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meters (+9.6% y/y). X5 opened 327 new stores on a net basis last quarter, most in the Pyaterochka format (289), as well as 43 Perekrestok stores. Five Karusel hypermarkets were closed on a net basis (including five conversions into Perekrestok stores).
Online sales. Perekrestok Online saw the number of orders rise 2.8x y/y while the average ticket grew 10% y/y, resulting in revenues tripling y/y to RUB2.8bn in 3Q20. Express delivery from Pyaterochka and Perekrestok brought in over RUB1.1bn in revenues, on our estimates. This means that online channels accounted for c. 0.8% of X5’s total revenues. That said, online sales in Moscow and the Moscow Region accounted for 1.9% in 3Q20 and 2.2% in September.
X5 Retail Group held a conference call for its operating partners that featured an address by the CEO. The key highlights are as follows.
· The store count is to reach 20,000 by 2023, from 17,025 as of June.
· The company’s market share is to increase from 13% in 2020 to 15% by 2023.
· The share of the egrocery market is to go up from 15% in 2020 to 20% by 2023.
· The company plans to enter the Russian Far East.
· The hard discounter pilot is to see 40 new openings in 2021.
· Pyaterochka’s refurbishment programme is to be completed in five years (9% coverage now).
The outlook matches the development path we use in our model as well as the company’s recent progress in the egrocery sector. We estimate the 2020-24F revenue CAGR at 8%, driven by ongoing sector consolidation and the online segment being rolled out, while the entrance into new formats, including hard discounters, represents an upside risk. The company has scheduled its 3Q20 operational results for 15 October and financials for 26 October.
We maintain our robust outlook as the sales trends remained elevated across the sector during the quarter, which is likely to have a favourable impact on the commercial margin and operating leverage.
X5 Retail Group is to terminate the joint venture with Sovcombank in a parcel lockers company. The JV was created in November 2018 and currently operates more than 3,000 parcel lockers in the retailer’s stores.
137 RUSSIA Country Report November 2020 www.intellinews.com
