Fnac Darty Sa Ord

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We're part of a unifying and highly rewarding movement. Returning to our performance to the end of September, it's in line with the dynamic results we've posted since the beginning of the year. ...varied offerings, product innovation, and high-value added services. These services continue to win over our customers and are making a significant contribution to our growth. We're approaching the closing of the offer to acquire UniEuro. We are convinced of the value creation that this unique strategic opportunity will bring to our group and stakeholders, I believe, in the success of this translation, which will enable us to confirm our position as European leader in specialized distribution. Over to Jean-Brieuc Le Tignan. Thank you. As Enrique has already mentioned, we're very satisfied with our performance this quarter. thanks in particular to the high single-digit growth of our services business. Over the first nine months, we posted sales growth of 1% on a reported basis and virtually unchanged on a like-for-like basis with market share gains in most of our categories. In the third quarter, the group posted sales of 1.8 billion euros, up 0.3% on a reported basis and down slightly by 0.8% on a like-for-like basis. The gross margin rate excluding the dilutive impact of the franchise and changes in the scope of consolidation, rose by 50 basis points over the first nine months of the year and by more than 100 basis points in Q3. Now, let's take a closer look at sales performance by channel, region, and product category over the period. First, by channel, the proportion of online sales remains high at 21%. The complementary nature of our shops and our digital platforms has once again increased. been demonstrated with click and collect accounting for more than half of online sales at the end of September. Now, by geography, the France-Switzerland region was virtually stable over the first nine months on an LFL basis. Once again, the group outperformed the French market, which remained in negative territory at the end of August, minus 2%, while our growth rate was virtually stable at the end of September, minus 0.4%. I'd remind you that the scope The effect corresponds mainly to the closure of three Manor shopping shops in non-French-speaking Switzerland, which took place in the first half of 2024. Let's turn now to the Iberian Peninsula. Sales posted an excellent performance of 5.7% in the third quarter, giving growth of 1.8% in the first nine months of the year. A better macroeconomic situation in the region has supported consumption. In Portugal, the integration of media markets consolidated from the 1st of October 2023, is continuing. And today, the 10 shops have generated sales of around 75 million euros. Lastly, the Belgium-Luxembourg region reported virtually stable LFL sales over the first nine months. Sales are benefiting in particular from sustained growth in services.

Let's look at developments by category. Let's start with publishing products. Books performed very well, buoyed by the craze for new reading trends. This performance did not make up for the sharp decline in gaming, still impacted by a particularly high basis of comparison in 2023, but with a much lower gross margin. Services continue to grow in all regions, with the ongoing rollout of our subscription-based offers, and in particular the rollout of DottyMax and Fnac V-Digital. Technical products grew slightly over nine months. In Q3, telephony sales slowed due to new product launches that got off to a more gradual start than last year. Computers benefited from the continuation of the renewal cycle, and innovations began in the second quarter. Sales of household appliances are up. The excellent momentum in small electrical appliances continues, driven by numerous technical innovations and new product launches in the cooking, beauty, and floor care sectors. Sales of large electrical appliances, on the other hand, remain down. Last but not least, diversification has performed well, with solid growth in the games and stationary sectors since the beginning of the year. Finally, a word on gross margin trends. It's important to note that apart from the negative impact of the dilutive technical effect linked to the franchise and changes in the scope of consolidation, the gross margin rate is up by more than 100 basis points in Q3 2024 compared with 2023. This increase is mainly due to growth in services and a favorable product mix, confirming the relevance of the everyday plan. The group benefited in particular from strong momentum in services, small electrical appliances, and books. Overall, for the first nine months of the year, the group posted gross margin growth of plus 50 basis points, excluding the dilutive effect of franchising and changes in the scope of the consolidation and recap. On slide four, I would like to come back to the strategic project of uni-euro acquisition. The bid is open until October 25, and we are very determined and confident in our ability to make a success of it. Let me remind you that the offer price of around 12 euros per share represents a 42% premium of a uni-euro spot price on July 15, 2024. The premium is also 20% of the average of analyst targets prior to the announcement. This valuation was deemed fair from a financial point of view by the two independent financial experts appointed by uni-euro's board of directors. Finally, We've lowered the minimum threshold for acceptance of the bid to 66.67% of Union Euro's capital. This reflects our determination to successfully implement the tender offer. This project is a structuring one for our group for the years to come and will enable us to play a key role in the consolidation of the European market. With Union Euro, we would form a group with sales of over €10 billion, €30,000. 30,000 employees in more than 1,500 stores. It would also be a value-creating transaction for all stakeholders, and we expect to achieve over €20 million in full-year synergies from the massification of purchasing in all brands. Finally, this operation will preserve our financial flexibility to pursue our capital allocation policy. In conclusion, We approach the end of the year with confidence while remaining focused and rigorous financial management. We are seeing the first encouraging signs on the macroeconomic front with inflation falling and interest rates beginning to come down. These factors, combined with the remarkable performance of our services business, have led us to raise our guidance for full-year operating profit. We now expect recurring operating income for 2024 to exceed €180 million compared with at least €171 million previously. We're maintaining our target of a cumulative operating cash flow of around €500 million. and over the 21-24 period with $180 million in 2024. Finally, we're very focused on the success of the major end-of-year sales event, FNAC's 70th anniversary, the 50th anniversary of Dottie's Contrat de Confiance Black Friday and Christmas. We approach the end of this year with determination, convinced that the group has solid assets to create sustainable value. Thank you for your attention. Jean-Brieu and I are now available to answer your questions.

Ladies and gentlemen, if you wish to ask a question, please press star on your phone. First question comes from from . You have the floor. Good evening. I have two questions on the gross margin to start with. Is the increase This high increase is also due to ticketing. As we know, that has an accretive effect. And as far as the guidance, did you factor in the fact that consumption will be low in France the next season? with all the political talk of higher taxes. Thank you. On the gross margin, it's not related to ticketing effects, because Olympic Games tickets have been sold well before Q3, so no impact there. Ticketing is doing better in Q3 than last year, but impact on the gross margin is very marginal. It's a very, very small, insignificant part of the 100 BPs that we were talking about. The origin of these 100 BPs is, first of all, services, particularly subscriptions, and then the product mix with small appliances, books, etc., Whereas gaming is not doing as well, but its gross margin and impact on company figures is lower. Product cycles and innovation and the test consumption scenario that we've integrated for the next few months. Consumer trust has been low recently, and those are long-term trends. So we're not anticipating a short-term significant impact on consumption. Thank you very much. Next question.

From Christian Devim from the CIC, the floor is yours. Good afternoon. Two questions. First, ticketing during summertime. I always thought that if competition was not allowed to do this sort of transaction, that was probably not to disrupt ticketing. So my question is, nowadays, 14 months after the official announcement, Do you have any news about competition on this transaction? Second question. This relates to government projects to raise taxes on sales between 7% and 10%. Should we take that on board or should we take anything else on board to take into account the impact on your profits in the coming couple of years. Let me take the second point first. Unfortunately, no. We don't have deficit companies in France, so we cannot use them. So we'll get the full tax raise, the full-blown tax raise. There's no technical components that would allow us to winnow this down. Of course, we don't know what the final picture is going to be. Yes, obviously. Ticketing, we keep waiting, both in Europe and Switzerland, We are about to finalize this transaction. We don't have the components to do anything about this yet. Thank you.

Next question is from Emmanuel Vigneron, HSBC. You have the floor. Yes, good evening. I'd like to go back to the gross margin. Could you give us any indications on the trend that we could expect in Q4? My second question would be as follows. Could you give us more detail about nature and decouverts and how well it performed? Thank you. We've seen that services had a very favorable impact on the gross margin. That's been true since the beginning of the year in Q1 and even more so in Q3. We expect a better-looking gross margin The beauty of services is that it's a very resilient business. It's the whole principle of the strategy that we've put in place and how it's been rolled out over time. So we feel that gross margin Q4 will look better than last year. We can't give you more details at this stage, but we're in the right territory. Okay. As far as Naturez Découverte, it's living its life. But the future of Naturelle Découverte will play out in Q4 because that's where there's a strong acceleration of sales. And we've prepared for that season with the team. So we'll see at the end of the year. We have to wait for the end of Q4 to give you a real visibility of Naturelle Découverte and its performance. Thank you.

Let me remind you that if you want to ask a question, you should push down on the star one button of your phone. We have another question now from Alexandra Pugliaetta from Kepler. The floor is yours. Good evening. Two small questions. On the revising of the guidance, Could you explain what happened? Why was it better? Was it because Spain or some other region performed better? Is that the reason for this improvement? Second question. Could we have an update on this? Lauren Puppies and so on, are they up to your expectations? Or is there any new component, new element you could tell us about? Let's start with Wiven. It's performing quite well. It's exactly what we expected. Figures now. You see, it's a beginning business. So it's still very small, but it is in line with what we expected. It's doing well. So we're happy with this. We will have more information in the full year results. On guidance, the revision of guidance, as we said before, it's about the same as last year. Consumption is a little better. Inflation is down. And also we see a return to a more normal background context. We have a strong cost control. Inflation is going down. So we have more impact. And then another point is the gross margin, which is pulled by services. Currently, we're looking at the services model, which is beginning to be more profitable. So this depends less on the current economic moment. It depends more on our products. But we can tell you more about this at the end of the year.

Next question is from Marie Faure of Bernstein. You have the floor. Good evening. I have a question about the gross margin. Just wanted to know, you know, in Q1, you had seen the dilute effect of franchise by 20 basis points. Should we expect something similar for the rest of the year? Yes, that would be the order of magnitude. It varies a bit because it depends on how much has been stored in the franchises. But, yes, around 20, 25 basis points, there's no reason for it to figure to be significantly different. And that's essentially from the reason why the guidance was revised. Are there any other reasons? As Alessandro has said, the service model is becoming increasingly profitable, and the inflationary environment of September 1.2%, which is much easier for us to control, we're used to those kinds of environments when last year we had inflation of about 4% to 5%. It's easier for us to control both the cost and gross margin, particularly in light of the fact that our service is increasingly important.

Thank you. Let me remind you that if you want to ask a question, you should push the star 1 button on your phone. gentlemen we have no more questions so you let me give you the floor back well thank you very much for your time and hopefully we'll talk to you soon ladies and gentlemen this concludes the phone the conference call today thank you for being in and you can now