Earnings call transcript: SECONOMY AG sees strong Q1 growth despite margin pressure

SECONOMY AG reported robust growth in its first-quarter earnings, with sales rising by 9.5% year-over-year, outpacing its trailing twelve-month revenue growth of 0.9%. However, competitive pressures led to a decline in gross margin by 40 basis points. The company remains optimistic about its future, expecting moderate sales growth and a clear increase in adjusted EBIT. According to InvestingPro analysis, the company maintains a GOOD financial health score of 2.66, suggesting solid operational fundamentals.

Key Takeaways

• Q1 sales increased by 9.5% year-over-year.
• Adjusted EBIT rose 13% to €279 million.
• Gross margin declined by 40 basis points.
• Strong market share gains in Germany.
• Confidence in achieving €500 million EBIT target by 2026.

Company Performance

SECONOMY AG demonstrated strong performance in the first quarter, with sales increasing by 9.5% compared to the same period last year. The company showed resilience in a volatile market, gaining significant market share in Germany, Spain, and the Netherlands. Despite a challenging environment, SECONOMY capitalized on its omni-channel strategy, which has proven effective across most operating countries.

Financial Highlights

• Revenue: 9.5% year-over-year growth.
• Adjusted EBIT: €279 million, up 13%.
• Gross margin: Declined by 40 basis points.
• Free cash flow: Robust at €1.5 billion.

Outlook & Guidance

SECONOMY AG is optimistic about its future, forecasting moderate total sales growth of 3-5% and a clear increase in adjusted EBIT. The company is targeting €500 million in EBIT by 2026, focusing on growth areas such as services, marketplace, and retail media. InvestingPro data shows analysts expect earnings per share to reach €0.39 in FY2025, while the company maintains a debt-to-equity ratio of 5.1x. Get access to the comprehensive Pro Research Report for detailed analysis of SECONOMY’s growth strategy and financial outlook.

Executive Commentary

CEO Karsten Wilberger emphasized the company’s transformation, stating, "We are no longer just a traditional retailer. We’re transforming into a growing profitable omni-channel service platform." CFO Kai Ulrich Teysner expressed confidence in the company’s growth areas, saying, "We do see all the proportional growth in those growth areas and that gives us good confidence that we can achieve those numbers."

Risks and Challenges

• Competitive pressure impacting margins.
• Volatile market conditions, particularly in Turkey.
• Weak performance in Poland.
• Inflationary pressures affecting consumer spending.

SECONOMY AG’s strong start to the year positions it well for future growth, despite facing challenges in certain markets. The company’s strategic focus on innovation and market expansion is expected to drive performance in the coming quarters.

Full transcript - CEC Entertainment Inc (CEC) Q1 2025:

Conference Recording Operator: The conference is now being recorded.

Conference Moderator: Ladies and gentlemen, thank you for standing by. Welcome and thank you for joining the SECONOMY AG Q1 twenty twenty four-twenty five results presentation. Throughout today’s recorded presentation, all participants will be in a listen only mode. The presentation will be followed by a question and answer session. I would now like to turn the conference over to Fabian Caron, Vice President, Investor Relations.

Please go ahead.

Fabian Caron, Vice President, Investor Relations, SECONOMY AG: Good morning, everyone, and welcome to our Q1 results presentation. By my side today are our CEO, Karsten Wilberger and our CFO, Kai Ulrich Teysner. Before we dive into the detail of our performance, I want to remind you that we will be discussing certain forward looking statements. Please refer to the disclaimer for more information. You can also find the presentation slide on our website for your reference.

This call is being recorded and will be accessible on the website later today. Now without further ado, I’m delighted to hand over the call to Karsten, who will walk us through the highlights of the first quarter. Karsten, the stage is yours.

Karsten Wilberger, CEO, SECONOMY AG: That’s great. Thank you, Fabienne, and good morning, everyone, and thanks for joining us. Today, we are proud to present to you the results for the first quarter of the current fiscal year twenty twenty four-twenty twenty five. And as you know, Q1 is always a particularly important quarter for SIKONOMY and MediaMaxxertorn. So let’s turn to Slide three, please.

Ladies and gentlemen, we have delivered an outstanding peak season. We created great customer demand, executed exceptionally well across all channels and delivered great results. We entered the quarter facing uncertainty and a challenging market environment, and yet we delivered once again. And this is proof that our strategy is gaining momentum and that the real power of MediaMark Sartorn is becoming more visible than ever. And even when the market gets tougher, our business model stands strong.

And we navigated these challenges with confidence and gained significant market share across our portfolio. And nowhere is this more evident than in Germany, where we outperformed the market and grew our share by an impressive 110 basis points. And this success was the result of our strategy gaining momentum, of course, of intense preparation, hard work and flawless execution by our teams. And I’m incredibly proud of what we achieved together. Let me give you some color on what made the success possible.

First, we followed a well prepared and flawlessly executed go to market plan. Secondly, we continue to drive great online growth, attracting new customers with targeted campaigns that generated strong interest. And one proof point, the app visit surge by 23% and our digital engagement is clearly gaining traction. And this wasn’t just an online success. Our strategic efforts also delivered notable offline growth.

And thirdly, when customers turn to MediaMarkt Saturn, they found exactly what they were looking for. We ensured top availability with over 90% of our products ready for purchase, meeting great customer demand. And we ended the year with excellent stock levels and freshness levels. The future of retail is omni channel and we proved it once again By seamlessly integrating our stores with our online platforms whether through our app or website, we enhanced the shopping experience and the result a 6% increase in our online conversion rate. And also our ninety minute MediaMark delivery service powered by Uber (NYSE:UBER) in Germany remained a customer favorite.

And on Black Friday alone, more than 3,000 orders were placed through the service. And on December 24, we left the market being the only retailer offering this unique last minute delivery service. And none of this would have been possible without the passion and dedication of our team. They put our customers first every single day and it shows our Net Promoter Score rose by three points to 59. A huge thank you to every team member for making this happen and for the excellent Q1 performance.

Now let’s put this performance into numbers. Our start to the twenty twenty four, twenty twenty five fiscal year has been nothing short of remarkable. Sales grew by 9.5% compared to the previous year, driven by a great 7.8% like for like growth. And that’s a clear indicator of our strong customer traction. We gained significant market share, particularly in Germany, where we expanded our position by over 110 basis points.

We delivered our eighth consecutive quarter of positive adjusted EBIT growth, increasing by 13% to EUR279 million in the first quarter. And our Net Promoter Score rose by another three points reinforcing our strategy to enhance customer satisfaction and long term loyalty. And with these great Q1 results, I’m pleased to confirm that we are well on track to achieve our midterm targets and we remain very confident in our positive outlook for the year. Slide five, please. Looking at the first quarter, we ticked all the boxes on our growth plan.

Sales increased across all categories. Our brick and mortar sales grew by 7.2% year over year and online sales surged by 15.9%. Our online share improved by two ten basis points, reaching 28.6% in house share. And this underscores the success of our mobile first omni channel approach, proving that both online and offline can grow together. And our growth businesses delivered impressive results.

Operational service and solutions saw a great increase. Marketplace growth hit 90% in gross merchandise value, GMV. Retail media income more than doubled and we are firmly on track to reach our revised and increased ambition of $100,000,000 retail media income mid term. Looking at our country performance, our largest markets Germany, Spain, Austria and Italy delivered great results. We always emphasize our lead strategy, meaning we aim to hold a number one and number two position in every market we operate in.

And there are two countries where we are not yet in a leading position, Switzerland and Poland. In Switzerland, we have made excellent progress over the past nine months, including a great Q1. Poland, however, remains a challenge and we have work to do. That said, I am confident that we will find the right approach and solutions. Kai will share more details on this later.

And what does this operational acceleration mean for our financials? We saw a significant increase in profitability with great EBIT improvement and the same positive trend applies to earnings per share. Adjusted EPS increased by $0.04 year over year, while reported EPS remained stable. Most importantly, we generated a strong free cash flow of billion in Q1. And let me emphasize free cash flow growth remains a tough priority.

Let’s turn to the peak season and product highlights. So what product groups drove our strong performance during Black Friday and the Christmas season? Well, first IT led the way with 12% sales growth. We achieved strong market share gains in the premium laptop segment in particular, and we may now be at the beginning of replacement cycle. Many customers upgraded their IT infrastructure during the COVID period and with AI advancements and the imminent Windows refresh in ’25, we expect continued momentum in this category.

Second, our mobile segment also grew by 12% with significant market share gains. We didn’t just sell more devices, we increased our attach rate for accessories and services. And third, domestic appliances delivered 8% growth with floor care, vacuum cleaning robots, hair care, laundry and dry appliances driving strong demand. Looking ahead, we expect continued growth across all these categories in this fiscal year. Now let’s turn to Slide seven, please.

This is a key chart we share every quarter to track progress on our key pledges. In Q1 of this financial year, we made clear progress across all relevant KPIs. But now let’s zoom in on retail core and then on our growth businesses. Our retail core is stronger than ever, driven by our omni channel strategy and a focused approach to multi format store openings. In Q1, we prioritized expanding our multi format store network.

Across our countries, we opened 21 Express stores and eight Smart stores. And in Germany, we launched five Smart stores in former gravis locations. In Switzerland, we successfully integrated 19 former M electronics stores into our portfolio as Express and Smart, contributing to our great progress in Switzerland I mentioned earlier. And in Italy, we strengthened our presence with further shop in shop locations in partnership with the supermarket chain Bennett. And at the same time, we continued to expand our online business.

Online sales grew by 15.9%, reinforcing the success of our digital strategy. And I’m very happy to report that we completed our state of the art web shop and app rollout now across all our countries. And our app gained particular traction with user numbers increasing by 18% and total order value increasing by 30%. And this is a true omni channel success story, because we are strengthening our digital capabilities, we’re expanding our physical presence and ensuring that MediaMarkSaturn is wherever our customers need us and we are growing in all channels. So when we presented our full year results in December, I shared how we are unlocking the power of our rich customer data to become even more relevant and drive stronger customer loyalty.

And I want to continue to explain what we’re doing with data and how we’re applying that for a better customer experience. And I’d like to explain that after more than nine months of preparation now, we are ready to roll out a personalized shopping experience, as we call it, in Germany, Switzerland, Austria and soon Spain. And this initiative will set us apart from the competition by creating signature experiences across the entire shopping journey, both online and in stores. For example, customers can now book online appointments before visiting our stores. And in the store, we provide a personalized welcome and guided store visit experience.

Our sales and service teams offer more tailored advice based on individual preferences. There’s a lot of training going on and customers can stay connected with their local store across multiple channels, making interactions smoother and more personal. This is about making every touch point more meaningful. And with online appointment booking, we add more convenience and value to store visits. Customers can share what they are looking for in advance, allowing our experts to prepare and deliver a truly personalized experience.

And this is how we turn data into a competitive advantage by making every interaction smarter, more relevant and more personal. And as we say, my customer, my responsibility. So I will keep you updated on all these initiatives and over time of course also share the numbers. Let’s now turn to our growth businesses. Our growth business include operational services and solutions, marketplace, private label and retail media.

All of our growth businesses played a great role in driving profitability. And today they represent around one third of our total gross profit and are key drivers of EBIT growth. Now let’s take a closer look at operational service and solutions on Slide 11. We delivered remarkable 23% income growth in Service and Solutions. And this makes it a key contributor to our great overall performance.

The entire Service and Solutions portfolio performed exceptionally well with rising attach rates proving that customers see real value in our offerings. Looking ahead, we will fully integrate our service and solutions portfolio also into our marketplace And this creates even greater growth potential. And this means we are now driving service and solutions growth in our core business and simultaneously adding momentum through our marketplace business. Another exciting new addition has been our live video consultation, which launched in April in Germany and Austria, and the response has been outstanding. On Black Friday alone, we handled more than 1,000 live video calls.

We partnered with 20 key brands to provide expert knowledge and real time product support. Customers love it. Conversion rates are strong and customer satisfaction is super high with an NPS of 88. And this is a great example how we are innovating in customer service, making expert device more accessible, more interactive and ultimately more valuable. Let’s turn to Retail Media and Marketplace.

I’m very pleased to report great momentum in both Retail Media and Marketplace. These business make us substantially stronger, creating greater value for both our customers and our partners. And our strategy is taking shape. We’re enhancing customer loyalty, expanding our offerings and diversifying our income streams. And this is how we evolve our business model.

And I’m both happy with our progress and confident in what’s ahead. Our marketplace gross merchandise value grew significantly year over year increasing by around 90%, a major step forward. We also saw strong growth in refurbished products meeting rising customer demand for more sustainable and affordable options. And our Retail Media business is accelerating with Q1 income doubling compared to last year, and we are already preparing for the next wave of Retail Media growth. We launched our new product in store ads in five countries and opening another exciting income stream.

And with the success of our growth businesses, we are no longer just a traditional retailer. And as I always say, we are transforming into a true omni channel service platform, offering more value, more convenience and more opportunities for both customers and partners. And now let’s take a look at our sustainability initiatives on Slide 13. In the first quarter, demand for eco friendly products and services remained high, and that’s a clear sign that customers are making more conscious purchasing decisions. Our better way sales share or label for sustainable products continues to grow.

The number of trade in products has increased, supporting circular economy efforts and refurbished product sales have also seen significant growth. Sustainability is not just a responsibility, it’s an opportunity to create value for our customers, our business and the environment. And with that, I will now hand over to Kai, who will take you through a deep dive into our great financial development.

Kai Ulrich Teysner, CFO, SECONOMY AG: Thank you, Carsten, and good morning to you all. Now let me share some more detail of our Q1 results. We will start with Slide 15. Carsten already highlighted in the beginning, this now makes eight consecutive quarters with positive adjusted EBIT growth. And to be fair, this is in a market that does remain volatile and competitive.

So our latest results really are great. One of my key messages in the next few minutes will be that our growth businesses continued to perform really well and now account, as Karsten already pointed out, for around a third of our gross profit. But let’s start with headline numbers. We grew sales in Q1 by an impressive 9.5%. Please keep in mind, this is adjusted for currency and portfolio changes and it is pre IAS ’29.

And our like for like sales grew 7.8%. So we really did hit the ground running this financial year. In terms of countries, all countries contributed to this except for Poland. And I’ll spend a word on Poland. In Poland, the market is really aggressive.

And to be fair, we also lost sales and market share there. We had already last year put in place some structural measures. For example, we rolled out our Groupwide online platform, and we did ramp up our service portfolio, especially around goods delivery. In addition now, a new management team will be taking over shortly, and we do look positively at the Polish market. Like in other countries recently, we are determined to turn the business around again, but this will take some time.

Back to overall sales. I’m really pleased that our growth was again driven by both bricks and mortar and online. This then resulted in the strong increase of market share, which you heard from Carsten, Especially in Germany, which given the macro environment, I do understand is a focus for investors, we strongly grew market share. Then on bottom line, our adjusted EBIT on a group level reached $279,000,000 in the quarters, thus $32,000,000 better than previous year. That represents a 20 basis points margin increase to now 3.7%.

So in summary, our strategy based on omni channel and growth businesses and the rigorous transformation and execution do enable us to deliver a remarkable performance in a pretty competitive sector. Now in the second step, let’s look at segments, starting with DACH and sales. We saw great like for like growth of 5.4% driven by all countries in DACH and a similar like for like as well as in our home market Germany. To reiterate, we strongly gained market share both in the region and in Germany. Profitability in DACH improved by $24,000,000 in adjusted EBIT that’s equivalent to a 40 basis points margin increase.

And second, in Western And Southern Europe, we grew sales significantly in all countries again, but more importantly, we gained market share in all countries. Spain and The Netherlands continue to drive strong growth, but Italy reported again positive like for like, which by now really marks a trend break from most quarters last year. On profitability, we also increased our adjusted EBIT by EUR 15,000,000 and our margin again by 40 basis points. Moving to Eastern Europe. Sales once again driven by Turkey.

As anticipated, the market continues to slow down in line with inflation. Profitability is normalizing as expected, and we finally recorded a EUR 25,000,000 adjusted EBIT that’s equivalent to a 2.4% margin. On Poland, I’ve already commented. Finally, allow me a sentence on our Others segment, which primarily represents holding costs in our private label business. I’m satisfied to say that we improved by another SEK 13,000,000 this quarter.

So you do see our strategic cost control really contributing. Now let me take another look at another dimension of our business, not the segments, but the business areas. We start with one of our growth areas, Service and Solutions. On Slide 18, you can see that we grew sales over proportionally with a plus of nearly 24%, like the classical retail part driven by both online and offline, so truly omni channel. All service categories increased in Q1, but the strongest growth came from consumer financing.

Perhaps you remember that this service is now available on our marketplace in Germany, so for third party resellers and is being well received by our customers with a plan to roll this out to other countries soon. Then the final dimension, online. Our first party online sales also grew over proportionally with a 15.9 increase and now reached a total of around $2,000,000,000 We did actually grow across all regions with particularly strong performances in Turkey, Belgium, Germany, Switzerland, Hungary and Austria. And on the back of this, our online sales share increased to nearly 29% in the quarter, again a pretty great performance. So after these different cuts on our growth fields and our omni channel performance, let me come back to our EBIT development as a whole on Slide 20 and dissect it for you.

Most importantly, our absolute gross profit increased by roughly 90,000,000 in the quarter driven by our great sales growth in core retail and in particular in the growth fields. In percentage, our gross margin did decrease by 40 basis points, essentially impacted by a very competitive environment for the peak season. But to reiterate, overall gross profit was up 7% year over year. Non cost and OpEx. Our adjusted OpEx ratio improved by another 50 basis points, thanks on the one hand side to our great top line growth as well as to our relentless focus on cost.

As I shared already with our full year numbers, our specific program on headquarter and administrative costs, which we call DRIVE, has now been delivered. And I just showed you the results in the other segment a few minutes ago. Now what we add are three additional areas with dedicated cost initiatives: technology cost, supply chain and logistics costs and finally, media spending. Overall, we target additional cost savings in the mid double digit million range for the full year. But all three initiatives are already delivering tangible results in Q1.

Now turning to the full overview on Slide 21. Walking down from the adjusted EBIT of EUR $279,000,000, we recorded EUR 50,000,000 negative of non recurring items. The bulk of those are first, a $29,000,000 impairment for Poland. As just explained, we are not happy with the development in Poland and we have started to restructure the business with both short term and long term initiatives. You can expect us to update you throughout the year.

However, this performance did now meant that we had to record a write off both for goodwill and for assets. Secondly, in the non recurring items, we also booked a SEK 7,000,000 negative for our share in Snak. That’s mainly including the dilution of our stake. And for your information, we now hold a 21.95% stake in Flak. And then thirdly, another $7,000,000 negative for IAS 29 hyperinflation accounting.

Consequently, our reported EBIT does reach $229,000,000 which is still a robust increase of $11,000,000 year over year. And further down, our financial result came in at minus EUR 57,000,000. This is mainly due to our bond refinancing from last year as well as to currency impacts. The latter is non cash and mainly represents the translation effects from the potashlotti to euro. Then tax, we again paid little tax with a 13.9% tax rate on an underlying basis, so which it means if you take out FLAC, if you take out IAS 29 and the impairment on Poland, our tax rate was an impressive 11.3% pretty great level.

This is the tax rate you should use for the year, so even lower than we initially anticipated. All in all, for the full year, our reported net results and EPS are stable. Looking at our performance adjusted for the impairment of Poland, FLAC and pre ARIAS twenty nine, in other words, our operating performance, our adjusted EPS increased by 14% to To me, that’s a very solid performance. Then let me close with free cash flow on Slide 22. Looking at this quarter, our free cash flow was robust with EUR 1,500,000,000.0.

And then looking at the underlying dynamics from left to right. First, our EBITDA improved by EUR 40,000,000 to AUD $423,000,000. Next (LON:NXT), working capital. As you’ve heard me emphasizing throughout last year, we use our working capital to drive growth, especially through better product availability. As you can see, we were really good.

We’ve also seen the great effect on the top and on the bottom lines in Q1. Then on taxes, you can see a positive year over year effect of EUR 24,000,000 and actually a cash inflow of EUR 4,000,000 in line with the expectations. Finally, other operating cash flow was positive with EUR 117,000,000. The EUR 97,000,000 improvement year on year is mainly due to the increase in VAT receivables linked to our strong sales growth and that’s coupled with some insurance payments. All in all, we generated a strong positive free cash flow of 1,500,000,000.0, 20 3 million more than last year.

That’s a robust result for this very, very strong quarter. That completes the financial section. Let me hand back to Karsten for his closing remarks.

Karsten Wilberger, CEO, SECONOMY AG: Yes. Thank you, Kai. And now let’s turn to our full year outlook. We confirm our positive outlook for the year ahead. And despite the volatile economic conditions expected in 2024, ’20 ’20 ’5, we remain confident in our ability to drive further growth.

Our performance is not just dictated by the market. We set the pace, we break away and we define our future. So we expect a moderate increase in currency and portfolio adjusted total sales with all regions contributing to growth. And moderate means three to five percentage points growth. We also anticipate a clear increase in adjusted EBIT, primarily driven by DACH, Western And Southern Europe.

And here we feel very comfortable with the current consensus at million. Before summarizing and closing, maybe just a bit of an outlook on some exciting developments. Everyone is talking about AI and most of us are already using it in our daily lives from Chat, GPT, Gemini or Apple (NASDAQ:AAPL) Intelligence to AI powered smartphones, AI is no longer just a concept it’s becoming an essential part of everyday technology with rapid speed and rapid adoption rates. And at MediaMarkSatone, we do not just sell AI enabled products, we help customers understand them. Many come to us seeking advice, wanting to learn how to use AI and looking for guidance in this rapidly evolving space.

And this growing demand is clearly reflected in our sales. Our sales of AI enabled laptops were up 40% during the peak season, twice the market growth and allowing us to significantly expand our market share. And also the most recent Samsung (KS:005930) Galaxy S25 launch had a very strong start with high demand from customers. And looking ahead, we expect also entirely new product categories to emerge as seen as CES and Vegas and two trends stood out to me in particular. First, smart glasses, which are getting closer to mainstream adoption.

And secondly, a new generation of home robotics offering higher quality and greater capabilities than ever before. And one thing is clear, tech innovation keeps creating new opportunities for growth, and we are very well positioned and committed to lead the way. So let me now wrap up this presentation with Slide 26. And here are the key takeaways. First, Siconomy and Mediamaxathartone delivered exceptional results, outperforming in a challenging market environment.

Second, we gained great market share, strengthening our competitive position. Third, our growth businesses continue to accelerate and expand adding new revenue streams and reinforcing our business model. Fourth, we are making significant progress in leveraging data, enhancing the customer experiences with personalized services. Fifth, our focus remains sharp on cost, liquidity and profitability to ensure sustainable success. And finally, we confirm our positive outlook for the twenty twenty four-twenty twenty five fiscal year with confidence in our strategy and momentum on our side.

So ladies and gentlemen, the last eight quarters have made one thing clear, Our company is on the right path. We have delivered great results in a highly uncertain and competitive market. We have proven our resilience, stayed focused on our customers and continued to evolve our business model. We’re no longer just a traditional retailer. We’re transforming into a growing profitable omni channel service platform.

And I’m deeply convinced in our strong foundation, in our strategic direction, and most importantly, in this and our exceptional team. Thank you for attention. Now Kai and I look forward to your questions.

Conference Moderator: And the first question comes from Emmanuel Vignon, HSBC. Please go ahead with the question.

Conference Recording Operator: Yes. Hi. Thanks for taking my questions. The first one is, could you please give us some color about the German performance as well as the competitive environment? Secondly, what can we expect in terms of financial results for the full year?

And finally, what are the countries where you lost market shares? And could we expect some rationalization in the portfolio? Thank you.

Kai Ulrich Teysner, CFO, SECONOMY AG: Mona, this is Kai speaking. I’ll take those questions. So on Germany, look, we are aware that many are struggling on the German market, and we do also see this market volatile. But I can only reiterate what we’ve emphasized throughout this presentation. We entered this most important quarter for us extremely well prepared.

We executed extremely well. And so in Germany, we saw good market share gains and a strong, strong improvement of profitability. That’s what I can say in Germany. For the financial results, let me also reiterate what I commented on when we talked about the twelve months results. For the financial results for the full year, we do expect a small improvement on a twelve month basis, so compared to the prior year.

There are certain headwinds that we’re facing. These are primarily from our refinancing from a year ago from last summer on the bond side. We’ve also recently seen some improvements on the Turkish market in terms of interest rates, which are not yet reflected in our numbers for Q1. So we expect these to kick in from Q2 onwards. And overall, we just expect a small improvement versus the prior year on our financial results.

Then perhaps finally on market shares, again, I would go back to what we’ve emphasized. The one market where we are really facing headwinds is Poland. But I would repeat what we said. Look, we’ve put in place certain long term measures. I’ll reiterate my point about the online platform.

We’ve also started to look at the store portfolio in line with our overall strategy. So we’ve introduced different formats on the Polish market. And short term, we’ve now also reacted with a new management team. So putting all this together, I do have to be open here. I do not expect this to be an immediate turnaround in the next quarter, but this is what I would see in that market.

But I think the overarching message here is we have gained as a group strong market share throughout this quarter. So Poland is really the only exception for that. Let’s emphasize the positive one here. I hope that answers your questions.

Conference Recording Operator: Yes. Thank you.

Conference Moderator: And the next question comes from Fokker Basu Badabank. Please go ahead with your question.

Fokker Basu, Analyst, Badabank: Hello, Fokker Basu Badabank. Thanks for taking my question. I have three. I would like to start with the gross margin, which declined by 40 basis points. Is it fair to say that this was basically driven by negative product mix effect?

Or how do you look at your gross margin developments by product categories in detail, please? Second question would be on your outlook for the EBIT in 2526, which you outlined in June 2023, you said 2.5% adjusted EBIT margin and above 500,000,000 EBIT. If I look at $360,000,000 as in yes, potential EBIT for the current full year, this would mean, yes, a strong increase by 38% next year and 100 basis points marginal improvement. How do you look at this guidance which you outlined? We all know the situation is difficult, but is it really fair to assume that you will achieve your target as you stated in your presentation?

And the final one, there were speculations in the market about potential interest of GD.com. It’s of course not easy to say to comment on these rumors, but nevertheless, I would like to take the chance asking if you had any contact, if you heard anything from this side. Please, your view on these rumors, please. Thank you.

Karsten Wilberger, CEO, SECONOMY AG: Yes. Thank you very much, Carsten. Thank you, Falka, for your questions. I will take the third question. And I will just make an introductory comment with regards to your first question that Kai will detail.

And the remark I would like to make more on a general basis is that we look and I look at what we call the triangle. So of course, the product margin percentage margin is important factor in that, but there are two other things we look at. And the triangle is sales, but also drives market share, then we have the percentage margin and then we have total income. And it’s finding the optimum of those three. Let me be very clear, I’m super happy with that quarter, because if I take a metaphor, that was a great serve.

So we were on the wave finding that optimum driving great elasticity. And rest assured, we have a strong program in place where we are actually getting better, also focusing of course on the percentage margin. But for me, it’s most critical that also the sales drive the total income. And of course, we look at the margin and Kai will also explain the effects. I thought just maybe it’s just that you wanted to share this, that my thinking.

Look, on this speculation, as you said, in the last years, there have been many speculations. And as we did in the past, we also do it now. We do not comment on speculation. But the only thing I can say that with confidence that our company is on the right and a successful path. And what’s also natural in my view is that when you are successful as an accompany, you’re changing and transforming that attracts attention.

And but we are fully focused on the continued execution of our strategy of becoming what we call the leading omni channel service platform. And Kai will answer it, but we’re also confident with the 25%, twenty six % result of $500,000,000 and Kai will explain that. And our business model is very robust, transformation on track and we are well positioned for the future. So with that, Kai?

Kai Ulrich Teysner, CFO, SECONOMY AG: Yes. Perhaps let me start with that second question first to pick it up from where Carsten just left it. So to reiterate, we are confident to achieve our midterm target for the end of the next financial year, so 09/30/2026. And what gives us confidence here, look, we’ve just gone through the development in particular of our growth areas. And if you do the numbers on this, in each and every one, we see them performing over proportional to our overall top line growth.

Service and Solutions, 25% income growth. Retail Media, targeting even more than we had initially anticipated at our Capital Markets Day. And marketplace growing at three digits year over year. So we do see all the proportional growth in those growth areas and that gives us good confidence that we can achieve those numbers in at the end of the next financial year. Then back on gross margin, your question, I will reiterate the two statements that I think financially express what Carsten was saying.

EBIT grew more than sales, right? More than 13% growth of EBIT, less than 10% growth of sales, which is still a strong number. So you see that the bottom line is actually overperforming, if you will, the top line growth. Secondly, we grew absolute gross profit by almost EUR 90,000,000. And as Kastan explained, it’s an equation that exists of sales, market share and the margin.

But what counts in the end of the day in the books is the absolute figure and that grew by an impressive almost three digit number. Now I’m not pushing away your question on the margin. I just want to emphasize what’s most important for us. If we do go to the margin as one of the three key elements in this, yes, it was driven by two things, I would say. It is the very high competitive pressure that we do have in our peak season.

That is so. Keep in mind, we grew market sales. So we push back against competition. But yes, there is high competitive market pressure in that season. And secondly, we do see slightly different developments in the regions.

So in West and South, for example, we saw very, very good margin development. In East, guys, you know we keep talking about normalization of the growth in Turkey. So you can translate that yourself. And in DACH, we did see that high competitive pressure, but again we grew market shares, we increased our profitability by more than 20,000,000. So that’s the underlying dynamics of that question.

Hopefully a little more color to what customers are saying. Thank you.

Fokker Basu, Analyst, Badabank: Thank you for all the details. Thank you. Very helpful.

Conference Moderator: The next question is from Andreas Raymond (NSE:RYMD), ODDO. Please go ahead with your question.

Andreas Raymond, Analyst, ODDO: Yes, good morning. Three questions from my side. First one again on the balance between growth and margins. So it seems that discounting and product mix in Q1 led to more traffic, higher volume growth and this also supported your growth businesses. So does it imply that you may invest more going forward in top line growth to further push those growth businesses like Marketplace, S and S and others?

Or is Q1 an exception to

Karsten Wilberger, CEO, SECONOMY AG: the rule? So this is the first

Andreas Raymond, Analyst, ODDO: topic. Second one, the DACH region, the EBIT margin is now above 4%. Is it fair to say that the growth businesses account for 50% or more of the gross profit in DACH so that the DACH EBIT margin is now the leading indicator for the group EBIT margin? That would be question number two. And the third one, I’m coming back to a podcast, Kasten, last summer, you remember, with OMR.

And I think you mentioned something like you better want to make use of people coming to the stores. So maybe you want to show a cost and other companies that could pay for that. Are there any measures you can share with us? Number three.

Karsten Wilberger, CEO, SECONOMY AG: Great. Thank you, Andreas, for your set of questions. We’ll take the third one. And again, I will comment just more generally on the first one. First one is when you talk about growth in margin, Q1 is definitely a different quarter in that sense.

It’s more competitive because of the Black Season Christmas period that’s for us it’s clear. But we always have an eye on the margin. As I said, it’s the triangle. It’s really sales, market share and total income. And it’s the total income that matters.

Of course, we take into account the gross margin. You can assume that we have sensible financial economic steering in all of that. And of course, there will be periods where we either say when we see the momentum, we push a bit more or we push a bit less. So that is really an ongoing decision. As I said, we also have this margin program in place that we use to steer this.

But again, Kai will give you more say a bit more details eventually. So on the podcast, what I said about making our stores more interesting for customers in and increase of footfall again. Look, the first thing I would say and that’s something I can share year on year, we have seen also in our stores, not just this great online growth, we’ve seen more footfall in our stores this quarter. And I think that is also thanks to the change in the portfolio, the refurbishment and also of course the products, how we display them. It is more interesting, more exciting for customers to come.

And yes, new categories like health fitness, for instance, that we try out. In some countries, we do have some cars. E mobility is growing. Those of course, those new category expansion attract customers. And let me put the expansion of categories into and next year probably we’ll also report on another very fighting business under the roof of MediaMarkt.

We call that space as a service. So we give now top brands more ability to showcase their products, to showcase their brands in the stores through experience zones, through boutiques, through entrance statements. And yes, you will find eventually some companies showcasing cars, other categories. And for that, we get, of course, recurring income from our partners. And most importantly, that makes the shopping experience more interesting, more attractive and attracts more customers.

So we are on that path. And because you asked me about some numbers, we will share in the not too distant future space as a service with some commercial numbers as well and also target because another income growth stream for us. And that will then basically put more meat to the bone. What I say when we say we make our stores more attractive through product expansion, different experiences. Kai?

Kai Ulrich Teysner, CFO, SECONOMY AG: And then let me add to Karsten’s other two points. So first on the balance between growth and margin. Let me just formally reiterate our guidance for this year. We continue to expect despite volatility, a moderate growth of the top line and a clear increase of the bottom line. You know how this translates into percentages.

So less than 5% of sales growth and more than 10% of EBIT growth that I think should give you an indication more than an indication of financial translation of our balance between top line growth and bottom line growth. Of course, if there are opportunities on the market, we will not say no to that. But the target here is clearly on the increase of profitability and not on top line growth. That’s just to back up what Karsten was saying. Then on the DACH region, we give you a little more color.

Just to remind everybody growth in that, that is bottom line growth, adjusted EBIT growth, million in this quarter and all countries contributed to that. Each and every country contributed to that. But to be fair, of course, Germany is the biggest contributor to that result. In Germany, the one indication that I can give you is that one of our growth areas, service and solutions, contributed in particular to this result. We’re particularly happy to see that because it does mean that we’re simply asking what customers need, right.

And it’s also financially accretive for us. We do expect that DACH and especially Germany continue to contribute to the EBIT expectation for this year throughout this year. That’s as much as I can say about DACH at the moment. Thank you, Volker. Thank you, Andreas.

I apologize. Sorry, Andreas.

Conference Moderator: And the next question comes from Clemens Genelot Reorganier. Please go ahead with your question.

Clemens Genelot, Analyst, Reorganier: Yes. Good morning to all of you. Three questions from my side, if I may. So the first one, is the gross margin declining across all geographies in Q1? My second question is whether on the prices.

Was Q1 life for like performance only fueled by volumes? Or is there any inflation boost as well? And do you or let’s see a small inflation or whether kind of a deflation obviously? And my last question is on the services. Can you recall us your coming initiatives to will continue to boost the services throughout this year?

Thank you.

Kai Ulrich Teysner, CFO, SECONOMY AG: Thank you, Clement, for those questions. I’ll take the first two and then I’ll pass over to Carsten. Now on the first question on margin, let me reiterate what I think we’ve emphasized throughout. EBIT grew more than sales. Gross profit is up in absolute figures.

That to us is the most important message here. And while we do not want to push away the question about margin decline, I think we need to put it in perspective. Now on that margin decline in gross profit, we did see a different performance across the regions, as I think I answered previously, where West and South performed really well on the margin side. East dominated by Turkey normalized as expected. That’s as much detail as I would give at the moment and reiterate a question that we had.

Then you asked about volume versus inflation. We’re really pleased to see that Q1 performance on a group level was mainly driven by volume, not by inflation. Of course, there are different trends in the countries and in the regions. West and South, where we just discussed a positive margin development, we’ve also seen a positive volume development. In Eastern Europe, in particular in Turkey, you can think of this rather stable compared to prior year.

And in DACH, it’s challenging still despite our market share gains, but we do see certain trend improvements in DACH as well. So that’s on volume development. Now on inflation, keep in mind the products that we sell generally decrease their prices over time. That’s a general, I guess, rule or characteristic of this market because of the short product life cycles. So that’s a general trend.

On the other hand, there is one supporting factor here and that is the AI laptops and IT hardware, which Carsten mentioned. These come into the market at premium prices. So we see some compensation here, but that’s what I would say about inflation and deflation. And Carsten, I’ll let you comment on services. Yes.

Karsten Wilberger, CEO, SECONOMY AG: Thank you, Clement. A very important question, how we sustain and accelerate the momentum in Service Solutions. I will explain four areas of focus. But before I do that, let me be clear what we’re doing. We manage Service Solutions in two ways.

First, of course, we look at the current performance, review the performance where we are on track, where’s operational excellence going and other things we wanted to do gaining traction the way we wanted them to gain traction. That’s one thing. It’s more shorter term in the current fiscal year. The second path, the second work stream that we have in place and it’s very intense, we asked the team the question, what’s the next level of growth that we are building. We call it internally how to build the ramp.

And that is a lot of focus going in there. And that of course will becomes the short term measure next time. What are the four areas that what we’re looking into? The first one I would say is operational excellence in the sense of we have tremendous opportunity still in our stores by making it more personal, talking to the customer, servicing the customers in person and increasing the attach rate. That is massive.

One benefit of personalized service and that’s one of the other reasons we’re rolling it out is to increase that personal contact. I always say sales is contact sports, so let’s do more good contact sports. So that’s one element. The next element, very important is process improvement, journey improvements. You will find that, so how can we make it easier for customers to not just sign up to services, We take complexity out, but you will see that massive opportunity in online.

And as part of online, as we said, we will have a double whammy by now introducing service in the marketplace. So working on the service process, the service experience also when we deliver the service is critically important. The third one is the portfolio, working on the attractiveness of offers, focusing on recurring revenues, etcetera, and enlarging the portfolio by not losing focus, but there is a lot of great work happening in making our portfolio even stronger. And the fourth area is great opportunity for us. I’m still surprised that so many customers don’t know about our services enough.

So there’s a lot of education, communication going on because that is an untapped potential and we need to be also become even more famous for that because I want sometimes customers to come just for a service and then by the way, we can also sell them the product. Anyway, so these are the four areas, operational excellence, especially the contact sports part, process improvement, journey improvements with very much focus also in online portfolio as well as communications.

Conference Moderator: And the next question comes from Marco Schmidt, Odor, BHF. Please go ahead with your question.

Marco Schmidt, Analyst, Odor, BHF: Yes, good morning. Thanks for taking the questions. Just a couple for me. So the first one is more a technical question on the other service and solutions revenue given the change of illustration. So retail media and the commission and fees from the marketplace are included now in online revenue and delivery fees from the store from stores, pick and mortar.

Is that understanding correct? And secondly, on Slide 38, I mean, these are obviously then the restated operational sales and service figures under the new definition. I guess maybe this is right, maybe you can confirm this. And then third question, you mentioned just mid double digit cost savings for 2025. Is this the result of the already implemented optimization initiative, which will have an effect still in the first three quarters this year?

Or are these new measures? So implying an upsizing from 130,000,000 to, let’s say, 180,000,000 maybe clarification there. And finally, on the cash taxes, could you just remind me what amount of tax loss carry forwards are left as of now, respectively? Where do you see cash taxes in 2025 and 2026? Thank you very much.

Kai Ulrich Teysner, CFO, SECONOMY AG: Okay, Markus. On the first two questions, on the rather technical questions, let me give you a general answer here and the IR team around Fabienne will reach out to you straight after the call with the technical details. I don’t want to I want to make sure that we use the time here a little more efficiently. So services and solutions, as we now use it, is operational services and solutions. And that does no longer, no longer include marketplace or delivery.

It’s operational services, anything from installation of a device to customer financing or insurances. That’s operational services and solutions. The numbers that you see in the backup are indeed numbers adjusted for this effect on Page 38. But Fabienne and team will reach out to you straight after this call to make sure that we go through all the details of that. Just for everybody, that’s the definition here.

It makes it easier for everybody to see what drives what. Now on cost savings. Let me be clear on that. My statement was and I’ll reiterate it. In the course of this year, we expect a mid double digit million euro cost saving contribution.

In addition and on top of the million that we reported delivered at the end of the last financial year. Okay. So these are additional cost savings in the cost of this financial year that we would expect by the end of the year. And as I said, some portion of that is already in our Q number, but of course, some portion only coming from the three initiatives, which I cited. Then finally, on the tax losses carried forward, essentially, let’s be clear on this.

Under German law, they don’t have an expiry date. So they do not run out, yes, they don’t expire. The overall tax losses carry forward around to a 5,000,000,000 sum, 2,300,000,000.0 that’s around the figure now, 2,300,000,000.0 in CIT and then trade taxes of 2,500,000,000.0. These are to be used in the future and offset against any profits that we may make. And again, I are happy to reach out with details, but that’s the rounded figure that I would give you.

I hope that answers your questions, Markus.

Marco Schmidt, Analyst, Odor, BHF: No, very good for me. Thank you very much.

Conference Moderator: And the next question comes from Alessandro Corrieta, Kepler Cheuvreux. Please go ahead with your question.

Alessandro Corrieta, Analyst, Kepler Cheuvreux: Hi, everyone. Thanks for taking my questions. I just have two. One maybe on the restructuring I mean, on the cost cutting measures you announced for this year. Does that imply restructuring costs?

Just to make sure I understand correctly that one. And the second question is on I mean given the strong performance in Q1 and the fact that you confirmed the guidance, are you maybe considering resuming bank dividend as early as this year? Can you comment on that part?

Kai Ulrich Teysner, CFO, SECONOMY AG: Alessandro, hi, good to hear you again. Let me come back on cost again. So it’s a double digit million euro cost savings ticket. And yes, some restructuring cost will be incurred by that. It is nowhere near the roughly SEK 100,000,000, which we’ve talked about for the last two years, the roughly SEK 100,000,000 were for SEK 130,000,000 of a savings run rate, SEK 100,000,000.

So for the roughly double digit figure for this year, expected in the low double digit high single digit million euro range for that double digit million cost ticket. And then for the guidance and for the dividend, let me reiterate also our statement. We do aspire to be able to pay a dividend or recommend to the supervisory board and to the AGM to pay a dividend in the range of up to 25% of EPS. And we wouldn’t have made that statement at the end of the last financial year if we didn’t see a chance of actually getting into that position at the very latest with the achievement of our midterm targets. So that’s 2526%.

That’s as much as I can say about this at this particular stage.

Alessandro Corrieta, Analyst, Kepler Cheuvreux: Thank you very much.

Fokker Basu, Analyst, Badabank: At the

Conference Moderator: moment, we have no further questions. There are no further questions. So thank you so much. I would now like to hand back to Doctor. Kasten Rizbera for closing comments.

Karsten Wilberger, CEO, SECONOMY AG: Thank you very much and thank you all for your questions today, for your time and your engagement. I hope it’s clear that we are fully committed. We will continue to work very hard and deliver our strategy. And the results today speak for themselves. Our plan is working and we are in full execution mode.

And if you would like to engage with us again through our official channels, I invite you there are two great opportunities. First, our Annual General Meeting will take place on February 26, once again in person, of course, it’s also a hybrid version, but it will be in Essen. And on May 15, we will present our Q2 results and share further updates on our progress. Until then, I wish you all the best and thank you for your interest and see you soon. Bye bye.

Thank you. Bye bye.

Conference Recording Operator: The conference is no longer being recorded.

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