Russia's X5 Retail Group has posted a 1.0% increase in like-for-like sales in the second quarter of its financial year.
This was driven by a 1.7% increase in store traffic, however the average basket size was down 0.7%.
The group posted revenue of RUB 383 billion (€5 billion) for the quarter, which was up 19.3% in reported terms.
In the period, X5 reported a 18.4% year-on-year increase in net retail sales from new space, resulting from a 23.3% rise in selling space.
“X5 continues to demonstrate strong revenue growth, delivering an increase of 19.6% year-on-year in the first half of 2018, and remains the fastest growing public retailer in Russia," said X5 chief executive officer Igor Shekhterman. "The adjusted EBITDA margin in the first half of 2018 was 7.0%, recovering in the second quarter to 7.7%."
Gross profit margin at the business rose by 11 basis points year-on-year to 24.0% in the quarter, due to 'improvement in commercial margin as a result of promo level stabilisation', as well as higher sales at its Perekstrok business, the company said.
The company recently announced the opening of its 1,500th Pyaterochka store in the Moscow region. In May, it also restructured the management team of the Pyaterochka business.
Divisional Performance
The group's Pyaterochka banner posted a 0.5% increase in like-for-like sales in the period (traffic +1.3%, basket -0.8%), recording sales of RUB 302 billion. Reported sales at the division were up 21.0%.
Its Perekstrok arm saw a 4.4% increase in like-for-like sales (traffic +6.4%, basket -1.9%), with sales of RUB 55.2 billion, a reported sales increase of 22.8%.
Its Karusel hypermarket business, however, posted a 0.4% decline in like-for-like sales (traffic -2.8%, basket +2.5%), recording sales of RUB 21.9 billion. This was a reported sales increase of 1.3%.
“We continue to focus on operational efficiency at our three core formats, especially at proximity stores," said Shekhterman, who added that the main priorities of its proximity format are "delivering healthy balanced growth, improving operational efficiencies and reducing shrinkage levels by revising in-store business processes, decreasing staff turnover, and adapting assortment and promo to a more local level."
Outlook
Shekhterman noted that the business continues 'to face headwinds' in the current operating environment, saying that food inflation remained at a low level of 0.4% in the second quarter, "which negatively affected both sales and margins for food retailers.
“We are also positioning the Company to remain an industry leader in the years ahead by emphasising innovation, big data and omni-channel sales. We have identified the priorities for X5’s strategy and are developing and implementing our key projects in these areas.”
© 2018 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.
