COMMUNIQUÉ DE PRESSE

par GROUPE FNAC (EPA:FNAC)

Fnac Darty 9m 2024 revenue: Dynamic business with outlook revised upwards

Ivry-sur-Seine – France, October 15, 2024, 5:45 p.m. CET

Dynamic business with outlook revised upwards

9m 2024 sales up +1.0%1

Sustained high single-digit growth in Services

Gross margin rate increase

Upward revision of 2024 Current Operating Income (COI) target 

 

 

▪  Revenue:

–    9m 2024 increasing: €5,238 million, up +1.0% on a reported basis and down -0.2% on a LFL basis2Stable Q3 2024: €1,849 million, up +0.5% on a reported basis and down -0.6% on a LFL basis2

▪  Gross margin rate up by over 100 bps in Q3, excluding dilutive impacts from franchise and changes in scope

▪  Current Operating Income (COI) target raised, now expected to exceed €180m, compared with the previously announced target of at least equal to that of 2023. The cumulative FCF target for 2021-2024 remains unchanged.

▪  Envisaged strategic acquisition of Unieuro:

–    Strong conviction regarding the attractiveness of the proposed Consideration, valuing Unieuro at c.€123 per share and representing a premium of 42%4, which was also deemed fair from a financial standpoint by the two independent financial advisors appointed by Unieuro’s board of directors5

–    Minimum threshold condition lowered from 90% to 66.67% of Unieuro share capital

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Q3 2024

Change vs Q3 2023

9m 2024

Change vs 9m 2023

In €m     

Reported

Like-for-like basis – LFL2

In €m      

Reported

Like-for-like basis – LFL2

1,506.2     (1.3)%            (1.2)%

      192.3 +19.8%             +5.7%

     150.1    (2.4)%            (1.9)%

4,266.9      (0.6)%              (0.4)%

535.9        +18.4%             +1.8%

435.5         (0.9)%              (0.4)%

1,848.6

+0.5%

(0.6)%

 

5,238.3

+1.0%

(0.2)%

 REVENUE

France and Switzerland

Iberian peninsula

Belgium and Luxembourg

Group

Enrique Martinez, Chief Executive Officer of Fnac Darty, stated: “The strength of our diversified offering combined with high-value-added services, continues to attract customers and significantly contribute to our growth. Our performance through the end of September is in line with the results we have achieved since the beginning of the year. We are proud to have contributed to the widespread success of the Olympic and Paralympic Games through our ticketing and services activities. As we near the closing of the tender offer on Unieuro, we are convinced of the value creation potential of this combination and look forward to entering the integration phase to create a European leader in specialized retail.  We approach the end of the year with confidence, maintaining a focus on rigorous financial management and our commitment to creating sustainable value. We are raising our Current Operating Income target for 2024 and are fully mobilised to delivering the best to our customers and partners.”

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On reported basis

Like-for-like basis – LFL: excludes the effect of changes in foreign exchange rates, changes in scope, and store openings and closures

Taking into consideration both the Cash Portion and the Share Portion and based on the closing price of Fnac-Darty shares equal to €30.20, as recorded on July 15, 2024 (i.e. the last trading day before the announcement of the Offer). 

Based on the spot volume-weighted average closing price as of July 15, 2024.

The offer price was deemed fair from a financial standpoint by EQUITA SIM S.p.A. and Mediobanca Banca di Credito Finanziario S.p.A., both appointed by Unieuro’s board of directors to release a fairness opinion on the consideration of the Offer, as well as by five directors of Unieuro (including the chairman of the board of directors and two other independent directors).

Q3 sales amounted to €1,849 million, up +0.5% on a reported basis and down -0.6% on a like-for-like basis[1]. This growth was driven by the outstanding performance of the Iberian Peninsula and sustained high single-digit growth in services across all the Group's regions.  

Over the first nine months of the year, the Group's revenue reached €5,238 million, reflecting a +1.0% increase on a reported basis and -0.2% decline on a like-for-like basis1. These results illustrate the Group’s strength and agility in successfully adapting to a constantly evolving environment.

Change by distribution channel over the first 9 months of the year

Sales grew both in stores and online, reflecting the relevance of the Everyday strategic plan. Digital activity accounted for 21% of total Group sales, stable compared to 2023. Omnichannel sales represented more than 50% of total online sales.

Changes by region over the first 9 months of the year

Sales in France and Switzerland were almost stable at -0.4% on a like-for-like basis1 (-1.2% in Q3). The scope effect mainly reflects the effect of the closure of the last three Manor shop-in-shops in nonFrench speaking Switzerland.

In the Iberian Peninsula, sales posted solid growth of +1.8% on a like-for-like basis1 (with an excellent performance in Q3, up +5.7%). The integration of the 10 MediaMarkt stores in Portugal, consolidated since the 1st October 2023, is in progress.

Business in Belgium and Luxembourg was almost stable at -0.4% on a like-for-like basis1 (-1.9% in Q3). Sales benefited from a significant growth in services.

Changes by product category over the first 9 months of the year

Consumer electronics grew slightly on a reported basis. In Q3, Telephony experienced a slowdown due to a more gradual start of new products launches compared to last year. Computers benefited from ongoing renewal cycles as well as innovation since the second quarter.

Editorial products performed well, driven by the strong performance of books, fueled by the growing enthusiasm for new reading trends. However, this did not offset the decline in gaming, which had a very high comparison base from 2023.

Services continued to grow strongly in all regions, notably with the roll-out of the Darty Max and Fnac Vie Digitale subscription-based offers, confirming their key role in our strategy. 

Diversification also posted a robust performance, thanks to growth in toys and games, and stationery. 

Lastly, Domestic appliances were almost stable. Small domestic appliances are growing strongly, benefiting from a number of technological innovations across various segments (cooking, beauty, floorcare). Sales of large domestic appliances continued to decline.

Gross Margin Rate, at end-September 2024 

In Q3, the gross margin rate, excluding the dilutive impact of the franchise and changes in scope, was more than 100 basis points higher compared to Q3 2023.

This increase was primarily due to growth in services and a favorable product mix, underscoring the effectiveness of the Everyday strategic plan. The Group benefited in particular from strong momentum in services, small electrical appliances and books. 

Over the first nine months of the year, the Group's gross margin rate increased by 50 basis points, excluding the dilutive effect of the franchise and changes in scope.

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ENVISAGED UNIEURO ACQUISITION

On October 7, 2024, the minimum threshold condition was lowered from 90% to 66.67% of Unieuro's share capital, reflecting the determination to successfully pursue the Tender Offer announced on July 16, 2024.

The offered Consideration, values Unieuro at c. €12[2] per share representing a premium of 42%[3]. This valuation was also deemed fair from a financial standpoint by the two independent financial advisors appointed by Unieuro’s board of directors[4], as better detailed in the Issuer’s statement published on August 29, 2024. In addition, the share portion will allow Unieuro shareholders tendering their shares to benefit from value creation potential arising from the combined entity. 

Furthermore, the combination would create a leader in consumer electronics, domestic appliances, editorial products and services in Southern and Western Europe. This large-scale, value-creating project would be beneficial to the clients, employees and franchisees of both companies and intend to retain all of Unieuro’s employees.

2024  OUTLOOK REVISED UPWARDS

The improvement in several macroeconomic indicators since the start of the year (such as decreasing inflation and interest rates) are encouraging signs of a recovery in household consumption.

The major end-of-year sales events: the 70th anniversary of Fnac, the 50th anniversary of the “Contrat de confiance”, Black Friday and Christmas will be decisive for Group’s full-year financial results.

Given the good level of business activity over the first 9 months of the year, and assuming no unfavourable change in the economic and geopolitical context, the Group is raising its target for its 2024 Current Operating Income (COI) now expected to exceed €180m, compared to the previous target of at least equal to that of 2023 (€171m).

The Group also confirms its objective of achievingcumulative free cash-flow from operations4 of around €500m over the period 2021-2024, i.e. a level of €180m in 2024, demonstrating its disciplined financial management and its commitment to creating sustainable value.

 

***

Q3 2024 REVENUE

Enrique Martinez, Chief Executive Officer, and Jean-Brieuc Le Tinier, Group Chief Financial Officer, will host a virtual presentation of the results in French, with simultaneous interpretation into English, on Tuesday October 15, 2024 at 6:30 p.m. (CET); 5:30 p.m. (UK); 12:30 p.m. (East Coast USA).

To access the conference call, please dial-in:

France: +33 1 70 91 87 04

UK Dial-in +44 1 212 81 80 04 USA Dial-in +1 718 705 87 96

The webcast will be available at this link.

You can listen to a recording of the presentation at any time, in either French or English, via www.fnacdarty.com.

CONTACTS

ANALYSTS/INVESTORS

Domitille Vielle – Head of Investor Relations – domitille.vielle@fnacdarty.com – +33 (0)6 03 86 05 02 Laura Parisot – Investor Relations Manager – laura.parisot@fnacdarty.com – +33 (0)6 64 74 27 18

PRESS

Marianne Hervé – mherve@image7.fr – +33 (0)6 23 83 59 29

 

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APPENDIX

DEFINITIONS OF ALTERNATIVE PERFORMANCE INDICATORS

Indicator title                                                     Indicator definition

Change in revenue at a constant exchange rate

 

Change in revenue at a constant exchange rate means that the impact of changes in exchange rates has been excluded. The exchange rate impact is eliminated by recalculating sales for period N-[5] using the exchange rates used for period N.

Change in revenue at a comparable scope of consolidation

Change in revenue at a comparable scope of consolidation means that the impact of changes in the scope of consolidation is corrected so as to exclude the modifications (acquisition, disposal of subsidiary). Revenue of subsidiaries acquired or sold since January 1 of period N-1 are, therefore, excluded when calculating the change (in the event of a significant variation at Group level).

Change in revenue on a same-store basis

The change in revenue on a same-store basis means that the impact of directly owned store openings and closures is excluded. Revenue from stores opened or closed since January 1 of period N-1 is, therefore, excluded when calculating said change.

 

 

REVENUE BY OPERATING SEGMENT

 

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STORE NETWORK

France and Switzerland*

Dec. 31, 2023

Opening

Closure

Sept. 30, 2024

838

12

10

840

Traditional Fnac

96

0

0

96

Suburban Fnac

17

0

0

17

Travel Fnac

37

4

1

40

Proximity Fnac

82

1

0

83

Connect Fnac

7

0

1

6

Darty

492

6

7

491

Fnac/Darty France

1

0

0

1

Nature & Découvertes**

106

1

1

106

Of which franchised stores

431

11

8

434

Iberian Peninsula

88

0

3

85

Traditional Fnac

53

0

1

52

Travel Fnac

4

0

1

3

Proximity Fnac

18

0

0

18

Connect Fnac

3

0

1

2

MediaMarkt Portugal

10

0

0

10

Of which franchised stores

6

0

1

5

Belgium and Luxembourg

84

2

2

84

Traditional Fnac***

12

2

1

13

Proximity Fnac

1

0

0

1

Darty (Vanden Borre)

71

0

1

70

Fnac Darty Group

1 010

14

15

1 009

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Traditional Fnac

161

2

2

          161                    

Suburban Fnac

17

0

0

           17                     

Travel Fnac

41

4

2

           43                     

Proximity Fnac

101

1

0

          102                    

Connect Fnac

10

0

2

            8                      

Darty/Vanden Borre 

563

6

8

          561                    

Fnac/Darty 

1

0

0

            1                      

MediaMarkt

10

0

0

           10                    

Nature & Découvertes

106

1

1

          106                    

Of which franchised stores

437

11

9

          439                    

* Including 13 Fnac stores abroad: 3 in Qatar, 3 in Tunisia, 2 in Senegal, 2 in Ivory Coast, 1 in Congo, 1 in Cameroon, 1 in Saudi Arabia and 3 Darty stores abroad in Tunisia; and including 18 stores in the French overseas territories. Excluding Fnac shop-inshops opened in Manor stores.

** including Nature & Découvertes subsidiaries managed from France: 4 stores in Belgium, 1 store in Luxembourg, 7 franchises in Switzerland, 1 franchise in Portugal and 5 franchises in the French overseas territories. *** Including one store in Luxembourg, which is managed from Belgium.

 

 

 



[1] Like-for-like basis – LFL: excludes the effect of changes in foreign exchange rates, changes in scope, and store openings and closures

[2] Taking into consideration both the Cash Portion and the Share Portion and based on the closing price of Fnac-Darty shares equal to €30.20, as recorded on July 15, 2024 (i.e. the last trading day before the announcement of the Offer).

[3] Based on the spot volume-weighted average closing price as of July 15, 2024.

[4] The offer price was deemed fair from a financial standpoint by EQUITA SIM S.p.A. and Mediobanca Banca di Credito Finanziario S.p.A., both appointed by Unieuro’s board of directors to release a fairness opinion on the consideration of the Offer, as well as by five directors of Unieuro (including the chairman of the board of directors and two other independent directors). 4 Excluding IFRS 16.

[5] Like-for-like basis – LFL: excludes the effect of changes in foreign exchange rates, changes in scope, and store openings and closures.

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