Russian retailer X5 has said profit was up 64% for 2010

Russian retailer X5 has said profit was up 64% for 2010

X5 Retail Group said today (14 April) that it "met its growth outlook" for 2010 as it recorded a 64% increase in net profit for the year.

Russia's largest retailer by sales recorded US$271m in net profit for the year ended 31 December, while net sales increased 29% in dollar terms to reach $11.3bn.

For the year, sales were up 24% in roubles, while like-for-like sales grew by 7%.

The retailer said like-for-like sales were up due to its "Close to the Customer" policy in reinvesting in prices to enhance loyalty and drive traffic growth. Prices on the retailer's shelves rose on average by 8.7% year-on-year, but was well below Russia's official food inflation rate of 12.9% for December 2010.

During the fourth quarter, net profit increased 99% to $88m, while net sales rose 32% in dollar terms to reach $3.5bn.

"We continued to invest in customer loyalty, keeping average prices for our products well below the country's official inflation rate and providing meaningful savings to Russian consumers. This approach supported strong like-for-like growth but put pressure on gross margin and EBITDA," said recently appointed CEO Andrei Gusev.

Speaking about the retailer's plans for 2011, Gusev said that 2011 will be a "critical year" for the execution of its organic store expansion and fast-tracked integration of recently acquired discounter Kopeyka. "Our management team is focused on strengthening operational performance and making X5 an even stronger and more efficient business."

He added that tight financial discipline remains a "key priority" and that it will work to ensure "disciplined capex plan execution, cost control, cash generation and working capital management while pursuing longer-term efficiency gains from IT systems transformation, supply chain logistics and in-store productivity enhancements".

Shares in the retailer, however, were down 2.11% at 9:23 BST to $40.14 a share.