Russian retail market

Russia confirms itself as a key market for Spar

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Spar International strengthened its position in Russia with the signing of a license agreement with two local partners: Anix and the Semya Group. The first operates in the region of Altai, while the second is in Kaliningrad.

With these two new partnerships, the multinational totals five new distribution partners in the Russian market in the last twelve months. Apart from the two regions previously mentioned, Spar has also reached the provinces of Tyumen, Irkutsk and Tomsk this year.

Additionally, the company has confirmed that its partner, Spar Retail, which operates in the Moscow area, will invest 20 million Euro in a plan to reform and expand its 27 facilities with the aim of strengthening the Spar brand positioning in fresh food and customer service.

Spar Group sales in Russia grew by 21 % in 2012 amounting to more than 1,130 million Euro. By the end of July, the turnover of the company had grown more than 18 %. Numbers that make the Russian market one of the most important markets for the brand.

Spar, which came into Russia in 2001, currently has 13 local partners and operates over 300 stores, including supermarket, hypermarket and convenience stores.

www.freshplaza.com

METRO Cash & Carry logistics center opened in Aksai (Rostov region)

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On August 7, METRO Cash&Carry southern logistics center was opened in Aksai (Rostov region). That is a joint project of Metro Cash & Carry and logistics company STS Logistics.

This center allows local suppliers of fruits and vegetables to increase the supply of their products to METRO hypermarkets, and reduces time for transportation of products from the suppliers’ warehouses to hypermarkets.

South logistics center will consolidate orders and redistribute the products received from local suppliers to METRO Cash & Carry in the southern region of Russia.

«By the end of 2013, 75% of the fruits and vegetables in the hypermarkets METRO Cash&Carry in this region will be regional» – said Alexander Levchenko, Minister of Economic Development of the Rostov region.

Source: www.regnum.ru

Magnit raises 2013 profit target

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Magnit increased its 2013 profitability target and said sales growth will be at the top end of a forecast range. Earnings before interest, taxes, depreciation and amortization as a percentage of sales will be “in line” with the previous year’s 10.6 percent, Krasnodar, southern Russia-based Magnit said today in a statement. The retailer had previously forecast a margin of 9.7 percent to 10 percent.

Magnit, run and owned by billionaire Sergey Galitskiy, has the highest Ebitda margin among publicly traded peers globally, according to Sberbank CIB. The margin in the first half of 2013 was 10.1 percent of sales. “The new guidance shows management’s confidence that the company will continue its strong performance and accelerate it in the fourth quarter,” Natalia Kolupaeva, an analyst at ZAO Raiffeisenbank in Moscow, said by phone.

Sales this year will rise 29 percent to 30 percent, Magnit said on September 25, compared with previous guidance of 27 percent to 30 percent. For 2014, the retailer forecast revenue growth of 25 percent, in line with analysts’ estimates compiled by Bloomberg.

Magnit also said it plans capital spending of $1.7 billion to $1.8 billion next year, at least as much as in 2013. It plans to open 1,000 convenience stores, 80 hypermarkets and 350 cosmetics outlets next year.

Magnit fell 1.4 percent to $62 at 9:51 a.m. in London, where the stock is traded. The company overtook X5 Retail Group NV (FIVE) in March as Russia’s largest retailer by sales. Its market value has increased by 54 percent this year to $29.3 billion.

Source: www.freshplaza.com

Essen to enter Kazan

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Essen Production AG, a food producer and retailer, intends to introduce its Essen small-format hypermarket brand on the Kazan market by 2015. The store will take up 3,300 m2 and will be built from scratch. The construction work will require an investment of RUB 300m ($9.5m).
At present, the brand is represented by express and hypermarket formats in 19 towns and cities of the Republic of Tatarstan and four neighbouring regions. As PMR has reported on a number of occasions, in the very near future, the Essen network will be increased by 59 Kamilla convenience stores which were acquired this year and which will bear the Essen name after rebranding. After this, the Essen chain will have around 100 stores.

Source: www.russiaretail.com

Magnit increases its reserves

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September 12, FMCG-retailer Magnit launched a new distribution center in Zelenodolsk. This is the 20th Magnit distributional center. Total area is 22,524 square meters. Thanks to the new distribution center, the company hopes to improve the quality of service in the Volga region.

Source: www.retailer.ru

Magnit ups revenue by 31.42% in H1 2013

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Magnit, the grocery retailer, received revenue of RUB 272.8bn ($8.2bn) in H1 2013, a growth of 31.42% year on year. Net profit rose by 39.67% year on year to RUB 14.5bn ($436m). EBITDA grew by 34.34% to RUB 27.6bn ($829.4m).
In January-June 2013, Magnit opened 532 new outlets, including 506 convenience stores, 12 hypermarkets, six mini-hypermarkets under the banner of Magnit Semeyny, and eight cosmetics stores. On 30 June 2013, the total company store count included 7,416 units (6,552 convenience stores, 138 hypermarkets, 26 Magnit Semeyny shops and 700 Magnit Kosmetik outlets).

Source: www.russiaretail.com

Outlook for Magnit and X5 Retail Group

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According to retail analysts at Kantar Retail, there is a positive outlook for Magnit and X5 Group from Russia – both retailers are expected to deliver good performances with new store openings planned over the next five years and a focus on multi-channel formats. Magnit is expected to enter the top 20 at number 12 – a big leap from its position at number 25 in the ranking – and sales are estimated to more than double by 2018 to €34.9bn.

Source: www.freshplaza.com

“Spar Retail” has problems

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Victor Balashov, director of “Spar Retail” (retail chain Spar), leaves the company after eight months of work. According to the market experts, Mr. Balashov has difference in opinion with major shareholder of the chain – Alexander Mamut’s Fund A & NN Capital Management. Industry experts estimate the state of the “Spar Retail” as critical and recommend to declare bankrupt. Alexander Mamut owns 61% of  “Spar Retail” (through A & NN Capital Management Fund), Russian Retail Growth Fund owns 36%, and Dmitry Maslov, ex-CEO of the company, has 3%.

Now there are 24 Spar stores. The main idea was to create an ideal supermarket for upper middle class, supermarkets were to occupy a vacant palce between the “Perekrestok” format and premium networks “Azbuka Vkusa” and “Globus Gourmet”. But the idea failed. According to some market analysts, although the revenue of the chain is 6.3 billion rubles, «Spar Retail» does not cost more than 2 billion rubles, without considering its debts, which are about 6 billion rubles.

Source: www.retailer.ru

X5 Retail appoints new General Director of Supermarket Format

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X5 Retail Group N.V., a leading Russian food retailer, announced today the appointment of Janus Lella as the Company’s General Director of the Supermarket format effective 1 September 2013.

Mr. Lella has approximately 20 years of managerial and operational experience at the senior executive level with leading Russian and international retailers, including; Castorama, Office Depot, M.video, Yoplait and CPC Amino/Bestfoods. During this time he has been involved in various restructuring programs to improve operational efficiencies and distribution platforms to increase sales and profits.

Mr. Lella replaces Valeriy Tarakanov who will continue to lead X5’s Convenience Store format as well as cooperating on strategic projects to strengthen the Company’s multi-format value proposition.