Equity Analysis /
Russia

Detsky Mir: 1Q21 trading update – Neutral-to-Positive

  • 1Q21 revenue came in at RUB35.7bn, 14.9% higher y/y

  • LfL sales growth in Russia accelerated to 7.5% y/y in 1Q21 vs. 5.7% y/y in 4Q20

  • Selling space grew 6.5% y/y in 1Q21

Evgeniy Kipnis
Evgeniy Kipnis

Senior Banking/Consumer Analyst

Alfa
15 April 2021
Published by

Detsky Mir (E/W; TP RUB 145/sh) reported its 1Q21 trading update. 1Q20 net revenue grew 14.9% y/y, slightly accelerating vs 4Q20. While the company guided on January-February sales to grow in line with 4Q20, the acceleration likely reflects the low base of March 2020. Increased share of high-margin Toys and Apparel & Footwear sales, coupled with bonuses from suppliers shifted from 4Q20 to 1Q21 (as guided earlier by the company), likely to support profitability in Q1. At the same time, we think that is already reflected in prices: currently the stock is trading at 6.9x EV/EBITDA 2021F, which is 17% above its historical average. Company is scheduled to report 1Q21 IFRS on April 29.

  • 1Q21 revenue came in at RUB35.7bn, 14.9% higher y/y, accelerating from 14.4% y/y in 4Q20. 1Q21 GMV (incl. VAT), which includes recently launched 3P marketplace, grew 15.6% y/y to RUB39.6bn.

  • LfL sales growth in Russia accelerated to 7.5% y/y in 1Q21 vs. 5.7% y/y in 4Q20, driven by improvement in traffic, which came 4.5% y/y (vs. 1.4% y/y in 4Q20), while LfL ticket growth decelerated to +2.9% y/y (vs. +4.3% y/y in 4Q20).

  • Selling space grew 6.5% y/y in 1Q21. Detsky Mir opened five new Detsky Mir stores, 6 Detmir Pickup and 1 new Zoozavr store during 1Q21.

  • 1Q21 online sales increased 79% y/y to RUB10.9bn and constituted 27.6% of total revenue (vs. 17.8% in 1Q20 and 29.8% in 4Q20). The company started to disclose online performance metrics, including online visits (+82% y/y), online orders (+92.1% y/y) and 3P marketplace sales (RUB399mn, 15.9x growth y/y from low base, contributing 3.7% to online sales and 1% to total GMV).

  • Share of high-margin Toys and Apparel & Footwear categories in sales grew 1.4pp and 1.6pp y/y, respectively, to 32.3% and 25.5% on the back of Men’s and Women’s Day (February-March), start of spring collection sales, also supported by low base of previous year.

Source: Company data, Alfa-Bank