UPDATE: RUSSIA: Magnit seen overtaking X5 as largest Russian grocer
X5 revealed today (23 January) that full-year sales were up 8.4% to RUB490.09bn (US$16.2bn). This figure is dwarfed by Magnit's full-year sales gain of 34%. Magnit said yesterday its sales for 2012 totalled RUB448.5bn.
"At their current respective rates of sales growth, the market expects Magnit to overtake X5 in total revenues in 2013," Ian Luyt of emerging market strategic advisory firm NOViROST told just-food.
According to Luyt, Magnit's performance was "very impressive". Significantly, Magnit has grown its hypermarket sales - in contrast to X5, who saw hypermarket sales contract in the year.
Luyt said this helped the group to boost profitability at Magnit: "Growth was reported from hypermarkets... Hypermarket contribution to margins is higher due to the efficiencies from higher sales per unit of overheads."
Speaking to just-food yesterday, Magnit investor relations director Timothy Post revealed that the group had been able to achieve a 300bps improvement in gross margins over the last 15 months. He attributed much of this trend to Magnit's growing market share, which has given it greater power in pricing negotiations.
Post reveals that, as Magnit has expanded its store footprint and closed the gap with market leader X5 Retail Group, suppliers have come to view the group as "one of Russia's two market leaders". As a result the company has been able to "get the same pricing" as X5.
"We have continued to push hard on pricing," he added.
According to Post, Magnit's market share currently stands at "a little over" 5% of the Russain grocery sector. "We are gaining market share. This was primarily due to store openings," he said.
During 2012, Magnit opened 1,500 outlets with a CAPEX of $1.6m. In the coming year, Magnit expects to open around the same number of stores and is raising CAPEX to $1.8m. This compares to X5's 800 store openings in 2012.
The company is planning further expansion of convenience stores locations and hypermarket. In 2013 Magnit plans to open 1,100 convenience stores, 250 cosmetic stores and 60 hypermarkets. The company a...
Half-year sales at Russian retailer Magnit jumped 30%, thanks to the contribution of new stores and signs underlying sales were also up....
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