Fnac Darty Biggest Fall in SBF 120 at Close Wed Jan 18, 2023 – 01/18/2023 at 6:02 pm

(AOF) –

Fnac Darty

(- 6.78% to 34.08 euros)

The SBF 120’s biggest decline to date Fnac-Darty yesterday reported downgraded preliminary results for 2022, questioning the “increased strain on household purchasing power”, in “a particularly difficult context for distribution”. Its sales had fallen by 55 million euros compared to the same period of 2021 during the month of December, one of the most important for its turnover.

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Main points

– The first French distributor, born in 2016, of technical and electrical household products under the Fnac and Darty brands and the second online distributor;

– Activity of 8 billion euros divided between technical products (49%), editorial products (16%), electrical household appliances (22%) and other products and services;

– Strong presence in France and Switzerland (83% of sales), the Iberian Peninsula (9%) and Belgium & Luxembourg and the first steps in Africa in Senegal;

– The business model of the responsible digital distributor;

– Open capital with German Ceconomy as the first shareholder, followed by the insurer Indexia, Enrique Martinez as managing director and Jacques Veyrat chairman of the board of 14 members;

– Financial position under control with 1.2 billion euros in cash and 1.6 billion euros in equity, compared to 1.1 billion euros in net debt

challenges

– New day-to-day strategic plan based on 3 pillars until 2025: digitization, through 50% investment, in omnichannel distribution by placing sellers at the center of advice and targeting 30% of web sales / customer support towards more sustainable products through sustainability score (reliability, availability of spare parts, repair) / deployment of DartyMax, subscription repair service (targeting 2 million subscribers) / free cumulative self-financing of €500 million during 2021-23 and 240 million € per year from 2025;

– Data-driven innovation strategy and open innovation: improving knowledge and data quality and partnering with Google for data use, network of partner venture capital funds and Digital Factory;

– Environmental strategy: halving CO2 emissions in 2030 compared to 2019 / circular economy by extending the life cycle of products (DartyMax repair subscription, Darty Sustainable Choice label, WeFix repair service deployment in partnership with Apple) and the resale of the second – handbook in partnership with La Bourse aux livres / partnership with Valeco to increase the share of green energy and with the Raise Seed for Good seed fund integrating ESG criteria in its support;

– Customer loyalty with 10 million members, including 7 million in France;

– Expanded diversification after Darty kitchen furniture and mobility, creating home spaces, games and toys in stores;

– 26% increase in sales in France from online purchases, accompanied by the opening of 55 stores, bringing the total to 957.

challenges

– Strong competitive threat from Amazon;

– Ability to maintain supply despite difficulties in supply chains;

– Spin-off from partnerships with Google Cloud and, in Switzerland, with the Manor network;

– 2022 expectations confirmed after an increase in profitability in the first quarter: watch out for market trends, but accelerate the daily plan capitalizing on the omnichannel sector, cost control and ongoing subscriptions;

– Dividend of €2 for 2021.

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Concerns remain

According to the Specialized Trade Federation, Procos, in October 2022, activity fell by 1.5% over the year. However, the activity of beauty and health (+ 5.2%) and specialty food (+ 3.5%) is dynamic compared to October 2021. The attendance of the points of sale has been greatly affected by the problems of fuels and bad weather. Compared to October 2019, the year before COVID-19, the drop in attendance is very sharp (-20.9% in October). Malls and suburbs are more affected than city centers by a margin of four to five points.

There are several reasons for concern about the future. The players are experiencing a very significant scissor effect given the increase in their operating costs, while the evolution of demand is very uncertain. Very few brands can pass their cost increases into their selling prices. Therefore, the federation requests, among other things, to limit the indexation of the Commercial Rent Index to + 3.5% for the rents of all companies in 2023. It also requests an absolute urgency: to limit the price of energy for 2023 and to reject already signed contracts to prevent acceleration of the failure rate.

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