(AOF) – For its 2023 results, Fnac Darty generated current operating income of 171 million euros, down 60 million euros over one year but in line with the expectations of the distribution group. Turnover is also down over the period, going from 7.95 billion euros a year ago to 7.88 billion euros in 2023. “This change comes half from the drop in activity particularly strong in Spain and at Nature & Découvertes in the fourth quarter,” the group said in a press release.
Group share of net income from continuing operations – adjusted amounts to 31 million euros in 2023 compared to 104 million euros a year earlier.
The group, which is waiting to recover the 40 million euros linked to the closure – in its favor – of the litigation in the United Kingdom over the sale of Comet Group, ended the year with cash flows of 180 million euros, while they were negative by 30 million in 2022.
Fnac Darty also announced that it would propose a dividend of 0.45 euros per share at its next general meeting of shareholders in May.
In terms of prospects, the group confirmed that it is targeting a cumulative free operating cash flow of around 500 million euros over 2021-2024, as well as a current operating profit at least equal to that of 2023.
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Key points
– First French distributor, born in 2016, of technical products and household appliances under the Fnac and Darty brands and second web distributor;
– Activity of €8 billion distributed between technical products (49%), editorial products (16%), household appliances (22%) and other products & services;
– Strong presence in France & Switzerland (83% of sales), the Iberian Peninsula (9%) and Belgium & Luxembourg and first steps in Africa in Senegal;
– Responsible digital distributor business model;
– Open capital with the German Ceconomy as 1st shareholder, followed by the insurer Indexia, Enrique Martinez being general manager and Jacques Veyrat chairing the board of 14 members;
– Financial situation under control with €1.2 billion in liquidity and €1.6 billion in equity, compared to €1.1 billion in net debt
Challenges
– New Everyday strategic plan on 3 pillars by 2025: digitalization, via 50% of investments, in omnichannel distribution by placing sellers at the center of advice and targeting 30% of sales on the web / support for customers towards more sustainable products via the sustainability score (reliability, availability of spare parts, repair) / deployment of DartyMax, subscription repair service (2M subscribers targeted) / cumulative free self-financing of €500 million over 2021-23 and €240 million annually from 2025 ;
– Data-oriented and open innovation strategy: improvement of knowledge and quality of data and partnership with Google on the use of data, network of partner venture capital funds and Digital Factory;
– Environmental strategy: halving of CO2 emissions in 2030 vs. 2019 / circular economy with the extension of product life cycles (DartyMax repair subscription, “Darty sustainable choice” label, deployment of WeFix repair services in partnership with Apple) and resale of second-hand books 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 kitchen furniture at Darty and mobility, establishment of home spaces, games and toys in stores;
– Rise to 26% of sales in France from online purchases, coupled with the opening of 55 stores, bringing the total to 957.
Challenges
– Strong competitive risk from Amazon;
– Ability to maintain supply despite difficulties in supply chains;
– Benefits from partnerships with Google Cloud and, in Switzerland, with the Manor network;
– 2022 expectations confirmed after an increase in profitability in the 1st quarter: caution on market developments but acceleration of the Everyday plan by capitalizing on the omnichannel sector, cost control and continuation of subscriptions;
– Dividend of €2 for 2021.
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Concerns remain
According to the Federation of Specialized Trade, Procos, in October 2022, activity fell by 1.5% year-on-year. However, the activity of beauty and health (+ 5.2%) and specialized food (+ 3.5%) are dynamic compared to October 2021. Attendance at points of sale was very impacted by the problems fuel and unfavorable weather. Compared to October 2019, a pre-covid year, the drop in attendance is very sharp (-20.9% in October). Shopping centers and the outskirts are more impacted than city centers with a gap of four to five points.
There are several reasons for concern for the future. The players are experiencing a very significant jaws effect given the increase in their operating costs while the evolution of demand is very uncertain. Very few brands can pass on the increase in their costs in sales prices. The federation therefore asks, 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 invokes an absolute emergency: cap the price of energy for 2023 and retroact on contracts already signed to prevent the rate of failures from accelerating.