The plan aims to generate recurring free cash flow from operations1 targeted at €240 million by 2025 and a shareholder payout as soon as this year
The Group's aim, in its day-to-day work and for the long haul, is to be the key ally for consumers, helping them to be sustainable in their consumption habits and daily household tasks.
“Everyday is a particularly ambitious plan that engages us in an unprecedented disruptive strategy while accelerating the rollout of our omnichannel model. This new strategic plan is our response to the growing digitalization of consumption, the proven importance of day-to-day human contact, and the pressing need to work toward consumption that is more in line with societal and environmental challenges. As a renowned omnichannel leader,
The new strategic project bolsters the rollout of the Group's mission, which is to "commit to providing an educated choice and more sustainable consumption" to its customers.
The launch of Everyday is based on three ambitions that are to be achieved by 2025:
1. Embodying new standards for successful digital and human omnichannel retail in the future
Omnichannel retail will be digitalized by improving the performance of sites with a web experience that is increasingly immersive, efficient, and fueled by artificial intelligence. As a result, over 50% of the Group's investment budget for the period of the plan will be devoted to supporting digital growth, particularly to modernizing and mechanizing the logistics platform.
Omnichannel retail will be humanized by showcasing the spirit of stores on the web and by investing in the expertise of the sales team.
Advice and digitalization will be increased at all levels — the Group intends to invest in training its employees on how to showcase their expertise on digital and social networks. In order to improve the in-store experience, 'welcomers' will maintain a key role and the IT resources available to sales experts will be boosted to provide a response tailored to every in-store customer (order pick-up, after-sales service, repair needs, specific search, etc.). In doing so,
The Group is of the firm belief that stores are the cornerstone of this new retail. 100% of our integrated stores will therefore be profitable by 2025, with the specific challenges of each store being addressed and promising new formats such as the kitchen or small proximity formats being developed.
The purpose of all these initiatives is for at least 30% of the Group's revenue to be generated online by 2025, including half in omnichannel thanks to the proven success of Click & Collect, which reflects the complementary nature of in-store and online. These channels will be the best showcase for the
In this way, the Group will be at its customers' side every day, in-store and on the web, to help them make educated choices, backed by the expertise of its 12,000 sales people.
2. Helping consumers adopt sustainable practices
The product offering will trend toward more sustainable products, with marketplace products and partners that do not meet the sustainability criteria being possibly delisted, and the huge expansion of the second-life service and the option return used products as part of a circular economy strategy.
Customer choices will be geared toward more sustainable products thanks to sustainability scores, which will be visible both online and in-store and are expected to reach 135 by 2025 (compared to 95 in 2018). These scores are based on our after-sales repair database—the only one on the market—which rates products on their reliability and the availability of spare parts. It is a unique and independent indicator created by
Lastly, services that enable customers to 'use better to consume better’ and to repair products more often will be strengthened (sale of spare parts, express repair of smartphones WeFix,
We will therefore support customers in their educated and socially responsible approach to consumption, allowing them to take advantage of the best that technology and entertainment has to offer, while at the same time consuming in a more sustainable way.
3. Rolling out the benchmark subscription-based home assistance service
The Group laid the foundations for this service for large domestic appliances with the launch of
To make it a success, the Group will rely in particular on its in-depth knowledge of services, benefit from its unrivaled distribution network, capitalize on its ability to carry out high-quality repairs directly, and take advantage of its expertise in subscription management — an area honed by the Group's current total of 11 million active subscribers. As such,
This new home assistance service makes
With its innovative approach to service and sustainability, Everyday is revolutionising the world of retail for the benefit of consumers and of the planet, while accelerating the deployment of the omnichannel model.
These three ambitions will enable the Group to generate profitable growth alongside recurring cash generation.
FINANCIAL OUTLOOK AND MID-TERM AMBITIONS
Against the backdrop of the 2020 COVID crisis, the end of which still remains uncertain, fulfillment of the various objectives listed below relies on the following assumptions: no new prolonged lockdown periods or store closures, no significant break in the supply chain, and no lasting downturn in consumer confidence levels.
With Everyday,
- Increase its revenues, which will primarily come from accelerated growth in online sales and continued opportunities for expansion in growth markets;
- Increase its gross margin mainly with the subscription-based service sales model, which is a significant margin generator and will more than offset the dilutive effects of the less favorable product/service mix sold online and the expansion of the franchise;
- Continue its program to reduce operating costs, which will more than make up for the effects of inflation each year;
- Maintain its annual investment expenses at a normal level of around €120 million, excluding one-off investments of around €40 million for modernizing and upgrading logistics equipment, which will impact the first few years of the plan.
The purpose of the various strategic drivers of the Everyday plan implemented by the Group is to increase recurring cash generation with the following objectives:
- Aggregate free cash-flow from operations2 of around €500 million over the 2021–2023 period;
- Free cash flow from operations2 of at least €240 million each year, starting in 2025.
Over the 2020–2023 period, the Group is therefore expected to generate close to €700 million in aggregate free cash-flow from operations1, in a period that includes two years impacted by the COVID crisis.
This growth in cash generation, along with a level of debt that will remain controlled and sustainable for the company over the long term, with maximum leverage of 2.0x3, will enable it to finance its activity through external growth operations and ensure a regular return to shareholders.
As soon as this year, the Group is reactivating its policy of giving a return to shareholders and is aiming for a distribution rate of at least 30% in the medium term. The Group therefore proposes to distribute, in 2021, a dividend of €1 per share for 20204, with the aim of increasing this amount to €1.50 per share as early as the following year.
Lastly and additionally, the Group will, each year, take the opportunity to look at the possibility of making an additional distribution to shareholders in the form of an exceptional dividend or share buyback, after financing any external growth operations and paying the ordinary dividend.
PRESENTATION OF THE GROUP'S NEW STRATEGIC PLAN FOLLOWING THE 2020 ANNUAL RESULTS
On
here
The presentation slides are available on the Group website under the heading Presentation in the investors section: www.fnacdarty.com
A recording will also be available on the Group's website.
Disclaimer - Forward-looking information
This press release may contain indications of the Group's objectives, prospects and development paths as well as forward-looking statements. Although these indications and statements are based on data, assumptions and estimates considered reasonable by
CONTACTS
Analysts & Investors | stéphanie.laval@fnacdarty.com +33 (0)1 55 21 52 53 | |
marina.louvard@fnacdarty.com +33 (0)1 72 28 17 08 | ||
Press | audrey.bouchard@fnacdarty.com +33 (0)6 17 25 03 77 | |
leo.le.bourhis@fnacdarty.com +33 (0)6 75 06 43 81 |
APENDIX: DEFINITION OF ALTERNATIVE PERFORMANCE INDICATOR
Free cash flow from operations | + Payment of rents within the scope of IFRS 16 = | Free cash flow from operations, excluding IFRS 16 |
Net cash flow from operating activities, less net operating investments | Free cash flow from operations, including cash impacts relating to rents within the scope of IFRS 16 |
1 Excluding IFRS 16.
2 Excluding IFRS 16
3 Ratio (net debt/EBITDA) excluding IFRS16 which will be assessed at the end of June each year.
4 Proposal submitted to a vote at the General Meeting on
Attachment
- CP_Fnac Darty Everyday_vDEF_ENG
© OMX, source