Supermarket chain Pyaterochka has issued a trading update for the second half of 2005, with expected sales revised down.

At the time of our interim results we said that we expected sales in the second half of 2005 to represent 60% of the total FY 2005 sales, implying a 2005 sales target of approximately US$1,595m, the company said.  Our current expectation is for sales for the full year to be in the range of US $1,300m-$1,350m.  

As of 1 December, the company has exceeded its full year 2005 target of 70 stores, it said. With 75 openings since 1 January 2005 Pyaterochka now operates 310 stores in total.  This has comprised 26 openings in Moscow to a total of 150, and 49 openings in St Petersburg to a total of 160.  Including the 46 stores opened in 2004, some 39% of the company’s portfolio is less than 23 months old.

In terms of underlying performance, we have seen some divergence between our owned stores in Moscow and those in St. Petersburg, where the company first started trading six years ago and where we have some of our older stores.  In Moscow the company has experienced solid year-on-year growth in its comparable store base in the period to 31 October 2005, driven by stable footfall and rising basket sizes.  We have seen an increase in these stores both in the average price of purchased goods, and in volumes.

St. Petersburg has historically been a less competitive market than Moscow, and our average densities in this market are still higher than those in Moscow.  The St Petersburg market is becoming increasingly competitive, and both Pyaterochka and its competitors are rapidly expanding their footprint.  Our year-on-year growth in the St. Petersburg comparable store base has declined in the period to 31 October 2005.  We believe that some of this decline can be attributed to the age of our stores, and we are currently in the process of trialling refits in 22 of our older St. Petersburg stores.  This said, we now expect that over the coming few years densities in St. Petersburg will converge towards Moscow levels.