Russian retailer X5 Retail Group has posted a 4.3% increase in like-for-like sales in the second quarter of its financial year, a period in which it had to adapt to a "rapidly changing environment", its CEO said.
Net retail sales were up 13.2% for the period, to RUB 493 billion, with its Pyaterochka and Perekrestok banners both posting double digit sales growth, of 16.1% and 12.6% respectively. Karusel posted a 34.3% decline in sales in the period.
On a like-for-like basis, Pyaterochka posted a 6.0% increase in sales, with a 24.8% increase in basket size offset by a 15% reduction in traffic, due to the impact of COVID-19.
Perekrestok, meanwhile, posted a 2.4% decline in sales (incorporating a 32.6% decrease in traffic and a 44.9% increase in basket size), while Karusel saw like-for-like sales down 8.4%.
'Important Contributions'
“The teams at Pyaterochka, Perekrestok, Karusel and our other business units all made important contributions to our Q2 2020 performance by adapting to customer demand, reducing operating costs and making smart investments to support profitability and returns," commented X5 Retail Group chief executive Igor Shekhterman.
He added that the period also saw X5 take the leadership position in online grocery in Russia, a segment that is likely to gain in importance.
"This market segment saw explosive growth in Q2 2020 and we expect it may triple in value during 2020," he said. "The overall profitability of X5’s online platforms was well ahead of budget targets in Q2, and our online operations even saw positive EBITDA performance in May 2020."
EBITDA under IAS 17 increased by 14.4% in the second quarter, reflecting gross margin expansion and positive operating leverage effect, the group said. EBITDA margin stood at 8.4%, or 13.3% under IFRS 16.
Analyst Viewpoint
Commenting on X5's performance, Artur Galimov, senior analyst with Sova Capital, said, "X5 released expectedly strong 2Q20 IFRS financials today, with the EBITDA margin at 8.4% and net income 4% higher than consensus.
"Strong LfLs, a reduction in shrinkage, a better sales mix and cost controls supported margins in 2Q20, while decent working capital management and moderate capex ensured solid FCF generation in 1H20."
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
