Magnit, Russia’s largest retailer, plans to strengthen its market position by accelerating store openings just as the country’s economy enters a recession.
“We’ll have our most aggressive opening plan this year,” billionaire chief executive officer Sergey Galitskiy recently said on a conference call. The company plans to spend 65 billion roubles ($960 million) opening 1,200 convenience stores, 800 cosmetics stores and 90 hypermarkets, he said.
Magnit boosted sales 32 per cent last year, increasing the gap over nearest competitor X5 Retail Group NV as it added 1,600 new stores. The Krasnodar, southern-Russia-based retailer expects sales growth of 26 per cent to 32 per cent this year, depending on market conditions, Galitskiy said.
Magnit has about 6 per cent of the Russian food retail market, according to 2013 figures cited by the company in a presentation this month. X5, controlled by billionaire Mikhail Fridman, has about 5 per cent.
Russia’s largest food retailers, Magnit, X5 and OAO Dixy Group, managed to hasten revenue growth at the end of 2014 as they increased prices amid the highest inflation in five years. At the same time, the rouble’s sharp depreciation against the dollar increased the cost of food imports.
Magnit’s net-income growth slowed to 14 per cent in the fourth quarter from 42 per cent in the first nine months of the year because of a foreign-exchange loss caused by a drop in the value of the rouble between purchasing goods and paying for them. The shares fell 2.3 per cent to 11,270 roubles in Moscow.
Bloomberg News, edited by ESM
