CEC.DE

LLM Evaluations

Transcript Summary

CECONOMY delivered solid H1 2025/2026 results, reporting ‣13.1 billion in sales and a 14.2% increase in adjusted EBIT. The company is successfully transitioning from a traditional retailer to an 'experienced electronics' player, with high-margin growth sectors like services and its marketplace now contributing 40% of gross profit. While the DACH region remains soft, strong performance in Türkiye, Spain, and Italy has maintained momentum. Outgoing CEO Kai-Ulrich Deissner confirmed the ‣500 million full-year EBIT target and noted that the strategic partnership with JD.com remains on track for a H2 calendar year close, pending final regulatory clearances in Austria and the EU. CFO Remko Rijnders, who will succeed Deissner as CEO on July 1, highlighted improved operational efficiency and a successful CRM strategy, with the loyalty program reaching 60 million members. The company also reported a 380% surge in its refurbished products business. CECONOMY's focus remains on cost management and scaling its omnichannel capabilities ahead of its July Strategy Day, where it will unveil its 2028/2029 ambitions.

Full Earnings Call Transcript — Q2 • 2026-05-13

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the CECONOMY Q2 and Half Year 2025, 2026 Results Webcast and Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker today, Fabienne Caron, Vice President, Investor Relations and Communications. Please go ahead.
Fabienne Caron: Thank you, Sharon, and good morning, everyone. It's a pleasure to welcome you to our Q2 results call today. I'm joined by our CEO, Kai-Ulrich Deissner; and our CFO, Remko Rijnders. Before we begin, I'd just like to briefly remind you that today's discussion will include forward-looking statements. Please refer to the disclaimer in the presentation for further details. This call is being recorded, and the recording will be available on our website later today. With that, I'm pleased to hand over to Kai.
Kai-Ulrich Deissner: Thank you, Fabienne. Good morning, everyone. Thank you for joining us today. Together with my trusted CFO and my soon-to-be successor, Remko Rijnders, I will now take you through the results of our first half and the second quarter of this financial year. As many of you know, we set out on this transformation journey 3 years ago, and we made some bold promises back then at our Capital Markets Day '23. We said we would put customers first and that we would establish a new category, experienced electronics rather than consumer electronics. We said we would build a business beyond traditional retail, and we said we would deliver consistent profitable growth. Well, I'm happy and proud that we are delivering on those promises once again with a strong half year result. The result, you'll see aren't just numbers on the slide, they are proof that our strategy is working quarter-by-quarter, step by step by step, and that we're on the finishing stretch to those promises from 3 years ago. If you want it in 2 sentences; we're strengthening our customer relationships and we're increasing our profitability. But we must not get and we are not arrogant. We know there is still significant work ahead of us to serve our customers and to achieve our vision even beyond the commitments from our last CMD. I'll come back to this at the end of this presentation today. Now let me start with Slide 3, some of our operational highlights this past quarter. I am super proud that our loyalty program, so myMediaMarkt and mySaturn have been ranked #1 in the shopping category at the 2026 German Bonus awards. Almost 150,000 consumers voted across 7 categories, and they chose us over many other well-known programs. If you take a step back and remember where we come from, this recognition becomes even more meaningful. Our business used to be purely transactional, fire and forget. People came in, bought what they were looking for and left the stores again. No true customer relationship, no loyalty, no CRM. That's different today. By now, we know many of our customers. We stay in contact and we reward their loyalty. Actually, according to this award, we're now the top player in that space. Our app is where customers want to be. That's an excellent proof of our strategy. Another example of strict customer focus is our marketplace. When you browse our online shop, you now have access to a huge assortment through our marketplace partners, way beyond traditional consumer electronics. To give you the numbers, in our stores, you can usually find up to 10,000 individual products. Online, we sell a few more. But on our marketplace, there is nearly 4 million individual products available. And this marketplace has reached meaningful scale. With our launch in Switzerland in January, it now covers 98% of our footprint. This is no longer a pilot or an experiment. It is a core part of how we serve our customers. These are just 2 examples that show customer centricity is not a buzzword for us. It's a strategy. It's what drives every decision we make, every innovation we implement and every service we deliver. When customers choose us, we want them to choose an experience that puts them first. We now give you an overview of our results on Slide 4. With one big headline. We are on course to reach our midterm targets. We're on the finishing stretch. In H1, we delivered sales of EUR 13.1 billion. That's growing 4%. This number is as always adjusted for currency and portfolio changes. When you look at Q2 alone, we achieved like-for-like growth even up 4.8%. That's solid momentum in an admittedly challenging retail environment. And so our market shares increased in Q2 by 20 basis points. And profitability, our adjusted EBIT grew by EUR 43 million. That's a 14.2% increase in H1 and including another growth in Q2. Remko will, of course, walk you through the dynamics behind these numbers in more detail, but here's what I am very happy about. Customer satisfaction continues to grow. Our Net Promoter Score increased by 2 points year-over-year. It now stands at 62%. That tells us something fundamental. The investments we're making in customer experience are paying off. Our customers are noticing the difference. Not perfect, but better every time. And most importantly, we confirm our outlook for '25, '26. We're delivering exactly what we promised. This consistency is what builds trust for our shareholders, with our stakeholders and confidence in our strategy even beyond our targets for September 30, this year. We will give you a bit more color on what drove this performance in the first half on Slide 5. First, looking closer at our omnichannel sales. We saw strong momentum in Q2 even better than in the first quarter. Online sales grew by 7.3% in H1 and even by 8% in Q2. Our online share for H1, thus was 28.5%, including marketplace. That's up 150 basis points. And similarly, our Bricks-and-Mortar sales grew by 2.8% in H1, but with 3.9% in Q2. For me, this is proof that omnichannel is the right strategic approach in our sector. Our customers are visiting our stores. They shop online and they use the app across all touch points. And this integration is our competitive advantage. Then our growth businesses continue to scale rapidly. Services & Solutions income increased strongly. Retail media income nearly doubled and again, high double-digit GMV growth in marketplace. I'll come back to these growth fields in a minute, but let's have a look at countries. Sales performance was especially strong in Hungary, Türkiye and Spain. Profitability improved in almost all countries, but even more in Poland, in Türkiye and Hungary. On the other hand, demand in Germany and Austria remains somewhat subdued, but we are managing that actively. Most importantly, this overall development shows why our diversified international portfolio is so valuable. It gives us balance. On profitability, we grew EUR 43 million in EBIT with EUR 10 million of that coming in Q2 alone. That's 30 basis points up in EBIT margin. As promised as in the last 3 years consistently, we're not just growing. We're growing profitability. And our cash generation rose slightly by EUR 7 million above last year, with free cash flow now at minus EUR 165 million. That's typical for a second quarter. Again, Remko will share more details on this later. So when I say we're on the finishing stretch to reach our midterm targets, this is exactly what I mean. Our strategy is working. Every business line is contributing and every market is playing its part. You'll probably recognize this also on the next Slide #6. We present this table each quarter to give you detailed transparency about the developments of those 9 KPIs and that we introduced at our Capital Markets Day back in '23, the essence of our strategic focus. We're getting to the finishing line now. Across the various business fields, Retail Core, Service & Solutions, Marketplace, Retail Media, we took big steps towards those targets for September. And all of this, if you take a helicopter view, has changed the structure of our business. You can see that on Slide 7. Our growth businesses now represent approximately 40% of our gross profit. That's up from 35% a year ago. This is what we mean when we say to move beyond traditional retail. All of our growth businesses contributed to this increase of our EBIT and gross profit, Services & Solutions, Marketplace, Private Label, Space-as-a-Service and Retail Media. This matters because these businesses carry structurally higher margins, and they are less dependent on the classical consumer electronics cycle. The more we grow these segments, the more resilient and profitable our overall business becomes. This is exactly the kind of structural change that positions CECONOMY for sustainable long-term growth in the future too. Again, I will come back to this at the end of my presentation. Let me share an operational initiative that is making a real difference for our customers on Slide 8, our Hub rollout. So what's the Hub. Hub is a regional logistics infrastructure that handles supply and demand of larger products, for example, white goods. Not just for 1 store or 2 stores or 3 stores, but for all stores in a larger region. Now when you're buying a washing machine or a fridge, it's usually not a fun purchase, right? It's a household necessity. And very often, it's urgent. You want it quickly and you want to make sure it comes when we say that it comes. That's what we're delivering with these hubs. And the rollout of those is far advanced. We're targeting in Germany, 14 hubs overall, and 10 are already live now. This is already now reducing pressure on stock levels and improving product availability and delivery speed. And our customers appreciate that. Our delivery NPS is growing compared to our traditional approach. This is why we also have clear plans to expand this Hub model to Spain, to Benelux, Italy and Türkiye, so across our European footprint. I already spoke about customer relationship management, CRM at the beginning with our Bonus programs. Let me come back to this because it's really key. Knowing our customers is so important for us because we can design our shopping experience to precisely what they need and want. Our loyalty program at the basis delivers outstanding results. Our active loyalty base grew by 26% year-on-year. This shows that customers aren't just signing up and then silent, they are actively choosing to shop with us. And our overall loyalty community now stands at nearly 60 million members. And we're using this potential. The sales from direct marketing campaigns in Germany grew by 62%, almost 2/3. We're successfully shifting from broad mass market messaging to relevant targeted offers that customers actually want and how they want to offer those offers. Mobile engagement continues to accelerate. Our app and mobile channels are now becoming the primary touch points for those campaigns. Looking ahead to the second half of the year, we'll scale this personalization further. This means, for example, real-time targeting and log in via existing social media accounts that you may have as you know it from other services. Before I hand over to Remko, let's have a look at our sustainability numbers on Slide 10. To start with BetterWay sales. Those increased by 5 percentage points, with solid growth across the entire assortment. Secondly, trade-in volumes grew by 6.7%. It shows that customers increasingly value the ability to bring back their used devices. But here's the real one, right? Our refurbished business grew by 380%. Let me repeat that for you, 380%. That's driven by our own new refurbished offers. And by the way, these are now part of our private label business in segment and driven by better presentation and search results, for example, online. We see that this is bringing entirely new customers to this category. Admittedly, in absolute numbers, there's still a lot of potential. But with these growth rates, there's a clear trend that extends into the future. At this stage, let me now hand over to Remko for a closer look at our financials. Remko?
Remko Rijnders: Thank you, Kai, and of course, a good morning to all of you. Now let me share more details of our Q2 results. We will start with Slide 12. Before digging into the numbers, let me quickly highlight an accounting restatement, we had to do and which has an impact on our numbers. Let me be clear, this is an accounting correction, not a change in underlying trading performance. And this relates to the timing and release of voucher-related accruals after redemption. There is no impact on cash generation, liquidity or the economics of our business. Our previous treatment was too cautious, which means sales and earnings were reported below the appropriate level. We have now corrected this and restated the comparative period for transparency. Our fiscal year adjusted EBIT for fiscal year '25 is now EUR 406 million compared to the EUR 378 million that we have reported. Our adjusted EBIT in Q1 increased by EUR 9 million to EUR 320 million. The chart highlights that we increased our adjusted EBIT by EUR 43 million in H1 and need another EUR 51 million increase in H2, which makes us confident we will reach our targets. We had another quarter of growth, resulting into profitable EBIT growth in H1, and this, in a market which is volatile and competitive where consumers spending is under pressure, so we are extremely proud of our achievements. Let's look at the headline numbers. Our sales growth accelerated in Q2 by a solid 4.9% resulting in a 4% growth in the first half of the year. This is the number adjusted for currency and portfolio changes in pre-IAS 29. And our like-for-like sales grew by 4.8% in Q2 and 3.7% for H1. That is, if you count only comparable selling space and stores already opened 1 year ago. Compared with the overall economic developments, particularly in retail, this is a very good result. Now let's look at the segments, starting with DACH and sales on Slide 14. We recorded a 3.1% decline in like-for-like as consumer demand was rather soft in the region over the first half of the year. I would like to point out that we noticed a trend improvement at the end of the quarter. Our market share in Q2 was broadly flat in the DACH region. Still, Profitability improved with a EUR 7 million increase in adjusted EBIT. This achievement was made possible by an improved gross margin and effective cost control allowing us to counter the decline in sales due to the soft market. In Western and South Europe, our sales were strong with a 4.1% increase in like-for-like in H1. And we gained 0.2 percentage point market share. On profitability, we increased our adjusted EBIT by EUR 15 million and our margin by 30 basis points. A great performance, in my view, where Spain and Italy were the main drivers. Moving to Eastern Europe. Sales were once again driven by Türkiye and Poland continues to improve as well. We gained 0.5 percentage point market share in the first half. Both countries contributed to the increase in profitability. Finally, let me highlight our other segments which primarily represents holding cost and our private label business. The decline in EBITDA is primarily due to a higher risk provision on mobile phone contracts, reflecting the current macroeconomic headwinds. Now turning to Slide 15. Let's take a look at the performance of Services & Solutions, our biggest growth area. You can see that we grew sales over proportionally with a plus of 12.5%. The strongest growth came from our insurance warranty business. Then to online. Our first party online sales also grew over proportionally with 7.3% increase in H1 and now reached a total of EUR 3.5 billion in H1. And on the back of this, our online sales share increased to nearly 28.5%, again, a great performance. So let me come back to our EBIT development on Slide 17. Our gross margin increased by 30 basis points in H1 to 18.1%, which is a strong performance. This improvement was driven by our growth areas. Now circa 40% of our gross profit comes from our growth business. Our OpEx ratio was stable to 16% as we have mitigated the OpEx increase with strict cost management. Turning to the full overview on Slide 18 from adjusted EBIT to net profit. Walking down from adjusted EBIT of EUR 347 million, we recorded EUR 62 million nonrecurring items. The EUR 50 million increase year-on-year is mainly due to a lower profit share of Fnac Darty of EUR 32 million. Regarding tax, we paid more tax due to our better profitability. All in all, those 2 elements impacted our net profit and resulted in a reported EPS of EUR 0.20 in the first half of the year. Turning to Slide 19. Free cash flow was, as expected, seasonally negative in the first half as the second quarter is typically when we pay our supplies for the Christmas period. Even so, free cash flow improved by EUR 7 million in H1 and by around EUR 100 million in Q2. This improvement was driven by strong operating performance. In April, Standard & Poor's upgraded CECONOMY's long-term credit rating from BB- to BB. This rating remains on credit watch positive. The upgrade reflects recognition of CECONOMY's sustainable profitability trajectory and improve stand-alone financial risk profile. On this positive note, I will now hand back to Kai for some closing remarks.
Kai-Ulrich Deissner: Thank you, Remko. Look, what you've just heard from both of us, we continue to have positive momentum, and we expect this to continue for the full financial year '25, '26. But before I come to our outlook, let me address what's obviously relevant, our management transition, Slide 22. As you know, I have personally decided to step down from my role as CEO for personal reasons, actually stepped down from any executive role in the future, and I feel privileged to be able to take this step because our company is so well placed now. The path for the future is set, there is a strong leadership team here for the handover. Remko Rijnders, who you've just all heard, will take over from July 1. Most of you know Remko, of course, well from his time as CFO. But before that, as cluster CEO and CEO of our Benelux business. He's been with MediaMarkt, Saturn for 17 years. He brings deep operational knowledge, proven track record, the strong strategic vision. He's been part of our omnichannel transformation from day 1. Second, Jan Niclas Brandt has been serving as our CCO, Chief Customer Officer since April 1. Niclas has an outstanding track record. He led our business in Switzerland and Austria, and before that was the driving force behind our experience electronics strategy as VP Corporate Strategy. His mission now is to take us to the next level. Niclas will help us move beyond just putting customers first to really understanding what matters to each individual customer and delivering exactly that through customer relevance. To make our leadership team complete, only one is missing, as you can see on the slide. For the Chief Financial Officer position, we expect a timely announcement in the coming quarter. I'm personally deeply convinced that this board setup is strong. They bring the right combination of strategic vision and execution to deliver. They understand what it takes to win in this market, and how to position us for sustainable growth in the next chapter. And we're also already working closely together as a team to ensure a smooth handover without missing a beat. Now to our outlook on Slide 23. As I said at the very beginning, we confirm our guidance for '25, '26. We're on the finishing stretch. But we did specify the details with a closer look at the performance of our countries this year so far. We expect -- continue to expect a moderate increase in currency and portfolio adjusted total sales, with Western, Southern and Eastern Europe contributing to that sales growth. Secondly, we continue to expect an adjusted EBIT of around EUR 500 million, driven by Western and Southern Europe. And to remind you, one more time, this is still the target for the financial year '25, '26 that we first communicated at our Capital Markets Day back in '23 and ever since. On to Slide 24. I've mentioned the next chapter and the future path and the next level several times today. So let me cordially invite all of you to our Strategy Day on Thursday, July 9, 2026. It will be a hybrid event. You can join us in person at our lighthouse in Hamburg or participate via stream. My board colleagues will lay out our way forward to 2028, '29. Our new midterm ambitions, strategic priorities and the many, many initiatives that will make us not just an experienced electronics player, but an experienced champion. This will be an important event for both the financial community as well as for media and Remko, Niclas and their teams look forward to sharing our vision with you in detail. In this context, let me give you an update on our proposed partnership with JD.com on Slide 25. We're still on route to closing. On the regulatory front, we have, together and under the lead of JD, made significant progress. First, merger control clearance has been granted everywhere as set out in the offer document. Germany, Austria, the Netherlands, Poland, Spain and Türkiye. Second, Foreign Direct Investor, FDI, clearances have also been received in Italy and in France. As per the offer document, 3 more countries are required. First bunch, Germany and Spain, we expect the FDI clearances to be granted in due course. And regarding the FDI clearance in Austria, we released on March 27. We now continue to engage actively with the Federal Ministry of Economy, Energy and Tourism to meet the clearance conditions. This dialogue is now constructive. Thirdly, JD.com has also submitted the FSR filing in Brussels, again, as defined in the offer document, and so no surprise. They are in constructive engagement with the EU authorities. This process takes time, and they're moving in the right direction. Given the complexity of these approval processes, we said in our talk in late March that closing is likely to extend into the second half of the year. But let me be clear, we remain fully committed and confident to this partnership, and we're working diligently, together with JD, to bring it to completion. Allow me to repeat. We chose this partnership as a strategic next step not because we had to, but because we could and wanted to. JD.com will be a powerful partner to accelerate our development. This partnership will strengthen everything we're building here at CECONOMY and it will enable us to lead European retail in the future. Let me wrap it up with Slide 26. A brief summary of what this quarter tells you about CECONOMY today and about the foundation for the future. Our experienced electronics strategy continues to drive higher customer satisfaction and deeper engagement, even stronger loyalty. Are we already done? No, of course, not. Are we on a good path? Definitely, yes. You've seen the proof today. Our H1 performance underlines we have a strong and balanced portfolio. Our growing high-margin businesses make us strong. Together, they make the company more resilient and more profitable. They're an integral part of our business now, and they continue to expand. Our focus continues to remain on cost, liquidity and profitability. And with our strategic partner, JD.com, we have a unique opportunity in Europe to accelerate this development even further. We're making progress on the approval process. Finally, to repeat one more time, we are confirming our outlook for '25, '26. We expect a moderate sales increase and adjusted EBIT of around EUR 500 million. Before we now open it for questions, allow me a personal word because this is the 14th, but also my last earnings call personally. Thank you. Thank you all for our many, many good conversations in the past 3.5 years. Thank you for your continued interest and openness. But most importantly, thank you to the 50,000 people in this wonderful company. They have pushed us to where we are today with a clear strategy, with a path into the future, and above all with many, many happy customers. It's been an honor for me to be part of this journey and to lead it. Thank you for your attention, and we're now ready for your questions.
Operator: [Operator Instructions]. There are currently no phone questions. I will hand the call back for the webcast questions.
Fabienne Caron: Yes. So we take the first question from Frank [indiscernible]. The first one is why are we structuring costs so high in Germany? Are there plans for further store closure? And the second question is, are there any details in the acquisitions by JD.com -- delays, sorry. .
Kai-Ulrich Deissner: Thank you, Frank, for your questions. Remko's going to take the first one, I'll take the second one. Remko?
Remko Rijnders: Yes, indeed, I will take the first one regarding Germany and the restructuring costs. Yes, we did quite some restructuring in the first half of the year in Germany, to make us for mid- and long-term scalable and viable. And of course, we always reviewed, as we always have said before, our store performance and where we see capabilities and opportunities. Do we plan for any additional store closures in the future? At the moment, we don't. That being said, with always the statement that we say, we will always, as any retailer would do, look at the performance of our stores and may we see opportunities to open new store, we do evaluate current stores.
Kai-Ulrich Deissner: Yes. And you also asked whether there are any delays in the acquisition by JD.com. Let me repeat what I've just said. We remain confident in this acquisition process. And on the details, we've already cleared all merger control clearances that we need or that JD.com needs according to the offer document. On FDI, as I said, we're now in constructive discussions with Austria, and we expect, in due course, the [indiscernible] for Germany and Spain. And for the FSR process in Brussels, the filing has been made and we're now in constructive discussions again, to ease and constructive discussions with the EU authorities.
Fabienne Caron: Thank you, Kai. Let me take the next question from Alex from MWB. Congratulations on the results. Wishing you all the best. Thank you, Alex. First, can you give us more color on what has changed in Poland? And second regarding the key pledges, how should we think about the remaining upside for those open KPIs? Is there any meaningful EBIT and margin upside that can carry over behind '25, '26? And is it more -- or is it most already in our target of EUR 500 million?
Kai-Ulrich Deissner: Remko, you want to start with Poland and I'll do the second one.
Remko Rijnders: Yes, I'm more than happy to give an update on Poland. As we said, we are happy with the performance in Poland also with an EBIT increase compared to last year, also again in Q2. What changed? First of all, we put our so-called matrix structure in play where we put additional efforts from our HQ when it comes to supply negotiations, supporting the organization in Poland, but we also have a new board that has a new CFO, a new CEO, a new team, and together with the senior management, we see now actually that dynamics is also working and the position in Poland is getting stronger and stronger from a performance perspective, but also from a team perspective, which we then also see in MPP for example.
Kai-Ulrich Deissner: Then, Alex, so first of all, thank you for your good wishes, very kind of you. You asked on those open pledges, which we've given at the Capital Markets Day where many, but not all KPIs are already on the target level for the 30th of September. Look, it's a package, right? We made a commitment in 2023 for those KPIs to reach the targeted level and to deliver the EUR 500 million. So that is a package. Now I cannot preempt what will be said in July about the next phase. But what I can preempt that we don't believe that EUR 500 million is the ceiling here and everything else will need to be set in July. .
Fabienne Caron: Thank you, Kai. We take the next question from [indiscernible]. She's asking some questions regarding the JD.com transaction. We expect the closing in H2. Is it calendar year or fiscal year? And the second part of the question is when do you expect the delisting to take place under the Q1 plan? .
Kai-Ulrich Deissner: Thank you for the questions. It's Kai. So the closing date in the second half of the calendar year is what we're referring to. Remember, there is a long stop date in this transaction in November. So we expect it in the second half of the calendar year, but obviously before November 10, which is the long stop date to be very precise on this. On delisting, you know how these things go. It's -- let's say between 3 and 6 months after closing, we would expect delisting to take place, but that's part of -- not 100% easy process. So I can't give you a precise timing, but between 3 and 6 months.
Fabienne Caron: Next question is from Fred Ward from Verition Fund. Please could you give a little more detail on timing expectations for the Austrian approval on the JD.com deal? And will remedies be required and how does that -- those remedy process could work?
Kai-Ulrich Deissner: It's Kai. Thanks, Fred, for the questions. Please understand, these are very sensitive discussions, the confidentiality of which we respect 100%. So I cannot comment on ongoing discussions. What I can repeat is that we remain confident across all necessary approvals that includes the Austrian one in the second half of this year, as I've just specified, but further details I cannot give you at this stage.
Fabienne Caron: Thank you, Kai. We see no more questions in chat. We have seen one from Charlie, but I think we gave the answer during the presentation. So we'll still wait a few minutes if you want either to type your question on the chat or just to raise the questions per telephone.
Kai-Ulrich Deissner: We see no further questions here on our end. I'll give you a time to brief; 3, 2, 1. Look, thank you all for your time today and your questions. If you would like to engage us again through our field channels, we are very happy to do so to continue the conversation. We hope to see you in our Strategy Day on July 9, either in Hamburg or virtually and for our Q3 results on July 30. For now, Fabienne, Remko and I wish you all the best and a wonderful day. Thank you, and goodbye for now. .
Remko Rijnders: Thank you. Goodbye. .
Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.