Magnit has announced that its February sales grew 25.9% year on year to reach 41.9 billion rubles ($1.36 billion US). The company opened 74 stores last month, bringing its total number of shops to 6,995, compared to 5,380 a year ago. In January, sales rose 32.6 percent to 41.3 billion roubles.
Source: www.freshplaza.com
OJSC “Magnit” is pleased to announce the opening of new hypermarkets.
The 129th hypermarket of a medium format is located at 30 Zhukova street, Ufa, Republic of Bashkortostan, Volga federal district. Assortment of the hypermarket consists of more than 14,200 SKUs, out of which about 68% are food items. There are 23 cash desks installed in the sales area.
The 130th hypermarket of a small format is located at 58 Saratovskoe shosse, Balakovo, Saratov region, Volga federal district. Assortment of the hypermarket consists of more than 10,600 SKUs, out of which about 68% are food items. There are 19 cash desks installed in the sales area.
Source: www.freshplaza.com
Russian retailer Magnit is closing in on market leader X5, reporting a bullish full-year performance for 2012 with significantly higher figures across the board. A rash of store openings and higher margins underpinned the success, seeing EBITDA increase by 71.62 per cent and net revenue up 33.6 per cent to RUB 448 billion (roughly €11 billion).
Analysts have branded Magnit the best-performing grocer in Russia, as well as one of Europe’s most profitable, with market share reported to be around 5 per cent. The group expanded its store network by 1,575 outlets during the fiscal year, including 1,057 supermarkets and neighbourhood stores and 36 hypermarkets, bringing its total tally to 6,884 stores.
2012 net income increased by 103.15 per cent, coming in at RUB 24,994.79 million (roughly €621 million) with a 5.26 per cent rise in like-for-like sales.
Magnit’s 126 hypermarkets delivered a stronger performance than its supermarkets and neighbourhood store division with like-for-like growth of 11.43 per cent and 8 per cent, respectively.
CEO Sergey Galitskiy declared the group’s ambition to increase its market share, with a busy 2013 scheduled. “We are already thinking of 2013 and have set a challenging task for ourselves to open over 1,100 convenience stores, over 60 stores of the hypermarket and Magnit family format, and 250 cosmetics stores. We also hope that this year we will launch four distribution centers and buy at least 1,200 trucks,” he said.
Source: www.freshplaza.com
Magnit, Russia’s largest food retailer by market value, said December sales increased 35 percent because of new store openings and an increase in the average amount spent by each customer.
Sales were 51.8 billion rubles ($1.7 billion), the Krasnodar, Russia-based company said in a regulatory filing. Full-year revenue rose 34 percent to 448 billion rubles, outpacing a Russian retail market that grew 6 percent in the year through November, according to the state’s statistics service.
Magnit said it opened 407 stores in December, bringing its total to 6,884. The monthly increase is the biggest in the fast- growing company’s history, according to analysts at VTB Capital. Two-thirds of its shops are in small cities with a population of less than 500,000 as the company expands into under-developed parts of the Russian regions, the retailer said.
Source: www.freshplaza.com
Thanks to relative political stability and strong oil and gas prices, Russia’s retail turnover more than quintupled from 2001 to 2011 and now exceeds US$600 billion annually. Data suggest that this sector is entering the steepest part of its growth curve. How will Russia’s retailers face the challenges of this critical period of expansion? Will foreign retailers manage to get a slice of this growing pie?
Russia’s enormous size and level of economic development mean that the retail market is currently divided among many players. While large retail chains dwarf the majority of competitors in market capitalization, their market share is relatively small. The X5 Retail Group, the largest food retailer, for example, controls only 5.6% of the market, and the top 10 food retailers comprise less than 20% of the market. This is in stark contrast to the developed markets of Western Europe, where leading food retailers hold a quarter of the market or more e.g., Tesco (30% market share) in the U.K. and Edeka (26% market share) in Germany.
This opportunity for consolidation is fueling a pitched battle among Russia’s retail chains to establish regional and national market share. Which chain prevails as top dog will depend on how well it can confront the logistical challenges of the country’s decaying infrastructure, responsibly manage expansion and successfully navigate an uncertain regulatory environment.
Russia’s road network stands at 610,000 miles, of which only 482,000 miles are paved. (In comparison, the U.S. has four million miles of roads, of which 2.7 million are paved.)
In addition, there is a lack of quality warehousing in the country. Colliers International reported that there are 81 million square feet of industrial space in all of Russia, while the Chicago market alone houses 537 million square feet, according to real estate service firm Newmark.
All the leaders in Russia’s retail sphere are rapidly modernizing their logistical operations. Retail chain Magnit is currently recognized as the cutting-edge logistics innovator. As a result, it is rapidly closing in on X5’s lead as Russia’s largest retailer in terms of revenues. Its profits more than doubled in the first half of 2012 compared to the previous year, while X5’s profits over the same period dropped 20.6%. X5 appears to be playing catch-up in logistics. During this period, its margins were hit by the high costs of opening a new distribution center and the set-up costs related to adopting a direct-import model.
Magnit’s main advantage over its competitors has been its effectiveness in bringing the supply chain completely in-house and cutting out the middle men who previously added costs and delays. Today, Magnit runs a fully independent supply chain, with over 3,900 of its own vehicles and a proprietary network of 15 distribution centers totaling close to 3.9 million square feet. It continues to expand this network, opening a new facility in late December 2012 to serve the Volga region and Ural region.
The Russian retail market is heavily saturated, and barriers to entry are high. The two foreign chains that have found success have one thing in common: They struck when the iron was hot. German retailer Metro and the French chain Auchan entered the Russian market in the early 2000s, before competitors became well-established. Of the top-10 leading food retailers, Metro and Auchan have been the only non-Russian firms to command a leading position in the retail sector.
Walmart is looking at a second attempt to access this market, having recently hired former X5 CEO Lev Khasis and appointing him senior vice president for international operations. Khasis was key in positioning X5 as the Russian market leader and grew the company to annual revenues of US$15 billion. He will likely be the strategic player for Walmart’s eventual entrance into the sector.
Source: www.freshplaza.com
Fast-growing Russian retailer Magnit said on Monday its November sales grew 35.1 percent, year-on-year, to 39 billion roubles ($1.27 billion) after a 36-percent increase in October.
The company opened 196 outlets last month, bringing its total number of stores to 6,477, compared to 5,023 a year ago, it said in a statement.
Magnit is targeting 30-32 percent sales growth in the whole of 2012.
Source: www.freshplaza.com
The market share of the five largest companies in the food retail will grow from the current 18% to 30% in 2015, but the change of the leader is not expected, said Natalia Kolupaeva, Raiffeisen bank customer analyst.
“At the end of 2015 we will approach more or less the average Europe rate; the major players – top 5 companies – will get about 30% of the market. And these companies are already known today, the changes are not expected, besides the relocation of X5 Retail Group and “Magnit”, – she said during the telephone conference on the forecast for the development of the consumer market in Russia.
According to the analyst, other major companies – besides X5 Retail Group and “Magnit” – will be “Auchan”, Metro, and “Dixy”, which will continue their aggressive campaign to promote and expand their networks.
The limit of beer sales in retail outlets less than 50 square meters (from January 1, 2013) and the law in draft proposed by Public Health Department, according to which tobacco products will not be sold in small retail stores, will also favor the expansion of retail networks, excluding small stores from the food market.
However, according to the forecast, the annual growth rate of the food retail market will be reduced from 9% to 8% in the period from 2013 to 2016 as Raiffeisen bank analysts said.
Source: www.retailer.ru
Low-cost food retailer Magnit, Russia’s second-biggest by revenue, pledged to sacrifice profitability to retain market share as it posted third quarter earnings ahead of forecasts.
Magnit, which has been expanding its mostly discount store chain rapidly in Russian regions since 1998, has outperformed competitors in terms of sales growth and margins.
Third-quarter net profit almost doubled to $200 million, beating a $155 million market forecast, and earnings before interest, taxation, depreciation and amortisation (EBITDA) grew 60 percent to $383 million for an 11 percent margin.
Sergei Galitskiy, Magnit’s founder and chief executive, said the company was reaping the benefits of scale from its supply chain and enjoyed broadly the same purchasing terms as its bigger rival X5.
An EBITDA margin of 11 percent is untypical of the sector, where other publicly-listed players recently recorded margins of 6 to 8 percent.
Galitskiy said he expected it to decline in the future when competitors become more aggressive.
“If the market requires lower prices, we will give even lower prices. We will not hold on to EBITDA,” Galitskiy told analysts during a conference call, adding he saw no reason to be worried as long as the EBITDA margin stays above 6.5 percent.
He told Reuters in an interview this month he would stick to a winning formula of targeting low- to middle-income shoppers through mostly convenience stores.
Source: www.reuters.com
Russia’s No.2 food retailer Magnit by sales, is targeting Siberia as it presses on with a rapid expansion into the country’s regions which it believes can deliver at least another four or five years of strong growth.
Sergei Galitskiy, who opened his first shop in 1998 and has built Magnit into a 6,000-store empire, told Reuters he would stick to a winning formula of targeting low- to middle-income shoppers through mostly convenience stores.
Magnit turned over $11.4 billion in 2011, compared with $15.5 billion at Russian grocery leader X5 Retail.
But it is currently growing three times as quickly as it opens three stores a day and as X5 struggles with its shift away from acquisition-led growth and underperforming hypermarkets.
Magnit expects revenue growth, which has run at an annual rate of around 40 percent in recent years, to slow to 30-32 percent this year and gave preliminary guidance last month that it would ease further to 25-27 percent in 2013.
Magnit is grabbing business in towns from outdoor markets, kiosks and independent shops. It plans to add 800-1,000 convenience stores, up to 60 hypermarkets and 500 cosmetic shops next year – similar to the expansion this year.
Source: www.reuters.com
Russian retailer, Magnit, has announced this week that its September sales grew by 36%, year on year, to 36.1 billion roubles ($1.16 billion US), after rising 34% in August.
Last month the company obtained 145 new outlets, bringing the total number of stores to 6,119.
Last month Magnit raised its full-year sales growth guidance for 2012 to 30-32 percent from 30 percent and said that it expected growth to slow to 25-27 percent next year.
Source: www.freshplaza.com