Retailers had to keep their doors closed for almost three months last year, but bargain chain Action has not let those obstacles stop them. The sales of the company from Zwaagdijk in West Friesland grew faster in 2021 than in the last year before the corona pandemic, as it turned out on Thursday when owner 3i presented their own results. The same goes for gross profit.
Unlike many other retail chains, Action (65,000 employees) is completely dependent on its (physical) store network. The company hardly sells via the internet. Since June last year, the budget chain in the Netherlands has had a pilot online store, where customers can order a handful of products. As a rule, these are relatively expensive items, such as a fifty-piece tool set (24.95 euros) or a hot air fryer (59.95 euros). For the vast majority of the range, the customer still has to go to the store.
In the Netherlands, for example, Action was again confronted with store closures last year. In an effort to contain the corona pandemic, non-essential stores were closed for the first ten weeks of the year, and then limited open for another two months, by appointment only. A new lockdown followed in the last weeks of last year. Also in Austria and Germany – after France and the Netherlands the most important market – Action had to keep its stores closed until well into the spring.
Also read: Everything at Action is aimed at explosive growth
During the period when the branches were open, and in countries with fewer measures, things went better than ever before. In all its markets, Action achieved a turnover of more than 6.8 billion euros. Adjusted for the fact that 2021 administratively counted one week less than the year before, that is a growth of 23 percent. In the first year of the pandemic, growth was significantly lower due to all kinds of corona measures: 9 percent.
The gross profit (EBITDA) of the bargain store, founded in 1993, increased by more than a third to 828 million euros. Owner 3i, a British venture capitalist, adds that these are still provisional figures, which have not yet been reviewed by the accountant. Action’s final figures will appear when the company comes out with its own annual report, usually in the second half of March.
Super Dividend
The fact that Action continues to grow so fast is largely due to the fact that the chain continues to open new stores quickly. Just over four years ago, Action had a thousand branches, last week the two thousandth store was opened. Only in the first corona year, 2020, did Action curb the growth plans slightly, with 164 new branches. More than 250 branches were opened last year. 3i has stated that it sees space for at least 2,500 to 3,000 stores.
Also read this report from the distribution center of Action: A complex logistical dance between order picker to canteen lady
For the British owner, Action has proven to be a dream investment in recent years. The private equity firm bought the retail chain from its three founders in 2011 for an amount of reportedly 500 million euros. Action is now valued in the books of 3i at 14.9 billion euros. That is 1.4 billion more than three months ago, and more than 4.5 billion more than before the pandemic broke out.
3i has long since returned the original deposit, without having to sell a single share. In recent years, Action has already paid 2.8 billion euros in dividend to shareholders. Initially, the investor planned to take a super-dividend of possibly more than 1 billion euros from Action this year, confirmed 3i CEO Simon Burrows last spring on The Financial Times. He later decided to go for a “classic dividend”. Thursday’s figures show a payment of 325 million euros. That was also possible, because even after this, Action still has 760 million euros in cash.
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