Retail

Magnit’s Profit to Drop

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Magnit retail chain, one of Russia’s largest retail operators, has reported a worse-than-expected drop in profit for its fiscal first quarter by 5.5% y-o-y to USD 61.01m according to IFRS. In RUB terms the company’s net profit dropped by 7.5% and made RUB 1.786bn. The company’s income within the fiscal period grew by 56.5% and reached USD 2.564bn. In RUB terms the income went up by 53.14% and reached RUB 75.052bn. The income growth is due to the sales area expansion and growth of the like-for-like sales by 20.15% (VAT exclusive). The retailer’s EBITDA in USD terms grew by 30% to USD 161.97m, in RUB terms – by 27.25% to RUB 4.741bn.

CEO Sergei Galitsky noted: “We liked sales growth in the first quarter and did not transfer additional expenditures through increase of fuel costs and social tax to the customer which resulted in lower EBITDA versus consensus. But from the second quarter we have started to gradually transfer increased costs to the customer, at that we are confident in fulfilling EBITDA margin and sales plan provided earlier.”

Source: www.retail.ru, www.freshplaza.com

Federal Retail Chains to Change Development Strategy

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Federal grocery chains in the North-Western Federal district were traditionally fighting for consumers in St. Petersburg. Since 2009 the battle has been gradually moving towards the periphery. Retailers are ready to reconsider their development strategy and enter small towns in province with population less than 10.000 people, which have been interesting for only one retail chain – Magnit. Magnit occupied this niche and built the largest retail chain in Russia. Retailers who will be the first to enter towns and villages, which are not yet occupied by Magnit, will win the race and occupy the share of the regional market.

Source: www.retailer.ru

Organic Products Gain Popularity Remaining in a High-Price Segment

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According to experts’ opinion the farm products market in Russia is still at the initial stage of the development.  The share of farm products is tiny as consumer’s demand tends to grow. Food retail chains started to cooperate with private farms only 5 years ago. Today such retail chains as Azbuka Vkusa have meat, poultry, dairy products, seasonal fruit and vegetables from private farms in their assortment. These products  are twice as expensive as their analogues from factory farms due to the high transportation and logistics expenses, but shoppers are ready to overpay for organic high-quality food items.

Source: www.retail.ru

Facts and Figures about Russian Retail Market 2011

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2011 the Finnish retail chain Prisma is planning to open a new hypermarket and two supermarkets in St. Petersburg. The premium-class supermarket chain Globus Gourmet will open four stores in Moscow and St. Petersburg, with the investment volume reaching RUB 600m. Russia’s retail market leaders – X5 Retail Group and Magnit – accounted for 80% of all the new stores opened by the largest market players in Q1 2011. Dixy’s net revenues in 2010 amounted to RUB 257.7m. The sales of Lenta, retail chain from St. Petersburg , grew by 35% in Q1 2011.

Source: www.retailer.ru

Okey Retail Chain Increased the Annual Profit Fourfold

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The large Russian food retailer Okey reported that its net annual profit in 2010 increased to RUB 3bn. The profitability reached 3.6%, EBITDA grew to RUB 7.1bn from RUB 5.8bn in 2009. The company’s gross profit went up by 22% to RUB 18bn. 2010 the revenues reached RUB 82.7bn, the like-for-like sales in RUB terms grew by 7%. The company is planning to invest the revenues in further expansion. New stores are waiting to be opened in Moscow, Yekaterinburg, Tyumen, Omsk, Novosibirsk, Voronezh and Nizhniy Novgorod.

Source: www.foodnewsweek.ru

Azbuka Vkusa to Increase the Share of Private Labels to 30%

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Azbuka Vkusa food chain is planning to increase the share of private label items to 30% within the next few years. The majority of Russian retail chains have much smaller shares. The market leader X5 Retail Group has 12% in Pyaterochka, 6.5% in Perekryostok and 5% in Karusel and is planning to raise the share of private labels to 50%, 25% and 10% respectively. Azbuka Vkusa is also considering the opportunity of starting its own production of broilers. In the future the company will give its name to fruit, vegetables, meat, dairy and grocery products.

Source: www.fruitnews.ru

Russian Retail Market: Dixy to Double Capital Investment in 2011

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The large Russian food retailer Dixy has reconsidered and doubled the planned capital investment in 2011 from RUB 2.5bn to 5.5-6.3bn. RUB 1.5bn will be spent on new stores, RUB 1bn – on the opening of 3-4 Megamart hypermarkets in the Urals. Equipment and reparatory works for the new Dixy discounters will cost about RUB 1bn, the new trucks – RUB 500m.

Source: www.foodnewsweek.ru

Dixy Makes Profit

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The Dixy Group, one of Russia’s largest retailers, reported RUB 257.7m net profit in 2010, and seems to have recovered after the loss of RUB 111.9m in 2009. The retail sales in RUB terms grew by 19.4% to 64.799bn, in USD terms – by 24.7% to 2.134bn. The company’s income in 2010 reached USD 8.5m after the loss of USD 3.5m in 2009. The company reported EBITDA growth of 26.5% in RUB terms to 3.678bn and 32.2%  in USD terms to 121m.

Source: www.retail.ru

As Economy Recovers Premium-Class Retail Chains Open New Stores

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Premium-class food store chain “Globus Gourmet” is planning to open four new stores in Moscow and St. Petersburg after having frozen the expansion program during the crisis. At the moment the chain operates seven stores: one in St. Petersburg and the rest – in Moscow. Investment in the new openings may reach RUR 600m. The retailer’s recovery is due to the significant increase of the average basket and customer traffic (2010 they grew by 10%). Other premium-class chains have also noticed this trend: “Azbuka Vkusa” and “Sedmoy Kontinent” are also opening new stores.

Source: www.foodnewsweek.ru

Inflation in Russia Eats Away the Incomes

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The Russians tend to spend their savings and take loans more actively. Deposit accounts don’t protect savings from the inflation, which is higher than the average interest rate, whereas loans become more lucrative. The real wages in Russia have been falling during the last three months with retail turnover gradually growing. As Rosstat (Russia’s State Statistics Office) reports, in Q1 the food items turnover grew 1.2% and non-food items turnover – 8.3%. The real income has lost 2.9% in Q1 and 3.4% in March. Inflation growth has accelerated and reached 9.5% (versus 7.2% three months ago).

Source: www.retail.ru