Russian retailer O’Key Group has posted a 3.5% decline in like-for-like group revenue in the first nine months of its financial year, driven by a 2.4% decline in like-for-like traffic and a 1.2% decline in the average basket size.
Reported organic group net retail revenue, excluding the effect of the recent sale of its supermarket business, fell by 1.9% in the period, the group noted.
Hypermarket Decline
Like-for-like net retail revenue at the group’s O’Key hypermarket business was down 4.6%, with traffic down 4.5% and a 0.1% decrease in average basket size.
The group cited ‘macroeconomic headwinds, strong competition, low shelf inflation, less effective promotional campaigns and less favourable weather conditions compared to the same period last year’ as contributing factors to the decline in sales.
‘The weakening of consumer purchasing power resulting from diminishing real disposable income put negative pressure on LFL basket growth in Q3 2018, as the decline in items per items wasn’t fully offset by [an] increase in shelf inflation,’ it added.
Discount Promise
However, the group’s Da! discount operation saw like-for-like net revenue increase by 13.3% in the period, driven by a 12.9% increase in traffic and a 0.4% increase in basket size.
The company has also taken steps to revamp its private-label offering, introducing 50 new SKUs in Q3, to bring its total private-label count to 2,350 product lines.
© 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.