Fix Price Group PLC: Fix Price announces key operating and financial results for Q2 and H1 2024

8 August 2024, Astana, Kazakhstan – 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 auditor-reviewed IFRS financial results for the six months ended 30 June 2024 (H1 2024).

Operating and financial summary for Q2 2024

• Revenue was up by 9.9% y-o-y to RUB 76.7 billion

• Retail revenue grew by 11.8% to RUB 69.3 billion
• Wholesale revenue stood at RUB 7.4 billion

• LFL sales[1] increased by 3.2% y-o-y, supported by category management initiatives and signs of recovery in consumer confidence, which resulted in more active impulse buying
• During the reporting period, the Company opened 177 net new stores (including 15 franchise stores). As of 30 June 2024, Fix Price was operating a total of 6,722 stores
• In Q2 2024, 37,800 sqm was added to the Company’s total selling space, which reached 1,456,920 sqm (+11.4% y-o-y) as of the end of the quarter
• During the quarter, 0.7 million new members[2] joined the loyalty programme, bringing the total number of registered cardholders to 27.1 million (+13.0% y-o-y). Loyalty card transactions accounted for 59.9% of retail sales. The average ticket for purchases with a loyalty card remains almost twice as high as the average ticket for non-loyalty-card purchases
• Gross profit grew by 12.4% to RUB 26.0 billion, supported by optimised cost of sales. Gross margin increased by 74 bps to 34.0% thanks to efficient assortment management as well as improved commercial terms with suppliers, which helped offset pressure from volatile currency exchange rates
• SG&A costs (excl. LTIP expense[3] and D&A) as a percentage of revenue were 17.3%, versus 15.3% in Q2 2023, mainly driven by growth in staff costs, advertising, repair and maintenance costs and other expenses as a percentage of revenue, which was partially offset by improved cost management in terms of bank charges, rental expense, security services and utilities
• Adjusted EBITDA[4] under IFRS 16 grew by 2.3% y-o-y to RUB 13.0 billion, supported by solid gross margin dynamics, which offset higher SG&A costs. Adjusted EBITDA margin stood at 16.9%
• EBITDA under IFRS 16 was up 3.0% to RUB 12.8 billion. The EBITDA margin was 16.7%
• Net profit stood at RUB 5.8 billion for the period. Net profit margin was 7.6%
• CAPEX as a percentage of revenue decreased to 1.7% from 1.9% in Q2 2023, reflecting stable investments in new store openings amid revenue growth

Operating and financial summary for H1 2024

• Revenue grew by 9.4% y-o-y and reached RUB 148.4 billion

• Retail revenue increased to RUB 132.7 billion, up 10.5% y-o-y
• Wholesale revenue was up 0.9% y-o-y to RUB 15.7 billion

• LFL sales increased by 1.9%

• During the past six months, Fix Price opened 308 stores on a net basis, including 287 Company-operated stores and 21 franchise outlets, in accordance with store opening guidance for 2024. Store openings slowed versus the previous year, as the Company decided to push store openings to the second half of the year, which has generally been more profitable

• The total selling space of stores increased by 66,309 sqm to 1,456,920 sqm in H1 2024
• The total number of registered loyalty cardholders grew by 1.4 million from the beginning of the year to 27.1 million, with penetration in retail sales reaching 60.4%
• Gross profit grew by 9.6% y-o-y to RUB 49.5 billion. Gross margin increased by 7 bps y-o-y to 33.3%
• SG&A costs (excl. LTIP expense and D&A) as a percentage of revenue reached 18.1%, compared to 15.7% in H1 2023, mainly reflecting growth in staff costs, advertising, repair and maintenance costs and other expenses as a percentage of revenue, which was partially mitigated by improved cost management in terms of bank charges, rental expense and security services
• Adjusted EBITDA under IFRS 16 was RUB 22.9 billion. Adjusted EBITDA margin was 15.5%
• EBITDA under IFRS 16 stood at RUB 22.5 billion, with an EBITDA margin of 15.2%
• Profit for the period stood at RUB 9.1 billion, reflecting increased tax expense on the back of withholding tax paid as a result of intra-group dividend distribution, as well as the high base of the previous year when tax provisions were released as a result of a reassessment of certain tax risks. Net profit margin was 6.1%
• CAPEX as a percentage of revenue decreased to 1.8% from 2.5% for H1 2023

“In the second quarter, we continued to see a recovery in consumer demand, as evidenced by the 3.2% year-on-year increase in the Group’s LFL sales. Consumers are making more frequent impulse purchases; due to inflation expectations and overall uncertainty, however, they continue to save and to look for the best deals. For our part, we remain committed to offering low prices across all product categories.

During the reporting period, we remained focused on our seasonal assortment, which was the main driver of a 5.7% increase in the LFL average ticket. We observed heightened interest in vacation and leisure goods and ongoing strong demand for kitchenware, household goods, DIY products, and party and celebration supplies. We are also enhancing our assortment of food products, including ice cream, milk and cereals, which encourages more frequent visits and, in turn, boosts sales of interesting, regularly updated products in our non-food categories, which dominate our product mix.

I am proud of the fact that our initiatives to improve our stores’ value proposition are resonating with customers. A recent study by Vector showed that the percentage of customers with a positive view of our store format had risen by 2 percentage points over the past year, to 92%.

We are dedicated to making the unique Fix Price shopping experience widely accessible across all our geographies. Consequently, we continued our organic growth in the second quarter, opening 177 new stores (net) and reaffirming our guidance for 750 net openings in 2024. Notably, around 17% of net openings in the reporting period took place in international markets: we recently surpassed the mark of 600 stores in total in Belarus and Kazakhstan, which are showing strong LFL sales growth, and our first store in the United Arab Emirates opened its doors in July.

At the same time, the operating environment in the Russian retail market remains challenging, with an acute labour shortage putting pressure on profit margins alongside ongoing instability when it comes to freight transport. Nevertheless, our extensive logistics management experience has ensured the timely delivery of goods, including seasonal items, to store shelves. Our constant focus on improving operational efficiency, including the installation of self-checkout cash registers and the reduction of bank fees, has partially mitigated margin pressures. Our adjusted EBITDA margin improved to 16.9% on a quarterly basis, which remains one of the best results in the sector. In the first half of the year, we earned RUB 9.1 billion in net profit, although this was impacted by withholding tax on dividend payments, which we were able to declare despite infrastructure challenges.

Our priorities remain respecting the rights and protecting the interests of all investors, along with maintaining an open dialogue with the investment community. We are continuously adapting to changing conditions in capital markets. We are working on solutions to eliminate key infrastructure restrictions for all Fix Price investors, including minority shareholders, regardless of jurisdiction. Negotiations are currently under way to appoint a successor depositary for our GDR programme. As before, we will communicate all changes and decisions in due course.”

Dmitry Kirsanov, Fix Price CEO