Page 51 - RusRPTFeb21

4.5.3​ Retail sector dynamics
The volume of retail trade in November was 3.1% lower than in the same period of the previous year​, ie slightly deeper than in late summer and throughout the autumn (when the decline was between one and 2%).
The slump in November supports e.g. previous estimates that in previous months, household consumption demand included purchases to prepare for the second wave of the coronavirus.
According to Fashion Consulting Group, the fashion market in Russia lost 25% YoY to RUB 1.7tn in 2020. ​The agency factors in a recovery by 2023 in its upbeat scenario, and by 2025 in its bear case. Last year, the fashion sector experienced multiple operational challenges from store shutdowns, lower demand associated with work-from-home patterns, and the overall pressure on household budgets. During lockdown, e-commerce is vital and it grew 11% YoY last year to RUB 245bn, accounting for 14% of the total, according to Fashion Consulting Group, which sees the segment adding an additional 37% YoY in 2021. In our coverage universe, Obuv Rossii’s sales were down 20% YoY in 11m20. The company aggressively developed its marketplace for various goods, which accounted for 31% of retail sales in November. We maintain our cautious view on the name, as sales remained pressured and have been volatile lately, while working capital is still elevated (157% of sales as of YE20F, in our model). In the near term, there are uncertainties about how sustainable the rebound of sales can be, while in the longer term we note sizable opportunities for a pick-up in turnover, net working capital optimisation, and deleveraging from 5.5x net debt / EBITDA as of YE20F, as per our forecast.
National accounts, demand-side data reflect the uneven demand has recently developed. In the third quarter of 2020, private consumption recovered strongly from its low in the second quarter​, but was still 8.4% lower than a year ago. In Russia, too, public consumption has maintained aggregate demand, and in the third quarter it was 1.8% higher than in the corresponding period of the previous year.
The State Statistics Service recently published a detailed breakdown of GDP in 3Q20 under the expenditure approach. ​GDP was down 3.4% y/y in the quarter (the same as the previous estimate). The most significant improvement compared with 2Q20 was registered in household consumption (down 8.4% y/y after plunging 22.2% in 2Q20) and investment (down 6.0% y/y after the 11.7% drop in 2Q20).
51 ​RUSSIA Country Report​ February 2021 ​ ​www.intellinews.com