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Detsky Mir Grows Adjusted EBITDA 29.3% in 1H 2021

Moscow, Russia, 25 August 2021 – Detsky Mir Group (“Detsky Mir” or the “Company”, MOEX: DSKY), the largest children’s goods retailer in Russia and Kazakhstan, announces its unaudited financial results in accordance with International Financial Reporting Standards (IFRS) for the second quarter and the first half of the year, ended 30 June 2021.

Q2 2021 Operating Highlights

The Group’s gross merchandise value (GMV) increased 32.2% to RUB 41.9 bn (incl. VAT).
Total online salesin Russia increased 20.1% to RUB 11.7 bn (incl. VAT); the share of online sales stood at 29.3%.
The Group’s revenue increased 29.6% to RUB 37.4 bn.
Gross profit increased 34.3% to RUB 11.9 bn, with a gross margin of 31.9% (+1.1 p.p. year-on-year).
SG&A as a percentage of revenue increased 1.8 p.p. to 20.2%.
Adjusted EBITDA increased 24.2% to RUB 4.4 bn; adjusted EBITDA margin was 11.8% (–0.5 p.p. year-on-year). EBITDA totaled RUB 5.5 bn (+55.3% year-on-year).
Adjusted net profit amounted to RUB 2.8 bn vs. RUB 1.4 bn in the same period last year; net profit totaled RUB 3.9 bn.
The net debt/adjusted EBITDA LTM ratio stood at 1.3x as at June 2021-end vs. 1.6x at June 2020-end. Net debt was RUB 23.7 bn (–5.0% year-on-year).
The Company opened 49 new stores: 19 Detsky Mir branded stores, 27 Detmir Pickup stores and 3 Zoozavr stores.
The total number of Group stores amounted to 929 (+9.3% year-on-year), across 378 cities and towns in Russia, Kazakhstan and Belarus.
The Group’s total selling space increased 8.4% to 922,000 sq. m, while the total floor space of stores amounted to 1,148,000 sq. m.

1H 2021 Financial Highlights

The Group’s GMV increased 23.6% to RUB 81.5 bn (incl. VAT).
Total online sales increased 42.4% to RUB 22.5 bn (incl. VAT); the share of online sales was 28.9%.
The Group’s revenue increased 22.0% to RUB 73.1 bn.
Gross profit increased 25.1% to RUB 22.5 bn, with a gross margin of 30.8% (+0.7 p.p. year-on-year).
Share of SG&A as a percentage of revenue grew 0.3 p.p. to 20.6%.
Adjusted EBITDAincreased 29.3% to RUB 7.5 bn; adjusted EBITDA margin was 10.3% (+0.6 p.p. year-on-year). EBITDA totaled RUB 8.3 bn (+52.4% year-on-year).
Adjusted net profit was RUB 4.3 bn vs. RUB 1.4 bn in the same period last year; net profit stood at RUB 5.2 bn.
Sales of private labels and direct imports in Russia grew 25.3%, accounting for 44.3% of total sales (+1.5 p.p. year-on-year).
The Company opened 61 new stores: 24 Detsky Mir branded stores, 33 Detmir Pickup stores and 4 Zoozavr stores.
The number of partner pickup points and parcel lockers increased 3.5x to 20,800 year-to-date.
Total warehouse space was 146,000 sq. m.

Q2 2021 Key Events

Detsky Mir’s shareholders approved the distribution of the entire net profit for Q4 2020 as a final dividend, totaling RUB 4.5 bn, or RUB 6.07 per ordinary share. The total value of paid dividends for 2020 amounts to RUB 8.2 bn, or RUB 11.15 per ordinary share.
Detsky Mir’s shareholders elected a new Board of Directors, including the new independent director David Rönnberg, four incumbent independent directors and five incumbent non-executive directors. More information on the members of the Board and its committees is available on the Company website.
The Company launched its second regional distribution center – an 8,000 sq. m facility in Kazan operating from Russian Post’s fulfillment center. The distribution center’s throughput will reach up to 250,000 orders per month.
Andrey Osokin was appointed Marketing Director and Member of the Management Board at the Company. Mr. Osokin boasts an over 14-year track record in marketing and e-commerce at companies such as Goods.ru, Otto Group Russia and Baon-Desam.

Key Events After the Reporting Date

Detsky Mir has decided to strengthen its C-suite team, driven by the fast pace at which the Company’s new ambitious strategy, business verticals and digital transformation are being implemented and deployed. Anna Garmanova, Chief Financial Officer (CFO) at Detsky Mir, left the Company effective 1 August 2021. Andrey Spivak took up the roles of CFO and Member of the Management Board from 16 August. Mr. Spivak has over 19 years of experience in retail and FMCG (Magnit, X5 Retail Group, Wrigley Ukraine and Wrigley Russia). Sergey Li was appointed Chief Operating Officer (COO) and Member of the Management Board from 15 July. Mr. Li has over 17 years of experience in retail (M.Video-Eldorado, M.Video, Sulpak (Kazakhstan) and Philips). Another appointment was Mikhail Makhyanov, starting as Head of Investor Relations from 16 August. Mr. Makhyanov has more than seven years of experience working at public companies and in capital markets (Polyus and Renaissance Capital).

ESG Highlights

Detsky Mir has approved its Policy on Chemicals and Environmental Protection, which aims to ensure that chemicals are used responsibly in the production of goods purchased by the Company. In line with this policy, Detsky Mir suppliers are required to comply with an approved list of chemicals that may not be used to produce products purchased by the Company.
Detsky Mir has developed a methodology and set of standards for auditing suppliers for compliance with sustainability principles. The goal for 2021 is to carry out the first ESG audit of the Russian manufacturers that produce Detsky Mir’s private label goods.
The Detsky Mir Charitable Foundation donated more than 2.7 m gifts to disadvantaged children, along with one tonne of pet food to animal shelters.
Detsky Mir Group was awarded a prize in the Social Responsibility category of the Retail Week Awards 2021, while the Detsky Mir Charitable Foundation won the Best Russian Social Project 2021 award.
Over the first six months of 2021, almost two tonnes of waste from shoe and textile manufacturing were collected and handed over for recycling to the Dmitrov RTI Plant, the largest waste recycling enterprise in Russia.
Every Detsky Mir Group store complies with all COVID-19 protocols, with couriers delivering online orders provided with the necessary personal protective equipment.

Maria Davydova, CEO of PJSC Detsky Mir:

“The results of 1H 2021 once again prove Detsky Mir to be the recognized leader in the children’s goods market, with the Group’s GMV increasing 23.6% to RUB 81.5 bn. The Company continues to deliver strong performance both online and offline. Our key strategic priority is to further consolidate the children’s goods market by digitizing sales, expanding our selection of private label brands, growing our own marketplace, improving the customer experience, launching new services and strengthening our logistics and retail infrastructure. We will press ahead with transforming the Company into a leading multi-vertical digital retailer and driving up share-of-wallet among Russian shoppers. To achieve these ambitious goals, we have strengthened our C-suite team with experts who have relevant experience in delivering retail digitalization and integrating best-in-class solutions.”

View the full press release

For additional information:

Julia Polikarpova

Head of Public Relations

Tel.: +7 495 781 08 08, ext. 2041

upolikarpova@detmir.ru

Mikhail Makhyanov

Head of Investor Relations

Tel.: + 7 495 781 08 08, ext. 2315

mmakhyanov@detmir.ru