DGAP-Adhoc CECONOMY AG with strong quarterly results - Outlook for 2020/21, however, subject to significantly increased uncertainties due to prolonged temporary store closures as a result of COVID-19
DGAP-Ad-hoc: CECONOMY AG / Key word(s): Preliminary Results/Forecast
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CECONOMY AG ("CECONOMY") has closed the first quarter of the new financial year 2020/21 with a strong sales and earnings performance despite numerous COVID-19-related restrictions in stationary retail and local lockdowns in a number of countries.
Based on preliminary figures, CECONOMY expects sales adjusted for currency and portfolio change effects to increase by around 11.4 per cent for the first quarter of 2020/21. This positive sales development is mainly due to the strong start during the first two months, which were characterised by continued pleasing customer demand as well as successful promotions such as "Black November". This more than compensated for the renewed temporary closures of the stationary stores and increasing restrictions in November and December. In November 2020, an average of around 31 per cent and in December on average even around 62 per cent of MediaMarkt and Saturn stores were affected by a temporary closure due to COVID-19, including the stores in Germany, Austria, the Netherlands as well as the majority of the stores in Poland. The online business recorded extraordinary growth of around 117 per cent across the Group, which corresponds to a sales share in the quarter of around 30 percent (Q1 2019/20: 15.4 per cent).
Furthermore, CECONOMY expects an adjusted Group EBIT* of around €346 million for the first quarter of 2020/21 (Q1 2019/20: €289 million). The year-on-year increase in adjusted Group EBIT* of around €56 million is mainly due to strong sales growth. Decreasing personnel and material costs thanks to increased cost efficiency as well as government support in the context of the COVID-19 pandemic also contributed to this development. On the other hand, the result for the quarter was impacted by a negative gross margin development. This is mainly due to the COVID-19-related increased shift to the online channel, coupled with higher delivery costs, as well as lower Services & Solutions income due to the COVID-19-related store closures and declining customer footfall. Transaction costs of around €6 million in connection with the transaction announced on 14 December 2020 regarding the acquisition of the minority stake in MediaMarktSaturn and the reorganisation of the shareholder structure are not included in the adjusted Group EBIT*.