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Colruyt sold more last year due to corona, but lost customers to the competition. The profit margins remained stable only thanks to a one-off windfall of 31 million euros. The supermarket chain expects to make less profit this year.
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Colruyt
did not present an optimistic report on Tuesday. The retail group scored within analyst expectations (see stake), but there is cause for concern about the future. Colruyt was only able to keep the profit margins stable last year thanks to a one-off windfall. It transferred its Eoly energy activities to a new holding company and received 31 million euros in exchange.
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Colruyt’s performance
In the financial year that ended at the end of March, Colruyt achieved a turnover of 9.93 billion euros, or 3.7 percent more. This is in line with analyst expectations. The same applies to the gross operating profit (EBITDA) of 850 million euros.
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Operating profit (EBIT) was slightly lower: at 523 million euros, versus the expected 550 million. The margin of 5.3 percent was in line with the analyst consensus collected by the bank ING. This amounted to 416 million euros, compared to the expected 442 million.
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Without that effect, the EBITDA margin (gross operating profit) would have fallen from 8.4 to 8.3 percent, the EBIT margin (operating profit) from 5.3 to 5 percent.
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In addition, the group expects last year’s net result – even without one-off windfall – to be ‘hard to match’ in the current financial year.
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Colruyt expects less profit because, unlike last year, there are no hoarders to boost turnover. “At the same time, there will be additional corona costs,” says financial director Stefaan Vandamme. ‘We are giving our employees extra holidays and breaks until July. And we will continue to deploy security personnel. Moreover, our stores still attract fewer people than before corona.’
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Closed night shops
This phenomenon marked the past financial year. Although turnover increased, Colruyt lost customers to the competition. The joint market share of Colruyt, OKay and Spar decreased from 32.1 to 31.3 percent. ‘We are not satisfied with that,’ says Vandamme. ‘But we are not worried, because we continue to grow, albeit in an even faster growing market. That is less bad than losing ground in a stable market.’
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The problem lies with the large Colruyt stores. Because the Spar and OKay neighborhood stores grew by more than 10 percent. Convenience stores became more popular as people shop closer to home. Carrefour and Delhaize benefited more from this trend than Colruyt, because they have more local shops.
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We are not satisfied with a declining market share. But we’re not worried.
Stefaan Vandamme
Financial director Colruyt Group
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In addition, Colruyt was waived due to the closure of the night shops. Many operators get their merchandise in the large Colruyt supermarkets.
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Colruyt brands such as Dreamland and Bike Republic (ex-Fiets!) also sold less because the stores were closed for a while. In addition, the DATS 24 filling stations were under pressure.
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Higher costs
The fact that Colruyt was able to keep its profit margins stable last year can partly be explained by the fact that the chain gave fewer discounts. Colruyt lowers its prices when its competitors do. Shortly after corona, the government banned discounts. In the current financial year there are as many discounts as in the past. This also puts pressure on profits this year.
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We continue to invest in new warehouses, stores, digitization and automation.
Stefaan Vandamme
Financial director Colruyt Group
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Moreover, Colruyt continues to invest unabated. It is investing in new warehouses for the Newpharma pharmacy, the Collect&Go web store and the French Colruyt stores. ‘We are also opening new stores and investing in automation and digitization’, says Vandamme. ‘That will lead to growth in the future.’ After a test project, Colruyt wants to deliver groceries to home on a larger scale from the autumn.
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Although the company is under pressure, shareholders should not settle for less. Colruyt increases its dividend. It increases from gross 1.35 to 1.47 euros.
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Colruyt indirectly spoiled its shareholders even more over the past year and a half. Last year, it bought 52.5 million euros of its own shares. Since March, Colruyt has bought another 22.4 million euros.
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