Eurotorg, Belarus' biggest retailer, has reported a 14.0% increase in net retail sales in the first half of its financial year, to BYN 2.2 billion (€1 billion).
Overall revenue increased by 11.9% year-on-year to reach BYN 2.4 billion (€1.06 billion).
According to the retailer, this growth was largely driven by accelerated store openings, with 131 net new stores added in the period, as well as the consolidation of the group's e-commerce activities and its drogerie retail chain Magia in June of last year.
Like-For-Like Performance
However, like-for-like sales at the business was down 5.8% in the period, the group said, mainly due to cannibalisation as a result of the group's rapid acceleration strategy.
Negative like-for-like traffic of -7.4% was partly compensated by growth of 1.8% in like-for-like average ticket.
Gross margin declined to 24.7% (down 1.1 percentage points) due to the launch of the Hit! Discounter format, as well as investment in price positioning. EBITDA decreased by 19.4% year-on-year.
Eurotorg has continued to focus on the development of smaller format stores, with almost all stores opened in the first half being convenience-format outlets.
In addition, the group has maintained its capex-light strategy, with 82 of the net 89 new stores opened in the period done so in leased premises, as well as all 42 new Magia stores.
Top-Line Growth
“Eurotorg continued its expansion in the first half of 2019 and as a result delivered another half-year of double-digit top-line growth, with revenue and net retail sales increasing by 11.9% and 14.0%, respectively, year-on-year," commented Eurotorg CEO Andrei Zubkou.
“Gross margin was affected by a number of factors including the launch of the Hit! format and investment in shelf prices to strengthen our position as a price leader. Despite the short-term decline in margins, we believe that these steps are strategically important for the company and its long-term market leadership."
Zubkou added that Eurotorg is "cautiously implementing" optimisation measures in its stores, in order to boost traffic density, which he said will "avoid any negative impact" on service quality.
"I want to underscore that sales densities in our stores remain significantly higher than for the vast majority of emerging market retailers, which reflects our status as the leader in customer appreciation in Belarus," he said.
Elsewhere, the group's online operations, which include online grocery services E-dostavka.by and Gipermall.by, saw sales increase by 19.8% year-on-year to BYN 107.8 million.
© 2019 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.
