O`KEY GROUP NET RETAIL REVENUE RISES BY 10%, DA! DISCOUNTERS DELIVER 54.8% REVENUE GROWTH IN Q3 2022

Press release

28 October 2022
 

O`KEY GROUP NET RETAIL REVENUE RISES BY 10%,

DA! DISCOUNTERS DELIVER 54.8% REVENUE GROWTH IN Q3 2022

O`KEY Group S.A. (LSE, MOEX: OKEY, the Group or the Company), one of Russias leading food retailers, has announced its unaudited operating results for the third quarter (Q3) and the first nine months (9M) of 2022.

All materials published by the Group are available on its website www.okeygroup.lu.

Q3 2022 operating highlights

• Group net retail revenue[1] rose by 10.0% YoY to RUB 47.8 bn, driven mainly by discounters LFL performance and O`KEYs online sales growth and supported by discounter stores openings.
• O`KEY hypermarkets net retail revenue declined by 1.2% to RUB 34.4 bn in Q3 2022, mainly due to a year-on-year drop in customer footfall in shopping malls resulting from continued changes in the retail brands portfolio. Nevertheless, the decline in LFL traffic was almost offset by additional revenue from four new O`KEY stores opened in April 2022.
• DA! discounters again showed one of the fastest paces of growth, with their net retail revenue adding 54.8% YoY to reach RUB 13.4 bn. The increase was led by a 26.1% LFL net retail revenue growth and the chains expansion.

[1] Hereinafter, net retail revenue, LFL net retail revenue, and the average ticket metrics are provided net of VAT.

9M 2022 operating highlights

• Group net retail revenue increased by 10.3% YoY to RUB 144.6 bn.
• O`KEY hypermarkets net retail revenue declined by 1.1% YoY to RUB 105.7 bn.
• OKEY total online sales rose by 44.3% YoY to RUB 4.3 bn and accounted for 4.1% of O`KEY's net retail revenue.
• DA! discounters net retail revenue grew by 60.2% YoY to RUB 38.9 bn, driven by a 32.0% LFL net retail revenue growth and the chains expansion.
• The Group opened 20 DA! discounters (net of closures) in 9M 2022.
• DA! discounters share in the Groups net retail revenue increased by 8.4 pps YoY to 26.9%.
• The Group expects to be receiving half of its revenue from discounters in the medium term.
• In 2022, the Group plans to open up to 45 new DA! discounters and have nine O`KEY hypermarkets in its portfolio in an updated concept.

Operating review

Group Net Retail Revenue in Q3 and 9M 2022

Group Net Retail Revenue Metrics for Q3 and 9M 2022

Group Like-for-like Net Retail Revenue Performance in Q3 and 9M 2022

Note: Q3 2022 LFL metrics are calculated based on 74 O`KEY and 126 DA! stores.

The Groups net retail revenue rose by 10.0% YoY to RUB 47,797 mln, led by discounters and online revenue growth and supported by expansion of both store chains.

Net retail revenue of O`KEY hypermarkets declined by 1.2% YoY to RUB 34,369 mln in Q3 2022, due to a 3.3% decrease in O`KEYs LFL net retail revenue resulting from a temporary footfall decrease in shopping malls amid changes in the tenant mix.

In Q3 2022, shopping malls in the Moscow and St. Petersburg regions continued to face a YoY decline in customer traffic due to geopolitical and macroeconomic turbulence. In order to support traffic in these locations, the landlords keep reshaping their tenant portfolios, attracting new partners and brands.

In August 2022, O`KEY reopened after renovation its hypermarket in Sochi, upgraded in line with the latest trends in the retail industry and global best practices. In the upgraded hypermarket, more space was allocated to the fresh and ultra-fresh categories, with their share in the overall product range increased to 20%, while the stores total selling space was optimised.

O`KEYs total online sales, including via our own and external delivery services, rose by 26.2% YoY to RUB 1,286 mln in Q3 2022. The share of total online sales in O`KEYs net retail revenue grew by 0.8 pps YoY to 3.7% in Q3 2022.

In Q3 2022, DA! discounters net retail revenue expanded by 54.8% YoY to RUB 13,428 mln, led by a 26.1% LFL revenue growth and 18.2% YoY increase in the chains selling space over the quarter. The LFL revenue growth was driven by both customer traffic and average ticket performance thanks to rising DA! brand awareness, as well as the chains high-quality product assortment, with a special focus on own brands, at the best possible prices. The share of these products in the discounters net retail revenue amounted to approx. 50% in Q3 2022.

The discounters share in the Groups net retail revenue rose by 8.1 pps YoY to 28.1% in Q3 2022. The Company expects the DA! discounter chain to remain a key driver of the Groups top- and bottom-line growth.

Group Stores and Selling Space in 9M 2022

In 9M 2022, as part of an ongoing real estate portfolio revision and optimisation, the Group closed three O`KEY stores and opened four hypermarkets in Central Russia. Also, the selling space of a hypermarket in Sochi was optimised in the course of its renovation and reduced by 2,093 sq m to 4,607 sq m.

In 9M 2022, the Group also opened 20 discounters (net of closures) under the DA! brand.

As of 30 September 2022, the Group operated 79 O`KEY hypermarkets and 172 DA! discounters with a total selling space of 642,015 sq m.

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ABOUT O`KEY GROUP

O`KEY Group S.A. (LSE, MOEX: OKEY) is one of the leading grocery retailers in Russia, operating hypermarkets under the O`KEY brand and discounters under the DA! brand.

As of 30 Septmeber 2022, the Group operated 251 stores across Russia (79 hypermarkets and 172 discounters) with the total selling space of 642,015 square meters. The Company opened its first hypermarket in St. Petersburg in 2002 and has since demonstrated continuous growth. O`KEY was the first Russian food retailer to launch e-commerce operations in St. Petersburg and Moscow, offering a full range of hypermarket products for home delivery. The Group has nine e-commerce pick-up points in Moscow and fifteen e-commerce pick-up points in St. Petersburg. In 2015, the Group launched the first discount chain in Russia under the DA! brand. The Group operates five distribution centres in Russia three in Moscow and two in St. Petersburg. The Group employs more than 22,000 people.

In 2021, Groups revenue amounted to RUB 187.1 billion, while EBITDA reached RUB 15.5 billion.

The O`KEY Group shareholder structure is as follows: NISEMAX Co Ltd 49.11%. GSU Ltd 34.14%, free-float and other holders 16.75%.

DISCLAIMER

These materials contain statements about future events and expectations that are forward-looking statements. These statements typically contain words such as expects and anticipates and words of similar import. Any statement in these materials that is not a statement of historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

None of the future projections, expectations, estimates or prospects in this announcement should be taken as forecasts or promises nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects have been prepared are correct or exhaustive or, in the case of the assumptions, fully stated in this announcement. We assume no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements.