23 July 2020, Moscow,
PJSC M.Video (M.Video-Eldorado Group, the Company, or the Group;
MOEX: MVID), Russia’s largest consumer electronics retailer by revenue and part
of SAFMAR Group owned by Mikhail Gutseriev, releases its combined unaudited net
sales for the second quarter and first half ended 30 June 2020 and
publishes its business overview and key events in 2Q 2020 and after the
1H 2020 highlights
- The Group’s net sales rose by 7.6% year-on-year to
RUB 208.4 billion (incl. VAT).
- Total online sales (TOS) grew by 97.5% year-on-year to
RUB 116.8 billion (incl. VAT), accounting for 56.1% of total
- The average monthly audience of the Group's websites was up by 43%
vs 1H 2019 to reach 75.9 million visitors.
- The number of the M.Video mobile app downloads increased by 457% to
3.6 million. The app is rated 4.5 and 4.7 on the App Store and Google
- The Group’s net sales were down by 5.8% year-on-year to
RUB 86.9 billion (incl. VAT).
- In April and May, the Group's net sales decreased by 23.5% and 3.8%
year-on-year, respectively, and in June, bounced back to growth, up 7.1%
- Total online sales (TOS) grew by 117.5% year-on-year to
RUB 60.1 billion (incl. VAT), accounting for 69.1% of total
- In April, May and June, the Group's total online sales added 110.9%, 127.1%
and 115.2% year-on-year, respectively.
Key factors behind 2Q 2020 results
- The Group more than doubled its total online sales thanks to accelerated
scaling of the online business driven by: 1) a number of projects and
partnerships to improve the efficiency, speed and safety of customer service;
2) dark store automation and effective stock management, including
redistribution and cross-brand redistribution within cities; 3) promotion of
the M.Video mobile app and its enhanced capabilities; and 4) a shift in our
marketing and advertising focus towards the online segment to drive more
traffic to our websites and the mobile app and boost their conversion.
- With many consumers forced to work and study remotely, Group’s sales of
mobile devices and home office equipment outperformed the market.
- Significant restrictions imposed across most of Russia to slow the spread
of the coronavirus had a negative impact on non-food retail sales, including
those associated with in-store pick-up of online purchases and in-store
fulfillment of online orders. The lockdown exerted strong pressure on traffic
in non-food stores. The Group was able to cope with the negative effects as
early as in April, re-launching store operations in line with local
restrictions and introducing new contactless delivery options, including
delivery to the parking lot and ‘walking courier’ delivery from the store,
while also leveraging partnerships to boost the effectiveness and swiftness of
last mile delivery services. The company also improved customer experience,
launching contactless payments via app or link, as well contactless product
exchange and returns.
2Q 2020 highlights
- The Group launched fast contactless delivery of online orders using
Yandex.Taxi, Gett Delivery or services of local partners in all cities across
its footprint, delivering more than 10,000 orders by taxi every week.
- M.Video and Eldorado opened virtual stores on the Ozon marketplace,
featuring some 80% of both brands’ product ranges.
- The Group teamed up with X5 Retail Group to deliver online orders of
medium-sized equipment under 15 kg to pick-up points and parcel lockers
located in Pyaterochka stores.
- We launched remote video calls for customers visiting our stores for
consultations with a shop assistant through our websites, the mobile app or
WhatsApp account. Our team handles 5,000 video calls weekly with a
conversion rate of 25%.
- The Group now teams up with the Russian Post to expand delivery of online
orders to more than 300 additional cities and towns.
- Since June, the Group has re-launched most of its stores across the
country, including Moscow, and reformatted retail operations following the
lifting of restrictions in a number of regions. All transactions can be made
online, with payment through a link, mobile app, QR code on a price tag or
other options, with safety protocols in place to protect customers and
M.Video-Eldorado Group’s President Alexander Tynkovan said:
‘Though April and May of this year were the most challenging months in
more than twenty-five years of our operations, the Group confidently navigated
through this time and fast-tracked transfer to ONE RETAIL business model.
Notwithstanding the difficulties, we were able to retain our retail staff,
which is about 30 thousand people. In April and May, we performed over one
million courier service deliveries and implemented dozens of projects –
from video calls to taxi delivery – to ensure that Russians have access
the appliances and devices they need for work and everyday needs. I would like
to thank our entire team, all our employees and partners for their commitment
and flexibility in responding to the challenges that we faced.
The coronavirus outbreak has changed our daily habits, making it clear
that many things can be done remotely, while shopping become ‘smartphone
dependent’. Based on our own and global experience, stores continue to fuel
business growth, serving as its foothold and a source of business growth and
access points to products – their role even increased. Our online business
outperformed the market, almost doubling its sales vs an approximately 60%
market growth in online sales of household appliances and electronics in
1H 2020. The ongoing sales growth is also driven by a rapid growth
of courier delivery and expansion of in-store online operations, including
in-store pick-up and sales to authorised customers checked-in through shop
assistants’ mobile devices. We plan to further develop the Group’s ONE RETAIL
model by enhancing our online presence supported by the offline retail
Ekaterina Sokolova, M.Video-Eldorado Group’s Chief Financial Officer,
‘M.Video-Eldorado Group has started its transformation into an online
business long before the pandemic, and unlike many large nation-wide retailers,
we were well-prepared for this challenge. In 2Q, this helped us to scale up the
Group’s online business quickly and efficiently, putting us in a position to
bring timely, high-quality and safe service to our customers while providing
them with everything they needed during the lockdown. We are happy to be a
retailer of choice offering products, most of which have become truly essential
in today’s digital world. In 2Q, product deliveries quadrupled in value terms,
pick-up more than doubled, and the traffic of our both websites increased by
60%. Despite such rapid growth, we were able to maintain healthy profit
margins, our key priority.
There is still much work to be done in the online segment. We need to
boost logistics efficiency, maintain maximum security and expand online payment
options, while also increasing the loyalty of our existing users, attracting
new ones, and improving the unit economics of our business as a whole. We are
ready to embrace more changes and drop irrelevant metrics, invest in new
technologies, expand the boundaries of the new space shared by our customers
and partners that we call ONE RETAIL.’
Business overview and key events after the reporting date
- As of mid-July, about 93% of the total number of the Group's stores have
resumed normal operations in compliance with all sanitary and
epidemiological requirements. A number of Russia’s regions still keep
restrictions in place for non-food retail.
- The Group complies with sanitary and epidemiological requirements at all
its facilities and takes all necessary steps to protect the well-being and
health of employees, which includes regular weekly monitoring of workplace
safety and COVID-19 testing for those employees who have come into contact with
an infected person.
- Since early July, the Group has seen a surge in total sales growth,
which is attributable to the continued lifting of restrictions across the
country and deferred demand, as well as a drop in domestic and international
travel, which enabled consumers to reallocate their budgets in favour of
durable goods. In the first three weeks of July, the Group's sales increased by
more than 30% year-on-year. The strongest growth was seen in the sales of
smartphones, computers, HVAC appliances, refrigerators and other household
and personal care products.
- Since late June 2020, the Group has expanded its Proper Recycling
programme for collecting, transporting and recycling electronic waste to
eight regions of Russia that now covers 15 regions in total, and also
plans to send its own office equipment for recycling.M.Video-Eldorado
continues to advance its key partnerships and projects launched during the
lockdown period and focused on boosting online sales along with the efficiency,
swiftness and safety of last mile delivery services. The Company's management
plans to conduct financial and strategic review of these initiatives on a
regular basis to decide whether they should be cut, maintained or
M.Video-Eldorado Group (PJSC M.video) is Russia’s largest consumer
electronic retailer uniting the M.Video and Eldorado brands in the market for
home appliances and electronics. The companies’ total annual turnover exceeds
RUB 430 billion, including VAT (FY 2019). The M.Video-Eldorado Group is the
only Russian publicly-traded company in the electronics retail sector. The
company's shares are traded on Moscow Exchange (ticker: MVID).
The Group operates Russia’s largest online platform for consumer electronics
and household appliances commanding a market share of over 30%. As of June 30,
2020, the Group also operates 512 stores under the M.Video brand, 505 stores
under the Eldorado brand and 20 m_mobile stores in more than 250 cities across
Russia with a total selling space of 1,450 thousand square meters. The Group
has 100% online coverage in all cities of operation.
Maxim Novikov, IR Director,
Tel: +7 (495) 644 28 48, ext. 1425
Tel: +7 (495) 644-28-48, ext. 1384
Valeriya Andreeva, Head of PR
Tel: +7 (495) 644 28 48, ext. 7386
Full version of press-release