Hello everyone. Thanks for joining us today. I'm Affan Nomak, welcome to Migros Q3 2021 financial results webinar. I'm together with Cem Bey and Özgür Bey, Migros CFO and CEO, and we'll discuss briefly our operations and financials regarding Q3. There's going to be a Q&A session at the end of the meeting. Now I'll turn the call to Özgür Bey. Migros Board Member and CEO, Özgür Bey.
Thank you, Affan. Thank you everyone for joining us today. Our third quarter results. I hope you all received our presentation pack, published, and we're gonna try to cover this presentation accordingly. Before starting our regular quarter results reflections, I think it will be worth to underline one more time that there is an unpleasant decision coming from the Turkish Competition Authority in the Turkish market regarding five retailers and one manufacturer. We are one of the retailers. Practically, the accusation was based on a cartel formation regarding activities on a basic good called Yudum branded, and it's a cooking oil based on sunflower. At the time, reflected to us is based on our turnover, 1.8% of our turnover, which is a significant amount obviously.
We already organized a webinar regarding this last week, and I don't wanna just go into the full details one more time, but I think it is worth to elaborate one more time that we definitely do not accept this, we call it irrational accusation. So for that reason, we will file an annulment action, of course, following the detailed official notice to regarding the decision. Not to mention, I think it is, again, one more time worth to express that Migros definitely always complies with all legislations while of course executing all of our efforts, and that will be the case for the future as well. There are two major values attributed to Migros. One of them is honesty, and the other one is the trustworthiness.
These are attributed by our shoppers and as the primary principles of this company, and we definitely maintain our dedication to continue offering best quality products at affordable prices for our shoppers, as we did in the previous years. Other than this, we have an exciting quarter result to be shared with you today. We are clearly happy to deliver strong top-line performance combined with our operational results. Definitely our positioning in the markets under the terminology of omni-channel providers is helping us for this strong top line performance. At the same time, we are also glad at our balance sheets to report a net cash position after years under the shadow of leverage by our periods.
At this moment on our September results, we are definitely happy to report a cash position at the end of nine months results. I definitely want to thank our execution team for their strong endeavor to reach these results, of course. Another excitement for us is our dedication regarding the omni-channel providers, retailers, and we have an important decision which we have expressed regarding the establishment of a new entity as a new subsidiary, which will run our e-commerce efforts and initiatives. Following, of course, this new subsidiary formation, starting from this quarter, we are disclosing our top line performance with a split of online/offline separation. Of course, by still keeping the omni-channel operational proposition at the company level. This will be the highlight for our presentation today.
Now I will try to go one by one with the pages, and at the end we will try to get your questions if there are any. Starting from our page 3 of the presentation, which is our online and offline expansion slide. Obviously, the company's dedication for physical growth and online growth combined is helping us on the top line performance. We managed to provide 29% top line growth on the third quarter results. All in all, in the nine months, we have around 24% top line growth. For domestic markets, Turkey only, this number is around 25% levels on nine months figures.
If you are to dig in, the backbone of this strong top line growth, we need to underline of course the strong recovery of the large store formats, especially three plus and five Ms, after the easing of the restrictions of COVID-19 measures. That helped our shopping mall operating stores definitely. Next to it, I think it's also worth to express the strong performance of seasonal stores at summer destinations especially. Of course, our continuing focus on online operations is another driver of the top line growth for the third quarter results. The expansion of the company as we used to right now in the last couple of years, we are trying to split the expansion efforts in two platforms.
On one side, we are growing our physical number of stores. We opened another 211 stores in one year period. As of the end of October, actually, this number reached 245 stores opened already. That take us to more than 2,500 store levels at the end of October as of this year. That represent around 6% levels of physical growth in space for the company. At the same time, we are also increasing the number of store servicing online with the omni-channel wheel, and that number of stores has reached right now more than 850 stores by an increase of 323 new online operating stores in the first 10 months of the year.
These are the definite efforts which are taking us to a new era where Migros will focus both physical stores and online operations at the same time with a dedicated focus on each side. Another dimension of the growth obviously is the capital expenditure amounts. As of nine months results, we spent around TL 500 million equivalent of capital expenditures, and that is roughly 2% of our turnover. By the end of the year, our expectation is now about TL 800 million. Obviously, this is ahead of our expansion plan expressed at the beginning of the year for obvious reasons of opening more stores. We're gonna guide at the end with similar numbers.
at the same time, our focus on online, which is also helping two sides on physical stores, and at the same time, our online penetration within the country.
Özgür, sorry to interject, but I can see just the first pages of the presentation. Are we gonna move to the expansion side, or is it just my computer?
I am actually on the CapEx slide.
Okay.
I hope everyone can see it clearly.
Maybe only issue on my computer. Okay. Thank you.
Okay. Please let me know if there is an issue on the other listeners, participants. I will move now to the market share evolution page, which is page six of the presentation if there is any issue on the screen. Our market share penetration has reached right now the total market to the levels of 8.9%, which is another 20 basis points increase on the total markets, measured by Nielsen company. As usual, we are tracking FMCG figures that represent the basic market share representation in the country. Regarding within the organized market shares figures, we are representing 17.1% of the market as Migros, which is pretty much flat with last year comparison. That is thanks to our both, as I expressed, the physical and online penetration continuing.
Of course, having said that the market penetration is strong, we have to underline that the growth is coming from several different formats. Not to mention, discount stores are opening significant number of stores. At the same time, there is a clear recovery coming from the traditional markets. I think it's worth to express as well. The dimensions of trading in the country on one side, supermarket operations, online operations, discount operations as the organized effort, but also the traditional formats and local chains are also growing. That's there is an impact of base impact, of course, coming from previous years. After the ease coming from the less restriction due to COVID-19, I can easily express that the local chains and mom and pops also recovering their turnover for this year.
The representation of market share gain is against this significant growth coming within the food consumption in the market. Following this, I will now move to our financial overview pages. I'm on page eight at the moment with our consolidated gross profit figures. The gross profitability of the company is pretty much maintained. What I can express, as you can see here, that we reached around 24.5% gross margin levels at the third quarter with an increase of 33%. Nine months are reflected with a 27% increase on the gross margin. But of course, it's worth to express again the impact of due date charges, which are incremental to the company's account this year due to the increase on the interest rates applied to our payables.
That has an element of increase on our gross profitability figures. If we are just to normalize that, our margins are pretty much flat compared to last year regarding the gross profitability of the company. We are moving the top line growth and our gross profitability parallel with the company's effort. Definitely there is a significant focus on providing the best prices in the market. That has been the case, and I think on one side, the clear definition of competition, and on the other side, the transparency provided to the shoppers, thanks to technology and thanks to a lot of stores clearly located in similar distances, shoppers can easily justify the pricing efforts of retailers, and we are clearly positioning ourselves with providing the best price in the market, especially on commodity items and fresh foods.
This proposition is still valid, and we are even increasing our penetration within the private label categories to match the best possible price in the market. Private labels are one of the key competitive instruments. Of course, next, which is the Migros' differentiating offers, a large variety and brand products, which are also heavily supported by marketing promotions. On page nine, we will see our EBITDA figures in evolution. In that front, we are pretty much parallel with last year's figures, excluding the impact of due date charges again. Other than that, IFRS accounts based on IFRS 16, I think it's worth to express that there is an increase around 44% on our third quarter results, and the combined nine months results, there is a 31% increase on our EBITDA generation.
If we are to again dedicate our efforts to make sure that the company's offer is coming to a level, a satisfactory one in terms of profitability, that is the main guidance of course. I think it is also worth to express that our efforts of growth on online operation are at the moment dilutive for obvious reasons. At the same time, company is maintaining its profitability levels if we are to exclude due date charge impacts on our figures. Pretty much we are parallel with the guidance levels that we shared at the beginning of the year. At this moment, and roughly the same understanding of growth coming from online may still have the dilutive impact on our consolidated figures.
Next of course, coming with the asset divestitures coming from the previous years, but we are compensating this with the overall efficiency that we are gaining based on coming from the purchasing terms. At the same time, our operating results, especially focused on new technologies on the supply chain. All in all, I guess for the general track records, it is worth to express that TRY 2.2 billion levels of EBITDA generation is an important figure for the coming years for the company's overall performance. Now at this moment, I will just for this slide, which is a net cash position, which is a great moment to express by myself, and I will leave the floor to Cem for this moment, and considering his specific view. Please, Cem.
Thank you, Özgür Bey. Good afternoon, everybody. I hope you can all hear me. I'm a bit far from the microphone, but it should work fine, I suppose. The gross financial position by the end of September was TRY 2.75 billion. This was all in TL, contrary to what we have experienced in the past. So there's a slight amount coming from Kazakhstan, EUR 5 million on the foreign currency borrowing. But apart from that, this is all in TL. The average maturity of this debt is approximately two years.
It is comprising a little bit of bond, some long-term debt, and short-term working capital debt that we acquired over the past one year or so. Of course, 2.75 represents more than TL 1 billion debt reduction over the past 12 months. This debt reduction has also improved net cash to EBITDA position of the company. That improvement corresponds to 0.6x of the EBITDA. Last year in September, we have reported -0.4x EBITDA net debt/cash, net cash to EBITDA position.
This year is a positive TL 450 million cash position we are reporting. The TL, of course, with rising interest rates, inflation and rising interest rates expected for next year, the management of this debt is going to be an important element. Currently, the average cost of debt is around 17%. Next year, we are assuming that this is going to slightly increase and end up around 18%-18.5% range. Overall, net finance charges should not significantly change from 2021. After these slides, we wanted to give you a brief summary of our online operations and a bit of a strategy update.
With that, I will hand over to Özgür Bey to give that, to go through those operations.
Thank you, Cem, for the insights on our financials. So now I'm on page 12. That, as I tried to express at the introduction, it's an exciting moment for us that we are just committing ourselves into a new subsidiary. For clear reasons that Turkey's online potential in the retailing activities. Obviously, this country is representing around 84 million people, and there is a clear penetration increase on the online efforts. A lot of analysis are going on at this moment. Of course, there are depending on different figures of market share statistics and everything. I guess we can express that the online food business is representing roughly 5% of the total food sales in the country. This is our figure estimation.
When it comes to the total trade, these figures are reaching to the levels of 15%, and in some categories, even much higher. All in all, I guess there's still a big room to grow the online activities in this country. Having said that, of course, the potential for the following years that we are just chasing with the industry itself for the next, over the course of, five years time horizon, we are expecting around more than 70% in real terms growth on this business line. Historically, Migros has been very active online, and obviously our historical brand, Migros Sanal Market, has been increased with new channels in the recent years you know very well. The instant delivery option coming from Migros Hemen.
The fresh direct proposition coming from farmers directly to the shoppers with the Tazedirekt, and obviously Macroonline, which is dedicated to our Macrocenter operations. Recently, in the last years, we started integrating all these applications. As of now, I can easily express that all these four initiatives are getting combined under one umbrella and called Migros Integrated App. This is taking place already for scheduled delivery, instant delivery, and the cargo delivery for non-food categories. All these things are already integrated. Very soon we are trying our efforts to combine Tazedirekt and Macroonline also to be embedded under one umbrella of brands and to be called Migros Integrated Application. All these efforts are giving us clear guidance to form a new structure.
We disclosed last month that we formed a new subsidiary, 100% owned by Migros. Obviously, our focus will be which on page 13 there is a clear reasoning coming from the strategic focus to grow this channel stronger. When it comes to management agility, we already have a dedicated team for online efforts, and we're gonna definitely increase the number of participants here, and there will be a much more agility coming from the standalone business operation with a different subsidiary. Of course, our main focus will be still online grocery, but we are digging into meal business with different incentives, initiatives, and where we will be just providing our shoppers next to online groceries, some meal options as well.
Also our new focus will be, at the same time, new verticals, which are near to the food business, which will have a dedicated verticals, what we call on the apps, to make sure that we are targeting specific shopper segments and specific product categories with much more flexible app environment and delivery flexibilities. Obviously, our last mile delivery entity, which we already own 25% of the stake in one specific initiative, will be combined within the next operational activities into this company's efforts. That our dedicated efforts regarding the last mile efficiency will definitely keep continuing.
We're gonna be just also forming some new technological partnerships through this new entity of online operations to make sure that next to last mile efficiency, we will also introduce the new initiatives around introduction of picking technologies, which we are already piloting in more than 40 stores right now to be embedded and to be deployed across the channels that we are servicing our physical stores. These are the initiatives of why we are just building up a new subsidiary. Not to mention, of course, we definitely have a target to unlock an additional value for our shareholders as well.
With these incentives, we already structured this entity, and that entity will be mainly responsible for the last mile delivery and the application developments, and obviously, the digital marketing efforts for all these channels that I expressed, specifically for grocery and coming with the meal, and new verticals as well. That dedicated team will service, and we're gonna definitely keep our motivation of omni-channel providing retailer activity, which means that Migros, the main entity, will still serve the new entity as the picking platform. Which means that the stores in the large formats will service as a physical store and also an online hub for picking purposes. The new entity will be responsible for the store to the delivery points, either it's a household or a different physical space.
With that dedication, the omni-channel perspective of the company will be definitely kept, but there will be a clear dedication coming from, as I expressed, application development, much more agile structures and systems, and clearly much more deeper digital marketing efforts and together combined last mile efficiencies, both coming from the new subsidiary that we already established. At the same time, new technological partnerships to be add on. With this structure in the following page, you can see that the expansion on our geographical stage right now on page 14, the already scheduled delivery, which we are using our main efforts of online operations, is already active in 81 cities today and servicing more than 30,000 SKUs. That's a representation of more than 627 stores today, which is servicing in this platform.
On top of it, as you know, we added the instant delivery, which is now serviced by 196 stores in 42 cities. The expansion guidance is very clear. Wherever Migros is available, whenever it's feasible, that dimensional expansion will continue for both our physical space stores and at the same time, the scheduled delivery, and so for the instant delivery options. Obviously, Macroonline operations will be dedicated where Macrocenter is physically available. At this moment, this is eight cities, and we are planning to keep our track records around eight to 10 cities on the coming futures. That's going to be a much more focused effort for a dedicated consumer segment. Tazedirekt will continue operating with the same expectations around the direct deliveries from farmers to the consumers.
That geographical expansion will be guided in the coming quarters with much more clear roadmaps, where we're going to just have, as I expressed, Migros physical stores as the continuing hub structures. As I expressed earlier, there are new efforts regarding what we call mini dark stores, which are the hubs within the stores, warehouses. We are also digging into further elaborating the new options around total dark stores to be expanded with the same reflections as well. Finally, on the slides, on page 15, at this current moment, we are excited to share with you the online dedicated figures as new disclosures coming from Migros Management. The number has reached in terms of our net sales turnover.
I want to underline that these figures are net sales excluding VAT, and that has reached more than TRY 3 billion turnovers in the nine months results of the company, and that is almost doubling versus last year. When we are to compare our pace of growth with this time horizon, you can easily grasp that it's a great momentum that we are gaining from our online dedication of our efforts on retailing activities. As a representation of our sales, we are quoting here 14.5% of our turnovers coming from our online operations, to be underlined, excluding tobacco and alcoholic beverages, for obvious reasons that these categories are restricted to be delivered online. The eligible categories are included in this turnover percentage.
In that reflection, we strongly believe that the momentum will continue, and we are chasing new grounds, new infrastructures to make sure that this growth is also supported with a guidance of profitability. As we know that across the globe, online food grocery is not a profitable category. Not just for Turkey, but across the globe today, every retailer are trying to dig into the new trends and new tools and infrastructures to make sure that they are becoming more efficient. I guess by establishing this new entity, we're going to just put more focus to realize that effort. On one side, this new subsidiary will be formed with an already existing turnover. As you can see here, more than TRY 3 billion sales turnover will be already embraced by the new entity.
At the same time, we're going to be just having the physical presence of Migros' own operations, which will provide us the ground and the base to form a more profitable structure compared to the rest of the other market players within the online grocery segment. All in all, the main target is definitely the top line growth, but also with a differentiated offer coming from Migros than the competition within the online grocery, where we're going to just have a guidance coming for the coming years with a structured growth supported with a profitability proposition as well. For today, that would be the presentation. I want to close right now with the guidance and underlying performance.
The final two slides on page 17, we have our net sales figures for nine months, around TRY 26 billion sales turnover with a domestic top line growth of 25% and EBITDA margin based on IFRS 16 accounts at the levels of 8.7%. A net profit delivered for this year is reaching TRY 367 million for the nine months results of the company. Regarding the end of year expectations, we are upgrading our top line expectations to more than 23% levels at this moment. Close to 23 closure.
I guess this is one important step forward for the company for obvious reasons of third quarter strong performance helped us for this additional guidance. At the same time, there is an base impact coming from last year's highly increased. Can you hear? I hope you can hear me. My screen is frozen.
Yes, we can hear you very well, Özgür Bey. Yes. You were talking about high base of last year.
Just to repeat my comment, the up-trading from the previous figure to 23% levels are based on our third quarter results from performance. At the same time, last quarter of last year was highly biased because of COVID-19 impact, which was a difficult period of highly restricted environment. That base impact may slightly negatively impact our top line growth performance in the last quarter. We are positive that the last quarter results also will continue helping the company's growth potential for additional efficiency metrics as well. For that reason, we are guiding the EBITDA margins within similar levels of 8%-8.5%.
As I expressed at the introduction, the commitment on physical growth is right now higher level, more than 300 store levels for this year, with a capital expenditure at the levels of TRY 800 million. That will be the presentation for today. I guess we are all now ready to answer your questions, if there are any.
Thank you, Özgür Bey, Cem Bey. Dear participants, please raise your hand to ask questions. We will authorize you. Thank you. Yes, there is one question from Cemal Demirtas. Cemal Bey, please unmute yourself to talk.
Okay. Thank you for the presentation. My question is about the OpEx side. We see that you have, you know, excellent quarter in terms of operational efficiency. I wonder how sustainable that is. Your guidance is within a range of 8%-8.5%. Do you expect any, you know, just higher than expected at the higher end of the range? That's my first question. The second question is about this new entity. What are the technical advantages of setting up this company for you? You mentioned the strategy is very well defined, but any, you know, any specific positive sides about this structure, because it's gonna be new entity, new levels, and et cetera. I wonder, you know, more details about that.
The third one is about a penalty. As you mentioned, you are gonna pay it in third quarter. Will you have some tax return from that? You know, in my calculation, if you pay in full, you are gonna have TRY 388 million. It will be recorded as an expense, right? In the fourth quarter. It means from your profitability, you will pay less tax. Or is there any exception? I wanna understand. My question is net effect of that on your income statement. I see the cash flow effects, net effects. You mentioned about the financial expenses similar to this year. Does that include the penalty payments? You know, your calculations.
Because this year, in fourth quarter, third quarter, you had less financial expenses compared to the first two, at least. What was the, you know, justification for that? Interest rates, are you assuming that the current interest rates will continue? That's why you mentioned that we are gonna have similar financial expense. Thank you.
Thank you, Cemal Bey, for the questions. I will try to answer them one by one. First of all, the Q3 results in terms of operating outcomes are positive definitely for us. As I try to express, there are two major reasons. One of them is the higher performance of our large stores, and the other one is the seasonal stores', relatively better performance than our expectation. That's why the Q3 is positive, positively reflected to our accounts. In the Q4, obviously we don't have that seasonal impact. Of course, there is an upside which may come from the November and December accounts. Of course, there is another seasonality coming from the end of year.
We are not taking this into account for the moment, for obvious reasons that in Turkey, not just in Turkey, this is overall right now. There is a clear logistical issue coming from, especially the large ticket non-food items. The representation of the product assortment is not at the levels of very high, I would call promotional levels that all is expecting coming from Black Fridays or anything similar. Of course, we will definitely force the market with a very competitive offer to support our top line growth with that new incentive as well. For that reason, we are not expecting a similar profitability level, I will call it, to Q3 or Q4.
Of course, when it comes to the EBITDA margin direction, for my personal expectation, I'm expecting to do upper side of the guidance that we are sharing for as a reflection of the EBITDA performance. The positive upside to this guidance might be the seasonal sales, which is depending on the shoppers' appetite. Obviously the inflation, the high inflation environment today is definitely impacting shoppers' income level. For large ticket items, there is a downside impact coming from the shoppers' overall purchasing power. As I said, there might be a positive surprise, depending on the shoppers' appetite to reflect on the new incentives on the seasonality. The second question of yours, the reflections of a technical advantage of a new entity.
If your question is in terms of technology-wise, I think we are already benefiting with several different tools. With a separate entity, there might be an increased dedication to form out more open sources, more radical steps towards a new software platforms to be guided. Let's not put ourselves in the position that we are not doing it as of today. We are definitely in that platform, so-called open platforms, open sources, AWS or the similar AWS type of services which are already embedded within the cloud services that we are already using. Definitely the new entity will have more flexibility around that technology.
That flexibility of managerial skills, we are also having a structural change in the organization and that new entity for obvious reasons, as you might know, that all the technology companies, not just for Turkey, but across the globe today, are looking for human resources which are rare assets to be more competitive in their operations. I'm expecting a technical advantage regarding that front as well that will provide us a relatively more flexibility regarding the HR practices that we may be just implementing in the new entity. On that reflection coming from the organizational structures and depending on the new offerings of additional services. These are the advantages that we are looking.
Rather than this focus, I want to emphasize one more time the management focus regarding the new application developments facilities coming with the technological advantages. At the same time, the focus regarding the last mile efficiency and the picking efficiency will be definitely our primary focus to deliver at this level. Coming to the next part of your question, I think the reflections around the penalty. First of all, still we have not seen yet what we call the structured detailed decision of the Turkish Competition Authority. That should be the first step, and we need to know what are the main rationales of the penalty.
Depending on that clear structure, we're gonna decide either to pay in first with the advantage of discounting and then accordingly to go to the court case. Because paying down this penalty doesn't mean that you accept the causality of the penalty. It can still go to the court and continue chasing your case. That would be pretty much our approach. When it comes to the expensing and or not expensing or the tax impact, I think we need some more time with our auditors to make sure that what will be the impact of it. There are already existing cases in the market today in different industries. In that different industries, there are publicly listed entities with their own practices, and we are also cross-checking those practices.
We are now in exchange with our auditors how to really record. Obviously, there will be a cash outflow and next to it how to record it, expense it accordingly. In case we might have an optionality regarding an asset structure or not, to balance that impact on our balance sheet. But as I said, it's an early comment. We need to just check the advice of our auditors. For clear obvious reasons, as you may anticipate, this is not gonna be a specific decision of how to expense it or not expense it accordingly. It will be a structural decision coming for different publicly listed entities, not just for Migros.
Obviously, what I'm expecting is a kind of a general practice for the, at least for the listed four entities, to be addressed within the same way. I think, as long as the timelines are clarified, we will give you much more clear outlook of the impact of this, both on the P&Ls and on the balance sheets at the same time. For the interest charges, for the financial expenditures, Cem already expressed that we have a less debt position at the moment. But of course, the current interest rates in the market, at least to our assumption for next year's budgets, might not be kept within these levels.
This is why there will be a relatively less debt, but comparably maybe about 100 basis points higher interest charges on our averages all in all, which may result in similar interest charges compared to 2021 to 2022. Which means that less debt, but that's relatively slightly higher interest charges, which we are expecting at least as the company will. Maybe Cem can add some more insight if there are any. Please, Cem.
Sure, sure. Of course. Cemal, I mean, our working assumption is that for next year, we are taking a borrowing rate around 19%, and this could be, of course, a lot more than that. Currently, our average financing cost is around 17%. We are going to be doing a refinancing around TRY 800 million for next year, and we were planning to pay down approximately TRY 200 million. All in all, the average debt level of 2022 is going to be slightly lower than what it is today. We are assuming a similar figure. Actually, it's going to be perhaps slightly less than what we have seen in 2021.
Thank you. It's very clear. Thank you.
Thank you, Cemal Bey.
Thank you, Cemal Bey. Please raise your hand if you have further questions. Yes. I guess there's one question from Brett. Brett, please unmute yourself to ask your question.
Hi, thank you for taking my question. I was just wondering, what's the rationale for keeping as much debt given that you have a net cash balance? Why not pay some more of it off to avoid paying a higher interest expense?
Thank you, Brett, for the question. We can give you much more insight for a one-to-one session, but the cash position of the company is a large amount of it is based on our credit card receivables. This is not cash in hand, I will call it. The rest is the day-to-day management cash. For any case that there is an excess cash, I think your question is very valid. I think in case we realize this within the course of next year, we will definitely pay down the debt. Time to time, of course, seasonality, time to time is working capital, but large portion of it is our receivables. That is an argument why you have a credit card receivable. That's the Turkish market practice today.
In the reflections of the charge coming from the credit card payable or receivable, sorry, if you want to receive it in cash, then you need to pay down an interest charge, which is not a beneficial thing to do today. In a high interest environment, these interest charges are relatively higher, which will all in all impact your P&L again. That is why we are keeping these credit card receivables in our balance sheet.
Okay. That makes sense. Thank you. Appreciate it.
Thank you, Brett. Any more questions from the participants? Please raise your hand if you have any. I guess there is no more questions from the participants. Please raise your hand if you have any questions. Yes. Yes, there's one more follow-up question from Cemal Bey.
Again, another issue about retail law that was also on the agenda for a while, but I don't know whether something clear, do we see in that front, or could we expect that, you know, after 2023? Any indication on that or any new thing on that issue? Thank you.
Cem Bey, thank you for this question, for clarification as well. The new retail law, it's a pending issue, we know, and we already exchanged our views with the Ministry of Trade. As to my knowledge, of course, this is up to the parliament to discuss it at the time. There are relatively more urgent trading activities regarding especially fruits and vegetable territories of the supply chain of fruits and vegetable trading, and similarly, e-commerce trading. These are. When you are to rank it, for obvious reasons of the urgency and the structuring requirements, to our knowledge, these are more privatized items at the moment, coming to the retail law expectation. It doesn't mean that, there's not gonna be a retail law regarding lobbying effect. There are continuing efforts.
For the last two quarters, if I may express myself, I think that the traditional market today is already growing pretty much the similar pace of the organized retail. If there is a concern or issue regarding the unorganized trade activities or challenges or reasoning, to be honest, I don't see it. If unorganized trading activities are growing strongly, why there is a dedication to discuss more on the retailing law. The other part of the dilemma is the manufacturer part, sometimes lobbying for the trade trading law or just retail law. I think the demand supply is for today is much more focused on supply chain rather than we are doing the right activities or not.
We are facing significant issues on logistics, production lines, I would call it raw material efficiency, even the pricing of raw material, packaging materials, the logistics of the end products. These are all very clear priorities today. Not to mention, these are not the priorities of Turkey only, but these are global issues today. For that reason, our manufacturing partners are keeping themselves busy, and we are keeping ourselves busy to focus to solve those issues rather than the retailing law impact issue. My answer was a relatively longer one, but in this circumstance, I think the priority is not there.
Thank you very much again.
Thank you. There's one more question from Paul. Yes, Paul, please unmute yourself to talk. Please unmute yourself to ask your question.
Sorry about that.
Yeah. No worries.
Two questions. First question is your share of online market similar to your market share in the offline market? The second question is, what is private label penetration in your business today, and to what extent can you push private label further across the organization? Thank you.
Thank you, Paul, for two questions. There are still no official statistics provided by online market shares. We have offline market shares, which I'm sharing at the moment as the omni-channel figures. Our organized state market share is more than 17%. Our total market share is at the levels of 9%. When it comes to online market shares, we are definitely much higher market share representation today. At least I can express that we are the largest online grocers today in the market. For that reason, our market share is relatively and significantly higher than our physical market share. As I expressed, there are still no real data that we can share.
We are working with companies like Nielsen and companies like IRI and all the other similar initiatives to make sure that there are much more structured data to be published. I hope we can do that in the coming quarters. There are few categories, which I will call mainly near food categories like cosmetics, detergents, cleaning items, soft drinks. These categories has already started publishing, but they are not sizable enough to publish at the moment for the representation of the total market. This is why we are not publishing any figure yet, but I'm positive that starting from next year, we can come up with some figures supported by Nielsen, at least. Regarding the private label penetration, in our terminology, there are two dimensions of private label.
One of them is packaged, which means the regular commodities, regular FMCG. In that respect, our private label penetration is at the levels of 7% of our turnover. But our fruits and vegetable operation, fresh fruits and vegetable, and our fresh meat operation is our own operations. So depending on your definition of private label, you can also quote these two categories as the term of private label penetration. So in that sense, if we are to quote, our private label representation goes up to 23% levels, including all the fresh categories that we operate ourselves across the supply chain. For some of our investors, analysts who may not be aware, we are running our own fresh meat factory.
We are running across the country 9 distribution centers to buy fruits and vegetables regionally to pack, to distribute ourselves. This is what I am expressing as the fresh categories, but that's based on your definition of private label. Another dimension for analysts and investors is that two categories, tobacco and alcoholic beverage, are restricted categories where you cannot provide private label. For that reason, that's another denominator's difference when you are to compare our private label penetration at the level of 6%-7%.
Thank you. Is there any reason why the business couldn't reach sort of developed market norms of 40% to over 50% private label long-term?
I'm not saying it cannot reach, but this is our strategic proposition. In the market today, there are players who are operating based on their expression, not mine. Around 70% of their turnover today is represented by private labels. There are players in the market today with this. As Migros' overall proposition, we are providing the best variety of our services, and this is why, strategically, we are not targeting a very high level of private label. Brand awareness of the Turkish shoppers. When I mean brands, please do take into account international brands, national brands and local brands, which are very strong in Turkey, and their representation and our partnership with them is commercially at this moment beneficial for the company.
If we are benefiting from this commercial relationship, as long as, let's say, we can still maintain our strategy of brand focus not to have a very high level of private label penetration, except the categories which I raised, the basic commodities, as I expressed, and the fresh product categories, where we are strongly performing with our brands of private label.
Thank you.
Thank you, Paul, for the question. Any more questions from the participants? Please raise your hand. Okay, I guess there are no more questions. Özgür Bey.
Thank you for joining us today, and we are glad to see you all. I hope this format is helping our analysts better than the regular conference calls, and we want to maintain this structure. Hopefully to have more physical meetings as well soon with our investors and our analysts, coming out of the COVID-19 impact, hopefully better results coming from next year. We want to see you all with our full year results, at the beginning of the year. Thank you for joining us today.
Thank you very much. Thank you. Thank you. Bye.