Madrid, 18 June 2015 – The measures included in the Grupo Vips Transformation Plan continue to have a very positive impact on the Group's accounts, which reflect a clear improvement of all of the indicators as of the close of fiscal year 2014. This improvement began slowly in 2012, and got stronger in 2013, which was the year in which the restaurant sector had some of its worst results of the crisis period, as confirmed in 2014. The figures for these first few months of the year 2015 reflect the consolidation of this trend.
Thus, the Group's total turnover was €350 million, showing a first increase in sales (0.2%) since the crisis began. On the other hand, total sales of the Group's different restaurant brands (including Franchises), which represent more than 88% of the weight of the total turnover, rose to €319 million, which means growth of 1.6% with respect to the year before, data that is clearly better than the most comparable organized restaurant market which grew 0.7% during the same period.
The Grupo Vips comparable market, the “Casual Dining” segment where the Group concentrates 70% of its business, held steady with growth of around 2% in the first quarter of 2015, with the Group's major chains doing slightly better on average during that same period. (+2.5%)
Very noteworthy is also the Group's recurrent EBITDA which, as of the close of 2014, totaled €20.3 million and which meant an improvement for the third consecutive year: an increase of 34.2%, with respect to the year before (at €15.2 million) when it had already improved 86.8% over 2012 (with €8.1 million). Therefore, this result confirms the inverse trend in comparison to the previous years and the start of the consolidation of the results of its Transformation Plan. In addition, the negative impact on the Group of the increased costs of welfare contributions approved by the Spanish government at the end of December 2013, and during 2014, must be highlighted as it meant an increased cost of more than 4 million euros given the large volume of internal staff at nearly 8,000 employees. If it hadn't been for this tax increase, the Group's recurrent EBITDA in 2014 would have surpassed €24 million.
In 2014, the Group recorded profit before tax of €0.6 million versus the -€0.285 million seen in 2013, and much higher figures than seen in prior years, including a drastic reduction in extraordinary expenses deriving from the Transformation Plan, which totaled €0.225 million in 2014 and €6.9 million in 2013. This great decrease in extraordinary expenses is a result of the end of the Group's transformation process. All of this came without renouncing its growth and the renovation of its business premises, the strategic lines that have accounted for investments totaling €6.7 million in 2014.
In 2014, the Group completed 26 openings - 8 internally owned and 18 under franchise agreements- in addition to 20 closings for a net balance of 6 more locations than before meaning the Group closed the year with a total of 342 establishments in Spain and Portugal. The development is noteworthy with the franchise division, one of the growth lines the Group committed to in its Transformation Plan, which accounts for 52 locations (16 Ginos, 13 VIPS, 11 VIPSmart, and 12 Starbucks under the “Travel Channel”). This year will see a strong boost with between 30 and 40 new openings, 10 of which have already been completed in the first few months of the year. This growth in the number of locations is a turning point in the contraction trend that the Group began with the crisis in 2008 and marks the start of an expansion and development phase.
In addition to focusing on the development of the franchise division, the Group has moved forward with its strategic reorganization concentrating its resources and priorities on its restaurant chains in the “Casual Dining” and “Fast Casual” segments (VIPS, VIPSmart, Ginos, Fridays and The Wok) and its Starbucks stores. The Group has continue with the road map designed for its "Fine Dining" restaurant division in the new strategic growth and profitability plan. Thus, four restaurants were closed in 2014: Lah!, Teatriz, El Bodegón and Bice and a few additional changes in this division are expected sometime in 2015. These decisions do not involve completely abandoning this business line, which represents around 1% of the Group's total turnover as it will continue to operate some restaurants in Madrid.
As far as the expansion of Starbucks, Grupo Vips signed a collaboration agreement in May 2013 with El Corte Inglés to open stores on their premises in Spain and Portugal and, specifically, in the major capital cities on the Peninsula. This agreement allows Starbucks to enrich its expansion strategy along with the channels it is already exploiting such as stores in large cities street side and in shopping malls, the travel channel and at the headquarters of major companies. In addition to the first store, which was inaugurated in 2013 (at ECI Preciados, Madrid), 4 more stores were opened in 2014 (3 in Spain and 1 in Portugal) and a similar opening pace is expected for 2015.
Another aspect worth highlighting is the Group's financial solidity with a net financial debt over recurrent EBITDA ratio, which has dropped to 0.54x, which means it is in an optimal financial position to continue with the projects underway and consolidate its growth. As of the close of 2014, the net financial debt had dropped 31.7% to total €11 million versus the €16.1 million from the year before or the €44 million recorded in 2012. This significant decrease in debt is both due to the improved results as well as the latest shareholder contribution of €3 million, as established in the refinancing agreement signed in 2012. In February 2015, the Group completed the early cancellation of a syndicated loan it had taken out in 2006 with a pool of banks, which was set to mature at the end of 2016.
So far in 2015, the Group has shown its commitment to technology and digital marketing by launching a unique APP on the market, the Club VIPS APP, which has a triple aim: transactional, relational and facilitating for the Group's customers. After two years of work, more than a million euros invested in the process and a number of professionals within the Group as well as external collaborators in different areas of expertise participating in the project, this new App respects, shares and enhances the values that have turned Club VIPS into a community of 2,800,000 members throughout Spain and the generator of 45% of the Group's sales. Within the first month of its launch, the APP already surpassed 170,000 downloads which exceeded the goal set out for this period.
For fiscal year 2015, the Grupo Vips priorities for recovering its leadership in the sector will focus on growth through franchising, with 30 to 40 new openings expected, the gradual renovation of the image of its own VIPS and GINOS locations, the development of new digital initiatives revolving around the Club Vips, the websites and the brand's social networking accounts and new technological applications aimed at modernizing its customer experience, as well as keeping its focus on operational excellence, customer service and efficiency.
About Grupo Vips
Grupo Vips is one of the leading multi-brand and multi-format groups in the food service and retail sector in Spain. It includes restaurants, cafés and shops. The company manages a total of 6 well-known chains it either owns or operates under franchising agreements: 4 internally-created brands - VIPS (café-restaurant and shop), VIPSmart, GINOS and The Wok - as well as 2 of international fame, Starbucks Coffee and Fridays. Since 2001, Grupo Vips is the sole and exclusive partner of Starbucks Coffee, the world's coffee leader, licensed to develop the brand in Spain and Portugal. On the other hand, it has an exclusive licensing agreement with Fridays, the top casual dining chain in the United States, to operate the brand in Spain. In addition, the group has 3 fine dining restaurants including Lucca, Rugantino Casa Tua and Tattaglia. The company manages a total of 350 locations serving more than 120,000 customers a day. It runs a pioneer and restaurant sector-leading loyalty program, Club VIPS, with more than 2,000,000 members throughout Spain. The APP, which is unique in the market and was launched at the end of April 2015, has already been downloaded more than 300,000 times. Grupo Vips is a private equity company which was founded in 1969. Goldman Sachs Capital Partners V acquired 30% of the company in 2006. Grupo Vips employs 8,700 people and ended fiscal year 2014 with 350 million euros in turnover.