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Edited Transcript of BIMAS.IS earnings conference call or presentation 19-Aug-20 1:30pm GMT

Q2 2020 BIM Birlesik Magazalar AS Earnings Call

Sep 18, 2020 (Thomson StreetEvents) -- Edited Transcript of BIM Birlesik Magazalar AS earnings conference call or presentation Wednesday, August 19, 2020 at 1:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Serkan Savas

BIM Birlesik Magazalar A.S. - Reporting & IR Manager

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Conference Call Participants

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* Berna Kurbay

BGC Partners, Inc., Research Division - Director

* Ilya Ogorodnikov

BofA Merrill Lynch, Research Division - Analyst

* Metin Esendal

Renaissance Capital, Research Division - Research Analyst

* Regiane Yamanari

Morgan Stanley, Research Division - Equity Strategist

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Presentation

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Unidentified Company Representative, [1]

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Hi, everyone. Welcome to second quarter results for BIM. I would like to introduce Serkan Savas, the Head of the Investor Relations, to give you the presentation of the results. Serkan, the floor is yours.

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Serkan Savas, BIM Birlesik Magazalar A.S. - Reporting & IR Manager [2]

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Thank you, Nina. Dear analysts and investors, thank you for joining us today for our second quarter results presentation. I am Serkan Savas, Investor Relations Director, and today, I will be hosting the call. I hope everyone is safe and well in these uncertain times.

Today's presentation is, again, this webinar platform, like the first quarter, and presentation is also available, as you see in the screen. And please note that it's also available on our website, if you want. If you are one of them who dialed by phone, you can find it on our website as well.

Please note that we will hold Q&A at the end of the presentation. (Operator Instructions)

I now invite you to have a look at our second quarter results. To start, again, with COVID-19 in Page 3, early second quarter has -- also has been impacted by changing environment of COVID-imposed rules, and we will be mentioning any COVID-19 impact on our business during our presentation, if applicable.

But let's -- but first, let's look at our top headlines for the second quarter. Our quarterly net sales were TRY 14 billion, reflecting 37% year-on-year growth, which is above our guidance. And same goes for EBITDA, reaching TRY 1.3 billion EBITDA with the margin of 9.6% and 58% year-on-year growth.

Capital expenditures were TRY 273 million in the second quarter, corresponding to 1.9% of sales. Net income was around TRY 700 million, which is around 100% higher from the previous year and is corresponding 5% margin -- net income margin.

On the store front, even in COVID's challenging environment, we have still successfully added 281 new stores in total, of course, including 50 seasonal stores -- 50 seasonal stores are also included in these 281 stores. And that brings us to 8,921 of total consolidated stores as of second quarter. As a small note, as you see in the slide, there's a small note about SKU range. We have slightly increased our SKUs from 750 to 800. This has been tested for a while in the last few months, and we have decided to expand the old stores gradually in the first half. New SKUs are mostly comprised of both private label and branded, and we will be keeping stable going forward. So today, we have around 800 SKUs -- regular SKUs.

Finally, in this page, due to many unexpected changes this year, we are revising our guidance for the full year, which we will disclose at the end of the presentation.

Moving on to net sales at Page 4. Sales grew by 37% in second quarter, which is still strong. The partial effect is attributable to COVID-19 impact, which started in Turkey beginning of March. Our strongest month was April, during which we had COVID-imposed rules as well as Ramadan periods that's always stronger in sales. And so COVID plus Ramadan period, the April was the strongest month in the second quarter. But from mid-May, maybe late May, we are not seeing that sales coming back to pre-COVID levels, similar to January and February.

Our quarterly gross profit has increased to TRY 2.6 billion with 18.4% margin -- gross margin. As you'll notice that there is improvement in gross margin, which is mostly attributable to better purchasing terms and rebate, and also some is coming from our achievements in weekly spot assortments, in-and-out, we call it spot assortments. You know that we are listing our products, spot products on Fridays Friday products. So for a while, in the last few years, we have been working on improvements on spot products, and now it's starting to pay off. For example, with the spot articles, it used to have around 4% share in sales, but now it is almost reaching to 10% and with better margins. So this also added our gross profit margins.

Actually, yes, in the first half, it's -- we had 17.8% gross margin in the first 6 months' period. I think this first half gross margin would be a good indicator for the remaining of the year, but it shouldn't be -- give any guidance for the following years. As you know that we are setting our targets yearly basis, so for the long-term period, we are still keeping our long-term profitable targets. But this year, in profits -- profit margins is almost going around 18% levels.

Moving on to quarterly EBITDA and EBIT, Page 5. The positive effects of increase in sales and gross margin also had positive effects on realized EBITDA, which is around TRY 1.3 billion and a margin of 9.6%, which is, again, our -- above our guidance. Regarding EBIT, quarterly EBIT was around TRY 1 billion at the margin of 7.1%. As I said before, we are revising our EBITDA guidance for the full year as it progressed better than expected, even in pre-IFRS 16 EBITDA, which are due to better gross margin as well as operating leverage.

And let's now -- let's look at the semiannual EBITDA and EBIT figures in the next slide. On a semiannual basis, our first half EBITDA was TRY 2.3 billion, which is 55% growth with same period last year, same half last year. Semiannual EBIT was TRY 1.7 billion with corresponding margin of 6.3%, resulting in 71% year-on-year increase. As with quarterly EBITDA and EBIT, same goes for semiannual results. Those are also, as I said before, above our yearly guidance.

Moving on to net income slide. Our quarterly net income was TRY 697 million, around TRY 700 million in second quarter, which is 100% growth year-on-year. As you know that in the first quarter as well, we have 100% year-on-year growth in net income side. Net income margin increased significantly to 5%. On semiannual basis, net income was TRY 1.1 billion, which is again 100% higher than the first half of last year. As already mentioned, the main drivers continues to be high operating leverage, better gross margin and -- as well as the higher financial income due to strong cash position.

If touch on cash position here, we still have -- as you see in our financials, we still have strong cash position in second quarter, although there was TRY 300 million dividend payment in second quarter. And also, working capital has a little bit normalized after the COVID period. As you know that in the first quarter and as of end of the March was the peak of the COVID period, so our working capital is almost normalized in the second quarter. So besides this, we have still a strong cash position, and because tax payment deferrals also led cash position to increase in the second quarter. Today -- so we have around more than TRY 3 billion, we have cash on hand.

Looking at like-for-like sales slide. This is the segment we have seen the biggest change in our business analysis, as mentioned in our previous call, our -- because our usual trend indicator measure, like-for-like KPI, used to be customer traffic for the -- this has been multiple for discounters, but due to COVID-19 implications, trend is a little bit misleading due to changes of consumers' behavior because due to COVID-19 and self-isolation measures, customers are shopping less frequently but in much larger baskets. This is why the traffic growth in this quarter is negative in second quarter. And I can say that the higher basket and lower traffic trends is still going on after Q2, but in somewhat lower extent.

So this quarter, basket growth is main driver of high like-for-like, which increased by 66%, and consecutive sales were also up 41%. But note that the second quarter 2020 has 12 less working days than the last year due to the curfews and lockdowns. So as you know that in April and May, in sometimes the older cities and sometimes the big cities are in curfew days. So on average, our stores -- on average, 12 days closed down during the period. So we have 12 days missing than the same quarter last year. This is just for your proper assumption and calculations of our like-for-like because some are asking that you have 41% like-for-like growth but your top line is 37%, less than the like-for-like. This is the main reason: less working days.

And a few words on the internal inflation, which is our internal inflation as of second quarter, it's running around 16.5% levels, and this is in second quarter. But we are noticing that post second quarter, it is almost closer to 14% or 15%. There's a bit easing in internal inflation.

Moving on to CapEx slide. Our second quarter CapEx was TRY 273 million, corresponding to 1.9% of net sales. And the first half CapEx is TRY 546 million, is in line with our annual target for the year.

And no new warehouses were opened in second quarter. However, on the 1st of August, we have opened 1 warehouse in Kastamonu. And additionally, one of our warehouse in (inaudible) moved to new one, new constructed one, which is almost in double size.

In terms of CapEx guidance, there are no any changes in our CapEx plan, and store openings and warehouse opening was on track. And we are planning by year-end to open 1 more warehouse in Denizli that's already under construction. And maybe we will likely to start some field construction in a few months' time, but of course, those will be open next year, likely to open next year.

And on store side, we are continuing with the increased opening pace, as we mentioned before in the first quarter call. We have opened 276 new BIM Turkish stores in Turkey, and 10 stores in Morocco we opened and 5 FILE stores we opened. And this quarter, we closed down 10 stores in Egypt, nonperforming stores. So to sum up, in total, we had 8,921 stores by the end of the second quarter. But this is also including 50 seasonal stores, so those will be closed down in September or October. There is no change in our increased store opening plan and would like to continue in the same pace of first half as per the seasonal stores.

If you look at foreign operations and FILE slide, next page, we are pleased to say that Moroccan net income has continued to contribute to our Turkish net income in nominal terms. And in Morocco, we have opened 10 new stores in second quarter. Profit margins are on track. We will be closing monitoring the sustainability of the EBITDA margin outlook in the next quarters. So Morocco is going well. And in Morocco, in terms of store opening, we are targeting same pace of store opening as previous years, maybe 50, something like that, 50 stores per year.

Operations in Egypt a little bit slowed down because we closed down 10 nonperforming stores in Egypt. Our focus is to increase the efficiency of our existing stores to date. Of course, the COVID-19 has positive affect on sales in Egypt as well. But from mid-May, it has normalized to pre-COVID levels in Egypt as well.

As of FILE operations, we have opened another 5 stores in second quarter, which means we had 103 by the end of quarter, but today, we have 113 stores. Today also, there is a store opening in Bolu. So we -- day by day, we are opening new stores. So we have opened 6, 7 stores in July and August as well. FILE already reached net income profitability in Q1. And FILE on 9 shopping platforms is still in planning phase, we are working on the online FILE operations.

And in addition to our foreign operations development, we would also like to show the contribution to total consolidated sales and EBITDA in Page 12. There was around TRY 1.7 billion contribution to total -- to consolidated sales in 2020 -- the first half 2020, and it was TRY 1.1 billion same period last year. That means that 6% of our total sales are coming from overseas. Overseas operations, or especially just Morocco, have been performing well.

With regards to EBITDA contribution, it's also going well, with Morocco, again, being the main driver. We are EBITDA positive, and total foreign operations' EBITDA was around TRY 71 million without IFRS 16 impact. This trend is expected to improve going forward due to better profit generation of Moroccan operation.

And now let's take a final look at our guidance for 2020 and our revisions. As you know, at the beginning of the year, we were planning some guidance for some sales growth, 23%, and keeping the EBITDA of 5% before IFRS 16 impact. But as this has been a very extraordinary year, and we are -- we see ongoing change in customer behavior and our results, now we are revising our year-end guidance as follows: sales growth, 32%, plus/minus 2% points; EBITDA margin, 6%, plus/minus 50 bps, which doesn't reflect IFRS 16 impact. This is before IFRS 16 impact. If you want to look including IFRS 16 impact, it corresponds around 7.2%, 7.3%. But note that EBITDA this margin guidance region is applicable for this year 2020, and following year guidance, we will define at the end of the year. So I want to mention that we are still keeping our long-term targets, which is 5% in EBITDA terms. But this year, we changed to 6% -- yes, just specifically for this year, we changed to 6% EBITDA margin guidance.

And in terms of the capital expenditure, there's no change. It's almost on track, TRY 1 billion CapEx. We are keeping it for the full year.

So yes, this is my -- end of my presentation, and I would like to thank you for your attention today. And we would like to open the floor for Q&A.

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Questions and Answers

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Serkan Savas, BIM Birlesik Magazalar A.S. - Reporting & IR Manager [1]

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(Operator Instructions) Thank you.

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Unidentified Company Representative, [2]

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Metin, the floor is yours.

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Metin Esendal, Renaissance Capital, Research Division - Research Analyst [3]

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You mentioned spot the share of spot products in the total is around 10%. Is it just second quarter, or in the first half? And do you think it is going to be a new normal for BIM? Or is it just tactical, and you just take advantage of the...

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Serkan Savas, BIM Birlesik Magazalar A.S. - Reporting & IR Manager [4]

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Yes. It's not -- it is reaching to 10%, thank you. It's reaching to 10% in the second quarter, especially after COVID-19 days, actually, my colleagues achieved very well in spot item sales. So -- but we have been actually working on this section. But going forward, we want to keep this close to 10% spot rate, and of course, with better margins, also adding our gross margin. So going forward, we want to keep this normal.

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Unidentified Company Representative, [5]

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Thank you. Regiane, the floor is yours.

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Regiane Yamanari, Morgan Stanley, Research Division - Equity Strategist [6]

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I have two questions. One is, are you seeing a change in basket composition? What's the percentage of private labels that you saw in the second quarter? And you mentioned a change in consumer behavior. Was there any other change in consumer behavior that you've seen this second quarter that you're seeing still during the third quarter? And how sustainable you think this impressive gross margin is going forward?

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Serkan Savas, BIM Birlesik Magazalar A.S. - Reporting & IR Manager [7]

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Thank you. Yes, actually, in basket, there's -- as I said, people are less shopping from the store, less visiting stores and in higher baskets. Yes, in the first days, in March and April, we have faced some basket change, composition change because, for example, the people rushed to buy some basic commodities in the first -- maybe flour products, some pasta products and paper cleaning materials, they rushed to buy those materials in April and somewhat in May. But today, it's most normalized -- it's almost normalized, as I -- in total sales, also normalized, and basket composition is normalized after June period.

But higher-basket shoppings and with less frequency is still going on after second quarter as well. So people still are cautious to shop with stores more frequently. So they prefer less visits to stores but in higher basket, but composition is almost changed.

But in our response to your question, private label questions, private label share is almost 64% in the first half. There's little bit decline in our private labels because, as I said, we already listed some products. And our spot items and our in-and-out product is also performing well in this year. So -- but a little bit today, our private label composition is 63% as of first half, I can say that. This is not the preference -- consumer behavior change, this is mostly coming from our policies to increase our spot items, group spot items, in-and-out and other branded products. So it's likely this private label composition will continue going forward, maybe stable, 63%, 64% stable, we expect in the coming quarters.

About your gross margin, how sustainable? As I said, as of first half, we had around 17.8% gross margin. So I think the second half -- for the second half, the first half gross margin would be a good indicator because our volume is going up. Maybe in the last 3 years, our volume -- purchase volume almost doubled, and we are taking better purchasing terms and better rebates we are taking. So of course, those are all affecting gross margins. But second -- for second half, the first half gross margin will be a good indicator.

For the following years, I cannot say that we will continue like this. It is because we are setting our targets yearly basis. For the following years, we will see. We will judge what's going on. We will clarify our policies. But this year, for the second half, it will be like the first half period.

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Unidentified Company Representative, [8]

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Ilya, the floor is yours.

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Ilya Ogorodnikov, BofA Merrill Lynch, Research Division - Analyst [9]

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Congratulations for the results. I got three questions. And the first one, it's again about the margins. You got all-time high results in terms of EBITDA margins. And maybe can you give us an idea about the reasons for such an improvement, aside the spot picture that you have mentioned before? And do you think the gross margin will be the same in the second half of this year?

The second one is why salary expenses were optimized so materially?

And the third one, can you please comment on July more specifically? During the call, you have mentioned that customers prefer to use bigger baskets for day-to-day shopping. And so in the current environment, do you think the growth in the second quarter would be sustainable?

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Serkan Savas, BIM Birlesik Magazalar A.S. - Reporting & IR Manager [10]

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Okay. Margin -- about the EBITDA increase, as I said, it is mostly coming from gross margin improvements. Gross margin improvement is better purchasing terms and better -- the spot items and group spot items achievements in the first half. So this is the main reason, gross margin and also better operating leverage. So the sales increased more than our -- the OpEx in the first half somewhat is coming from COVID-19 period. So those are the main re for EBITDA increase. So this is why we actually revised our guidance for the full year. Around 100 bps, we increased our EBITDA guidance for the full year. But this is -- was just for this year. For the following years, we are still keeping our long-term targets of 5%.

And second question, can you please repeat it? It's about the salaries? Okay. Let's look toward your third question. If you are online, please remind me your second question. And July, of course, the bigger basket is still going on. A bigger July basket is still...

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Ilya Ogorodnikov, BofA Merrill Lynch, Research Division - Analyst [11]

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Salary expenses.

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Serkan Savas, BIM Birlesik Magazalar A.S. - Reporting & IR Manager [12]

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Salary expenses, okay.

And your third question, in July, the growth is almost stabilized, as I said, to pre-COVID-19 period, in January and February. As you know that in January and February, our initial target -- sales target was 23%, like that. So after June, actually, after COVID-19 period, I can say that we came back to January and February levels, normal levels in terms of sales. Just I mentioned that in July, the basket gets higher, but traffic is also lower in July. But in terms of the sales top line, after 1st of June, we almost turned to normal pre-COVID-19 periods, like in January and February. So it's likely to continue going forward. So we have set our top line growth target accordingly for the full year, 33% -- 32% of total full year top line growth sales.

And your second question, the salary expenses. Salary expenses is -- today, for example, in second quarter, our salary expenses corresponds to 6.4%, so we have a little bit achievement on this. So we are happy with that, if the question is like that. So yes, we hired new people during the COVID-19 period. And also, we are actually using some incentives, the government incentives for employment. But this achievement in first half, let's say -- first half or second quarter in salary expenses is coming from mostly operating leverage and better sales.

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Unidentified Company Representative, [13]

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Berna, the floor is yours.

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Berna Kurbay, BGC Partners, Inc., Research Division - Director [14]

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I have two questions. The first one is if you could repeat the comment you made on the number of lower workdays in the second quarter because of the countdowns. Did you say it was 20 days less or 12? I was wondering...

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Serkan Savas, BIM Birlesik Magazalar A.S. - Reporting & IR Manager [15]

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12, 12. Average 12 days -- less working day we have in second quarter and also in first half.

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Berna Kurbay, BGC Partners, Inc., Research Division - Director [16]

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Okay. And in terms of your working capital, going forward, should we expect any changes? Or is what we are seeing in terms of days payables, which you were in the process of extending actually, are there any changes on that front?

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Serkan Savas, BIM Birlesik Magazalar A.S. - Reporting & IR Manager [17]

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Thank you, Berna. Actually, yes, number of working days, 12 less days. And it's also -- we also provided in our presentation for second quarter and also for the first half, just for your proper assumption.

Secondly, working capital change. Days -- actually in days payable, as we mentioned before, we expanded our days payable to 60 days, from 50 levels to 60 levels. This has been done at the end of the last year. We are still there. 60 payable days -- we have still 60 payable days in regards to working capital. We don't actually expect to change it going forward. We will keep at this level. But of course, in this period, in this quarter, the working capital -- net working capital contribution to cash is almost 0 because -- in this quarter, because as of first quarter, it was the peak of the COVID-19 days, high sales, high cash generation. So in the first quarter, it was big. Now it's a little bit normalizing -- working capital is normalizing. But going forward, we don't prefer to change our working capital days, and negative working capital will continue to contribute our cash position, but in more normal levels than the first quarter.

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Berna Kurbay, BGC Partners, Inc., Research Division - Director [18]

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Okay. And if I may ask one final question, in terms of what you're observing in the third quarter so far in July and August, is the sales composition in terms of the share of private label and spot products similar to the second quarter or the first half? Meaning around 10% spot and 63% private label, is that about right for what you've observed in the third quarter so far?

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Serkan Savas, BIM Birlesik Magazalar A.S. - Reporting & IR Manager [19]

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Yes. In private label, yes, almost same trend in private label. 63% private label share in sales we have post second quarter. In terms of sales, as you -- so we have set 32% for the full year. And as I said, actually in July and -- June, July and August, they are almost in line with the first 2 months' period growth rates, which is around -- in the first 2 months, as you said, our guidance is 23%. So it's more normalized, the sales top line growth is more normalized after June period. It's also going back to that in July and August, so 32% top line growth is set in accordance -- by considering the July and August top line sales as well. So we are not facing any COVID-19 impact nowadays. After June period, it's almost -- we are facing the normal levels, let's say, store opening rate, plus somewhat BIM internal inflation. So this is the calculation of our general top line growth. And private label is also the same.

And so what's your next -- other question about July and August, Berna?

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Berna Kurbay, BGC Partners, Inc., Research Division - Director [20]

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The share of, I mean, private label and spot. And you -- I think you just confirmed that it's similar to before, right?

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Serkan Savas, BIM Birlesik Magazalar A.S. - Reporting & IR Manager [21]

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Yes, similar. Similar. Yes, similar. And spot, also we are getting good achievements in spot items, and also group spot items. We are -- the group spot means Tuesday products, spot means Friday products, so we are still improving them.

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Unidentified Company Representative, [22]

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Thank you. [Alex], the floor is yours.

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Unidentified Participant, [23]

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Congratulations on your results. I just want to have very -- two quick questions. First one is a clarification question on the July and August. Did I hear it right, it was -- the growth there is similar to the first 2 months of the year, it's around 32% or 22% year-on-year?

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Serkan Savas, BIM Birlesik Magazalar A.S. - Reporting & IR Manager [24]

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Sorry? I didn't...

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Unidentified Participant, [25]

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When you were talking about trends in July and August, you were talking about top line, right?

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Serkan Savas, BIM Birlesik Magazalar A.S. - Reporting & IR Manager [26]

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Yes, yes, top line. Yes, top line.

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Unidentified Participant, [27]

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Top line. It's 32% -- around 30% or 20%?

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Serkan Savas, BIM Birlesik Magazalar A.S. - Reporting & IR Manager [28]

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22% is our full year guidance, revised guidance.

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Unidentified Participant, [29]

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Yes, yes.

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Serkan Savas, BIM Birlesik Magazalar A.S. - Reporting & IR Manager [30]

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Okay? Revised guidance. But our initial guidance used to be 23%.

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Unidentified Participant, [31]

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23%. Okay.

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Serkan Savas, BIM Birlesik Magazalar A.S. - Reporting & IR Manager [32]

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Before COVID-19.

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Unidentified Participant, [33]

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Now understood. And that's in line with the regional guidance, understood. Okay.

And my second question was about that you were talking about -- that there were some government compensation packages, if I'm right, correct me, for employees. And what is the extent that you were able to use them? I mean they are available for everyone? Or you -- for example, a retailer should lose some portion of his revenue and then he's eligible for this government compensation package? How does it work?

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Serkan Savas, BIM Birlesik Magazalar A.S. - Reporting & IR Manager [34]

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Actually, government incentive, of course, is for government. For example, there are lots of government compensation package for the employers. For example, if you hire unemployed people, actually, the government would subsidy you maybe the taxes, some taxes you are giving. But for example, in other compensation package, maybe 6 months -- for the 6-month period, the government pay their minimum base salary for 6 months' period. After 6 months, you will take this salary back. So there are lots of government compensation package to decrease the unemployment rates even before COVID-19 periods. So we are doing our best in terms of -- to benefit from those compensation packages, government subsidies. We are doing our best. So my colleagues in the regions are all working how to benefit those packages, subsidies. So there are lots of -- those are very technical, but we are doing our best to benefit from them.

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Unidentified Company Representative, [35]

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[Conroy], the floor is yours.

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Unidentified Participant, [36]

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So the first one I had was on the EBITDA margin on your long-term -- or sort of medium-term guidance. You mentioned that after this exceptional year, it may be back around the 5% level. But I just wonder with more profit coming from Morocco and FILE over the years, do you think that could potentially go up in the future? Or would you do something to reinvest the extra margin from that?

And the second question I have is gross margin in Morocco. How is that trending relative to what you're seeing in Turkey?

And finally, could you just please remind me of the internal inflation you're seeing and how that's trending into 3Q?

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Serkan Savas, BIM Birlesik Magazalar A.S. - Reporting & IR Manager [37]

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Thank you. EBITDA margin, long-term guidance, as you know that we have 5%. We are not changing it. We are still keeping 5% EBITDA margin for the long term. This is, of course, before IFRS 16, without IFRS 16 effect. We are still keeping that 5% because we are setting our targets yearly basis.

Yes, more profit is coming from Morocco, more is FILE. But of course, we will decide what -- how we judge it. How we maybe -- sometimes we are investing in lower prices to be more profitable. This has been done since the establishment of the company since 1995. So for the long-term period, mid- and long term, we are keeping 5% EBITDA margin for the time being.

And Morocco -- how is Morocco trending? In Morocco -- today, around 516 stores we have in Morocco. We are opening 40, 50 stores per year in Morocco. So they are also profitable. Last year also, it was profitable. They reached a net income profit last year as well. And this year, they are improving. And I can say that the COVID periods, the Moroccan operations benefited more than other operations during the COVID periods. People actually more reacted -- in Morocco, people are more reactive to COVID-19 period to stores. And after that, Ramadan period came. Ramadan was a very good season in Morocco as well. So Morocco is going well. It's going well. Cash profits, net income profits, and they are improving themselves.

In terms of inflation, your third question, internal inflation, in the second quarter, average is 16.5%. Our average, this is year-on-year, 16.5%. But in July, it's almost 14.5%. It a little bit came down as of July.

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Unidentified Participant, [38]

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Okay. Yes, that's helpful. Just to go back to the Morocco question, sorry, it's more on the gross margin. Now, obviously, across the company, you've had a big jump in the gross margin in 2Q, but I just wondered what -- how it moved in Morocco in relation to, say, Turkey?

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Serkan Savas, BIM Birlesik Magazalar A.S. - Reporting & IR Manager [39]

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Of course, generally speaking, Morocco has slightly better gross margin. But considering that foreign operations correspond only 6% of total sales, it doesn't have very material impact on our consolidated gross margin. But generally speaking, in Morocco, generally, the retailers' gross margins are slightly higher than the Turkish ones.

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Unidentified Company Representative, [40]

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Dear Serkan, those were -- thank you very much for all the participants for the questions. And Serkan, I would like -- now like to pass the floor back to you to close the call.

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Serkan Savas, BIM Birlesik Magazalar A.S. - Reporting & IR Manager [41]

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Okay. Thank you, everybody. Thank you for joining us today in second quarter results, better results. Hopefully, we will meet in the following quarter results with almost same or better figures.

So thank you for joining us today, and keep yourself safe. Bye.