Maisons Du Monde Sa

Good morning to all of you, and welcome to Maison du Monde's full year 2021 results call. I am Clémence Mignon-Duperrot, Head of Investor Relations, and I'm delighted to be with you today. I am with our CEO, Julie Valbaume, and our CFO, Régis Mathieu, who will be making today's presentation. It will be followed by a Q&A session. You have no doubt seen the press release we issued this morning. The conference call slides are available on our website. This call is also being webcast, and a replay will be available on our website later today. All listeners are reminded to read the forward-looking disclaimer on slide two. I will now turn the call over to Julie Balbon.

Thank you, Clément, and a very warm welcome to Maison du Monde. We are happy to have you with us. And I'd like to take this opportunity also to thank Chris Whelton for his contribution over the past couple of years and to wish him well in his future projects as he prepares to do so. Our agenda for today is on slide three. I will begin with an overview of the key business and strategic highlights for 2021, Then Regis will take you through our numbers and I will return to discuss our priorities and outlook before opening the floor to your questions. So let's begin on slide five with the year's highlights. Well, in short, 2021 was an excellent year for Maison du Monde, despite the challenging context. We operated in a complex environment with persistent headwinds from the COVID crisis. On one hand, lockdown and restrictive measures continued in several markets, In Germany, for instance, our stores were closed for a total of five months out of 12. Supply chain also continued to be materially disrupted. That said, thanks to our strong model and the focus and commitment of all our teams, we made major advances on our strategy and business priorities. On strategy, let me mention three highlights. First, we formalized our company purpose, our raison d'être, that captures Maison du Monde's history its culture, and also its aspirations. It is inspiring everyone to open up to the world so that we create together unique, heartful, and sustainable places to live. To us, this purpose means far more than mere words. All the company's roadmaps have been aligned around this meaningful project. Investments have been committed, and bold choices have been made, all with a long-term view. We firmly believe that combining performance and sustainability is the way to go to best operate in the world of tomorrow. Also, we held last November our Capital Markets Day, during which we reaffirmed our unique, inspirational, yet affordable positioning, powered by our distinctive only channel model. We also shared our vision to become the most desirable and sustainable home and living brand in Europe. as well as our ambition to create sustainable value for all our stakeholders through a focused and return-oriented approach. We presented our medium-term financial targets and also our ESG goals, which we will remind you of later in the presentation. In addition, we announced the investment of Modani in the U.S., reducing our stake to 15% from 70% by selling a controlling stake to Optimal Investment Group. This decision is fully in line with the strategic review that we launched last March and reflects our decision to focus our attention on Maison du Monde's existing positions in Europe, where we see better value creation opportunities. With our remaining 15% stake, we will be able to continue to observe evolutions in the U.S. market and also benefit from future value creation as Modani continues its growth. Concerning operations, I will mention four key highlights that will not dwell on, as I will develop them in the coming slides. They are improved brand awareness, strong customer dynamics, increased digitization, and international expansion. In terms of financials, again, I will not steal Richard's thunder, as he will be presenting our financials shortly. But the key message here is that a strong top line growth and rebound in profitability translates into record high earnings per share, and a proposed dividend that would also be the highest ever paid out by Maison du Monde if approved by our shareholders at the upcoming general assembly. On slide six, we look at some operational highlights that demonstrate the progress we've made on some of the key strategic pillars that we presented at our CMT. We presented our ambition of strengthening our direct-to-consumer love brands, and we are clearly making headway. A 2021 BVA survey showed that we were among the top five home and living brands in terms of unaided awareness in three out of four largest markets. Also, our number of active customers was up 22% in 2021 to more than 7.5 million. We said we would develop an omnichannel model, and that's happening as well. Digitally enabled sales accounted for more than half of our total sales, with 33% coming from online and 20% from click-in store. Our marketplace kept ramping up, and GMV reached €61 million in 2021, or 25% of total online GMV in France. And as we grow, we are also accelerating our part-European development, with international sales up 19% in the year and 18 growth store openings in a total of 21 made outside France. I will return to all these aspects later in the presentation. Slide 7 focuses in greater detail on how this translated in terms of financial performance. And as you can see, our 2021 metrics were at the top hands of our upgraded guidance for the year, or even beyond. Concerning top line, we guided growth in the low teens, and we delivered 15%, excluding modalities. On EBIT margin, our guidance was between 9% and 9.5%, and we delivered the top end of the range, that is 9.5%. And on free cash flow, we said we would deliver materially above 2020 level, and we did more than that with cash flow up 69% to €90 million. This translated into record high earnings per share of €1.52, excluding more than itself, representing a 58% increase compared to 2020. And on the back of this strong performance, we will propose to our shareholders at our AGM in June to approve a record dividend of $0.55 per share. Well, all in all, it is a year of clear rebound for Maison du Monde. And this set of financials illustrates the strength of our omniscient growth model and the capabilities of our teams to navigate in the complex and moving context. Now let's zoom in on some operational highlights, beginning with our brand on slide 8. Our direct-to-consumer brand is a key asset, and in 2021, we made further strides in strengthening what already is a love brand, one that is part of consumers' everyday lives and one that is differentiated in the home and living space by its creativity, inspiration, and engagement. Concerning creativity, we are in our second year of our capsule collections in collaboration with inspiring designers. And this line mentions two. For our 25th anniversary, we teamed up with the René Russique duo to present a capsule collection of one-of-a-kind upcycled products, whose profits were entirely donated to the Fondation des Femmes that combats violence against women. And next in line, coming next spring, is Lisa Gachet, the founder of the Make My Limited Fashion brand, who has designed a collection of desirable and sustainable objects, such as lamps, vases, dishes, and textiles. They will be available as of May on our website and in select stores. All the profits of this capsule collection will go to En Avantout, an NGO that fights for gender equality. We are also working at developing new innovative and responsible fabrics, as we did last year with recycled pads for our outdoor collection. Inspiration was nurtured by our interior design services. Rinov achieved another year of strong growth with a customer base up by 50% year-on-year to reach 30,000 customers, and Saltware up 60% to reach 4.5 million euros in services sold. Engagement came from our strong bonds with our communities and our reinforced CSR profiles. On social media first, our number of followers on Instagram rose another 17% to reach more than 5 million across Europe. and over 280,000 stories we share. That is nearly 800 every day. As for CSR, Maison du Monde was featured among the top 10 preferred brands in France across all categories in the first OCNC's CSR-oriented ranking. The key pillar of our distinctive business model is our omnichannel strategy. And on slide nine, we focused on how we leveraged our digital performance. We continued to grow our online sales in 2021 with another year of double-digit growth at plus 15%. Over two years, our online sales are up 46%. And if you look at online GMV, while it grew by 20% in 2021. In terms of products sold, we saw strong sales of outdoor, sofas, and frets. Online performance was very different between H1 and H2, largely due to the comparable base. H1 benefited from easier comps as the pandemic-related ramp-up of digital was only just starting, and online sales were up 45% in H1. H2 had a much higher comparable base, so sales were down 16% year-on-year as online traffic normalized and sales were more balanced between sold and online. But what's important is a continued growth in the year on an already high base, demonstrating that our onshore model keeps getting traction. This strong omnichannel model strategy does show results on customer side as well. Our active customer base grew by another 22% to reach more than 7.5 million, and the number of new customers grew by 30%. Also illustrating the ramp-up of our approach, click-and-store GMV was up 13%, and click-and-collect GMV has almost doubled over the years. Finally, we have launched new delivery options to meet customers' needs, including 48-hour and 24-hour home delivery, 4-hour click-and-collapse, and also pickup points for large items. Another key part of our online offer is our current marketplace, and on slide 10, we show that it's rapidly ramping up and rising in popularity in the home decoration space. GMV in 2021 reached 61 million euros, representing 24% of French online GMV. GMV in December 2021 was up 42% compared to December 2020, the marketplace's first full month of activity. Being an important part of this omnichannel strategy, we have started to roll out our marketplace in stores where customers can access it through dedicated tablets. At Iran, this was possible in 85 of our French stores. The development of our marketplace is underpinned by its ever-growing catalog, an important addition to La Sienne with our kids categories. Overall, we more than doubled our offering. We added 140 vendors, bringing the total to over 300. And at the end of the year, the marketplace offered over 760 brands and nearly 100,000 products, from 6340,000 one year ago. The marketplace is fully integrated to the Maison du Monde ecosystem and offers customers a seamless experience. As a result, customer satisfaction remains consistently high with a rate of 4 out of 5. We pay close attention to maintaining this rate at a level comparable to Maison du Monde as it is key for our brand image as well as customer experience and loyalty. And all this turns into higher sales. we showed that the Maison du Monde customer who buys in the marketplace spends on average more than 50% more than a Maison du Monde-only customer, whether that is on Maison du Monde or on marketplace products. The vendor retention rate is also extremely high at 98%, and our partners clearly see the benefits of our being under Maison du Monde's brand. For our top 20 vendors, 25% of their sales already comes from our marketplace after only one year of operations. The other brick in our omniscient strategy is, of course, our stalls, and you can see on slide 11 that we ended the year with 357 stalls in Europe, five more than one year earlier. Our fourth quarter was particularly active as we opened eight new stalls, two each in Italy, Portugal, and Spain, and one each in Belgium and Switzerland. During the same period, the group closed one stall in France. Taking a four-year view, openings in 2021 were again concentrated on markets outside France. On a net basis, Maison du Monde closed nine stores in France and opened 14 in the rest of Europe. To go into more detail by geography, in France, our footprint optimization strategy led us to close 12 stores and to open three. In the rest of Europe, we opened 18 stores and closed only four. Our openings included our first store in Austria, bringing the number of markets in which we operate as an omnichannel player to nine countries. Our total store network commercial area reached 433,000 square meters at the end of the year, up 13,000 square meters, or 3%, compared to the year before. Slide 12 focuses on our part in European expansion. The pie charts on the left show that France still contributes to more than half of ourselves, but the share of international is growing consistently, from 43% in 2019 to 46% in 2021. Nearly half of this growth on international markets came from online. We are seeing a strong performance in mature markets, with Spain, Italy, and Belgium growing at around 20% year-on-year. At the same time, new markets are ramping up at a fast pace. In Germany, we did saw sales growth, despite the fact that stores were closed for nearly half the year. As digital, more than offset the lost store sales. Compared to 2019, growth in Germany exceeded the 20%. In Portugal, sales almost doubled, with two new stores opened in Q4. I'll wrap up my opening section on slide 13 with a look at the further progress we made on ESG in 2021. On the environmental front, our sustainable product offering is developing rapidly, and products made from sustainable woods were up 21%, while those made from sustainable textiles were up by an even stronger 36%. We continued to advance on energy efficiency, as 97% of our stalls are now powered by renewable energy. And all our French stalls got ISO 50001 certified. And we're also making major headway on waste reduction and green logistics. At our repair center, the number of repair or reconditioned products was up 85%. In total, more than 50,000 products We are put back in sellable conditions as part of our circular economy approach. As you know, we are committed to reducing our greenhouse emissions, not just in our own operations, but at our partners as well, what is known as Scope 3. In that spirit, we did take part in the FRED21 initiative that aims at reducing carrier emissions. And we are also one of the first 15 e-merchants in France to sign last summer the French e-commerce federation FEVAS, responsible e-commerce charter that commits us to greener logistics. On the social front, our first responsibility saw us as employees. In order to reward them for their exceptional commitment and also support their purchasing power in the current inflationary context, we have decided to grant an exceptional 500 euro bonus to all group employees in Europe, whether they have been working full-time or part-time without. We have also included our amputees in this initiative. The idea is to be particularly supportive of our small-wage colleagues, again, in line with our company purpose. We also launched important diversity and inclusion initiatives. We are signatories of Enterprise Policy Diversity Charter that aims at fighting discrimination, and we also launched a mentoring program for our leadership group to help young people coming from underprivileged backgrounds to access the workforce. All our efforts have been recognized by a number of key players in the sustainability world, including MSCI, which ranks us number one in home retail, Sustainalytics, and VGO Airis, both of which rank us in the top 5% of patterns. With that, let me hand over to Brigitte for the financial review.

Thank you, Julie. Good morning, everyone. Happy to be with you again this morning. I will start on slide 15 with our classic 2021 sales, which posted strong double-digit growth despite the disruptive environment that Julie has just described. This slide shows the building blocks of the growth. With the disposal of Modani, we are restating our 2020 sales from the 50 million contribution from Modani to create a comparable base. So the starting point is 2020 full-year sales of 1,135,000,000. Life-or-life growth was up in double digits at more than 13%, adding €148 million in sales. Development added another €23 million, split roughly evenly between the contribution of stores, open in 2020 for €11 million, and stores, open in 2021 for €12 million. As we have already announced at the end of Jan, this brings us to our full-year sales of a little more than €1.3 billion, and the 15% reported growth was thus above our guidance of growth in the low teens. Let's go into detail, slide 16. On this slide, we break down our sales by quarter of a two-year period. Slide difference with what you have seen before, as the figures shown here have been restated for Modeni. Sales were up in every quarter of 2021 compared to the same quarter of 2019, with double-digit growth in the first three quarters and slow growth in Q4, which face a more challenging comparable scale. Overall, we are up in double digits over the pre-pandemic period, with our 2021 full-year sales up 11% versus 2019, of which 6% like for like. If you look at our sales performance in greater detail, you will see that growth was actually uneven over the year. 2021 was really a tale of two halves. As you recall, In the first half, we posted sales of 634 million euros with very strong growth of 35% versus H1 2020, as we, of course, were cycling over a low base due to the pandemic. In the second half of 2021, our sales of 672 million euros were broadly stable versus the same period in the previous year, as we faced headwinds from low product availability, notably in furniture. During this period, Store sales grew 8% and benefited from a favorable comparable base in the fourth quarter, as French stores were closed in November 2020. Online sales, on the other hand, declined 16% to 170 million and represented, at the end, 25% of our total second-half sales. This reflects an exceptionally high comparable base and a return to more normalized development of online traffic. Despite this web traffic slowdown, we perceived a positive Christmas season, proving us right in the choices we had to make earlier in the year regarding supply. We will come back to this later. Slide 17. We take a closer look at our sales performance by categories, channels, and geographies. And you see that we can be very satisfied with our performance as it shows double-digit growth across the board. Let's start with categories. furniture sales were up 11%, reflecting the strength of our collections and strong sales of products held in inventory, notably outdoor and sofas. However, the category was penalized in the second half by limited availability and longer delivery times. Compared to 2019, furniture sales were up 4%. Let's keep in mind Supply was already challenging in 2020, and we had to prioritize shipments in the second half, which we did in favor of decoration to secure our Q4, limiting already growth potential for furniture. For decorations, sales, which carry higher margin, were up but an even higher 18%. Demand was strong in this category, and Maison du Monde performed well, thanks to rigorous and agile management of sourcing throughout the year. This notably enabled us to secure the Christmas season, which is, as I just said, a strong season for decoration items. On a two-year stack, sales were up 16%, with a cagger over the period of 8%. By channel, store sales were up 16%. This growth, of course, reflects the fact that stores were open more in 2021 than in 2020, 85% of the time versus 75% in 2020. Compared to 2019, stores achieved broadly flat sales despite several weeks of closure of our like-for-like stores this year in 2021 and also smaller sales contribution from non-like-for-like as we had a net opening of only one store over the period 2020-21 compared to a net opening of 43 over 2018 and 2019. This shows the increasing relevance of our store model. Online sales showed healthy growth of 13%. The growth rate slowed in 2021 as we saw a rebalancing towards more in-store activity. Over two years, online sales are up by a very strong 46% and they are stabilizing at far higher levels than pre-pandemic, 33% of total sales compared to 25% in 2019. Over two years, online sales posted a strong 21% CAGR. On channels, I think it's worth remembering that we estimate that COVID-19-related restrictive measures in the year reduced total sales by 45 million euros, with store sales down 60, partly offset by a 15 million euro gain in online sales. All of this took place in the first half. Finally, by geography, you see that sales in France were up 12% versus 2020, versus 2019, while international sales were up 19% in both periods. As Julie mentioned, this reflects the pan-European expansion, as we focused our growth mostly on markets outside of France, while actively managing our store network in our home market to relocate to fewer but better locations. To put it in numbers, The number of stores was reduced by 14 in France between 19 and 21, while the number of stores in the rest of Europe increased by 15. On slide 18, let's take a closer look at the category mix ratio. This graph shows the evolution of the furniture share of sales. We can observe the low level of 2021 at 41% and the one-of-a-kind low H2 at 35%. Taking a longer-term view, we see that until 2019, furniture was gaining in the product mix every year, notably as a result of online penetration. This structural trend reversed in 2020 and again in 2021 due to COVID-related disruptions on supply chain. So 2021 number illustrates two realities. First, our furnitures have been penalized by the manufacturing and supply chain constraints Second, the fact that we are not yet, at your hand, at our target level of inventory for this category. This reality has been amplified by our agile and pragmatic approach to support decoration supply at your hand, to support the Christmas season. As we enter 2022, we are determined to keep rebuilding our inventories, especially on furniture. Realistically, this will take a few more quarters. I take this opportunity to pause and give some highlights on the freight situation that has been particularly tense and difficult since the end of 2020. Again, that backdrop, we have decided to specific actions, reviewing the overall strategy with our forwarders. We have developed a new approach, mixing one-year and longer-term contracts and developing new routes. Negotiation for 2022 is now over and pricing for 2022 secured. Capacity is still not back to normal, and we expect disruptions to continue throughout 2022. Let's move to EBIT on slide 19, which progressed strongly to reach a record high of nearly €124 million, up 39% or €35 million in 2021. It's an equivalent expansion of 160 basis points to 9.5%, returning to a high level of profitability. The bridge on the slide shows you the different building blocks of this improvement. Let's start with gross margin. Gross margin was stable thanks to good management of supplier contracts in a context of strong inflation, a low level of promotion, a favorable mix effect of decorations margin, a favorable effect, sorry, driven by decoration with a higher mix on margin, and an effect positive of the market place. Overall, as just mentioned, freight inflation had no significant impact on 2021 as its effects really began towards the end of the year and will impact gross margin in 2022. On logistics, we gained roughly 240 basis points thanks to strong operational efficiencies in transport and cost optimization plans. In 2021, We benefited also from an obvious scale effect, as our better sales performance allowed us to dilute fixed costs. Finally, 2020, as you remember, had been impacted not only by lockdowns, but also by strikes with some material one-off costs that did not repent in 2021, creating a favorable year-on-year variance. On SG&A, store operating and central costs were up 90% year-on-year, reflecting 21 growth store openings versus 9 in 2020, and the absence of governmental COVID-related subsidies, unlike 2020. To that extent, 2020, we know, was not a normative year for SG&A, as partial unemployment schemes and discounts on rental artificially improved the base. Another important point in this bridge is advertising. As explained during our recent Capital Market Day, we strongly believe in the necessity to invest to develop web, but brand equity and new initiatives as well. Advertising costs increased by 15 million to support those initiatives around the brand, the marketplace ramp-up, and overall sales growth. Compared to 2019, advertising sales ratio increased by an average 40 to 50 business points every year, which is very good development to support our future growth. Regarding DNA, the favorable effect is mainly a leverage effect, considering a stable level of rent expense in parallel of top-line growth of 15%. This result on EBIT is very positive. In a context of significant inflation, notably on freight, it shows that we are monitoring very cautiously our bottom line with the right discipline and an efficient resource allocation approach. On slide 20, We turn to our strong free cash flow generation, one of the major successes of the year. Free cash flow came in at 90 million euros compared to 53 in 2020, which is an equivalent of precisely 69% increase. The bridge on the slide shows you the different moving parts. Without any surprise, this increase is mainly the result of the EBITDA improvements, illustrating the strength of our profitable growth models that I just described before. Working cap requirement decreased by €8 million due to higher level of inventory compared to 2020, partly offset by lower accounts receivable and changes in payables. Working cap to net sales ratio improved to 1.1% from the 2.1% ratio in 2020. As commented before, the level of inventory is, however, not yet optimal and remains a key business priority. To that extent, we consider 2022 inventory replenishment that will affect free cash flow generation. CapEx finally was up 2 million due to higher store development investment while the CapEx to net sales ratios to that 3.9 down from 4.1% one year earlier. As mentioned during the capital market day, CapEx will follow a different trend and will represent a peak in 2022 in our CapEx journey as we will open the first phase of our new logistic platform. This project per se will represent an extra 15 million euro capex. A word to finish on debt and leverage. Thanks to our strong liquidity, in 2021, the group reimbursed 50 million euro term loan associated to its senior credit facility as well, as you remember, as the 150 million euro French state guaranteed loan. Taking into account its cash and cash equivalence position of 163 million euro, Maison Dumont net debt position was 60 million euros at December 2021. This translates into a leverage ratio decreasing to 0.36 times. Slide 2021, I will end this part of the presentation with EPS and the dividend. As Julie mentioned, our EPS reached a record high level in 2021, supported by our strong activity. Excluding Modani, it stood at €1.52, i.e. a plus 58% versus 2020 and a 15% increase versus 2019. On a reported basis, it reached €1.72 as a divestment of Modani adds €0.21 to our EPS. You can observe a slightly positive effect on the financial results, mainly due to interest charges effect as we decreased our debt regarding tax our ETR lands at around 28% and benefits from the small reversal of a taxable precision recorded in 2020. Again, this sharp EPS evolution plus 58% versus 2020 and 15% versus 2019 is showing the conversion of a profitable growth agenda. As a result of this strong performance, we will be submitting our dividend to our annual general meeting on May 31st for an amount of 50 euro cents representing 45% increase compared to 2020, and translating to a pay-out ratio of 36% of EPS, excluding modality. It is, for us, another evidence of our commitment to return value to our shareholders. With that, let me hand back to Julie.

Thank you, Régis. Let's now look at our priorities and outlook for the year. Obviously, on slide 23, I would say that our business priorities are largely the continuation of what we focused on in 2021 with a couple of additional points. In terms of commercial activity, we intend to keep strengthening our brand, building on the strong attributes and the achievement of 2021, while also continuing to improve customer experience. For example, we will develop new capsule collections with designers and further develop our communication with our consumer communities We will also continue to strengthen our omnichannel model through both levers, continued extensions of stores in Europe, with 0 to 5 net openings all outside France, and the further development of our digital footprint, notably through the deployment of the marketplace in all our stores, and also the launch of another European country online. In terms of supply, we will work at replenishing inventories gradually in a complex price and raw material sourcing environment. We target a normalized level of inventory by year-end. We'll give you updates on this point as visibility improves. Furthermore, we will open our new logistics center in northern France, starting with the first step, manual configuration, before launching the automation phase. Regarding our ESG agenda, we will deploy our Good is Beautiful label while also improving product flexibility and further enhancing supplier governance. I will have the opportunity to present Good is Beautiful in greater detail later in the year. But in a nutshell, it is our brand movement aimed at embedding sustainable development in our strategy and making this commitment more visible with the ambition that our customers and partners, including marketplace sellers, will join in. Before giving you our outlook for the year, let me update on our current trading on slide 24. We continue to see disruption in our supply chain, with production in Asia and freight remaining complex and tensions met with by substantial raw material scarcity. Moreover, even if we are seeing signs of easing in Europe, which is good news, we are not over the pandemic yet, and we are closely monitoring the health situation in Dublin, Asia. Furthermore, as you know, we are operating in a more inflationary environment globally, which may impact consumption in general and home and living in particular after a period of heavy household equipment at the peak of the pandemic. Well, it goes without saying that the war in Ukraine adds geopolitical uncertainty to the macroeconomic challenges and may create further disruptions and inflationary pressure with the possible impacts of smelts. All that being said, there are also positive objective factors that will support supply and growth in 2022. Improved product availability and easier comms in H2, for example. To that point, let me shed some light on how the year may look like. Well, again, 2022 will be a year of two halves. As expected, we see a slow commercial start to 2022 for the external conditions described above, and also a record high comparable base, notably for online, which had grown by 77% in Q1 last year and another 25% in Q2. All of this will translate into a slightly negative Q1 and a broadly flat H1. H2 will benefit from easier comps and from a progressive inventory replenishment, which will both lead to sales acceleration. To date, Considering the current war in Ukraine and its yet-to-be-determined impact on demand in our operating countries, it is hard to say to what extent sales will accelerate, but they certainly will. Also, on the positive side, we do not foresee at this stage substantial impact of this complex on product supply, as we have limited exposure to East European sourcing. This leads me to our full year 2022 guidance on slide 25. Taking into account the factors that just itself, we expect for 2022 positive revenue growth, the extent of which will be made more specific as visibility improves. And a bid margin around 9% through a strict management of our costs and resource allocation, as we've been doing over the last couple of years. And finally, free cash flow of Euro 65 to 75 million euros. In the light of our inventory replenishment objective, and also the investment needed for our second warehouse that will start operating by the summer. After our mid-term commitment in returning value to shareholders, we also confirmed our dividend payout ratio of 30 to 40%. And finally, 2022 will be a landmark year for MTM ESG journey as we will reach carbon neutrality on Scopes 1 and 2. Despite current uncertainty, we do stay fully confident in our ability to meet the medium-term guidance that we presented at our Capital Markets Day last November and which we can see again on Flight 26. We confirm all of our 2025 objectives, namely revenues of between 1.8 to 1.9 billion euros and a bid margin of around 11%, cumulative free cash flow of more than 350 million euros during the 2022-2025 period, the 30 to 40% payout ratio, and finally, carbon neutrality for Scopes 1 and 2, and a 25% reduction in carbon intensity at Scope 3 level, together with a doubling of our responsible products from 20% to 40% of our total offerings. So to conclude on this presentation, And we should say that our 2021 performance was another illustration of our unique value proposition, which represented our capital market stake. That is a direct consumer love brand, a distinctive business model that delivers high and sustainable growth, and a robust financial model that drives increasing shareholder results. Thank you very much for your attention, and Regis and I are now happy to take your questions.

Thank you. We will now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone. To withdraw your request, please press the pound or hash key. Once again, please press star 1 if you wish to ask a question. Please wait one moment. We are compiling the Q&A queue.

On the portal, we have a first question from . A question on H2 profitability. Can you give us more explanation regarding the quite low level of EBIT margin versus what you were used to? meaning EBIT margin above 13% in H2 in the past. It seems that your marketing expenses increased by 50% in H2, but we did not see any impact in the sales with flat sales in H2. Do we have to understand that in the coming years you will have to spend more marketing expenses just to stabilize the sales?

I can take this one. Thank you for the question. I think it's important to bear in mind the overall story in 2021 vis-à-vis EBIT margin, EBIT level. First, it's really management of the gross margin, and I think it's important to flag this in the context I described, and you all know vis-à-vis inflation. And I'm sure we may discuss later about 2022 gross margin evolution, but 2021 gross margin is really a key factor of the year. To what extent H2 can be explained at this level that you flag below usual? I think indeed there is an acceleration of marketing. You associate directly marketing investment phasing with the trend evolution of sales. Marketing has not been about only web support during the year, but it was really as well about marketplace launch that you may not factor precisely, but we'll that has been a couple of million already in 2021. And this marketplace investment on marketing does not translate in the sales, as you know, because we just take only the contribution vis-a-vis the commission. So it's marketplace evolution that has been a factor of marketing investment. Another element, I think, in this question of the trajectory of the margin is related a bit to a certain extent to the freight. I mentioned that freight started being a bit of an impact at your end with limited factor, but it was really H2. And we mentioned that already when commenting the record high level of margin in H1, that we were expecting this inflation to start at the back end of the year. So in a nutshell, margin was a bit impacted by threats at the end of the year. Second, marketing costs did indeed increase, one of the elements being the marketplace support.

First question on the phones comes from the line of Clement Giannillo from Brian Garnier. Please go ahead.

Yeah, good morning. I have questions from my side, if I may. The first one is on Ukraine. What could be the actual impact of the war on the supply side? Because if I'm right, your production sites are rather in Vietnam and China, and the wood comes from Asia as well. My second question is on the gross margin in 2022. What level of gross margin do you expect in 2022? Given that now you have maybe a better view on the price increases, magnitude and timing, and also on the freight costs. My third question is on the OPEX and more especially on the wages. What is the extent of wage increases? What would we expect in 2022? Recently, Carrefour indicated a 3% to 4% wage increase in its French employees' wage. So is it a magnitude that we could extrapolate? Thanks.

Thank you, Clément. I will take your first question, and Regis will answer the other two. Regarding the conflicts in Ukraine, you're perfectly right. We have very limited exposure to European sourcing overall and close to zero to Eastern European sourcing. The only manufacturing we have in Europe is around our sofas, and they are not in Ukraine nor the neighboring countries. So if there is an impact, that would be more on demand, given the fact that these conflicts may trigger different economic sanctions that might increase the inflationary pressure. which in turn might impact consumption and consumer behavior. But you're right on the supply side, the impact should be very limited. So really, the uncertainty for us is more around potential demand contraction due to overall price inflation.

Thank you, Julie. Thank you, Clément. Bonjour. On growth margin, first to your question, what is the expectation for the year? It will be a couple of big moving parts, I would say. Indeed, and we mentioned that earlier, raw material inflation and freight cost increase will have the impact now in gross margin in 2022. As I said, our contracts are confirmed now with the freight forwarder. So we do estimate that gross margin all in all should decrease by 100, 150 basis points versus to 21. which is to say roughly to be around the 65% line. How does it move inside? I think I would mention four elements. Indeed, raw material and freight will have a major effect, probably 400 to 500 basis points. One element as we replenish inventory will be a negative mix, which is a positive news for us in terms of trajectory of business, but to the reverse of the effect of 2021. Replenishing inventory and furniture will drive probably a negative mix effect around 50 bps. On the other side, we have some positive indeed pricing because we started pricing at the back end of the year 2021 and it will have a sequential progressive effect at the time of each launch of the new collection. But overall, over the years, it should be pricing effect around 300 basis points. I say 300 because the price per se could be higher, but we do envisage to increase the level of promotion, probably, versus a low level we had in 2021. Another positive will come from many initiatives that we have in terms of efficiencies, in purchasing, in logistics, warehousing activities, that should drive some positive. Those parts should give you a better view on the trajectory from gross margin, which is, again, in this context, I think, a good development, because we are monitoring the pricing to protect the level of demand to the extent of the overall global inflation context, and at the same time managing this inflation, which is just massive, notably on freight. To say as well and precise that this gross margin will have a two-tier approach, probably a lower level in H1 and a higher level in H2, considering that the pricing effect will much more come in the second part of the year. Your next question was about wages in our zone where we operate. We do see 2% to 3% in our current discussion with our internal partners, and it's fully embarked in the guidance that we gave this morning with the margin around 9%. So it's fully embarked, and we are confident to control this to this level. Understood.

Thanks a lot.

Next question we have online is from Marie-Lyne Faure from SBCID. Could you tell us how is the current trading at the beginning of the year? And also to help us estimate the phasing, would you say that H1 2022 should be between H1 19 and H1 21? Second question is, what was the impact of Modani divestment on your cash flow statements? Another question is, in terms of M&A, given your very sound financial position, do you expect to look at potential targets and in what field countries? Last question is, how many stores do you project to open in 2022 and where?

Thank you, Marilyn. So I will take your questions one, three, and four, and Riz will answer the second one. So on the current training, well, as we said, consumption is soft at the moment, which again comes from different reasons. Overall, a global inflationary context. Our latest estimates, as we've been seeing, forecast a 6% in the Eurozone for the year. And the recent geopolitical context doesn't help, as we said. And most specifically in our category, we had an explosive start to the year, Last year, we did mention the 7% growth online, but we also had a 20% growth in store levels. So all of that indeed turns into self-consumption. And if I take just a quantitative measure for that, in February, if I take the Google searches, the Google search volume for home and living works, well, those were down 20% year on year. and that is across our main countries, so that's not just a French situation. Now, if I take a channel view to maybe give more specifics on the current trend, well, in terms of retail, what we see is positive traffic, and we see that throughout Europe, but this is mainly due to bad effects. If we recall 2021 again, we had a lot of closures in Germany and Switzerland in January and February last year, In Italy, we were closed all weekends last year. And in France, we were closed in all shopping malls in February. And finally, in Spain, we were closed in all of Catalonia. So all of this means that the higher opening ratio this year makes the traffic positive. Now, in terms of spend per visit, what we see is a smaller conversion rate, but a higher basket. So basically, we are... Those who come, when they buy, they buy for more. And we see the same trend in terms of conversion rate in AOV online. We have less people converting, but when they convert, they buy for more. In terms of traffic, the picture is a bit different online. We did say that it was positive traffic in retail throughout Europe. Online, the traffic is negative out of France, again, to the best effect. But what is really good news is that it is still positive in France. And here we see the marketplace dynamics, which, again, keeps having a very good trend. Actually, compared to the global context, it's overperforming. And we're really seeing good results coming from the marketplace, which keeps gaining a share in total of Crenshaw Mind GMV, So for us, that's a very positive development, and this is why we've been accelerating our marketplace strategy with the finalization of the rollout installs, but also the opening of another online country this year. So just to really leverage what is currently happening. Now, to elaborate on the sequence of the guidance, Well, first, let me underline the confidence we see in the model and on our ability to keep growing after 15% growth last year. The current context is particularly volatile in European economies around inflation and impact on demand, which makes specific forecasts challenging at this time. Obviously, as visibility improves, we will be able to give more specifics. Where we can be specific is around H1, because as I said, we do not see any specific impact on supply of the European situation. So the broadly flat H1 is something that we can forecast on. And again, that is on the back of very high comps, as H1-21 is a plus 35% versus 20. So it is, for us, over a two-year period, still a very good performance. And as I said, cells are expected to grow in H2. Maybe, Régis, the second question?

Which was on Modani, right, Clémence? Yeah. So thanks, Marilyn, for the question. The free cash flow I presented is without discontinued activities. So you cannot read directly the proceed of Modani on this bridge because as per IFAS 5, We are communicating everything this morning without the effect of modeling. The transaction per se generated an extra cash to our model, which is around 12 million. You had a question on M&A, I guess, whether it is part of the agenda. Everything we have today in our plate is organic, and I think there is no different message versus what we said in the use of cash versus what we mentioned in the same day. And I think there was a last question on a stall opening.

So for this year, Marlène, what we plan is a net opening of 0 to 5 stalls, and that will be skewed to international. What we see geography-wise is a negative net in France up to minus 5, and a positive net outside France between 0 and 10. So that will be the plan for the year. And that is also the opportunity for me to link that to the strategic plan, as we said. We would be in a five to 15 net opening range over the course of the plan. But to give you a perspective and maybe a longer term view in our strategic plan, both 2021 and 2022 are yields of limited net openings. So I remind you that it was plus five last year and zero to five this year. Why? Because the number of closures is fairly high in those two years, in the mid-teens. Indeed, in our capital allocation optimization policy, we want to make sure that we rationalize our space adequately. Now, in the subsequent years, that is starting in 2023, the number of growth openings should stay high, or at comparable levels, but the number of closures will go down substantially, particularly in France, where the portfolio should be stabilized at this stage. So as a result, net openings from this year on, will go up. This explains the mid-term perspective, just to give you this longer view.

Thank you, Marilyn.

Thank you. Next question from the phones comes from the line of from BNP Paribas. Please go ahead.

Hi. Good morning, everyone. I got two questions, please. The first one is about the working cap. Your aim for 2022 is to replenish inventories. Can you please give us more color on what level of working cap as percentage of sales should we expect in 2022? And my second question is about the capex. I assume that there will be extra capex in terms of dedicated to the warehouse. Can you please give us an idea of what could be the level of CAPEX in 2022? Thank you.

Thank you, Steven. So, working cap trajectory and CAPEX evolution. I will start answering your question with perhaps trying to size what inventory replenishment could mean, because to be fair, in terms of working cap, we are managing receivables and payables in a quite good manner in terms of year-on-year evolution, considering that we have a good relation with our suppliers, notably in the way we manage this. So working cap evolution will be drastically related to the evolution of inventory that we consider to be around 20-25 million. I think that's probably the magnitude of what inventory replenishment could mean towards this, the way we qualify it, optimal kind of normal level of inventory. So, I mean, it will be in terms of working cap probably around the 1.5. It will depend a lot about the evolution of sales that we do not precise specifically this morning. Regarding CapEx, CapEx should be around 90 million probably, which is 30 million more than in 2021. The key driver of that is what we mentioned this morning already vis-à-vis the new second warehouse, which is probably an extra 15 million euro CapEx related to this project. But we have other elements, store opening with new stores plus renovation, which is still something we factor in our CapEx equation, probably around extra 5 million. And we have some ISIT developments that I did mention already during the capital market day in terms of systems, for finance, for HR, different initiatives to support the web evolution as well, which is probably CRCAT 10 million. So 2.22 in terms of CapEx is a bit of a peak in the journey due to this main element on logistics. So you should compute that kind of level of CapEx in your model.

Thanks very much.

We have an online question from Fabienne Carmon at Kepler. What cost inflation do you expect in your OPEX in 2022? When you quantify your energy cost in SG&A, should we expect rental charge increase rent-linked to inflation?

Thanks for those three questions, in reality. So inflation, in general, well, I mean, we do factor today in our... EBIT margin guidance and overall inflation, as I mentioned, for wages, which is 2% to 3% in general. So we may question whether it is enough or not yet, but at this moment, that's what we have factored, and I think in different elements of our P&L, I think it's relevant to consider this assumption. On energy specifically, I think there are probably three elements, energy for freight, energy from transport, and the, let's say, classic energy we use perhaps in terms of electricity in our stores. For freight, I think it's embarked in our contracts. We have some indexation, and I think we are confident today in the magnitude of the impact. I did comment on gross margin to say we are on track. Same for transportation, the one to deliver either consumers, shoppers directly or stores. And we are confident managing this overall envelope with many other efficiency programs that I did mention already in terms of not gross margin, but to a certain extent distribution, logistics, net margin, contribution. So this level of inflation is, at the time of today, not preventing from any other evolution of factor, but I think it's embedded in our EBIT margin. And for stores, we have transformed totally our setup in stores, transforming in our ESG commitment to decrease our carbon footprint. We have transformed electricity system in our stores, I think roughly everywhere, to Which helped us a lot decreasing the consumption and obviously it will help us Compensating the inflation we could have on that one.

So it should not be a factor of major cost evolution in our model Thank you as a reminder if you wish to ask a question on the phones, please press star 1 on the telephone keypad and And the next question comes from the line of Jack McNichol from Redburn. Please go ahead.

Hi, all. Jack McNichol from Redburn here. Thank you for the presentation. I'm just wondering if you could speak more to pricing this year, please. Could you give some more color on how your like-for-like sales growth has been affected by the full price versus discount mix, and how much by outright price increases? Thanks.

For 2021, or your question is on 2022? Sorry.

2021, please. And a bit of outlook for 2022 would be much appreciated as well.

Thank you, Jack, for your question. So the price increases we did have had very limited impact on the end of 2021 because basically we started them at the very end of the year, which really... following the sequence of the release of a new product to our store. So really this effect is starting in 2022. So really the pricing effect will be essentially in 2022, which indeed is a is a good way to combat the inflationary pressure. And compared to other players, we have very good assets indeed to face this inflationary pressure. Well, first, this in-house design that we have gives us pricing power, first. Second, we do have a wide price scale, which allows us to adapt to evolving customer needs. So for example, we are currently analyzing the elasticity on demand, of the very recent price raises we've been doing just to see whether we need to adjust to go maybe to the lower end of our pyramid compared to the mid to high end. So this is a very good observation field for us. Also, we have a high product renewal rate. That is really important because we do release products throughout the year. So that allows us to pass on pricing over time with the rhythm of new collections and to keep adapting as inflationary context moves up. And finally, I have to say that we are an agile and especially a digital and database company, so we can react fast. And to that end, the marketplace that we have is also a key asset, because it allows us to monitor consumer dynamics based on 100,000 SKUs. So basically, in this context, precisely now in this period of high inflation, We are regarding how consumer habits are evolving based on the marketplace traffic itself, and also that will probably drive us to onboard new types of vendors, maybe to go to more low to mid-price levels, just to make sure that we adapt very quickly to the situation. So pricing is indeed a very good lever that we have in this current context. on the top of the fact that our branded model gives us this pricing power and this big customer loyalty. So we are well-equipped to address the contacts.

Cool. Thanks, Julie.

Well, it looks like there is no more questions. So thanks a lot to you all for your attendance. The whole IR team remains available if you have extra questions. Thank you all. Have a nice day. Thank you.

Thank you. Have a good day. Bye-bye.