Page 129 - RusRPTFeb21

aforementioned trends were mostly visible for Moscow, where LSR's volumes decreased 22% YoY but prices rose 51% y/y.
9.2.5​ Retail corporate news
​Magnit​ reported trading results for the second half of December. Consolidated revenues were up 11.9% y/y in the period, while LFL sales growth came in at 8.9% amid a 7.8% drop in traffic and an 18.2% increase in the average ticket. These results were driven by more concentrated shopping due to the coronavirus, higher inflation and positive base effects. The company also mentioned that revenues were up 9.5% y/y with 6.3% LFL sales growth over the first 10 days of January (with traffic down 10.1% and the ticket up 18.3%), underpinned by Russians celebrating holidays at home amid limited travel options and restrictions on restaurants. The numbers were in line with the projections in our recent note, where we predicted an upbeat set of 4Q20 results, with 10-11% revenue growth and an EBITDA margin of 7.0-7.5%. We retain a neutral stance on the stock. The key drivers that supported Magnit's performance in 2020 (the effect of the virus and lockdowns, the expansion of the loyalty program and the ramp-up of previously opened stores) are being replaced by headwinds this year (high base effects, a lack of lockdown-induced panic-buying and a halt to space growth). Though it is hard to anticipate precisely what impact all of this will have on the top line, we currently expect robust results in January (with 9-10% y/y revenue growth), with the performance dropping off into a potential y/y decline in revenues in March, which we expect to be the weakest month this year.
X5 Retail Group​ and McDonald’s announced the launch of the first McDonald’s restaurant in a Pyaterochka store in Moscow​. The restaurant has a space of 220 square meters, an entrance from the store and a separate entrance from the street. The restaurant will offer home delivery and the McAuto service. This is the third restaurant that McDonald’s has opened in an X5 store, the first two openings were made in Perekrestok supermarkets last year. The companies plan to open several more joint restaurants in Pyaterochka stores in 2021. This could be an interesting partnership model that offers X5 customers a new experience and expands the service offering in X5 stores. The idea of making Pyaterochka a one-stop shopping destination where people can not only buy groceries but also pick up online orders (5Post), buy medicine (sub-leased pharmacies) and grab a snack should facilitate greater customer engagement, stronger traffic generation and increased customer loyalty.
129 ​RUSSIA Country Report​ February 2021 www.intellinews.com