LONDON: Fix Price Group PLC, a global leader in the variety value retail sector and the largest of its kind in Russia, has released its Q1 2024 financial figures, showcasing significant growth despite economic headwinds. For the first quarter ending March 31, 2024, the company reported an 8.8% year-over-year increase in revenue, reaching a robust RUB 71.7 billion. Retail revenue saw a 9.0% rise to RUB 63.3 billion, while wholesale revenue climbed 6.9% to RUB 8.3 billion.
A notable turnaround was seen in like-for-like (LFL) sales, which grew by 0.4% year-over-year, driven by an increase in LFL average ticket sales and a gradual recovery in LFL traffic. Despite ongoing macroeconomic pressures affecting consumer demand, LFL sales growth continued to improve, exceeding 2% in the early days of April 2024.
The quarter also witnessed the opening of 131 new stores, including 6 franchises, bringing the total number of Fix Price stores to 6,545. The company expanded its selling space by 28.5 thousand square meters, culminating in a total of 1,419.1 thousand square meters, marking a 12.1% growth from the previous year.
Loyalty programs played a significant role, with registered cardholders increasing by 3.4 million over the past year to 26.4 million—a 14.6% year-over-year surge. Transactions using loyalty cards accounted for 61.0% of retail sales, with the average ticket for loyalty card purchases being approximately 80% higher than non-loyalty card purchases.
Gross profit rose by 6.7% to RUB 23.4 billion, supported by revenue growth and a higher proportion of higher-margin non-food items in retail sales. This was despite the rouble’s devaluation and increased transportation costs, which impacted the gross margin, now standing at 32.7%.
Fix Price Group faced increased selling, general, and administrative (SG&A) costs, which, excluding long-term incentive plan (LTIP) expenses and depreciation & amortization (D&A), accounted for 19.0% of revenue, up from 16.2% in Q1 2023. This rise was attributed to higher staff costs, advertising, and other expenses, although efficiencies in rental expenses and security services helped mitigate some of the pressure.
Adjusted EBITDA under IFRS 16 reached RUB 10.0 billion, reflecting the challenges of gross margin pressures and SG&A cost increases, resulting in an adjusted EBITDA margin of 13.9%. EBITDA under IFRS 16 stood at RUB 9.8 billion, with an EBITDA margin of 13.6%.
The period concluded with a net profit of RUB 3.3 billion, translating to a net profit margin of 4.6%. Capital expenditures (CAPEX) as a percentage of revenue decreased to 1.9%, down from 3.2% in Q1 2023, following the planned completion of distribution center construction in the previous year.
Fix Price’s performance in Q1 2024 underscores the company’s ability to navigate challenging economic conditions while continuing to grow and deliver value to its customers and shareholders.
Dmitry Kirsanov, Fix Price Group CEO, said, “Since the beginning of 2024, we have noted signs of a recovery in consumer confidence, driving our LFL sales into positive territory. At the same time, amid high interest rates and inflation expectations, shoppers are still showing a preference for savings and large non-food purchases, limiting their spending on inexpensive items.
“Heightened competition in the labour market continues to put pressure on our margins, and recruiting and retaining line personnel remains the main challenge for the Company and for Russian retail as a whole. We expect this factor to affect our financial performance in the medium term. For our part, we remain committed to a conservative financial policy, maintaining high liquidity reserves and low leverage. We are incorporating digital solutions to improve our operational efficiency, including artificial intelligence–based products that enable us to automate business processes, reduce costs and increase our resilience to external challenges.
“In a challenging operating environment, we continue to take steps to bolster our long-standing leading position. During the reporting period, we surpassed the 6,500-store mark and began operating in 29 new communities, where Fix Price’s arrival was a long-awaited event for local residents. I would also like to note the expansion of our international presence: in Q1 2024, the share of international markets increased y-o-y to 10.3% of our total number of stores.
“We are constantly focused on analysing trends in consumer preferences and searching for intriguing new products for our customers. During the reporting period, we observed a gradual recovery in demand for items in non-food categories, with kitchenware, DIY as well as party and celebration products leading the way.
“Our loyalty programme continues to offer tangible benefits to members, and their number increased by 15% over the past year, reaching 26.4 million by the end of March 2024. The average ticket of loyalty cardholders continues to be nearly double that of other shoppers, an indication of the programme’s success.
“I am pleased to see that our team’s efforts were reflected in the high rating that we received in a recent study by the independent research company Romir. According to this research, we have consistently been among the top three retail chains in Russia in terms of trust and visibility, and 2024 was no exception.
I would like to thank all of the Group’s employees who have played a part in creating a quality customer experience, and I have no doubt that together we will be able to achieve our most ambitious goals and ensure long-term growth in the value of our business.”
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