Fix Price announces key operating and financial results for Q4 and FY 2023

28 February 2024, Limassol, Cyprus – Fix Price Group PLC (LSE and MOEX: FIXP, AIX: FIXP.Y, “Fix Price”, the “Company” or the “Group”), one of the leading variety value retailers globally and the largest in Russia, today announces its operating and financial results for the fourth quarter (Q4 2023) based on management accounts and audited IFRS financial results for the twelve months (FY 2023) ended 31 December 2023.

Operating AND FINANCIAL summary for Q4 2023

• Revenue was up 7.8% y-o-y and stood at RUB 81.7 billion

• Retail revenue was RUB 72.8 billion, an increase of 8.0% y-o-y
• Wholesale revenue stood at RUB 8.9 billion, up 6.0% y-o-y

• In Q4 2023, LFL sales[1] were 0.9% lower y-o-y due to softer consumer demand amid continued macroeconomic uncertainty
• The Company opened 252 net new stores (including 17 franchises); the total number of stores reached 6,414 as of the end of the reporting period
• The total selling space grew by 55.2 thous. sqm and reached 1,390.6 thous. sqm (+13.5% y-o-y)
• During the quarter, the total number of registered cardholders increased by 0.9 million[2] to 25.7 million (up 17.6% y-o-y). Loyalty-card transactions accounted for 60.9% of retail sales. The average ticket for purchases made using a loyalty card remained 1.8x higher than the average ticket for non-loyalty-card purchases
• Gross profit saw an 11.7% y-o-y increase, amounting to RUB 28.8 billion. Gross margin increased by 122 bps y-o-y to 35.3% primarily due to an inventory reserve reversal, supported by effective work with suppliers
• SG&A costs (excl. LTIP expense[3] and D&A) as a percentage of revenue stood at 16.0%, versus 14.6% in the same quarter of the previous year, on the back of higher staff costs, advertising expenditures, bank charges and other expenses as well as the negative operating leverage effect, to some extent mitigated by gained efficiencies in rental expense and security services
• Adjusted EBITDA[4] under IFRS 16 rose by 5.8% y-o-y to RUB 15.9 billion, with the adjusted EBITDA margin being 19.5% for the reporting period
• EBITDA under IFRS 16 was up 3.5% y-o-y to RUB 15.6 billion. The EBITDA margin stood at 19.1%, versus 19.9% in Q4 2022, on the back of pressure from SG&A costs (excl. D&A) and LTIP expense, which was partially offset by positive gross margin dynamics
• Profit for the period was RUB 8.6 billion, with a net profit margin of 10.5%
• CAPEX as a percentage of revenue decreased significantly, to 1.9%, down from 8.6% in the same quarter of the previous year amid lower investments in logistics due to the planned completion of the construction of distribution centres (DCs) started in 2022

Operating and financial summary for FY 2023

• Revenue rose 5.1% y-o-y to RUB 291.9 billion

• Retail revenue was RUB 259.0 billion, an increase of 5.2% y-o-y
• Wholesale revenue grew 4.7% y-o-y and stood at RUB 32.9 billion

• LFL sales were down 4.1%

• The total number of stores increased by 751, including 672 Company-operated stores and 79 franchise outlets, in line with the net store openings target for 2023
• The new stores added 165.3 thous. sqm of selling space, bringing the total selling space of stores operating under the Fix Price brand to 1,390.6 thous. sqm

• The total number of registered loyalty cardholders grew by 3.8 million to 25.7 million, with penetration in retail sales reaching 62.0%
• Gross profit increased by 7.8% y-o-y to RUB 99.2 billion. Gross margin saw an 84 bps increase y-o-y, reaching 34.0%
• SG&A costs (excl. LTIP expense and D&A) as a percentage of revenue was 15.6%, compared to 14.1% a year earlier, mainly on the back of the negative operating leverage effect and continued high labour market competition
• Adjusted EBITDA under IFRS 16 remained stable at RUB 54.2 billion. The adjusted EBITDA margin was 18.6%, reflecting gross margin growth offset by higher SG&A costs (excl. D&A and LTIP expense)
• EBITDA under IFRS 16 stood at RUB 53.1 billion, with an EBITDA margin of 18.2%
• Profit for the reporting period grew 66.8% y-o-y and totalled RUB 35.7 billion. The net profit margin surged to 12.2%, versus 7.7% for FY 2022

“Faced with a challenging market and regulatory environment last year, our team continued to adhere to the Company’s strategic priorities. We persisted in our efforts to improve our customer value proposition, implemented our development programme and acted in the best interests of our employees and shareholders. The strength and flexibility of our business model enabled us to continue on our growth path in the fourth quarter, and we once again recorded some of the highest margins in the industry. We met our target for net openings in 2023, growing by 751 stores. Our revenue growth rate picked up steam during the reporting quarter, reaching 8% year-on-year, and our adjusted EBITDA margin was 19.5%. Effective work with our assortment and suppliers helped us increase our gross margin and partially offset the rise in personnel costs owing to the tight labour market.

“In addition to developing our regular assortment, we also see great potential in niche holiday and thematic collections, kitchen products, as well as household and DIY goods. For example, our 2023 New Year’s collection enjoyed high demand among customers and made a substantial contribution to sales growth in the reporting period.

“In an effort to make customer service faster, in the fourth quarter we began installing a queue recognition system that uses computer vision at checkouts. The system enables us to retain customers who previously might not have completed their purchase because of queues at checkout counters. Two months after the introduction of the technology at seven pilot stores, average traffic had increased by 2% compared with identical stores where the technology was not used. Based on the results of the pilot project, we decided to roll out the technology at all of Fix Price’s Company-operated stores across Russia.

“We have always focused on improving and developing our loyalty programme, which gained some 3.8 million new members last year, bringing the total membership to over 25 million users, who not only benefit from participation but also provide valuable feedback on our products and services.

“I am proud of the fact that, despite infrastructure constraints, we were able to start the process of paying out dividends. As a result, on 15 January 2024 Fix Price’s Board of Directors approved interim dividends for 2023–2024 in the amount of RUB 9.84 per GDR/share, or RUB 8.4 billion, which our shareholders will be able to receive in the first quarter of this year.

“It’s important to note that Fix Price’s success is primarily the result of our team’s efforts. With that in mind, the development and retention of the Company’s key talents remains our priority. This year, we made our first payment under our long-term incentive programme, and the number of employees taking part is constantly increasing. Given that our personnel have shown so much interest in the programme, it serves not only as a retention incentive for those already participating but also as motivation for growth for our talent pool. I would like to thank our entire team for their concerted efforts. I am confident that together we can handle any challenges that arise and achieve ambitious new goals in the interests of all stakeholders.”

Dmitry Kirsanov, Fix Price CEO