Fix Price PJSC · RUS:FIXR
Fix Price PJSC — Fix Price — Investor Presentation (August 2021)
61 slides from Fix Price PJSC's investor presentation, Aug 12, 2021
Slide 1: The Fastest Growing Value Retailer Globally
THE FASTEST GROWING VALUE RETAILER GLOBALLY 12 August 2021
Slide 2: Disclaimer
DISCLAIMER IMPORTANT: This document does not constitute or form part of, and should not be other member of the Group’s competitors. Forward-looking statements involve risks performance of retail companies. The results of the Company's operations presented construed as an offer for sale or subscripti
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 4,600+ $2.6bn stores 2020 Revenue 2.4x 19%+ Consistently low prices Treasure hunt & essentials 93% $509mm 2020-25E variety value retail market increase(3) 2020-25E variety value retail market CAGR(3) Market shar
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: Strong Double-Digit LFL Growth
STRONG DOUBLE-DIGIT LFL GROWTH 18 CONSECUTIVE QUARTERS OF DOUBLE-DIGIT LFL SALES GROWTH(1) COMMENTS ON RECENT DYNAMICS Average: COVID-19 18.2% lock-down • Strong sales in April 2021 with moderation in May-June 2021 given abnormally hot weather in 30.1% June and new restrictions on the back of raisin
Slide 7: 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 7
Slide 8: Leader in a Large and Growing Market
LEADER IN A LARGE AND GROWING MARKET 1
Slide 9: Value Retail Is Proven Globally
VALUE RETAIL IS PROVEN GLOBALLY FIX PRICE IS AMONGST THE GLOBAL SECTOR LEADERS(1) Revenue in USDbn(2) US USDbn(2) USDbn(2) Revenue 3.0 Revenue 5.9 Revenue 2.9 # stores 1,368 # stores 1,097 # stores 4,585 ~145mm(3) ~135mm(3) ~250mm(3) USDbn(2) USDbn(2) USDbn(2) USDbn(2) Revenue 33.7 Revenue 2.0 Reven
Slide 10: Variety Value Retail 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 11: 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 218mm+ countries of opera
Slide 12: Unique Customer Value Proposition
UNIQUE CUSTOMER VALUE PROPOSITION 2
Slide 13: Deep Value Across a Diverse Product Offering
DEEP VALUE ACROSS A DIVERSE PRODUCT OFFERING UNCOMPROMISING EDLPs(1)… …CONSTANTLY CHANGING ASSORTMENT… $0.7 / ₽50 $2.0 / ₽149 Several anchor price $0.8 / ₽55 $2.7 / ₽199 points(2) ~63% of assortment is rotated $3.4 / ₽249(3) c.85% $1.1 / ₽77 New Price Point (Jan 2021) of our products 37% is represen
Slide 14: 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 15: 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 16: Growing Loyalty Programme with Attractive Benefits
GROWING LOYALTY PROGRAMME WITH ATTRACTIVE BENEFITS HOW IT WORKS BENEFITS FOR CUSTOMERS BENEFITS FOR US 1 point = RUB 1 when spent Get the maximum value Data and feedback of the up to 20% through customised offers(1) active of purchase amount is returned to the card in form of points client base up t
Slide 17: Instead of Thousands Words: 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 17
Slide 18: Operational Excellence
OPERATIONAL EXCELLENCE 3
Slide 19: 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 4,600+ stores(1) Platform scaled for growth sophisticated algorithms d
Slide 20: Agile Sourcing Model and Long-Standing Supplier Relationships
Sourcing Standardisation Property Management Logistics Technology Financial Algorithm 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 suppli
Slide 21: Sourcing Right Goods at Right Prices
Sourcing Standardisation Property Management Logistics Technology Financial Algorithm 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 o
Slide 22: 100% Standardised Store Portfolio Positioned to Drive Outstanding Unit Economics
Sourcing Standardisation Property Management Logistics Technology Financial Algorithm 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 lo
Slide 23: Proven Store Rollout Process
Sourcing Standardisation Property Property Management Management Logistics Technology Financial Algorithm PROVEN STORE ROLLOUT PROCESS Fit out, recruitment City / location selection Premises evaluation Financial appraisal Terms negotiation and marketing Assessment of Target terms Size / Traffic Reve
Slide 24: Efficient Property Management Framework
Sourcing Standardisation Property Property Management Management Logistics Technology Financial Algorithm 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
Slide 25: Logistics Infrastructure Scaled for Growth
Sourcing Standardisation Property Management Logistics Technology Financial Algorithm LOGISTICS INFRASTRUCTURE SCALED FOR GROWTH th. sqm - DC space owned leased STEADY GROWTH OF DISTRIBUTION CENTER SPACE… St Petersburg th. sqm, eop 235 35 th. sqm • Expected gradual increase of DC space to support st
Slide 26: State of the Art IT Infrastructure Constantly Enhanced
Sourcing Standardisation Property Management Logistics Technology Financial Algorithm 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 p
Slide 27: Strong Growth, Profitability and Cashflow
Sourcing Standardisation Property Management Logistics Technology Financial Algorithm STRONG GROWTH, PROFITABILITY AND CASHFLOW RAPID GROWTH AT SCALE STRONG PROFITABILITY # of Stores (EoP) Revenue (RUBbn) IFRS16 EBITDA Margin +19% +33% Standardised Asset +0.4pp store portfolio light model с. 9 3.2%
Slide 28: Substantial Growth Potential
SUBSTANTIAL GROWTH POTENTIAL 4
Slide 29: 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 30: Tested Levers to Drive Repeat LFL Growth
TESTED LEVERS TO DRIVE REPEAT LFL GROWTH 18 CONSECUTIVE QUARTERS OF DOUBLE-DIGIT LFL SALES GROWTH(1) Creating Drives desire constant range to visit store 30.1% COVID-19 lock-down “newness” 27.1% 26.6% 20.3% 20.3% 20.6% 18.8% 19.0% 18.3% Delivering 18.5% Drives need 16.3% 16.2% essential to visit sto
Slide 31: Best-in-Class Financial KPIs
BEST-IN-CLASS FINANCIAL KPIS 5
Slide 32: Continuous Store Expansion
CONTINUOUS STORE EXPANSION FIX PRICE PORTFOLIO EXPANSION SELLING SPACE EXPANSION (Number of stores) (Ths sqm) +418 4,585 +94 +655 4,167 486 984 +147 425 890 3,512 106 743 92 440 96 4,099 3,742 878 797 3,072 647 2019 2020 H1 2021 2019 2020 H1 2021 Company-operated Franchised Company-operated Franchis
Slide 33: Continuous Store Expansion (Cont'd)
CONTINUOUS STORE EXPANSION (CONT’D) GEOGRAPGICAL COVERAGE (2020 and H1 2021, eop) Russia LEGEND KEY RUSSIA SIBERIAN FD(1) (Number of stores) +313 +46 CENTRAL FD(1) +xx 4… 479 +77 xx 3… xx 433 1… 2020 H1 2021 1… NORTH-WESTERN FD(1) SOUTHERN FD(1) +37 +37 434 397 519 482 FAR-EASTERN FD(1) VOLGA FD(1)
Slide 34: Strong Revenue Growth and Robust Profitability
STRONG REVENUE GROWTH AND ROBUST PROFITABILITY TOTAL REVENUE GROSS PROFIT (RUBm) (RUBm) LFL Revenue Gross profit 18.6% 13.3% 11.9% 31.0% 32.7% 31.2% growth margin + 28.1% + 22.3% 106,116 + 29.3% + 36.3% 33,148 13,090 82,869 27,098 11,363 64,088 19,888 8,606 93,026 71,506 55,482 H1 2019 H1 2020 H1 20
Slide 35: 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 Operating profit (IFRS 16 ) 17.3% 19.3% 18.7% margin 11.0% 13.5% 13.3% + 24.1% + 26.4% + 44.1% + 58.2% 14,152 19,828 11,199 15,981 11,091 7,080 H1 2019 H1 2020 H1 2021 H1 2019 H1 202
Slide 36: SG&A Expenses Analysis
SG&A EXPENSES ANALYSIS SG&A BREAKDOWN COMMENTS (% of revenue) IFRS 16 20.2% 19.3% 18.3% • SG&A expenses decreased as percentage of revenue by 103 bps to 18.3% due to 3.2% 3.2% continued operating efficiency 1.0% 0.9% 3.3% 1.3% 1.3% 0.7% 4.9% 4.5% 1.2% 4.2% • The key driver in reducing SG&A expenses
Slide 37: Capital Expenditures to Support Further Growth
CAPITAL EXPENDITURES TO SUPPORT FURTHER GROWTH CAPEX(1) CAPEX COMPOSITION (RUBm) (%) 16% New stores openings 5% CAPEX 2.9% 3.1% 3.6% RUB 45% 3.2% DC (% of revenue) 3,794m Refurbishments Including CAPEX 34% for buyout of 100 stores from franchisees IT and Other 6,167 COMMENTS 4,196 3,794 • Capex incr
Slide 38: Net Working Capital Dynamics
NET WORKING CAPITAL DYNAMICS NET TRADE WORKING CAPITAL DEVELOPMENT(1) ROBUST INVENTORY DAYS AND DAYS PAYABLE LEVELS (RUBm) Inventory days(4) (days) and Days payable(5) (days) % of Inventory days Days payable 1.5% 2.2% 4.1% revenue H1 2019 65 H1 2019 70 H1 2020 70 H1 2020 70 31,951 23,301 H1 2021 74
Slide 39: Superior Cash Flow Generation and Consistent Shareholder Returns
SUPERIOR CASH FLOW GENERATION AND CONSISTENT SHAREHOLDER RETURNS ROIC EVOLUTION(1) FCF DYNAMICS(2) (RUBm) % of revenue 10.8% 15.6% 9.9% 98.8% 12,946 91.2% 87.9% 10,549 6,903 9,541 6,054 3,803 H1 2020 FY 2020 H1 2021 H1 2019 H1 2020 H1 2021 Lease payments FCF (post-lease payments) Source: Audited IFR
Slide 40: Superior Cash Flow Generation and Consistent Shareholder Returns (Cont'd)
SUPERIOR CASH FLOW GENERATION AND CONSISTENT SHAREHOLDER RETURNS (CONT’D) NET DEBT / (CASH)(1) DIVIDENDS (RUBm) (RUBm) Leverage Payout NM 0.5x 0.4x -- 96% 100% ratio(2) ratio(3) 9,788 10,500 10,000 9,500 9,000 8,646 8,500 8,000 7,500 7,000 12,963 6,500 6,000 5,500 5,000 14,000 4,500 13,500 10,654 4,
Slide 41: P&L Summary
P&L SUMMARY In millions of Russian rubles H1 2019 H1 2020 H1 2021 Revenue 64,088 82,869 106,116 Growth, % 36.9% 29.3% 28.1% Cost of sales (44,200) (55,771) (72,968) Gross profit 19,888 27,098 33,148 Gross margin, % 31.0% 32.7% 31.2% Selling, general and administrative expenses (excl. depreciation an
Slide 42: Balance Sheet Summary
BALANCE SHEET SUMMARY In millions of Russian rubles 30.06.2020 31.12.2020 30.06.2021 ASSETS Non-current Assets 21,308 25,297 28,973 Property, plant and equipment 12,507 13,308 13,923 Right-of-use assets (non-current) 7,051 8,554 9,864 Other non-current assets 1,750 3,435 5,186 Current Assets 34,434
Slide 43: Cash Flow Summary
CASH FLOW SUMMARY In millions of Russian rubles H1 2019 H1 2020 H1 2021 Profit before tax 6,260 11,982 13,601 Cash from operating activities before changes in working capital 11,658 16,582 20,759 Changes in working capital (2,514) (1,088) (6,437) Net cash generated from operations 9,144 15,494 14,32
Slide 44: EBITDA and Net Debt Reconciliation
EBITDA AND NET DEBT RECONCILIATION EBITDA IAS 17 RECONCILIATION In millions of Russian rubles H1 2019 H1 2020 H1 2021 EBITDA (IFRS 16) 11,091 15,981 19,828 Rental expense (3,373) (3,650) (4,764) Utilities (74) (80) (76) EBITDA (IAS 17) 7,644 12,251 14,988 NET DEBT RECONCILIATION In millions of Russi
Slide 45: Strong Management and Corporate Governance
STRONG MANAGEMENT AND CORPORATE GOVERNANCE 6
Slide 46: Management Team with Proven Track Record
MANAGEMENT TEAM WITH PROVEN TRACK RECORD 2007-2009 foundation Subsequent hires 2020 and beyond ZERO ROTATION Dmitry Kirsanov Valery Ryazanov Inna Kondratyeva Oleg Shtainagel Vladimir Pogonin IN SENIOR MANAGEMENT Chief Executive Officer Sales Director Head of Category Management Logistics Director Re
Slide 47: 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 48: 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 49: 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 50: Appendix
APPENDIX FY Financials Summary
Slide 51: Strong Growth Algorithm
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 % wholesa
Slide 52: Efficient Cost Optimisation Supporting Strong Profitability
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% 28
Slide 53: Asset Light Model with Consistent Unit Returns
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 54: Tight Control and Continuous Focus on Working Capital
TIGHT CONTROL AND CONTINUOUS FOCUS ON WORKING CAPITAL EFFICIENT BUSINESS MODEL RESULTS IN CLOSE TO ZERO ... INDUSTRY LEADING INVENTORY DAYS AND DAYS TRADE NWC(1) AND… PAYABLE LEVELS Net trade working capital development (RUBm) Inventory days(4) (days) and Days payable(5) (days) % of revenue (1.6%) 0
Slide 55: Superior Cash Flow Generation, Strong Balance Sheet and Consistent Shareholder Returns
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 202
Slide 56: P&L Summary
P&L SUMMARY IAS 17 IAS 17 IAS 17 IFRS 16 IFRS 16 In millions of Russian rubles 2018 2019 2020 2019 2020 Revenue 108,724 142,880 190,059 Growth, % 34.8% 31.4% 33.0% Cost of sales (74,838) (96,919) (128,544) Gross profit 33,886 45,961 61,515 Gross margin, % 31.2% 32.2% 32.4% SG&A (excl. D&A) (20,037)
Slide 57: Balance Sheet Summary
BALANCE SHEET SUMMARY IAS 17 IFRS 16 IFRS 16 In millions of Russian rubles 31.12.2018 31.12.2019 31.12.2020 ASSETS Non-current Assets 12,071 18,930 25,297 Property, plant and equipment 9,108 10,882 13,308 Right-of-use assets (non-current) – 6,220 8,554 Other non-current assets 2,963 1,828 3,435 Curr
Slide 58: Cash Flow Summary
CASH FLOW SUMMARY IAS 17 IFRS 16 IFRS 16 In millions of Russian rubles 2018 2019 2020 Profit before tax 12,269 17,535 26,310 Cash from operating activities before changes 15,152 28,216 38,338 in working capital Changes in working capital 732 (2,428) (1,548) Net cash generated from operations 15,884
Slide 59: SG&A Breakdown
SG&A BREAKDOWN IAS 17 IFRS 16 IFRS 16 In millions of Russian rubles 2018 2019 2020 Staff costs 9,085 13,361 17,329 % of revenue 8.4% 9.4% 9.1% Amortisation of right-of-use assets -- 6,921 7,618 % of revenue -- 4.8% 4.0% Other depreciation and amortisation 1,476 1,772 2,247 % of revenue 1.4% 1.2% 1.2
Slide 60: EBITDA Reconciliation
EBITDA RECONCILIATION IAS 17 IFRS 16 IFRS 16 In millions of Russian rubles 2018 2019 2020 Profit for the period 9,128 13,173 17,575 Add: Income tax expense 3,141 4,362 8,735 Add: Interest expense 205 1,040 1,125 Less: Interest income (87) (194) (376) Add: D&A 1,464 8,695 9,865 Add: Foreign exchange
Slide 61: Impact of IFRS 16 Standard
IMPACT OF IFRS 16 STANDARD NET INCOME RECONCILIATION SG&A RECONCILIATION In millions of Russian rubles 2019 2020 In millions of Russian rubles 2019 2020 SG&A expense 27,879 34,932 Profit for the period 13,173 17,575 Rent expense and associated non-lease components net of 7,373 8,156 variable lease c