Russian retailer O'Key Group has reported that weakened consumer sentiment, rising inflation and increased competition were all factors that contributed to its reduction in revenue in full-year 2018.
The group reported that underlying group revenue, excluding the effect of the sale of its supermarket business, fell by 1.1% for the year. IFRS [International Financial Reporting Standards] group revenue decreased by 8.4% year on year, to RUB 161.3 billion (€2.2 billion).
At its hypermarket operations, revenue was down 3.4% (IFRS revenue down 10.9%), while its DA! discounter business saw revenue rise by 31.9%.
Like-For-Like Performance
On a like-for-like basis, net retail revenue was down 3.3% for the group, driven by a 2.6% decline in traffic and a 0.6% decline in the average ticket.
At O'Key's hypermarket operations, like-for-like sales were down 4.3%, with a 4.8% decrease in traffic and a 0.4% increase in the average ticket. In its discounter operation, like-for-like sales were up 12.7%, with a 9.5% increase in like-for-like traffic and a 1.2% increase in the average ticket.
'Weakened consumer sentiment resulting from real disposable income diminishing by 0.2% YoY amid rising inflation, stagnant pensions and intensifying market competition continued to put pressure on the Group’s operations during the year,' O'Key Group reported in a statement.
'In addition, adaptation to new working schedules influenced service levels and freshness during the summer period, putting pressure on top line,' it furthered.
As of 1 April 2019, the group operated a total of 162 stores across Russia, including 78 hypermarkets and 84 discounters. It also operates six e-commerce pickup points in Moscow and six in St Petersburg.
© 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.
