Fnac Darty Sa Ord

Ladies and gentlemen, good evening and welcome to the conf call for the presentation of FNAG D'Arti 2025 half-year results. Mr. Enrique Martinez, FNAG D'Arti Chief Executive Officer, and Jean-Brieuc Le Tignier, Chief Financial Officer, will be our speakers today. The floor is yours. Thank you very much. Good evening, everyone. Thank you for being here. We had to present and comment the 2025 half-year results. First, the agenda, slide three. Jean-Brio is going to detail the results of the half-year. This is the first half-year since the Italian integration of Unieuro. We will then comment our foresight, our perspectives, et cetera, our outlooks, and we will take your questions at the end. On slide five, We are going to comment the financial results on the life-or-life basis versus 2024, which means that we are going to include the integration of UniEuro and the deconsolidation of the ticketing business. So this is new scope of NAGDATI following the acquisition of UniEuro. First half sales are encouraging and they reflect the strong sales momentum of the second quarter against the backdrop, which unfortunately remains rather lackluster, notably because the recovery in consumer spending in France continues to lag behind. In other European countries, we can see the first signs of a recovery. but it is lagging behind in France. Gross margin rose by 60 basic points, reaching 28.9 percent. It is mostly driven by the good sales momentum of our service activities in all geographies. This is a key element of our strategic ambition. As you know, it is at the heart of the Beyond Everyday Plan, and I will say a few words about that later. I will mention the main components. improved slightly at €189 million for the half year. You see the roadshed, which is negative, as usual, at minus €56 million for this half year. This is mostly due to the high seasonality of the group's business and the EBIT margin, which is mostly coming in the second half of the year. Moving on to slide six, a few words about the key macro trends on the revenue. If we start with services, so double digit growth, very good momentum in all of our perimeters, in all of our geographies. So this is a strong contributor to the group's margin over the period. Editorial or cultural products benefited from a great momentum, generally linked specifically to the launch of the Switch 2 gaming console at the beginning of June 2025. We only have a few weeks of activities involving the Switch 2. As you know, for years, the group has been investing a lot in order to be seen as a key and credible stakeholder in this category. And I believe that we are starting to bear fruit of these efforts because for the first time in France and in a few other countries, but most specifically in France, we are the top seller for the Switch 2 console. More than 50,000 units have been sold since the launch. This is a great achievement for the team. It's a very good start and it really bodes well for the future of this perimeter. Small electrical appliances also have a strong growth trajectory. It is buoyed by innovations. You see it in the various categories. You have the LED masks that are becoming quite interesting. You also have the air fryers and the robot vacuum cleaners, strong momentum also for anything that has to do with heat, fans, for example, which really, really drove this category for this half year. So large electrical appliances are buoyed by air conditioners, So we were really able to seize this opportunity. And as you know, the summer was very, very hot, especially compared with last year. You have a series of summer heat waves that really buoyed the activity. Something that is interesting We are looking at a rebound, a recovery in the real estate market, and so obviously we have more and more sales of fitted kitchens, especially Darty Cuisine is becoming a more and more important brand, and we are gaining market shares, a good trend for this excellent half year, and also diversification, so growth of toils, stationery categories. We mentioned the Pokemon cards, which are very, very popular with our young customers. A lot of business opportunities as usual. Slide seven. We mentioned it briefly. You know that having a stable and sustainable growth, robust growth of the web activity is one of our key ambitions. And the first half of the year was particularly good. We have online sales that rose sharply by 7.7 percent and they represent 21 percent of total group sales. The traffic grew as well and it is quite interesting to see the momentum of the marketplace where we see the contribution of our fulfillment activities because there is more and more volume that is being fulfilled by whether in France but in other countries soon. So major contributions of repackaged or yes, repackaged products and e-commerce and repackaged goods are particularly important and we are one of the only stakeholders able to benefit from those. Only channel sales account for almost 50% of the group's online sales. It's very important. They are less developed at UniEuro, but we will address that later. And I imagine that there will be some opportunities in the future. We'll tell you about the outlook. But generally speaking, even with a lower contribution from UniEuro, we are still close to our target of 50%. Moving on to slide number eight. If you were not able to follow our announcement in June, on the 11th of June, we presented our new strategic plan for 2030, Beyond Every Day. It was rather well received, very well received, actually. It focuses on our – it showed a very clear set of priorities and roadmap. We want to become a benchmark player in high-value-added products, while remaining rather popular in our existing markets. We want to accelerate the rollout of subscription-based services for the home with two different brands. And we also want circularity, so all repaired, repackaged products, et cetera. This is our model for the future. Obviously, when... We want to set market standards in omnichannel customer experience. There is a strong focus to come on in-store experience. The shops are going to change to be adjusted in order to perform even better and to offer a better experience to improve also our digital experience. And the third avenue, It's about deploying the group's expertise with partners in new geographies. We want to develop our business beyond our final customers, and we want to offer something to our industrial partners. This is a rather ambitious plan. It is already ongoing because there is a whole onboarding phase that already started. And so there is a whole roadmap that is being rolled out. And we will regularly tell you more about initiatives, about things that are going to be done. But the plan is already well alive and being rolled out. Now, a few words before giving the floor to Jean-Brieuc, a few words about Italy. The first half year of integration, we are very happy with the way things have been organized, things have been happening. There's a technical integration and human integration of the UniRO staff. I sometimes feel that we've been working together for many, many years, which is an excellent sign of a proper integration. We see that this integration is going to bear fruit. It is going to enable us to ramp up our business abroad, not only France and Italy, but we're also going to bring all countries together. We were able to confirm our objective of 20 million euros in synergies by the end of 2026. We can confirm this initiative or this target. There are things that are starting to be formalized, so to speak, for 2026. we are expecting to go even beyond 20 million euros in synergies. This is a very strong and dynamic half year as well for the Italian market. There is a strong transformation project to transform the whole supply chain and logistics chain, the opening of a second large warehouse near Rome, more than 50,000 square meters that is already operational, so we already opened it, and this is a way to improve the quality of service for Uniro. It is also a way to strengthen its presence in the north, in the center, well, in the center and in the south of Italy, sorry, center and south. This is a great opportunity to continue to ramp up our business, ramp up our performance, and develop the network. There are two main platforms at the moment, one near Rome, Collefero, and one close to Rome. and another one to serve Sicily, etc. And there are 33 home delivery centers to deliver goods to the customers. We have the optimal structure to address the Italian market. We're in very good conditions. This is all I wanted to say. That's it in a nutshell. I am now going to give the floor to Jean Brieu, who will tell us more, and I will give a conclusion at the end.

Thank you, Enrique. Good evening, everyone. Let me start by reminding you that following the transformative acquisition of UniEuro, the group has been reporting its financial information since early 2025 across two geographic zones, France and the rest of Europe, which includes Italy, Belgium, Luxembourg, Portugal, Spain, and Switzerland. This new segmentation gives a clear picture of the group's growing European footprint. Compared to the pro forma data we discussed during our full year in Q1 2025 results, we also decided to take into account the deconsolidation of the ticketing business, From now on, I'll be commenting on the evolution of our results based on 2024 comparable figures, which include UniEuro and exclude ticketing. To ensure proper comparison, you'll find restated historical data in the appendix to today's press release. Let's look at revenue first on slide 11. We're pleased with the group's performance, which is fully in line with our expectations. Q2 was particularly strong with solid momentum across all geographies. on a like-for-like basis. Revenue grew by 2.5% in France and 1.5% in the rest of Europe. Gaming was a strong driver, as Enrique said, especially with the successful launch of the new Switch gaming console, and weather conditions also played a very favorable role in boosting home appliance sales. This performance confirms the group's ability to gain market share by supporting product launches and meeting customer expectations effectively. In total, group revenue for H1 2025 stands at €4.5 billion, output 0.7%, like for like. By channel, as Enrique mentioned earlier, online sales grew by nearly 8%, now accounting for 21% of total revenue, with half of that driven by click and collect. By category, Trends are broadly similar across the different countries. Services continue to grow at a double-digit rate in most geographies, driven by the expansion of our offerings, including Darty Max and Snack Digital Live. Diversification is also progressing with double-digit growth in toys and stationery. Our new mattress offering, launched earlier this year in our integrated stores, is off to a very promising start and expanding rapidly. Home appliances were up nearly 2% versus H1 2024. Small appliances continue to grow, supported by innovation in areas like beauty tech and floor care. Large appliance sales are also going up, boosted by favorable weather and strong performance in fitted kitchens. In editorial products, gaming delivered excellent results thanks to the Switch 2 launch in early June 2025. Book sales were mainly driven by the popularity of thrillers taking over from the romance category, which is now normalizing. Lastly, tech products declined due to continued softness in the PC market. That said, the end of Windows 10 support in Q4 is expected to drive a refreshed cycle. Tablets, smart glasses, and photography posted strong growth. New phone sales were down, but refurbished devices performed very well. TV sales declined due to a high comparison base from 2024, which included the Euros and the Olympics. Solid sales performance across Europe on slide 12. Let's look at regional performance. In France, revenue grew up 0.5% in H1, including 2.5% in Q2 alone. According to the Banque de France data published yesterday, Fnac data continues to outperform the market overall. The scope effect over the period reflects the permanent closure of our Champs-Élysées stores. Moving on to the rest of Europe, revenues up 0.9% in H1, including 1.5% in Q2, though trends did vary by country. In Italy, the like-for-like revenue was stable at 0.3% in H1, with a slight Q2 decline of 0.7%. Strong growth in online services couldn't fully offset the drop in tech product sales, particularly phones, TVs, and PCs. Belgium and Luxembourg saw a 2% like-for-like drop in H1 despite stable Q2 performance. The region remains under pressure due to intense competitive activity. Portugal posted strong like-for-like growth of 4.6% in H1, including 8.3% in Q2 alone. On light send, sales were particularly dynamic, up more than 27% year-over-year. Spain delivered very strong like-for-like growth of 7.4% in 8-1 and 14.3% in Q2 alone. All categories posted gains and services were up double digits. The scope effect mainly reflects the temporary closures of our Callao and Valencia-Bonaire stores for renovation. Lastly, in Switzerland, revenue rose 1.8% like-for-like at the end of June, including 4.5% in Q2, driven by strong double-digit online growth. Let's turn to growth margin on slide 13. At first glance, it's down by 210 basis points in H1, mainly due to the inclusion of UniEuro, which has a structurally lower margin than the group, and the deconsolidation of ticketing. On a comparable basis with UniEuro included and ticketing excluded, gross margins actually up 60 basis points and 70 basis points, excluding the impact of franchising. This good performance is mostly driven by growth in service activities, particularly DartyMax, which offsets the dilutive impact of franchising. Moving to the rest of the P&L on slide 14, as I just explained, gross margin is up on a comparable basis. Operating costs reach €1,351,000,000 in H1 2025, up €31 million versus the comparable 2024 period. The impact of high real estate costs and general inflation has been largely offset by the effectiveness of our performance plans across the group's divisions. As a result, EBITDA is slightly up compared to last year, Current operating income came in at minus 56 million euros versus minus 49 million euros net one in 2024, reflecting higher depreciation rates. charges, particularly under IFRS 16. Non-recurring items totaled €11 million, minus €11 million, which is back to a normalized level. As a reminder, last year's figure included about €11 million in restructuring costs, half of which were linked to nature et découverte, and roughly €15 million in fair value adjustments of IT projects. All in all, operating income for the period stands at minus 67 million euros, an improvement of about 10 million euros year-on-year. Financial expenses totaled 57 million euros, up 23 million euros from last year. This reflects higher net debt cost driven by the group's new financing terms, an increase by as far as 16 related charges. After accounting for a tax gain of net income from continuing operations stands at 86 million euros, an improvement over last year's minus 95 million euros. Let's now turn to free cash flow on slide 15. Operating free cash flow, including IFRS 16, came in at 878 million euros versus 736 million euros at the end of June 2024, comparable, which is in line with our expectations. This change is mainly due to a 24 million increase in working capital and 22 million higher net capex. In Italy in particular, saw an increase in investments with the opening of the new Calderferro warehouse, which Enrico mentioned, and several new store openings. By comparison, at the end of June 2024, net capex showed a positive 21%. Million euros thanks to asset disposals including logistics warehouse in the Paris region. And now a word about our debt maturity on slide 16. The group's financial position remains sound and robust with 1.5 billion euros in equity at the end of H1. Net financial debt excluding IFRS 16 to the 779 million euros is traditionally higher mid-year due to seasonality and includes 109 million euro fine from the ADLC. In March, we successfully issued a €300 million bond, maturing in April 2032, with a fixed annual coupon of 4.75%. The gross proceeds were used to redeem part of our 2027 convertible bonds. Over 77% of outstanding Oceans were tendered, representing €147 million. At the same time, our banks agreed to extend the maturity of our revolving credit facilities, RCS and DDTL, worth €600 million in total, to March 2030, with two one-year extension options for each of them, taking us to March 2031 and potentially March 2032. This secures the group's liquidity and fully covers both the 2029 and 2032 maturities. Snagdutty is rated S&P Global Fitch Ratings and Scope Ratings. Just a few days ago, Standard & Poor's reaffirmed its BB Plus rating with a stable outlook following its review of our new strategic plan and operating performance. Fitch and Scope also have their BB Plus and BBB ratings, respectively both with a stable outlook. So in summary, we've extended our debt maturity and secured our long-term liquidity. Lastly, for the first year in a row, the group paid out a dividend of €1 per share, representing €40 percent of net income from continuing operations. The dividend is paid in cash on July 4th for a total amount of 29.4 million euros. And with that, I'll now hand it back to Enrique to wrap up the presentation.

Thank you. As you've understood, we are pleased with this first-half performance. As we announced, we have broaden the scope of our objectives for the full year 2025. This outlook updates the ones communicated in our financial results 2024, which concerned only the FNAC-DAR-T perimeter. So, we now expect our operating margin to increase by 15 basis points by 2025. This should reach 2 percent at the end of 2025. compared with 1.8 percent in 2024 on a like-for-like basis, so including Uniro and excluding the ticketing business. You are familiar with the impact of the operating margin because the acquisition of Uniro decreased the operating margin of the group, and so did the consolidation of the ticketing business. We are, of course, very confident We believe we are going to have a success by the end of the year. The team has always organized itself in order to face different challenges. And obviously, and I are available to answer your questions. Ladies and gentlemen, if you wish to ask a question, please press star 1 on your telephone keypad. We have a first question from . The floor is yours. Yes, good evening to both of you. Two questions on my side. Number one, regarding the scope effect, can we expect to see another perimetral scope effect strongly linked to the renovation of shops in Q3 and more specifically in H2? Second question, more generally speaking, it has to do with your relationship with suppliers. Given what is still happening, given all the uncertainties regarding tariffs, did you notice any behavioral changes from your suppliers during Q2? My question is, do suppliers reallocate stocks that were supposed to go to Northern Europe? Are they redirecting stocks towards Europe instead of North America? Thank you for your question. Regarding the scope, well, a few shops are involved. They were being renovated, and there is a closing of the Champs-Élysées store. Good recovery in other Parisian stores. However, they were able to get their customers. In the Iberian Peninsula, We are expecting the opening of a new shop in early September. We will be ready for the last four months of the year. As for the store in Barcelona, there is one that has been fully renovated and it has strong performance, and the other one is going to come later in the year. So I'd say that the Q3, a little bit of impact from the scope. Q4, not really. and we are excluding the share of business that has been redirected from the Champs-Élysées to other Parisian stores. As for suppliers, suppliers are like everyone else. There is a lack of visibility for everyone. Nobody knows what the final tariff policy is going to be, what the American administration is going to decide. At the moment, everybody is being careful, being cautious, conservative. We did not notice, we did not observe any strong changes, no changes in our relationship between Asia and Europe. So to date, I must say that we did not observe any impact, neither positive nor negative ones for our suppliers or manufacturers. Thank you very much.

La prochaine question.

Our next question is from Christian Delim from CIC. The floor is yours. Good evening, gents. Two questions. Number one, it has to do with France's operating income, minus 45 million euros, so it is worse than H1, 2024, and 2023. My question is the following. I know this is H1, so it's not necessarily particularly relevant, but in France, we have a great... sales performance, this is the most mature financial performance. So this, is this a one-off or Are there losses from that you had declared that are going to have an impact? So what can you say about France's profitability? France was supposed to be in a good position, and it's not great. And the second question, we do not have the detail of the financial expenses, but minus 47 million euros for the whole year, we can do that times two, and we will have a rather accurate estimate of what we can imagine for the full year end. Right, so regarding your first question, There's been a lot of rental costs that have been increased. We're indexing in Q2. There will be less of an impact in H2, so it is just because of the economic situation and there are performance plans that are more active in the H2 than in H1 in France. So no concerns to be had there. Very well. As for financial costs, financial, well, yes, you can't really multiply by two because we have less at the end of the year. So there will be less than, it's not going to be that times two. Very well, thank you. But it will depend on the final indexation of rents because you know that we have interest rates and the theoretical financial cost of the rents to take into account. And regarding ? Anything you'd like to say about that? No, no impact. The impact on the France business has to do with another business. Nothing major for . The recovery plan that was announced is being rolled out. We are seeing encouraging signs already. It's still too early to talk about it, but it is not because of natural decouverte that we have a worse result for this half year for France. And as you know, the half year result is not necessarily telling, doesn't reflect the four-year performance. But we are quite confident. And in France, the share of margin on the growth of services is very, very strong. And in H2, we are going to continue benefiting from this. So with a good Q2 in France, we feel rather confident. We know that there will be a lower negative effect on cost and we will get back to a normal model for our results. Thank you.

Just a reminder that if you want to ask a question, you should press star 1 on your phone.

Thank you.

Gentlemen, we have no other questions and so I'm going to give you the floor, give back the floor to you. Yes. Thank you for your attention. Wish you a great vacation if you're on vacation and we'll be happy to see you again for, you know, exchanges about Q3 and perhaps other conferences by that time. Thank you for your attention and good evening.

Ladies and gentlemen, this concludes today's conference call.

Thank you for your attention. You may now disconnect.