Page 121 - RusRPTJun19

Russian food retail X5 Retail Group has signed a long-term agreement with wholesale supplier RITM-2000 to open 85 stores across central Russia, RNS reported. The partnership is part of X5 Retail’s development strategy to combine organic growth with mergers and acquisitions, with a focus on lease agreements for a range of retail premises. Previously managed by RITM-2000’s Telezhka, Tverskoy Kupets and Volny Kupets brands, 70 stores will open in Tver, seven in Smolensk, six in Novgorod and two in Pskov regions. According to the company, its Pyaterochka proximity format has integrated 81 stores, while the remaining four are operating under the Perekrestokbrand. The expansion is expected to boost economic growth, create new jobs, and bring more benefits for local suppliers and communities. X5 said at the end of April that its net profit of in the first quarter of this year, according to IFRS, grew by 65.2% compared to the same period last year and amounted to 9.4bn rubles ($144mn). Net sales in the first quarter grew by 15.5% y/y and amounted to 405.8bn rubles ($6.23bn). X5 Retail currently has 14,779 company-operated stores under various retail formats, including 13,917 Pyaterochka proximity stores, 771 Perekrestok supermarkets, and 91 Karusel hypermarkets. It also has 41 distribution centres and 3,837 company-owned trucks across the Russian Federation. The Russian food retailer signed a letter of intent with parcel lockers and pick-up points operator PickPoint to establish a joint venture (JV) to develop a locker network, in February this year.
O’Key Group posted 1Q19 trading update, which was weak mostly due to the hypermarkets’ poor performance as a result of poor traffic. Net retail revenue, excl. the effect of the supermarket business sale, grew 0.7% year-on- year, Underlying net retail revenue generated by O'KEY hypermarkets decreased by 2.2% y/y due to weaker sales in January, but improved sales in February and March were driven by traffic improvements and shelf inflation. Net retail revenue generated by DA! grew by 36.0% y/y, supported by growth in traffic (up 25.9% y/y) and the average ticket (up 8.6% y/y). LfL net retail sales fell 1.3% y/y due to a 3.4% y/y decrease in LfL traffic and a 2.2% y/y increase in LfL average ticket. LfL net retail sales generated by O'KEY hypermarkets fell 3.7% y/y due to 6% y/y lower LfL traffic, though LfL average ticket rose 2.5% year-on-year. LfL net retail sales generated by DA! increased by 21.4% y/y, driven by 9.5% y/y increase in LfL traffic and 7.4% y/y increase in LfL average ticket. Two discounters were opened, bringing total number of stores to 162. Guidance for 2019 was provided. Hypermarkets' top line growth is expected to be around zero. DA! stores may show double digit LFL growth. Up to 30 discounters will be opened.
● Magnit
Russia's second-largest retailer Magnit launched delivery services from its stores in the southern city of Krasnodar, the company said on May 30. The collection and delivery is executed by local delivery company Broniboy. Currently the company is testing delivery from five largest stores, with about 10,000 items available on the mobile application. Most of the retailers work with specialised collection and delivery services such as Instamart, iGooods, Golamago, SaveTime, and others, Vedomosti daily notes.
● Other
Severgroup of steel tycoon Alexei Mordashov completed the acquisition of 41.9% of Russian retailer Lenta and is expected to make a binding buyout
121 RUSSIA Country Report June 2019 www.intellinews.com