Continued market outperformance in France and improving cash position
LONDON, 2015-9-10 — /EPR Retail News/ — Darty plc today announces first quarter trading for the period 1 May 2015 to 31 July 2015, based on unaudited management accounts.
- Successful summer sales and excellent growth in white goods
- Continued market outperformance in France with like-for-like sales up 1.1 per cent and in Belgium with a return to positive like-for-like sales
- Focus on working capital delivered a €65 million year on year reduction in net debt at the end of July
- Improvement in underlying gross margin in this quarter; up 30 basis points for the Group and 60 basis points in France
- Netherlands impacted by new warehouse systems implementation, impacting product availability, with a double digit decline in like-for-like sales
- Mistergooddeal.com integration into Darty completed, with an expected continued negative impact on sales performance. On track to be approaching break even this financial year
- Vanden Borre to open up to 50 franchise kitchen stores in Belgium. First store to open in the first half of 2016
Q1 revenue change (3 months to 31 July)
|Belgium and the Netherlands||0.5%||(5.0)%|
* excluding Mistergooddeal.com
Régis Schultz, Chief Executive, commented:
“We continued to outperform the market in France with Darty’s total revenue up 2.4 per cent and like-for-like sales up 1.1 per cent, and Belgium delivered a positive like-for-like sales performance. We performed very well in the summer sales and maximised the benefit from the warm weather with strong white goods sales, off-setting the anticipated weak vision sales compared to the World Cup campaign of last year. Our market leadership position and leading customer services offer continued to benefit our customers, enabling us to be first to market with Windows 10 products.
“Whilst our markets remain challenging, particularly in multimedia, we were well prepared for the “back to school” period with better product availability than last year and we are now seeing strong vision sales ahead of the rugby World Cup. With trading momentum in France, continuation of our growth and cost initiatives plus an improving average cash position we are well placed for the rest of the year.”
Total Group revenue was up 2.0 per cent and down 0.2 per cent including Mistergooddeal.com. Like-for-like sales fell by 0.3 per cent and by 2.5 per cent including Mistergooddeal.com. We saw strong sales in white goods, benefitting from weather related purchases of refrigeration and air conditioning products, and further strong growth in Communication. As expected, Vision sales declined against a successful football World Cup campaign last year and the multimedia market remained weak, with the introduction of Windows 10 only occurring at the end of the period.
Our web-generated sales continued to grow, up over 13 per cent excluding Mistergooddeal.com, now representing over 16 per cent of total product sales. Group gross margin saw an improving trend and was broadly flat for the period, including a positive impact of around 30 basis points from Mistergooddeal.com and a dilutive impact of around 60 basis points from the franchise business.
Darty continued to outperform the market, with total revenue up 2.4 per cent and like-for-like sales up 1.1 per cent, excluding Mistergooddeal.com. In addition to the warm weather benefit to white goods demand, the summer sale was a success with revenue from sale specific products nearly doubling compared to last year.
Darty’s web-generated sales grew nearly 10 per cent to over 16 per cent of total product sales. This was driven by strong growth in click and collect sales, which increased from 16 per cent to 27 per cent of web sales. Overall gross margin for France was up 20 basis points, with underlying gross margin up around 60 basis points. This reflected a positive mix effect from the strong sale of white goods, with Mistergooddeal.com having a positive impact of around 40 basis points and the franchise business having a dilutive impact of around 80 basis points.
The integration of Mistergooddeal.com into the main Darty operations was completed as planned during the period with an expected continued negative impact on sales performance, albeit on an improving trend. We saw an improvement in gross margin as we rationalised the product range and introduced our own sourced products. We are on track to be approaching break even this financial year as planned.
Belgium and the Netherlands
At Vanden Borre in Belgium and BCC in the Netherlands overall revenue was up 0.5 per cent and like-for-like sales were down 5.0 per cent. Web-generated sales continued to grow strongly, up over 32 per cent, to over 14 per cent of total product sales. Overall gross margin was down 50 basis points.
Vanden Borre saw a return to positive like-for-like sales, with enhanced delivery options continuing to improve web sales, but saw some gross margin pressure from competitive market conditions. In partnership with European leader, FBD, Vanden Borre is to create a franchised network of around 50 Vanden Borre kitchen stores. The first store will open in the first half of 2016.
Gross margin continued to improve at BCC, but revenue declined due to major disruption from the implementation of a new warehouse system, which impacted product availability. As a result, the first half retail loss at BCC is expected to be greater than last year.
A cash enhancement programme was launched during the quarter with the aim of optimising working capital. Our objective is to reduce average net debt by around €50 million over the year. The programme is off to a good start with net debt already down by €65 million year on year at the end of July.
Restatement of financial statements for the six months ended 30 October 2014
Two accounting treatments are possible for the business tax, CVAE (Cotisation sur la Valeur Ajoutée des Entreprises) – either as an operating expense or as income tax. In line with the treatment adopted by French retail listed peers the decision was taken to reclassify from an operational expense in the retail profit of the France reported segment, to income tax. CVAE was €5.3 million for the six months ended 31 October 2014.
In addition, having reviewed possible treatments under IAS19 Revised, retirement benefit scheme expenses of €0.7 million relating to the legacy UK pension scheme have been reclassified from finance costs to operating profit in line with most common practice. These costs have been reclassified as an operating cost, outside of retail profit, as they relate to Comet, a discontinued business.
Both the CVAE and IAS19 adjustments were first made for the last financial year for the 12 months to 30 April 2015.
In addition a new adjustment has been made relating to IFRIC21 (Levies). This clarifies that the triggering event for the recognition of a liability for levies (i.e. miscellaneous taxes, duties and other levies not within the scope of IAS 12) is determined by reference to the terms of the relevant legislation, regardless of the period used as the basis of calculation the levy. Consequently, a liability for payment of a levy cannot be recognised progressively in the interim financial statements if there is no present obligation at the interim reporting date. This interpretation has resulted in a €7.2 million benefit to the total operating profit for the six months to 31 October 2014, with an equal reduction to the total operating profit for the six months to 30 April 2015, and hence no impact on the total operating profit for the 12 months to 30 April 2015.
All three adjustments are expected to be of a similar amount for the six months ended 31 October 2015.
Restatement of the Group income statement for the six months ended 31 October 2014 is attached as an appendix to this announcement.
There will be a telephone conference call for analysts at 08.00 on 10 September 2015. Dial-in number: +44 (0) 20 3003 2666. A recording of this call will be made available after 10.00. Replay dial-in number: +44 (0) 20 8196 1998, Access Pin: 3613079#.
The Group will issue its Half Year Results on Thursday 10 December 2015.
+44 (0) 20 7269 1400
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About Darty plc
Darty group is a leading multi-channel service led electrical retailer operating over 400 stores and websites in three European countries. It generated an annual turnover of over €3.5 billion in 2014/15 through its operations of Darty and Mistergooddeal.com in France, Vanden Borre in Belgium and BCC in the Netherlands. Its ordinary shares are listed with the UK Listing Authority and trade on the market for listed securities on the London Stock Exchange under the symbol DRTY.L. It is also listed on the NYSE Euronext Paris.
For further information, please visit the company’s website, www.dartygroup.com.
Certain statements made in this announcement are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from any expected future results in forward looking statements. Unless otherwise required by applicable laws, regulations or accounting standards, Darty plc does not undertake any obligation to update or revise any forward looking statements, whether as a result of new information, future developments or otherwise.
SOURCE: Darty plc