Page 122 - RusRPTMay20

new openings 20% and reformatting by 40% were reiterated, yielding RUB15bn of capex savings, on our estimates. The final allocation is subject to spending on accelerating the e-grocery segment, with new cities targeted. The cost saving initiatives include lower rent, marketing and travel, while 11-20% of landlords are ready to revise terms now and an additional 50-60% to follow up after the April results. We consider the company’s response as one of the most efficient in the retail universe: it has yielded an impressive revenue acceleration to 17.5-20% y/y in March-April, double our expectations for 2020.
X5 Retail Group​ to remove mark-ups on socially important goods in line with other leading food chains. ​X5 Retail Group has announced its intention to lift the markups on socially important goods for at least one month. Items are to come in the lowest price category and match producers' prices. This initiative is likely to cover a limited number of SKUs at this stage which are currently generate less than blended margins, come from the lowest pricing tier and are traffic-generators, in our view. Thus, we see a limited impact on the financial results for now. Following a period of accelerated demand, volumes are currently undergoing a certain cooling. Subject to social distancing measures easing and depending on the ultimate impact on the consumption backdrop, we remain cautious on the consumer sector as a whole through 2020 until conditions stabilise and companies revisit their medium-term plans and strategies.
X5 Retail Group​ has announced an agreement with​ ​M.Video​ and Eldorado​, allowing the latter to deliver items from their product range into Pyaterochka stores. The assortment is to include some 10,000 SKUs: digital devices, smartphones, laptops, accessories, small household appliances for the kitchen, medium-sized microwaves and coffee machines. Pick-up is free of charge for a ticket of more than RUB 999, with delivery to take on average two to three days in the Moscow Metropolitan area. Goods can weigh no more than 15kg and in packaging up to 50cm. The logistics operator for the deal is 5Post (a subsidiary of X5). X5 Retail Group operated more than 8,000 pickup points as of December 2019 and plans to increase that to some 12,000 this year. The company is developing them through partnerships with Ozon, and joint ventures with Pickpoint and with Sovcombank. This is a new growth pillar for the company.
Magnit​ reported 1Q20 IFRS & Trading Update and held a conference call. A solid trading update and improved efficiency resulted in better than expected EBITDA, albeit net income slightly missed. Magnit also revised 1Q19, reducing revenue, EBITDA, net income. Total revenue is 3% above BCSe and consensus, increasing 18.5% y/y due to +8.3% y/y in selling space and +7.8% in LfL sales o LfL sales rose 7.8% vs +0.1% in 4Q19, driven by increased traffic (+4% y/y) and higher average basket (+3.7% y/y) Gross profit increased 14.6% y/y with a margin of 22.7% – down 78 bps y/y on lower trading margin and loyalty card roll-out EBITDA exceeded BCSe and consensus (+5.9% vs BCSe, 6.6% vs cons), growing +21.4% y/y. EBITDA margin was at 6% (vs 5.9% BCSe and consensus) thanks to 140bps y/y lower SG&A costs, including lower personnel costs, rental costs (-29bps y/y) and depreciation costs (-60 bps y/y) Net income missed BCSe and consensus (-9% vs BCSe, -2.4% vs cons) – up 30.8% y/y – driven by higher EBITDA, which was partly mitigated by RUB1.8bn net FX loss and higher effective tax rate of 28.2% vs 22.7% in 1Q19 due to higher share of non-deductible expenses. Net margin was 1.1% CapEx fell 25% y/y on decelerated redesign and expansion program Net Debt rose 5.3% y/y to RUB192.2bn. Net Debt/EBITDA ratio was 2.2x FY20
122​ RUSSIA Country Report​ May 2020 ​ ​www.intellinews.com