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for all of its new standard-size supermarkets and for planned refurbishment. When the company previously tested the Perekrestok makeover, all pilot stores outperformed sales forecasts, enjoyed positive feedback from customers and received high net promoter scores, BCS Global Markets reminds on February 21. Thus, BCS GM analysts expect higher sales and traffic in the format as a result, seeing the news as positive for X5. For 4Q19, 11.5% y/y sales growth was seen at Pyaterochka and 17.2% y/y at Perekrestok formats​, while hypermarkets Karusel declined by 6.9% y/y (accelerating from -2.6% in 3Q19), in line with the general global and Russian trend. To remind, X5 announced the restructuring of its hypermarket format.
Russian shoe retail chain Obuv Rossii announced plans to develop its own marketplace on 20 February, with the project to start in March. The key points are as follows. ​The marketplace will be based on the webstore of Westfalika.ru, the group’s core brand. It will be aimed at selling large items (household goods, children's goods, products for the dacha), and higher priced tier products (such as Bohemia Czech glassware). It will be possible to order them directly at stores, through special areas with monitors and designated sales persons, or directly through the marketplace. Goods will be available for both in-store pick-up or delivered to the customer's address. The start is planned in March in more than thirty stores in eleven cities of the Siberian region, while in the second half of the year other regions will gradually be included. By 2021, the company expects to be operating at full capacity throughout the whole network, constantly expanding its product range. According to the company, the marketplace is to increase retail revenues by more than 30% in the next two years, once it reaches full capacity.
Russian retailer ​Magnit​ launched a Digital Transformation programme, putting the internal operations on SAP-powered software, the company said on February 26, aiming to ensure stable growth and increase shareholder value. As reported by ​bne IntelliNews,​ Magnit has been struggling to catch up with the ​market leader X5 Retail Group​, which is focusing on digital innovation. Magnit has also seen a ​top manager exodus​ after CEO Olga Naumova quit the company last year. Now the company will test new digital solutions, which could increase performance by improving stores, customer offering and business processes. Magnit expects that the impact from the program will reach billions of rubles over several years and the full rollout could take up to three years.
Second tier Russian retailer ​Lenta​ reported a decline in revenue of 1% year-on-year in 2H19​, as ​slower traffic​ (-1.9% y/y) led to lower like-for-like sales (-2.2% y/y), the company reported on February 26. At the same time the company’s costs increased to 17.6% of revenues due to higher personnel expenses (management compensation) and higher utilities and cleaning costs. The company said that it won’t pay dividends this year as a result. Ebitda declined 7% y/y to RUB17.8bn and the Ebitda margin declined to 8.2% (versus 8.7% in 2H18) while net profit fell 65% y/y to RUB2.3bn in 2H19, implying 1.1% net income margin. For 2019 overall, Lenta posted RUB2.1bn net loss versus RUB11.8bn profit in 2018. As reported by ​bne IntelliNews,​ at the end of 2019 Lenta was acquired by Severgroup of steel tycoon Alexei Mordashov​, narrowly overbidding Magnit, its retailing peer. However, no strategy has yet been outlined by Severgroup for the asset.
97​ RUSSIA Country Report​ March 2020 ​ ​www.intellinews.com