The revenue of Obuv Rossii Group of Companies in the 1st half of 2020 decreased by 26,4% to RUB 3,963 billion. compared to 5,384 billion rubles. in the 1st half of 2019. • The net loss amounted to RUB 0,306 billion, says the financial report of Obuv Rossii Group of Companies.
At the same time, the group's gross profit amounted to 2,278 billion rubles. The gross profit margin for the first half of 2020 is 57,5%. • EBITDA2 for the 1st half of 2020 - 0,426 billion rubles. EBITDA margin is 10,7%.
The director of the Obuv Rossii group of companies, Anton Titov, called the second quarter of 2020 the most serious challenge in the entire history of the group's development. Due to anti-pandemic restrictive measures, the stores of the group were completely closed in April, and partially in May, and this had a significant impact on the financial performance of the first half of 2020. However, already in August 2020, the company's revenue exceeded the level of the average monthly revenue of the pre-crisis first quarter of 2020 (80% of the revenue in August 2019).
“The business of the Group is characterized by a relatively low share of fixed costs in the cost structure. The company operates mainly in the regions, including in cities with a population of up to 100 thousand people, most of the retail outlets are developing in a street format, in which lower rental rates and more flexible terms of contracts, which creates a significant margin of financial strength. Thus, in the first half of the year, we significantly reduced operating expenses. During the shutdown of the stores, we held negotiations with all landlords and agreed to either reduce rental rates or a complete amnesty for the period of the quarantine. As a result, in Q2 we were able to reduce rental costs by RUB 150 million. (40% of all rental costs). In addition, in the first half of the year, the company carried out a planned optimization of the retail network, closing the least profitable stores, most of which were located in shopping centers most affected by the pandemic, ”comments Anton Titov
The retail network of the group at the end of June 2020 consisted of 859 stores (at the end of 2019 - 908).
Titov also notes that thanks to the development of different channels of interaction with customers, the group, during the period of limited store operations, was able to quickly reorganize and reorient its customers in financial services to remote processing of loans and online payments. As a result, revenue from cash lending activities in the 1st half of 2020 increased by 44,1%. This diversification contributes to greater business resilience and allows generating EBITDA even under external constraints. The group plans to further develop this area, expanding the client base and geography of services provision, introducing the possibility of online loan processing.
Currently Obuv Rossii is improving its inventory and working capital management system due to the transition to a marketplace model when working with suppliers (the Sell project). The main task facing the group for the near future is to optimize the "solid" stocks that form their own paid goods. Most of the goods under the "Sell" project are reflected in the inventories and in the company's revenue, however, they do not affect the working capital, since they form the so-called "soft stocks" - these are goods that are accepted for sale with unconditional return in case of non-sale. The company continues to implement its strategy to reduce the cost of financing and increase the share of long-term borrowings in its loan portfolio. During the period of the quarantine measures, the group reached an agreement with key partner banks to grant a deferral of interest payments in the 2-3 quarters of 2020, to soften covenant conditions, as well as to postpone payments on the principal debt to a later period, which allowed the company to significantly reduce interest expenses. All credit institutions expressed their readiness for further joint work.
So, in September 2020, the group managed to reach an agreement with the main partner banks on the prolongation of existing credit lines with a decrease in the cost of financing. In addition, the group continues to actively work on the open capital market: in July, it successfully placed five-year exchange-traded bonds in the amount of RUB 500 million - the first issue since the quarantine was canceled. The Expert RA rating agency, having affirmed the group's credit rating at BBB + with a stable outlook in September, separately noted the quality of the company's work with its loan portfolio.
PJSC OR is in many ways completing the transition from a network of classic fashion stores to building a universal retail company that creates an infrastructure for the development of modern retail formats combining online and offline sales channels, innovative elements of working with suppliers, additional and financial services for customers ...
Obuv Rossii Group of Companies was founded in 2003 and has its headquarters in Novosibirsk and an office in Moscow. It is engaged in the production and trade of footwear and related products. Manages 8508 stores (175 franchises) under the brands Westfalika, Pedestrian, Rossita, Emilia Estra and Lisette, develops footwear and clothing brands for an active lifestyle S-tep, all.go and Snow Guard, owns two shoe factories in Novosibirsk area. In 2019, revenue amounted to RUB 13,7 billion, net profit - RUB 1,7 billion, EBITDA - RUB 3,6 billion.