Review of "Children's World": operating results for the third quarter

Обзор «Детского мира»: операционные результаты за третий квартал

"Child's world" (MOEX:DSKY) Is an omnichannel retailer, leader in the children's goods market in Russia and Kazakhstan. The company unites retail chains of stores "Detsky Mir", "Detmir mini", "Zoosaurus" and the marketplace

Growth continues

14 October Detsky Mir presented operating results for the third quarter of 2021 and demonstrated double-digit growth in almost all indicators of the retailer.

GMV and net revenue. The group's total sales increased by 16,4% - up to 49.5 billion rubles. This happened due to the normalization of traffic after the removal of quarantine restrictions, reaching full capacity of new stores and thanks to a one-time government payment for school-age children.

The retailer's net revenue in the third quarter of 2021 increased by 14% up to 43.9 billion rubles against the backdrop of the successful launch of school collections for the new academic year and strong sales in the private label category. Their volume increased by four points year-on-year and reached a record high in 54% from total sales.

Обзор «Детского мира»: операционные результаты за третий квартал

Online. Despite the high base effect due to exponential growth in 2020, Detsky Mir showed excellent results in the third quarter of 2021. Current online sales have grown by 43,7% up to 12.7 billion rubles, and its share in the overall results was 27% with the medium-term goal of the company 40%.

The main reason for the growth is the retailer's mobile app: the number of active users in the third quarter of 2021 increased by 75% up to 3.5 million people, and the number of installations through Google Play and Epstor exceeded 11.4 million.

Обзор «Детского мира»: операционные результаты за третий квартал

Network. The total number of stores in the group increased by 25% up to 1014 pieces. The company opened in the third quarter of 2021 85 new points of sale: 24 store chain "Detsky Mir" in Russia, Kazakhstan and Belarus, 34 store "Detmir mini" and 27 stores of the "Zoozavr" chain.

In addition to opening new stores, Detsky Mir continues to expand its logistics infrastructure. In the third quarter of 2021, the company launched a new regional distribution center in the Novosibirsk region. Now the retailer has five such centers: two federal in the Moscow region and three regional in Rostov, Kazan and Novosibirsk regions.

Обзор «Детского мира»: операционные результаты за третий квартал

Comparable sales. Like-for-like-sales in the third quarter of 2021 grew by 6,3% thanks to good performance in Russia and strong results in Kazakhstan, which are explained by the low base of 2020: during that period quarantine restrictions were introduced, and some of the shops did not work.

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Management. In August, the leadership of Detsky Mir was supplemented by three new directors: financial, operational and investor relations. The financial department is headed by Andrey Spivak, who previously worked in Russian retail for more than 19 years. Operations department received by Sergey Li, he worked for more than 17 years at "M.Video», Sulpak и Phillips. And Mikhail Makhyanov became the new Director of Investor Relations, which is more 7 years collaborated with "Polyus Gold" and "Renaissance Capital".


One of the main short-term drivers of Detsky Mir is the dividend payment for 9 months of 2021. Over the past few years, the retailer has been distributing 100% of net profit under RAS, but for 9 months of 2021, the company decided to return 60% adjusted profit under RAS, what corresponds to the payment 5,2 Р на 1 share.

According to the board of directors and management, the recommended amount of dividends for payment is quite comfortable in the face of high market volatility and uncertainty due to the COVID-19 pandemic in 2021.

Management and the board of directors plan to discuss the final dividend payout, including the amount of the remaining part of retained earnings of previous periods at the end of the fourth quarter.

Обзор «Детского мира»: операционные результаты за третий квартал

What is the bottom line

Detsky Mir reported good operating results for the third quarter of 2021, which show double-digit sales growth and allow shareholders to look forward to a high dividend yield for 2021.

Usually the company divides the annual payment into two parts - for 9 and 12 months. The first distribution for 2021 will take place this year, register closing date - 26 December, and the second should be expected not earlier than the summer of 2022.

The final dividend will be double-digit, if management decides to return 100% of RAS net profit. Shareholders will receive a dividend for 12 months plus part of retained earnings for 9 months, surcharge for which may be from 3,5 to 5,1 Р.

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