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Fnac Darty has issued a profit warning: the French electronics retailer has sold less in December and is struggling with a negative cash flow. The group is therefore pushing back its targets for 2023 by a year.
Father Christmas bought less
With December sales 55 million euros lower compared to the previous year, turnover for the year fell by 1.2 % to 7.95 billion euros. Consumers made fewer purchases in the year-end period, particularly in the household appliances and IT equipment categories, while a year earlier, the latter had performed particularly well.
Fnac Darty nevertheless stresses that its performance remains better than before the pandemic. Compared to 2019, the French group has recorded an annual sales growth of 7 %. Moreover, the end of the pandemic has its advantages: by selling more tickets and services (such as the Darty Max convenience subscription), the gross margin should be some 80 basis points higher than in 2021. The company expects a gross margin of 30.3 %.
No more cash
On the cash side, however, Fnac Darty is in trouble.Operating free cash flow fell from 170 million in 2021 to minus 30 million euros. This is all the more painful because expectations were above 100 million euros and the group had set itself the target of reaching a total of around 500 million euros over the period 2021-2023. This target has now been pushed back to 2024.
Analysts fear that the decline in sales will continue at least in the first quarter, while there is a good chance that Fnac Darty will also have to sacrifice profitability due to the current inflation. The company itself is not yet making predictions for the new year.
