Managing Partner, VRS (Valuation & Research Specialists)

VRS (Valuation & Research Specialists)

Financial analyst specializing on corporate valuation. Long-term experience in analyzing and valuing listed and non listed companies in a wide range of business sectors in Europe, North America and internationally. Some of the sectors covered are financial services, industrials, high technology and real estate. Certified Equity Analyst by the Hellenic Capital Market Commission, Greece. Member of the Hellenic Association of Certified Securities Analysts (HACSA), Greece. Associate Member of the Chartered Institute for Securities & Investment (CISI), UK.

Specialties: Applying methods in corporate valuation, developing valuation models and writing equity research and valuation reports. Consulting services to companies with regard to their valuation drivers and potential corporate value, utilized in corporate deals such as mergers, acquisitions and sale of businesses. Specialized financial translations.

Managing Partner

Valuation & Research Specialists (VRS) is a boutique financial advisor with more than 17 years of experience in Corporate Valuation and Finance, and a diversified client base including some of the largest Companies in Greece.

Since 2002, VRS has completed more than 200 engagements in the areas of business valuation and financial analysis for more than 100 clients in a wide range of industries.

VRS has been honored to work with small and large private and publicly traded companies in Europe and overseas.

Boutique Financial Advisor

Equity Bottom-Up

<h3>Corporate &amp; Investment Highlights</h3>
<ul>
<li>Restriction measures for Covid-19 pandemic affected negatively Fourlis revenue for 2020, when it recorded a revenue of €370.6 mn from €466.3 mn in 2019. First quarter’s revenue in 2021 also dropped to €76.0 mn, in contrast to €86.0 mn in the same period of 2020, as the days of lockdown in Greece during the first quarter of 2021 were significantly more from those of 2020. Even considering the non-lockdown days in 2020, restrictions in the number of visitors in Fourlis’ stores had a big impact on its revenue. To encounter these issues Fourlis improved and expanded its e-commerce capabilities which were also the only stream of revenue in the lockdown periods for every country. As a result, e-commerce sales doubled in 2020 and more than doubled in the first quarter of the current year compared to the previous year for each respective period. For the years, 2021 and 2022, we expect a revenue growth of 17.79% and 8.00% respectively.</li>
<li>During the pandemic there was a lot of pressure on the gross profit margin regarding the market that Fourlis operates. Retailers were in need of liquidity and were constantly trying to manage inventory stocks. Moreover, e-commerce sales nature worsens the general market discounting conditions, as consumers are more promo-seekers when buying online. Unique IKEA products, its low prices, and the loyalty of consumers to IKEA brand enabled the company to maintain its gross profit margin of retail home furnishing activities in satisfactory levels. However, that was not the case in retail sporting good activities as the seasonality of the products, their fashion related nature and the competitiveness of the sector made the company to discount a bit more. More specifically, Gross profit margin of 2020 fell to 41.30% versus 43.41% in 2019. Finally, taking into account the above, but also the 1st quarter’s results, we expect the Gross profit margin for 2021 to be lower but closer to the one of 2019.</li>
<li>EBITDA of 2020 came down to €41.0 mn from €68.3 mn in 2019 and EBITDA margin stood at 11.06% and 14.65% respectively. The significant drop of approximately 40.00% in EBITDA outweighs by far the 20.00% negative growth in sales, as the majority of the operating costs on the retail sector are fixed. It is worth noting that pay-roll expenses decreased in 2020 around €11.0 mn mostly cause of the covid-19 related government subsidies. Finally, EATAM dropped down to negative €8.7 mn in 2020 from the positive €11.9 mn the year before and in the first semester of 2021 and 2020 amounted to €0.6 mn and negative €7.2 mn. For 2021, we expect EBITDA margin to reach to 14.50%.</li>
<li>The company had a Capex of €20.6 mn in 2020. Throughout the year Fourlis opened 2 IKEA small stores, 6 new Intersport stores and 1 TAF store in Greece. Additionally, it terminated 5 stores in Turkey that were loss making. In the first semester, it terminated another 10 more stores in Turkey and again 2 more stores will close during second semester. If the remaining stores in Turkey are loss making in the second semester, they will be closed too. It should be noted that in both sectors and all countries Fourlis operates e-commerce stores. Overall Capex in 2021 will be around €28.0 mn from which €8.0 mn will be spent on the new real estate company after its completion. The breakdown of the capex will be as follows, the new logistic center which will operate all the e-commerce sales of the Group, started in 2020 with a capex of €3.0 mn and it will end in 2021 with a capex of €8.0mn. The rationalization of two provisional IKEA stores in Greece that completed in the first semester of 2021, costed €3.0 mn and will save €3.0 mn in PBT in the current and the ongoing years. The group opened 3 Inter-sport stores and plans to open 2 new Intersport stores and 2 IKEA stores in the second semester totaling to a cost of €3.0 mn. The investing in company’s digital capabilities will be around €2.0 mn. The remaining is the ongoing capex of the company and the refurbishing of 12 Intersport stores in Greece.</li>
<li>During 2020 the company’s top priority was cash flow management in order to maintain financial health. Fourlis achieved an availability of €100.0 mn in cash throughout 2020. It accomplished this by extending the credit limits and credit terms with its strategic partners, by taking advantage of all the covid-19 related special subsidy facilities (€17.0 mn) and by increasing the credit limits and lowering debt costs with its banking partners in Greece. In 2020, cash and Debt increased to €115.4 mn and €204.6 mn from €41.0 mn and €129.2 mn, respectively.</li>
</ul>

Corporate &amp; Investment Highlights

Restriction measures for Covid-19 pandemic affected negatively Fourlis revenue for 2020, when it recorded a revenue of €370.6 mn from €466.3 mn in 2019. First quarter’s revenue in 2021 also dropped to €76.0 mn, in contrast to €86.0 mn in the same period of 2020, as the days of lockdown in Greece during the first quarter of 2021 were significantly more from those of 2020. Even considering the non-lockdown days in 2020, restrictions in the number of visitors in Fourlis’ stores had a big impact on its revenue. To encounter these issues Fourlis improved and expanded its e-commerce capabilities which were also the only stream of revenue in the lockdown periods for every country. As a result, e-commerce sales doubled in 2020 and more than doubled in the first quarter of the current year compared to the previous year for each respective period. For the years, 2021 and 2022, we expect a revenue growth of 17.79% and 8.00% respectively.
During the pandemic there was a lot of pressure on the gross profit margin regarding the market that Fourlis operates. Retailers were in need of liquidity and were constantly trying to manage inventory stocks. Moreover, e-commerce sales nature worsens the general market discounting conditions, as consumers are more promo-seekers when buying online. Unique IKEA products, its low prices, and the loyalty of consumers to IKEA brand enabled the company to maintain its gross profit margin of retail home furnishing activities in satisfactory levels. However, that was not the case in retail sporting good activities as the seasonality of the products, their fashion related nature and the competitiveness of the sector made the company to discount a bit more. More specifically, Gross profit margin of 2020 fell to 41.30% versus 43.41% in 2019. Finally, taking into account the above, but also the 1st quarter’s results, we expect the Gross profit margin for 2021 to be lower but closer to the one of 2019.
EBITDA of 2020 came down to €41.0 mn from €68.3 mn in 2019 and EBITDA margin stood at 11.06% and 14.65% respectively. The significant drop of approximately 40.00% in EBITDA outweighs by far the 20.00% negative growth in sales, as the majority of the operating costs on the retail sector are fixed. It is worth noting that pay-roll expenses decreased in 2020 around €11.0 mn mostly cause of the covid-19 related government subsidies. Finally, EATAM dropped down to negative €8.7 mn in 2020 from the positive €11.9 mn the year before and in the first semester of 2021 and 2020 amounted to €0.6 mn and negative €7.2 mn. For 2021, we expect EBITDA margin to reach to 14.50%.
The company had a Capex of €20.6 mn in 2020. Throughout the year Fourlis opened 2 IKEA small stores, 6 new Intersport stores and 1 TAF store in Greece. Additionally, it terminated 5 stores in Turkey that were loss making. In the first semester, it terminated another 10 more stores in Turkey and again 2 more stores will close during second semester. If the remaining stores in Turkey are loss making in the second semester, they will be closed too. It should be noted that in both sectors and all countries Fourlis operates e-commerce stores. Overall Capex in 2021 will be around €28.0 mn from which €8.0 mn will be spent on the new real estate company after its completion. The breakdown of the capex will be as follows, the new logistic center which will operate all the e-commerce sales of the Group, started in 2020 with a capex of €3.0 mn and it will end in 2021 with a capex of €8.0mn. The rationalization of two provisional IKEA stores in Greece that completed in the first semester of 2021, costed €3.0 mn and will save €3.0 mn in PBT in the current and the ongoing years. The group opened 3 Inter-sport stores and plans to open 2 new Intersport stores and 2 IKEA stores in the second semester totaling to a cost of €3.0 mn. The investing in company’s digital capabilities will be around €2.0 mn. The remaining is the ongoing capex of the company and the refurbishing of 12 Intersport stores in Greece.
During 2020 the company’s top priority was cash flow management in order to maintain financial health. Fourlis achieved an availability of €100.0 mn in cash throughout 2020. It accomplished this by extending the credit limits and credit terms with its strategic partners, by taking advantage of all the covid-19 related special subsidy facilities (€17.0 mn) and by increasing the credit limits and lowering debt costs with its banking partners in Greece. In 2020, cash and Debt increased to €115.4 mn and €204.6 mn from €41.0 mn and €129.2 mn, respectively.


Fourlis Holdings S.A. Equity Research Flash Note

Fourlis Holdings Sa

Fourlis Holdings S.A. Equity Research Flash Note