CEO’s review

From Musti’s Financial Statements Release, financial year 2020, 12 November 2020

CEO David Rönnberg

I am very proud to conclude our first financial year as a listed company with the results we have published today. Over the past few quarters we have witnessed how individuals, businesses and societies everywhere in the world have adapted to a new way of living due to the COVID-19 pandemic. During the pandemic, our top priorities have been to keep our staff and customers safe and to maintain our ability to deliver high-quality support to our customers under exceptional circumstances.

We have been able to deliver high-quality service to our customers under exceptional circumstances and grow profitably in a challenging environment. Throughout this financial year, the commitment and efforts by the entire Musti team have been outstanding. I am also very grateful for the trust our customers have shown us and the ability of our staff to develope new opportunities in this environment. The fourth quarter of July-September continued to demonstrate again the strengths and resilience of Musti Group’s business model.

  • Group net sales increased by 19.2% to EUR 76.9 million (EUR 64.5 million). The increase was largely due to like-for-like growth in all countries, mainly driven by the increasing number of new customers, and an increased number of directly operated stores.
  • Store sales increased by 17.3% to EUR 56.3 million, driven by the increased number of stores and strong like-for-like store sales growth. Like-for-like store sales growth amounted to 7.9%.
  • Online sales increased by 30.0% to EUR 17.0 million. Online sales accounted for 22.1% of total net sales in the quarter. The channel shift impact from stores to online sales from COVID-19 was lower compared to the third quarter and we have started to see online shift to stores, bringing the channel mix back towards normal levels.
  • Net cash flow from operating activities was strong in the quarter and totaled EUR 20.6 million (EUR 10.0 million)
  • Musti Group’s underlying growth has continued strong after the fourth quarter.

Following of the ongoing strong pet parenting trend accelerated by the COVID-19 period, the number of pets in Musti Group’s operating markets has been seen to grow throughout the year as a result of increased registration of puppies. The number of Musti Group’s new puppy customers has increased by 22 per cent during the fourth quarter compared to the third quarter and the number of puppy customers is outgrowing our market share. Musti Group has a wide range of different initiatives, campaigns and activities planned to best serve the important phase of the puppy and kitten first year. The continued increase in puppy customers during the financial year 2020 will continue to support growth in a long-term and as we see growth opportunities geographically in all countries, we estimate to increase the number of own stores by 25-35 during the reporting year 2021, as we expect the favorable momentum in the market to continue also during 2021. Increasing the number of own stores allows us to reach even more customers through utilizing our omnichannel business model. 

Musti Group is focusing on profitable growth, supported by the scalable, cost efficient platform. This work continued strong in the fourth quarter profitability development as Musti Group’s adjusted EBITA increased by 44.6% to EUR 10.1 million from the corresponding quarter previous year. Gross margin decreased to 44.0% (45.2%) mainly due to the higher distribution costs driven by increased share of online sales, lower share of sales of own and exclusive brands and non-recurring items relating to the ongoing warehouse consolidation project. Operating profit increased by 63.5% to EUR 7.8 million.

Sweden and Norway are approaching the profitability level of Finland faster than expected, with adjusted EBITA margin increasing to 14.8% in Sweden and to 15.4% in Norway in the fourth quarter. In Finland, adjusted EBITA margin remained approximately at previous year’s level at 26.0%. The platform change in Vetzoo and the warehouse consolidation in Sweden, both to be finalized during the first quarter of the financial year 2021, are expected to increase efficiency in Sweden and Norway in the long term.

We have been agile and have updated the concept to meet the higher market growth expectations. We warmly welcome all the new pet customers to join the Musti pack, and we intend to pay a lot of attention to the continuous development of our services and products to even better serve our customers in the Nordics. We are in an excellent position going into the financial year 2021.

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