Detsky Mir Achieves Record Online Sales Growth in April 2020

Moscow, Russia, 20 May 2020 – Detsky Mir Group (“Detsky Mir”, the “Group” or the “Company”, MOEX: DSKY), Russia’s largest specialized children’s goods retailer, announces its sales results for April 2020.

The Company demonstrated an explosive online sales growth in April, increasing its sales via the Detmir.ru online store and Detsky Mir mobile app by 3.8x year-on-year to RUB 3.3 billion (including VAT) and delivering 1.9 million online orders of children’s goods in Russia. During the peak demand period, Detsky Mir’s orders hit 115,000 in 24 hours. For context, only the Black Friday sale at the end of 2019 topped this, with 124,000 orders completed in one day. The online share of Detsky Mir’s total sales in Russia grew almost fivefold year-on-year to 42%.

Apparel and footwear (+480%), baby food (+436%), as well as toys (+326%) were the top performing online categories. Pet supplies also recorded a stellar performance, with the category’s online sales growing 14x year-on-year. During the lockdown period, arts and crafts and board games (+874%) became the top sellers in the toys category. Customers in Moscow, Saint Petersburg, Samara, Yekaterinburg and Nizhny Novgorod were our most frequent online shoppers.

In April, amidst the challenging epidemiological situation in Russia, we saw an increased demand for our courier delivery service. This channel achieved almost a 30% share in total online sales for the month. Detsky Mir successfully launched a next-day delivery service in 30 of the largest Russian cities in late 2019. The Company also offers an express delivery service in 19 cities across Russia, with goods delivered within hours of ordering from the online store.

More than 70% of online revenue came from in-store pickup at Detsky Mir retail stores. The Company continues to offer an unrivalled order fulfillment service: 95% of all online orders picked in-store can be collected from the checkout within 60 minutes of ordering.

As of 20 May 2020, the majority of stores operated by the Group in Russia remain open, with 62 Detsky Mir stores out of the total 729 temporarily closed. In Kazakhstan, 30 stores out of the total 38 have been temporarily closed, with pickup points set up at 13 closed locations so that customers are able to collect goods ordered from the Detsky Mir online store. The Belarusian retail chain Detmir is operating normally.

In April 2020, Group unaudited revenue including the online segment decreased by 20% year-on-year to RUB 7.5 billion. At the same time, Group sales including the temporarily closed stores grew by 2% year-on-year for the first 18 days of May 2020.

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

“In April, we experienced a record-high growth in online sales, with our solid logistics and IT capacity allowing us to meet the increased demand and fulfill all our obligations to customers in a timely manner. Today, as growth rates have stabilized, our retail chain is demonstrating steady increases in sales.

E-commerce is not only a high-growth business segment but also a vital tool for combating the spread of coronavirus (COVID-19) in society. The Detsky Mir team managed to quickly adapt our business processes to a changing environment to ensure the safety of our customers and employees. We have rolled out “contactless” online delivery, with our online store couriers and staff at offline stores and distribution centers fully equipped with the required personal protective equipment, and disinfection efforts stepped up across all sales spaces and buildings.

The key drivers of our online segment’s strong performance are competitive pricing, a fast delivery service, and a wide product assortment. Today, we are not only developing a multi-channel retail chain but are also driving the digital transformation of all business processes to provide a seamless shopping experience across multiple sales channels.

Our new mobile app has also been increasingly gaining traction with our customers since its launch in late 2019, already generating 50% of our online sales.

We target a full-scale rollout of our children’s goods marketplace by Q3 2020 and plan to enhance our online store’s logistics infrastructure by launching its first regional warehouse in the Southern Federal District, measuring about 6,000 sq. m.”

For additional information:

Detsky Mir Group (MOEX: DSKY) is a multi-format retailer and Russia’s largest specialized children’s goods retailer. The Group comprises the Detsky Mir and the Detmir Pickup retail chains, the ELC (Early Learning Centre) branded retail stores in Russia and the ABC retail chain, as well as the Zoozavr pet supplies retail chain. The Company operates a retail chain of 772 Detsky Mir stores located in 297 cities in Russia, Kazakhstan and Belarus, 5 Detmir Pickup stores, as well as 46 ELC, 12 ABC and 11 Zoozavr stores as of 31 March 2020. Total selling space is approximately 847,000 sq. m.

Detsky Mir Group’s shareholder structure as of the date of this announcement is as follows: PJSFC Sistema[1] – 33.38%, the Russia-China Investment Fund (RCIF)[2] 9.0% and free-float 57.62%.

Learn more at www.detmir.ru, elc-russia.ru and ir.detmir.ru.

(1) PJSFC Sistema is a publicly-traded diversified Russian holding company serving over 150 million customers in the sectors of telecommunications, high technology, banking, retail, paper and packaging, agriculture, real estate, hospitality and healthcare services.

(2) RCIF, an equity fund established by the Russian Direct Investment Fund (RDIF) and China Investment Corporation (CIC), holds its stake in PJSC Detsky Mir through its two subsidiaries: Floette Holdings Limited and Exarzo Holdings Limited.