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Cnova N.V. : Cnova N.V. - 2nd Quarter 2015 Financial Results

  • Strong growth of GMV and net sales:
    • GMV : +25.8% (€1,154 million)
    • Net sales : +17.5% (€837 million)
  • Excellent key commercial performance indicators:
    • Traffic : +38.9% (396 million visits)
    • Orders/customer : +5.4%
    • Items/customer : +4.3%
    • Mobile share of traffic : 36.9% of total traffic vs 24.7% in 2Q14
  • Significant sequential improvement in France & Brazil in 2nd quarter 2015 in view of important investments in 1Q15 to fuel future growth:
    • Gross margin : +56 basis points
    • EBITDA margin : +93 basis points
    • EBIT margin : +78 basis points
  • Start-up operations in new countries had an impact on operating margin but contributed to growth according to plan
  • Last twelve month free cash flow of €27.8 million and €42 million excluding FX impact
  • H2 Outlook: increase in 2nd half 2015 net sales of 17.5% (+/- 1.5%) on a currency neutral basis, in line with 2Q net sales growth

AMSTERDAM, Netherlands, July 22, 2015 (GLOBE NEWSWIRE) -- Cnova N.V. (Nasdaq & Euronext in Paris: CNV) ("Cnova" or the "Company") today announced its financial results for the second quarter ended June 30, 2015.

Key Figures 2Q15 1Q15 2Q14 Change Change
Y-o-Y France and Brazil*
(Unaudited, € millions) Reported Vs. 1Q15 Vs. 2Q14
Gross Merchandise Value (GMV)¹ 1,154.1 1,248.2 967.8 +19.2%/+25.8%** -7.5% +18.2%
Net Sales 836.7 915.5 755.9 +10.7%/+17.5%** -8.7% +9.5%
Gross Profit 107.6 113.2 106.7 +0.8%/+6.9%** -4.7% +1.7%
France and Brazil* 108.6 113.9 106.7 +1.7% -4.7% +1.7%
% of Net Sales 13.1% 12.6% 14.1% -100 bps +56 bps -100 bps
New countries2 (1.0) (0.7) -
SG&A (131.3) (141.2) (98.0) +34.0% -10.1% +25.5%
France and Brazil* (123.0) (136.7) (98.0) +25.5% -10.1% +25.5%
% of Net Sales -14.9% -15.1% -13.0% -189 bps +23 bps -189 bps
New countries2 (8.3) (4.4) -
Operating EBITDA3 (13.2) (18.2) 16.3 -180.9% -66.9% -126.8%
France and Brazil* (4.4) (13.2) 16.3 -126.8% -66.9% -126.8%
% of Net Sales -0.5% -1.5% 2.2% -269 bps +93 bps -269 bps
New countries2 (8.8) (5.0) -
Operating EBIT4 (23.7) (28.0) 8.7 -370.9% -15.5% -264.6%
France and Brazil* (14.4) (22.9) 8.7 -264.6% -37.1% -264.6%
% of Net Sales -1.7% -2.5% 1.2% -290 bps +78 bps -290 bps
New countries2 (9.3) (5.1) -
Net Income/(Loss) (40.2) (40.6) (21.3) +89.1% -4.0% +51.0%
% of Net Sales -4.8% -4.4% -2.8%
Adjusted EPS (in Euros) (0.06) (0.06) (0.02)
Change in Operating Working Capital5*** 129.3 160.2 73.7 +55.6
Free Cash Flow6*** 27.8 91.6 65.2 -37.4
Net cash/(Net financial debt)7 (period end) 36.3 70.8 (112.9) +149.2

* Includes France, Brazil and Holding ** Currency neutral basis *** Last twelve months

2nd Quarter 2015 Financial Performance

· GMV amounted to €1,154 million for the quarter, increasing 25.8% on a currency neutral basis compared to the same period one year ago. After taking into account the exchange rate impact of (6.5)%, GMV grew by 19.2%. At Cdiscount, total GMV was up 24.9%, while at Cnova Brazil it increased by 26.7% on a currency neutral basis.

-Marketplace GMV as a percentage of total GMV reached 18.9%, up 813 basis points compared to the 2nd quarter of 2014. During the twelve month period ending June 30, 2015, active marketplace sellers increased by +117.6% to almost 10,000 while the number of marketplace product offerings expanded from 9.9 million to 20.1 million (+103.6%).

  • Net sales totaled €837 million, up 17.5% on a currency neutral basis compared to the 2nd quarter of 2014. The growth rate was 10.7% after taking into account the negative exchange rate impact of (6.8)%.
  • Main commercial indicators continued to improve:

-Number of items per Unique Customer8 increased by +4.3% year-over-year;
-Number of orders per Unique Customer8 increased by +5.4%, of which +8.4% in France and +2.3% in Brazil;
-Share of traffic from mobile devices grew to 36.9% in 2Q15, compared to 24.7% in 2Q14;
-Strong results from customer loyalty analysis based on October 2012, October 2013 and October 2014 customer data and their following 6 months repurchase behavior:

  • Increased 6-month repurchase rate: 56.0% for customers from Oct. 2014 up from 47.5% for customers from Oct. 2012;
  • Increased customer repurchase rate: 3.4 additional orders per customer from Oct. 2014 from 2.5 additional orders per customer from Oct. 2012.
    • France and Brazil9 enjoyed significant sequential improvement in their financial results:

-Net sales increased +13.7% in France and +20.5% at Brazil on a constant currency basis;

-Gross profit from France and Brazil9 was €109 million, with an associated gross margin of 13.1% (vs. 12.6% in 1Q15). The current pricing level in both countries is stable and well adapted to the commercial environment of both countries;

-SG&A expenses decreased as a percentage of net sales, falling to 14.9% compared to 15.1% in 1Q15. Investments made in the 1st quarter of 2015 to expand warehouse capacity both in Brazil and France are allowing the Group to keep pace with its expanded product selection and to further improve customer delivery services (see "Operational highlights and initiatives" below)

  • In terms of fulfillment costs, these increased to 8.3% of sales in 2Q 15 vs 7.8% in 1Q15 and 6.6% in 2Q14 due to the:
    • impact of fast growing marketplace;
    • changed product mix coming from strong growth of large home appliances and home furnishing items sales;
    • doubling of Click-&-Collect pick-up points in Brazil: 516 at the end of June 2015 up from 210 at the end of March 2015;
      • Tech and Content costs represented 2.7% of sales in 2Q15, down from 2.9% in 1Q15 and stable compared to 2Q14. G&A costs amounted to 1.8% of sales in 2Q15, down from 2.2% in 1Q15 and up from 1.6% in 2Q14;
      • At Cdiscount, 2Q15 SG&A costs were impacted by the opening of the last 5 new specialty web sites in 2015: Comptoirdesparfums.com (luxury beauty products) and Cornerliterie.com (bedding) opened earlier in July in addition to MoncornerKids.com and MonCornerJardin.com (garden) opened last April and Cornerhomme.com, opened last May.

-The operating EBITDA margin increased by 93 basis points sequentially;
-The operating EBIT margin improved 78 basis points compared to the previous quarter.

  • International expansion has led to an increase in the GMV and net sales thanks to start-up operations in Africa, LatAm and South East Asia. The associated margin investment is weighing on net results as expected and according to plan.


At Cnova level:

  • Gross profit of €107.6 million was up 6.9% on a currency neutral basis (reported basis: +0.8%) compared to 2Q14.

Gross margin at the Group level was 12.9%, up from 12.4% in 1Q15.

  • SG&A expenses (or opex: fulfillment, marketing, IT/content and G&A), totaled €131.3 million.
  • Operating EBITDA amounted to €(13.2) million.
  • Operating profit from ordinary activities (Operating EBIT) amounted to €(23.7) million, a sequential improvement compared to the previous quarter at €(28.0) million. The 2nd quarter 2015 reported operating EBIT margin was (2.8)%, up from (3.1)% in 1Q15.

Including other expenses, total operating profit improved to €(33.4) million compared to €(42.2) million in 1Q15.

  • Net financial expense declined from €17.3 million in 2Q14 to €14.8 million in 2Q15. This represented a reduction from 2.3% of net sales in 2Q14 to 1.8% of net sales in 2Q15. The company has been able to offset the impact of the approximate 20% increase in the Brazilian interest rate (SELIC) in the period through:

-the lower average number of installments in Cnova Brazil sales (from 8.7 average installments in 2Q14 to 7.5 average installments in 2Q15);
-and a stronger balance sheet in the period, with positive net cash at Cnova level.

  • Net income amounted to €(40.2) million of which €(36.2) million was attributable to equity holders of Cnova.

On a last twelve month basis:

  • The operating working capital change improved by €55.6 million.
  • Capex increased by €29.4 million primarily due to IT investments in search engine improvements and enhanced mobile platforms. In 1H15, capex represented 2.6% of net sales, compared to 2.1% in 1st half 2014.
  • Free cash flow (FCF) amounted to €27.8 million and €42 million excluding FX impact.

Operational highlights and initiatives
· International expansion: Cnova experienced strong growth in South-East Asia (Thailand and Vietnam), Latin America (mainly Colombia) and Africa thanks to its operational focus based on price leadership fuelled by purchasing synergies and the development of:

-a large network of pick-up points:

  • Colombia - 266 at the end of June 15, 30% of 2Q total sales;
  • Thailand - 457 at the end of June 15;
  • roll-out in Vietnam;
  • mobile platforms:
  • Colombia 41% of 2Q traffic;
  • Thailand 42%;
  • Vietnam 27%

-marketplace share of GMV: up to 9.8% in Colombia and 2% in Thailand in 2Q, roll-out elsewhere.


Cnova's operations in Africa continue to expand, with strong growth in the Ivory Coast which has extended its delivery catchment area to Burkina Faso and Mali.

  • Customer service: thanks to warehouse expansion investments made during the first six months of 2015, the following heavy product (weighing more than 30 kg) delivery enhancements are scheduled to be rolled-out during the fall of 2015:

-Same-day home delivery in metropolitan Paris and Lyon;
-Click-&-Collect:

  • Next-day delivery to all pick-up points in metropolitan areas of Paris, Lyon, Lille and Marseille;
    • Accelerated roll-out in Brazil with the launch in 3Q15 of over 400 pick-up points.

Subscribers to Cdiscount à volonté, Cnova's customer loyalty program, increased at the end of June 2015 by 43% compared to the end of March 2015.


· Continuous cost efficiency: Cnova is targeting new measures to further optimize its operating expenses on a full year basis through:
o Continuous improvement of logistics productivity in France and Brazil;
o Renegotiation of contracts;
o Optimization in IT costs in France and Brazil;
o Personal costs savings;
o Reduction in external service provider costs.

Outlook
The basic fundamentals of the Group's underlying business activity remain strong: 2nd half 2015 GMV is targeted to continue to grow at a similar rate as during the 1st half of 2015.

Cnova is targeting for the 2nd half of 2015 an increase of net sales of 17.5%, plus or minus 1.5%, on a currency neutral basis, in line with 2Q net sales performance.

Endnotes:

1) Gross Merchandise Volume (GMV) = product sales + other revenues + marketplace business volumes (calculated based on approved and sent orders) + taxes. GMV is calculated using data for orders that have been approved and sent.
2) New countries: Colombia, Ecuador, Panama, Thailand, Vietnam, Ivory Coast, Senegal, Cameroon, Burkina Faso
3) Operating EBITDA is calculated as operating profit (loss) before restructuring, initial public offering expenses, litigation, gain/(loss) from disposal of non-current assets and impairment of assets and before depreciation and amortization expense and share based payment.
4) Operating profit (loss) before restructuring, litigation, initial public offering expenses, gain / (loss) from disposal of non-current assets and impairment of assets.
5) Change in operating working capital is calculated as the sum of change in inventory, operating payables and operating receivables and other (see Cash Flow Statement).
6) Net cash from (used in) operating activities less capex (see Cash Flow Statement).
7) Calculated as the sum of (i) cash and cash equivalents and (ii) cash pool balances held in arrangements with Casino Group and presented in other current assets, less financial debt - See Non-GAAP Reconciliations section of this press release for additional information
8) Unique Customer - customer who has purchased a least once over the considered period but counted as a single customer irrespective of the number of orders placed by that customer over the considered period.
9) France and Brazil includes Holding expenses

More details are available in Cnova's semi-annual report and financial statements for the six-month period ended June 30, 2015 which can be downloaded from www.cnova.com/investor-relations
Cnova Investor Relations Contact:
G. Christopher Welton
christopher.welton@cnovagroup.com
investor@cnova.com
Tel: +31 20 795 06 71

Media contact:
Cnova N.V.
Head of Communication: +33 6 80 39 50 71
directiondelacommunication@cnovagroup.com

About Cnova N.V.

Cnova N.V., one of the world's largest e-Commerce companies, serves 15 million active customers via state-of-the-art e-tail websites: Cdiscount in France, Brazil, Colombia, Ecuador, Panama, Thailand, Vietnam, Ivory Coast, Senegal, Cameroon, Burkina Faso and Belgium; Extra.com.br, Pontofrio.com and Casasbahia.com.br in Brazil. Cnova N.V.'s product offering of more than 21 million items provides its clients with a wide variety of very competitively priced goods, several fast and customer-convenient delivery options as well as practical payment solutions. Cnova N.V. is part of Groupe Casino, a global diversified retailer. Cnova N.V.'s news releases are available at www.cnova.com/investor-relations.aspx. Information available on, or accessible through, the sites referenced above is not part of this press release.

This press release contains regulated information (gereglementeerde informatie) within the meaning of the Dutch Financial Supervision Act (Wet op het financieel toezicht) which must be made publicly available pursuant to Dutch and French law. This press release is intended for information purposes only.

Forward-Looking Statements

In addition to historical information, this press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the U.S. Securities Act of 1933, and Section 21E of the U.S. Securities Exchange Act of 1934. Such forward-looking statements may include projections regarding Cnova's future performance and, in some cases, may be identified by words like "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "future," "will," "seek" and similar terms or phrases. The forward-looking statements contained in this press release are based on management's current expectations, which are subject to uncertainty, risks and changes in circumstances that are difficult to predict and many of which are outside of Cnova's control. Important factors that could cause Cnova's actual results to differ materially from those indicated in the forward-looking statements include, among others: the ability to grow its customer base; the ability to maintain and enhance its brands and reputation; the ability to manage the growth of Cnova effectively; changes to technologies used by Cnova; changes in global, national, regional or local economic, business, competitive, market or regulatory conditions; and other factors discussed under the heading "Risk Factors" in the U.S. Annual Report on the Form 20-F for the year ended December 31, 2014 filed with the U.S. Securities and Exchange Commission on March 31, 2015 and other documents filed with or furnished to the U.S. Securities and Exchange Commission. Any forward-looking statement made in this press release speaks only as of the date hereof. Factors or events that could cause Cnova's actual results to differ from the statements contained herein may emerge from time to time, and it is not possible for Cnova to predict all of them. Except as required by law, Cnova undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.

Upcoming Events:

Thursday, July 23, 2015
Cnova Second Quarter 2015 Conference Call and Webcast at 10:00 ET / 16:00 CET

Conference Call and Webcast connection details:

Webcast: cnova.com/investor-relations/events-and-presentations.aspx

Participant Dial-In Numbers:
Toll-Free
Brazil 0 800 891 6221
France 0 800 912 848
UK 0 800 756 3429
USA 1-877-407-0784

Toll 1-201-689-8560

Replay Dial-In Numbers:
Toll-Free 1-877-870-5176
Toll 1-858-384-5517

Available From: July 23, 2015 at 13:00 ET / 19:00 CET
To: July 30, 2015 at 23:59 ET
July 31, 2015 at 05:59 CET
Replay Pin Number: 13612210

Presentation materials to accompany the call will be available at cnova.com on July 23, 2015.

An archive of the conference call will be available for a limited time at cnova.com
following its conclusion.

HUG#1940672

Source:Cnova N.V.