Third Quarter 2023 activity
Update on Conciliation Proceedings
In a demanding and uncertain environment with downward trends in High Tech & Home equipment categories, Cnova is pursuing its transformation towards a more profitable model. This transformation leads to solid growth of Services revenues, notably linked to Marketplace (+1% vs. 22), Advertising (+8% vs. 22), B2C Services (+12% vs. 22) and B2B activities (x2 vs. 22)1 unlocking a Gross Margin rate increase of +7pts. Efficiency Plan of €90m SG&A and CAPEX annual savings vs. 21 is ahead of schedule and supports continuous improvement of profitability and operational cash in 3Q23 vs. 22. Services revenues are growing both in B2C and B2B activities:
Continuous development of Cnova’s ESG policy:
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“Over the past three quarters, Cnova remained focused on its transformation plan to improve its profitability. Despite a difficult market environment, we delivered significant improvement of profitability and operational cash since the beginning of the year, especially thanks to the voluntary shift towards a marketplace-oriented model, the rationalization of our direct sales offer and the commitment of all our teams.
We have now reached a key milestone, with most of the Efficiency Plan behind us combined with our focus on streamlining our
The 3rd quarter also paved the way for our 2024 ambitions with generative Artificial Intelligence initiatives, notably in terms of product catalog optimization and customer experience, already bringing significant improvements in our operational KPIs. Our B2B activities accelerate with the launch of 2 large-scale marketplaces for Octopia and the soaring number of parcels shipped by Octopia Fulfilment and C-Logistics notably for an international sportswear company.”
Update on conciliation proceedings
It is recalled that on
These conciliation proceedings are part of the more global restructuring proceedings initiated by Casino group, for the purpose of engaging in discussions with its creditors within a protective legal framework.
On
The Agreement in Principle has been approved by Casino’s Board of Directors. It provides for the conclusion by the parties and the other creditors supporting the Agreement in Principle of a binding lock-up agreement during
The lock-up agreement, to which a signatory commits to support and take all steps and actions reasonably necessary to implement and consummate the group’s restructuring, allowed the opening of accelerated safeguard proceedings by
On
In the meantime, on
On
On
On
On the same day,
The main provisions of the conciliation protocol revolve around the reprofiling of the state-guaranteed loans (prêts garantis par l’Etat) repayment and the maintenance of overdraft facilities.
Lastly, Cnova NV was informed that, on
Third Quarter 2023 Key Figures
Financial performance (€m) | 3Q22 | 3Q23 | Change vs. 22 | ||
Total GMV | 772.0 | 667.5 | (13.5)% | ||
Ecommerce platform | 637.4 | 533.3 | (16.3)% | ||
o/w Marketplace | 333.4 | 335.6 | +0.7% | ||
o/w Direct sales | 304.0 | 197.7 | (35.0)% | ||
Marketplace share | 52.3% | 62.9% | +10.6pts | ||
o/w B2C services | 33.7 | 37.6 | +11.7% | ||
o/w Other revenues | 77.5 | 71.5 | (7.7)% | ||
B2B activities | 23.5 | 25.1 | +6.9% | ||
o/w Octopia B2B revenues | 5.0 | 7.7 | +54.0% | ||
o/w Octopia Retail & Others | 17.2 | 12.1 | (29.5)% | ||
o/w C-Logistics | 1.3 | 5.3 | x4 | ||
Total Net sales | 373.0 | 280.7 | (24.8)% |
Third Quarter 2023 Highlights
GMV | 3Q23 vs. 22 |
Total GMV evolution | (13.5)% |
Marketplace GMV growth | +0.7% |
Travel GMV growth | +4.8% |
Mobile GMV growth | +53.8% |
Octopia B2B revenues growth | +54.0% |
In the 3rd quarter 2023, GMV decreased by -13.5% vs. 22. This year-on-year evolution was driven by:
- Marketplace contributing +0.3pt (+0.7% y-o-y) with mix evolving towards more marketplace revenues offset by reduction in marketing investments. Marketplace delivered +10.6pts in GMV share and Fulfilment by Cdiscount GMV share has increased by +3.0pts, standing at 41.1%
- Direct sales contributing -13.8pts (-35.0% y-o-y) following the voluntary transformation towards a marketplace-oriented model, mostly for non-technical goods with low margins. Over the 3rd quarter, direct sales were also impacted by lower marketing intensity and inventories rationalization for non-core product categories. All these actions led to an improvement of direct sales profitability for Technical Goods and Home Equipment categories in the 3rd quarter vs. 22
- Advertising services contributing +0.2pt (+7.8% y-o-y) mostly due to Retail Media (+11.3%)
- B2C services contributing +0.5pt (+11.7% y-o-y) thanks to Mobile (+53.8% vs. 22) and Travel activities (+4.8% vs. 22)
- B2B activities contributing +0.2pt (+6.9% y-o-y) with:
- C-Logistics B2B contributing +0.5pt (x4 y-o-y) notably driven by an increasing number of shipped parcels for external clients
- Octopia B2B contributing +0.4pt (+54.0% y-o-y) driven by Merchants-as-a-Service and Marketplace-as-a-Service (x3 vs. 22) and Fulfilment-as-a-Service (+44.3% vs. 22)
Marketplace | 3Q23 | vs. 2022 |
Marketplace Product GMV share | 62.9% | +10.6pts |
12.6% | (1.9)pt | |
Fulfilment by Cdiscount GMV share | 41.1% | +3.0pts |
Total Fulfilment + Express sellers GMV share | 53.6% | +1.2pt |
Marketplace revenues (€m) | 46.1 | +1.4% |
Advertising services Product GMV take rate5 | 4.0% | +0.9pt |
Marketplace GMV posting a 35.6pts yoy growth differential against direct sales, slightly increasing by +0.7% vs. 22. Strong and regular customer satisfaction measured by the NPS led to a fast-increasing marketplace GMV share up to 62.9% in 3Q23. As part of this strategy, Fulfilment by
Clients | 3Q23 |
Active clients over the last 12 months (#m) | 7.8 |
CDAV subscriber base6 (#m) | 1.7 |
CDAV GMV share (%) | 38.1% |
Cnova’s loyalty program,
- Our loyalty program encompasses 1.7m members as at the end of
September 2023 , with a decreasing share of clients with free subscription - To strengthen our customer loyalty, the share of fidelity actions dedicated to CDAV customers on total fidelity actions to all clients7 has increased by +22.8pts in 3Q23 vs. 22
Net sales | 3Q23 vs. 22 |
Net sales evolution | -24.8% |
Net sales amounted to €280.7m (-24.8% decrease vs. 22). This decrease is primarily driven by:
- Declining direct sales revenues (-35.0%) in a difficult market for technical and equipment goods
- Partly offset by increasing Marketplace revenues (+1.4%), mostly driven by the voluntary mix shift towards marketplace especially for non-technical goods categories with negative margin, along with growing Advertising net sales (+7.8%)
Business highlights
In a difficult e-commerce environment, Marketplace growth is stabilizing:
- Marketplace GMV grew by +0.7% in 3Q23 vs. 22:
- Marketplace GMV increased gradually over 2023 quarters: -3.6% in 1Q23 vs. 22, -2.5% in 2Q23 vs. 22 and +0.7% in 3Q23 vs. 22
- Notably driven by home equipment and refurbished phones despite a context of challenging purchasing power
- Marketplace GMV share stood at 62.9% in 3Q23 (+10.6pts vs. 22, +23.1pts vs. 19), confirming the mix evolution towards more Marketplace revenues
- Marketplace revenues amounted to €46.1m in 3Q23, increasing by +1.4% vs. 22 (+29.4% vs. 19) and leading to an improvement of Marketplace contributive margin
- Many new strategic partnerships were formed with Marketplace sellers, including companies specialized in childcare and domestic appliances
- Express delivery eligible marketplace SKUs expanded over the quarter:
- Fulfilment by
Cdiscount covered 41.1% of Marketplace GMV in 3Q23 (+3.0pts vs. 22) - Cdiscount Express Seller, launched in 2019 for sellers able to offer express delivery to CDAV customers, represented 12.6% of Marketplace GMV in 3Q23
- Fulfilment by
- In the 3rd quarter 2023, Marketplace GMV was positively impacted by commercial initiatives undertaken by
Cdiscount during French Days which occurred fromSeptember 26 th toOctober 2 nd and Summer sales which occurred fromJune 28 th toAugust 1 st. On a comparable basis, French Days and Summer sales jointly contributed +1.1pts on Marketplace GMV growth8
Direct sales were impacted by inventories close monitoring and promotion initiatives:
- Following the rationalization of its direct sales assortment marked by inventories optimization and destocking initiative focused on SKUs with the most unfavorable inventory turnover, Cnova is now focused on extending inventories with profitable products
- In order to boost conversion rate, Cnova has enlarged its personalized promotions panel based on customers’ profiles
B2C Services GMV amounted to €37.6m in 3Q23, reaching a solid growth of +11.7% vs. 22, with Cdiscount Voyages (travel) GMV increasing by +4.8% vs. 22:
- Growth was mostly driven by Flights (+5.6% vs. 22) with an upturn from long-haul flights (
Thailand by +72.7%,the United States of America by +26.2%,Canada by +36.1% andBrazil by +53.8%)
NPS is steady above 50, amongst the best satisfaction rates on the market, rewarding our focus on customers despite the financial constraints.
In a context of inflation and declining purchasing power, Cnova keeps leveraging on payment facilities:
- Pursuing the deployment of its in-house 4-installment payment solution, which accounts for more than 40% of GMV in the 3rd quarter 2023
- Innovating with a new partnership between Floa and specific brands such as Apple, Samsung and Sony with a 12 to 36-months installment payment solution with spot and forward trade-in options. This solution has proven its success with up to 25% of GMV for some brands and categories with an accretive margin contribution
Cnova is aiming to generate more value, enrich customer experience and improve processes through Generative Artificial Intelligence-powered algorithms.
In order to improve its product catalog and increase marketability, Cnova has launched several initiatives over the past few months:
- Product reclassification since the 1st semester 2023: increase by c. +30% in conversion for products reclassified through Generative Artificial Intelligence
- Deployment of 2 new use cases in the 3rd quarter 2023:
- Product headlines and descriptives improvement: GMV increased by c. +3% for products with reviewed headlines and descriptives
- Product features enrichment: c. +15% of product features improved by Generative Artificial Intelligence
- Launch of a customer chatbot dedicated to product before-sales in the 1st semester 2023
Cnova is also developing Generative Artificial Intelligence to enhance process efficiency, with more than 500 employees already using Artificial Intelligence on a daily basis:
- Deployment of coding supporting tools for all our data scientists and developers
- Testing of Generative Artificial Intelligence tools across all business lines and departments
Strong growth of Advertising services supported by Retail Media revenues:
- Advertising services revenues increased by +7.8% vs. 22, amounting to €17.7m in 3Q23, with GMV take rate standing at 4.0%, growing by +0.9pt vs. 22
- Advertising services growth is mainly supported by Retail Media (+11.3% vs. 22):
- Advertising services to sellers showed a solid performance growing +29.3% in 3Q23 vs. 22
- Retail Media share on Advertising revenues increased by +2.5pts, standing at 80% in 3Q23
- Cdiscount Ads Retail Solution (CARS) is key to Advertising services development: CARS share on total Advertising revenues grew by +5.7pts vs. 22, with sponsored products performing well in 3Q23 (+17.4% vs. 22) and revenues generated for 1,000 pages viewed increasing by +43% vs. 22
Octopia B2B business remains dynamic:
- Merchants-as-a-Service and Marketplace-as-a-Service B2B revenues have multiplied by x3 vs. 22
- 2 marketplaces were launched in the 3rd quarter 2023, respectively for a childcare specialist and a consumer goods retailer
- Since the end of
December 2022 , the number of sellers onboarded on Octopia's platforms have increased by +73%
- Fulfilment-as-a-Service B2B revenues have grown by +44.3% in 3Q23 vs. 22
- In the 3rd quarter, a new warehouse partnership in the
United Kingdom was formed, allowing Fulfilment-as-a-Service sellers to expand their business in the biggest European e-commerce market - Octopia has been selected by 2 new marketplace operators in
France and in theUnited Kingdom to be their privileged logistic partner
- In the 3rd quarter, a new warehouse partnership in the
C-Logistics B2B business pursues its growth. C-Logistics B2B revenues have grown by 4x compared to 3Q22, standing at €5.3m in 3Q23, mostly related to the growing number of shipped parcels for external clients (x6 vs. 22).
Since the successful launch of its third-party logistic solution for a European sportswear company in
C-Logistics has undertaken actions to rationalize its warehouses capacity to adapt to business level: since
Cnova continues its action plan in favor of a more sustainable e-commerce.
Cnova is committed to promoting a more responsible consumption through its direct sales and marketplace product offer. Actions carried out by
Cnova is also taking actions to reduce the impact of its operations:
Cdiscount and C-Logistics use the experience gathered in the past years being actively engaged for a more sustainable logistics to contribute to several sectorial initiatives aiming at decarbonizing the e-commerce logistics and giving more information to consumer, among which the writing of an AFNOR SPEC “E-commerce: information to consumers on the environmental impact of their delivery choice” and the revised “Sustainable e-commerce logistics charter”- C-Logistics pursued its ESG approach with several initiatives:
- Reduction of greenhouse gas emissions generated by deliveries with alternative means of transportation for the last kilometers on light parcels increasing by 28% vs. 22, while the bulk loading increased by 31% vs. 22
- Deployment of Kraft wrapping machines in one of C-Logistics’ warehouse
mid-June 2023 . This automatic packaging solution, which has gradually ramped-up during the summer, aims at supporting productivity and ESG initiatives, with the optimization of transportation volumes and the rationalization of goods consumption - Decrease in C-Logistics’ energy consumption by -25% vs. the same period last year (from January to August)
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About
This press release contains regulated information (gereglementeerde informatie) within the meaning of the Dutch Financial Supervision Act (Wet op het financieel toezicht) which must be made publicly available pursuant to Dutch and French law. This press release is intended for information purposes only.
Cnova Investor Relations Contact: investor@cnovagroup.com Tel : +33 6 79 74 30 94 | Media contact: directiondelacommunication@cdiscount.com Tel: +33 6 18 33 17 86 cdiscount@vae-solis.com Tel: +33 6 17 76 79 71 |
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1 Marketplace, Advertising Services & B2B growth in terms of revenues; Direct Sales & B2C services growth in terms of GMV
2 Incl. marketplace commissions after price discounts, subscription fee and revenues from services to sellers (marketing, etc.)
3 Incl. both revenues from marketing services to suppliers and sellers (the latter being also included in marketplace revenues)
4
5 Calculated as Advertising services revenues divided by Product GMV excluding VAT (Marketplace GMV excluding VAT + Direct sales GMV excluding VAT)
6 Subscriber base as of
7 Calculated as cash-back dedicated to CDAV customers divided by total discount coupons and cash-back provided to all clients
8 Marketplace GMV (before cancellation) generated during the first 18 days of
Attachment
- Cnova NV_Activity Press Release_3Q23
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