Russian retail

11% increase in revenue for Metro in 2013

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There was an 11.3% year-on-year increase in the Russian revenues of Metro Cash & Carry, the grocery retail division of the German Metro Group, to RUB 183.2bn (€3.68bn), in 2013. At the same time, the company’s like-for-like sales grew by 7.7%. The company disclosed its Russian financial results for the first time because it is considering an IPO for the Russian Metro Cash & Carry business. The Metro Group is planning to float 25% on the London Stock Exchange (LSE).

In addition, the company’s EBITDA rentability figure has reached 12.4%, which is a record among large grocery retailers in the country.

According to Metro’s quarterly report, at the end of 2013 it was operating 73 Metro Cash & Carry hypermarkets in Russia.

www.ceeretail.com

31% increase in Lenta’s sales in 2013

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Lenta, one of the major Russian grocery retailers, increased its total sales by 31.3% year on year to RUB 144.3bn (€3.03bn) in 2013, according to the company’s IFRS financial report. At the same time, the LFL sales grew by 10%.

What is more, there was a 35% increase in the retail space of the Russian hypermarket retailer Lenta in 2013, and the company has become the most rapidly growing business in this arena among the largest grocery retailers in Russia.

At the end of last year Lenta’s retail space came to 508,000 m² and the company had 87 stores in total. The retailer has opened 31 stores, including 10 supermarkets in Moscow and the Moscow Province. It operates 77 hypermarkets in 45 cities in Russia.

Lenta’s main shareholders are the American investment fund TPG (49.8%), the EBRD (21.5%) and VTB Capital (11.7%). In early February the retailer announced that it intended to enter the London Stock Exchange and the Moscow Exchange by means of IPOs.

www.ceeretail.com

X5 revenue growth accelerates amid Russian retail slowdown

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X5 Retail Group NV posted the strongest quarterly sales growth in two years as it closed the gap on competitors including OAO Magnit and O’Key Group SA.

Fourth-quarter sales rose 12 percent to 150 billion rubles ($4.4 billion), benefiting from an improved product assortment and promotional activity, the Moscow-based grocer said today in a statement. That compares with growth of 6.6 percent in the previous three months.

The increase in sales beat the 8 percent estimate of VTB Capital, sending the shares up as much as 7.1 percent.

“This is surprising given that Magnit, O’Key and M.video reported a slowdown in fourth-quarter sales, citing weakening consumer spending,” VTB Capital analyst Ivan Kushch said.

While X5’s accelerating sales bucked the trend, the overall growth rate is still the weakest of its main rivals, according to Kushch. “We need to see if the company’s turnaround is sustainable,” he said. “Fourth-quarter growth was largely driven by promotional price declines, which may have hurt profits.”

Magnit, Russia’s biggest retailer, said this month that revenue rose almost 23 percent from a year earlier in December, less than November’s 29 percent growth. O’Key also reported weaker growth, while electronics retailer M.video said same-store sales declined in the fourth quarter.

X5 Retail shares rose 4.8 percent to $18.50 at 8:24 a.m. in London, where the stock has its main listing.

www.freshplaza.com

Metro to list 25% of Russian cash and carry

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Europe’s fourth biggest retailer, Germany’s Metro AG has confirmed speculation which surfaced in late 2013 that it is to list 25% of its Russian cash and carry business.

The retailer said yesterday that it plans to sell up to a quarter of its stake in the cash and carry unit in an initial public offering during the first half of this year on the London stock exchange.

Metro has been restructuring its large portfolio of cash and carries, supermarkets, department stores and electronics chains in order to cut debt and raise money.

www.freshplaza.com

Magnit establishes subsidiary in Altay Territory

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Magnit, the largest Russian retailer in terms of revenues, has registered an affiliate office for Tander (the chain’s operator) in Barnaul, with a plan to enter the Altay Territory market. The first of the company’s stores in the region is expected to open in September 2014.

The company had previously announced its intention to build a logistics centre in the neighbouring Novosibirsk Province, to cover the needs of nearby regions, including the Altay Territory. The construction period is 2013-2014. The amount invested in the project will be RUB 1.5bn (€33m).

Overall, at the end of 2013 Magnit was operating 7,407 grocery stores in Russia. In addition, the retail giant had 686 cosmetics stores (the Magnit Kosmetik brand).

www.ceeretail.com

Magnit reported slower sales growth

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OAO Magnit (MGNT), Russia’s largest retailer, reported slower sales growth in December as consumer-spending weakened, sending the shares down the most in about 18 months.

Revenue rose almost 23 percent from a year earlier to 63.6 billion rubles ($1.9 billion), less than November’s 29 percent growth, Krasnodar, Russia-based Magnit said in a statement today. Convenience stores led the slowdown as consumers switched to hypermarkets and open markets for New Year shopping.

Magnit fell as much as 6 percent in London trading, the steepest drop since July 6, 2012. The stock was down 4.9 percent to $60.35 at 8:30 a.m. in the U.K. capital.

Magnit’s slowdown may cause investors to revise growth prospects for the entire Russian retail sector, said Natalia Kolupaeva, an analyst at ZAO Raiffeisenbank in Moscow.

Russian gross domestic product grew 1.2 percent in the third quarter, missing estimates. Economic growth has slowed every quarter since President Vladimir Putin won a third Kremlin term in March 2012. Russian retail sales grew 4.5 percent in November, according to Federal Statistics Service.

www.bloomberg.com

New Lenta store in Perm

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Saint Petersburg retailer Lenta has opened its new store in Perm on December 25, has said Yana Mogileva, a press agent of the retailer.

Initially the opening of the store was postponed several times due to technical problems.

As far as future plans are concerned, the retailer doesn’t plan to open new stores in Perm prior to 2015.

Today Lenta is present in 44 cities of Russia. The official website of the company states that Lenta stores are opened seven days a week. Also, the retailer offers to its customers products at a price not less than 5% below the average market price. It’s specified that Lenta reduces its costs of warehouse storage by placing some of its commodity stocks in salesrooms.

www.retailer.ru

Magnit sets up transport arm in Hungary

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Russia’s biggest food retailer, Magnit, will set up a transport company in eastern Hungary creating around 1,500 jobs, Hungarian foreign affairs state secretary Peter Szijjarto was quoted as saying on Friday.

National news agency MTI reported Szijjarto as saying that Magnit’s road haulage arm will have a fleet of 1,000 trucks, which will transport foodstuff from European Union member states including Hungary to the retailer’s shops in Russia.

Magnit, earlier this year, overtook rival X5 as Russia’s No.1 grocery chain by revenue.

www.freshplaza.com

Russian retail slips into stagnation

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Russian retail is slipping into a state close to stagnation. Sharp slowdown in business confidence index (BCI) bears evidence of it. BCI has dropped to +3% for the first time in 4.5 years of surveys. Some experts believe that we are witnessing major changes in the driving forces of the Russian economy. Its “artificial engines”, such as retail and financial sector, can’t stimulate the growth anymore.

In concerns of consumers’ demand, it stoped its growth in the last quarter of 2013 and that’s why there can be seen the shift of households from the spending model to the saving one. The situation has worsened by potential consumers’ high debt burden: arrear of Russian credit users by the end of 2013 is about 25% of their aggregate income. As consuming power decreased, retailers’ basic financial rates continued to drop. Experts are also predicting further economic downturn in the beginning of 2014.

Against the background of this economic downturn employment rate remained almost the same.
By statistics trading companies’ revenues in the end of 2013 have shown one of the worst results in past 4 years. In first quarter of 2014 about 20% of entrepreneurs are expecting a revenues decline.
Georgy Ostapkovich, the expert of the Center of conjuncture research, says this negative tendency of market condition cannot be overcome in short run.

www.retailer.ru