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📈 M.Video continues expansion through compact format stores
Despite the current situation with the growth of the debt burden, M-Video does not intend to retreat and continues to expand the geography of its presence, mastering new store formats.
🏗 In the first 9 months, 68 stores of the new, efficient compact format were opened in 16 new cities in Russia. In total, 100 facilities are planned to open in 2024.
🛍The new format is half the size of the existing one, its average area is 500-600 square meters. This allows for significant savings on investments in the retail outlet (3 times cheaper) and reduces rent and turnover per square meter. This is much higher than usual.
📈The effects are already reflected in the financial statements. The EBITDA margin for small stores exceeds traditional stores. Therefore, M.Video expects to expand its stores in the near future (more than 100 stores will be opened annually).
📲As the offline business expands, the online sector is also developing. At the same time, some of M.Video's products are sold through large third-party trading platforms. Meanwhile, the company is working on its own development.
✔️This division combines offline and online divisions. As before, people prefer to make a significant part of their purchases directly in regular stores. And almost half of online orders are picked up at the nearest store. The share of orders using retail infrastructure consistently amounts to 90% of the total number of orders. In this regard, expanding and opening offline stores in new cities is an important part of online business growth.
💰 Returning to the issue of debt burden, according to the results of the first half of 2024, the ND/EBITDA ratio is 3.86 times, which is slightly higher given the current base interest rate. However, we also see positive dynamics: a decrease in net debt and an increase in LTM EBITDA.
😀 To sum it up, it is commendable that the management did not give up and continues to work on increasing store penetration and brand awareness. As mentioned above, the new format is already yielding positive results, but this will only be confirmed at the end of the year. We hope that M-Video will be able to confidently overcome all difficulties and maintain its market share. We continue to monitor developments.
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