Casino Guichard Perrachon SA

PAR:CO

Earnings Call Transcript

[Operator]

Ladies and gentlemen, welcome to the Third Quarter 2020 of Casino Group Conference Call. I'll now hand over to Mr. David Lubek, Chief Financial Officer of Casino Group. Sir, please go ahead.

[David Lubek, Chief Financial Officer]

Thank you. Good evening, and thank you for joining us for our third quarter sales conference call. I'm here with Lionel and the IR team. We hope you are safe and well. First, a few words about the current environment. As we are experiencing in every country, the evolution of the COVID-19 pandemic is difficult to forecast. In France, we came out of lockdown in May, and daily life reverted to some degree of normalcy during the summer, albeit with restrictions on international travel that severely curtailed tourist flows from abroad. Against this background, we have delivered stable sales in France and a EUR 46 million improvement in EBITDA in the quarter, principally due to our swift action on costs and strong performance from the Cdiscount marketplace. In recent weeks, we have clearly seen an increase in infection rates and hospitalizations. Night-time curfews were recently imposed in parts of the country, and now a new national lockdown has been decided effective this evening at midnight. I will discuss the possible impact of these restrictions later, bearing in mind that there are different factors at play. Less eating out at restaurants will likely increase sales in retail stores, and restrictions on movements would boost Proximity and E-commerce. At the same time, new restrictions could also impact consumer morale. Forecasting is not straightforward in this environment, and we are ready for a number of different scenarios beyond the recent announcements. In any event, we have already been operating our stores in the past months, fully complying with the security constraints of the pandemic, and we do not expect additional sanitary costs beyond Q3 level. How do we adapt to this environment? Simply put, we are keeping our focus on our 4 strategic priorities, as outlined in July during our H1 results presentation. We have continued to advance quickly on our commercial and financial priorities, which allows us to be well prepared for the coming quarters. Before going into our detailed performance per banner, I will first go through these main action plans in France, how they already produce effects on our Q3 results and how they are expected to develop in Q4 and beyond. Our first priority is sustainable growth in E-commerce and Proximity. The COVID-19 pandemic has accelerated an ongoing shift to these formats, and in Q3, we have seen this trend continuing. At Cdiscount, we have been focusing on marketplace growth with marketplace GMV up plus 9% year-on-year and marketplace revenues up plus 17% this quarter. Marketplace revenues is the key metric we are following, underpinning Cdiscount's profitable growth strategy. At the same time, we have accelerated a shift in direct sales towards higher margin and recurring categories such as hygiene, do-it-yourself or gardening, which proved particularly useful to our customers during the lockdown period. These categories maintained a strong growth of plus 16% in Q3, while we put less emphasis on nonprofitable categories in line with our strategy, leading to overall stable GMV. This has allowed Cdiscount to continue its trend of profitable growth, contributing to the increase of our EBITDA in Q3. In food e-commerce, the shift already underway before the pandemic has continued and sales were up plus 44% in Q3. We have continued the rollout of the Monoprix Plus offer powered by Ocado technology, with orders up 60% at end of September compared to end of June. The warehouse located in Fleury-Mérogis now accommodates the Casino offer on top of the Monoprix offer. Our exclusive partnership with Ocado is a key differentiator in these high-growth markets, and our midterm outlook for this first warehouse remains the same, EUR 500 million of incremental sales. Finally, we have continued our expansion into Proximity. We have 37 new stores this quarter, bringing the total opening of new stores to 105 since the beginning of the year, in line with our target to open 300 stores by end 2021. As for our like-for-like sales performance, the numbers were, as expected, impacted by the lack of foreign tourists, especially in July, which explains our overall stable sales during the quarter with growth picking up since August. Q3 growth on average was very good in convenience and in supermarkets outside of the Côte d'Azur area, while Franprix and Monoprix had positive numbers outside of Paris. In the inner city of Paris, our banners outperformed the market, which was very soft until September, with the lack of tourists and Parisians moving out away from the city. This has improved recently with sales picking up, notably in October. Also, sales in our priority category organic food was strong again at plus 8%, with its share of our sales reaching 9% in Q3. Overall, we are pleased by the progress that has been made across E-commerce and Proximity, and we remain confident that we are well positioned in the market. Our second priority is continued improvement in profitability through the ongoing implementation of our cost-saving plans. Since last June, we have accelerated our previous initiatives to streamline our operations and take advantage of the increased digitalization of our business to improve our productivity in stores, warehouses and headquarters. With around half of our sales in hypermarket and supermarket stores completed through smartphone apps or automatic cashiers, we have improved customer experience while also increasing productivity. We have also ramped up the synergies between our different businesses such as Monoprix and Franprix and have simplified our back office organization.The total impact of these cost-saving initiatives is estimated to be plus EUR 30 million in Q3 and will have the same magnitude in coming quarters. These cost-saving plans come on top of the impact of our 2019 Rocade plan, which had a EUR 15 million positive impact in Q3 compared to last year. At the same time, COVID-related costs were sharply reduced in the quarter, in line with our last communication. We had EUR 130 million of such costs in H1, including EUR 37 million of one-off bonuses recorded in our recurring results. These costs also included logistic disruption, exceptional sanitary measures and the hiring of additional staff. Virtually, all of these effects have now disappeared and COVID-related costs have been reduced to EUR 5 million in Q3 and now consists essentially of procurement of masks and gels for our employees at a fraction of the previous price. We don't expect this cost to move from their current low level even with the new lockdown since our day-to-day operations are now fully adapted to the context of the pandemic. These developments, combined with the increase in Cdiscount's profitability, have led to a significant growth in total France EBITDA, plus EUR 46 million compared to Q3 2019. This brings our last 12 months EBITDA in France to EUR 1.572 billion or EUR 925 million after rents. Looking forward, we expect a similar positive impact of our cost-saving plans in the coming quarters of EUR 30 million per quarter with a new sustainable organization in place in our stores, our warehouses and our headquarters. Our third priority is cash generation, where we have continued with our efforts to reduce inventories and control CapEx. We put a strong focus on cash management, and overall in Q3, cash generation improved by EUR 130 million compared to the same period last year. This was mostly due to EBITDA growth and good relative performance in working capital with CapEx kept under control. As is the case every year, we had a working capital outflow in Q3, but this was smaller than last year, thanks to the gradual recovery of fuel sales and continued strong monitoring of inventories. Our liquidity position at the end of September was strong at EUR 3 billion, including EUR 2.3 billion in fully undrawn credit lines and EUR 650 million of cash. Thanks to the EBITDA improvement in Q3 and good control of cash flows, our covenant ratios were once again comfortably met this quarter. Gross debt to EBITDA was 6.46x at the end of September, which equates to debt headroom of EUR 732 million, below the limit of 7.25x. As was the case last year, we expect a strongly positive cash inflow in Q4 with a reversal of the working capital seasonality and a strong EBITDA level. This will contribute to an increase in our cash and liquidity position by the end of the year. Finally, our fourth priority is the reduction of gross debt. As stated in our press release, we now target covenant gross debt of EUR 5 billion or below by the end of 2020, a reduction of at least EUR 1 billion compared to end 2019 and the lowest level of gross debt in France in 20 years. This should be achieved mostly through the closing of the Leader Price deal, which we expect in a matter of weeks, and the proceeds of which will be fully allocated to our segregated account. On top of this impact, Q4 cash flows will also contribute to our end-of-year target. With the proceeds allocated to our segregated account at the end of June, we have already started to buy back bonds in the markets. On September 22, we announced the cancellation of EUR 160 million of our '22 and '23 bonds, reducing the outstanding amount of the 2022 bond to EUR 386 million from EUR 452 million and the amount of the 2023 bond to EUR 626 million from EUR 720 million. At the end of September, the segregated account still had a positive balance of EUR 114 million, and our strategy remains the same, deploy cash either in the open market or through bond buybacks to reduce our debt. We are sufficiently confident in the outcome of our EUR 4.5 billion disposal plan to start buying back the 2023 bonds with the disposal already signed combined with the earn-outs from the Apollo and Fortress deals, securing the redemption or buyback of '21 -- '22 bonds.After these initial comments on France and before going into the details of our banners performance, a few words about Latin America. GPA published its Q3 results yesterday, and their detailed conference call will be held this evening. The performance has been remarkable in Q3 with GPA publishing sales of 15.5% and EBITDA up 30%. Assaí's numbers were particularly impressive with sales up 33% and EBITDA up 48%, while Multivarejo increased its EBITDA margin to 8.1%. Besides the excellent health of the business, the main event of the quarter was the announcement of the study of Assaí's spinoff from GPA. This project should unlock the potential of both companies, allowing the high growth cash & carry business and the high-quality retail business of GPA and Éxito to focus efficiently on their respective markets. Now let's review the sales dynamic of our banners, starting with France. As expected, Monoprix was impacted by the reduction in tourism, especially in July, and the food market that was sharply down in the inner city of Paris during the summer. In this context, the banner outperformed its market with like-for-like sales down just minus 1.2% on average during the quarter with positive sales since August and a significant improvement in recent weeks. Textile sales were positive during the quarter at plus 5%. Looking at our levers for sustainable and structural growth at Monoprix. A key factor looking forward is food e-commerce. Our O'logistique automatic warehouse powered with Ocado technology pursued its ramp-up with 60% increase in orders between end of June and end of September, in line with our plan, and the strong performance on all our key indicators. Notably, it has the largest number of available food SKUs among all home delivery offers at a very low level of missing items. As for our other main partnerships, the Amazon Prime Now offer focused on same-day delivery. It has been extended to Bordeaux after Paris, Nice and Lyon. As for our brick-and-mortar stores, Monoprix continues to innovate with its new concept store in Montparnasse with a high-quality food offer, which is strong on local products and a number of innovations is time to be tested and rolled out in the network. Monoprix also launched a Blackbox store, 100% automated store available 24/7, ready to be deployed in many different settings such as hospitals and train stations. Franprix, with its strong exposure to the Paris area, experienced the same dynamic as Monoprix, with challenging trading conditions in July followed by an improvement since August. Like-for-like sales declined minus 1.1% on average during Q3, clearly outperforming the Parisian market. The decrease in sales in the center of Paris due to lower tourist traffic and fewer office workers was mostly offset by a good performance in residential areas and suburbs, where the shift from eating out to eating at home boosted sales. Franprix' nonfood offer grew by 6% over the quarter, driven by its partnerships and its 198 corners with specialist players such as Hema on home products, Cdiscount on appliances and Decathlon on sport products. E-commerce was up 44% with deliveries available from 79 stores and 59 stores included in the Deliveroo offer. Convenience stores once again recorded a very good performance with 6.5% in terms of like-for-like growth over the quarter. The store base was expanded in line with our development target with 31 new stores opened in Q3. E-commerce from our dense network expanded by 57% through the development of Click & Collect services, which were boosted during the lockdown period and have remained attractive to our customers. Casino Supermarkets recorded 1.7% same-store growth with a strong performance in most areas, partially offset by the lack of tourists in the Provence Alpes-Côte d'Azur region. The focus on organic food delivered good results once again with 10% growth in Q3. E-commerce, which was ramped up during the lockdown, delivered very strong growth in Q3 as well, up 81%, driven notably by Click & Collect and by the Deliveroo partnership, which is effective in 70 stores. An important recent development for the Casino brand is its inclusion in the O'logistique automated warehouse powered by Ocado technology alongside the Monoprix offer, which gives Casino Supermarkets and Géant in the Paris area the opportunity to optimize online order preparation costs and at the same time accelerate the ramp-up of the O'logistique warehouse's capacity. Finally, Géant. Like-for-like sales were down minus 2.7%, mainly linked to its exposure to tourist-intense areas in the southeast of France. Our stores recorded good performances within our priority areas, especially organic food, which was up 6%, and e-commerce, which was up 24%. Géant has been rolling out its shop-in-shop strategy with nonfood specialists. These include a partnership with C&A with 7 corners already in place on top of 8 Hema home product corners and 52 Claire's accessories corners. That is 36 more over the quarter. Total sales at Géant improved by 7 points compared to Q2 with a gradual recovery of fuel sales and a gradual annualization of the Rocade plan. After our retail banners, a few words on our B2B businesses. First, GreenYellow. Solar panel and energy savings solutions business unit is ideally positioned in a strong growth market and has a bright outlook. Investment in renewables and a reduction of carbon emissions are clear priorities for governments and corporate clients, and GreenYellow's one-stop shop solution is perfectly adapted to these needs. After the end of the lockdowns in May, the development of the pipeline has picked up significantly. GreenYellow's pipeline has now reached 543 megawatts, 100 megawatts higher than at the end of 2019. Among its recent achievements, GreenYellow recently delivered a 6-megawatt solar plant for South East Textile in Thailand and finalized a 1.5-megawatt project for Soma Energy in Cambodia. Second, our data activity maintained its strong performance. We had relevanC GMV reaching EUR 24 million in Q3, a 27% increase compared to last year. The relevanC advertising platform is ranked in fifth position in the SRI ranking of top Internet advertisers, up 2 places since last year. Our relevanC marketing solution signed its first contract to provide app solutions to third-party corporate clients. This is a very promising new business, building on the success of our Casino Max apps with features such as couponing, self-scanning, loyalty and partnership programs. Third, ScaleMax, our data center business, expanded its portfolio with the signature of new contract with Illumination Mac Guff, the Universal Pictures subsidiary, which produced the animated movies Minions and Despicable Me. Moving to Cdiscount. Q3 was another quarter of significant development for Cdiscount's profitability drivers, recurring categories in direct sales, marketplace revenues and digital marketing. Firstly, in direct sales, the mix continued to improve with sales growing 16% in high-margin and higher purchasing frequency products such as home and decor, do-it-yourself, gardening, sports, beauty, food and IT. Cdiscount had 1 million new customers during the lockdown, who started buying such products regularly and have continued to do so. These recurring purchases are a key feature of customer loyalty. During the same period, sales of loss-making categories declined in line with our strategy of shifting them to our marketplace. Secondly, marketplace sales, which are the key driver of Cdiscount's growth and profits. Marketplace GMV increased by 9% during the quarter, bringing its share to 45% of GMV, up 6 points year-on-year. Total marketplace revenues, including commissions and services to sellers, grew 17%, above the 13% recorded over the last 12 months. Those revenues represented EUR 163 million over the last 12 months, and this is a key metric we are following to track Cdiscount's progress. Cdiscount's strength among marketplace vendors has been supported by its logistic excellence with fulfillment by Cdiscount now representing 36% of marketplace GMV. 122,000 SKUs are currently part of this program, and half of the space in Cdiscount's warehouses is now dedicated to hosting marketplace goods. This is a major evolution for Cdiscount business model since it allows for a reduction of inventory in the balance sheet, improving working capital and cash generation. Finally, digital marketing revenues had a strong showing this quarter again, plus 30%. It was supported by our proprietary Cdiscount Ads Retail Solution, a 100% self-care advertising platform enabling sellers and suppliers to bid to promote products in the search engine. Its revenues have increased threefold, and Cdiscount is adding features to further expand its services. Overall, GMV was stable despite the high growth of marketplace revenues. This was mostly due to a drop of travel GMV due to COVID-19, significant impact in GMV but small impact on revenues since commission on travel are much lower, the reduced duration of summer sales and the reduction of Cdiscount corner sales within hypermarkets. Finally, with increased share of marketplace sales in GMV, total sales are slightly negative since the sales number for the marketplace only counts the commissions received from outside vendors instead of the full amount spent by customers as in direct sales. Overall, this quarter demonstrated the successful and sustainable transformation of Cdiscount's platform model with increased customer loyalty, high growth of recurring high-margin categories, marketplace revenues and digital marketing, all of this leading to higher EBITDA. Looking forward, these pillars of Cdiscount's model will be enhanced in the coming quarters by the extension of its B2B offering to other websites in Europe. We are particularly excited by the possibilities this market offers with international sales growing 79% in Q3 and 157 websites now connected to Cdiscount. Finally, one notable development to mention regarding Cdiscount in Q3 is the approval on the 30th of July of a state-guaranteed loan based on its contribution to mask procurement to French SMEs and a strategic role in providing nonfood essentials during lockdowns. This EUR 120 million loan was concluded with 5 banks, and it allows Cdiscount to diversify sources of funding, which until then mostly consisted of loans from Casino. This concludes our review of the French business. Since GPA published the numbers yesterday and will comment in detail this evening, I will concentrate on the main highlights. In short, this was a very good quarter, both in terms of commercial performance and profitability for our LatAm businesses. Like-for-like sales were up 12% and organic growth, including expansion, was at 15.5%, driven notably by the excellent performance of Assaí. Consolidated EBITDA grew by 30% from BRL 1.3 billion to BRL 1.7 billion. In Brazil, organic growth reached 20% over the quarter, and EBITDA growth was 28% or BRL 1 billion last year to BRL 1.3 billion in Q3 2020. Assaí posted 33% organic growth during the quarter, reaching BRL 10 billion, adding BRL 2.5 billion of sales versus the previous year in a single quarter. On a same-store basis, growth was 18.1%, the highest level since the end of 2016. This performance was driven by the outstanding contribution from the 42 stores opened in the last 24 months, the gradual resumption of food service and the continued growth in the share of individual customers. EBITDA improved by 48% to reach BRL 718 million with a 7.8% margin, the highest level ever recorded by the business. As for Multivarejo, same-store sales were up 10.4% over the quarter with a positive evolution for all banners. Hypermarkets recorded 7.4% same-store growth, driven by double-digit increase in non-food categories even after the reopening of nonfood stores. Stores are being successfully renovated with adaptive pricing on categories that drive customer traffic, improved services on perishable categories and a simplification of the product mix. At Pão de Açúcar, like-for-like growth was 3.6% over the quarter with a strong performance of stores located in remote regions during the lockdown. Mercado Extra delivered 18% same-store growth with a rapid maturation of previously converted stores and a successful commercial campaign during the period. Eight stores were converted to the Mercado Extra format in Q3, and 30 additional stores should be converted by the end of the year. Compre Bem recorded 35.5% same-store growth with a significant increase in new clients. The Proximity segment grew 36.5%, the ninth consecutive quarter of double-digit growth. Minuto Pão de Açúcar and Mini Extra numbers were driven by strong neighborhood store performance. Food e-commerce remained particularly strong with a 240% increase over the period, driven by new customer recruitment and higher average basket size. Online sales now account for 6% of total Multivarejo sales with a particularly high 12% at Pão de Açúcar. With a strong commercial dynamic and with increased productivity gains in stores, distribution centers and headquarters, the EBITDA margin at Multivarejo improved again by 50 bps. This was the third quarter sequential improvement with close to 2 points improvement from 6.2% in Q4 2019 to 8.1% in Q3 2020. Total EBITDA is up 9% during the quarter to BRL 546 million. As for Grupo Éxito, like-for-like growth was 2.3%, and EBITDA margin was up 60 bps, reaching a margin of 8.2%, thanks to the outstanding performance of innovative formats such as Carulla. The rollout of the omnichannel strategy across all regions was accelerated by the impact of the pandemic movement restrictions. Same-store sales in Colombia declined slightly from the same period last year due to the restrictions imposed by the government during most of Q3 2020. Innovative formats performed well, driven by the quality of fresh products and service excellence at stores, notably Carulla Fresh Market, with 9.8% growth in like-for-like. As for Uruguay, sales were up 11% with strong progress in the omnichannel segment. To conclude, our teams have been focused on the continued transformation of the business across all our geographies with increased commercial focus on omnichannel, accelerated digitalization and significant sustainable gains in productivity. Our business units have performed well in Q3 with good commercial performance in their respective environments, strong increase in EBITDA in France as well as Latin America, with a particularly strong dynamic at Assaí. Looking forward, we know the global pandemic will present further challenges in the coming months. In France, measures to better control the spread of COVID-19 are being strengthened, and the net impact on sales is difficult to forecast precisely. It is likely that the new shift from eating out to eating at home will reinforce store sales, particularly in Proximity as well as E-commerce. And we know from our experience in Q1 and Q2 that the impact may be quite significant. Our teams are ready to face the challenge with sanitary precautions now fully incorporated in our store operations and supply chain prepared for possible surges in volumes.Importantly, our strategic priorities remain the same, and we will continue to execute them accordingly. Firstly, our commercial positioning is particularly well adapted to customer needs with a dense network of urban and Proximity stores and a strong omnichannel proposition powered by the success of Cdiscount and accelerated by the quick ramp-up of the Ocado warehouse. Our strong presence in organic food is also well suited to growing trend on this category. Secondly, the gains realized in our cost base, first from the Rocade plan and now from the new initiatives implemented in Q3, will be maintained in the coming quarters and contribute further to the profitability of our operations. As for COVID-related costs, which were high in Q2, they are now incorporated in our day-to-day business and will remain at a low level reached in Q3. Thirdly, our focus on cash flow generation will be maintained with strong control of inventories and CapEx and strong overall cash flow generation in Q4. And lastly, this cash flow generation, combined with the progression of our disposal plan, will allow us to reduce our France outstanding gross debt substantially by more than EUR 1 billion this year. Thank you for your attention. I'm now ready to take your questions.

[Operator]

[Operator Instructions] We have one -- first question from Mr. Arnaud Joly from Soc Gen.

[Arnaud Joly, Equity Analyst]

I have 4 questions. The first one, at end June '20, you had around EUR 700 million of assets under IFRS 5, if we exclude Leader Price. So are you still confident that this asset can be sold in a reasonable timeframe? The second question on Leader Price, when do you expect the potential greenlight from competition authorities? My third question is on your relative price positioning in France. How did it move in Q3? And the last question, for '20, which organic change do you expect for the French holding company's net debt, so only for the retail business? And what level do you expect for the end of '20?

[David Lubek, Chief Financial Officer]

Thank you, Arnaud. First question, the IFRS 5 that we had at the end of June excluding Leader Price. Again, on the disposal plan, we do not make specific comment until the disposals are finalized, are signed. So I can't make more comment on that. But the assets that are under IFRS 5 are assets which are in the process of being sold. And we have shown, I think, in the past that when we put an asset -- we decide to sell an asset, we do it. So I'm not going to go into the details of which assets and at what time this will be finalized. But when an asset is put in IFRS 5, it means that we expect it to be sold during the following 12 months. So I think that answers the question. And nothing has changed in terms of the assets that we have put there and that we wish to sell in terms of their salability and in terms of the value that we perceive and the ability of the potential buyers to buy them. On Leader Price, we expect a decision of the authority in the coming weeks. The 5 was completed by the buyer, by Aldi at the beginning of October. So with the usual delays, this should happen in the coming weeks, in November. And as soon as we have this decision, of course, we expect the closing to happen rather quickly. As far as price positioning is concerned, we have not seen much movement there. We -- actually as other retailers have commented, prices have not moved much. Everyone seems quite reasonable in price. There are some movements on promotions in certain formats depending on each month, but overall, on price itself and price including promotions, including opening, including everything, we don't see much movement. So on our side, we don't see much movement compared to last year. And when we look at our competitors, we don't see much movement either. So on each on our category, we make -- in each of our formats, we make sure that we have the right positioning. That's very important for us, and we monitor that closely. Of course, during the COVID period, the usual target that we have, which is client flow, is a bit more erratic because we can have very big sales in a time flow -- very big sales at certain times regardless of the price positioning. But in any case, we monitor that very closely, and we do not see any significant movements. For the net debt, I prefer now to give a target of gross debt. I think that's the target that we gave in our press release because this is the most relevant metric right now for us, is the metric for all our covenants, and it's the one where we have a firm commitment to get to EUR 5 billion or below this year. And again, this EUR 5 billion gross debt, we look back, the last time we were at that level and the French gross debt level was in 2000. It was 20 years ago. So we have brought -- we have done a very strong deleverage in terms of gross debt since half of 2018, where if you include the TRS [ in the foray ], we were at EUR 7.6 billion, EUR 7.3 million excluding these instruments, and we would be at EUR 5 billion at the end of the year. So that's a very strong reduction. The total net debt will depend on -- the net debt in France will depend on the cash position, which will depend on the ultimate cash flows at the end of the year and will also depend on the level of IFRS 5. So at this stage, I don't want to make any specific prediction there, but the -- we are very, very committed on reducing the debt. I think that's very clear.

[Operator]

Next question is from Mr. Andrew Gwynn with Exane BNP Paribas.

[Andrew Philip Gwynn, Senior Food Researcher & Analyst of Food Retail]

David, I was wondering if you could run through the profit bridge numbers. I wasn't quite quick enough to type them all down. So yes, if you just run through those again, that would be very much appreciated. And then on the gross debt figure, I think it's moved up marginally versus the first half. I think on my numbers, about EUR 200 million. Just want to understand, is that just sort of normal working capital moves in terms of sequential performance rather than year-on-year? And then last question, just on the orders being processed by the Ocado CFC, I'm just wondering what the number of orders at maybe at the end of September.

[David Lubek, Chief Financial Officer]

Thank you, Andrew. The profit number, well, the EBITDA drivers that I mentioned for the quarter were, first, the acceleration of our productivity initiatives, which yielded EUR 30 million, new initiatives, productivity in headquarters, installs and warehouses. We had EUR 15 million full year impact, still full year impact from the plans from last year, the Rocade plan and the cost-saving plans from last year, still had a EUR 15 million impact in Q3. And on top of that, we have the growth of EBITDA of Cdiscount. We don't publish the number quarterly because Cdiscount is listed separately and doesn't publish its EBITDA quarterly. So we don't publish it, but it's increased again on top of that. On the negative side, of course, we had the COVID cost, EUR 5 million, but it's a small number. And we have the Vindémia getting out. Vindémia had EUR 7 million EBITDA net of rents last year in Q3. So I would say that Cdiscount basically compensated -- more than compensated the loss of Vindémia. And these are the main drivers of the profit number. And if we project for Q4, we'll still have the EUR 30 million, as I mentioned. We expect that to continue in the coming quarters, the EUR 30 million from the cost-savings and the productivity plan that we started in Q3. We'll still have some impact of the Rocade plan, but of course, smaller than the EUR 15 million we had in Q3 because these are annualized. So we should have between EUR 30 million and EUR 40 million cost saving, cost reduction in Q4 '20 compared to Q4 '19. And we still expect Cdiscount to continue to grow, of course. In terms of gross debt and working capital. Every year, we have an increase of the gross debt, in commercial paper or in credit lines, depending on the access to commercial paper. In Q3 last year, we had EUR 875 million of credit lines drawn. This year, we have no credit lines drawn, but we had EUR 300 million of commercial paper drawn. By the way, it's -- why? Because just of the usual seasonality of the working capital, that obviously reverses in Q4. By the way, this renewed access to working -- to commercial paper is a good factor for our overall liquidity position. So we are quite pleased with that. Of course, we expect this commercial paper, as usual, to be repaid by the end of the year. That's what we do every year. For the order, we don't publish, at this stage, number of daily order by Ocado because they move so fast that it doesn't mean much to give a number one day. For instance, if I look at the number we had yesterday, the orders yesterday, the order yesterday, they were basically double the data that we had before. I mean that is, of course, basically linked to the very, very big boost that we have currently with the new lockdown. But even before that, they grew 60% between June and September. So we'll give, I think, a number when we have some kind of stabilization, and there will be something more meaningful. But in any case, it starts to be a significant contribution to our yearly sales. And I think by the end of the year, when we have a clear view of where we are in the following -- the following trajectory, we can make some update there.

[Operator]

Next question is from Mr. Clement Genelot from Bryan Garnier.

[Clement Genelot, Analyst]

I will get 2 questions from my side, if I may. The first one is on your guidance. So if I understood well, the EUR 5 billion gross debt will only be driven by cash in of Leader Price and the cash generation in Q4, implying no additional assets for disposals before year-end. My second question is regarding employees' bonuses, if payout of bonuses for employees is possible in Q4 in light of second COVID wave.

[David Lubek, Chief Financial Officer]

Thank you, Clement. For the EUR 5 billion debt, yes, the guidance we gave here includes -- if you get from the Q3 number, includes, of course, the cash in from Leader Price. It includes the fact that the cash flow will allow us to reduce the gross debt -- the short-term gross debt again. And there could be something more. But just by that, we can secure the EUR 5 billion. So it's just based on that, nothing more. So I think that is clear. As for the COVID costs, including the bonus, we had this bonus of EUR 37 million in Q2, and it was included in the EUR 130 million total cost that we had in H1. So in H1, we had these exceptional costs due to the very specific nature of the lockdown period, the first lockdown period. We are in a very different situation now obviously. We have been now used to working with the pandemic. Nothing will change from yesterday to the next day, and the stores will work the same. The life of our customers will change, but the life of the stores themselves is not going to change. So it's very different. And in the sense, it doesn't warrant any additional costs for our operations. So that's why when I said we intend to maintain the level of COVID costs at the level they are in Q3, that includes everything.

[Operator]

Next question is from Mr. Xavier Le Mené from Bank of America.

[Xavier Le Mené]

Two, if I may. The first one, can you potentially give us a bit more color on the exit rate because you said that July, Monoprix or Franprix was quite weak, improving in August and September being better. But can we get a sense potentially of what will be the exit rate and what you've seen so far early October? So that's the first question. The second one, just a question about the spinoff that GPA may do with Assaí. Obviously, you expect some -- to create some value there, but what will you do if it's going to happen? So how strategic are these assets? And do you have potentially any plan to reduce your stake in Assaí or GPA or both?

[David Lubek, Chief Financial Officer]

Thank you, Xavier. For the trading -- I gave the rough picture. The idea is July was not good. I mean the beginning of July especially was clearly not good because before the 14th of July, there was many banners -- we had the impact of the lack of tourists. In Monoprix and Franprix, it was clearly -- July was clearly low. And it was better in August, but I guess August is always smaller in any case than the rest of the quarter, but it was better than last year in August. And September continued basically the trend that we had in August. And October, October, we saw a clear uptick, especially at Monoprix, in the last 3 weeks of October. Now what's -- at Franprix, it's more of a -- we have very different dynamics in the center of Paris, in the center where the offices are, where we had a drop in sales; and the residential areas in Paris and the suburb of Paris, where we had growth. So the equilibrium between the 2 can vary from one way to the other. What we've seen recently is, of course, a very big uptick in the last few days. We are back to -- in the last few days, we've been in the same order of magnitude than in the first lockdown -- when the first lockdown started. So clear double-digit numbers and even a triple-digit number if you look at the E-commerce part of the business.So this is where we're at. And of course, I won't make projections for the next month because will it stay at this level or not, it's really very difficult to predict. I would say that overall, in this COVID period, we've had very strong variations from one month or one week to the other in some cases. So I will look at the overall dynamic, and I would say that the Parisian market overall was not good in Q3. And in that sense, it was mid- to high single-digit negative if we look at the numbers of the market. So Monoprix or Franprix did better than that. And now I think it's -- we're basically back to a period where it's going to be higher. But again, I will be very cautious because I can't extrapolate from the high double-digit numbers we're seeing right now. In the spin-off of Assaí, the goal of the spin-off is not to reduce our stake, not at all. It is to allow both companies to develop fully on their respective markets. There are basically no synergies between Assaí and GPA and the rest of the business, in CBD. These are very different businesses that operate totally separately, even on the purchases, even on the headquarters, everything is different. So they are on the same holding company. They have the same listed structure above, but these are 2 different companies. And I think it will be better for them to be viewed by the market separately because Assaí is an extremely strong growing business. I mentioned, again, 33% of growth in the last quarter, 40% EBITDA growth. And this is a very long track record. At Assaí, we have an extremely good manager with Belmiro Gomes, the CEO of Assaí. He's been there since, basically, the beginning and got this company from BRL 3.5 billion to where it's now, soon to BRL 50 billion. So it's -- I think it's one of -- of course, one of the best managers we have in this company. And it -- when we see the view that the market should have -- could have on Assaí, we think it will be best for this business to be listed separately. And also, it will be good for the rest of the business, the Multivarejo and the Éxito business, which have their own strategy, which are very focused on omnichannel, to be listed separately. But the idea for us is to keep the same stake, 41.3%, in both of this company and accompany the developments. And of course, what we think is that there is much value to be created there.

[Operator]

Next question is from Madam Maria-Laura Adurno from Morgan Stanley.

[Maria-Laura R Adurno]

Just 3 questions from me. The first one is, can you perhaps comment on the profitability associated with the partnership with Ocado, whether this venture is currently profitable or when you expect it to be profitable? That's the first question. The second question that I have is with respect to the cost savings that you detailed earlier on in the presentation. Are there any one-off cash costs that we should be aware of? And the third question that I actually had was with respect to the cost savings. And you mentioned that you would expect those to be recurring on an ongoing basis. What explicitly are the type of measures that you think could have a recurring positive impact?

[David Lubek, Chief Financial Officer]

Sorry, the last question, Maria-Laura, I didn't get it. I mean the recurring impact? Okay. Let's get to the 3 questions you asked. Profitability at Ocado. Of course, we've just started this business. There is the fixed costs of operating the warehouse. And when we start the business and we do 0 sales, of course, it's not profitable. So there is a ramp-up of the sales. And at some point, it gets to 0, and then it gets profitable. So we are too early, of course, to be profitable right now. But if it goes according to our plan and grows according to our projections, which might actually be exceeded if you look at what's happening right now, it should be profitable sometime by the end of next year, probably. But today, it's not yet profitable, of course. It's not a big drag on the profits either, as you can see, because it's -- in the overall result that we show, it's not a significant drag. But it's not yet profitable. In terms of cost saving and cash cost, most of the cost savings we do are productivity improvement. We have a lot of temporary workers, and we have a lot of -- we have some significant turnovers. So we've basically been on that to reduce our costs. So this does not generate very big cash costs. And the big restructuring cost that we've had in the past, we've seen them going down. So it's -- these cost savings are not generating in themselves big cash cost. If it was the case, by the way, we would assume that in the cash flows of the quarter, which are actually significant improvement compared to last year. If I got your last question well, it was about the recurring savings and the recurring COVID-19 cost. The recurring COVID-19 cost that we'll still have in the coming quarters, we see them at around EUR 5 million, as I said, which is basically the cost of providing the protection that we have to provide to our employees, masks and gels. But masks, of course, only cost a fraction of what they used to cost in Q2 and prices have been basically divided by 10 if you look at the cost of the masks. So it's not really the same thing at all. And we -- and the current level of operation is perfectly compatible with the sanitary necessities. So in that sense, I think this won't move, and it's a recurring -- this EUR 5 million per quarter is the cost of operating the business in this environment. So they will last as long as we have to protect our employees and our customers, but no more than that. We don't expect more than that. As far as the recurring sustainable cost reduction, there are EUR 30 million per quarter -- EUR 30 million in Q3. So the same thing next quarter. Same thing in Q1, Q2 next year. After that, you annualize, of course. And they come to what I said, which is basically taking -- making good use of the increased simplification, digitalization of the business everywhere, in the stores, in the warehouses. In the simplification of our organization, we've worked on the synergies between Franprix and Monoprix, for instance, worked in synergies in logistics and simplified the way we operate the business and control the stores. So we've done that. We had plans ongoing, and we accelerated them. And I think now we have the right -- we have a reaction that we are able to adapt quickly, and we think the current way we operate the business is perfectly sustainable. Actually, if we look at the increased digitalization of the business, we now have half -- about half of our sales done through automatic cashiers, smartphone apps. It can go a bit higher, probably. So it's an ongoing trend. And simplification of our back office is also something that increases actually our efficiency.

[Operator]

Next question is from Mr. Robert Joyce from Goldman Sachs.

[Robert Joyce, Equity Analyst]

David, 3 for me. First one, would you be able to say what the growth in EBITDA after leases was in France in the quarter? Second one, just -- it sounds like it is, but could you confirm that Ocado is ramping in line with your expectations? And how long you think it will take to get to the EUR 500 million in sales you're targeting? And then final one, if you could just help me. On the gross debt target of EUR 5 billion, it implies a sort of EUR 700 million reduction since the half year. I believe that's the expected proceeds in from Leader Price. So is that implying that there will be -- you're not expecting cash generation from the rest of the business?

[David Lubek, Chief Financial Officer]

Thank you, Rob. So EBITDA after rents, we published the EBITDA after rents, it's EUR 925 million. So if you compare it to the EBITDA after rents that we published in Q2, you can see that the improvement after rents is actually higher than the improvement before, and it's EUR 53 million. Why? Mostly because we don't have the rents for Vindémia anymore. So this improves even more the picture when we look at the EBITDA after rents. On the -- and we don't have additional rents basically compared to last year. The effects of the [ savings, that ] have been annualized, and we've worked to reduce the rents on some of our footprints actually. Ocado, yes, it's ramping up according to our plan. Really it's an industrial project when we have -- where we have the projections in demand and offer. The EUR 500 million, it's very difficult to pinpoint an exact time, of course. I would say it's -- sorry, it's a wide mark, but it's a bit too early to be more precise than that. It's between 3 to 5 years. So if we go very fast, it could be 3 years. If it takes a bit longer, it could be 5 years. That's basically the -- what we're looking at in terms of framework. The reduction of debt, actually, if you look at -- yes, your computation is correct. At the end of June, we had very little short-term debt on top of the bond debt. So the impact of the disposals made in H2 basically reduced the gross debt from the level at the end of June to the level it will be at the end of the year. The excess cash that we generate usually turns about more cash and balance sheet. If I look at Q4 -- at the end of Q3, we had short-term debt. We had commercial papers. We will repay this commercial paper with the cash flow from Q4. We can go beyond that. Of course, we could use also part of our cash flows to buy back some of the debt outside of the segregated account. So that's also a possibility, but it's a rather cautious guidance that we gave, which basically takes into account the disposals already secured. There is a prior disposal and the small disposal that we made in Q3, the small Mercialys disposal. And that's it. But you're right, we intend to generate cash. This will also improve our cash and liquidity position at the end of the year, not just reduce the gross debt. And that's the overall goal. Okay. Is there any more question? It is the last one, I think.

[Operator]

We haven't...

[David Lubek, Chief Financial Officer]

Okay. So I think if it's the last -- this was the last question, it means thank you all for being there tonight, and be safe, everyone. Thank you.

[Operator]

Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.