O`KEY Group S.A. (LSE: OKEY, the ‘Group’) has announced its unaudited operating results for the second quarter and the first six months of 2020.
Q2 2020 operating highlights
● Group net retail revenue* increased by 6.1% YoY to RUB 41,909 mln in Q2 2020.
● The Group like-for-like (LFL) net retail revenue grew by 7.4% YoY in Q2 2020, driven by a 40.4% increase in the average LFL ticket.
● DA! discounters net retail revenue jumped by 50.8% YoY to RUB 6,935 mln in Q2 2020, driven primarily by a 34.7% LFL net retail revenue growth, and supported by the expanded selling space.
● O`KEY hypermarkets net retail revenue showed a 0.2% YoY increase to RUB 34,973 mln in Q2 2020 on the back of a 3.7% LFL net retail revenue growth.
H1 2020 operating highlights
● Group net retail revenue rose by 6.9% YoY to RUB 84,335 mln in H1 2020.
● The Group delivered a 7.3% LFL net retail revenue growth in H1 2020, driven by a 19.4% increase in the average LFL ticket.
● DA! discounters net retail revenue grew by 47.0% YoY to RUB 12,617 mln in H1 2020, as a result of a 31.3% LFL net retail revenue growth and expanded selling space.
● O`KEY hypermarkets net retail revenue increased by 2.0% YoY to RUB 71,718 mln, owing to O`KEY hypermarkets LFL net retail revenue improving by 4.3% YoY in H1 2020.
Key events in Q2 2020 and after the reporting date
● In May 2020, O`KEY Group acquired a Karusel hypermarket in Saint Petersburg from X5 Retail Group, and has rebranded and relaunched it under the O’KEY brand. The new hypermarket is the region’s 24th O`KEY store. Through this deal, the company has further strengthened its foothold in its strategic market, and brought the North-West region’s total selling space to in excess of 185,000 sq. m.
● In July 2020, Expert RA affirmed O`KEY LLC, the main operating subsidiary of O`KEY Group S.A., the credit rating of ‘ruA-’ with a Stable outlook. The rating agency noted the improvement in the Group's revenue and profitability indicators for 2019, as well as the decrease in the total debt level and the debt portfolio optimisation.
COVID-19 situation response
In the beginning of 2020, the Group promptly addressed the situation with the spread of COVID-19 and undertook the necessary measures to maintain the safe and smooth operations of its stores and supply chain. These measures allowed the company to overcome the challenges the market faced in the first half of 2020, and fully satisfy consumer demand by creating a safe, convenient, and pleasurable shopping experience across all its formats and sales channels.
Safety of customers and employees
● Disinfection of store surfaces, hand sanitiser dispensers, masks and gloves, plastic screens at cash desks to protect customers and employees
● Strict sanitary control in own production areas, including germicidal lamps for air disinfection in the deli and bakery
● Strict monitoring of store, warehouses and office staff with mandatory temperature checks and remote work for most office employees
Supply chain and store replenishment
● Timely increase in stock levels to meet the anticipated rise in demand
● Ensuring sufficient safety stock of high-demand, entry-level products in distribution centres
● Optimising interactions with suppliers and increasing the efficiency of logistics operations
E-commerce and online orders
● Online delivery okeydostavka.ru showed a 77% YoY growth in sales during the reporting period
● The company started piloting delivery of internet orders in the regions through partnership with specialised delivery operators
● The social initiative Stay healthy with us, we’ll take care of the rest with zero mark-up for a wide range of product categories
● The social initiative Older People Hour, providing priority service in the morning hours for elderly customers
* Hereinafter, net retail revenue, LFL net retail revenue, and the average ticket metrics are provided net of VAT.