(News Bulletin 247) – The cultural goods specialist confirms its objectives for the current year, after observing a slight tremor in its activity in data published for the first three months of 2024.

In this flood of publications whose reception is rather mixed, Fnac Darty has fulfilled its contract of trust with the market. The specialist in the sale of cultural goods and household appliances has once again demonstrated its resilience in a difficult economic context, marked by a decline in consumption.

Between January and the end of March, Fnac Darty published a turnover up slightly by 0.8% in published data to 1.793 billion euros, which is in line with the expectations of TP ICAP Midcap which for its part predicted quarterly sales of 1.789 billion euros. On a comparable basis, Fnac Darty sales fell by 0.8%, while the research office feared a slightly more pronounced decline (-1.3%).

On the Paris Stock Exchange, Fnac Darty shares are regaining color. The stock jumped 6.2%, around 2:00 p.m., and took the lead in a Parisian market in a very bad position.

The best in the Iberian Peninsula

In detail, sales in the France and Switzerland zone amounted to 1.456 billion euros, a slight decline of -0.7% on a comparable basis compared to the 1st quarter of 2023. The stability of Nature & Découvertes, which has been in the fold of Fnac Darty since 2019, was offset by the dynamism of small household appliances, “which is returning to growth after two difficult years”, the contribution of the Culture Pass in France and the continued development of services , in particular from Darty Max, its subscription repair offer to promote product durability launched in October 2019.

Elsewhere in Europe, the Iberian Peninsula “still shows the worst performance”, notes Florent Thy-tine, head of equity research at TP ICAP Midcap, with a decline of 2.6% on a comparable basis to 179 million euros.

However, the picture is not as degraded as it seems. In published data, activity grew by 15.5% benefiting from the integration of 10 MediaMarkt stores in Portugal, while in Spain, Fnac Darty noted “a sequential improvement” in its activity throughout the quarter and “a return to growth in March.

Another element of satisfaction from the publication, the increase of 10 basis points, or 0.1 percentage point, in the gross margin rate over one year, which constitutes “good news” for Florent Thy-tine. This indicator is mainly driven by the growing adoption of services such as Darty Max, which made it possible in 2023 to maintain the gross margin rate at 30.2%.

Restated for the dilutive impact of the franchise, this margin rate increased by 30 basis points, or 0.3 percentage points, specifies Fnac Darty. This increase in this gross margin is “a good thing, while the group succeeded in making strong cost adjustments last year,” recalls Oddo BHF.

“The first quarter showed a level of activity in line with previous quarters. The timetable for the recovery of volumes remains uncertain,” detailed Fnac Darty in a press release.

A publication “in line” with expectations

This publication “is therefore in line with the expectations” of TP ICAP Midcap and allows the group to confirm its annual objectives, revealed for the first time during the 2023 results, last February.

Fnac Darty hopes for a resumption of growth in 2024 “supported by the decline in inflation, and by the drop in the savings rate”. As a numerical outlook, Fnac Darty is still targeting a 2024 operating profit at least equal to that achieved in 2023, i.e. around 170 million euros.

The group maintains its objective of achieving cumulative free operating cash flow of around €500 million over the period 2021-2024. An objective which assumes performance in 2024 similar to 2023, estimated TP ICAP Midcap in February. Fnac Darty puts it at 180 million euros.

The publication is therefore “not so bad” to use the title of the TP ICAP Midcap note published today, in a still tense consumer context. Like other specialized distribution groups, Fnac Darty has been on the front line of household arbitrage which has proven to be to the disadvantage of goods and discretionary (in other words non-essential) spending.

In 2023, its revenues fell by 1.1% on a like-for-like basis and its current operating margin eroded, going from 2.9% in 2022 to 2.2%.

The group led by Enrique Martinez had a rather complicated journey on the stock market. The value had been amorphous at the start of the year, after having lost a little more than 20% in 2023. This had caused its exit from the SBF 120, the second index of the Parisian market, last March. This eviction has not, however, been detrimental to the stock, which has increased by almost 16% since this release from the second major index of the Paris Stock Exchange.