OVS SpA (FRA:0OV1) Q2 2024 Earnings Call Transcript Highlights: Strong Sales Growth and ...

GuruFocus Research
4 min read

In This Article:

  • Net Sales: Above EUR760 million.

  • Gross Margin: Above EUR450 million, close to 60% gross margin percentage.

  • EBITDA: EUR89 million, growing versus last year, closer to 12% margin.

  • Net Income: Close to EUR35 million.

  • Upim Sales Growth: 7% increase.

  • OVS Sales Growth: 2.5% increase.

  • Upim EBITDA Growth: 26% increase.

  • Working Capital: Reduced by EUR11 million.

  • Trade Receivables: Increased DSO to support partners.

  • Inventory: Increase due to longer transit times and business growth.

  • Trade Payables: EUR30 million increase.

  • Capital Expenditures: EUR46 million, driven by store renewals and logistics automation.

  • Cash Flow: Negative due to CapEx and shareholder distributions.

  • Net Financial Position: EUR20 million worse than last year, but under 1.5 leverage ratio.

  • August Sales Increase: 7% growth.

Release Date: September 20, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • OVS SpA (FRA:0OV1) achieved a solid like-for-like growth across all segments, outperforming the market which was flat or slightly negative.

  • Upim, the company's second brand, saw a 7% increase in sales and is nearing its profitability level.

  • The group achieved a global gross margin increase of almost 200 basis points, indicating strong financial health.

  • The company expects continued gross margin growth in the second half of 2024, driven by a weaker dollar and lower markdowns.

  • Strong sales performance in August and early September, with a notable 7% increase in August and up to 80% growth in early September.

Negative Points

  • Negative weather conditions in May and June negatively impacted sales, although July was neutral.

  • Higher marketing costs in the first half, including a EUR2 million investment in TV advertising, affected EBITDA.

  • The company faced discontinuity in labor contributions, which were not confirmed for 2024, impacting costs.

  • Inventory levels increased due to longer transit times between the Far East and Europe, partly due to the Suez Canal crisis.

  • Net financial position worsened by EUR20 million compared to last year, partly due to dividend and buyback payments.

Q & A Highlights

Q: Can you clarify the recent like-for-like growth figures you mentioned, particularly for the last few days and the full month of September? A: August saw a 7% growth, and the beginning of September was modestly positive. However, the last six to eight days experienced a significant surge, with figures like +80% and +70%. This likely means our like-for-like growth is more than 5% currently.

Recommended Stories