 2.0% YoY to RUB 33,820 mln, driven by steady average
ticket growth of 3.5% YoY
• Net retail revenue generated by DA! grew by 27.5% YoY to
RUB 4,257 mln, supported by steady growth in traffic (up 19.5% YoY)
and average ticket (up 6.7% YoY)
• Like-for-like (LFL) net retail revenue of the Group increased by
3.0% YoY due to a favourable pricing environment which resulted in
higher LFL average ticket and almost flat YoY LFL traffic
• Like-for-like (LFL) net retail revenue generated by O'KEY increased by
2.1% YoY, supported by continued average LFL basket growth of
3.3% YoY, while LFL traffic dynamics remained slightly negative (down
1.2% YoY)
• Like-for-like (LFL) net retail revenue generated by DA! increased by
12.1% YoY, driven by a 3.8% YoY increase in LFL traffic and a 8.0% YoY
increase in the LFL average ticket
Stores development of the Group
Indicator Q3 2019 Q3 2018 Net change Change (%)
Number of stores 165 151 14 9.3%
Number of net store openings 1 4 (3) (75.0%)
Total selling space (sq. m) 589,362 579,150 10,212 1.8%
Total selling space added (sq. m) 653 5,955 (5,302) (89.0%)
Group key operating indicators for the first nine months of 2019
9M 2019 9M 2018
Segment Net retail Traffic Average Net retail Traffic Average
revenue ticket revenue ticket
Group 2.9% 1.3% 1.6% (9.4%) (13.0%) 4.1%
Group LFL 1.3% (0.6%) 1.9% (3.5%) (2.4%) (1.2%)
Group key operating indicators for the quarter
Q3 2019 Q3 2018
Segment Net retail Traffic Average Net retail Traffic Average
revenue ticket revenue ticket
Group 4.4% 2.4% 2.0% (10.7%) (14.1%) 3.9%
Group LFL 3.0% (0.2%) 3.2% (5.9%) (4.0%) (2.0%)
Underlying Group net retail revenue dynamics by quarter, YoY
Parameter Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 9M 2019
Underlying Group net (2.4%) 0.8% 0.7% 6.1% 4.4% 3.6%
retail revenue
Key operating indicators by month
Indicator July August September
Net retail revenue 5.9% 6.7% 0.7%
LFL net retail revenue 3.7% 3.4% (0.6%)
Customer traffic 3.2% 1.9% 1.9%
LFL customer traffic 0.3% (0.6%) (0.4%)
Average ticket 2.6% 4.6% (1.2%)
LFL average ticket 3.4% 4.0% (0.2%)
O'KEY: Operating Review
Stores development
Indicator Q3 2019 Q3 2018 Net change Change (%)
Number of stores 78 79 (1) (1.3%)
Number of net store openings 0 1 (1) (100.0%)
Total selling space (sq. m) 2 1 529,055 529,469 (414) (0.1%)
Total selling space added (sq. m) 0 3,967 (3,967) (100.0%)
In Q3 2019, O'KEY did not open any new hypermarkets. As at 30 September
2019, the total number of stores was 78, while total selling space came to
529,055 sq. m.
Key operating indicators for the first nine months of 2019
9M 2019 9M 2018
Segment Net retail Traffic Average Net retail Traffic Average
revenue ticket revenue ticket
O'KEY 0.1% (3.4%) 3.6% (11.9%) (18.3%) 7.7%
O'KEY LFL (0.0%) (2.5%) 2.6% (4.6%) (4.5%) (0.1%)
Key operating indicators for the quarter
Q3 2019 Q3 2018
Segment Net retail Traffic Average Net retail Traffic Average
revenue ticket revenue ticket
O'KEY 2.0% (1.4%) 3.5% (13.4%) (19.6%) 7.8%
O'KEY LFL 2.1% (1.2%) 3.3% (6.9%) (6.2%) (0.8%)
Underlying O'KEY net retail revenue dynamics by quarter, YoY
Parameter Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 9M 2019
Underlying O'KEY net (4.8%) (1.3%) (2.2%) 3.0% 2.0% 0.8%
retail revenue
Key operating indicators by month
Indicator July August September
Net retail revenue 3.4% 4.7% (1.9%)
LFL net retail revenue 2.7% 2.7% (1.7%)
Customer traffic (0.7%) (1.2%) (2.2%)
LFL customer traffic (0.8%) (1.0%) (1.8%)
Average ticket 4.2% 6.0% 0.3%
LFL average ticket 3.5% 3.8% 0.1%
In Q3 2019, the Company continued to demonstrate gradual recovery in
operating performance, posting a 2.0% YoY growth in net retail revenue.
Business efficiency initiatives launched towards the end of 2018 were
focused on an overall improvement in fresh and ultra-fresh offer, service
level, and logistics operations. Implemented with the ultimate goal of
improving shopping frequency, the initiatives continued to deliver impact
throughout the quarter while partially offsetting the macroeconomic
headwinds.
To enhance our assortment management and improve the customer shopping
experience, we initiated an in-store rezoning programme in Q3 2019. The
programme will help harmonise and standardise the assortment within our
available trading space in accordance with approved clustering. The
rezoning initiative was successfully piloted in the O'KEY hypermarket
located in the Columbus shopping centre in Moscow during the third
quarter.
During the quarter, we continued to work on our customer value proposition
by expanding the assortment range of 'O'KEY's selection' private label
brand to target middle-class customers, modernizing promo areas in
hypermarkets, and improving our promo offers. Successful marketing
campaigns for the non-food category during the reported quarter helped
sustain the average ticket growth. As continuous improvement of our
assortment mix and higher quality of fruit and vegetables remain our top
priority we continue to grow own imports and focus more on capturing the
synergies with our discounter business.
To improve on-shelf availability to better meet the daily needs of modern
customers, we implemented a series of logistics initiatives in Q3 2019,
aimed at more efficient palletising processes at distribution centres and
faster pallet unloading at hypermarkets.
In the third quarter, we strengthened our 3 top-management team with the
addition of Olga Surnina, Marketing Director, and Tatyana Bukanova, Real
Estate Director.
DA!: Operating Review
Stores development
Indicator Q3 2019 Q3 2018 Net change Change (%)
Number of stores 87 72 15 20.8%
Number of net store openings 1 3 (2) (66.7%)
Total selling space (sq. m) 60,307 49,681 10,626 21.4%
Total selling space added (sq. m) 653 1,988 (1,335) (67.2%)
In Q3 2019, the Company opened one new discounter in Kaluga. Total selling
space amounted to 60,307 sq. m as at 30 September 2019. In line with our
guidance, the remaining 14 stores will be opened before the end of the
year.
Key operating indicators for the nine months of 2019
9M 2019 9M 2018
Segment Net retail Traffic Average Net retail Traffic Average
revenue ticket revenue ticket
Discounters 33.7% 25.3% 6.7% 33.2% 30.1% 2.5%
Discounters 16.4% 9.0% 6.8% 13.3% 12.9% 0.4%
LFL
Key operating indicators for the quarter
Q3 2019 Q3 2018
Segment Net retail Traffic Average Net retail Traffic Average
revenue ticket revenue ticket
Discounters 27.5% 19.5% 6.7% 29.3% 25.7% 2.8%
Discounters 12.1% 3.8% 8.0% 8.8% 10.3% (1.3%)
LFL
Key operating indicators by month
Indicator July August September
Net retail revenue 29.3% 25.6% 27.8%
LFL net retail revenue 13.7% 10.5% 11.8%
Customer traffic 21.5% 16.3% 21.0%
LFL customer traffic 5.4% 1.2% 5.3%
Average ticket 6.4% 8.0% 5.6%
LFL average ticket 7.8% 9.1% 6.2%
In the third quarter of 2019, the Company continued to demonstrate solid
LFL growth, with net retail revenue up by 12.1% YoY and the discounter
value proposition continuing to gain traction with customers. The average
LFL ticket increased by 8.0% YoY, supported by an improving basket mix and
continued food CPI growth. LFL traffic went up by 3.8% YoY, driven by
better pricing and a more attractive assortment. Prices for essential
goods at the Group's discounters remained among the most competitive in
the industry in Q3 2019.
During the third quarter, the Company continued to refine and enhance its
customer value proposition by improving the assortment mix. Paying high
attention to the quality and appeal of our private label (PL) products, we
rebrand them on an ongoing basis as well as continuously enhance their
recipes. In the third quarter, the Company rebranded several existing
private label brands and introduced new private label SKUs, bringing the
total number of SKUs to 2,500. The share of private labels as a percentage
of revenue was 49% as at the end of the quarter. To enhance the appeal and
user-friendly style of our store interiors, we also redesigned the
in-store bakery area during the quarter.
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 18 October 2019, the Group operates 166 stores across Russia (78
hypermarkets and 88 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:
Anton Farlenkov
Corporate Development Director
+7 919 777 0220
4 Anton.farlenkov@okmarket.ru
5 www.okeygroup.lu
Veronika Kryachko
Head of Investor Relations
Tel. +7 495 663 6677 ext. 404
Mob. +7 915 380 6266
6 Veronika.Kryachko@okmarket.ru
7 www.okeygroup.lu
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8 1 Total selling space net of the 9,728 sq. m leased to Familia and
other strategic partners.
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ISIN: US6708662019
Category Code: QRT
TIDM: OKEY
LEI Code: 213800133YYU23T4L791
Sequence No.: 23968
EQS News ID: 892869
End of Announcement EQS News Service
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