“We are proud of our performance in the last quarter. In recent months, we have made major progress on the execution of our strategy, which is firmly geared towards customer benefit. Our financial success is the result. In Germany and Italy, we have rolled out new store formats and significantly increased our external Marketplace sales. We are making great strides in our transformation into a customer-centric service platform and strengthening our position as a leading provider of consumer electronics in Europe. Given our company’s performance in the financial year so far, we are confident about the final quarter and optimistic that we will achieve our growth targets for the year as a whole. I warmly thank all our employees for their tremendous dedication, which led to this success.”

Dr Karsten Wildberger, CEO of CECONOMY AG

CECONOMY AG (“CECONOMY”), Europe’s leading company for consumer electronics, grew again in the third quarter of 2022/23, increasing sales1 adjusted for currency effects and portfolio changes by 7.4 % year-on-year to around €4.5 billion. In the reporting period, adjusted operating earnings (EBIT2 ) amounted to around €–60 million, up around €43 million on the previous year’s figure (Q3 2021/22: €–102 million). CECONOMY benefited from continued good customer demand in the brick-and-mortar business and positive development in the Services & Solutions business.

On a nine-month basis, CECONOMY generated sales1 of €16.9 billion. This equates to an increase of 5.9 % compared with the previous year (9M 2021/22: €16.5 billion). At around €149 million, adjusted EBIT2 was significantly higher than the previous year’s level (9M 2021/22: €114 million).

Germany still on course for growth, recovery in Western/Southern Europe

CECONOMY’s business performance in the individual segments was largely positive in the third quarter. Customer demand picked up again in the DACH segment, especially in Germany and Austria. In the Western/Southern Europe segment, sales decreased by 1.4 %¹ compared with the prior-year period. However, the Netherlands saw sales growth as a result of good development in the online business and strong demand in the Services & Solutions segment. The Eastern Europe segment achieved substantial growth thanks to strong sales development in Türkiye.

Stronger customer demand in the brick-and-mortar business in the DACH region

In the DACH region, MediaMarktSaturn’s customers spent more in brick-and-mortar stores in the third quarter: In Germany, CECONOMY increased sales in its stores by 8,2 %. So far, over a third of stores in the DACH region have been modernized or converted into new store formats with sizes and concepts better tailored to customer needs at the respective location.

Online business: increased pick-up rate in a declining overall market

In a declining market, the online business of CECONOMY and MediaMarktSaturn posted sales of €947 million in the third quarter, less than in the same quarter of the previous year. The online share of total sales was 20.4 % (Q3 2021/22: 22.9 %). Customers continued to follow the trend of ordering online and collecting in store. The pick-up rate therefore increased to around 41 % (Q3 2021/22: 38 %).

Sales share in the Services & Solutions business increases to 6.5 %

The Services & Solutions business generated sales of €302 million in the third quarter. This equated to 6.5 % of total sales (Q3 2021/22: 6.4 %). The sales growth in the Services & Solutions segment was driven among other things by the increased demand in retail media and for extended warranties. In the first nine months of 2022/23, Services & Solutions sales increased by 8.5 % to around €1 billion.

Customer satisfaction improved further

In the implementation of their strategy, CECONOMY and MediaMarktSaturn are doing everything to further improve the customer experience and customer satisfaction across all channels. An indicator for measuring their progress is the net promoter score (NPS). In the third quarter, the company increased its NPS to 55, the highest figure since measurements began.

In the third quarter, CECONOMY and MediaMarktSaturn also made significant progress in the strategic core areas of their retail service platform approach.

Accelerated expansion of Marketplace: around 1.2 million products already on the platform

With their Marketplace, CECONOMY and MediaMarktSaturn extend their product range and offer their customers even greater choice. It is an important source of income for the company, which requires no internal inventory holding and thus avoids the related costs. Marketplace is currently live in Germany, Austria and Spain, where it achieved sales growth of 121 % in the third quarter. Next, Marketplace will be launched in the Netherlands and Italy. The Marketplace range is also growing for customers: At the end of July 2023, the company already had around 1,060 resellers with a total of nearly 1.2 million products on its platform.

Free cash flow increased by nearly €1 billion year-on-year

The measures to strengthen liquidity continue to prove effective: In the first nine months of financial year 2022/23, free cash flow exceeded the previous year’s figure by around €990 million. This was driven primarily by the change in net working capital thanks to the successful implementation of the planned reduction of inventories and improved receivables management.

“Step by step, we are adapting our business model for significantly higher profitability and cash generation with a persistently sharp focus on cost management,” said Dr Kai-Ulrich Deissner, CFO of CECONOMY AG. “With a stable gross margin in the third quarter, we substantially increased our operating earnings year-on-year. Despite the challenging circumstances in our industry, our liquidity, free cash flow and inventory management are now much better than they were last year.”

Guidance adjusted for a more positive outlook

In light of the successful course of the financial year in the first nine months, CECONOMY expects sales to increase moderately and adjusted EBIT to improve clearly in 2022/23 as a whole. This is assuming that the macroeconomic conditions will not deteriorate and the consumer electronics market will shrink moderately at the most.

 

1 Sales adjusted for currency effects and portfolio changes.
2 Adjusted EBIT before non-recurring effects, associates and portfolio changes.

At its Capital Markets Day today in Cologne, CECONOMY AG (“CECONOMY”) will unveil the key drivers of its strategy to become a customer-centric service platform and present its new mid-term financial targets. Aligned with this strategic approach, the company is switching towards a more profitable and cash generative business model. It plans more than €500 m adjusted EBIT by FY 2025/26 (more than double vs FY 2021/22) as well as to steadily increase of lease-adjusted free cash flow to about €200 m in FY 2025/26.

CECONOMY‘s strategic plan is rooted in its unique position as the largest consumer electronics retailer in Europe with nine leading positions out of eleven markets and with above two billion annual customer interactions and a more efficient organization resulting from the far-reaching transformation carried out since 2021.

The five building blocks of CECONOMY’s retail service platform approach are now:

// A retail core moving towards omnichannel excellence focusing on the Customer Experience

// Growth and new capabilities of the Services & Solutions business

// Acceleration of the marketplace

// Private label development

// Scaling up of Retail Media

"In the mid-term, the market for consumer electronics provides us with exciting strategic growth opportunities. The cornerstone of our new strategy is the Customer Experience. We are stepping away from CECONOMY and MediaMarktSaturn’s traditional product-centric identities as a retailer. We are committed to becoming a customer-centric service platform, seamlessly integrating sustainability into all aspects of our operations, ensuring superior customer services and experiences in an environmentally conscious way."

Dr Karsten Wildberger, CEO of CECONOMY

1. Retail core: Moving towards omnichannel excellence

CECONOMY’s strategy has the customer at its core, and customer needs are changing rapidly and fundamentally. With over two billion annual touchpoints, the Group aims to refine the Customer Experience and raise service levels to foster customer loyalty. The new loyalty program 

MyMediaMarkt and MySaturn will be rolled out in eight further countries by FY 2024/25. At the heart of CECONOMY’s strategy sits the transformation of its consumer app into a holistic experience hub. This should result in an online sales share of 30% by FY 2025/26. 

MediaMarkt and Saturn stores remain key assets. CECONOMY is continuing to overhaul its store portfolio with 30% of stores already modernized and plans to reach 90% by FY 2025/26. Developing new store formats (Lighthouse Experience Centers, Xpress and Smart stores) are key to answer customers’ evolving needs. Furthermore, the Group aims to further reduce location cost1 by FY 2025/26 and increase the productivity of retail space by as much as 10% by FY 2025/26. 

Developing a customer-centric product offering and branching out into adjacent and emerging categories, such as e-mobility, AR/VR, fitness and smart home will further enhance the company’s competitive edge. Alongside this, CECONOMY is boosting the share of sustainable and energyefficient products in its assortment through its “BetterWay” logo.

2. Growth and new capabilities of the Services & Solutions business

Services & Solutions is a key pillar in CECONOMY’s business model. The Group provides services spanning the entire product life cycle, forming a circular economy value chain. The “trade-in”2 proposition resonates strongly with customers with an anticipated 250,000 trade-in products expected already in FY 2023/24. The planned expansion of CECONOMY’s offerings, which includes subscription services for extended warranties and software licenses, both online and in-store, will lead to dynamic income development. Subscription services should enable the Group to secure attractive recurring income and foster long-term relationships with customers. These initiatives will result in a c. €200 m increase in operational Services & Solutions income3 by FY 2025/26 vs FY 2021/22 representing c. 5.5% of Group sales and will strongly enhance the Group’s profitability.

Launch of myMediaMarkt Plus in Germany

This autumn, the Group will launch a comprehensive and customer friendly proposition in Germany called myMediaMarkt Plus. This full care proposition designed to provide customers with important extra value and 'peace of mind' – all for a monthly fee. This means customers can get all their electronic devices repaired at MediaMarkt, no matter where they were originally purchased. In addition, myMediaMarkt Plus members will enjoy around-the-clock tech support and expert advice.

3. Acceleration of the marketplace

From the customer’s perspective, the marketplace offers a wide assortment, while also serving as a new income stream, and optimizing working capital by not holding stock. Today, the marketplace is already live in Germany, Austria and Spain with future roll out in at least two more countries soon.

Coupled with the onboarding of more sellers, this should translate into €750 m GMV (gross merchandise value) as of FY 2025/26

4. Private label development

CECONOMY’s ambition is to further develop the share of its private label products to over 5% of Group sales by FY 2025/26, driven by an optimized assortment, seamless integration into datadriven category management and well-orchestrated logistics. Private label products offer customers attractive alternatives with high value-for-money and contribute positively to the Group’s profitability.

5. Scaling up of Retail Media

As an omnichannel retailer CECONOMY wants to leverage customers’ data to take a significant share of the fast-growing Retail Media market which is expected to at least double in size towards €25 bn4 by 2026. The Group offers state-of-the-art media products with highly measurable and scalable results for our industry partners. The further roll-out of our product offering in our international markets as well as the launch of new self-service marketing platform should see our income soar nearly tenfold by FY 2025/26 to around €45 m, bolstering the Group’s profitability. 

These five initiatives are underpinned by a robust omnichannel supply chain infrastructure and a cutting-edge technology stack. Both are vital in delivering exceptional customer experiences, ensuring competitive delivery promises, and maintaining our appeal as a retail platform for suppliers.

Strengthened commitment to people and environment

Sustainability is embedded in CECONOMY’s organizational DNA. It encompasses management responsibilities, cultural transformation, the introduction of new services, product categories, efficiency measures, and regulatory frameworks within each function. In line with this commitment, the Group has signed the European Union‘s Sustainable Consumption Pledge and is in the process of applying for the Science Based Target initiative. By next year, the target is to achieve net-zero emissions for scope 1 and 2. Scope 3 – encompassing upstream and downstream activities such as suppliers’ operations – will be reduced by at least 33 percent until 2033. CECONOMY offers the most sustainable range of consumer electronics products in Europe and is pioneering circular business at a large scale, from trade-in offerings to refurbished products. Beyond that, the group’s social responsibility extends not only to the employees and communities, but also includes active engagements with suppliers

Financial outlook and mid-term ambition

With its refined strategy, CECONOMY releases the following mid-term targets. They do not indicate any changes from the guidance for FY 2022/23. 

“With our key pledges and initiated actions such as our implemented efficiency program, we are fully committed to growing our business profitably
while continuously placing special attention on cost discipline and strengthened liquidity. We have a clear vision for our future and we are ready to deliver.”

Dr Kai-Ulrich Deissner, CFO of CECONOMY

Key financial mid-term targets for FY 2025/26

// Net sales slightly above market growth and adjusted EBIT of more than €500 m

// Gross margin to increase to about 20%

// Adjusted OPEX ratio to remain stable at about 18% of sales 

// Cash investments to reach roughly €300 m per year 

// Lease adjusted free cash flow to steadily grow to about €200 m by FY 2025/26 

// Net debt to adj. EBITDA below 2.5x5

Useful information

The event will be broadcast live on https://www.ceconomy.de/en/investor-relations/capital-markets-day-2023/. A recording will be available via the same link shortly afterwards.

1 Rental costs & IFRS 16 depreciations, occupancy costs, location depreciations
2 Trade-in allows customers to trade in their used devices in exchange for a gift card or discount
3 Operational Services & Solutions excludes e.g. Retail Media, Marketplace commissions & fees, deliveries
4 Source: industry experts
5 Net debt incl. IFRS16 leases

“After a successful Christmas season in the first quarter, our measures are also making a positive impact in the second quarter of the financial year. We have made significant progress in our transformation thanks to the effective implementation of our strategy and continuous optimization of our business processes. Despite the challenging conditions, we are heading confidently into the second half of the year.”

CEO Dr. Karsten Wildberger

CECONOMY AG (“CECONOMY”), Europe’s leading company for consumer electronics, generated more customer demand in the second quarter of 2022/23, increasing sales by 6.4 per cent1 to €5.3 billion (Q2 2021/22: €5.0 billion). The growth was driven by a recovery in brick-and-mortar business and positive development in the DACH region and Turkey. CECONOMY was also able to gain market share in DACH. In the first half of the year, the company increased sales by 5.5 per cent1 year-on-year to €12.4 billion (H1 2021/22: €11.9 billion). 

Regarding earnings, adjusted EBIT2 climbed by €35 million year-on-year to –€23 million. At €207 million in the first six months, adjusted EBIT2 was almost at the previous year’s level (H1 2021/22: €216 million).

Strong business in key markets

The company increased its sales and earnings in Germany, the largest single market. This was mainly driven by marketing and logistics synergies, which CECONOMY achieved through the increasingly integrated management of the two retail brands MediaMarkt and Saturn. In Turkey, CECONOMY has again grown very dynamically and profitably.

Strategic Services & Solutions business grows significantly

In the profitable Services & Solutions business, a cornerstone of the corporate strategy, CECONOMY increased sales by 5.2 per cent to €323 million in the second quarter. This equates to 6.1 per cent of total sales. For example, the company made gains with its extended warranty offers as well as new services such as the trade-in of used electronic devices.

Strong growth in brick-and-mortar business

Similar to the first quarter, there was significant growth in the brick-and-mortar business: MediaMarktSaturn generated higher footfall, which increased sales by 11 per cent year-on-year to nearly €4.2 billion. The company is modernizing its stores and launching new store formats with sizes and concepts better tailored to customer needs at the respective location.

Online business contributes nearly 22 per cent of total sales

In the second quarter, the online business delivered sales of €1.1 billion, which equates to 21.5 per cent of total sales. This figure is significantly above the pre COVID-19 pandemic level (about 14 per cent). The pick-up rate increased by 3 percentage points year-on-year to 39 per cent.

Customer satisfaction at all-time high

CECONOMY and MediaMarktSaturn are doing everything to continuously improve the customer experience and customer satisfaction, as measured by the net promoter score (NPS). The NPS was 53 in the second quarter, matching the all-time high from the first quarter. Compared with the same period of the previous year, the Group increased the NPS by 4 points.

Free cash flow significantly increased

The measures to strengthen liquidity are proving effective: In the first half of the year, CECONOMY increased its free cash flow by more than €800 million. This was driven primarily by the optimization of inventories and stock turnover. 

“Our advances in stock management are paying off,” said Dr Kai-Ulrich Deissner, CFO of CECONOMY and MediaMarktSaturn. “At the same time, we continue to work hard to boost our profitability. This includes adjusting our cost structures to the altered conditions. We are optimizing workflows in the administrative functions and reducing complexity. We want to become faster, more efficient, and more powerful, and thus boost our profitability in a sustainable manner.”

Outlook: Scenario 1 more likely – slight sales growth and clear improvement in adjusted EBIT

In light of the uncertain and volatile economic environment, CECONOMY has created two scenarios for planning for the rest of the year: 

In scenario 1, the company expects sales adjusted for exchange rate effects to increase slightly and adjusted EBIT to improve clearly in FY 2022/23. This is assuming that the macroeconomic conditions will not deteriorate, and the consumer electronics market will shrink moderately at the most. 

Scenario 2 represents a less favourable macroeconomic development than currently foreseen, which would also more sharply decrease demand in the consumer electronics market. In this case, CECONOMY would have to factor in clear declines in sales adjusted for exchange rate effects and adjusted EBIT.

“Our performance in the first half of the year affirms my confidence for the whole financial year. We continue to consider scenario 1 as the more likely scenario.”

CEO Dr Karsten Wildberger