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bne Invest
April 19, 2019 www.intellinews.com I Page 13
Russian children's store Detsky Mir puts in robust 1Q19 trading results, launches in Minsk
Ben Aris in Berlin
Russia’s leading children's store Detsky Mir has published a robust 1Q19 trading update with sales accelerating 16.1% y/y, driven by robust like-for- like (LFL) growth in both Russia and Kazakhstan, the company said on April 15.
Real incomes in Russia may be stagnating but people are still spending on their kids and most of the gains came from increasing customer numbers, up by 7.25 in the quarter, VTB Capital (VTBC) said in a note.
“The company’s core, Russian market demonstrated 6.6% LFL growth, boosted by the national holidays in Russia (23 February and 8 March) and the matu- rity of stores opened in 2017-18," Maria Kolbina, a retail analyst with VBTC, said. “These results provide upside risks to our more conservative forecast
for 2019F of 11% y/y growth and could potentially serve as a foothold for better growth prospects.”
The company continues to expand on the back of its iconic brand, well known to everyone in the for- mer Soviet Union. The company opened five outlets in the first quarter, bringing its total store base to 748 locations, and 769,000 sqm of selling space.
Detsky Mir also entered the Belarusian market this year as an emerging middle class makes it more appealing to retailers, as bne IntelliNews has reported with “The long march of Belarusian retail” in September 2018. Detsky Mir opened
its first three stores in the first quarter and con- firmed plans to open at least 80 more Detsky Mir stores in 2019, including 10 more in Belarus. As bne IntelliNews has already reported, Detsky Mir plans to open 30-50 new stores in Belarus in the next three to four years.
The real disposable money income of Belarusians rose by 8.1% y/y in January-October 2018, the National Statistics Committee of Belarus reported on December 18, and is expected to continue rising. The domestic supermarket chain Eurotorg (aka Euroopt) twice tried to IPO in London last year and is expected to try again this year.
VTBC has the stock market up as a Buy with a 47% upside to the 12-month target price of RUB120.
Robust results
Revenues increased 16.1% y/y to RUB27.9bn ($434mn) in the first quarter — the highest level for five quarters.
According to the company, this growth can be attributed to:
• the national holidays (23 February and 8 March); • the start of procurement from Spin Master (one of the largest toy manufacturers in the world),
which boosted sales in the toys category (33%
of total sales in 1Q19);
• the sale of the winter collection in the cloth-
ing and footwear category (24% of total sales in
1Q19); and
• the maturity of stores opened in 2017-18, which
reached full capacity utilisation. LFL growth was also impressive, reaching 6.6% in Russia and 7.2% in both Russia and Kazakhstan, mainly due to the growing number of customers.
Read the full story here