Detsky Mir Group Adjusted EBITDA Increased by 37.3% YoY in Q1 2021
Detsky Mir Group, announces its unaudited financial results in accordance with International Financial Reporting Standards (IFRS) for the first quarter ended 31 March 2021.
Q1 2021 Financial Highlights
- The Group’s gross merchandise value (GMV) increased by 15.6% to RUB 39.6 bn (incl. VAT).
- Total online sales increased 1.8x to RUB 10.9 bn (incl. VAT); online share in Russia increased 1.6x to 28.6%.
- The Group’s revenue increased by 15.0% to RUB 35.7 bn.
- Gross profit grew by 16.1% to RUB 10.5 bn; gross margin was 29.6% (+0.3 p.p. year-on-year).
- SG&A as a percentage of revenue decreased by 1.0 p.p. to 21.0%.
- Adjusted EBITDA increased by 37.3% to RUB 3.1 bn; adjusted EBITDA margin was 8.7% (+1.4 p.p. year-on-year). EBITDA amounted to RUB 2.8 bn (+47.2% year-on-year).
- Adjusted net profit amounted to RUB 1.5 bn vs RUB 15 m in the same period of last year; net profit totaled RUB 1.3 bn.
- The net debt/adjusted EBITDA LTM ratio improved to 1.4x as of 31 March 2021 vs 1.6x as of 31 March 2020. The net debt was RUB 24.0 bn (-0.9% year-on-year).
Q1 2021 Group Business Development
- Using its marketplace model (third-party sellers or manufacturers may sell their goods on the Company website or mobile app for a fee), Detsky Mir piloted the sale of Women’s Clothing, a new category. The Company will continue to actively develop this pilot in Q2 2021.
- The Company signed a basic agreement to open an 8,000 sq. m regional distribution center in Kazan, based on Russian Post’s fulfillment center. It was commissioned at the end of April 2021.
- Detsky Mir piloted a subscription delivery service for recurring orders, including diapers, baby food and pet food. Full-scale rollout is planned for Q2 2021.
- In Kazakhstan, the Company launched an iOS and Android app, as well as courier delivery for online orders in 11 cities and next-day delivery in a number of cities.
- Detsky Mir continued to expand its network of pickup points with new logistics partners: 500 pickup points were added through handset retailer Svyaznoy, the logistics service SberLogistics brought 1,700 pickup points, while the TelePort chain gave our customers access to 570 parcel lockers. The total number of partner pickup points and parcel lockers increased 2.1x to 12,200 year-to-date.
- The Company successfully completed a pilot project selling digital services and partner services through its own mobile application, starting to develop a full-fledged platform.
Q1 2021 Key Events
- Detsky Mir’s shareholders elected a new Board of Directors, composed of five independent directors, four representatives of the major shareholder Gulf Investments Limited (Altus Capital), and one non-executive director. Maria Gordon was elected Chairwoman of the Company’s Board of Directors and Pavel Grachev was elected Deputy Chairman of the Board. More information on the members of the Board and its committees is available on the Company website.
- Detsky Mir became the first Russian contributor to Zero Discharge of Hazardous Chemicals program (ZDHC), an international initiative aimed at reducing the negative impact of the textile and footwear industry on the environment around the world.
- The rating agency Expert RA revised its rating for Detsky Mir under its updated methodology, upgrading it by one notch to ruAA– with a stable outlook. Previously, Detsky Mir’s credit rating stood at ruA+, with a stable outlook.
- According to Data Insight Ranking of the largest Russian online stores in 2020, Detsky Mir moved up to 14th place vs 17th place a year earlier by sales and achieved 4th place by the number of orders.
- In 2020, Detsky Mir ranked among the Top 30 most mentioned e-commerce retailers on social media, according to Brand Analytics.
- Detsky Mir achieved International CX World Awards 2020/2021, the largest professional award in the customer experience industry.
- As part of the first stage of this year’s Participate! program, the Detsky Mir Charitable Foundation donated more than 1.4 million items to disadvantaged children and sent about 15 tons of aid to children’s homes in the Rostov Region, while the annual initiative Comfort to Shelters saw more than 1.3 tons of pet food donated to homeless animals.
Maria Davydova, CEO of PJSC Detsky Mir:
“Detsky Mir had an outstanding first quarter in 2021: we not only managed to up the pace of business growth, we also secured a significant increase in EBITDA and net profit. Even with an uncertain market outlook, we are bullish on the future of the Company and believe our chosen strategy is solid.
“First, we find our impressive online sales figures encouraging, as even off a high base from last year following the surge in demand for online shopping, they continue to outpace the market. A strategic priority for us now is to further increase the share of our online channel in total sales to 45%. Still, by actively developing our own marketplace and expanding our product assortment, we see a good chance of exceeding this target.
“The Detsky Mir Development Strategy to 2024, which was approved last summer, envisages a doubling of GMV in four years, driven by increased investment in infrastructure and new business verticals. The Company’s plans for 2021 include the launch of at least 70 new Detsky Mir stores, 100 Detmir Pickup retail outlets and 70 Zoozavr stores. At the same time, we will grow our network of partner pickup points to 20,000.
“Furthermore, Detsky Mir plans to open its first new digital-format store in Q2 to provide a superior customer experience for those willing to pick up their online order in-store. We will use the outcomes of this pilot to come up with a mid-term modernization roadmap for the whole network of our stores.
“In April, we opened our second regional distribution center, located in Kazan. Our logistics infrastructure is soon to be reinforced with three more facilities: two regional distribution centers will be opened in the Novosibirsk and Leningrad Regions by the beginning of 2022, while a federal distribution center will be opened outside Yekaterinburg in January 2022, bringing total warehouse floor space to over 200,000 sq. m. Meanwhile, building up our retail infrastructure will ensure better penetration for our express delivery service out in the Russian regions.
“The Detsky Mir team will definitely bring new improvements to the user experience and functionality of our mobile platform, as this is now the major engine of online sales at the Company. We have sound plan for new features this year, including delivering children’s goods in one hour, adding a ‘pay in installments’ option and launching delivery of orders on-demand from our store. We aim to become one of the top Russian mobile apps in the Shopping category.
“I would also like to draw your attention to the fact that Detsky Mir’s net profit (RAS) for Q4 2020 increased by 10.8% to RUB 4.5 bn. We will recommend that the Board of Directors and shareholders distribute all net profit as a final dividend for 2020, making Detsky Mir not only a growth stock, but an attractive dividend story.”
Conference Call Information
Detsky Mir’s management will host a conference call today at 16:00 (Moscow time) / 14:00 (London time) / 9:00 (New York time) to discuss the Company’s Q1 2021 unaudited IFRS Financial Results.
The dial-in numbers for the conference call are:
For additional information:
Head of Public Relations
Tel.: +7 495 781 08 08, ext. 2041
Head of Investor Relations
Tel.: + 7 495 781 08 08, ext. 2315