Russia's largest food retailer X5 reported a 10.7% rise in second-quarter revenue on Thursday, boosted by higher like-for-like sales, an expansion in selling space and a two-fold jump in its online business.
Although X5's online sales accounted for just 2% of its consolidated revenue in the latest quarter, the business has been growing at a furious pace as more Russians rely on mobile apps for shopping or ordering food.
X5, which has created a separate entity for its digital businesses amid plans for an initial public offering, said net profit rose 1% to RUB14.9 billion in the quarter from a year earlier. Its revenue was RUB546.5 billion ($7.43 billion) for the period.
'Robust' Performance
Chief executive Igor Shekhterman described X5's performance as "robust" and said growth in its online business demonstrated that the pandemic-induced trend toward online purchases represented a long-term shift in Russian consumer behaviour.
In June, X5 created a separate entity for its digital businesses, paving the way for the new entity to go public.
X5 in April announced the acquisition of a dark kitchen operator and launched food.ru, a media platform to interact with consumers earlier in the customer journey - part of plans to meet all the food-related needs of its customers.
"By the end of the year, we plan to launch the first products of X5 Bank, our fintech service for X5 customers," Shekhterman said.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 8.5% year on year to RUB71.7 billion in the second quarter, while its EBITDA margin dropped to 13.1% from 13.4% a year ago.
X5's performance currently looks stronger than rival Magnit , said ITI Capital analysts, and despite the high base from the same quarter in 2020 the company continues to improve its financials.
