Ceconomy AG (CEC) Earnings Call Transcript & Summary

Good morning, everyone. My name is Stephanie Ritschel. I'm the Vice President, Investor Relations at CECONOMY. Welcome. Welcome to this full year results and strategy update webcast. We're excited to be here today, and we have a lot of news to share with you. Before we start, let me briefly address the usual formalities. This replay is being recorded. A replay will be available on our website later today. Please also kindly take note of the disclaimer. Having said that, let me now hand over to our CEO, Bernhard Duttmann. Please go ahead.

Good morning, ladies and gentlemen. You see me smiling because I think it's a very good day for CECONOMY. So welcome to our full year results call with our strategy update. We would have liked to welcome you in person. Unfortunately, this is not possible due to corona. We also would have liked to be here with 3 persons: there's our CFO, Karin; and the CEO of MediaMarktSaturn, Ferran. Also this is not possible. Corona again played against us. Karin is in quarantine. She is connected with us via her PC, and she will be able to answer the questions later, live on screen, but she is not with us today here in Düsseldorf. As if we have feared this to happen, we did a prerecording 2 weeks ago, for some parts of the presentations, and we will make use of it later. So luckily, we did that. So we can give you, although Karin is not present at this time of -- at this moment, we can give you the presentations that we have planned. Ladies and gentlemen, when I joined CECONOMY in October 2019, I did it with a clear focus on 2 tasks. The first task was to finish, to conclude the strategy process for CECONOMY and the way forward of CECONOMY. And the second task was to improve the relationship to the family Kellerhals, and if possible, to find somehow a solution. And today, I'm very happy that we are able to tell you the story that we have found an agreement with Convergenta. To roll up Convergenta as a shareholder of CECONOMY and to take full ownership of the Media-Saturn business in CECONOMY. And this -- with this, I would like to begin my presentation to share with you the information of this -- on this transaction. So in a nutshell, what did we do over the last weeks? So we found an agreement with the family Kellerhals. And now it is very clear with this transaction, we will acquire the 21.62% of MediaMarktSaturn, which is owned by Convergenta today and bring it into our balance sheet in CECONOMY. And we do it by some kind of contribution in kind by giving our new ordinary shares and some other financial instruments we talk about later. So Convergenta will become a new anchor shareholder of CECONOMY, and they are committed to be in that role. So they have a target to be a stable shareholder and to roll up the shares to CECONOMY. So the financing of this deal is as follows: we have a mixture of ordinary shares; secondly, we have a convertible bond; and we have some limited amount -- and a limited amount in cash. This transaction will allow us to unlock a big value creation potential in CECONOMY, which was locked up to this transaction. And with this value creation potential, the transaction will be value-accretive from year 1. We come to more detail in a minute. The transaction, however, is still pending on the approval of our shareholders meeting in February. Because the transaction is complex, and for that reason, we put it on purpose to the vote of our shareholders that they all can agree on this transaction. So let's go more -- into more detail. As I said before, Convergenta will roll up and will become a shareholder of the CECONOMY. In the beginning of 25.9%, later, it can be -- even become more because from the convertible bond, they can move up the shareholding up to 29.9%, and that is the target what Convergenta wants to achieve in shareholding. So we have, on the one hand, a new shareholder structure, which will allow a unified shareholder interest in the company, and all of them are looking forward that the strategy implementation will lead to the success of CECONOMY in the future. In CECONOMY, with 100% ownership of MediaMarktSaturn, we can simplify our governance. We have a lot faster decision process because we do not have the 2-tier Board structure in the company, which we had with an Advisory Board of Convergenta and a Supervisory Board at CECONOMY. That we will not have in the future, it will make our life a lot easier. Let's have a look into the value creation potential from this transaction. I think the predominant part of this value creation comes from locked up, up today tax losses carried forward in CECONOMY. These amount to EUR 1.2 billion, each for corporate and trade tax. And that will result in tax savings, of EUR 360 million over the next year. On top, we have holding costs, which were not tax deductible in the past, but we can now deduct from our earnings of MediaMarktSaturn. So this will -- on top will lead to savings of around EUR 10 million annually. And all of this will reduce our tax rate by 2 to 3 percentage points, the underlying tax rate. The tax savings will lead to roughly EUR 50 million benefits in the next 3 years. In the first year, it is less. In the third year, a little more. And that will be increasing over the years. And the major part of the EUR 360 million will last for 6 to 9 years, depending on the tax. The trade tax there a little longer than the corporate tax. On top, on the benefits, we also have some holding cost savings, and the amount is EUR 4 million. So might -- you might have expected a little more, but you need to have in mind that we already have reduced our holding costs in the beginning of 2019 by EUR 10 million, from EUR 40 million to EUR 30 million. So now the savings are a little bit more limited what we can achieve on top. The third benefit the shareholders will have is that we move the minority share from Convergenta now to the earnings of CECONOMY. This is on top, an amount of more than EUR 50 million. And all the elements together will ensure that the transaction is accretive for our shareholders from year 1. And the year 1 would be this year after closing. So what are the key parameters for the transaction? We -- this -- number one, we have 125.8 million shares, which we will issue as ordinary shares after general -- the assembly, which have a value of EUR 525 million. On top, we have a convertible bond at a nominal value of EUR 151 million at an issue price of EUR 160 million. And we have a cash transaction, so we pay upon closing, EUR 80 million to Convergenta and EUR 50 million we pay only after we have given back the KfW facility. That means the whole transaction has a limited cash-out and debt issue. It is in line with our stable financial profile; number two, it reflects the intention of Convergenta to become an anchor shareholder up to 29%; and if you add up all the considerations, you come up to a total consideration value of EUR 815 million. When you ask me, so how do you calculate this kind of values? It's based on a 3-month average share price, which is at our EUR 4.17, we measured up to Thursday evening. And with that, the shares of the 125.8 million is exactly the EUR 525 million. Having said all this, there's still a process we have to go through. So we had agreed with Convergenta on the deal. We signed it yesterday, and we also got the Supervisory Board approval yesterday. Now we have in January 21, we have -- we will have the convocation of the Annual General Meeting. And in February, we have our shareholders meeting in Düsseldorf. It will be a virtual meeting this year. And we hope that on that shareholder meeting, we will get the approval from our shareholders and investors to improve the capital increase for the consideration in kind of the -- for the shares, for the ordinary shares, for the issuance of the shares and the issuance of the convertible bond. The closing of the transaction would be around end of March, depending on when the court will register the new shares. So far, for the news of the day for CECONOMY, and I think this news is an incredible news for us because it's solved something which was in the room for many, many years. And finally, we have done it. I'm really proud [ of ] my team that we have gone so far in achieving this. So I think with that one, we can now continue with our normal program, which we have intended you -- for you to present, and that is to the results from last year, the strategy update, which is, I think, also important in light of all the new news from the outside world, what we get. And that is what we start now. So let's take a look back into the beginning of 2019. At the time when I joined, we had to set the reset button because CECONOMY was off track and we need to stabilize the business. One of our main conclusion at that point in time was that it was not the insights we were missing what needed to be done, no, it was lacking the timely and consistent implementation. For that reason, we shifted our focus to relentless execution for all our strategic initiatives. And we defined 4 initiatives, and we have defined it in 4 tiles, and you might remember them. And the first one was omnichannel. In omnichannel, we delivered tangible results. We consolidated. First of all, the different online shops we had for the different brands. We also consolidated the IT platform from 6 different web shop platforms to 1. In Germany, we implemented an improved web shop front end. And we introduced new apps, which were far more -- far better in user experience than the existing ones. In -- last July, we introduced the marketplace for Germany. And we are pretty convinced that we, as the third largest player, online player in Germany after Amazon and Otto will have a marketplace with high relevance. We are already pleased by the momentum, which we see in our marketplace, and the interest from suppliers who want to sell in our platform. So second tile was one of Services & Solutions. We implemented the harmonized service offering for our SmartBars across all countries and all the stores. At the same time, we tendered and refined our insurance and warranty packages for Germany and Austria. And we also launched the monthly subscription for extended warranties. The third one, category, supply chain management. This is key for us. It is key in the transformation from [ the decentral ] structure to the central one. And the most important project we had was the launch of a centralized category management approach. We have given guidelines to all countries how to define the assortment. So the products in each country might be -- differed slightly, but it is in a framework, in a clear framework and that has been defined by the central category management department. And most important, with that approach, we have shifted the category management or the ordering of products from the stores to the countries. So much more centralized. If you now look how much we buy centrally, we have achieved on a country level, a level of more than 95%, which we buy centrally on a country-by-country level. Lastly, category and supply chain is also about logistics. We are in the process of improving our logistics also to a more central structure. It will need some more time as the whole category will need more time because category management needs systems in place and logistics in place. And both things are underway, but they still need time to be finished. The fourth tile was the tile of organization and cost structures. Actually, this was a tile which we started with, to get back to a competitive cost structure for the group. And in August, we implemented the new operating model, where we harmonized the organizational structure across the group. And also introduced harmonized and standardized processes, which are now a prerequisite for all countries. This new operating model will help us to reduce costs but will even more help us to increase speed in the transformation. All that helped to stabilize the company in the year 2018 and '19. And we were very confident that we will be able to show in the year '19/'20 sales growth and higher earnings, but we all know it came differently. So let's have a look back how the corona pandemic influenced our business. So the year started quite well. We had a very -- an excellent Black Friday campaign. And we finished the first quarter with good results. We increased the sales, and we increased the earnings. So on both elements, we were successful. In January, we increased the level of sales development. In February, even be past the January development. And in March, we were even stronger. Up to mid-March where at a sudden point in time, within 1 week, all of our stores -- not all, but 90% of our stores were closed. We had to shift all resources immediately to our online activities. Luckily, we have prepared our online tools ahead of the time. So we were able to have a resilient online business, which could deliver the high volumes. And you might remember what we reported after the quarter, that in April, we had delivered 60% of our previous year volumes just via our online channels. So we managed successfully this phase in the lockdown phase. And at the same time, we prepared for an opening of the stores. The -- with the restrictions eased end of May -- or in May, and end of May, almost all stores were open again. And there was always a question if corona was the reason why the business, in general, moved a lot more towards online, but the post-lockdown phase was a clear evidence that customers want stores. They were coming back to our stores. In the first days, they were queuing to get into our stores. And the customers who came had a strong shopping intention. So they were buying more. So in the 3 months, June, July -- in the 4 months, June, July, August and September, we had very good sales development. We even exceeded our sales store volumes in our brick-and-mortar stores. At the same time, development on online remained positive. All in all, we were able to really grow our business in these 4 months, and we could compensate for the sales losses we incurred in the lockdown phase. And that resulted in a sales number, where we had to show development only slightly below last year despite the COVID-19 disruptions. And for EBIT, we achieved a good level far beyond what we have anticipated in the beginning of the year, where we had no idea what this year would lead to. And also, when we did our internal forecast in July, the forecast was much lower. And also the result was much better than it was expected from the markets. We did not only work on financials last year, we also worked on our ESG ambition because we have a clear ambition to make our operations sustainable by reducing the carbon footprint. We want to be a responsible partner for society, employees and customers, and we want to work in a compliant way. In terms of sustainability, we were successful in reducing our direct carbon emission compared to the base of 2015 by 75%. In the meantime, 80% of our power supply is provided with green electricity. We are working to extend the life span of products with repairs. Last year, we did 2.9 million repairs across the group. More important, what happens if a product comes to an end of its lifetime. We all know that it's e-waste. And in Germany, we take 50% of the total e-waste back from the consumers and feed it back to recycling. In diversity, we want to increase the female share, which stands at 38% today. And we have a good cultural set with people from 128 nations in our group. Lastly, in our private label company, where we sell products directly from production sites, we have to make sure that these sites are audited for labor and human rights protection, and we achieved that for 97%. With that, I will hand over to Karin for the financial year's -- for the financial numbers of last year.

Good morning, ladies and gentlemen. If I had asked you in March this year, how you would -- or what kind of financial development you would expect from the CECONOMY AG, you would have been certainly very critical on that. Today, I can show you that we mastered this corona-related year very well. The sales came in slightly below prior year. And we finished the financial year with an adjusted EBIT of EUR 236 million. But let's start with a closer look at the development of the fields. Despite more than 6 weeks of store closure and the currency and portfolio-adjusted sales is only slightly below prior year, it declined by 1.8% year-on-year basis. As Bernhard already mentioned, we have seen in the first 5 months, a very positive sales development based on successful campaigns during the Black Friday and the Christmas period in the last calendar year. The stationary losses, sales losses, which we have seen during the lockdown period could partially offset by extraordinary online sales growth. We also have seen a noticeable sales recovery since we reopened the stores, driven by a catch-up demand of our customers and by further stronger customer demand until the end of the financial year. If we look at the country level, we see different pictures. So Germany, Italy, Spain and Poland were mostly affected by the COVID-19-related store closures. Turkey, Belgium and Austria were able to fully make up the sales losses of the lockdown period. They even achieved sales above the prior year's level. The Netherlands, Sweden, Hungary and Portugal were not affected by the store closures and performed well during the last financial year. If we look at the sales development by product categories, we see that we have a high gross rate in the computer hardware as well as in the home appliances, thanks to the work-from-home trend. We also -- but on the other hand, we also have seen a negative growth rate on the brown goods due to the absence of major sport events in the current year. A key factor for us in this financial year was the resilience of our omnichannel business model. The online sales rose sharply by 44% to EUR 4.2 billion. And if we look at the online sales share of the last financial year, we have seen a historical high with a share of 20.2%. This high gross was not only limited of the lockdown period. Even after the reopening of the stores, we have seen that the momentum remained high. Since the COVID-19 outbreak, we concentrated our marketing activities and resources on the online channel as customer increasingly switched to the -- to online. On the right side of this slide, there's one figure with -- which is pretty impressive. It is the growth rate of the online business in April. There, we have seen a growth rate of more than 200%. And we delivered without any big disruptions. Our IT and logistics worked overall well despite the exceptional order amount. During this time, we also implemented the shipment from store capabilities in order to use the product availability in the stores in order to fulfill the customer demands. The number underlines our tremendous progress in this whole process. But even after the lockdown, the sales, the online sales remained strong, increasingly by 50% on a year-on-year basis. Let's dive a bit deeper on the online sales development in Germany. As Bernhard already mentioned, we have not only consolidated the IT platforms, we also improved the web shop front end and the user or interface of our app. These measures supported the online business success in 2020. This chart also illustrates the success of the online business. As you can see, we have consistently outperformed the online market in Germany. We did especially well in the third quarter during the lockdown, but also after the reopening of our stores. Our focus on the online sales activities since COVID-19 was just the right way, and we made it better than any other online player. The development of the Services & Solutions sales faced COVID-related headwinds. The sales decreased by 7.6% to EUR 1.1 billion. The decrease was due to the temporary store closures and after the reopening of the stores based on a lower traffic in our stores. During the first 5 months, we have seen a very positive development of the sales in this segment. We have even seen a double-digit growth rate. Especially financing was negatively impacted by the store closures. And to a certain part, intentional by the reduction of the 0% interest offers. Despite the lockdown, SmartBars or the services on the SmartBars, which we offer, remained stable. Even though these services are a pure brick-and-mortar service. Our new and improved warranty extension showed a strong growth during the whole period and could partially offset the negative development of other Services & Solutions categories. The gross margin, our gross margin was significantly impacted by COVID-19 as well and declined by 120 basis points to 18.2%. This was mainly due to the COVID-related store closures, again, resulting from a channel shift, the higher delivery costs, stock-related issues and lower Services & Solutions income. Since the store reopened, we could see a noticeable sequential improvement in the gross margin trend, which continued until the end of this financial year. Please remember that we have seen a stabilization of the gross margin in the first 5 months of the last financial year. For the new financial year, that means for the financial year 2020/'21, we expect that the gross margin will be supported by an increase of the stationary sales as well as a higher income from the Services & Solutions segment. Moving down the P&L. Let's have a look on the OpEx development. The OpEx ratio improved by 60 basis points to 17.8%. The COVID-related OpEx savings amounted to EUR 227 million, mainly coming from contingency measures, which we rapidly took during the lockdown period in order to mitigate the negative effects. These include the short-time work for our employees. We also made progress in the operational cost savings in marketing, in personnel as well as in location costs. These cost efficiencies are related to the reorganization and efficiency program, which we announced in April 2019. The absolute savings in the OpEx came in at EUR 212 million as we incurred some negative effects as well. If we look at the negative effects, we are talking about nonrecurring effects. We are talking about EUR 40 million nonrecurring effects, including a provision for legal risks, in connect with contractual penalties in Q2 and impairment losses on software in Q4. And we are talking about 20 -- around EUR 27 million, resulting from impairments of leasing-related right-of-use assets. As you can see, we could partially compensate the decline in sales and gross margin by significant cost reduction. The adjusted EBIT of the financial year 2019/'20 came in at EUR 236 million. That is EUR 167 million lower than the prior year level but above our guidance, which we updated in July. Looking at the earnings in the segment. Despite temporary store closure, Germany finished the year with a solid operator performance, mainly due to cost reduction. The earnings were slightly below prior year, only due to nonrecurring effects of EUR 40 million. These EUR 40 million include legal risk provision in Q2 and the software impairment in Q4. In the other countries, the earnings developed -- development is slightly above prior year. In Western and Southern Europe, Spain and Italy recorded a significant earnings decline due to the negative COVID-related sales and margin development. In the Netherlands, earnings were down year-on-year basis due to margin-related factors and based on a highly competitive environment. The negative decline in the region, Eastern Europe, was driven by a decline of sales and margin in Poland. The EBIT in Poland was additionally impacted by impairments of right-of-use assets. Turkey showed slightly higher earnings due to a strong sales growth while currency effects offset a part of the positive earnings development. In the segment Others, the increased earnings, which you can see, are due to lower CECONOMY headquarter costs and the disposal of iBOOD. Sweden, which is also part of the Others segment came in at prior year's level. This slide, ladies and gentlemen, shows you the bridge from adjusted EBIT of EUR 236 million to the reported EBIT of minus EUR 80 million. And you can see that we have 2 main columns between. In the first column, we are talking about the nonrecurring effect in the financial year 2019/'20, which mainly include a positive EBIT effect related to the Greek transaction in Q1, the expenses for already decided store closures announced in Q3 and the expenses related to the implementation of the new operating model, which we also announced in Q3. With regard to the expected EUR 130 million restructuring expenses in the financial year 2019/'20, we only booked EUR 72 million. But please keep in mind that this is just a timing effect, and a reminder we'll switch in the financial year 2020/'21. But with this effect, you will see a shorter payback period. The other adjustment items are mainly the result of the noncash effects impairment of the Fnac Darty stake in Q2. Coming to the free cash flow development. The lease-adjusted free cash flow came in at EUR 453 million. That's a strong increase of EUR 586 million on a year-on-year basis. This development was driven by a strong Q4, but also driven by some positive, nonrecurring, COVID-related effects. And these COVID-related effects are not sustainable going forward. The significantly better free cash flow was mainly impacted by a net working capital inflow, which was supported by a strong sales momentum in Q4 and a higher purchasing volume in the expectation of a strong sales development during the Black Friday and Christmas period in this calendar year. For the financial year 2020/'21, we expect net working capital to normalize. The positive cash tax inflow is due to tax refunds, which we get from prepayments out of the financial year 2018/'19. And it is based on a lower tax prepayment in the financial year '19/'20. As you know, we suspended nonessential investments in modernization and expansion. Therefore, we had a slightly lower cash investment compared to the already low level in the prior year. For the financial year 2020/'21, we expect cash investments to normalize of around 1.5% of total sales. As you are aware, the uncertainties regarding the further development of the COVID-19 pandemic as well as the global macroeconomic environment remains high. We are currently, again, facing local lockdowns and stricter social distancing guidelines. Nevertheless, we decided to provide you with an outlook of our financial year 2020/'21. The following outlook assumes that the further impact of the COVID-19 pandemic on both, on the overall economic situation and of the group position, will not differ significantly from the extent currently known. The achievement of the guidance, all the requireds that there are no additional extensive temporary closures of a significant part of our business. It requires that there are no serious worsening in consumer confidence. And it also requires that the supply chains remain largely intact. The outlook is made, as always, before portfolio changes and associates. In addition, the outlook does not include nonrecurring effects in connection with COVID-19-related store closures as well as the introduction of the new operating model. We expect a slight increase in ForEx adjusted sales. Yes, we had an excellent start in the first quarter so far with a double-digit gross in total sales, but please keep in mind that we will be facing a high comparison base in the second half of the new financial year. Also, we expect some mild recession, especially in Southern Europe. The adjusted EBIT of our outlook, exclusive associates is expected to come in at between EUR 320 million and EUR 370 million. We are confident that this is a solid outlook for the current financial year despite the ongoing pandemic. Ladies and gentlemen, after a short break, we will come back with our strategy and our way forward. [Break]

We will now start with the strategy session. So in the last 2 years, we have worked a lot on our strategic initiatives. And I can say we are now in the middle of our transformation. And I think it's the right time to give a strategy update. You see already in that line, what it means for us becoming the first choice, and I will come back to that. We have 3 parts here. First, we want to talk about our market in which we operate. Then we will talk about how we want to behave in that market, what are our measures, our strategy. And number three, we will go to the financial ambitions, what are our targets we want to achieve. CECONOMY operates in an attractive market. The market has a size of EUR 159 billion in the 13 countries in which we operate. We expect that this market is growing to EUR 162 billion by the year 2022/'23 million. This is a moderate growth rate of 0.5% as the CAGR. But the market is also a market which is highly influenced by innovations. We have seen that when the MP3 players were introduced and also with the launch of the iPhone, in these situations, the pace of development increased quite dramatically compared to normal times. And we expect in the future that 5G can play this role because 5G will change a lot compared to the technology today. It will boost things like smart home, where because devices will be interconnecting and interacting much more than it does today. The same applies to health and wellness -- products, electronic products for health and wellness. And lastly, artificial intelligence and virtual reality, especially in entertainment, are things which will be much more capable with 5G. This will be complemented by secondary services like warranties, insurances and other services. And as we already see gradually coming in now, recurring revenues from services just to be booked from consumers. So the market can be much larger in 2023 already. One thing is clear. If you look at the channels in the markets, online channel is a part which will grow. So the growth will be predominantly coming from online. So we expect the share of online -- of the online marketing and consumer electronics to rise to 33%. But brick-and-mortar is here to stay. And we believe omnichannel is a winning model. Already today, we see many customers going into various channels, be it online, be it on the app of the smartphone, be it going to the store. And it is these customers who are on all channels active, these are the ones who spend about 50% more than customers who just -- who are just on 1 channel, be it online or just going to the store. And that is the reason why we strive to develop our omnichannel expertise to a higher level to benefit from this development. COVID-19 has changed behaviors. There are many new ways. And the new ways will create new business areas and new opportunities. For example, today, more and more customers use online tools with a way of interacting to stores -- to people in stores. And that -- this is just one example. And we have to see how this can change behaviors who will stay for some time will influence our roles in the different channels. And I think we have to define the role of the stores in a new way, as well the accelerated omnichannel capabilities, and we have to define how this has an influence on how to define new assortments. So the stores will not have just the role of offering products to be bought by the customers. No. It will be the room for inspiration and exploration. It will be the room where customers take -- or are in contact to salespeople for personal confrontation. And it will also be the area for the fulfillment of online orders in the pickup process in the store. The accelerated omnichannel capability is important to stay in close proximity to the customers across all channels. It needs robust technology in the back end of the online capabilities, especially for the increased volumes we will have. And lastly, we have to define which future assortments are important and are worthwhile taking in, especially when they are becoming more and more electronic products. And the best example here are attractive health and fitness related products. We believe that we have the great assets at hand to succeed in this development. Last year, we had about 570 million customers visiting our stores. To these touch points, we had about 1.8 billion touch points via online, which generated EUR 4.2 billion sales. With over 1,000 stores and our online capabilities, we are best positioned to be -- to grow profitably as an omnichannel supplier. And as a market leader, I think in Europe, we have a good position. And that defines the vision for us what we want to be, and I'll read it to you. We want to be the first choice as a trusted retailer for tailored solutions in a tech-driven world. And I will now hand over to Ferran, who will explain to you in detail how this way forward will be defined and measured.

Thank you, Benhur, and good morning from my side. Let me start my presentation saying that we are operating in the right sector. The reason is pretty clear. Digital technology today is becoming so core as part of our life, our society, our economy, it's embedded everywhere. And that means that retail is the perfect place to learn about it. Why? Because 31% of our wall GDP is coming from retail. And that's the same, and that's true for the digital part. That means that we are creating everyday tons of data. And these tons of data will reshape the future of our economy. These tons of data will enable us to become a smart retailer. How we will use this data is what I will try to explain as well during my presentation. Let me reinforce as well the idea from Benhur that we operate in the right industry. Not only because the new wave is coming and we will increase or will make growing our market with the new 5G, augmented reality, it's because COVID has shown that our sector is resistant, that technology and digital life will become even more important. So when I look to our way forward, I would like to start 2 years ago. 2 years ago, when I started in Indostat as the CEO of MediaMarktSaturn. At this point of time, we had 3 profit warnings in a row, and the company mood was at 0.0. When I was walking through the campus, I only could see sad people. I only could see that the people was rumoring that maybe the company could collapse soon. But today, when I talk to our people in the stores, in the countries, even in the headquarters, the spirit is totally different. The people, you can see it in their face, have passion again. The people have confidence, has trust, MediaMarktSaturn is back in the game. And the reason is pretty clear because we have a clear way forward. We have a clear vision. And ultimately, we have a clear goal. Our goal is to build the biggest omnichannel platform in Europe. And we have a privileged position to do it, a unique selling proposition. So a lot have been changing in the last 2 years. And now I would like to explain why I feel confident, I feel optimistic that we are going to get there. Why the best brands in the world want to sell through MediaMarktSaturn. In our way forward, we would like always to answer 2 fundamental questions. The first one, how we can deliver our product to consumer in a more relevant way, in more inventive way. The second one, what new habits of consumption have been formed and how do we get there. So our way forward have mainly 3 pillars: the first one, growth. So we want growth with our core business, with new families, but as well with new income pools. The second pillar is building a unique value proposition, how we will differentiate. Here, we want to strengthen our position as a category authority, and we want to provide a superior convenience and experience through our omnichannel model. And finally, creating an efficient organizational structure will help us to be faster and leaner. So let's move to the first pillar that is the basis for our growth, an efficient organization and structure. Let me say here that when you are innovating, you are changing everything. But you are changing not only the way you deliver the product. You are changing your processes, you are changing your practices in the stores, in the company, and you are changing your structure. So this is what we are doing in our operational model. Basically, here, we have 3 main cornerstones. The first one is centralizing and standardizing the organization. So we are changing the store structures, we're changing the country structures and changing the role of the holding. The second one, is scaling our global IT platform that will help to have fast deployments. If we have 1 web, 1 app, 1 CRM system, 1 billing platform. And finally, we will build a global logistic network. This will help, of course, to have a much faster delivery and a much convenient experience for our customers. So all in all, what we are trying to do is to become more cost efficient, to be a faster implementation. And finally, to give much time, much free time to our people, especially in the stores to take care of what is the most important thing, our customer. The second pillar is building a unique value proposition. Here, as a key differentiator, we have 7 strategic initiatives. Let me remark that knowing more about customer behavior, understanding is what is about retail. So now using digital to taking to the next level, the things that we always did well, it will be crucial for our future. So let me start with our brand. 2 years ago, we started our transformation. So today, it's time to reposition our brand as category authority, mainly focusing in quality and experience. Our superior convenience and experience coming from our store network will help us to appeal to higher-value segments. So let me say that our brand transformation already started with our international campaign and with the video that I'm going to show you, you will feel the new tone, the new appearance of the brand. That's just the first step. [Presentation]

The basis of our value proposition, of our unique value proposition is the product. So what are we trying to achieve here? We are trying to offer the right assortment, at the right place, at the right price. So with CatMan we can create a creative assortment in our stores. With -- it will generate a free space for new families, for services and experience areas. So we will reduce 30% of the stores [ that use ] in the future to generate this free space. The second topic that is crucial for us is availability. We're introducing a state-of-the-art technology to improve our demand planning and our stock management. So you could see already that in our top 300 products, we improved availability by 8 points. And finally, we need to ensure a consistent and competitive pricing. This is the tool that helped to steer our business. We have been talking a lot about this tool. This is a tool that comes basically from the deep analytics, from the price elasticity, and it's really helpful to steer our business. Technology, we were saying, is going to be embedded everywhere, and that opened a lot of opportunities for MediaMarktSaturn to get into new families. New families like Smart Home, for example, that is already implemented to all of our stores, to all of our countries that allow us to enter in new families like lighting or like IP cameras. Already solar panels have been implemented in Germany and in Spain as a test phase or urban mobility for e-scooters or e-bikes. Health and wellness is being tested as well in some subfamilies, and we will have the result in short term. Nevertheless, for me, what is important here is to understand that we have the right prerequisites to scale these families because we have a distinct go to market. In one hand, we have, or we will have, in some countries, but it's not there yet, we will talk later, the marketplace, which gives higher speed to introduce new families with a very low investment with no stock. And the scalability will come from our omnichannel, having much better experience and better advice. These new families and these new categories will help us to sell more than EUR 500 million until 2023. CatMan, as well, it will be a game changer for our own brands. We have been talking a lot about our own brands in the past. The problem of our own brands was not the products itself. In fact, this year, we have -- getting more than awards for our products, for the quality of our products and the great value for money. The problem in the past is that we didn't have logistics and we were a decentralized company. So today, with the centralized category management and scaling our logistics, we see clear that our in-house share of our own brands will be more than double in '22, '23. All of us knows that services are a big part of our profitability. In the last 2 years, we have been standardizing our services and rolling out in all of the countries, especially in combination with our smart bars. Here, for the next year, we have 3 clear priorities. The first one is improve the operational excellence of the existing services because there is room for improvement still and to reduce new services like cloud services, content services like Apple Music and repair services at home. All in all, we are preparing all of new services to help to continue growing. The second important priority is the attach in online. This priority has become even more important due to the COVID-19, due to the shifting channel sales that we are experimenting. So all in all, here, we are deploying a modular spaces in every single touch point of our web to increase our attachment. In fact, this is already improving our sales, especially in Germany and in Austria, and we will roll it out during next year to the rest of the countries. And finally, what we call the recurring revenue models, the subscription models. We know that with the subscription models, we have a much better customer lifetime value. So we want to shift the onetime commissions to the revenue models for the services that -- or commissions that we already have today, like warranties, like AppleCare Plus and for the new services that are coming, for example, for the cloud services. All in all, our services will grow until 2023 for more than 30%. When we look at to our web platform, we want to continue scale it. To continue boosting our sales, but in combination with profitability. So you know and Karin have been talking that we have been achieving triple-digit growth in some months, especially during the pandemic, and we want to continue keeping this momentum. For this, we need to improve the usability. This is a day-to-day job. We need to increase our traffic, optimizing our marketing performance. We have been learning a lot during the pandemic, when we switch off our marketing off-line, and we focus in the marketing online. So our role has improved a lot. And finally, we need to improve, and we are on a way, and we will see later, our fast and convenient delivery. When we talk about profitability, basically it's oriented to personalization and recommendation as a first step for solutions, taking in consideration customers' insights. Improving the attachment of the services, of course, I've been talking 1 slide before. And finally, improving our logistic cost from the cost unit point of view, but as well, increasing permanently the income ratio. And this, we will do it with the newer store formats that we will present later. But all in all, it's important that you understand that our digital sales in house share in the future, what we expected is to be in 30%. When we talk about omnichannel, our apps, consumer and employee app are crucial. Let me say that for me, the consumer app is the major driver to scale our digital business. It's the perfect combination of the web and the store experience, it's where we get our best data profile from our customers. The new web -- sorry, the new app, honestly, is a step change in usability, in design and in content. We have been putting a lot of features like price alert, like digital received, a lot of services in, like financing. So all in all, all of these features are boosting our traffic in our web, are improving our conversion and obviously, our attachment. But more features will come in the future are already in our road map plan, like virtual trial -- virtual reality trial, sorry, appointment scheduling or delivery tracker. All in all, our app, it will be the most important tool for our club members in the future. This app will be the remote control of the digital life of our club members. I will talk later on about the club in the last part of my presentation. Employee app, probably the highest return on investment. Why? Because 85% of our employees work in the store, and ultimately, in retail, our employees in the stores are the ones that drive the decision. And just putting the customer insight in their hand will make the difference. In fact, it's already making the difference. You know that our employee app is already live in Germany, in Benelux in Sweden. And all of the insights that we are getting is that it's a better experience for our customers. So the NPS is going up because our sales guys feel more confident. They have the stock, they have the features so they can advise much better, better conversion, better attachment. You can see 24% more attachment in services and as well, better productivity. And better productivity for us means that our people will have -- will generate free time to do other tasks, like B2B calls, like customer training in the future and so on. So for me, all in all, the employee app is the perfect tool in combination of our training program, passion for customers that we are rolling out about -- in all of our countries to transform our people. Stores. The stores are our key differentiator of our omnichannel strategy. But we understand that the role of the stores in the future will change a lot. We have mainly 3 store formats plus what we call the shopping shops when we cannot open the smart formats. But let me explain what we are trying to do here. We are trying to do an omnichannel approach by city or by region. What does it mean? So we are trying to combine our web platform with our 3 store formats to achieve a higher penetration, higher sales, better experience, better NPS and less cost. So basically, what we will have, we will have 1 or 2 lighthouse in a city that is our experience stores, where the people still will drive longer. It's our brand promise that it's more than 3,000 square meters, the biggest showrooms in the cities. This will be in combination with our core formats. The format that we have today that we will rightsize, that we will adapt to the turnover that they need. So we are always talking that we will reduce a lot of part of the portfolio to 2,000 square meters. This core format is related to availability to advise to services. And finally, to cover the white spots, we will have the smart concept that is in test. So we will have the results next quarter. That is the convenience store. It's the fulfillment store for pickup, for returns, for repairs. So this triple combination will help us to have a much better approach by city or by region. Let me say that the shop-in-shop is already in test in Hungary with very promising numbers and will be extremely helpful to cover some areas that we cannot cover with the 3 format stores. As well, I have good news for you because in July, we already launched what we call our lighthouse format in Milano. And the numbers are impressive. 13% more points in NPS, 38% more sales and what is even more impressive, 2.8 points in EBIT margin. But let's take a look in a video to see exactly what is this new lighthouse format. [Presentation]

So finally, in our unique value proposition, we have logistics. What we are trying to do here? We are trying to build the Europe's largest omnichannel supply chain. And this is based in 3 corner stores, what we call 1 order. So that means that we will have 1 order despite of any touch point, any customer touch point. One inventory, that means that we will have the visibility of the stock through the different channels. And 1 transport, that means that we will have a pan-European logistics network that will give enough visibility to reduce and to have more efficient routes. Our approach here is very clear. We don't want any more online or off-line warehouses. We want omnichannel DCs. These omnichannel DCs will -- we will open in strategic positions all around Europe. And from these omnichannel DCs, we will deliver most of the customers, we will deliver to our stores and we will use our repair centers. These omnichannel DCs we will complement with what we call the urban hubs. For 2-man handling products, for services at home or services installations and for returns. All in all, I have to say that we are fully on track on our logistic expansion. As an example, I could say that in Germany, we will open in May, our biggest omnichannel DC in Gottingen, 75,000 square meters. And middle of next year, we will as well have available, what we call one inventory platform to see stock availability everywhere in Germany and in Netherlands. We will roll out next year as well hubs in Germany, Benelux and Poland. So what we are trying to achieve with our logistics? We are trying to have a higher customer satisfaction. That means delivery needs to be faster and having more options, more flexible. And a state-of-the-art omnichannel network is what we are trying to do with our omnichannel DCs. And obviously, we are trying to reduce the cost per unit. We believe that we can reduce the cost per unit 3% in the next years, year by year. Obviously, when we talk about logistics, we talk about delivery promise, our last mile. And we have to say that here, we are well on track. Nevertheless, good is not enough. So we have seen since April, our -- that our NPS is going up 5 points and that we are already in more than 80% next-day delivery in parcels in Germany. Next steps that we want to achieve because what I was saying that it's good is not enough, is to improve our same-day pickup. Today, we are achieving, thanks to our pick and pack, 2 hours pickup, but we want to move to 29 minutes. This is already possible, for example, in Spain. Regarding next-day delivery, we want to improve next-day delivery. So for example, in Germany, we will move in the next month, the cutoff from 7:00 p.m. to 9:00 p.m. Scheduling delivery, which is crucial for 2-man handling is already live in Netherlands and in parts or in some regions of Germany, but we want to have it for the rest of the countries during next year. And finally, we would like to have same-day delivery that is referring to 2 to 4 hours. And we want to use the bikes in the main cities. We are talking about 80 cities by 2023 that will support our 0 carbon delivery. So all in all, a lot of things will come during next year in logistics to have a much better customer experience. And finally, the last pillar. The accelerating growth. When we talk about accelerating growth, we are talking that we want to build 4 platform for new income pools. These 4 platforms are marketplace, B2B, marketing services and the club. All of these platforms will have some financial impacts in 2023, but the big value will come in 2025. But it's important to say here, is that all of these 4 platforms are reinforcing each other. What does it mean? Marketplace and B2B will help us to be more relevant for our customers, and for our suppliers. Generating more traffic, we will get more members. And the combination of having more members and more traffic will help, definitely, our marketing service platform to be more relevant for our partners. So let's take a look to these new income pools. The first 1 is marketplace. Well, our marketplace will help to increase the relevance for our customers and our suppliers. We'll boost our organic traffic. We'll push our own retail and service sales. And finally, it will be extremely helpful to test the new categories with less investment. Let me say that I know that there are already in place a lot of marketplace. And what I see different from our marketplace is that we will offer to our customers and our suppliers, a higher convenience and experience, thanks to our store network. Our customers and our suppliers can take the advantage of the pickup of their returns of the unboxing in the stores. Even they -- our suppliers can launch their products through our stores, putting a special space for them. That is what it's really different from our marketplace solution, from our omnichannel proposition. Our marketplace is already live in July. So it's in the test phase, and we already on-boarded 70 sellers, and we have more than 50,000 SKUs today. The strategy is to fill the gaps in the existing categories, for example, in gaming, and I can say already that the results are quite promising. So all in all, what we are trying to achieve with our marketplace is to generate more than 1 billion GMV opportunity for 2025. The second income pool is about B2B. We want to step into the small and medium enterprise business segment. Today, we operate in the B2C segment in combination, so-called SOHO market. The companies that they have less than 5 people. Addressing this new market, we will increase 50% the potential market. How we want to do it? Basically, until today, we have been rolling out our B2B people in more than 500 stores, but in the passive mode. What does it mean? We were fishing in the carpet. We were detecting the customers, and we were calling back. To scale our B2B, we want to create a central team being proactive. The central team will act as an account manager. The central team in midterm will create solutions for the small and medium enterprise vertical like education, like health care that will take advantage of all of our services. Let me explain what I'm saying. Basically, we will go, for example, in school, and we will digitize the classroom. We will provide the devices, and we will provide the services. Services can come from insurance, from financing or from installations needed for the classroom. All in all, we think that we have the perfect proposition for our customers. For our -- the new customers that are the small and medium enterprises. The third income pool that we want to address is our marketing service platform. This is a really strategic decision. Why? Because today, the online advertising is almost a monopoly, and we need to change this dynamic. Why? Because we have the most important asset, the consumer behavior data. It's -- this is in our hand. Here, we want to do 3 things. First, because our partners, our brands, our suppliers are a little bit tired to invest in these online channels that they are raising their prices. We want to work because the transaction is happening in our platform in a much deeper partnership. It will be much more effective from them to invest in our platform. The second thing that we want to do here is related to the gross margin. We need to get this income. Customers' expectations are growing (sic) [ going ] up. Our customers are becoming much more demanding. So we cannot continue giving away our advertising in different platforms. We will need this gross margin in the future in to invest to fulfill these expectations. I don't think we have an option here. And finally, building this platform, we are protecting our data we are not giving away. We don't know where this information is going. So all in all, we are very convinced that this is a very strategic decision. I would like to say that we already have a leading marketing people in place with track record. So they -- some of them, they already did it in the past. So I'm very great to have all of them on board. And that give us an opportunity of EUR 0.5 billion of 2025. And finally, loyalty, retention, our club. We want to move from 23 million members to 40 million. And for this, we need to reshape our club. We need to change the benefits of our club. Our benefits will be much more oriented to services and through entertainment. We know that 1 loyal customer have much better customer lifetime value. In fact, we know that the customers that are more than 3 years with us in our club, they double their purchase. So here, we see more than EUR 1 billion increase in 2025. But to give a better flavor, how we will look our club, let's see the video. [Presentation]

So all in all, we have a clear road map, a clear priorities that we have been summarizing in this slide. I will not go into the detail. You can check it. I've been explaining during my presentation, and we will be tracking these in the next month. Ladies and gentlemen, we have every reason to be optimistic. We are convinced that this company has a bright future. Let me conclude my presentation highlighting 4 success factors: first, we have the right team on board. We have an international experienced team with the right skills and what is even more important, with the right mindset. We have been demonstrated our ability to execute. We have strong growth opportunities, and we are building the biggest omnichannel platform in Europe. Thank you.

Thank you, Ferran. Ladies and gentlemen, I now show you how our way forward translate into the financial ambition. Our financial ambition for the financial year 2022, '23, is that we will reach ForEx adjusted net sales more than EUR 22 billion. And our EBIT -- adjusted EBIT margin range will go at between 2.5% and 2.7%. Our aim was to have a tangible time horizon for our targets. The target should be not too far away, yet it should be long enough so that we are able to show you substantial financial improvements. Therefore, we decided for this 3-year horizon for our financial ambition. As Ferran laid off, we will grow market share by stepping in new business models. With our marketplace, with improved B&B solutions and with the offer of marketing services to our suppliers. Furthermore, we have a clear focus on margin uplift. In particular, the Service & Solutions segment will significantly contribute to the improvement of our gross margin going forward. We expect CapEx to return to normalized CapEx level of 1.5% of total sales. Overall, with all these factors, we expect a positive development of the free cash flow. And this is how the strategy initiatives are reflected in our EBIT margin ambition for the financial year '22/'23. In order to have a clean base to begin with, the pre-COVID adjusted EBIT margin of the financial year 2018, '19, that was 1.9%, is a starting point of our bridge. In the last weeks, we have seen that more and more customers switching to the online channel. As a result, we are expecting that the online sales share will move towards 30% in the financial year '22/'23. The increased online penetration goes along with a pressure on our gross margin. From mix effects and categories and also was higher -- based on higher delivery costs. But we are confident that we can compensate these effects, to some extent, with an online margin uplift, our work on the omnichannel spine and also with further IT enhancement. Nevertheless, it remains a headwind of between 115 and 140 basis points over the coming years. But the good news is that we have already incurred a considerable portion of the impact in the financial year 2019, '20. As you know, we have already made a lot of progress on the efficiency and cost side. Our relentless work on efficiency measures will help us to overcompensate the cost inflation. In general, a slight EBIT margin uplift over the years. The most important driver for the cost optimization is the operating model. Let's look at the unique value proposition, the middle of our strategic pyramid. The measures out of this part will contribute most to the EBIT margin ambition. We expect here a margin of uplift of around 145 to 170 basis points. The increase of our highly profitable service and solution business is by far the biggest lever for the margin uplift. Further initiatives like the expansion of our category offering and CatMan initiatives, but also the optimization of the store footprint will support the margin uplift. So let's go to the top of our pyramid to the accelerated cross path. Here, we expect to gain 20 to 45 basis points in March and until 2022, '23. The platforms for new income puts -- reach the full upside potential beyond 2023. However, there were already a contribution, a positive contribution until the financial year 2022, '23. In total, our adjusted EBIT margin ambition for the financial year 2022, '23 is 2.5% to 2.7%. In light of the elevated uncertainty, we have also addressed the impact of different macroeconomics on our EBIT ambition. So we have actually 3 cases. The assumption for the base scenario, that means the adjusted EBIT margin range of 2.5% to 2.7%, have the following assumptions. We expect an accelerated customer shift towards the online channel in the direction of 30% of sales. And we anticipate a mild recession in some countries. The assumptions for the upside scenario in which we see a potential of plus 20 basis points include a stronger consumer climate, and a less pronounced channel shift of our customers. And the assumptions for the downside scenario with a downside potential of minus 20 basis points, are a deeper recession going along with a decreased consumer climate and an even more pronounced channel shift. Let me now explain how we plan to allocate our cash. In order to become the customers' first choice, we need to invest in our business for further growth. At the same time, of course, we recognize the importance of dividend payments to our investors. But please keep in mind that at the moment, we still have the KfW credit in place. This credit requires from us to suspend dividend payments for the duration of the facility. We will intend to consider future dividend payments once we have a clearer view on the macroeconomic environment and the impact of COVID-19 on our business. But it's also clear that when we determine future dividend payments, the current balance sheet structure must be taken into account accordingly. Ladies and gentlemen, in order to take you along our journey, we have defined a set of KPIs for the 3 elements of our strategy. We will report these KPIs on an annual basis and some of them even on a quarterly basis. To track our accelerated growth path, we will report marketplace GMV, sales uplift from new categories, B2B sales share and the marketing service uplift. In order to track our unique value proposition, we will report, for example, the online transactions and the number of total contracts. We will also report the availability of our top 300 products to track our category management progress. And in addition to that, we will start reporting our NPS. Going forward, it's a key metric to track our success in becoming the customers' first choice. Besides the financial figures, we also have ambitious sustainability targets for the financial year 2022/'23. One of our targets is that we reach a 0 direct carbon emission of our own operations. That includes scope 1 and 2. The second target is that we are reached for the fact that the suppliers of 80% of our sales are audited for labor and human rights compliance. And the third target is that we want to double the number of sustainable products in our assortment compared to today. With this said, we want to make our progress transparent to you and give you an idea where we stand in our transformation. Thank you from my side. Thank you for your attention, and back to Bernhard.

Ladies and gentlemen, there's a lot of information you have to digest this morning. But I'm sure there are plenty of questions which you have that we need to answer later. But there is something -- one thing that we need to put in perspective, and that was a guidance given by Karin because the recording had been done 2 weeks ago. At that point in time, we didn't know about the lockdowns we currently have in Germany and the Netherlands. But I will come to that in a minute. First, I think you are very curious how we did so far this year, especially in the Black Friday period. And I want to give you some information how the actual development was. So all in all, we anticipated that we might get into logistical problems in Germany and also in the other countries with all these lot of online traffic going on, specifically in the high season period of October, November for Black Friday, the Black Friday week. For that reason, we stretched out our campaigns. We started already in October with first campaigns and continued that throughout full November. And that was really successful. It was proved to be exactly the right position. We then had the Black Friday, the Black Friday week. And again, it was a positive week for MediaMarktSaturn. And I can tell you today that first in October and November, we speed up in our sales development compared to Q4. Actually, there was a lot of speed increase we did. Our development was a lot better than in the last quarter of last year. Secondly, the Black Friday week was even more successful than the one last year. And that was complemented also by better earnings in October and November, exceeding the earnings of last year. There's also been -- to be noted that the online traffic was high during October, November, especially during the Black Friday period. You might remember that at the time of Black Friday, we had lockdowns in Austria and Belgium. And still, we were better -- had a better sales development. And the good thing is the sales development continued until yesterday. So I can tell you, until yesterday, all our countries have a sales performance better than last year. And overall, the level of development has continued to be on a high level for October, November up to until yesterday. The only small backdrop we had is due to the lockdown in stores, so sales and services is not as dynamic as it could be because we have seen the frequency in the stores were lower. And they -- because on their online share, a lot higher. But overall, it was a very successful campaign. It was a very successful period up to yesterday. So we go into the first quarter very confident that we will have a good quarter. But -- here is the but because we don't know exactly what it means now for the lockdown. And the first we said, we said in the guidance explicitly, the guidance is given -- has been given in the light there will be only minor limitations. And here, we see now a big limitation in Germany. And actually, we don't know whether it will end of 10th of January or will it continue -- will be continued. We don't know yet. Politicians said that they want to meet again later and decide how they want to proceed in their decision-making process towards 10th of January or be it extended or not. In Germany, luckily, we are allowed to have a pickup process. And I think that's extremely important. And I think it's fair because whether you pick up your pizza or you pick up your PC, what is the difference? Unfortunately, in the Netherlands, it's different. There, you're allowed to pick up your pizza, but you're not allowed to pick up your PC. So this is difficult because also in the Netherlands, they will have logistical issues because at the year-end, highly traffic, all logistic capacities are being needed. And on the peak time, most likely we might get into a bottleneck. So we're a little bit cautious on this lockdown period because we know -- we don't know how long it will take. But we moved in with a successful 2.5 months, what we have achieved so far. With that, I would like to come to the summary. So why people should invest in Ceconomy? I think the most important part is, before I come to the 4 arguments or the 4 thesis I have, I think you have a feeling we are back. We are back in the market, and we are back in execution. So what was lacking, I think we have proven, we have shown to you that execution is key for us. And we will also bring the transformation to an end. We are in the middle of the transformation, and we'll bring it to an end. And then we will open up the new potentials, the growth potential Ferran has explained on. So why is it that Ceconomy is interesting for investors? I think we are in an attractive market, which is -- has a higher rate of innovation. Whenever we -- if there is an elevation, the market growth rates are disrupted and funnel higher growth rates. Secondly, MediaMarktSaturn is the leading category authority. We have great assets, be it our stores or be it our online capacities, even complemented now with our marketplace in Germany. And all this, we are things -- we have the best prerequisite to have the leading omnichannel world. Number three, we are -- we have already, but we are building upon what we already have to have the right platform to expand into the new income pools and to accelerate our growth. And lastly, which is also extremely important, we have a sizable even EBIT improvement potential. On that, we have over a tangible period of time. We have worked on a lot of issues to get to it. Unfortunately, corona slowed us down a little. But I think you have learned today how we manage through this difficult period, on how we manage successfully and we executed. And I think that we will also do in the future. And with that one, I think the potential is a good one that we have this catch-up potential and bring it to life. And that concludes my presentation, the summary of all of the 3 of us, what we have told you. And I will hand over now to Stephanie for your questions. Thank you.

Thank you, Mr. Duttmann. We'll now start the Q&A session. We're happy to receive your questions, and we hand over to the operator. Thank you.

[Operator Instructions] And the first question is from the line of Volker Bosse of Baader Bank.

Volker Bosse from Baader Bank. First of all, congratulations on the deal with Convergenta. I think a great achievement, long awaited. But finally, you made it. Perfect. And I also would like to tell you that I appreciate the new set of KPIs to be reported in the future. So with that, I would like to start the question. First of all, a clarification on the Convergenta deal. You roll up the shares from the subsidiary to the group, Ceconomy. Does it also mean that the golden share or the special rights which Convergenta had is out of the game, so to say? A clarification that would be helpful. And the second question is on the marketplace. I think an exciting project. But you already started. You said 70 partners are on board. Could you give perhaps some examples of names which are already onboarded? And you also provided guidance of EUR 1 billion market opportunity. This is below 5% of CMV for '22/'23. I think this can also only be a step stone on a way forward to -- as we speak about midterm targets today. Could you also provide a kind of midterm marketplace potential, which you see beyond '22/'23, whenever it will be then? And finally, I would like to come on your market share development in the crisis. How was your performance versus your market? You showed just online outperformed the competitors. But how did your market share in Europe, in general, developed during the crisis? How did you come back versus the others? And perhaps also finally, in that context, how does the crisis also provide consolidation opportunities for you going forward? How do you look at that?

Volker, thank you for your question. I will start with the first question. I think it's a very fair one. As you know, in the past, for structural decisions, we needed the approval for Convergenta. Not for all decisions, but for structural ones. For example, to implement the marketplace that needed to be approved by Convergenta. And if we roll up now, this will be gone. Convergenta will just be a shareholder like everybody else. It will have a share of -- in the beginning of 25.8%, 25.9%, and later, 29.9%. But in general, it's just a normal shareholder. There is no special right, nothing at all. Second part, I gave a short remark because I want to clearly put that into perspective. When we talk about market value -- marketplace, and if we talk any -- about the size, it's the GMV. So it's not our sales. It's basically the gross market value. Out of that, we just get some commissions. So I think that is important to understand. But in terms of details, I think Ferran is the best to answer that question.

Yes. Well, basically, in marketplace, we are in the test phase until the end of December. And what we are doing today with these 70 sellers is trying to complement existing categories. Let me say the most successful ones that we tested complementing was with the gaming, for example, with online players, really highly specialists in computer gaming. They are a perfect complement that help us even to boost our online sales in our own platform. So it's a perfect combination. That is as well true for accessories, new range of accessories that, in the past, we didn't have in our web page. And that helps a lot to have much more assortment than ever. So that's a clear 2 examples how we are onboarding now our sellers as a test phase. And obviously, once we are in control and fill in the gaps in our categories, we will move to the new categories. The next gap is in [ SDA ] that we already started some small tests. But all in all, we are pretty happy with the results.

The third question was about the market share. And we had a market share picture like a typical V shape. So the market share overall dropped during the lockdown last year. And it dropped down a lot despite the fact that we had an increase of market share in online. The online market share was a tremendous increase. But still, as predominantly the share of our business is still in the stores, we saw the decline in market share. But with the opening up of the stores in May, we immediately recovered back to old levels. In June, we were on previous level. In July, we were slightly exceeding already our previous market shares. And since that time, we're in a good progress. And also in the first quarter this year, we saw that we are increasing our market share. So overall, we are happy with our market share development. We see that it -- I think the people see that we are back on the market and that we play the market.

Thanks a lot. Another question?

And the next question...

Sorry, sorry, sorry, I just see there was one part, and there was a side question. Is there consolidation opportunities through the crisis? I think it's -- that might very well be. And I think we will see that coming more. We see first points in some markets that people try to find solutions. And I think that could become even stronger -- that we see a stronger chance on that one. But it's just -- let's wait a little bit, and I think it will appear on the market.

Yes. Maybe to reinforce the answer, like we -- Bernhard was saying, we are already seeing some approach in the markets. Basically, this acceleration in online is making suffer a lot of traditional players. And we are convinced that in the next month, we will see even more approach in this field.

And one question -- one answer was still open regarding the marketplace, potential GMV going forward, marketplace share and percentage of GMV going forward beyond '22/'23.

Actually, it was -- I think when the -- you need to note, we were looking first now for the GMV value of EUR 1 billion at the year of 2025.

Yes.

If that will exceed, we will certainly come up with new information. But for the time being, as we just had the pilot in Germany starting this year, we had just said, okay, let's be realistic for the time being and set a target which we believe we can achieve. For that reason, we have just said EUR 1 billion for 2025.

Yes. Maybe to be clear, we want a marketplace where quality is very important. So our SLA is very strict. We check very in detail the customer feedback. And as well our marketplace, what I was saying in my presentation, it's different. Our marketplace needs to be linked to our stores. So in our marketplace, our sellers, we will offer them to do pickups, returns and basically, unboxing and more experience things in the future. And that's crucial for us that we take the right steps in the next quarters.

The next question is from Nicolas Langlet of Exane BNP Harbor.

I've got 3 questions, please. The first one on the gross margin for full year '21. Karin, you mentioned higher gross margin. But do you expect to recover most of the 120 basis point decline booked in full year '20 or there are still some headwinds that will limit the recovery for full year '21? And then if we look at the gross margin in the midterm plan, so you mentioned the gross margin uplift. Do you expect already in full year '22 and '23 to see improved gross margin year-on-year in all the initiatives you announced? That's the first question. Second question, to come back on the marketplace. I think today, the test is only in Germany, right? And do you plan to launch the marketplace in other large countries like Spain or Italy in the near future or mostly focused on challenger? And then on the marketplace, based on the current categories you plan to address, what's the average level of commission, your ambition on the GMV on that marketplace? And last question on working capital. You announced a lot of new growth initiatives. Taking all them together, what's the net implication on the working capital requirement as a percentage of sales in the mid to long term?

May I ask Karin to answer the first question in terms of numbers and maybe Ferran give some flavors why we think the numbers would be that way? Karin, firstly answer about the numbers.

Yes, of course.

Yes. Here I am. At least I can participate by video today. Nicolas, I will take your first question regarding the development of the gross margin. Actually, for the financial year 2021, we expect an improvement of the gross margin, mainly based on the stronger brick-and-mortar business and the recovery of the sales and -- not of the sales, of the Service & Solution business. So these both points will support the gross margin in this financial year. And regarding -- to the outlook to the financial year '22/'23, we also expect a large uplift of the gross margin by a very strong Service & Solution business. I hope that answered your question.

Maybe to reinforce the message from Karin. Thank you, Karin. I mean all of our initiatives -- a lot of our initiatives, apart from the growth, goes to reinforce this gross margin. So the Services & Solution, obviously, today, with such a big shift from offline to online, yes, makes that -- our gross margin is suffering. But you have seen that we are working a lot in our attachment in online, and we are working a lot in our subscription model, which if we see that we want to grow 30% sales in our Services & Solutions, we want to grow much more from the profit point of view, which will reinforce a lot the gross margin. We believe that our products margin still is very consistent. We have seen in the last month that this did not really go down. So it's due to the mix but not losing margin product by product. So the rest of the initiative like marketplace -- marketing services will help as well to support this gross margin pressure. So all in all, we go in the direction trying to recover these margin losses during this COVID period. When we go to the marketplace, of course, we would like to expand our marketplace. So let's -- next year, we will inform on a quarterly basis our step by steps in Germany. And in 2022, the first 2 countries that we want to roll out first will be Netherlands and second will be Spain. And based on this experience, we will roll out the rest of the countries. You were asking about which -- what is the...

The question was on the commission.

The commission, yes. The commission, based on our categories today, it's a high single-digit Number.

Percentage.

Yes, percentage-wise, yes.

Karin, do you want to comment, please, on the working capital net implications?

Yes, I will. Well, for the financial year '22/'23, we expect a slight decrease of -- a slightly negative change of the net working capital based on a bigger share of Service & Solution business.

When you said slightly negative change, it means slight improvement of the working capital requirement?

Well, actually, we have seen a pretty good net working capital in that -- in this financial year. And therefore, this slight negative change is not seen as an improvement.

The next question is from Caron of Kepler.

Fabienne Caron from Kepler. Three questions from my side. The first one, if I take a step back and look at your midterm target EBIT of 2.7%, 2.9%, looking at the past and looking at the economy as a whole, you are the biggest consumer electronic in Europe but you're less profitable than your peers. And one of the expectation was to reduce setup, which is -- which was not efficient with the decentralization. But looking ahead, it looks as if you're addressing most of these points. You're addressing as well your product mix, the services, your solution. That's why I'm just wondering why shouldn't you be as profitable as some of your peers like Fnac. What am I missing that would prevent you to close this gap? This would be the first question. The second question on Service & Solution. If my math is right, by '22/'23, it should represent between 6.5% and 7% of group sales. Could you give us an idea on the profitability on Service & Solution at the EBIT level? Because I know, Ferran, that you always say sales doesn't matter as much as the EBIT for this. And the last question on the dilution on online. If I look at your graph, it seems to be more backward-looking because as you were explaining, the logistic is not in place, you don't have omnichannel DC yet. And I suspect transport cost has a high impact on the profitability. So by '22/'23, what -- if you had to give an estimate, what would you be seeing could be the profitability of online or the difference compared to in stores?

Fabienne, thank you for your questions. I will try to answer them. And my colleagues may complement if they feel there's more to say. Number one, about the midterm target. You say, yes, we are making progress and going for the target as presented. And why is that still lagging behind peers? Number one, I don't know whether Fnac is the right peer because Fnac has a big book business in there with protected margins. But even then, I feel when we want -- when we set targets, we want to set a realistic target. And we know the transformation is still in the making. We are in the midst of the transformation, and a lot of issues depend on category management systems and logistics. When we -- on every call, we tell you that today, our logistics structure is not what we want to have. And that, for example, is a typical point why our online channel is less profitable because we have still higher logistic costs because we don't have a central logistic concept ready at this point in time. The concept is ready, but the execution takes longest when you go into hardware. So as you know that we are building our central warehouse in -- close to Göttingen. That is still not ready, this warehouse, and that will take some time. And for that reason, we are cautious on our margin picture, '22/'23 because we don't want to just explain something and not deliver. I think we made clear, whatever we say, we also are committed to deliver these numbers. Service & Solutions. You were asking the ratio of 6% to 7%. I think that's exactly right, the ratio, what we want to have in Service & Solution that fits quite well. So the question is, what is the margin on Services & Solutions? In general, Service & Solutions tend to have a high fixed cost basis of people in the stores, for example, for SmartBars or for other things where the people who give the services are already borne in our fixed costs. So whatever we sell is cream in the coffee, let's say, is high margin business. That's the reason why we intend also to increase our level of Service & Solutions. And the second one is naturally guarantee and insurance policies which are also where we get commissions on these insurance, which is also a good one. And therefore, the margin is also a positive on Service & Solution, definitely higher than the margins that we get from the sales of our products. Can you add something on -- you want to give some flavor on this one?

Well, we know that the commissions -- the margins are pretty high. And in the SmartBars, it probably is half of this commission's margin. But all in all, highly profitable for us. And due to the subscription model, it will become even more profitable. And that's the crucial point here. So we have room still to improve in attachment because we started 1.5 years. So a lot of countries were pushing there a lot. But they are not on the level that we would like to be, so still potentially in the operational excellence. And for us, what is really crucial is moving to the subscription model that today, there's a single digit and we want to move higher double digit.

I think we said it in the last quarterly call also. We need to have the online sales with higher attachments and higher Service & Solutions. And that's where we have to improve, the customer journey, the online customer journey, that the people are understanding our offerings and taking advantage of it. And here we are continuously progressing, upgrading our tools to get that into realization. And as you rightly pointed out, transport cost is a dilutional issue on our online business. It's true. For that reason, we focus very much on pickup. And we said we want to make the pickup as most convenient as possible. So in the future, we aim for a 29-minute pickup process. So whenever you buy something online, that you are able to pick it up within 29 minutes or up to 30 minutes in the store, to make this very, very much convenient.

[Operator Instructions]

And there's one thing actually which we need to have in mind. Overall, due to the channel shift, the online margins are always slightly lower than the store margins. And part of it comes from the point that we have less attachments, less services attached to it in the online business. And for that reason, we expect as we see the online business growing over the year and as a trend towards a 30% limit, that we expect also some kind of headwind from this channel shift.

I think our online P&L is improving month by month. We have seen from a margin point of view, thanks to our pricing tool, but as well from the attachment that not only by usability as well by our personalization and recommendation, which is extremely important and that we are putting in place in every country now. So all in all, together with these new income pools, we want to increase to support and to overcompensate the gap that we have today with our off-line business.

And the next question is from Genelot, Clement of Bryan Garnier & Co.

We've got 3 questions from my side, if I may. The first one is on online. With 30% of sales coming from online by '22/'23 versus 20% in 2020, you seem to have in mind that COVID actually boosted online, right? And then to what extent do you think maybe upsizing online will help you in gaining market shares over the chains of independents, let's say, Euronics or Expert in Germany? My second question is again on available services. In my view, your guidance looks quite [ small ] with only 6% to 7% of sales. Is it because it is a structural buyer? And my last question is on the ERA alliance. Given your ambitions in private labels and your successful revamp of operation, when do you intend to resume talks with Fnac Darty and M.video?

Clement, thank you for your question. To the first question of the online business, whether we gain share against the independent chains like the Euronics, Expert or -- as we name them, yes, we do. We do. We see it happening in the market share development that these chains are losing and we are gaining. So there is a big difference. I think the corona crisis has accelerated this trend. So we see us in a much stronger development than they are. Number one, because we are back, as I said, in the stores as well as in online. So on both elements -- and online, I think, is even proven here more superior for -- against these independent partners. Second one on the -- you want to comment on that one?

Well, basically, I wanted to say that, yes, we are always saying that omnichannel is the winning model. But this omnichannel is based in online growth today for all of the traditional brick-and-mortars. And this is where we are. So we are back in the game because our company understood definitely that online business is profitable. And we need to go for online growth. And this is why it's -- yes, it's forcing our, yes, competitors in omnichannel and in brick-and-mortars to move forward. And this is why we see the consolidation. Basically, it's on this point. Maybe I answer the second one. I think this 10%, we have -- it's related to an accounting effect related to IFRS 15. And so we are saying that we go more into the 7%. So we are going to grow in services above 30%, but I think this 10% is more related to that.

Yes. That's just an accounting issue. It's definite. Because the effect of IFRS 15 is EUR 300 million on sales, which is -- be allocated to product sales moving away from Service & Solutions. And for that reason, we had to correct this target into the right direction after the IFRS change. The third question was on -- what was the third question? I lost track a little bit here.

Alliance with Fnac Darty and M.video.

About our -- yes. As you know, we have 2 shareholdings, one in Fnac, around 25%. And we have the shareholding in M.video from our Russian transaction. Up to September, we had a lockup with the M.video transaction. So we were not able to move. Now we can. And we are looking into whatever is there a solution in the future. But for the time being, it's -- we are quite content with what we have. So if there's some movement, we can -- we could act. But for the time being, it's okay. We collected, over the last 2 years, EUR 20 million on dividends. So the operation of the group is running fine. Secondly, on Fnac, and here, I reiterate what I have stated already in the past, that the main focus is today on our transformation, to get from a decentralized model to a centralized model because only then we can benefit from our participation in Fnac and have a much stronger cooperation. Today, it would be still limited by our unfinished transformation. So for that reason, I always say let's do our homework first, and that is finish the transformation towards centralization. Next question -- or Clement, did we answer your questions?

Yes.

And the next question is from Lorenzo Margiotta also of Bank of America Securities.

Congrats on some good results. It's good news. I'm just wondering, the EUR 815 million consideration, could you just give me an idea of how you thought about that and why that's the right number? And then maybe a sort of tag on how you thought about that in terms of your share price as it stood today. So in absolute terms and then relative to the share price.

Yes. The EUR 815 million is the consideration amount. And we looked at it always. When you negotiate a deal, it's difficult to fix a certain price when the prices are always moving. So for that reason, we agreed on an average price of the share price. And by that, we came to the EUR 4.17 with consideration adjustment in shares for EUR 525 million. When you look carefully, you can see that the EUR 525 million for the share price value corresponds to the calculated value of Convergenta shares in MediaMarktSaturn. So it's about exactly the same value what we have. So that means whatever we paid in premium was coming from the convertible and the cash proceeds. And here, we said, why paying a premium? And here, the argument is quite easy because we were unlocking value potential we do not have otherwise. And the value potential, as I said, which will amount to about EUR 50 million annually of increase in earnings from just the tax losses. Total tax loss is EUR 360 million. Additionally EUR 10 million for the yearly expenses of the holding, we can make tax deductible -- no, no, sorry. The EUR 30 million will be tax deductible, EUR 10 million savings on taxes annually. And the holding costs on that, all that together leads to a value of, I would say, EUR 400 million or even significantly above EUR 400 million in synergies, if you just put everything into one amount. When I think -- and then you can understand why there is certainly some kind of premium to be paid for this transaction. Most important for me was in our whole negotiations that we do not mix any premium with the future transformation of the company because the transformation of the company is something we have to deliver going forward, and we want to deliver the results. And that should not be paid out in advance to -- in that deal. So we just looked that we only pay on whatever part of a premium, we only pay for the part of some savings we can generate in the situation as it is today, not taking into account the future of the company. And I think that is incredibly important that we keep that in mind. So the Convergenta share transaction is basically just based on tax savings and a few holding cost savings, which come out of this transaction, nothing more. And here, we have still -- we have split it in a certain way that all shareholders will participate, will benefit from this transaction as it is laid out today.

[Operator Instructions] And we have a follow-up question from Caron of Kepler.

Ferran, when you talked about the 3 pillars of centralization, global IT and global logistics, could you give a percentage of what has been done today? And how will it increase until '22/'23?

Sure. The percentage of centralization, you mean?

Completion, yes, the percentage of completion. Logistics and systems.

Yes. How much have you...

Okay. Yes, yes. The percentage of centralization related to procurement, it is very clear. We know that it's 95%. Related to pricing, we will be as well in the same numbers. When it goes to logistics, we want to achieve to be already in 50%. You need to know that in some countries that they already have, that they see -- like in Turkey or in Italy or even in Netherlands, the 2-man handling, you have already achieving numbers of 80%. But all in all, we need still 2 years to have all of the countries in this 50% in logistics. So I don't know if I miss...

So you're telling me 50% is in 2 years. So how much is it today? So that I get a feeling of the speed.

Well, if you look at Germany, we are not centralized for the logistic point of view. We will open Göttingen. We will centralize. Now we have our online warehouses, but we don't have our central warehouse, for example, in Germany. If you look at -- and this is why we are just doing by country because it's -- percentage-wise, it's too small. If you look at Netherlands and Italy that are much more advantaged, yes, you have numbers on 80% in 2-man handling and depends -- low digit numbers in parcels that we will accelerate next year, and it's the same for Germany once we open the warehouse. So this is why I say in '22/'23, we would like to have, in average, all over the countries in 50%.

Okay. And for what you call the global IT platform?

Yes. The global IT platform, when we talk about the rollout of the web, the app and the marketing platforms, that should be all of them roll out until '22/'23.

And there are no more questions at this time. I hand back to Stephanie Ritschel for closing comments.

Well, thank you, everyone. Thank you for joining today's results call. In case you have any follow-up questions, please feel free to contact us at Investor Relations. We're happy to take your calls. We wish you Merry Christmas. Take care, stay healthy, and bye-bye.