Eurotorg, Belarus's largest retailer, has posted a 5.9% increase in like-for-like sales in the first half of its financial year, driven by a 0.4% increase in traffic and a 5.5% increase in average basket size.
Reported revenue was up 14.9%, to BYN 2.18 billion (€860 million) for the period, while net retail sales increased by 11.5% year on year, to reach BYN 1.95 billion (€0.78 billion).
Read More: ESM's exclusive interview with Eurotorg CEO Andrei Zubkou, on the company's half-year results.
Gross margin stood at 25.8% for the period – a slight decline of 80 basis points, due to 'higher transportation expenses, growth of the share of wholesale in revenue and the launch of Brusnichka stores', according to the company.
In addition, SG&A expenses increased as a share of revenue to 17.0%, due to increased marketing and advertising spend, higher rental costs, and an accelerated rate of openings in leased premises.
Store Roll-Out Programme
Eurotorg accelerated its roll-out programme in the period, with store numbers growing by 25.4%, to 627, with total selling space rising by 7.8%, to 300,300 square metres. This is in line with the company's medium-term strategy to develop smaller-format stores.
It also increased its expansion into rural areas, with the company's banners now present in 225 localities across Belarus, compared to 143 at the end of last year.
As well as focusing on a capex-light development strategy, Eurotorg has also invested in its online platforms, E-dostavka.by and Gipermall.by, as well as Magia, a chain of drugstores launched in January 2018.
As of 30 June, the group had opened 38 Magia stores, mainly adjacent to existing Euroopt and Brusnichka grocery stores.
New Structure
The results are the first since Eurotorg completed a reorganisation of its business, consolidating the offline, retail, e-commerce and drugstore businesses under a single holding company, with the half-year financial results reported under International Financial Reporting Standards (IFRS) for the six months ended 30 June 2018.
Looking ahead to the coming year, Eurotorg CEO Andrei Zubkou said that the company "remains committed" to expanding its operations into parts of rural Belarus that do not currently have modern retail services.
"At the same time, our e-commerce and drogerie businesses, consolidated under a single common holding company in June 2018, represent significant opportunities to build on the solid retail marketplace and infrastructure we have already built," Zubkou added.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
