Eurocash: We can see the effects of Deliaketsy Centrum chain optimization

  • One-off events that lower the level of reporting parameters, including operating profit, EBITDA and net profit / loss, especially in the retail segment (deletions due to the closure of 50 private stores) and deletions in the Projects segment. to the renewed value of the right to use the selected real estate and fixed assets. The total amount of write-offs above was more than 89 million PLN.
  • Eurocash Group’s sales of goods in the fourth quarter of 2021 amounted to 6.9 billion PLN, an increase of more than 9% over the previous year. Last year, sales of goods reached 26.3 billion PLN, an increase of more than 3% per year. Improvements have been made in each segment of the group’s activities.
  • EBITDA, created by Eurocash Group in the last quarter of last year, ie operating profit increased by depreciation and amounted to 270 million PLN, which is 21% more than in the corresponding period of 2020. EBITDA was normalized in 2021, ie after registration. The decline in the retail segment was at the same level as the previous year and amounted to 782 million PLN.

The impact of the pandemic has also affected its own stores

– 2021 has been extremely demanding for independent retailers, who are the main customers of the Eurocash Group. Consumers who were left out of their daily work due to locks and remote work and worried about the physical and financial consequences of the pandemic, adjusted their purchasing behavior accordingly, preferring less frequent and larger purchases. As a result, we have witnessed a general transition of consumers from the independent market to discounts. We have clearly felt the impact of the pandemic in our own stores, where Mila stores continue to integrate with the Delikatesy Centrum network and longer than expected. This required tough decisions, such as closing the top 50 best-selling stores, to focus efforts to develop the rest of the chain.. Therefore, we are relieved to see that these decisions are bearing fruit, he said Paweł Surowka, President of Eurocash Group.

Frisco is the perfect model for the post-pandemic world

– Most importantly, we observe that the partial transition of consumers from independent stores to discounts observed during the pandemic is only temporary, and by returning to the previous normal state in favor of the independent market. As bans eased, vaccination rates increased, and people slowly learned to live with the virus, we saw a return to local free shopping, which generally resulted in a better second half and a better fourth quarter of 2021. Our franchising partners performed particularly well. and Frisco – Poland’s largest online supermarket, once again the ideal model for the world after the pandemic. The reversal of the unfavorable trend for the Eurocash Group from the first half of 2021 can be observed, especially in the first quarter of this year. 2022 has started very well for the Eurocash Group – the group’s sales have grown by more than 10% year on year, which has led to improvements in all business indicators, which in addition is higher than in the pre-pandemic period – Paweł Surówka added .

Wholesale: Stable growth in the first half of the year despite a weak market environment

In 2021, the foreign sales of goods in the wholesale segment by Eurocash Group amounted to 19.25 billion PLN, which is 2% higher than the previous year. The decline in sales at Cash & Carry wholesale companies was offset by the Eurocash Dystrybucja (delivery with delivery to the customer) and Eurocash Serwis (sale of cigarettes and pulse products) formats. In 2021, the wholesale segment EBITDA exceeded 668 million PLN, which means an annual growth of 6%.

– In the first half of last year, the unfavorable market environment affected major small stores, including stores affiliated with ABC, Cash & Carry’s main customers. However, the end of the year caused a strong response in this format as well. As a result, similar sales dynamics at Cash & Carry grew by more than 5% in the fourth quarter, down more than 12% in the first quarter, said board member Jacek Owczarek. and Chief Financial Officer of Eurocash Group.

In the fourth quarter of 2021 alone, the total foreign sales of goods in the wholesale segment increased by 6% year-on-year to 4.95 billion PLN, while the segment’s EBITDA increased by more than 12% year-on-year to 191 million PLN. .

At the end of 2021, the ABC network, organized by Eurocash, consisted of 9,149 stores (compared to 9,317 stores a year earlier). The number of affiliates and franchise stores in Lewiatan, Euro Sklep, Groszek and Gama (PSD), customers of Eurocash Dystrybucja, amounted to 5,570 outlets, an increase of 319 stores per year.

Retail sales: strong EBITDA growth in the fourth quarter

Sales of goods by Eurocash Group in the retail segment in 2021 amounted to 6.38 billion PLN, an increase of about 5% per year, while in the fourth quarter of last year alone it exceeded 1.76 billion PLN, and the previous 14% more than last year.

– As announced, in the fourth quarter, we closed 50 of our stores, which performed the worst in the market and did not promise continuous improvement in the results of previous corrective measures. These stores reduced last year’s EBITDA in the retail segment by more than 15 million PLN, and the closure by more than 64 million PLN. These were one-time events that would not adversely affect our results in the future. Already in the fourth quarter, the positive effects of the changes and other Delikatesy Centrum results have improved. – owner and franchise. As a result, in the last quarter of 2021, the normalized EBITDA y / y of the retail segment increased by 28% to 125 million PLN. In addition, given the results of the Archelan chain, which we started consolidating in the fourth quarter, the segment’s total EBITDA reached about 130 million PLN, Jacek Owczarek said.

In 2021, the normalized EBITDA of the retail segment amounted to 284 million PLN compared to 318 million PLN a year earlier.

The network of small supermarkets built by Eurocash Group at the end of 2021 consisted of 1608 stores, including 1569 stores operating under the Delikatesy Centrum brand (966 of which are franchising stores and 603 are private or joint stores).

The Eurocash Group’s retail segment also includes 417 Inmedio media outlets (as of December 31, 2021). Last year, their sales exceeded 486 million PLN, which is 9% higher than the previous year.

Projects: Expansion of Frisco and Big Ben

Sales of the Project segment in 2021 amounted to 533 million PLN, which is 77% higher than in 2020, and in the fourth quarter of last year alone it amounted to 163 million PLN, which is an annual increase of 39%. The increase is mainly due to the further expansion of the Frisco e-supermarket (fully consolidated since June 2020). In the fourth quarter of last year, after Warsaw, Wroclaw, Poznan and Krakow, Frisco introduced e-shopping to residents of Tricity, Katowice, Myślenice and Sosnowiec. LFL sales in the Warsaw market – the first and largest of the Frisco markets – rose 16% y / y last year.

Eurocash Group is also dynamically developing a network of Duży Ben liquor stores with 204 stores by the end of 2021, compared to 129 stores a year earlier. Last year’s sales of this chain exceeded 250 million PLN with an 11% y / y increase in LFL sales.

EBITDA of the Project segment remained negative due to continued investment in innovative retail formats and the above-mentioned costs of expanding the Frisco and Dui Ben network: -44 million PLN in 2021 compared to -33 million PLN in 2020.

Digital transformation is accelerating

– Eurocash Group has many more difficult years ahead of us and we expect growth in the coming quarters. Most importantly, despite many new challenges, the board has continued to implement strategic projects, including digital transformation projects. As a result, the number of customers using the eurocash.pl platform increased by more than 32,000 in 2021, and sales through it reached 5.6 billion PLN, which is almost 30% of total sales in the wholesale segment. Major projects such as eurocash.pl and the Innovative Trading Platform will be further developed, and I am confident that they will play a key role in the long-term success of the Eurocash Group, concluded President Pavel Surovka.

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