Bizim Toptan Satis Magazalari A.S. (BIZIM) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by and I would like to welcome you to Bizim Toptan's Second Quarter 2026 Results Call on the 18th of August 2026. [Operator Instructions] So without further ado, I would now like to pass the line to Ms. Isil Buk. Please go ahead.

Thank you, Rafal. Good afternoon, esteemed investors and analysts. Welcome to Bizim Toptan's conference call for the second quarter results. The presentation that you will see on the screen is now available on the Bizim Toptan Investor Relations website. As it always has been, our webcast will include general comments regarding the overall performance of the quarter. Then I will give more details about our financials, which will be followed by Q&A session. Please note that the presentation, which contains the usual formal disclaimer concerning forward-looking statements can be accessed through our website. The presentation and the entirety of today's discussion are conducted subject to the disclaimer. In the interest of time, I will not read the disclaimer. If there are no objections, I propose to take it as read into the record for the purpose of the conference call. Please note that all figures are in Turkish lira unless otherwise stated and rounding differences may occur. Also, in accordance with the Capital Market's Board decision, presentation contains only (sic) TSA 29 [ TAS 29 ] applied financials. Finally, I would like to highlight that the webcast have been recorded, and it can be published on our Investor Relations website in accordance with our private note that you'll see at the beginning of the presentation. Now let's start the presentation with a summary of the quarter. Macroeconomic environment and its effect on traditional channel customers continue during the second quarter of the year. Especially, global policy atmosphere was tense and turbulent. Oil price increases fueled the inflationary expectations globally. Hence, although there is a slight increase in headline inflation, monetary policy remains strict. Therefore, its impact on the traditional channel customers demand continued. According to experiences of our out-of-home consumption market customers, individuals purchasing power deterioration caused significant demand increase in the market by affecting the business performance of our out-of-home consumption market customers. In addition to this, high competition in B2B and B2C market sustained. As a result, tough business environment remain in the market. On the company level, both Bizim Toptan and G2M maintained efficiency-oriented transformation strategy. Although growth levels are not enough encouraging, gross margin levels continue to be strong. Thanks to continued OpEx controls in each and every level of the organization, total OpEx decreased by around 16%. Management stayed careful about new investments, therefore, evolution of store and warehouse performances continued. Three of the existing cash and carry stores were merged with Bizim Gross Stores. One of the warehouse was closed and operations transferred to existing 13 warehouses. One new gross store opened in Hatay and one of the existing stores converted to Bizim gross in Darica. Therefore, Bizim Toptan continued its operations in 73 cities of Turkey with its 163 stores and 13 warehouses. Nine stores of the store network are in Bizim gross format. In SEC sites, 35 SEC stores were closed net during the quarter compared to the end of the first quarter. Total SEC market number is 2,244 by the end of the quarter. SEC closures continue to be resulted from market dynamics and economic reasons. We are not pleased about our business partners' current situation since they were forced to go out of the market due to the market dynamics. However, we are glad to say that remaining franchisees are stronger. Also, new entries continued and new business partners are efficient as well. For instance, new franchisees sales were fourfold of closed franchises. Also, main category sales for franchisee increased by 22% in Q2 compared to the same period of last year with the support of the strong business partners. Let's move to financials. In Q2 and first half, total sales decreased by [indiscernible] 17%, respectively. In Q2, total sales were TRY 9.6 billion, while in the first half of the year, it reached to nearly TRY 20 billion. As I mentioned in the beginning of my speech, macroeconomic conditions and highly competitive marketing environment were the main reasons for lower sales, which mainly resulted from traditional channels performance. Also, internal inflation stayed lower than the headline CPI by shadowing growth and profitable performance under the (sic) TSA 29 [ TAS 29]. However, customer mix improved towards more profitable customers. G2M and out-of-home consumption customer sales increased to 39% of total sales compared to 33% of the same period of the last year. Also, individual customers' purchases reached more than 17% of the total sales. Now I will continue with the gross profitability side. Gross profit decreased by nearly 20% in Q2 and 18% in the first half of the year. Gross margins were strong as well. Gross margin was 15.8% in Q2 and 16.2% in the first half of the year. Minor deteriorations on the margins caused due to the high competitive environment of the market. Let's turn to operating expense slide. As we have constantly emphasized, management's main focus is keeping OpEx under control. Thanks to cost efficiency initiatives, we managed to decrease the operating expenses by 16% in Q2. Total OpEx was TRY 1.7 billion compared to TRY 2 billion of the same period of the last year. Also, in the first half of the year, total OpEx dropped from TRY 4.1 billion to TRY 3.6 billion. OpEx over sales ratio was 17.6% and 17.9% in Q2 and first half of the year, respectively. Limited sales growth affected OpEx over sales ratio. However, we expect OpEx leverage will be improved in each quarter. Now I will continue with the EBITDA slide. EBITDA decreased by 24% and 25% in Q2 and first 6 months of the year, respectively. However, EBITDA margin stayed at strong levels. It was 3.1% in Q2 and 3% in the first half of the year. We believe expected sales increase and mix improvement will support EBITDA levels and margins in the following quarters. Let me come to net income loss part. Unfortunately, net loss continued. However, that net loss improved by 54% in Q2 and also, it improved by 50% in the first half of the year. Strong gross margins and successful results of the OpEx control initiatives supported the bottom line. High interest expenses, limited sales growth and (sic) TSA 29 [TAS 29] implementations shadowed bottom line performance. However, we believe in the following quarters, we will continue to see an improvement in the bottom line trend. Next slide is about capital expenditures. As I mentioned, under our cost management actions, we limited capital expenditures, and we continue to evaluate the performance of the existing stores. Therefore, in Q2, we opened the new store in gross format. We converted one of the existing cash & carry store into Bizim gross, and we merged 2 of the cash & carry stores with the gross stores. As a result, Bizim Toptan closed the quarter with 166 stores in the 73 cities of Turkey. Also, we closed one of our warehouse in Gebze and moved operations into the existing other 13 warehouses. Total CapEx was TRY 54 million with a near 13% increase compared to the same period of last year. CapEx over sales ratio around 0.27%. In the following quarters, we plan to convert some of the existing stores into the Bizim gross format and renovate some of them to attract more customers with a wider product portfolio. Also, we continue to analyze the very high efficiency. Now I would like to give brief information about working capital structure and balance sheet of the company. Like the previous quarters, we continued the factoring to credit card receivables. Our focus was to optimize inventory days with improved availability. In the coming quarters, our main actions will be in that area as well. Like the previous quarter, we didn't have any liabilities, except the rental contractual obligations of IFRS 16. Also, we have FX-free balance sheet structure. With this, I would like to start with the Q&A session.

[Operator Instructions]

I think there's no question.

It looks like we have no questions from the audience. I will pass the line back to Ms. Isil for her closing remarks.

Thank you, Rafal. Thank you for joining our call. I look forward to updating everyone about third quarter results at the beginning of November. Meanwhile, if you have any questions, please don't hesitate to contact with me and have a nice day. Sorry, I think there is a question. Yes, I saw a question on the screen, Rafal. Could you please help for taking it?

Yes. We have a voice question from [indiscernible] from Yapi Kredi.

Hello, can you hear me?