RUSSIA: X5 drives 2014 turnaround despite "ebbing" confidence

By Katy Askew | 23 January 2014

X5 sales accelerate in Q4

X5 sales accelerate in Q4

Russian retailer X5 Retail Group has said that it will push ahead with plans to improve its performance in 2014 in the face of what it described as "ebbing" consumer confidence in the country.

"With signs that consumer confidence may be ebbing we need to continue executing on many fronts to complete the turnaround in our operations," CEO Stephan DuCharme said.

DuCharme said X5 will separate its supply chain services and infrastructure, continue to roll out a new Pyaterochka concept, including a "significant" store refurbishment programme, and introduce category management principles at its larger Perekrestok and Karusel banners.

X5 will also continue its store opening programme, which helped drive up sales during 2013. The company increased selling space by 12.9% in the 12 month period.

Net sales rose 8.7% during the year, with revenue gains accelerating in the fourth-quarter to growth of 11.9%. DuCharme said X5's fourth-quarter performance meant that it entered 2014 with "momentum". 

X5 has struggled to maintain its market share in the competitive Russian retail sector. Last year the company was overtaken by rival Magnit, which became Russia's largest retailer by sales. 

Show the press release

X5 RETAIL GROUP REPORTS Q4 & FY 2013 TRADING RESULTS (1)

Amsterdam, 23 January 2014 - X5 Retail Group N.V. ("X5" or the "Company"), a leading Russian food retailer (LSE ticker: "FIVE"), announced today the Company's preliminary consolidated operational results and net retail sales for the fourth quarter (Q4) and full year (FY) of 2013.

·    FY 2013 net selling space increased by 12.9%, year-on-year (y-o-y); and

·    Q4 and FY 2013 net Russian Rouble (RUR) retail sales increased y-o-y by 11.9% and 8.7%, respectively.

Expansion Dynamics (2)  

Selling space and # of stores by format

 

As at  

As at 

%  change,

 

31-Dec-2013

31-Dec-2012

y-o-y

Net Selling Space,  square meters (sq. m.)

 

 

Pyaterochka

1,414,102

1,191,353

18.7%

Perekrestok

397,750

383,459

3.7%

Karusel

375,808

368,249

2.1%

Express (3)

35,223

26,683

32.0%

X5 Retail Group

2,222,883

1,969,745

12.9%

# of Stores

 

 

 

Pyaterochka

3,882

3,220

20.6%

Perekrestok

390

370

5.4%

Karusel

83

78

6.4%

Express

189

134

41.0%

X5 Retail Group

4,544

3,802

19.5%

Selling space and # of stores added by format

 

Net Added

Net Added

%  change,

Net Added

Net Added

%  change,

 

Q4 2013

Q4 2012

y-o-y

FY 2013

FY 2012

y-o-y

Net Selling Space,  sq. m.

 

 

 

 

 

Pyaterochka

112,248

77,798

44.3%

222,749

195,300

14.1%

Perekrestok

6,606

14,248

(53.6%)

14,292

36,193

(60.5%)

Karusel

17,266

6,782

154.6%

7,559

 (3,044)

na

Express

5,888

5,495

7.2%

8,540

14,012

(39.1%)

X5 Retail Group

142,009

104,323

36.1%

253,139

242,461

4.4%

Net # of Stores

 

 

 

 

 

 

Pyaterochka

314

284

10.6%

662

695

(4.7%)

Perekrestok

8

20

(60.0%)

20

40

(50.0%)

Karusel

5

2

150.0%

5

1

na

Express

30

24

25.0%

55

64

(14.1%)

X5 Retail Group

357

330

8.2%

742

800

(7.3%)

Regional contribution to  net selling space added by format in 2013, %

 

Central

North-West

Other

Total change

Pyaterochka (4)

3.9%

2.7%

12.1%

18.7%

Perekrestok

2.9%

0.8%

0.0%

3.7%

Karusel

3.8%

(2.1%)

0.4%

2.1%

Express

32.0%

0.0%

0.0%

32.0%

________________________

(1)  Numbers in this press release are preliminary and have not been reviewed or audited by the Company's auditor.

(2) Note that in the text and other tables of this press release, immaterial deviations in calculation of % change, subtotals and totals are explained by rounding.

(3) Refers to Perekrestok Express and Kopeika branded convenience stores; previously disclosed as Convenience stores.

(4) Regional contributions to net selling space and net sales are impacted by the redrawing of the Central, North-West, and "Other" regions' boundaries for the Pyaterochka store base due to the new "cluster" based operational model.  Year-on-year comparisons have been adjusted to reflect the new boundaries.

In Q4 2013, X5 closed six Pyaterochka and two Perekrestok stores. In FY 2013, X5 closed 34 Pyaterochka stores, eight Perekrestok supermarkets, two Karusel hypermarkets and 19 Express stores. Stores closed in both periods did not meet the respective formats' efficiency criteria.

Net Retail Sales (1) Performance

Net RUR retail sales by format,  million (mln)

 

Q4 2013

Q4 2012

% change,

 y-o-y

FY 2013

FY 2012

 % change, y-o-y

Pyaterochka

97,520.0

85,451.6

14.1%

348,390.2

317,751.3

9.6%

Perekrestok

31,038.3

29,411.0

5.5%

110,661.8

105,472.1

4.9%

Karusel

18,362.3

17,143.4

7.1%

64,306.9

61,484.9

4.6%

Express

2,258.7

1,595.1

41.6%

7,902.3

4,877.8

62.0%

E5.RU

606.8

280.2

116.6%

1,431.1

502.1

185.0%

X5 Retail Group

149,786.0

133,881.4

11.9%

532,692.4

490,088.2

8.7%

Regional contribution to net RUR retail sales by format, %

 

Q4 2013

Total % change

FY 2013

Total % change

Central

North-West

Other

Central

North-West

Other

Pyaterochka

5.6%

0.4%

8.1%

14.1%

2.9%

(0.2%)

6.9%

9.6%

Perekrestok

4.0%

1.2%

0.3%

5.5%

3.7%

0.7%

0.5%

4.9%

Karusel

5.4%

0.4%

1.3%

7.1%

3.3%

0.3%

1.0%

4.6%

Express

41.6%

0.0%

0.0%

41.6%

62.0%

0.0%

0.0%

62.0%

X5 Retail Group

 

 

 

11.9%

 

 

 

8.7%

Q4 2013 monthly net RUR retail sales by format, % change y-o-y

 

October 2013

November 2013

December 2013

Pyaterochka

11.6%

14.9%

15.6%

Perekrestok

3.8%

7.7%

5.2%

Karusel

2.3%

6.3%

10.9%

Express

44.3%

45.0%

36.7%

E5.RU

103.7%

148.4%

104.8%

X5 Retail Group

9.4%

12.9%

13.0%

Average Ticket and Number of Customer Visits

Q4 & FY 2013 average ticket and customer visits by format

 

 Q4 2013

 Q4 2012

 % change, y-o-y

 FY 2013

 FY 2012

 % change, y-o-y

Average Ticket, RUR

 

 

 

 

 

 

Pyaterochka

291.2

282.2

3.2%

274.4

268.1

2.4%

Perekrestok

433.4

434.4

(0.2%)

412.0

405.9

1.5%

Karusel

633.3

624.4

1.4%

600.7

593.0

1.3%

Express

267.5

259.0

3.3%

254.3

237.3

7.1%

E5.RU

1,153.2

1,814.6

(36.4%)

1,366.2

1,754.9

(22.1%)

 X5 Retail Group

   337.1

331.5

1.7%

317.6

        312.3

1.7%

# of Customer Visits, mln

 

 

 

 

 

 

Pyaterochka

 382.7

346.1

10.6%

1,450.1

1,353.0

7.2%

Perekrestok

81.8

77.5

5.5%

307.1

297.1

3.4%

Karusel

33.3

31.8

4.6%

122.4

118.8

3.0%

Express

10.0

7.3

36.9%

36.7

24.1

52.3%

E5.RU

0.6

0.2

224.6%

1.3

0.3

270.0%

X5 Retail Group

508.4

462.8

9.8%

1,917.6

1,793.3

6.9%

 

________________________

 (1)  Net retail sales represent revenue from operations of X5 managed stores net of VAT. This number differs from total net sales that also include revenue from direct franchisees (royalty payments) and other revenue. The total net sales number will be reported as part of Q4 & FY 2013 financial results.

Q4 2013 average monthly ticket and customer visits by format, % change y-o-y

 

October 2013

November 2013

December 2013

Average Ticket

 

 

 

Pyaterochka

2.8%

4.5%

2.0%

Perekrestok

(0.7%)

1.1%

(1.0%)

Karusel

3.9%

0.6%

(0.7%)

Express

3.9%

4.8%

1.9%

E5.RU

(47.9%) 

(38.6%) 

(23.9%) 

 X5 Retail Group

1.5%

2.9%

0.4%

# of Customer Visits

 

 

Pyaterochka

8.4%

10.1%

13.3%

Perekrestok

4.0%

6.3%

6.3%

Karusel

(1.5%)

5.7%

9.2%

Express

39.8%

37.7%

33.7%

E5.RU

308.5% 

227.7% 

170.1% 

X5 Retail Group

7.6%

9.7%

12.2%

LFL Sales Performance

Q4 & FY 2013 LFL (1) store performance by format, %

 

Q4 2013

 

FY 2013

 

Sales

Traffic

Basket

Sales

Traffic

Basket

Pyaterochka

5.2

0.6

4.5

 

0.3

(3.7)

4.2

Perekrestok

(0.0)

0.2

(0.2)

 

(0.2)

(2.0)

1.8

Karusel

3.4

2.5

0.9

 

3.1

2.5

0.6

Express

9.7

3.8

5.7

 

12.7

4.2

8.1

X5 Retail Group

3.9

0.7

3.1

 

0.7

(2.9)

3.7

Q4 2013 monthly LFL store performance by format, %

 

October 2013

November 2013

December 2013

 

Sales

Traffic

Basket

Sales

Traffic

Basket

Sales

Traffic

Basket

Pyaterochka

3.1

(1.3)

4.4

6.5

0.4

6.1

5.9

2.7

3.1

Perekrestok

(2.3)

(1.6)

(0.8)

1.8

0.8

1.0

0.3

1.3

(1.0)

Karusel

1.5

(1.9)

3.4

3.8

3.4

0.4

4.2

5.5

(1.2)

Express

11.6

4.4

6.9

9.6

2.3

7.1

8.2

4.6

3.4

X5 Retail Group

1.8

(1.3)

3.1

5.2

0.7

4.4

4.4

2.7

1.7

 

Key Drivers for Q4 2013 Results

Expansion:  Primarily organic growth in current regions of presence.

Retail & LFL sales: 

·    selling space expansion and the positive performance of maturing stores added over the past two years;

·    improvement in volume and quality of promotional and marketing activities;

·    assortment rotation and expansion (especially at Pyaterochka and Karusel); and

·    improvement in product shelf availability (especially in December).

 

 

 

________________________

(1)       LFL comparisons of retail sales between two periods are comparisons of retail sales in local currency (including VAT) generated by the relevant stores. The stores that are included in LFL comparisons are those that have operated for at least twelve full months preceding the beginning of the last month of the reporting period. Their sales are included in LFL calculation starting from the day of the store's opening.  We include all stores that fit our LFL criteria in each reporting period.   

 

 

 X5 Retail Group CEO Stephan DuCharme commented:

 

"I am pleased with the way we finished 2013 and the solid revenue growth we achieved in the last three months of the year.  These results were underpinned by improved LFL sales across all banners and reflect the investments we have made into our customers, stores and people as well as our preparedness for the traditional retail high season.

 

The fourth quarter provides momentum going into 2014, however

 

We have set an ambitious program for 2014 that includes the separation of our supply chain services and infrastructure, the continued roll-out of our new Pyaterochka concept including a significant store refurbishment program and the introduction of category management principles at our larger Perekrestok and Karusel banners. We will also continue to expand our store base to support revenue growth and strengthen our position in current regions of presence.

 

 

We have made significant progress in 2013 in strengthening our team, our operations and our multi-format operating model, which gives me confidence that we are on the right path and can deliver the results our customers and shareholders expect." 

Original source: X5 Retail Group

Sectors: Emerging markets, Financials, Retail

Companies: X5 Retail Group, Magnit

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