Fix Price announces key operating and financial results for Q3 and 9M 2023

31 October 2023, Limassol, Cyprus – Fix Price Group PLC (LSE and MOEX: FIXP, AIX: FIXP.Y, “Fix Price”, the “Company” or the “Group”), one of the leading variety value retailers globally and the largest in Russia, today announces its operating and IFRS financial results based on management accounts for the third quarter (Q3 2023) and nine months (9M 2023) ended 30 September 2023.

Operating AND FINANCIAL summary for Q3 2023

• Revenue grew by 6.3% y-o-y to RUB 74.5 billion

• Retail revenue was RUB 66.1 billion, up 6.3% y-o-y
• Wholesale revenue stood at RUB 8.4 billion, up 6.0% y-o-y

• In Q3 2023, LFL sales[1] were 2.8% lower y-o-y amid the high base effect from last year and continued cautious consumer behaviour
• During the quarter, the Company opened 123 net new stores (including 19 franchises); the total number of stores reached 6,162 as of the end of the reporting period. Store opening dynamics saw a certain slowdown as the Company decided to push store openings to the generally more profitable fourth quarter
• The total selling space of the stores increased by 27.2 thous. sqm to 1,335.4 thous. sqm (13.1% y-o-y growth)
• The total number of registered loyalty cardholders increased by 0.8 million new members[2] over the quarter to 24.8 million (+21.5% y-o-y). Loyalty card transactions as a percentage of retail sales increased by 5.0 pps y-o-y and reached 61.4%. The average ticket for purchases with a loyalty card was 1.9x higher than the average ticket for non-loyalty-card purchases
• Gross profit increased by 11.0% y-o-y to RUB 25.2 billion. Gross margin was up 143 bps y-o-y to 33.9% thanks to efficient assortment and category mix management, an increased share of non-food products, as well as the positive impact of the Company’s performance in Kazakhstan and Belarus
• SG&A costs (excl. LTIP expense[3] and D&A) as a percentage of revenue totalled 15.0%, compared to 14.1% a year ago, due to higher staff costs, banking charges, advertising and repair and maintenance costs as well as the negative operating leverage effect, to some extent mitigated by gained efficiencies in rental expense, security services and other expenses
• Adjusted EBITDA[4] under IFRS 16 totalled RUB 14.2 billion, up 8.0% y-o-y. Adjusted EBITDA margin increased by 29 bps to 19.0%
• EBITDA under IFRS 16 was up 5.8% y-o-y to RUB 13.9 billion, with the EBITDA margin generally flat at 18.7%, reflecting positive gross margin dynamics partially offset by pressure on SG&A costs (excl. D&A)
• Profit for the period grew by 6.4% y-o-y to RUB 7.4 billion. Net profit margin was up by 1 bp y-o-y to 10.0%
• CAPEX as a percentage of revenue decreased to 2.1% from 2.6% in Q3 2022 amid lower investments in logistics due to the planned completion of the construction phase of distribution centres that started in 2022

Operating and financial summary for 9M 2023

• Revenue increased by 4.1% y-o-y to RUB 210.2 billion

• Retail revenue stood at RUB 186.2 billion, up 4.1% y-o-y
• Wholesale revenue was up 4.2% y-o-y and stood at RUB 24.0 billion

• LFL sales were down 5.3%

• During the first nine months of 2023, 499 stores were opened on a net basis, including 437 Company-operated stores and 62 franchise outlets
• In 9M 2023, the total selling space of the stores grew by 110.0 thous. sqm to 1,335.4 thous. sqm

• The total number of registered loyalty cardholders grew by 3.0 million to 24.8 million, with penetration in retail sales reaching 62.4%
• Gross profit increased by 6.3% y-o-y to RUB 70.4 billion. Gross margin improved by 69 bps y-o-y and stood at 33.5%
• SG&A costs (excl. LTIP expense and D&A) as a percentage of revenue was 15.5%, compared to 13.9% a year ago, on the back of the negative operating leverage effect and high labour market competition
• Adjusted EBITDA under IFRS 16 reached RUB 38.3 billion, versus RUB 39.1 billion for 9M 2022. Adjusted EBITDA margin was 18.2%
• EBITDA under IFRS 16 was RUB 37.5 billion, with an EBITDA margin of 17.8%, reflecting gross margin growth offset by higher SG&A costs (excl. D&A)
• Profit for the reporting period was up 124.0% y-o-y to RUB 27.1 billion. Net profit margin grew to 12.9%, compared to 6.0% for 9M 2022

“Our business model again proved effective during the reporting period, as we enjoyed high profit margins in the face of cautious consumer sentiment. Revenue for Q3 2023 reached RUB 75 billion, while our operating margin was 13.4%. Going forward, we intend to further expand our network while maintaining a balance between growth and profitability. Even though some of our planned openings for the reporting period were postponed until the higher-yielding fourth quarter, our annual forecast of 750 net openings remains unchanged.

“In the third quarter, we saw a quarterly improvement in LFL performance on the back of accelerated growth of retail turnover in Russia. However, households continued to favour large purchases in non-food categories due to the weakening of the rouble and inflationary pressure. For our part, we are proceeding with our unceasing work to improve our stores’ value proposition, and we are studying customer needs even more closely on the basis of sales data, our loyalty programme and market research. We expanded our offer of popular new products in the non-food segment, and we are seeing a positive trend in LFL sales in the categories of kitchenware, accessories and party supplies.

“I am proud that over the past year we have managed to enrol about 4.5 million new members in our loyalty programme, and, as a result, the total number of cardholders has now surpassed 25 million. It is important that, in addition to the rapid growth in the number of users, the programme’s effectiveness and member engagement have also improved – for example, in the reporting period, the average ticket of loyal customers was 90% higher than that of customers without a loyalty card; a year ago, this figure was at 80%.

“The labour market remains highly competitive, and we expect staff costs to continue to put pressure on profitability in the medium term. Nevertheless, we increased our gross margin during the reporting period and delivered a robust adjusted EBITDA margin of 19.0%. In the third quarter, we also improved working capital turnover, despite moderate business growth, thanks to more efficient planning and assortment management.

“In addition to improving operational efficiency, we are focused on finding solutions to ensure the utmost protection of the interests of all stakeholders and increase the value of our business for shareholders. With that in mind, on 16 September Fix Price’s GDRs were listed on the Astana International Exchange (AIX), while in November of this year an extraordinary meeting of shareholders will be held to discuss the issue of re-domiciliation to Kazakhstan. We hope that this will help diversify our shareholder base and potentially increase the liquidity of the Company’s securities.

“The issue of dividends remains one of our priorities. We are committed to paying out dividends again, and we are now actively exploring possible options that, given the regulatory environment, would address the interests of all shareholders.”

Dmitry Kirsanov, Fix Price CEO