Fix Price PJSC · RUS:FIXR
Fix Price PJSC — Fix Price — Investor Presentation (October 2021)
57 slides from Fix Price PJSC's investor presentation, October 2021
Slide 1: The Fastest Growing Value Retailer Globally
THE FASTEST GROWING VALUE RETAILER GLOBALLY October 2021
Slide 2: Disclaimer
DISCLAIMER IMPORTANT: This document does not constitute or form part of, and should not be because they relate to events and depend on circumstances that may or may not occur the results of the Company's operations presented under IAS 17 after 1 January 2019 construed as an offer for sale or subscri
Slide 3: The Fastest Growing Value Retailer Globally
The Fastest Growing Value Retailer Globally 3
Slide 4: The Fastest Growing Value Retailer Globally
THE FASTEST GROWING VALUE RETAILER GLOBALLY (1) OUR PROPOSITION OUR NUMBERS OUR AMBITION 4,750+ $2.6bn stores 2020 Revenue 2.4x 19%+ Consistently low prices Treasure hunt & essentials 93% $509m 2020-25E variety value retail market increase(3) 2020-25E variety value retail market CAGR(3) Market share
Slide 5: Fix Price – Purpose-Built from Inception to Disrupt the Retail Market at Scale
FIX PRICE – PURPOSE-BUILT FROM INCEPTION TO DISRUPT THE RETAIL MARKET AT SCALE (2007 – 2010) (2011 – 2014) (2015 – 2016) (2017 – 2020) (2021 and beyond) Phase I Phase II Phase III Phase IV Phase V Format development Network expansion Multi-price point evolution High quality growth Cementing leadersh
Slide 6: Key Pillars of Fix Price Success
KEY PILLARS OF FIX PRICE SUCCESS 1 Leader in a large and growing market 2 Unique customer value proposition 3 Operational excellence 4 Substantial growth potential 5 Best-in-class financial KPIs 6 Strong management and corporate governance The Fastest Growing Value Retailer Globally 6
Slide 7: Leader in a Large and Growing Market
LEADER IN A LARGE AND GROWING MARKET 1
Slide 8: Value Retail Is Proven Globally
VALUE RETAIL IS PROVEN GLOBALLY FIX PRICE IS AMONGST THE GLOBAL SECTOR LEADERS(1) Revenue 2020 in USDbn(2) US USDbn(2) USDbn(2) Revenue 3.0 Revenue 5.9 Revenue 2.6 # stores 1,381 # stores 1,097 # stores 4,753 ~145m(3) ~135m(3) ~250m(3) USDbn(2) USDbn(2) USDbn(2) USDbn(2) Revenue 33.7 Revenue 2.0 Rev
Slide 9: Variety Value Retail Is One of the Fastest Growing Segments of Russian Retail
THE VARIETY VALUE RETAIL IS ONE OF THE FASTEST GROWING SEGMENTS OF THE RUSSIAN RETAIL MARKET SUSTAINABLE GROWTH OF THE ADDRESABLE MARKET(1) RAPID EXPANSION OF THE VARIETY VALUE RETAIL MARKET Addressable market for variety value retail, incl. VAT, RUB bn Variety value retail market, incl. VAT, RUB bn
Slide 10: Fix Price = Variety Value Retail in Russia
FIX PRICE = VARIETY VALUE RETAIL IN RUSSIA FAVOURABLE CONDITIONS FOR VARIETY VALUE RETAIL IN THE ADDRESSABLE MARKET STRONG INCUMBENT POSITION 93% Market share(5) captured by Fix Price in Russia Number of stores Revenue Population in Russia and other core Stores CAGR Year of 218m+ countries of operat
Slide 11: Unique Customer Value Proposition
UNIQUE CUSTOMER VALUE PROPOSITION 2
Slide 12: Deep Value Across a Diverse Product Offering
DEEP VALUE ACROSS A DIVERSE PRODUCT OFFERING UNCOMPROMISING EDLPs(1)… …CONSTANTLY CHANGING ASSORTMENT… Several $1.1 / ₽77 $1.4 / ₽99 anchor price points(2) $0.8 / ₽55 $2.0 / ₽149 65% of assortment is rotated c.73% $0.7 / ₽50 $2.7 / ₽199 of our products 35% is represented by consumables/regular segme
Slide 13: Driving Constant Newness in Assortment
DRIVING CONSTANT NEWNESS IN ASSORTMENT WHAT? HOW? 40-60 PRODUCTS LAUNCHED EVERY WEEK 8 SEASONAL DEDICATED TRACKING OF GLOBAL TRENDS DRIVING TREASURE HUNT EXPERIENCE COLLECTIONS Week 1 Week 2 Week 3 Week 4 CONTINUOUS LEVERAGING LONG-STANDING Accessories BROWSING PARTNERSHIPS WITH SUPPLIERS Household
Slide 14: Turning an Essential Trip into an Exciting Treasure Hunt
TURNING AN ESSENTIAL TRIP INTO AN EXCITING TREASURE HUNT “THINGS YOU NEED, THINGS YOU DREAMT OF AND THINGS YOU NEVER KNEW EXISTED” Wow, no way I just needed to ₽199 1 the price can be 2 ₽99 Flowers Celebration Seasonal goods Decoration get shampoo… that low! Entry 2 Cosmetics Hair accessories Haberd
Slide 15: Growing Loyalty Programme with Attractive Benefits
GROWING LOYALTY PROGRAMME WITH ATTRACTIVE BENEFITS HOW IT WORKS BENEFITS FOR CUSTOMERS BENEFITS FOR US 15 1 point = RUB 1 when spent Get the maximum value Data and feedback of the up to 20% active client base m through customised offers(2) of purchase amount is returned to the card in form of points
Slide 16: Introduction to Our Stores
INSTEAD OF THOUSANDS WORDS: INTRODUCTION TO OUR STORES YOU ARE WELCOME AT ANY TIME AT OUR VIRTUAL STORE https://fix-price.ru/ Welcome to Fix Price! Unique Customer Value Proposition 16
Slide 17: Operational Excellence
OPERATIONAL EXCELLENCE 3
Slide 18: Operational Excellence – Efficient, Hard to Replicate Business Model
OPERATIONAL EXCELLENCE – EFFICIENT, HARD TO REPLICATE BUSINESS MODEL 1 2 3 4 AGILE EFFICIENT PROPERTY WELL-INVESTED SOURCING STANDARDISATION MANAGEMENT Direct sourcing backed by Fueling expansion at scale and LOGISTICS Across all 4,750+ stores(1) Platform scaled for growth sophisticated algorithms d
Slide 19: Agile Sourcing Model and Long-Standing Supplier Relationships
Sourcing Standardisation Property Management Logistics Technology AGILE SOURCING MODEL AND LONG-STANDING SUPPLIER RELATIONSHIPS LARGE AND DIVERSIFIED SUPPLIER BASE EFFECTIVELY MANAGING FX EXPOSURE HIGHLY EFFICIENT TEAM ORGANISATION Average 63 65 72 Department head • Top-10 suppliers account for 39%
Slide 20: Sourcing Right Goods at Right Prices
Sourcing Standardisation Property Management Logistics Technology SOURCING RIGHT GOODS AT RIGHT PRICES TRANSPARENT PROCUREMENT MODEL BEHIND LOW PRICE STRATEGY INCREASING SHARE OF LOCAL SUPPLIERS(1) 2014 Fix Price: Supplier: price setter price taker Known to supplier Fixed price offered (along with F
Slide 21: 100% Standardised Store Portfolio Positioned to Drive Outstanding Unit Economics
Sourcing Standardisation Property Management Logistics Technology 100% STANDARDISED STORE PORTFOLIO POSITIONED TO DRIVE OUTSTANDING UNIT ECONOMICS WE HAVE 100% STANDARDISED BOXES DELIVERING TO OUR CUSTOMERS(1)… …value… …convenience… …and experience Same assortment High traffic locations 75 shelves p
Slide 22: Proven Store Rollout Process
Sourcing Standardisation Property Property Management Management Logistics Technology PROVEN STORE ROLLOUT PROCESS Fit out, recruitment City / location selection Premises evaluation Financial appraisal Terms negotiation and marketing Assessment of Target terms Size / Traffic Revenue / Predominantly
Slide 23: Efficient Property Management Framework
Sourcing Standardisation Property Property Management Management Logistics Technology EFFICIENT PROPERTY MANAGEMENT FRAMEWORK KEY REAL ESTATE STRATEGY HIGHLIGHTS(1) CONSTANT FOCUS ON PORTFOLIO OPTIMISATION Highly automated store roll-out and property management processes 100% Fix Price proactively n
Slide 24: Logistics Infrastructure Scaled for Growth
Sourcing Standardisation Property Management Logistics Technology LOGISTICS INFRASTRUCTURE SCALED FOR GROWTH th. sqm - DC space owned leased STEADY GROWTH OF DISTRIBUTION CENTER SPACE… St Petersburg th. sqm, eop 282 35 th. sqm • Expected gradual increase of DC space to support store rollout STRATEGI
Slide 25: State of the Art IT Infrastructure Constantly Enhanced
Sourcing Standardisation Property Management Logistics Technology STATE OF THE ART IT INFRASTRUCTURE CONSTANTLY ENHANCED TO SUPPORT FUTURE GROWTH WE LEVERAGE TECHNOLOGY TO AUTOMATE DECISION-MAKING, STRATEGY FOR RESULTING IN BETTER DECISIONS AND LOWER COSTS SCALING BUSINESS Data powering every facet
Slide 26: Substantial Growth Potential
SUBSTANTIAL GROWTH POTENTIAL 4
Slide 27: Continuous Store Expansion
CONTINUOUS STORE EXPANSION GEOGRAPGICAL COVERAGE (2020 and 9M 2021, eop) Russia LEGEND KEY RUSSIA SIBERIAN FD(1) (Number of stores) +442 +63 CENTRAL FD(1) +xx 4,333 496 +110 xx 3,891 xx 433 1,263 1,153 2020 9M 2021 NORTH-WESTERN FD(1) SOUTHERN FD(1) +50 +57 447 397 539 482 FAR-EASTERN FD(1) VOLGA FD
Slide 28: Up to 15 Years of Store Runway Potential Ahead
UP TO 15 YEARS OF STORE RUNWAY POTENTIAL AHEAD(1) SIZEABLE WHITE SPACE POTENTIAL ACROSS RUSSIA AND OTHER INTERNATIONAL GEOGRAPHIES... ...SUPPORTED BY STRUCTURAL FORMAT ADVANTAGES Potential total number of variety value retail stores in Russia and other international geographies(2) ~15,500(7) Ability
Slide 29: Tested Levers to Drive LFL Growth
TESTED LEVERS TO DRIVE LFL GROWTH Creating Growing active Investing in store Delivering constant range “Bonus Card” Managing pricing and customer essential products “newness” holders experience Attractive, clean, well-lit stores to Flexible price Higher spend, shop comfortably Drives desire Drives n
Slide 30: Best-in-Class Financial KPIs
BEST-IN-CLASS FINANCIAL KPIS 5
Slide 31: Strong Growth, Profitability and Cashflow
STRONG GROWTH, PROFITABILITY AND CASHFLOW 1 RAPID GROWTH AT SCALE 2 STRONG PROFITABILITY # of Stores (EoP) Revenue (RUBbn) IFRS16 EBITDA Margin +19% +33% Standardised Asset +0.4pp store portfolio light model с. 9 3.2% Months Store 2020 Capex as a CAPEX Payback(1) % of revenue(2) High return on capit
Slide 32: Strong Growth Algorithm
1 STRONG GROWTH ALGORITHM STRONG AND CONSISTENT UNIT GROWTH CADENCE > 30% TWO-YEAR STACKED LFL(1)(2) INDUSTRY-LEADING TOP LINE GROWTH Unit development (# of stores as of end of period) LFL development (%) LFL Sales (Current Year) Revenue development (RUBbn) LFL Sales (Prior Year) % of stores % whole
Slide 33: Efficient Cost Optimisation Supporting Strong Profitability
2 EFFICIENT COST OPTIMISATION SUPPORTING STRONG PROFITABILITY ROBUST GROSS MARGIN EBITDA MARGIN EBITDA GROWTH Gross margin development (%) EBITDA margin development (%) IFRS 16 IAS 17 EBITDA development (RUBbn) IFRS 16 IAS 17 35% (IFRS 16) 45% (IAS 17) 39% 36.8 (IAS 17) 19.0% 19.4% 27.2 32.2% 32.4%
Slide 34: Asset Light Model with Consistent Unit Returns
3 ASSET LIGHT MODEL WITH CONSISTENT UNIT RETURNS LAST THREE YEARS CAPEX(1) CAPEX COMPOSITION CAPEX (RUBm) Key CAPEX components Other CAPEX components CAPEX (% of revenue) 3.9% 2.9% 3.2% New Store Openings CAPEX Refurbishment CAPEX Distribution center CAPEX 0.6% 0.8% 1.2% DC CAPEX IT and Other CAPEX
Slide 35: Industry Leading ROIC
3 INDUSTRY LEADING ROIC(1)(2) US DOLLAR STORES / VALUE RETAIL(3) INTERNATIONAL VALUE RETAIL(4) RUSSIAN RETAIL(4) Non-capitalised leases Capitalised leases 163.2% Average: Average: Average: 21.7% 21.5% 15.8% 98.8% 29.9% 26.1% 25.8% 25.8% 24.6% 16.0% 20.0% 19.8% 10.4% 11.1% 10.4% 2020 2020 2020 Axis T
Slide 36: Superior Cash Flow Generation, Strong Balance Sheet and Consistent Shareholder Returns
3 SUPERIOR CASH FLOW GENERATION, STRONG BALANCE SHEET AND CONSISTENT SHAREHOLDER RETURNS FCF DYNAMICS(1) DIVIDENDS DECLARED (RUBm) Lease Payments FCF (Post-Lease Payments) (RUBm) % of revenue 11% 15% 16% Payout ratio(2) 73% 104% 186% 32,644 30,628 13,740 21,631 6,633 11,699 23,110 14,942 2018 2019 2
Slide 37: Strong Management and Corporate Governance
STRONG MANAGEMENT AND CORPORATE GOVERNANCE 6
Slide 38: Management Team with Proven Track Record
MANAGEMENT TEAM WITH PROVEN TRACK RECORD 2007-2009 foundation Subsequent hires 2020 and beyond ZERO ROTATION Dmitry Kirsanov Inna Kondratyeva Oleg Shtainagel Victoria Smirnova Vladimir Pogonin IN SENIOR MANAGEMENT Chief Executive Officer Head of Category Management Logistics Director Head of Marketi
Slide 39: Corporate Governance: Board of Directors
CORPORATE GOVERNANCE: BOARD OF DIRECTORS With effect from the IPO, the Board of Directors will consist of 7 members, 3 of which will be INEDs Sergey Lomakin Artem Khachatryan Dmitry Kirsanov Chairman and Founding Shareholder Founding Shareholder Executive Director Highly experienced Board of Directo
Slide 40: Fix Price ESG Agenda Is Embedded in Company Culture
FIX PRICE ESG AGENDA IS EMBEDDED IN COMPANY CULTURE E ENVIRONMENTAL Minimizing environmental impact 20-35% reduction in electricity consumption(1) ~2.5x reduction in consumption of stretch film(2) Increased offering of healthy lifestyle products ~6.5x less energy consumed at Fix Price’s DC(3) Good D
Slide 41: Undisputed Leader in Value Retail
UNDISPUTED LEADER IN VALUE RETAIL Value retail business model proven globally 33% Revenue Growth(10) 4,167+ ~15,500(3) ~1/4bn addressable Strong financial algorithm 19.4% Fix Price stores(1) population – up to 15 years of EBITDA Margin (IFRS 16)(9) ~4,600 roll-out potential ahead c.100% ROIC (IFRS 1
Slide 42: Operating and Financial Results Q3 and 9M 2021
OPERATING AND FINANCIAL RESULTS Q3 AND 9M 2021
Slide 43: Key Achievements in Q3 / 9M 2021
KEY ACHIEVEMENTS IN Q3 / 9M 2021 17.8% / 24.3% 168 / 586 4.4% / 9.0% Revenue growth Net store openings(1) LFL sales year-on-year growth RUB 11.0bn / RUB 30.8bn 19.0% / 18.8% c.11% / c.34% (2) EBITDA EBITDA margin Loyal customer base growth Source: Company information, Management Accounts for 9M 2020
Slide 44: Continuous Store Expansion
CONTINUOUS STORE EXPANSION FIX PRICE PORTFOLIO EXPANSION SELLING SPACE EXPANSION (Number of stores) (Ths sqm) +586 4,753 +655 +133 4,167 516 1,022 +147 890 425 113 3,512 743 92 440 96 4,237 3,742 909 797 3,072 647 2019 2020 9M 2021 2019 2020 9M 2021 Company-operated Franchised Company-operated Franc
Slide 45: Strong LFL Growth
STRONG LFL GROWTH STRONG 2-YEAR STACKED LFL SALES GROWTH(1)(2) COMMENTS ON Q3 2021 DYNAMICS LFL Sales (Current Year) LFL Sales (Prior Year) Average: 33.2% • LFL sales grew by 4.4% y-o-y following abnormally high LFL sales growth of 20.6% in Q3 2020 40.9% 37.5% 38.2% • LFL traffic was supported by pr
Slide 46: Extended CVP and Continued Robust Price Advantage
EXTENDED CVP AND CONTINUED ROBUST PRICE ADVANTAGE >70% OF ASSORTMENT UNDER RUB100(1) RETAIL SALES MIX % of retail sales % of SKU Q3 2019 Q3 2020 Q3 2021 1% 1% 0.3% 3% 2% 1% 11% 18% 19% 8% 10% 18% 19% 8% 27% 25% 28% Food 71% 66% 58% 64% 61% 55% 22% 23% 23% Drogerie 17% 15% 15% 23% 19% 17% 51% 52% 49%
Slide 47: Strong Revenue Growth and Robust Profitability
STRONG REVENUE GROWTH AND ROBUST PROFITABILITY TOTAL REVENUE GROSS PROFIT (RUBm) (RUBm) LFL Sales growth Gross profit margin 13.6% 20.6% 4.4% 16.7% 15.9% 9.0% 32.0% 32.1% 31.8% 31.4% 32.5% 31.4% + 24.3% + 20.2% 163,966 + 17.8% + 32.6% 19,724 + 37.3% 51,534 + 16.5% 131,964 42,880 + 38.5% 57,850 17,26
Slide 48: Strong Revenue Growth and Robust Profitability (Cont'd)
STRONG REVENUE GROWTH AND ROBUST PROFITABILITY (CONT’D) EBITDA (IFRS 16) OPERATING PROFIT (RUBm) (RUBm) EBITDA margin (IFRS 16 ) Operating profit margin 19.0% 19.1% 19.0% 17.9% 19.2% 18.8% 12.7% 14.0% 13.6% 11.6% 13.7% 13.4% + 21.5% + 21.7% 30,792 + 42.1% 22,032 25,346 + 56.4% 18,097 17,833 +17.1% +
Slide 49: SG&A Expenses Analysis
SG&A EXPENSES ANALYSIS SG&A BREAKDOWN COMMENTS (% of revenue) IFRS 16 • SG&A expenses decreased as percentage of revenue by 53 bps to 18.4% for 9M 2021 driven by improved operating efficiency in staff costs, rental expense and advertising costs 19.6% 20.0% 18.6% 18.9% 18.4% 18.3% 3.4% 3.3% • Staff c
Slide 50: Capital Expenditures to Support Further Growth
CAPITAL EXPENDITURES TO SUPPORT FURTHER GROWTH CAPEX(1) CAPEX COMPOSITION (RUBm) (Q3 2021, %) 17% New stores openings 4% CAPEX 2.2% 2.5% 2.7% 3.2% RUB (% of revenue) DC 1,420m 58% 22% Refurbishments IT and Other 5,214 COMMENTS 3,616 • Capex increase on a y-o-y basis was driven by higher investments
Slide 51: Net Working Capital Dynamics
NET WORKING CAPITAL DYNAMICS NET TRADE WORKING CAPITAL DEVELOPMENT(1) ROBUST INVENTORY DAYS AND DAYS PAYABLE LEVELS (RUBm) Inventory days(2) (days) and Days payable(3) (days) % of Inventory days Days payable 2.4% 2.0% 2.8% revenue 9M 2019 67 9M 2019 70 9M 2020 71 9M 2020 69 37,574 26,540 9M 2021 79
Slide 52: Superior Cash Flow Generation and Consistent Shareholder Returns
SUPERIOR CASH FLOW GENERATION AND CONSISTENT SHAREHOLDER RETURNS ROIC EVOLUTION(1) NET DEBT / (CASH)(2) FCF DYNAMICS(4) (%) (RUBm) (RUBm) Leverage % of NM 0.5x 0.5x 11.8% 14.7% 12.3% ratio(3) revenue 98.8% 20,229 19,364 87.2% 86.9% 11,756 18,000 17,500 16,820 17,000 12,963 16,500 16,000 15,500 15,00
Slide 53: Appendix
APPENDIX
Slide 54: P&L Summary
P&L SUMMARY In millions of Russian rubles 2019 2020 Q3 2020 Q3 2021 9M 2020 9M 2021 Revenue 142,880 190,059 49,095 57,850 131,964 163,966 Retail revenue 123,194 166,025 43,192 51,216 114,698 144,242 Wholesale revenue 19,686 24,034 5,903 6,634 17,266 19,724 Cost of sales (96,919) (128,544) (33,313) (
Slide 55: Balance Sheet Summary
BALANCE SHEET SUMMARY In millions of Russian rubles 31.12.2019 30.09.2020 31.12.2020 30.09.2021 ASSETS Non-current assets 18,930 22,905 25,297 29,308 Property, plant and equipment 10,882 12,900 13,308 14,502 Right-of-use assets (non-current) 6,220 8,181 8,554 9,469 Other non-current assets 1,828 1,8
Slide 56: Cash Flow Summary
CASH FLOW SUMMARY In millions of Russian rubles 2019 2020 Q3 2020 Q3 2021 9M 2020 9M 2021 Profit before tax 17,535 26,310 5,497 7,496 17,479 21,097 Cash from operating activities before changes in working capital 28,216 38,338 9,751 11,406 26,333 32,165 Changes in working capital (2,428) (1,548) (2,
Slide 57: EBITDA and Net Debt Reconciliation
EBITDA AND NET DEBT RECONCILIATION EBITDA (IAS 17) RECONCILIATION In millions of Russian rubles 2019 2020 Q3 2020 Q3 2021 9M 2020 9M 2021 EBITDA (IFRS 16) 27,150 36,788 9,365 10,964 25,346 30,792 Rental expense (7,221) (7,999) (2,098) (2,511) (5,748) (7,275) Utilities (153) (157) (39) (38) (119) (11