Musti Group plc Financial Statements Release 1 October 2020 – 30 September 2021

Musti Group plc Financial Statements Release              16 November 2021 at 8:30 a.m. EET

Musti Group plc Financial Statements Release 1 October 2020 – 30 September 2021

Strong growth with best-ever quarterly EBITA

July – September 2021

• Group net sales totaled EUR 91.5 million (76.9 million), an increase of 18.9%.
• Like-for-like sales growth was 10.9%.
• Adjusted EBITA was EUR 11.2 (10.1) million, up by 11.2%.
• Adjusted EBITA margin was 12.2% (13.1%).
• Operating profit increased by 10.0% to EUR 8.6 (7.8) million, representing 9.4% (10.2%) of net sales.
• Profit for the period totaled EUR 5.2 (5.9) million.
• Earnings per share, basic was EUR 0.16 (0.18).
• Number of stores grew to 312 (293).

October 2020 – September 2021

• Group net sales totaled EUR 340.9 million (284.4 million), an increase of 19.9%.
• Like-for-like sales growth was 11.8%.
• Adjusted EBITA was EUR 36.8 (29.8) million, up by 23.4%, offset by additional costs of EUR 1.5 million due the warehouse consolidation project that was executed in Q1.
• Adjusted EBITA margin was 10.8% (10.5%).
• Operating profit increased by 45.1% to EUR 28.4 (19.6) million, representing 8.3% (6.9%) of net sales.
• Profit for the period totaled EUR 20.9 (11.8) million.
• Earnings per share, basic was EUR 0.62 (0.37).
• Number of stores grew to 312 (293).
• Number of loyal customers grew to 1,297 thousand (1,151 thousand).
• The Board of Directors proposes to the AGM that shareholders will be paid a capital return of EUR 0.44 per share.

The figures in parenthesis refer to the comparison period, i.e. the same period in the previous year, unless stated otherwise. Musti Group’s financial year is from 1 October to 30 September.

Key figures

EUR million or as indicated	7-9/2021	7-9/2020	Change %	10/2020-9/2021	10/2019-9/2020	Change %
Net sales	91.5	76.9	18.9	340.9	284.4	19.9
Net sales growth, %	18.9%	19.2%		19.9%	15.3%
LFL sales growth, %	10.9%	12.2%		11.8%	11.5%
LFL store sales growth, %	8.2%	7.9%		8.8%	7.3%
Online share, %	22.3%	22.1%		23.1%	22.5%
Gross margin, %	45.7%	44.0%		45.7%	43.8%
EBITA	10.3	9.4	9.4	34.9	25.5	36.6
Adjusted EBITA	11.2	10.1	11.2	36.8	29.8	23.4
Adjusted EBITA margin, %	12.2%	13.1%		10.8%	10.5%
Operating profit	8.6	7.8	10.0	28.4	19.6	45.1
Operating profit margin, %	9.4%	10.2%		8.3%	6.9%
Profit/loss for the period	5.2	5.9	-12.1	20.9	11.8	77.8
Earnings per share, basic, EUR	0.16	0.18	-12.2	0.62	0.37	69.0
Net cash flow from operating activities *)	15.0	20.4	-26.3	54.9	41.9	31.3
Investments in tangible and intangible assets	3.2	1.9	70.1	12.9	8.9	44.5
Net debt / LTM adjusted EBITDA	1.9	2.0	-2.3	1.9	2.0	-2.3
Adjusted EBITDA	17.2	15	14.6	58.8	48.1	22.4
Number of loyal customers, thousands	1,297	1,151	12.6	1,297	1,151	12.6
Number of stores at the end of the period	312	293	6.5	312	293	6.5
of which directly operated	280	231	21.2	280	231	21.2

*) Interest and other finance income received has been reclassified from net cash flow operating activities to net cash flow from financing activities.

CEO’s comments

On behalf of the Musti team I am delighted to report that the most recent quarter was the strongest in the group’s history. 

We achieved our strongest EBITA growth; accelerated our two-year like-for-like sales growth from 31% to 42%; gained market share in all markets; acquired a record number of new customers, including the parents of more than 50% of puppies welcomed into families and did so while increasing our gross margin. It highlights that our growth investments are paying off in the front end, supporting our short- and long-term growth goals.  We will not let it stop there though.  We continue to seek ways to improve our customer experience and value proposition, with a key opportunity being to improve the performance of our back end, specifically supply chain.  During the year we commenced the next phase of our warehouse consolidation project and it has not proceeded as quickly as we had planned and has burdened our full year result, impacting EBITA by approximately EUR 1.5 million. The actions we have taken today will be visible and efficiencies gained during financial year 2022.

We are excited about what financial year 2022 holds seeing great opportunities for continued growth coupled with efficiency gains from the firm actions that we have and are taking.

The September quarter delivered strong quarterly growth development:

• Group net sales increased by 18.9% to EUR 91.5 million in Q4. The increase was largely due to like-for-like growth in all countries and the increasing number of new customers together with an increased number of directly operated stores. Like-for-like growth amounted to 10.9%.

• Store sales increased by 21.7% to EUR 68.6 million, driven by the increased number of stores and strong like-for-like store sales growth in all countries. Like-for-like store sales growth amounted to 8.2% (7.9%). Store sales growth in the comparison period were negatively impacted by restrictions relating to the COVID-19 pandemic.

• Online sales increased by 20.4% to EUR 20.4 million. Online sales accounted for 22.3% (22.1%) of total net sales in the fourth quarter.

All the important indicators supporting our growth are going into right direction.

• We increased the number of our loyal customers by 13%. This was supported by the continuous increase in puppy registrations in the Nordics and us winning more than our market share of the new puppies by actively engaging the new puppy parents to Musti ecosystem and putting effort on the cooperation with the breeders.
• We grew the average spend per loyal customer by 5% to EUR 188.3.
• We overdelivered network expansion increasing the number of own directly operated stores by 49 stores
• Our Net Promoting Score measuring customer satisfaction has remained on an excellent level.
• We increased the share of own and exclusive products leading to a very strong gross margin development.

Supported by the strong sales growth, Group’s adjusted EBITA increased by 11.2% to EUR 11.2 million and was the best quarterly EBITA in Musti Group’s history.

I am extremely pleased with the gross margin development in Q4. Gross margin increased to 45.7% (44.0%) even though slightly burdened by increasing freight costs from Asia, supported by the favorable product mix and efficient category management. Operating profit increased by 10.0% to EUR 8.6 million.

I want to sincerely thank all of our employees for the great engagement with serving our customers in the best possible way. I look forward to the financial year 2022 with a great deal of confidence, based both on the positive signals we see in the market and on the positive energy within the organization. We are excited to develop our ecosystem to further increase the customer experience. We strongly believe the end-to-end ecosystem presents a unique value proposition enhancing and strengthening sticky customer relationships and differentiating us from the competitors.  The aim is to create a one-stop-shop for the customers – all you need is Musti.

David Rönnberg,

CEO

Financial targets

The long-term financial targets updated by the Board of Directors on 3 May 2021 are:

Growth	Net sales to reach at least EUR 500 million by the financial year 2024 by continuation of strong customer acquisition momentum and increasing share of wallet.
Profitability	Mid- to long-term adjusted EBITA margin of at least 13 per cent with steadily improving profile. Margin increase is expected to be realised through steady gross margin and improving operating leverage.
Capital structure	Maintain net debt in relation to adjusted EBITDA below 2.5x in the long term.
Dividend policy	To pay a dividend corresponding to 60-80 per cent of net profit. Any potential dividend shall take into account acquisitions, the company’s financial position, cash flow and future growth opportunities.

The financial targets are forward-looking statements and are not guarantees of future financial performance.

Webcast for analysts and media

A live webcast for analysts and media will be arranged on 16 November 2021 at 14:00 EET. The event will be held in English. The report will be presented by CEO David Rönnberg and CFO Toni Rannikko. The webcast can be followed at https://mustigroup.videosync.fi/2021-q4-results.

A recording of the webcast will be available later at the company’s website at www.mustigroup.com/investors/reports-and-presentations/.

The telephone conference can be participated by calling:

Finland: +358 9 817 10310

Sweden: +46 856642651

UK: +44 3333000804

US: +1 6319131422

The participants will be asked to provide the following PIN code: 67350102#

Helsinki, 16 November 2021

Board of Directors

The information in this Financial Statements Release is unaudited.

Further information:

David Rönnberg, CEO, tel. +46 70 896 6552
Toni Rannikko, CFO, tel. +358 40 078 8812                                                                                                                  

Essi Nikitin, Head of IR and Communications, tel. +358 50 581 1455

Distribution:

Nasdaq Helsinki
Main media
www.mustigroup.com

Musti Group in brief

Musti makes the life of pets and their owners easier, safer and more fun. We are the leading Nordic pet care company, and we operate an omnichannel business model to cater for the needs of pets and their owners across Finland, Sweden and Norway. We offer a wide, curated assortment of pet products. We also provide pet care services such as grooming, training and veterinary services in selected locations.

Musti Group’s net sales were EUR 341 million in the financial year 2021. At the end of the financial year 2021, the company had 1,397 employees, 1.3 million loyal customers and 312 stores.