Valora, 3rd quarter

Just in the profit zone again

The Avec format from Valora. Retail is recovering faster than foodservice.
The Avec format from Valora. Retail is recovering faster than foodservice.

Sales of Valora, the Swiss food convenience provider (including Ditsch, Backwerk), recovered in the third quarter (Q3) compared to the first half of the year. The company reports pre-tax earnings (EBIT) of CHF8.5 m for Q3, plus a positive net profit. For 2020, the company expects an EBIT of CHF10 to 15 m.

The company's foodservice sales recovered more slowly than retail sales. In the foodservice division, the decline in sales in the third quarter of 2020 was 24 percent below the figure for the same period last year. However, the division has recorded a significant increase of 12.5 percentage points since the first half of 2020 (-36.5%).

The Retail division recorded a year-on-year sales decline of -10.5% in the third quarter and has thus improved by 2.9 percentage points since the first half of 2020 (-13.5%). Cumulative figures also show a slight recovery. While external sales in the first half of 2020 were still -18.0 percent down on the previous year, the decline in Q3 was reduced to -13.1 percent year-on-year. Cumulatively, after three quarters, external sales in 2020 were -16.3 percent below the previous year.

Almost all outlets open again

Due to the unprecedented decline in customer frequency, Valora had operated some 40 percent of its outlets with reduced opening hours at the height of the lockdown, and some 20 percent were closed. By the end of September 2020, the number of outlets with reduced opening hours had fallen to 22 percent, and only 2 percent were still closed.

In the third quarter of 2020, the Group continued to prioritize projects, optimize its sales outlet network, reduce central costs and make use of short-time working for its employees, while at the same time providing temporary support to its franchise and agency partners. At the end of September 2020, 17% of Valora's workforce was on short-time working, mainly in the Food Service division. The cost savings achieved enabled Valora to offset half of the decline in gross profit.

The company is also in dialogue with landlords. "In view of the permanent changes in mobility and working behaviour, adjustments to the rental structure to reflect the new economic conditions of the store locations are a key issue," says a company release. For 2020, partnership-based solutions have been found in many places, but negotiations for 2021 and beyond are still ongoing.

Valora: out-of-home market set to recover

The company is convinced that out-of-home consumption in high-frequency locations will recover and is investing accordingly. The main focus of investment is currently on converting the sales outlets secured by the SBB tender into Avec Convenience Stores and into modernised k kiosk outlets with an expanded food offering, and on developing new digital convenience solutions.

With regard to the outlook, the company emphasises the imponderables caused by Corona, but expects a positive EBIT of around CHF 10 to 15 million for the full year 2020. For 2021, however, Valora also anticipates that sales will be 10 to 15 percent lower than in 2019, the year before the crisis. Valora's retail businesses are also expected to perform better than its food service operations in 2020. Demand for food to-go will be slower to recover as a result of the restrictions expected to continue in future.
About Valora
The Swiss company is primarily active at transport locations in Switzerland, Germany, Austria, Luxembourg, the Netherlands and France. Besides kiosk concepts, the Foodservice brands Ditsch, Brezelkönig, Caffè Spettacolo and Backwerk to the portfolio. Valora also operates one of the world's leading producers of pretzel pastries and benefits from a highly integrated value chain in the bakery products sector. According to its own figures, Valora generates annual external sales of over CHF2.7 bn. The Group's head office is located in Muttenz, Switzerland. In Germany, foodservice sales (net) in 2019 were estimated at EUR 265 million (+ 1 %) with 495 units (-19 cf. prior year) (as of 31.12.2019, source: foodservice Top 100).