Russian retailer Magnit has posted a decline in net income for H1 2018 to RUB 18 billion, a drop of 14.3% year on year.
Gross profit also saw a year-on-year decrease, amounting to RUB 147 billion. Magnit's margin also saw a drop to 25.7%, due to price investments, May and June promotions, and shrinkage growth caused by inaccurate promo volume projections, the company said.
EBITDA equalled RUB 44 billion in the first half of 2018, impacted by increase of lease expenses as well as one-off inventory write-offs, among other influences.
Revenue increased by 7.2% to RUB 595 billion, when compared to the same period in 2017.
'LFL performance in 1H 2018 was influenced by low food inflation and Easter calendarisation (prior to the salary payment), lower number of stores opened after redesign (414 vs. 830 respectively), as well as intensifying competition and cannibalisation,' the company said in a statement.
The company added 335 stores (net) in the first half of 2018 as part of its expansion drive, reaching a total store base of 16,960.
"Ambitious Goals"
Olga Naumova, Magnit’s CEO, said of the results, “We have ambitious goals and those will not be achieved overnight. The management team is currently working hard to deliver a comprehensive plan for transformation of the business.
"Magnit has important fundamental advantages that serve as a solid base for improvement including strong brand recognition, well-established market presence and scale, as well as a sophisticated logistics system.
"In the new board and my colleagues in management, we have a world-class leadership team and I am confident that together we will deliver growth and regain leadership.”
As of 30 June, 2018, Magnit operated 37 distribution centres and nearly 17,000 stores, in 2,808 cities and towns within seven federal regions of Russia.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Karen Henderson. Click subscribe to sign up to ESM: European Supermarket Magazine.
