Migros results for 3Q 2016
08 November 2016
3Q 2016: + 52 new stores, total of 1,575 stores
9M 2016: + 194 new stores
Migros’ consolidated sales grew by 16.4% and reached TL 8,159m in the nine months of the year. Domestic sales revenue rose by 18.5% in the same period. Growth momentum of domestic operations in 3Q2016 continued to be strong just like it was in the first half. Albeit tough competition in the food retail market, domestic growth trend did not lose momentum in the third quarter. Migros continued to gained traffic and market share as a result of our long standing efforts to give value back to our customers, continuous focus on service quality and rich product assortment.
Listening to the customers, offering them the most relevant product range with better pricing, identifying new sales channels and increasing our footprint are the pillars of Migros’ strength in the market. Under the current macro climate, it has become all the more important to focus on value, helping our customers with their family budget without compromising on the differentiated Migros shopping experience.
The consolidated gross profit increased by 16.1% in 3Q 2016. Vigilant cost management as well as efficiency gains on the supply chain continued to compensate for unit cost increases. In the third quarter, the consolidated EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) was TL 211m, with a 13.6% increase. In 3Q2016, the EBITDA margin sustained, went back to 2015 levels and reached 6.9% (3Q 2015: 7.0%). EBITDA margin was 6.4% in 9M 2016, in line with the full year guidance of 6.0% to 6.5%. EBITDAR (EBITDA before rent) rose by 13.6% y-o-y in 3Q 2016, representing a margin of 11.6% (3Q 2015: 11.9%).
The Company’s operational profitability is undermined by mostly FX losses and one-off charges resulting in a net loss of TL 56.9m in 9M 2016.
In the nine months of the year, 194 new stores, including 1 Ramstore in Macedonia, were added to the store network. With the additional 8 stores opened in October, the total number of stores reached to 1,578 as of October 31, 2016.
In 3Q 2016, the consolidated sales grew by 16.5% and EBITDA margin was 6.9% despite the impact of the minimum wage hike at the beginning of the year. Resilient top-line growth of especially domestic operations, strong vigilance over costs and efficient working capital management are expected to enable Migros to deliver a strong operating performance during the rest of the year.
As disclosed before, Migros has been waiting for the regulatory approval to finalize the acquisition of 95.5% of Tesco-Kipa shares.
Migros remains the only food retailer in the sustainability index as disclosed by Borsa Istanbul last month. Furthermore, Migros’ CDP (Carbon Disclosure Project) climate change score was upgraded to A- in 2016. Accordingly, Migros succeeded to be among the companies in leadership category.
The number of new store openings reached 202 in the first ten months of the year. Following a strong quarterly operational performance, the company revised its 2016 full-year new store openings guidance upwards, from 150-200 to 220+ stores. Consolidated sales growth of Migros in FY 2016 is expected to be parallel to the top-line growth in 9M 2016. Migros aims to maintain the EBITDA margin within the range of 6.0%-6.5% in 2016.
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