Analyst and Investor Conference Call for FY 2020 Audited IFRS Financial Results

15 February 2021. Moscow, Russia. – Detsky Mir Group (“Detsky Mir” or “the Company”, MOEX: DSKY) announces that FY 2020 Audited IFRS Financial Results will be released on March 1, 2021.                  

Detsky Mir will host a brief conference call for investors and analysts on IFRS results.

Please find the details of the conference call below.

Date: Monday, March 1, 2021

Time: 17:00 (Moscow) 14:00 (London) 9:00 (New York)

Speakers:

• Maria Davydova, Chief Executive Officer
• Anna Garmanova, Chief Financial Officer
• Sergey Levitskiy, Head of Strategy and Investor Relations

Russia

+7 495 283 98 58

UK/ International

+44 203 984 98 44 

USA

+1 718 866 46 14

Conference ID

288 543

Online presentation 

Web dial-in and Presentation

 ***

For additional information:

Detsky Mir Mobile App Reaches Another Milestone with Over Six Million Downloads in 2020

Moscow, Russia, 9 February 2021 – Detsky Mir Group (“Detsky Mir” or the “Company”, MOEX: DSKY), the largest children’s goods retailer in Russia and Kazakhstan, announces a record high number of downloads of its mobile app in 2020.

Barely a year after its launch, the Detsky Mir mobile app has already been downloaded more than six million times, with the number of users exceeding 7.8 million, the number of sessions up to 1.3 million per day, and the average duration per session lasting 5.5 minutes. More than 17.4 million orders were placed through the Company’s mobile app in 2020, while January 2021 saw as many as 72.8% of all online orders being made on the app. Mobile app users’ favorite products are apparel and footwear, toys, baby food and care products. Moreover, the average income from a user of a mobile application is 27% higher than from a user of an online store.

In December 2020, the active audience reached 3.6 million users. Detsky Mir was ranked in the top 10 Russian apps in the Shopping category with a rating of 4.7 stars on the App Store and 4.8 on Google Play.

The Detsky Mir app appeals to online shoppers with its vibrant design and user-friendly interface, as well as its tremendous choice of children’s goods. The developers of Detsky Mir have been busy making improvements to it throughout the year. App users can now access their personal account, which is integrated with the detmir.ru website; the functionality of the shopping basket has also been enhanced, in particular by integrating Apple Pay and Google Pay; while the ordering process itself has also been given an upgrade. The Company’s mobile app has become even faster and more user-friendly.

The Detsky Mir mobile app was launched in December 2019 and is available for iOS and Android smartphones. The service enables Detsky Mir’s customers not only to make purchases in a convenient online store format, use the Company’s loyalty program card, find out updates on promotions, and view their order history and number of reward points but also to constantly be in touch with the customer care service via an online chat.

For additional information:

The Detsky Mir Online Store Marks a 10-year Milestone

Moscow, Russia, 5 February 2021 – Detsky Mir Group (“Detsky Mir” or the “Company”, MOEX: DSKY), the largest children’s goods retailer in Russia and Kazakhstan, celebrates the tenth anniversary of its online store detmir.ru.

At the end of 2010 Detsky Mir Group announced the launch of its own online store at detmir.ru. When the project was launched, the online store’s product assortment exceeded one thousand SKUs of children’s goods from the world’s major brands and was available only to customers in Moscow and the Moscow Region.

Since then, the Detsky Mir online store has grown into a multifunctional online platform, offering an outstanding shopping experience and counting close to 250,000 SKUs of children’s goods as well as pet supplies. Now, online shoppers can access detmir.ru from all over Russia and Kazakhstan, and it is one of the most visited children’s goods websites.

The website offers a modern and eye-catching design with a user-friendly interface and services, updates on current promotions and corporate news, as well as the functionality to contact our customer care team 24/7 regarding any details of your order.

In 2020, detmir.ru and Detmir mobile app were visited by more than 453 million users, and over 24 m orders were completed. The Company’s online revenue for FY2020 grew 2.4x year-on-year to RUB 34.8 bn, while its online sales for Q4 2020 more than doubled, accounting for almost 30% of Detsky Mir’s total revenue in Russia.

Background

In March 2011, Detsky Mir’s online platform won the oldest award in the Russian online segment, Golden Website, being named the best online store.

In April 2011, a panel of expert judges at the Online Retail Russia business forum recognized our online store as the Best Online Store of Children’s Goods.

 In 2012, the Detsky Mir online store won the Golden Bear Cub National Award for Best Online Project.

 In 2016, the Detsky Mir online store won the High Turnover award for Breakthrough of the Year.

In 2017, E-Commerce Index TOP-100 ranked the online store detmir.ru 1st in the Children’s Goods segment.

In 2018, Detmir.ru ranked 28th among Data Insight’s Top 100 online stores.

In 2019, Detsky Mir’s website ranked 1st in the online market for children’s goods among the Top 1,000 online retailers, according to Data Insight.

In 2020, Detmir.ru won the Growth Leader: Styer nomination according to Data Insight annual rating.  

For additional information:

Cyber Monday Boosts Detsky Mir’s Online Sales by 2.3 Times

Moscow, Russia, 3 February 2021 – Detsky Mir Group (the “Group”, “Detsky Mir” or the “Company”, MOEX: DSKY), the largest children’s goods retailer in Russia and Kazakhstan announces the results of its online Cyber Monday campaign, held from 25 and to 29 January.

The campaign boosted the Company’s online sales by 2.3 times year-on-year to keep it among the top performers by growth rates in the Russian e-commerce segment. Online orders exceeded 120,000 on 25 January, the campaign’s key date, while its online sales peaked at 40.1% of Detsky Mir’s total sales in Russia. Orders made via the Company’s mobile app during the campaign totaled 73.5%.

The strong online performance was led by the following categories: Apparel (+292%), Stationery, Books and Multimedia (+212%), Baby Food (+185%), and Toys (+130%). The most customer activity came from Moscow, Saint Petersburg, Nizhny Novgorod, Yekaterinburg and Perm.

For additional information:

Detsky Mir’s Total Sales Growth Accelerated to 14.4% in Q4

Moscow, Russia, 20 January 2021 – Detsky Mir Group (the “Group”, “Detsky Mir” or the “Company”, MOEX: DSKY), the largest children’s goods retailer in Russia and Kazakhstan, announces its operating results for the fourth quarter and twelve months ended 31 December 2020.

Q4 2020 Operating Highlights[1]

• Group unaudited consolidated revenue increased by 14.4% year-on-year to RUB 44.5 bn, compared to RUB 38.9 bn in Q4 2019.
• Online revenue[2] increased 2.2x year-on-year to RUB 12.7 bn.
  • The share of online sales in total revenue of Detsky Mir in Russia increased 1.9x year-on-year to 29.8%.
  • The share of in-store pick-up service amounted to 83.4%.
• Revenue in Kazakhstan increased by 21% year-on-year to RUB 1.4 bn.
• Like-for-like sales[3] at Detsky Mir stores in Russia and Kazakhstan grew by 5.9%. The number of tickets increased by 1.2%, while the average ticket grew 4.7%.
• Like-for-like sales at Detsky Mir stores in Russia grew by 5.7%. The number of tickets increased by 1.4%, while the average ticket grew by 4.3%.
• Detsky Mir opened 41 new branded stores[4] in Q4 2020, as well as 11 new Detmir Pickup stores and 7 new Zoozavr stores. The Group had 868 stores[5] as of 31 December 2020:
• Total selling space increased by 6.4% year-on-year to approximately 897,000 sq. m.
• The total number of Detsky Mir loyalty cards issued increased by 11.4% year-on-year to 26.8 m, while the number of active loyalty card holders[6] was 10.7 m. Transactions involving a loyalty card accounted for 84.2% of total sales.

FY 2020 Operating Highlights

• Group unaudited consolidated revenue increased by 11% year-on-year to RUB 142.9 bn, compared to RUB 128.7 bn in 2019.
• Online revenue increased 2.4x year-on-year to RUB 34.8 bn.
  • The share of online sales in total net revenue of Detsky Mir in Russia increased 2.2x year-on-year to 25.2%.
  • The share of in-store pick-up service amounted to 82.2%.
• Revenue in Kazakhstan increased by 1.6% year-on-year to RUB 3.8 bn.
• Like-for-like sales at Detsky Mir stores in Russia and Kazakhstan grew 3.9%. The number of tickets decreased 1.5%, while the average ticket grew 5.5%.
• Like-for-like sales at Detsky Mir stores in Russia grew 4.0%. The number of tickets decreased 1.4%, while the average ticket grew 5.4%.
• Detsky Mir opened 71 new branded stores[7] in 2020, as well as 12 new Detmir Pickup stores and 10 new Zoozavr stores.

Q4 2020 Key Events

• In December 2020, Detsky Mir paid out the entire net profit for 9M 2020 as an interim dividend, to a total of RUB 3.8 bn, or RUB 5.08 per ordinary share, bringing the total dividend payout for 2020 to RUB 7.8 bn, or RUB 10.58 per ordinary share, up 11.3% year-on-year.
• In December 2020, Gulf Investments Limited (Altus Capital) acquired a 25.0% stake in Detsky Mir.
• In December 2020, the Company’s Board of Directors resolved to convene an Extraordinary General Meeting of Shareholders on 12 March 2021, and following the recommendation of the Nomination and Remuneration Committee proposed that the Extraordinary General Meeting considered the following candidates to the new Board of Directors.
• Furthermore, Detsky Mir opened its second flagship hypermarket in December 2020. Located in Moscow’s MEGA Teply Stan mall, the new store is designed as a shopping and entertainment space for both children and parents.
• In December 2020, Detsky Mir signed an agreement with the developer PNK Group for the construction of a third federal distribution center outside Yekaterinburg. The site measures 63,200 sq. m and is slated for commissioning in Q1 2022.
• In December 2020, Detsky Mir appointed Nikolay Ermakov as its new Chief Technical Officer and member of the Company’s Management Board. Mr. Ermakov brings more than 16 years of experience in information technology, digital transformation and product development (X5 Retail Group, Gett and Rambler & Co).
• In November 2020, Detsky Mir took the top spot among Russian retailers on Russia’s 50 Best Employers 2020 List released by Forbes.
• In October 2020, the Company signed a preliminary agreement to open an 8,000 sq. m regional distribution center in Kazan, based on Russian Post’s fulfillment center and scheduled for commissioning in Q2 2021.
• In October 2020, Detsky Mir announced the full-scale launch of its own marketplace, which offers suppliers a new personal account functionality with all the necessary features, and has grown the total online assortment 2.5 times to 250,000 SKUs.
• In October 2020, the Company launched a super-express delivery service from Detsky Mir stores. Customers in 250 cities across Russia can now receive their orders within two hours of placing them on the website, and a good number of deliveries in Moscow are fulfilled by own courier service.
• In October 2020, the Company continued to enhance the UX of the detmir.ru online store by launching a new personal account, optimizing the shopping cart and adding Apple Pay and Google Pay to the mobile application, with results of A/B testing showing that revenue per user increased by 15%.
• Detsky Mir was included in the annual Corporate Philanthropy Leaders ranking under the Good Practice category.

View the full press release

Maria Davydova, PJSC Detsky Mir Chief Executive Officer, said:

“The past year of 2020 was a challenging one, not only for our Company, but also for the entire retail industry. The increased level of uncertainty, as well as new operational and logistics challenges have really made us stronger and allowed us to demonstrate the high efficiency of our business model. Both customers and the competitive environment were in flux over the year, with high demand for online shopping prompting many retailers to accelerate their digital business transformation.

“In this context, our team’s efforts were focused on further enhancing our omnichannel proposition: expanding our retail chain’s footprint, strengthening our federal and regional logistics infrastructure, growing our assortment by developing Detsky Mir’s marketplace, along with accelerating our online delivery services and improving customer service across our sales channel mix. As a result, we have consolidated our leadership in the children’s goods market, becoming one of the largest and fastest-growing e-commerce players in the Children’s category.

“During the fourth quarter, we had a successful New Year season, boosting total revenue growth to 14.4%. Importantly, our aggressive push to develop omnichannel engagement has not only enabled us to maintain high growth momentum in like-for-like (LFL) sales, but also put our LFL number of tickets  back on a steady growth trajectory. In January 2021, we have been demonstrating similarly strong rates of revenue growth across all segments and expect an improved EBITDA margin for FY 2020, according to preliminary unaudited statements.

“High-margin categories such as Toys and Apparel and Footwear continued to lead the growth during the last quarter of the year, with a 65.5% share in the Company’s total revenue. We continued our private-label push across these categories, with the share of private labels in Toys sales increasing by 2.2 p.p. year-on-year to 19.2%, and in Apparel and Footwear by 2.4 p.p. year-on-year to 88.3%. As a result, the share of private labels and direct imports in total annual sales increased by 2.9 p.p. year-on-year to 44.5%.

“We ended the quarter having broken a string of records in our online business, including the share of online channel peaking at 52% of the Detsky Mir chain’s total sales on the busiest day of the Black Friday event in November, and selling a record RUB 1.5 bn worth of goods in the last week of December.

“Our online sales more than doubled during the fourth quarter, at almost 30% of the Group’s total revenue, due to effective price setting and assortment expansion, as well as our faster order-fulfillment times.

“Our new mobile app has also been increasingly gaining traction with customers since its launch in late 2019, with the number of downloads for the Detsky Mir mobile app passing the 6,100,000 milestone in 2020 and 70% of all online orders placed via the mobile app in the first two weeks of January.

“I should also highlight that we have met our annual expansion target for the retail chain, with most store openings, 59 new stores, taking place during the fourth quarter of 2020.

“Our key objectives encompass the further assortment development of our own private labels and marketplace, a focus on continued regional expansion, including by opening new compact format stores, as well as expansion in the pet supplies market and launches of digital services. Achieving leadership across all e-comm products in terms of mobile app and online store usability is another key pillar of our new digital strategy.

“We have set ourselves the ambitious target of growing the share of online sales to 45% in the medium term by developing direct delivery and in-store fulfillment of online orders. In addition to our strong leadership position in our core Children’s category, we see potential for us to become a leader in the pet supplies market with our own Zoozavr brand.”

Guidance

Detsky Mir’s 2021 guidance for operational and financial performance will be announced in March 2021 following the disclosure of FY 2020 financial results.

For additional information:

Detsky Mir Group (MOEX: DSKY) is a multi-format omnichannel retailer and the leader in the children’s goods sector in Russia and Kazakhstan, as well as a significant player in Belarus. The Group comprises the Detsky Mir and the Detmir Pickup retail chains, the detmir.ru online store and marketplace, as well as the Zoozavr pet supplies retail chain. The Company operates a retail chain of 832 Detsky Mir stores located in 331 cities in Russia, Kazakhstan and Belarus, 16 Detmir Pickup stores, as well as 20 Zoozavr stores as of 31 December 2020. The total selling space was approximately 897,000 square meters.

Detsky Mir’s shareholder structure: Gulf Investments Limited (Altus Capital) – 25%; Free-float[8] – 75%.

Websites: detmir.ru, ir.detmir.ru

Disclaimer:

Some of the information in these materials may contain projections or other forward-looking statements regarding future events or the future financial performance of Detsky Mir. You can identify forward looking statements by terms such as “expect”, “believe”, “anticipate”, “estimate”, “intend”, “will”, “could,” “may” or “might” the negative of such terms or other similar expressions. Detsky Mir wishes to caution you that these statements are only predictions and that actual events or results may differ materially. Detsky Mir does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of Detsky Mir, including, among others, general economic conditions, the competitive environment, risks associated with operating in the Russian Federation, rapid technological and market change in the industries Detsky Mir operates in, impact of COVID-19 pandemic on macroeconomic situation on the markets of presence and financial results of Detsky Mir and its subsidiaries, as well as many other risks specifically related to Detsky Mir and its operations.

([1]) The Company’s consolidated financial measures for 2019–2020 and related interim periods are based on proforma financial information prepared as if IFRS 16 “Leases” had not been adopted, and thus do not represent IFRS measures.

([2]) This channel includes online orders at www.detmir.ru, including in-store pick-up.

([3]) Hereinafter like-for-like RUB sales growth, like-for-like number of tickets growth and like-for-like average ticket growth are based on stores in operation for at least 12 full calendar months. A store is included in the calculation of the monthly like-for-like if the difference between the worked periods in comparable months does not exceed three business days.

([4]) In Q4 2020, Detsky Mir closed one store.

([5]) Including 16 Detmir Pickup stores as well as 20 Zoozavr stores.

([6]) Cardholders who made at least one purchase at Detsky Mir during the last 12 months to 31 December 2020 are considered active.

([7]) In 2020, Detsky Mir closed five stores. In Q3 2020, in order to improve profitability on the back of the accelerated opening of the compact-format Detmir Pickup stores, the Group decided to close ELC and ABC branded stores, the share of which in the total revenue of the Group comprised less than 0.3% in 2020.

([8]) Excluding quasi-treasury shares and shares held by management and directors (0.7% of total shares).

Detsky Mir’s Shareholders Approved an Interim Dividends for 9 Months 2020

Moscow, Russia, 21 December 2020 – PJSC Detsky Mir (“Detsky Mir” or the “Company”, MOEX: DSKY), the largest children’s goods omnichannel retailer in Russia, announces the results of its Extraordinary General Meeting of Shareholders (EGM) that took place on 17 December 2020.

The EGM passed the following resolutions by absentee vote:

1. Approve an interim dividend payment of the entire net profit for 9 months 2020 of RUB 3,754,120,000 or RUB 5.08 per ordinary share. Thus, the total amount of paid dividends in 2020 increases by 11.3% year-on-year to RUB 7.8 bn, corresponding to around RUB 10.58 per ordinary share.

2. Set the record date for dividend for 28 December 2020. The Company plans to pay out the indicated dividends by the end of 2020.

At the same time, the EGM decided to retain the previous version of the Company’s charter, as well as number of members of the Board of Directors for 10 people.

For additional information:

The Detsky Mir Group of Companies (MOEX: DSKY) is an omnichannel retailer and the leader in the children’s goods sector in Russia. The Group comprises the Detsky Mir and the Detmir Pickup retail chains, the detmir.ru online store and marketplace, as well as the Zoozavr pet supplies retail chain. The Company operates a retail chain of 805 Detsky Mir stores located in 319 cities in Russia, Kazakhstan and Belarus, 13 Detmir Pickup stores, as well as 14 Zoozavr stores as of 30 November 2020. The total selling space was approximately 872,000 square meters.

Detsky Mir Group’s shareholder structure as of the date of this announcement is as follows: Free float[1] – 100%.  

Websites: detmir.ru, ir.detmir.ru   

([1]) Excluding quasi-treasury shares and shares held by management and directors (0.7% of total shares)

Detsky Mir Doubles Its Online Sales, Building on a Bumper Black Friday 2020

Moscow, Russia, 2 December 2020 – Detsky Mir Group (“Detsky Mir” or the “Company”, MOEX: DSKY), the largest specialized children’s goods retailer in Russia and Kazakhstan, announces its sales performance for November 2020[1]. 

Detsky Mir has set a new record for its online sales, building on another successful Black Friday campaign, spanning the week from 23 November to 29 November. Friday, 27 November saw the sales peak for the whole campaign, with 266,000 online orders processed, twice as many as on the Black Friday of 29 November 2019, as well as the share of the online channel in Detsky Mir’s total sales in Russia reached 52%. During the campaign week, sales for the Detsky Mir online store hit a record high RUB 1.3 bn, with apparel and toys among the top performers.

In November 2020, Detsky Mir Group’s total sales, including online, grew 14.8% year-on-year. Sales via the Detsky Mir online store and mobile app increased more than twofold year-on-year to RUB 4.4 bn. The share of online sales in Detsky Mir’s total revenue in Russia doubled year-on-year to 32.9%.

Maria Davydova, CEO of PJSC Detsky Mir:

“In November, we set several online sales records in a row: on the back of our seasonal campaigns, sales for the online store grew by an order of magnitude, and we were able to increase the number of orders processed to post one of the highest growth rates across the Russian e-commerce segment.

“This solid performance proves that we are heading in the right direction, dramatically accelerating our total revenue growth and further consolidating the market. Importantly, we are holding our position among our segment’s top performers in terms of margins. We expect even better performance on adjusted EBITDA margin for October and November.

“The convenient and fast click-and-collect service is supported by the aggressive expansion of our retail chain’s footprint and the increasing total store count across all formats. Since each store serves to concentrate the Company’s merchandise inventory, our clients can receive their orders within 60 minutes after the online purchase. Moreover, the customers can take advantage of the super express delivery service. Thanks to it, we are among the first to deliver orders in 250 cities of Russia in a few hours. In November, the number of retail stores of the traditional Detsky Mir format reached 800, and this strong expansion will continue until the end of the year.

“In October, we fully rolled out our own marketplace covering all categories, including apparel and footwear, toys and games, products for newborns and pet supplies, with the number of SKUs to grow to 2.4 million in the medium term.

“A new phase in our ongoing efforts to reinforce our logistics infrastructure was marked by the signing of a preliminary agreement to open a distribution center in Kazan based on Russian Post’s fulfillment center, which will accelerate online delivery to customers in the Volga Federal District.

“The mobile app has also been increasingly gaining traction with customers, already generating over 65% of total online sales in the week of last November. We are planning to push this segment further and meet the most relevant needs of our customers.

“As part of our efforts to offer a seamless customer experience across our sales channels, we regularly launch new solutions and services to keep pace with customer demands and consumer expectations, the success of which is demonstrated by our business performance.”

For additional information:

The Detsky Mir Group of Companies (MOEX: DSKY) is an omnichannel retailer and the leader in the children’s goods sector in Russia. The Group comprises the Detsky Mir and the Detmir Pickup retail chains, as well as the Zoozavr pet supplies retail chain. The Company operates a retail chain of 805 Detsky Mir stores located in 319 cities in Russia, Kazakhstan and Belarus, 13 Detmir Pickup stores, as well as 14 Zoozavr stores as of 30 November 2020. The total selling space was approximately 872,000 square meters.

Detsky Mir Group’s shareholder structure as of the date of this announcement is as follows: Detsky Mir Group’s shareholder structure as of the date of this announcement is as follows: free float[2] – 100%.

Websites: detmir.ru, ir.detmir.ru.

Disclaimer:

Some of the information in these materials may contain projections or other forward-looking statements regarding future events or the future financial performance of Detsky Mir. You can identify forward looking statements by terms such as “expect”, “believe”, “anticipate”, “estimate”, “intend”, “will”, “could,” “may” or “might” the negative of such terms or other similar expressions. Detsky Mir wishes to caution you that these statements are only predictions and that actual events or results may differ materially. Detsky Mir does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of Detsky Mir, including, among others, general economic conditions, the competitive environment, risks associated with operating in the Russian Federation, rapid technological and market change in the industries Detsky Mir operates in, impact of COVID-19 pandemic on macroeconomic situation on the markets of presence and financial results of Detsky Mir and its subsidiaries, as well as many other risks specifically related to Detsky Mir and its operations.

([1]) The Company’s consolidated financial measures for 2019–2020 and related interim periods are based on proforma financial information prepared as if IFRS 16 “Leases” had not been adopted, and thus do not represent IFRS measures.

([2]) Excluding quasi-treasury shares and shares held by management and directors (0.8% of total shares).

Detsky Mir’s Online Sales Exceeded RUB 1 bn Over the Last Week

Moscow, Russia, 16^th November 2020 – Detsky Mir Group (“Detsky Mir” or the “Company”, MOEX: DSKY), the largest specialized children’s goods retailer in Russia and Kazakhstan, announces the results of its Shopping Week campaign ended on 15 November.

Detsky Mir set several new records in online sales. On 11 November, the campaign’s key day, the Company increased its online sales more than threefold year-on-year, demonstrating one of the highest growth rates in the Russian e-commerce segment. Orders exceeded 170,000 over one day, while its online sales reached 41% of Detsky Mir’s total sales in Russia.

Over the entire Shopping Week, the Company’s online sales grew by 2.5 times year-on-year. Weekly sales via the Detsky Mir online store and mobile app exceeded RUB 1 bn. Fashion (+291%) was the top performing online category. The most customer activity came from Moscow, Saint Petersburg, Samara, Yekaterinburg, and Nizhny Novgorod.

The Board of Directors Recommended Shareholders to Approve an Interim Dividend Payment of the Entire Net Profit for 9M of 2020

Moscow, Russia, 12 November 2020 – Detsky Mir Group (“Detsky Mir”, the “Group” or the “Company”, MOEX: DSKY), Russia’s largest specialized children’s goods retailer, announces that its Board of Directors at a meeting on 11 November 2020 resolved to convene the Extraordinary General Meeting of Shareholders (EGM). The EGM will be held by absentee vote, and the deadline for receipt of completed ballots is 17 December 2020. The record date for the EGM is 22 November 2020.

The Board of Directors recommended that the EGM approved to pay out the entire net profit for the nine months of 2020 as an interim dividend, representing a payment of RUB 3,754,120,000 or RUB 5.08 per ordinary share. Thus, the total amount of paid dividends in 2020 would increase by 11% year-on-year to RUB 7.8 bn, corresponding to around RUB 10.6 per ordinary share. The Board of Directors recommended that the EGM set the dividend record date for 28 December 2020.

In addition, the agenda of the EGM includes the following issues: approving the updated Company’s Charter and determining the number of directors to serve on the board.

The EGM materials will be available on the Company’s website (ir.detmir.ru), as well as on Interfax’s website (e-disclosure.ru) and by request at the Company’s corporate secretariat: 3 3rd Nizhnelikhoborsky proyezd, Bld. 6, 127238, Moscow after 26 November 2020.

Shareholders may register to participate in the EGM, fill out the electronic ballot form and vote via the electronic voting service online aoreestr.ru.

For additional information:

The Detsky Mir Group of Companies (MOEX: DSKY) is a multi-format retailer and the leader in the children’s goods sector in Russia. The Group comprises the Detsky Mir and the Detmir Pickup retail chains, as well as the Zoozavr pet supplies retail chain. The Company operates a retail chain of 792 Detsky Mir stores located in 306 cities in Russia, Kazakhstan and Belarus, five Detmir Pickup stores, as well as 13 Zoozavr stores as of 30 September 2020. The total selling space was approximately 858,000 square meters.

Detsky Mir Group’s shareholder structure as of the date of this announcement is as follows: Detsky Mir Group’s shareholder structure as of the date of this announcement is as follows: Free float[1] – 100%.

Websites: detmir.ru, elc-russia.ru, ir.detmir.ru

Disclaimer:

Some of the information in these materials may contain projections or other forward-looking statements regarding future events or the future financial performance of Detsky Mir. You can identify forward looking statements by terms such as “expect”, “believe”, “anticipate”, “estimate”, “intend”, “will”, “could,” “may” or “might” the negative of such terms or other similar expressions. Detsky Mir wishes to caution you that these statements are only predictions and that actual events or results may differ materially. Detsky Mir does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of Detsky Mir, including, among others, general economic conditions, the competitive environment, risks associated with operating in the Russian Federation, rapid technological and market change in the industries Detsky Mir operates in, impact of COVID-19 pandemic on macroeconomic situation on the markets of presence and financial results of Detsky Mir and its subsidiaries, as well as many other risks specifically related to Detsky Mir and its operations.

([1]) Excluding quasi-treasury shares and shares held by management and directors (0.8% of total shares).

Detsky Mir Group Adjusted EBITDA Increased by 24.2% YoY in Q3 2020

Moscow, Russia, 2 November 2020 – Detsky Mir Group (“Detsky Mir”, the “Group” or the “Company”, MOEX: DSKY), Russia’s largest specialized children’s goods retailer, announces its unaudited financial results in accordance with International Financial Reporting Standards (IFRS) for the third quarter and the nine months ended 30 September 2020.

Q3 2020 Financial Highlights[1]

• Group unaudited consolidated revenue increased by 13.5% year-on-year to RUB 38.5 bn, compared to RUB 34 bn in Q3 2019.
• Online revenue[2] increased 2.4x year-on-year to RUB 8.0 bn.
  • The share of online sales in total revenue of Detsky Mir in Russia increased 2.1x year-on-year to 21.4%.
  • The share of in-store pick-up service amounted to 83%.
• Revenue in Kazakhstan decreased by 26.7% year-on-year to RUB 780 m.
• Like-for-like sales[3] at Detsky Mir stores in Russia and Kazakhstan grew by 3.9%. The number of tickets decreased by 2.1%, while the average ticket grew 6.0%.
• Like-for-like sales at Detsky Mir stores in Russia grew by 4.4%. The number of tickets decreased by 1.5%, while the average ticket grew by 5.9%.
• Detsky Mir opened 10 new branded stores[4] in Q3 2020, as well as two new Zoozavr stores. The Group had 810 stores[5] as of 30 September 2020:
• Total selling space increased by 8.1% year-on-year to approximately 858,000 sq. m.
• Gross profit increased by 13.8% year-on-year to RUB 12.2 bn. The gross margin improved by 0.1 p.p. year-on-year to 31.6%.
• SG&A as a percentage of revenue[6] decreased by 1.2 p.p. year-on-year, driven by increased operational efficiency.
• Adjusted EBITDA[7] increased by 24.2% year-on-year to RUB 5.2 bn; the adjusted EBITDA margin improved by 1.2 p.p. year-on-year to 13.5%. EBITDA[8] totaled RUB 5.2bn (+26.7% year-on-year).
• Adjusted net profit[9] amounted to RUB 2.4 bn (-3.9% year-on-year). Net profit totaled RUB 2.3 bn (-1.5% year-on-year).
• The net debt[10]/adjusted EBITDA LTM ratio improved to 1.1x as of 30 September 2020. 

9M 2020 Financial Highlights

• Group unaudited consolidated revenue increased by 9.5% year-on-year to RUB 98.4 bn, compared to RUB 89.8 bn in 9M 2019.
• Online revenue increased 2.5x year-on-year to RUB 22.1 bn.
  • The share of online sales in total net revenue of Detsky Mir in Russia increased 2.3x year-on-year to 23.3%.
  • The share of in-store pick-up service amounted to 81%.
• Revenue in Kazakhstan decreased by 7.2% year-on-year to RUB 2.4 bn.
• Like-for-like sales at Detsky Mir stores in Russia and Kazakhstan grew 3.0%. The number of tickets decreased 2.7%, while the average ticket grew 5.8%.
• Like-for-like sales at Detsky Mir stores in Russia grew 3.2%. The number of tickets decreased 2.5%, while the average ticket grew 5.8%.
• Detsky Mir opened 30 new branded stores[11] in 9M 2020, as well as one new Detmir Pickup store and three new Zoozavr stores.
• Gross profit increased by 6.5% year-on-year to RUB 30.1 bn, with a gross margin of 30.6%.
• SG&A as a percentage of revenue decreased by 1.5 p.p. year-on-year, driven by increased operational efficiency.
• Adjusted EBITDA increased by 15.8% year-on-year to RUB 11.0 bn; the adjusted EBITDA margin improved by 0.6 p.p. to 11.2%. EBITDA totaled RUB 10.6 bn (+16.6% year-on-year).
• Adjusted net profit amounted to RUB 3.8 bn (-23.2% year-on-year). Net profit totaled RUB 3.4 bn (-24.7% year-on-year).

Q3 2020 Key Events

• In September 2020, the Company started to accept payments via the Faster Payments System (FPS) across its retail stores. Detsky Mir customers are now able to pay for their purchases using a QR code via the FPS across all of Detsky Mir retail stores in Russia.
• In September 2020, the Extraordinary General Meeting of Shareholders approved a final dividend payment of the remaining undistributed profit for Q4 2019 totaling RUB 1.8 bn, or RUB 2.5 per ordinary share.
• In September 2020, PJSFC Sistema (the majority shareholder of the Company) and the Russia-China Investment Fund (RCIF) successfully priced the offering of Detsky Mir shares. The offering size was 185 million existing shares in Detsky Mir, representing 25% of Detsky Mir’s issued share capital. Through this offering, Detsky Mir became the first Russian company with a 100% free float. Sistema and RCIF ceased to hold any ownership interest in the Company.
• In July 2020, the Company launched its first regional distribution center in PNK Park Rostov-on-Don, a Class A+ industrial park developed by PNK Group. Detsky Mir leased 6,000 sq. m of warehousing space for seven years with the option to expand. The project’s CAPEX totals around RUB 100 m.
• Despite the repeated closures of most of Detsky Mir stores in Kazakhstan due to the spread of the coronavirus (COVID-19), the Company promptly launched pickup points for online orders at its retail outlets, which helped maintain its revenue generation and deliver positive financial results.
• Detsky Mir updated its mid-term growth strategy. The Company primarily plans to strengthen its leadership in the children’s goods market while maintaining double-digit growth in total sales via the further rollout of its omnichannel business model. At the same time, the Company sees a solid upside in family digital services, as well as in the pet supplies market. A recording of the online conference where the updated strategy was discussed is available here: Medium-term Strategy.
• The Detsky Mir Charitable Foundation donated humanitarian aid totaling about RUB 24 m to boarding schools and medical institutions of the eight Russian regions. In July, the Zoozavr retail chain successfully held the Comfort in a Shelter campaign aimed at helping homeless animals: one whole ton of feed were collected in total. The Company held the Uchastvuyte campaign to collect the goods for disadvantaged children: more than 1.5 million participants donated more than 1.8 million items.
• The Company held a campaign for the collection of post-consumer household appliances at the head office – about 70 kg of equipment, as well as 1.5 tons of waste paper were collected and sent for recycling.

Events after the Reporting Period

• As of 2 November 2020, all Detsky Mir stores[12] remained open to customers.
• In October 2020, the Company signed a preliminary agreement to open a distribution center in Kazan based on Russian Post’s fulfillment center at Kazan International Airport with an area of 8,000 square meters. The distribution center is expected to be launched in Q2 2021.
• In October 2020, Detsky Mir announced the full-scale launch of its own marketplace. A personal account functionality has been added to the online platform, offering all necessary features – assortment creation and management, analytical reporting, price management, etc. The Company plans to further expand the marketplace functionality by adding a promotion management system, financial reporting and operational analytics. In the medium term, the assortment is expected to grow to 2.4 million SKUs. The Company has already established long-term partnerships with a number of local and foreign brands
• In October 2020, the Company launched a super-express delivery service from Detsky Mir stores. Customers in 250 cities across Russia can now receive their order within two hours of placing it on the website. Moreover, a good number of deliveries in Moscow are fulfilled by own courier service.
• In October 2020, the Company continued to enhance the UX of the detmir.ru online store by launching a new personal account, optimizing the shopping cart and by adding Apple Pay and Google Pay to the mobile application. Preliminary results of A/B testing show that revenue per user increased by 15%.
• The Detsky Mir Charitable Foundation donated humanitarian aid totaling about RUB 1 m to children’s social institutions in Udmurtia. The fund also provided support to large families in the three Russian regions with aid totaling over RUB 5 m.
• Detsky Mir is running a campaign to collect and recycle clothes and shoes across the retail chain and at its head office.
• Detsky Mir is observing all necessary epidemiological safety measures in retail stores: the health of all personnel is monitored, personal protective equipment for employees (masks, gloves, hand sanitizers) have been purchased, special markings have been applied to help our customers maintain social distancing, disinfection efforts have been stepped up across all our sales areas and buildings, and hand sanitizers are available to customers at store entrances. The Company constantly monitors the decrees of regional leaders and fulfills their instructions for transferring employees to remote work. Employees who work at the head office in Moscow are regularly tested for COVID by PCR.

Maria Davydova, PJSC Detsky Mir Chief Executive Officer, said:

“Q3 results once again proved Detsky Mir’s high resilience in the face of the crisis. We managed to quickly return to the trajectory of double-digit business growth and strengthen our leadership in the children’s goods segment. In October, we also expect a high total sales growth over 16%, as the online channel grew by 2.4 times year-on-year.

“We continuously focus on execution excellence by optimizing costs and improving the efficiency of business processes, thanks to which we achieved a solid operating income growth. As a result, adjusted EBITDA margin increased by 1.2 p.p. year-on-year to 13.5%.

“In addition, we continue to generate strong cash flow thanks to low capital requirements and the efficient optimization of debt capital. It is critical to highlight that the accumulated FX losses of RUB 2.6 bn, which significantly diminished net profit under IFRS, are mainly non-cash in nature due to the revaluation of foreign currency payables from suppliers. Cash FX losses amounted therefore to RUB 504 m for 9М 2020.

“Given our strong financial position, the Company’s management team will recommend the BoD and shareholders to pay out our entire net income as an interim dividend for 9M 2020. Thus, the total amount of paid dividends in 2020 would increase by 11% year-on-year to RUB 7.8 bn, corresponding to around RUB 10.6 per ordinary share.

“Given that Detsky Mir has become the first Russian company with a free float of 100%, process has been initiated to refresh the Board of Directors to achieve majority of independent directors. The BoD launched the formal search to nominate four new independent directors, including a new Chairman. The Company will place a heavy focus on candidates with a background in e-commerce and digital transformation. We fully expect that new candidates will be presented to our shareholders before year-end 2020.

“Looking ahead, we will continue to consolidate the children’s goods retail market in Russia and the CIS thanks to our unique and diversified product range, affordable prices and a well-developed online sales channel. Our team will do our best to ensure that the shareholders get a high return on their investment in Detsky Mir.”

View the full press release

***

Conference Call Information

Detsky Mir’s management will host a conference call today at 17:00 (Moscow time) / 14:00 (London time) / 9:00 (New York time) to discuss the Company’s Q3 2020 unaudited IFRS Financial Results.

The dial-in numbers for the conference call are:

Russia

+7 495 283 98 58

UK

+44 203 984 98 44

USA

+1 718 866 46 14

PIN

288 543#

Online presentation 

Web dial-in and Presentation

For additional information:

The Detsky Mir Group of Companies (MOEX: DSKY) is a multi-format retailer and the leader in the children’s goods sector in Russia. The Group comprises the Detsky Mir and the Detmir Pickup retail chains, as well as the Zoozavr pet supplies retail chain. The Company operates a retail chain of 792 Detsky Mir stores located in 306 cities in Russia, Kazakhstan and Belarus, five Detmir Pickup stores, as well as 13 Zoozavr stores as of 30 September 2020. The total selling space was approximately 858,000 square meters.

Detsky Mir Group’s shareholder structure as of the date of this announcement is as follows: Detsky Mir Group’s shareholder structure as of the date of this announcement is as follows: Free float[13] – 100%.

Websites: detmir.ru, elc-russia.ru, ir.detmir.ru

Disclaimer:

Some of the information in these materials may contain projections or other forward-looking statements regarding future events or the future financial performance of Detsky Mir. You can identify forward looking statements by terms such as “expect”, “believe”, “anticipate”, “estimate”, “intend”, “will”, “could,” “may” or “might” the negative of such terms or other similar expressions. Detsky Mir wishes to caution you that these statements are only predictions and that actual events or results may differ materially. Detsky Mir does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of Detsky Mir, including, among others, general economic conditions, the competitive environment, risks associated with operating in the Russian Federation, rapid technological and market change in the industries Detsky Mir operates in, impact of COVID-19 pandemic on macroeconomic situation on the markets of presence and financial results of Detsky Mir and its subsidiaries, as well as many other risks specifically related to Detsky Mir and its operations.

([1]) Hereinafter the Company’s consolidated financial measures for 2019–2020 and related interim periods are based on proforma financial information prepared as if IFRS 16 ‘Leases’ had not been adopted, and thus do not represent IFRS measures.

([2]) This channel includes online orders at www.detmir.ru, including in-store pick-up.

([3]) Hereinafter like-for-like RUB sales growth, like-for-like number of tickets growth and like-for-like average ticket growth are based on stores in operation for at least 12 full calendar months. A store is included in the calculation of the monthly like-for-like if the difference between the worked periods in comparable months does not exceed three business days.

([4]) In Q3 2020, in order to improve profitability on the back of the accelerated opening of the compact-format Detmir Pickup stores, the Group decided to close ELC and ABC branded stores, the share of which in the total revenue of the Group comprised less than 0.5% in 1H 2020.

([5]) Including five Detmir Pickup stores as well as thirteen Zoozavr stores.

([6]) Hereinafter, selling, general and administrative expenses is calculated as selling, general and administrative expenses adjusted for depreciation and amortization expenses, additional share-based compensation expense and cash bonuses under the LTI program.

([7]) Hereinafter, adjusted EBITDA is calculated as profit for the period before income tax expense, foreign exchange (loss)/gain, gain on acquisition of controlling interest in associate, finance expense, finance income, depreciation and amortization, adjusted for share-based compensation expense and cash bonuses under the LTI program. See Attachment A.

([8]) Hereinafter, see Attachment A for definitions and reconciliation of EBITDA to IFRS financial measures.

([9]) Hereinafter, adjusted net profit is calculated as profit for the period adjusted for the share-based compensation expense and cash bonuses under the LTI program. See Attachment A.

([10]) Hereinafter, net debt is calculated as total borrowings (defined as long term loans and borrowings and short-term loans and borrowings and current portion of long-term loans and borrowings) less cash and cash equivalents. Lease liabilities are not included in the calculation of net debt. Adj. EBITDA LTM is calculated as adj. EBITDA for the last 12-months period.

([11]) In 9M 2020, Detsky Mir closed four stores.

([12]) The Company temporarily closed one store, in which a fire occurred on November 1, 2020. The store is located in the Zhemchuzhina Sibiri shopping center (Tobolsk city). 

([13]) Excluding quasi-treasury shares and shares held by management and directors (0.8% of total shares).