Interim report - H1 2020/21 - Best summer quarter ever: Record sales and strong earnings growth - Guidance lifted

Company announcement no. 07 2020/21 – INSIDE INFORMATION

Allerød, 5 November 2020

Interim report – H1 2020/21

(1 April – 30 September 2020)

Best summer quarter ever: Record sales and strong earnings growth – Guidance lifted

Matas generated revenue of DKK 932.6 million in Q2 2020/21, a year-on-year increase of DKK 110.1 million, or 13.4%.

Earnings (EBITDA before special items) amounted to DKK 179.6 million in Q2, up DKK 26.0 million on Q2 2019/20.

Online sales continued to grow at a strong rate in Q2. Sales on matas.dk were ahead by 115% year on year with 40,000 new customers shopping at matas.dk for the first time. Physical store sales grew by 3.8% year on year.

All categories recorded higher sales. Boosting sales by 16.9%, Health & Wellbeing recorded the strongest sales growth, while High-End Beauty grew sales by an also solid 15.6%.

Based on the strong Q2 performance, guidance for full-year 2020/21 is adjusted upward. The Group now forecasts growth in both overall revenue and underlying revenue of about 8%, compared with its previous guidance of about 6%. EBITDA margin guidance has been lifted from about 18% to above 18%.

“The summer quarter was doubly good for Matas. Growth was at a record high with the physical stores recovering strongly, while the buoyant online sales momentum continued. Earnings also improved markedly, despite the additional costs incurred to ensure a safe shopping environment amid the coronavirus pandemic”, says Gregers Wedell-Wedellsborg, CEO of Matas A/S, and adds:

“The staycation trend gave Matas significant momentum over the summer, but sales have remained exceptionally strong in all categories also after the school holidays. Against this background, we are lifting our full-year guidance for both sales and earnings, but we must also emphasise that developments during the remainder of the Christmas season quarter are subject to considerable uncertainty due to the growing number of COVID-19 infections and the new retail sector restrictions.

Based on the strong sales momentum – in physical stores and online – we’re working full speed to hire additional staff to ensure next-day delivery of Christmas purchases at matas.dk and a safe Christmas shopping environment at our stores”, Gregers Wedell-Wedellsborg concludes. 

Q2 2020/21 highlights

• Revenue grew by 13.4% year on year, while underlying like-for-like sales, i.e. sales in stores operated by the Group in both Q2 2020/21 and Q2 2019/20, were up by 13.6% in Q2 2020/21. All categories recorded higher sales. Boosting sales by 16.9%, Health & Wellbeing recorded the strongest sales growth, while High-End Beauty grew sales by an also solid 15.6%. The number of trading days was unchanged compared with Q2 2019/20.
• Online sales via matas.dk were up by 115% year on year with 40,000 new customers shopping at matas.dk for the first time. Overall online sales, including revenue generated by Firtal, grew by 90% to make up 20.1% of Q2 2020/21 revenue against 12.0% in Q2 2019/20.
• Underlying like-for-like sales in the Group’s physical stores were up by 3.8% year on year, driven mainly by an increasing basket size. 
• The gross margin was 43.1% compared with 43.5% in Q2 2019/20. The lower gross margin was attributable mainly to a higher proportion of online sales and low-margin sales of personal protective equipment.
• Overall costs accounted for 24.1% of revenue against 26.6% in the same quarter of last year. Overall costs were up by DKK 5.9 million as a consequence of higher activity and acquisitions. Underlying costs continued to decline thanks to rationalisation measures.
• EBITDA before special items came to DKK 179.6 million, up from DKK 153.6 million in the year-earlier period. Growth was driven by higher revenue combined with a lower cost to revenue ratio attributable in part to greater economies of scale in the online business. The EBITDA margin before special items was 19.3% against 18.7% in Q2 2019/20.
• Cash generated from operations was an inflow of DKK 119.2 million in Q2 2020/21 against an inflow of DKK 109.0 million in Q2 2019/20.
• Full-year guidance is adjusted up: The Group now forecasts growth in both overall revenue and underlying revenue of about 8%, compared with its previous guidance of about 6%. EBITDA margin guidance has been lifted from about 18% to above 18%.

H1 2020/21 highlights

• Revenue grew by 10.7% year on year, while underlying like-for-like sales, i.e. sales in stores operated by the Group in both H1 2020/21 and H1 2019/20, were up by 10.9%. Boosting sales by 16.4%, Health & Wellbeing recorded the strongest H1 sales growth. The number of trading days was unchanged compared with H1 2019/20.
• Online sales via matas.dk were ahead by 165% year on year, while overall online sales, including revenue generated by Firtal, surged by 120% to make up 22.8% of H1 2020/21 revenue against 11.5% in H1 2019/20.
• Underlying sales in the Group’s physical stores were down by 2.9% year on year as footfall was adversely affected by the COVID-19 pandemic, especially at the beginning of the first half of the financial year. In the latter half of the H1 reporting period, footfall was in line with the year-earlier level.
• The gross margin was 43.8% compared with 44.3% in H1 2019/20. The lower gross margin was attributable to a higher percentage of online sales.
• Up by DKK 21.3 million as a consequence of higher activity and acquisitions, overall costs accounted for 25.2% of revenue against 26.6% in H1 2019/20. Underlying costs fell as a result of ongoing rationalisation measures.
• EBITDA before special items came to DKK 352.4 million against DKK 316.9 million in the year-earlier period, for an EBITDA margin before special items of 18.7%, in line with the H1 2019/20 level.
• Cash generated from operations was an inflow of DKK 420.2 million in H1 2020/21 against an inflow of DKK 191.8 million in H1 2019/20. The DKK 228.4 million increase was attributable to favourable working capital and earnings developments. In the first half of the financial year, Matas benefited from the postponed payment of A tax and VAT under the government's COVID-19 relief packages.

* The number cannot be calculated at 30 September 2019 due to a lack of historical EBITA numbers after IFRS 16 implementation.

Financial targets

The health, financial and structural consequences of the COVID-19 pandemic have been and continue to be severe, and the pandemic could potentially affect consumer behaviour and society at large for a long time to come. As a result, the current uncertainty pertaining to the retail industry in particular and economic developments in general has increased.

Based on the current uncertainty caused by the COVID-19 pandemic, Matas Group decided not to provide specific financial guidance for financial year 2020/21 in connection with the presentation of the annual report for 2019/20 on 27 May 2020. In connection with the presentation of the interim report for Q1 2020/21, the management of Matas A/S provided the following financial guidance for financial year 2020/21:

• Overall revenue growth of about 6% relative to financial year 2019/20
• Underlying (like-for-like) revenue growth of about 6%
• EBITDA margin before special items of about 18% (after IFRS 16 effects)
• CAPEX between DKK 120 million and DKK 140 million

Based on the strong revenue performance in the second quarter and the first month of the third quarter and the increase in earnings in the second quarter, management has decided to adjust the Group’s financial guidance for financial year 2020/21 as a whole as follows:

• Overall revenue growth of about 8% relative to financial year 2019/20
• Underlying (like-for-like) revenue growth of about 8%
• EBITDA margin before special items above 18% (after IFRS 16 effects)
• CAPEX between DKK 120 million and DKK 140 million (unchanged)

It should be noted that the assumptions are subject to higher-than-usual uncertainty. The above targets do not factor in the effects of a potential aggravation of the current second wave of COVID-19 or a dramatic change in consumer behaviour in the wake of, for example, a recession in the second half of the financial year.

* Includes revenue from Firtal and Kosmolet A/S.

Video conference

Matas will host a video conference for investors and analysts on Thursday, 5 November 2020 at 11:00 a.m. The video conference and the presentation can be accessed on Matas’ investor website:

Video conference access numbers for investors and analysts:

DK:

UK: 9

US:

Link to webcast: /matas/2020h1

Contacts

Gregers Wedell-Wedellsborg                                                                                              

CEO, tel

Anders Skole-Sørensen

CFO, tel                                                                          

Klaus Fridorf                                                                                            

Head of Communication, tel

Forward-looking statements

This interim report contains statements relating to the future, including statements regarding Matas Group's future operating results, financial position, cash flows, business strategy and future targets. Such statements are based on management’s reasonable expectations and forecasts at the time of release of the announcement. Forward-looking statements are subject to risks and uncertainties and a number of other factors, many of which are beyond Matas Group's control. This may have the effect that actual results may differ significantly from the expectations expressed in the announcement. Without being exhaustive, such factors include general economic and commercial factors, including market and competitive conditions, supplier issues and financial and regulatory issues as well as any effects of measures to contain the spread of COVID-19 that are not specifically mentioned above.

Attachment