Russian retailer Magnit might have posted a 6.37% increase in revenue last year, but when it comes to how the company performed on a like-for-like basis, the devil is in the detail.
According to the group's audited full-year sales report, published this week, like-for-like sales at its hypermarket division were down 10.24% last year, with the average basket down 2.53% and traffic down 7.91%.
Its Magnit Family supermarket business saw like-for-like sales decline 7.82%, driven by a 1.21% decrease in average basket, and a 6.7% decrease in Traffic.
At its convenience store operation, which boasts 7,848 outlets across Russia, like-for-like sales were down 1.42%, with traffic down 2.63%, however the average basket size rose by 1.23%.
Its drugstore business was the only division to post a like-for-like sales increase last year, with sales rising by 0.02%, on the back of a 1.17% increase in average basket size, and a 1.14% decrease in traffic.
Overall, the business posted a 3.37% decrease in like-for-like sales, with traffic down 3.17% and average basket down 0.21%.
Gross Profit
On the face of it, Magnit appears to be not too disheartened by its like-for-like performance; after al, the business' gross profit increased by around 3% last year to RUB 304.64 billion, and gross margin was 26.65%.
It also appears to be showing no signs of abandoning its 'race for space' approach anytime soon, with the business opening a net 2,291 new stores last year, to give it a total store count of 16,350 stores by year end. Selling space increased by 13.56% in comparison to 2016, from 5.07 million square metres to 5.75 million square metres.
But the departure of the company's founder Sergei Galitsky last month means that sooner or later, Magnit's new management may need to consider the best course of action for the business, in order to maintain that level of profitability.
Galitsky sold almost all of his shares in the business to VTB Bank last month, with the businessman said to be at odd somewhat with the group's investors; according to reports, Galitsky was seeking to focus more on profitability, while investors sought to continue the rapid expansion that had thus far served Magnit well.
"Nothing lasts forever," a resigned Galitsky explained in an interview announcing his departure from Magnit last month.
Analysts will be watching closely to evaluate where Magnit goes next.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.
