• Fnac Darty 9m 2024 revenue: Dynamic business with outlook revised upwards

    Source: Nasdaq GlobeNewswire / 15 Oct 2024 11:45:00   America/New_York

    Ivry-sur-Seine – France, October 15, 2024, 5:45 p.m. CET

    Dynamic business with outlook revised upwards
    9m 2024 sales up +1.0%1
    Sustained high single-digit growth in Services
    Gross margin rate increase
    Upward revision of 2024 Current Operating Income (COI) target

    • Revenue:
      • 9m 2024 increasing: €5,238 million, up +1.0% on a reported basis and down -0.2% on a LFL basis2
      • Stable Q3 2024: €1,849 million, up +0.5% on a reported basis and down -0.6% on a LFL basis2
    • Gross margin rate up by over 100 bps in Q3, excluding dilutive impacts from franchise and changes in scope
    • Current Operating Income (COI) target raised, now expected to exceed €180m, compared with the previously announced target of at least equal to that of 2023. The cumulative FCF target for 2021-2024 remains unchanged.
    • Envisaged strategic acquisition of Unieuro:
      • Strong conviction regarding the attractiveness of the proposed Consideration, valuing Unieuro at c.€123 per share and representing a premium of 42%4, which was also deemed fair from a financial standpoint by the two independent financial advisors appointed by Unieuro’s board of directors5
      • Minimum threshold condition lowered from 90% to 66.67% of Unieuro share capital
           
     REVENUEQ3 2024Change vs Q3 2023 9m 2024Change vs 9m 2023  
     

         		In €m

     

         		Reported

         		Like-for-like basis – LFL2

         		 In €m

     

         		Reported

         		Like-for-like basis – LFL2

         		 

         		  
       
    France and Switzerland1,506.2(1.3)%(1.2)% 4,266.9(0.6)%(0.4)%   
    Iberian peninsula192.3+19.8%+5.7% 535.9+18.4%+1.8%   
    Belgium and Luxembourg150.1(2.4)%(1.9)% 435.5(0.9)%(0.4)%   
    Group1,848.6+0.5%(0.6)% 5,238.3+1.0%(0.2)%   

    Enrique Martinez, Chief Executive Officer of Fnac Darty, stated: “The strength of our diversified offering combined with high-value-added services, continues to attract customers and significantly contribute to our growth. Our performance through the end of September is in line with the results we have achieved since the beginning of the year. We are proud to have contributed to the widespread success of the Olympic and Paralympic Games through our ticketing and services activities. As we near the closing of the tender offer on Unieuro, we are convinced of the value creation potential of this combination and look forward to entering the integration phase to create a European leader in specialized retail. We approach the end of the year with confidence, maintaining a focus on rigorous financial management and our commitment to creating sustainable value. We are raising our Current Operating Income target for 2024 and are fully mobilised to delivering the best to our customers and partners.”

    Q3 sales amounted to €1,849 million, up +0.5% on a reported basis and down -0.6% on a like-for-like basis6. This growth was driven by the outstanding performance of the Iberian Peninsula and sustained high single-digit growth in services across all the Group's regions.

    Over the first nine months of the year, the Group's revenue reached €5,238 million, reflecting a +1.0% increase on a reported basis and -0.2% decline on a like-for-like basis1. These results illustrate the Group’s strength and agility in successfully adapting to a constantly evolving environment.

    Change by distribution channel over the first 9 months of the year

    Sales grew both in stores and online, reflecting the relevance of the Everyday strategic plan. Digital activity accounted for 21% of total Group sales, stable compared to 2023. Omnichannel sales represented more than 50% of total online sales.

    Changes by region over the first 9 months of the year

    Sales in France and Switzerland were almost stable at -0.4% on a like-for-like basis1 (-1.2% in Q3). The scope effect mainly reflects the effect of the closure of the last three Manor shop-in-shops in non-French speaking Switzerland.

    In the Iberian Peninsula, sales posted solid growth of +1.8% on a like-for-like basis1 (with an excellent performance in Q3, up +5.7%). The integration of the 10 MediaMarkt stores in Portugal, consolidated since the 1st October 2023, is in progress.

    Business in Belgium and Luxembourg was almost stable at -0.4% on a like-for-like basis1 (-1.9% in Q3). Sales benefited from a significant growth in services.

    Changes by product category over the first 9 months of the year

    Consumer electronics grew slightly on a reported basis. In Q3, Telephony experienced a slowdown due to a more gradual start of new products launches compared to last year. Computers benefited from ongoing renewal cycles as well as innovation since the second quarter.

    Editorial products performed well, driven by the strong performance of books, fueled by the growing enthusiasm for new reading trends. However, this did not offset the decline in gaming, which had a very high comparison base from 2023.

    Services continued to grow strongly in all regions, notably with the roll-out of the Darty Max and Fnac Vie Digitale subscription-based offers, confirming their key role in our strategy.

    Diversification also posted a robust performance, thanks to growth in toys and games, and stationery.

    Lastly, Domestic appliances were almost stable. Small domestic appliances are growing strongly, benefiting from a number of technological innovations across various segments (cooking, beauty, floorcare). Sales of large domestic appliances continued to decline.

    Gross Margin Rate, at end-September 2024

    In Q3, the gross margin rate, excluding the dilutive impact of the franchise and changes in scope, was more than 100 basis points higher compared to Q3 2023.

    This increase was primarily due to growth in services and a favorable product mix, underscoring the effectiveness of the Everyday strategic plan. The Group benefited in particular from strong momentum in services, small electrical appliances and books.

    Over the first nine months of the year, the Group's gross margin rate increased by 50 basis points, excluding the dilutive effect of the franchise and changes in scope.


    ENVISAGED UNIEURO ACQUISITION

    On October 7, 2024, the minimum threshold condition was lowered from 90% to 66.67% of Unieuro's share capital, reflecting the determination to successfully pursue the Tender Offer announced on July 16, 2024.

    The offered Consideration, values Unieuro at c. €127 per share representing a premium of 42%8. This valuation was also deemed fair from a financial standpoint by the two independent financial advisors appointed by Unieuro’s board of directors9, as better detailed in the Issuer’s statement published on August 29, 2024. In addition, the share portion will allow Unieuro shareholders tendering their shares to benefit from value creation potential arising from the combined entity.

    Furthermore, the combination would create a leader in consumer electronics, domestic appliances, editorial products and services in Southern and Western Europe. This large-scale, value-creating project would be beneficial to the clients, employees and franchisees of both companies and intend to retain all of Unieuro’s employees.

    2024 OUTLOOK REVISED UPWARDS

    The improvement in several macroeconomic indicators since the start of the year (such as decreasing inflation and interest rates) are encouraging signs of a recovery in household consumption.
    The major end-of-year sales events: the 70th anniversary of Fnac, the 50th anniversary of the “Contrat de confiance”, Black Friday and Christmas will be decisive for Group’s full-year financial results.

    Given the good level of business activity over the first 9 months of the year, and assuming no unfavourable change in the economic and geopolitical context, the Group is raising its target for its 2024 Current Operating Income (COI) now expected to exceed €180m, compared to the previous target of at least equal to that of 2023 (€171m).
    The Group also confirms its objective of achieving cumulative free cash-flow from operations10 of around €500m over the period 2021-2024, i.e. a level of €180m in 2024, demonstrating its disciplined financial management and its commitment to creating sustainable value.

    ***

    Q3 2024 REVENUE

    Enrique Martinez, Chief Executive Officer, and Jean-Brieuc Le Tinier, Group Chief Financial Officer, will host a virtual presentation of the results in French, with simultaneous interpretation into English, on Tuesday October 15, 2024 at 6:30 p.m. (CET); 5:30 p.m. (UK); 12:30 p.m. (East Coast USA).

    To access the conference call, please dial-in:
    France: +33 1 70 91 87 04
    UK Dial-in +44 1 212 81 80 04
    USA Dial-in +1 718 705 87 96

    The webcast will be available at this link.

    You can listen to a recording of the presentation at any time, in either French or English, via www.fnacdarty.com.

    CONTACTS
    ANALYSTS/INVESTORS
    Domitille Vielle – Head of Investor Relations – domitille.vielle@fnacdarty.com – +33 (0)6 03 86 05 02
    Laura Parisot – Investor Relations Manager – laura.parisot@fnacdarty.com – +33 (0)6 64 74 27 18

    PRESS
    Marianne Hervé – mherve@image7.fr – +33 (0)6 23 83 59 29

    APPENDIX

    DEFINITIONS OF ALTERNATIVE PERFORMANCE INDICATORS

    Indicator titleIndicator definition
    Change in revenue at a constant exchange rate

         		Change in revenue at a constant exchange rate means that the impact of changes in exchange rates has been excluded. The exchange rate impact is eliminated by recalculating sales for period N-1 using the exchange rates used for period N.
    Change in revenue at a comparable scope of consolidationChange in revenue at a comparable scope of consolidation means that the impact of changes in the scope of consolidation is corrected so as to exclude the modifications (acquisition, disposal of subsidiary). Revenue of subsidiaries acquired or sold since January 1 of period N-1 are, therefore, excluded when calculating the change (in the event of a significant variation at Group level).

     
    Change in revenue on a same-store basisThe change in revenue on a same-store basis means that the impact of directly owned store openings and closures is excluded. Revenue from stores opened or closed since January 1 of period N-1 is, therefore, excluded when calculating said change.

    REVENUE BY OPERATING SEGMENT

          
    (€ million)Q3 2024

         		Change compared with Q3 2023 
     ReportedAt comparable scope and at constant exchange ratesLike-for-like basis – LFL 11 
    France and Switzerland1,506.2(1.3)%(1.3)%(1.2)% 
    Iberian Peninsula192.3+19.8%+19.8%+5.7% 
    Belgium and Luxembourg150.1(2.4)%(2.4)%(1.9)% 
    Group1,848.6+0.5%+0.4%(0.6)% 


          
    (€ million)9m 2024

     

         		Change compared with 9m 2023 
     ReportedAt comparable scope and at constant exchange ratesLike-for-like basis – LFL1 
    France and Switzerland4,266.9(0.6)%(0.6)%(0.4)% 
    Iberian Peninsula535.9+18.4%+18.4%+1.8% 
    Belgium and Luxembourg435.5(0.9)%(0.9)%(0.4)% 
    Group5,238.3+1.0%+1.0%(0.2)% 


    STORE NETWORK

     Dec. 31, 2023OpeningClosureSept. 30, 2024 
    France and Switzerland*8381210840 
    Traditional Fnac960096 
    Suburban Fnac170017 
    Travel Fnac374140 
    Proximity Fnac821083 
    Connect Fnac7016 
    Darty49267491 
    Fnac/Darty France1001 
    Nature & Découvertes**10611106 
    Of which franchised stores431118434 
          
    Iberian Peninsula880385 
    Traditional Fnac530152 
    Travel Fnac4013 
    Proximity Fnac180018 
    Connect Fnac3012 
    MediaMarkt Portugal100010 
    Of which franchised stores6015 
          
    Belgium and Luxembourg842284 
    Traditional Fnac***122113 
    Proximity Fnac1001 
    Darty (Vanden Borre)710170 
          
    Fnac Darty Group1 01014151 009 
    Traditional Fnac16122161 
    Suburban Fnac170017 
    Travel Fnac414243 
    Proximity Fnac10110102 
    Connect Fnac10028 
    Darty/Vanden Borre 56368561 
    Fnac/Darty 1001 
    MediaMarkt100010 
    Nature & Découvertes10611106 
    Of which franchised stores437119439 

    * Including 13 Fnac stores abroad: 3 in Qatar, 3 in Tunisia, 2 in Senegal, 2 in Ivory Coast, 1 in Congo, 1 in Cameroon, 1 in Saudi Arabia and 3 Darty stores abroad in Tunisia; and including 18 stores in the French overseas territories. Excluding Fnac shop-in-shops opened in Manor stores.
    ** including Nature & Découvertes subsidiaries managed from France: 4 stores in Belgium, 1 store in Luxembourg, 7 franchises in Switzerland, 1 franchise in Portugal and 5 franchises in the French overseas territories.
    *** Including one store in Luxembourg, which is managed from Belgium.

    1 On reported basis
    2 Like-for-like basis – LFL: excludes the effect of changes in foreign exchange rates, changes in scope, and store openings and closures
    3 Taking into consideration both the Cash Portion and the Share Portion and based on the closing price of Fnac-Darty shares equal to €30.20, as recorded on July 15, 2024 (i.e. the last trading day before the announcement of the Offer).
    4 Based on the spot volume-weighted average closing price as of July 15, 2024.

    5 The offer price was deemed fair from a financial standpoint by EQUITA SIM S.p.A. and Mediobanca Banca di Credito Finanziario S.p.A., both appointed by Unieuro’s board of directors to release a fairness opinion on the consideration of the Offer, as well as by five directors of Unieuro (including the chairman of the board of directors and two other independent directors).
    6 Like-for-like basis – LFL: excludes the effect of changes in foreign exchange rates, changes in scope, and store openings and closures
    7 Taking into consideration both the Cash Portion and the Share Portion and based on the closing price of Fnac-Darty shares equal to €30.20, as recorded on July 15, 2024 (i.e. the last trading day before the announcement of the Offer).
    8 Based on the spot volume-weighted average closing price as of July 15, 2024.
    9 The offer price was deemed fair from a financial standpoint by EQUITA SIM S.p.A. and Mediobanca Banca di Credito Finanziario S.p.A., both appointed by Unieuro’s board of directors to release a fairness opinion on the consideration of the Offer, as well as by five directors of Unieuro (including the chairman of the board of directors and two other independent directors).
    10 Excluding IFRS 16.
    11 Like-for-like basis – LFL: excludes the effect of changes in foreign exchange rates, changes in scope, and store openings and closures.

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