Ceconomy, the holding company behind Media Markt and Saturn, saw its turnover rise by 19 % in the second quarter. The growth is driven by physical shops and services, as online sales fell by 40 %.
Looking for margins elsewhere
In the second quarter, Ceconomy’s turnover rose by 18.8 % to 5 billion euros. The previous operating loss of 146 million euros was reduced to 62 million euros. However, the increase in profit is mainly achieved in Germany and the Netherlands, which were still in lockdown in 2021 and therefore constituted a weak basis for comparison.
During the entire first half of the year, turnover increased slightly by 2.1 %, while the operating result also rose modestly by 12 million euros to 212 million euros. The gross margin improved by 2.2 percentage points to 17.1 %, driven by higher physical sales and service revenues. Services and solutions grew by 54.5 % and represented 6.1 % of total revenues in the second quarter. Due to high inflation but also strong competitive pressure, it was difficult for Ceconomy to increase its prices and, as a result, the margin on products decreased.
E-commerce has reached its peak
A quarter of turnover now comes from online sales, whereas before the pandemic this figure was only 14 %. During the lockdown periods, however, a third of all sales were made online. As a result, online sales fell by 40 % in the second quarter to 1.26 billion euros. Over the last six months, online sales decreased by 28%.
Nevertheless, it was to be expected that Media Markt and Saturn would experience a strong decline online, as people have returned to the physical shops since Covid restrictions have been lifted and last year’s records are no longer being reached. Other retailers, from Nike to Bol.com, have reported the same phenomenon.
The Netherlands get a new spine
For the year as a whole, Ceconomy expects a slight growth in turnover and, above all, a clear improvement in profits. The company is not affected by the war in Ukraine and supply levels are slightly better, although the blockades in China are a new challenge. The electronics chains are therefore focusing on larger stocks, more different suppliers and omnichannel solutions.
In April, the Netherlands will be the first to receive its ‘omnichannel spine’: an IT system that links and synchronises logistics, IT and ordering processes across all channels. This should be an important step for the company. In the second half of the year, the group will also renovate 120 shops.