X5 Retail Group NV jumped to a two-month high as the Russian food retailer said that third-quarter sales accelerated at the fastest pace in four years, exceeding its larger rival, Magnit PJSC, amid measures to lure customers to its stores.
The global depositary receipts rose 2.7 per cent to $18.75 in London on Tuesday, widening this year’s advance to 54 per cent, more than any other Russian food retailer. US-traded Russian stocks slid for a second day in New York.
X5, Russia’s second-biggest retailer, said that sales rose 28 per cent to 195 billion roubles ($3.1 billion) during the three months ended in September, exceeding Magnit’s revenue growth for a second consecutive quarter. Revenue jumped as the company’s efforts to renovate stores, increase selling space and improve product assortment boosted traffic and same-store sales.
“All the efforts the management have been making in increasing product variety, refurbishing stores and making prices more competitive are paying off,” Marat Ibragimov, a senior analyst at BCS Financial Group, said by phone from Moscow. “They are seeing an inflow of customers, which drives an increase in same-store sales, and this is a substantial achievement at a time when the macroeconomic environment remains weak.”
X5 trades at 14.2 times projected earnings, compared with a multiple of 20.3 for Magnit’s London-traded stock, data compiled by Bloomberg shows. On a scale from one to five, the stock has a consensus-analyst recommendation of 4.8, compared with an average of 3.5 among 16 peers.
The Moscow-based retailer posted the biggest increase in sales since the third quarter of 2011 at a time when the country is beset by its first recession in six years. Economic growth will contract in each quarter until the second half of 2016, according to the median estimate of 14 economists surveyed by Bloomberg. While annual inflation decelerated to 15.7 per cent in September for the first time in three months, it is still almost four times faster than policymakers’ midterm target of 4 per cent.
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