X5 Retail Group, Russia’s largest food retailer by sales, has said a series of promotional campaigns boosted revenue during the third quarter of the year.
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The company posted net sales of US$1.3bn for the three months to September as it ran promotions linked to the eighth anniversary of its Pyaterochka chain. Like-for-like sales rose 20%.
“Like-for-like sales as well as new store performance were very strong despite seasonal effects of the third quarter – the toughest quarter for modern food retail,” said X5 chief executive Lev Khasis. “We have invested a lot of effort to retain customers by running a country-wide promo in September, which proved to be a great success but pressured margins.”
Gross margins inched up to 25.9% as X5 faced competition from open markets during the summer. “Moreover, it’s vacations period which negatively affects both basket and traffic,” the company said.
Nevertheless, operating income climbed 64.3% to US$58m. “Our focus on improvement of purchasing terms, an upgrade of logistics capacity and optimisation of business processes, combined with strong sales momentum, shall enable X5 to meet its aggressive growth and profitability targets for the full year,” Khasis said.
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