Release Date: September 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- OVS SpA (FRA:0OV1, Financial) achieved a solid like-for-like growth across all segments, outperforming the market which was flat or slightly negative.
- Upim, the company's second brand, saw a 7% increase in sales and is nearing its profitability level.
- The group achieved a global gross margin increase of almost 200 basis points, indicating strong financial health.
- The company expects continued gross margin growth in the second half of 2024, driven by a weaker dollar and lower markdowns.
- Strong sales performance in August and early September, with a notable 7% increase in August and up to 80% growth in early September.
Negative Points
- Negative weather conditions in May and June negatively impacted sales, although July was neutral.
- Higher marketing costs in the first half, including a EUR2 million investment in TV advertising, affected EBITDA.
- The company faced discontinuity in labor contributions, which were not confirmed for 2024, impacting costs.
- Inventory levels increased due to longer transit times between the Far East and Europe, partly due to the Suez Canal crisis.
- Net financial position worsened by EUR20 million compared to last year, partly due to dividend and buyback payments.
Q & A Highlights
Q: Can you clarify the recent like-for-like growth figures you mentioned, particularly for the last few days and the full month of September?
A: August saw a 7% growth, and the beginning of September was modestly positive. However, the last six to eight days experienced a significant surge, with figures like +80% and +70%. This likely means our like-for-like growth is more than 5% currently.
Q: What are your plans regarding the treasury shares?
A: We are considering various options, including the possibility of canceling them. We have a significant capital gain on these shares, and we are discussing the best course of action internally and with our board.
Q: Can you provide an update on the Goldenpoint acquisition?
A: We are still in the preliminary phase. However, we are happy with the cost synergies achieved so far, and we have identified over 30 new locations for expansion next year. The business plan's three main pillars—cost synergy, like-for-like performance improvement, and network expansion—are progressing well.
Q: What is the outlook for gross margin and EBITDA in the second half of the year?
A: We expect another gross margin increase in the second half, albeit slightly lower than the first half's 200 basis points. Factors include a higher percentage of lower-margin beauty items and a stronger dollar. However, lower markdowns and higher sales density in perfumery will positively impact EBITDA.
Q: Can you update us on your network expansion plans?
A: We plan to open around 10 new OVS stores and 10 Upim stores this year, with similar numbers expected next year. Additionally, we aim to open 20-30 franchised stores for both OVS and Upim annually.
Q: What is the expected tax rate for this year?
A: The tax rate for the full year 2024 will be in the range of 25-26%, similar to last year.
Q: Can you break down the organic performance in terms of price mix and volume?
A: The growth is mostly volume-driven, with prices remaining flat in adults and reduced by about 2% in kids. This price reduction has been positively received by customers.
Q: What are the details regarding the higher marketing costs and other expenses?
A: We had EUR2 million higher marketing costs in the first half due to TV advertising, which will not be repeated in the second half. Personnel costs increased by about EUR4 million due to one-off effects last year, and we expect a 6% increase in personnel costs for the second half.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
