X5 Retail Group Reports Q3 2011 Trading Results
OREANDA-NEWS. October 11, 2011. X5 Retail Group N.V.,
Q3 2011 Highlights |
9M 2011 Highlights |
Consolidated net retail sales increased 32% year-on-year in RUR terms to RUR 104,979 mln or 39% in USD terms to USD 3,611 mln; |
Consolidated net retail sales increased 40% year-on-year in RUR terms to RUR 329,166 mln or 47% in USD terms to USD 11,443 mln; |
Organic sales increased 18% in RUR terms year-on-year while Kopeyka's Q3 2011 sales contributed approx. 14% to X5's consolidated Q3 2011 RUR net retail sales growth(2); |
Organic sales increased 24% in RUR terms year-on-year while Kopeyka's 9M 2011 sales contributed approx. 16% to X5's consolidated 9M 2011 RUR net retail sales growth(2); |
• X5's LFL sales grew 4% in RUR terms year-on-year; |
• X5's LFL sales grew 9% in RUR terms year-on-year; |
• 102 stores added on net basis in Q3 2011, including 114 soft discounters, six supermarkets, two hypermarkets, 11 convenience stores and closure of 31 Kopeyka stores; in addition, 297 Kopeyka stores were rebranded; |
• 316 stores added on net basis in 9M 2011, including 328 soft discounters, 11 supermarkets, one hypermarket, 20 convenience stores and closure of 44 Kopeyka stores; in addition, 613 Kopeyka stores were rebranded; |
• Net addition of 37 thousand sq. m. of selling space. |
Net addition of 87 thousand sq. m. of selling space. |
Management Outlook
• FY 2011 sales growth: Due to the recent rapidly weakening macroeconomic environment and Kopeyka integration effects, X5 expects 2011 RUR gross retail sales growth to be below the Company's initial target of 40% and closer to approx. 35%;
o Russian consumers have cut back on spending amid unstable economic conditions in
o Kopeyka sales were affected more than expected by longer temporary store closings due to contractor delays and the longer sales ramp-up period for reopened stores. We remain confident in delivering higher sales densities from beginning of 2012 onward, however we acknowledge that the challenging macro environment may delay the realisation of full potential synergies associated with the Kopeyka transaction.
• We expect the following factors to negatively affect X5's margins this year and beyond:
o The continuing deterioration of the macro-economic environment could further deepen our customers' trading down in Q4 2011 and beyond;
o In Q3 2011 X5 rebranded the largest number of Kopeyka stores, with corresponding pressure on margins due to inventory liquidation. While rebranding was largely over by the beginning of Q4, the vast majority of stores will require continued promo campaign to ramp up to mature sales levels within next 6-9 months;
o In an effort to support our customer base in an uneasy economic environment, we are increasing the pace of promo-campaign in Q4 2011 that together with a comprehensive aged stock clearance could adversely affect X5's margins in Q4 2011;
• X5 intends to gradually shift its relationship with suppliers towards an increased focus on front margin and a better control over the assortment in order to enhance the attractiveness of our value proposition. While this move will have a long term positive impact on our sales and profitability, it may have a negative effect on our short term gross margin until the transition is over.
• The Company is on track to deliver on its objective of 540 new stores in 2011, with
significant number of store openings planned for Q4 2011.
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