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Showroomprive.com: First half 2019 results - DECREASING EBITDA IN ACCORDANCE WITH end of June ESTIMATES
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Showroomprive.com
First half 2019 results DECREASING EBITDA IN ACCORDANCE WITH end of June ESTIMATES
La Plaine Saint Denis, 25 July 2019 - Showroomprivé, a leading European online retailer specialising in fashion for the Digital Woman, has published its results for the first half of 2019, ended 30 June.
Showroomprivé co-founders and co-CEOs Thierry Petit and David Dayan commented: "The first half clearly didn't live up to our expectations - we faced logistics issues and difficulties managing surplus inventories, in an increasingly demanding environment. However, this disappointing performance, composed of endogenous and exogenous elements, doesn't jeopardise the strategic focus of our 2018-2020 performance plan, nor the suitability of the value proposition for our clients. We plan to continue our actions by first building on the resilience of orders placed by our loyal buyers' base, who continue to demonstrate their strong attachment to the brand. Genuine advances in operational optimisation have been made under our transformation plan, with already positive effects at gross margin and cost savings levels. We will continue to reap the benefits in the second half. We intend also to step up and extend our logistics optimisation efforts, which present a major challenge for the coming months. Our sights remain set on our goal to turn our performance around". KEY FIGURES
The first half of 2019 was marked by a deviation of the Group's economic performance from the trajectory of the "Performance 2018-2020" plan. The Group has been impacted by economic factors affecting its business, significant logistics overruns - particularly relating to returns handling - and by a more challenging surplus inventory rundown, which led the Group to record significant impairment on inventories. These factors have masked the tangible results obtained under the "Performance 2018-2020" plan. The Group is however starting the second half of 2019 on more solid footing and intends to return to profitability during the second half. Decline in revenue in an unfavourable environment
First half revenues were down 4.3% to 302 million euros, due to a sluggish global economic environment over the first six months of the year, and the mechanical decline in revenues expected in International business.
Internet sales in France held up well, posting an economic decline of just 1.8%, in a context of optimisation of around a third of marketing investments. These costs have been redirected towards promoting loyalty amongst repeat buyers, rather than recruiting new ones. Nevertheless, the appeal of the Showroomprivé brand has attracted 360,000 new buyers over the first half. SRP Media, one of the key pillars of the Group's strategy, suffered from an unfavourable comparison base with the lack of one major advertising campaign, such as the one realised in H1 2018 which contributed over EUR2.5 million. Adjusted for this operation, SRP Media's business was up 8% in line with the strategy, which aims to more effectively monetise the Group's assets.
Internationally, the decline in revenues can be attributed in equal part to i) closures in certain countries and ii) a refocusing of the offer, particularly at Saldi Privati in Italy, in order to concentrate on the most profitable business opportunities and return to profitability in the first half. The second quarter shows a better dynamic and marks a rebound which nevertheless was unable to offset the decline of sales in the first quarter. Other revenues, including non-internet sales, fell sharply. The Group offered considerable discounts in an attempt to run down surplus inventories via its non-internet sales channel, due to a sluggish inventory clearance physical market over the first six months of the year. Logistics difficulties in the handling of returns also weighed on business.
Key performance indicators*
The Group's performance indicators are resilient in the context of a downturn in activity in the first half of the year and the optimization of marketing investments, confirming the solidity of the model.
Revenue per buyer is thus almost at equilibrium given the decline in the number of buyers (particularly new ones), a change directly linked to the optimisation of marketing costs, which have been redirected towards engagement, loyalty and brand preference.
The number of repeat buyers has thus increased over the first half, representing 83% of buyers and generating 88% of revenues, up three points over the previous year. This increase reflects the efforts made to reactivate its customer base and is in line with its strategy to reduce acquisition expenses, while boosting revenues from repeat buyers.
However, Showroomprivé continued to attract more than 360,000 new buyers during the first half, while drastically reducing the related marketing costs.
The mobile continues its rise with a contribution that continues to strongly support the activity. It represents 84% of the traffic and 69% of the revenues, up by 3 and 7 points respectively.
Operational performance
In accordance with AMF recommendations, the amortisation of intangible assets recognised during a business combination is presented under "underlying EBIT", as marketing costs. The Group posted an EBITDA loss of 23.2 million euros, i.e. a decline of 22 million euros, in line with expectations announced on 26 June. The change in the first half was mainly due to:
Restated of all non-recurring and essentially non-cash items, EBITDA would amount to a loss of around 8.1 million euros.
Underlying Operating income before cost of share-based payments and other operating income and expenses amounted to a loss of 31.1 million euros, compared to a loss of -6.3 million euros in the first half of 2018.
Net income (loss)
Other operating income and expenses (-12.8 million euros) composed of non-recurring charges, as follows:
The Group also recognizes a tax income of 2.6 million euros. As a result, Group net income stands at -41.4 million euros. Cash items
The change in cash over H1 2019 amounted to a net outflow of -39.3 million euros, due to:
Ongoing strategic developments
Real progress has been made in preparation for the opening of the Group's new logistics warehouse during the period:
The opening of the new owned warehouse in the second half should help promote greater efficiency in logistics processes, with increased control over incomings and outgoings. The efficiency gains generated by this extra internal space will result in a decrease in the cost per order on around 20 % of shipments by 2020 and will represent full-year EBITDA saving in the order of 4 million euros.
In addition, dropshipping continued to grow in the Group's offering mix to account for 11.8% of gross Internet sales in the first half, up 5 points compared to the first half of 2018.
The two Groups have made progress in the roll-out of the four synergy priorities identified:
The Group continued its developments over the first half through enhancing the services and features of its online selling platform. The redesigned homepage, the offers' geolocation, a notification centre, a new IT system to manage all travel business and a supplier portal for the dropshipping offer were set up in the first half of the year.
Showroomprivé's management team has appointed François de Castelnau Group Chief Financial Officer, who brings with him extensive experience in the distribution sector. His first assignment will be to return the company to profitability under the "Performance 2018-2020" plan.
RETURN TO PROFITABILITY EXPECTED IN THE SECOND HALF The Group will start the second half of the year on a sound and solid basis and aims to see a return to profitability over this period, without being able to compensate for the delay in the first semester. This turnaround will be driven by:
The Board of Directors of SRP Groupe met on July 25, 2019, examined and approved the half-year consolidated financial statements of the Group as of June 30, 2019. The half-year consolidated financial statements were the subject of the usual limited review by the statutory auditors; their certification report is in the process of being issued. Analyst & Investor Conference on July 25, 2019 at 6:30 pm Paris time (in French)
Dial-in numbers to follow the LIVE conference From France: +33 (0) 1 76 77 22 57 From the United Kingdom: +44 (0) 330 336 9411 Confirmation code: 2082258
Webcast https://globalmeet.webcasts.com/starthere.jsp?ei=1252195&tp_key=11761fba45
FORWARD-LOOKING STATEMENTS This press release solely contains summary information and is not intended to be detailed. This press release may contain forward-looking information and statements relating to the Group and its subsidiaries. These statements include financial projections and estimates and their underlying hypotheses, statements with respect to plans, to objectives and to expectations relating to operations that are still to come, to future revenues and services, and statements with respect to future performance. Forward-looking statements can be identified by the words "believe", "anticipate", "objective" or similar expressions. Even if the Group believes that the expectations reflected by such forwardlooking statements are reasonable, investors and shareholders of the Group are advised of the fact that the information and forward-looking statements are subject to numerous risks and uncertainties, many of which are difficult to predict and generally out of the control of the Group, which could imply that the effective results and events can differ significantly and in an unfavourable manner from those that are communicated, implied or indicated by this information and these forwardlooking statements. These risks and uncertainties include those that are advanced or identified in the documents filed or that are to be filed with the Financial Markets Authority by the Group (in particular those detailed in chapter 4 of the reference document of the Company). The Group does not take on any commitment to publish updates of the forwardlooking information, this whether subsequent to new information, to future events or to any other element.
Next releases Q3 2019 net revenues, 24 October 2019
ABOUT showroomprive.com Showroomprivé.com is a European player in event-driven online sales that is innovative and specialized in fashion. Showroomprivé proposes a daily selection of more than 2,000 partner brands over its mobile applications or its Internet site in France and in six other countries. Since its creation in 2006, the company has undergone quick and profitable growth.
Listed on the Euronext Paris market (code: SRP), Showroomprivé achieved a gross business volume with all taxes included of more than 900 million euros in 2018, and net revenue of 672 million euros, growing by 3% over the preceding year. The Group employs more than 1,150 people.
For more information : https://www.showroomprivegroup.com
Contacts
APPENDICES
INCOME STATEMENT
1 In compliance with the recommendations of the AMF, amortization of intangible assets recognized upon business combinations is indicated in the "Current Operating Income" within marketing expenses PERFORMANCE INDICATORS1
1 Other than Beautéprivée
SEGMENTAL INFORMATION
BALANCE SHEET
Cash flows
[1] Excluding the impact of the application of IFRS 16 as of January 1, 2019 (+19.2 million euros of debt as of June 30, 2019) [2] Source: Kantar Worldpanel / Panel Ekommerce / CAM fin septembre 2018 vs. A-1 Regulatory filing PDF file Document title: PDF EN Document: http://n.eqs.com/c/fncls.ssp?u=TKURFONKLE |
Language: | English |
Company: | Showroomprive.com |
1, rue des Blés - ZAC Montjoie | |
93210 La Plaine Saint-Denis | |
France | |
Internet: | showroomprive.com |
ISIN: | FR0013006558 |
AMF Category: | Inside information / News release on accounts, results |
EQS News ID: | 847059 |
End of Announcement | EQS News Service |
847059 25-Jul-2019 CET/CEST
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