Musti Group plc Interim Report 30 July 2024 at 8:30 a.m. EEST
Musti Group plc Interim Report 1 October 2023 - 30 June 2024
Musti remains resilient, continuing to grow customer base
April - June 2024
- Group net sales totaled EUR 104.0 (103.3) million, an increase of 0.7%.
- Like-for-like sales decreased by 2.6%.
- Adjusted EBITDA was EUR 12.5 (17.3) million.
- Adjusted EBITDA margin was 12.0% (16.7%).
- Adjusted EBITA was EUR 3.9 (9.5) million.
- Adjusted EBITA margin was 3.7% (9.2%).
- Net cash flow from operating activities was EUR -3.3 (22.1) million (including impact of non-recurring items EUR 8.7 million).
- Operating profit was EUR 1.7 (9.9) million.
- Profit for the period totaled EUR -0.2 (7.3) million.
- Earnings per share, basic was EUR -0.01 (0.22).
- Number of stores grew to 350 (341).
- Number of loyal customers grew to 1,575 thousand (1,522 thousand).
October 2023 - June 2024
- Group net sales totaled EUR 326.9 (315.4) million, an increase of 3.7%.
- Group net sales growth excluding the changes in the currency exchange rates was 5.0%
- Like-for-like sales growth was 1.8%.
- Adjusted EBITDA was EUR 47.9 (53.0) million.
- Adjusted EBITDA margin was 14.7% (16.8%).
- Adjusted EBITA was EUR 22.8 (30.1) million,
- Adjusted EBITA margin was 7.0% (9.5%).
- Net cash flow from operating activities was EUR 19.5 (50.5) million (including impact of non-recurring items EUR 13.6 million).
- Operating profit was EUR 6.0 (27.1) million.
- Profit for the period totaled EUR 0.8 (19.1) million.
- Earnings per share, basic was EUR 0.02 (0.57).
Key Events in the Quarter
- The non-recurring cost items had a significant negative impact on the operating cash flow during the third quarter. The costs were attributable mainly to the public tender offer. Also, the product recall of certain SMAAK-products in November caused non-recurring costs. In addition, the Board of Directors decided, that the rewards for the performance period 2023-2025 of the long-term incentive plan are settled fully in cash which had an adverse impact on the cash flow.
The figures in parentheses refer to the comparison period, i.e., the same period in the previous year, unless stated otherwise. Musti Group's previous financial year was from 1 October to 30 September and the current is from 1 October to 31 December.
Key figures
EUR million or as indicated | 4-6/2024 | 4-6/2023 | Change % | 10/2023-6/2024 | 10/2022-6/2023 | Change % | FY2023 |
Net sales | 104.0 | 103.3 | 0.7% | 326.9 | 315.4 | 3.7% | 425.7 |
Net sales growth, % | 0.7% | 8.2% | 3.7% | 9.0% | 8.9% | ||
LFL sales growth, % | -2.6% | 10.2% | 1.8% | 9.3% | 9.5% | ||
LFL store sales growth, % | -5.4% | 7.3% | -0.9% | 6.6% | 6.7% | ||
Online share, % | 26.1% | 23.5% | 24.5% | 23.1% | 23.0% | ||
Gross margin, % | 43.3% | 45.7% | 44.4% | 45.6% | 45.7% | ||
EBITDA | 11.8 | 19.2 | -38.2% | 35.4 | 54.5 | -35.0% | 74.6 |
EBITDA margin, % | 11.4% | 18.5% | 10.8% | 17.3% | 17.5% | ||
Adjusted EBITDA | 12.5 | 17.3 | -27.8% | 47.9 | 53.0 | -9.6% | 73.6 |
Adjusted EBITDA margin, % | 12.0% | 16.7% | 14.7% | 16.8% | 17.3% | ||
EBITA | 3.2 | 11.4 | -71.6% | 10.3 | 31.5 | -67.3% | 43.6 |
EBITA margin, % | 3.1% | 11.0% | 3.1% | 10.0% | 10.2% | ||
Adjusted EBITA | 3.9 | 9.5 | -59.4% | 22.8 | 30.1 | -24.1% | 42.6 |
Adjusted EBITA margin, % | 3.7% | 9.2% | 7.0% | 9.5% | 10.0% | ||
Operating profit | 1.7 | 9.9 | -82.5% | 6.0 | 27.1 | -78.0% | 37.8 |
Operating profit margin, % | 1.7% | 9.6% | 1.8% | 8.6% | 8.9% | ||
Profit/loss for the period | -0.2 | 7.3 | -102.6% | 0.8 | 19.1 | -95.7% | 26.5 |
Earnings per share, basic, EUR | -0.01 | 0.22 | -102.7% | 0.02 | 0.57 | -95.9% | 0.79 |
Net cash flow from operating activities | -3.3 | 22.1 | -115.1% | 19.5 | 50.5 | -61.3% | 79.6 |
Investments in tangible and intangible assets | 3.7 | 2.9 | 26.9% | 11.7 | 9.0 | 28.8% | 11.9 |
Net debt / LTM adjusted EBITDA | 2.4 | 2.1 | 12.7% | 2.4 | 2.1 | 12.7% | 1.9 |
Number of loyal customers, thousands | 1,575 | 1,522 | 3.5% | 1,575 | 1,522 | 3.5% | 1,543 |
Number of stores at the end of the period | 350 | 341 | 2.6% | 350 | 341 | 2.6% | 342 |
of which directly operated | 345 | 328 | 5.2% | 345 | 328 | 5.2% | 330 |
"Musti remains resilient, continuing to grow the customer base and market share during a soft trading period stemming from the summer holiday season, and low consumer confidence." - David Rönnberg, Musti Group CEO
The business environment continued to be challenging. We continued to invest in enabling greater convenience through our omni and pure play online initiatives, opened six new stores to extend direct reach and focused price and campaign activities, all of which have aided customer satisfaction, although affected sales mix, growth and profitability.
Group net sales increased by 0.7% to EUR 104.0 (EUR 103.3) million. The growth was delivered by a growth in our online offering 7.4% to EUR 26.1 (24.3) million and offset by relatively flat development -1.6% in store sales to EUR 75.3 (76.6) million including -2.6% store like-for-like growth (partly impacted by inflation). Positively, vendor price inflation has moved back to long term averages after 18 months of significant price rises. Online sales accounted for 25.1% (23.5%) of total net sales. We opened six directly operated stores and are actively looking for new opportunities outside our current operating environment.
Gross margin decreased to 43.3% (45.7%) due to targeted investment in price and campaign activities. The share of employee benefits and other operating expenses as percentage of sales was 33.2% (30.1%) driven mainly by the increased number of stores. The overall share of operating expense as percentage of sales will rebalance as new stores ramp. As a consequence of all the above, Group adjusted EBITA decreased by 59.4% to EUR 3.9 (9.5) million. The decrease was mainly due to the pressure in gross margin resulting from a weak consumer climate. Adjusted EBITA margin was 3.7% (9.2%). Profit before taxes amounted to EUR -0.5 (9.5) million.
The long-term market trend of Pet Parenting has globally experienced a year of stabilization with temporarily soft demand, affected by the macro consumer climate including a short-term decrease in households bringing a new puppy or kitten into them as we return to long term new puppy and kitten growth post an inflated COVID period. Our expectation, based on recent data, is that the market is rebounding to the long-term trend. Our fundamentals and competitive advantage remain strong, the customer base is growing year on year in all countries, as is spend per customer. Norway, where we have most headroom for growth, is showing the strongest trends.
As we move into Q4, our focus remains on executing on our long-term Nordic strategy and seeking further opportunities to expand the Musti business, focusing on the components within our control in the temporarily softer market environment. Musti is the leader in the structurally growing Nordic market and with our concept we are well positioned for the improving economic outlook and the improving consumer climate.
To our team members - on behalf of our shareholders, our Board, our Group management team and myself, thank you for the year so far, I hope you have a great summer?and will be back rested for the exciting path we have in front of us.
David Rönnberg,
CEO
Financial targets
Following its review in April 2024, the Board of Directors of Musti Group Plc decided to withdraw the company's long-term financial targets, updated by the Board of Directors on 3 May 2021. With the new majority owner, Musti Group is now in a new strategic phase with need to focus on sustainable growth to create value to its pet parent customers, owners and other stakeholders. In addition, the Board of Directors resolved to amend the company's dividend policy as follows: The company's net profit shall be used towards financing the company's growth and investments, and the company does not expect to distribute dividends. The Board of Directors may however assess dividend distribution annually.
Webcast for analysts and media
A webcast for the analysts and media will be arranged on 30 July 2024 at 14:00 EEST via Teams. To register in advance, please send an email to ir@mustigroup.com. The event will be held in English. The report will be presented by CEO David Rönnberg and CFO Robert Berglund.
Helsinki 30 July 2024
Board of Directors
The information in this Interim Report is unaudited.
Further Information:
David Rönnberg, CEO, tel. +46 70 896 6552
Distribution:
Nasdaq Helsinki
Principal media
www.mustigroup.com
Musti Group in brief
Musti makes the life of pets and their owners easier, safer and more fun. We are the leading Nordic pet care company, and we operate an omnichannel business model to cater for the needs of pets and their owners across Finland, Sweden and Norway. We offer a wide, curated assortment of pet products. We also provide pet care services such as grooming, training and veterinary services in selected locations.
Musti Group's net sales were EUR 426 million in the financial year 2023. At the end of the financial year 2023, the company had 1,643 employees, 1.5 million loyal customers and 342 stores.
