X5 Reported Q1 2009 Trading Update
09 Apr 2009
Amsterdam, 9 April 2009 - X5 Retail Group N.V., Russia's largest retailer in terms of revenue
(LSE ticker: “FIVE”), announced today its retail sales and operational performance for the first
quarter 2009.
Q1 2009 Highlights
• Consolidated net retail sales increased 46% year-on-year in RUR terms to RUR 63,089 million
or 5% in USD terms to USD 1,859 million;
• On a pro-forma basis, net retail sales grew 28% year-on-year in RUR terms and declined 8%
in USD terms (due to negative RUR devaluation effect of approximately 36%);
• X5’s like-for-like (LFL) sales grew 13% in RUR terms year-on-year;
• Discounters’ customer traffic surged 6%, driving Pyaterochka’s LFL sales growth of 17%
year-on-year;
• 43 stores added on net basis in Q1 2009, including three hypermarkets, 38 soft discounters and
two supermarkets;
• Net addition of selling space totalled 33.1 thousand square meters;
• Warehouse capacity increased by 10.3 thousand square meters due to one new Distribution
Centre (DC) opening and expansion of two existing DCs.
Lev Khasis, X5 Retail Group CEO, commented:
“X5’s first quarter sales performance demonstrates the resilience of our multi-format approach, supported by leading positions in major cities and regions less impacted by trading down trends. Soft discounters were the clear winners, as Pyaterochka gained market share and strengthened its image as price leader. Supermarkets demonstrated healthy performance in Moscow, St. Petersburg and other large cities, partially offset by declines in certain regions more affected by economic downturn. The success of Karusel’s relaunch was evident with the
strong pick-up in LFL sales and traffic trends, as we are winning customers with our “Everything Under One Roof - at Low Prices” concept in hypermarkets.”
___________________________________
* Numbers provided in this press-release are preliminary and unaudited.
** Consolidated sales figures include acquired Karusel’s business in Q1 2009 and exclude it in Q1 2008.
*** Pro-forma sales figures include acquired Karusel’s business in both Q1 2008 and Q1 2009.
Net Retail Sales* Performance
X5 net retail sales for the first quarter of 2009 reached RUR 63,089 million or USD 1,859
million. On a consolidated basis, i.e. including the results of the acquired Karusel chain in Q1
2009 and excluding Karusel in Q1 2008, X5’s net retail sales rose 46% in RUR terms or 5% in
USD terms. On a pro-forma basis, i.e. including acquired Karusel stores in both Q1 2008 and
Q1 2009, X5’s net retail sales increased 28% in RUR terms and declined 8% in USD terms.
|
Net Retail Sales Dynamics by Format (pro-forma) |
|
RUR mln |
Q1 2009 |
Q1 2008 |
% change y-o-y |
|
Hypermarkets
Supermarkets
Soft Discounters |
11,979.2
18,323.8
32,785.7 |
9,243.7
15,493.1
24,450.1 |
30%
18%
34% |
|
Total Net Retail Sales |
63,088.7 |
49,186.9 |
28% |
|
USD mln |
|
|
% change y-o-y |
|
Hypermarkets
Supermarkets
Soft Discounters |
353.0
540.0
966.3 |
381.0
638.6
1,007.8 |
(7%)
(15%)
(4%) |
|
Total Net Retail Sales |
1,859.3 |
2,027.5 |
(8%) |
|
Gross Retail Sales** Analysis
Like-For-Like*** Store Performance |
|
|
|
Based on RUR-denominated gross retail sales |
Total LFL, % |
Q1 2009 Traffic, % |
Basket, % |
|
Hypermarkets
Supermarkets
Soft Discounters |
11
8
17 |
1
(3)
6 |
10
11
11 |
|
X5 Retail Group Total |
13 |
3 |
10 |
|
Gross Retail Sales Dynamics |
|
|
|
|
Based on RUR-denominated gross retail sales |
LFL, % |
Expansion, % |
Total change %, excl. FX |
|
Hypermarkets
Supermarkets
Soft Discounters
Total Gross Retail Sales |
11
8
17
13 |
19
10
17
15 |
30
18
34
28 |
|
FX Effect
Total change %, incl. FX |
(36)
(8) | _____________________________________
* Net retail sales represent revenue from operations of X5 managed stores excluding VAT. This number
differs from total net sales that also include revenue from franchisees (royalty payments) and other
revenue. The total net sales number will be reported along with the Q1 2009 financial results.
** In this section all sales dynamics analysis is based on RUR-denominated gross sales (including VAT,
excluding FX). Net sales RUR growth rates may immaterially differ due to effective VAT rate.
*** Like-for-like (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 first day of the
month following the month of the store opening.
The Company’s total LFL sales (including Karusel stores on a pro-forma basis) in first quarter
2009 increased 13% in RUR terms, driven by a 3% increase in customer traffic and 10%
increase in average basket. Organic expansion of selling space plus contributions from new
stores not included in the LFL calculation accounted for the balance of the retail sales increase
of 28%.
LFL Sales Performance
Q1 2009 was the first quarter in which trading down trends became clearly evident, especially
in February and March. The impact of trading conditions on our stores’ performance varied
significantly from region to region and format to format:
• Soft discounters were the clear winners in Moscow and the regions, reporting 10% and
11% traffic increases, respectively, with overall LFL sales growth reaching 25% in
Moscow and 23% in regional locations, underscoring Pyaterochka’s strength over the
competition. St. Petersburg discounters’ performance was affected by aggressive
promotional campaigns by competitors, which had certain pressure on Pyaterochka’s
average ticket and resulted in 7% LFL sales growth on the back of flat traffic. On 19
March 2009, Pyaterochka announced a new pricing strategy across the regions
extending its “lowest price” concept to every item on our shelves, to further strengthen
its image as price leader and encourage customers to spend more at our stores.
• Supermarkets’ performance was in line with management’s expectations: LFL sales
increased 8% on the back of healthy trends in Moscow and St. Petersburg-based stores
and declines in regions affected by economic conditions. In Moscow and St.
Petersburg, average traffic held steady and basket increased as we made up for the loss
of more price-sensitive consumers shifting to discounters and hypermarkets by winning
new customers from competing supermarkets and premium stores. Regional stores’
performance varied significantly across our regions of operation, but LFL sales declined
6% overall. In Q1 X5 began converting Perekrestok stores in the most economically
sensitive regions to soft discounter format, and completed the rebranding of three stores
by the end of the quarter.
• Hypermarket LFL sales increased 11% year on year. Karusel’s “Everything Under One
Roof - at Low Prices” brand promise clearly gained recognition among customers as
the chain was successfully relaunched following completion of the integration program
last year. The relaunched Karusel hypermarkets delivered a clear improvement in LFL
sales trends compared to the second half of 2008: Moscow and St. Petersburg-based
stores delivered strong year-on-year traffic growth of 3% and 4% respectively, resulting
in LFL sales increases of 10% in Moscow and 15% in St. Petersburg. Overall
hypermarket performance in the regions and partially in Moscow was impacted by the
one-time effects of a major Q1 2009 program to rebrand 14 Perekrestok hypermarket
stores as Karusel.
During the first quarter 2009 X5 continued to invest in its customer value proposition and
restrain price increases despite inflationary pressures. Prices on X5’s shelves increased on
average by 14% year-on-year (March 2009 versus March 2008) compared to officially reported
food inflation in Russia of 16% for the same comparison period.
In first quarter 2009, X5 added a net 43 stores, including 38 soft discounters, 2 supermarkets
and 3 hypermarkets with total net selling space of 33.1 thousand sq.m. Of the 38 discounter
stores, 21 were relaunched Agrotorg-Rostov Pyaterochka outlets acquired in December 2008.
A further three were supermarkets converted to the discounter format (one Perekrestok in
Lipetsk and two in Nizhny Novgorod); contributions from these stores will be excluded from
supermarkets and included in discounters’ results as from 1 April 2009. During the quarter, X5
closed a total of 13 stores (one supermarket and 12 discounters), in order to maximise the
efficiency of our store portfolio in the current economic environment. In line with the
Company’s plans for 2009, expansion concentrated on regions with existing operations.
As at 31 March 2009, X5 Retail Group was present in 41 cities of European Russia and the
Urals and operated 1,144 stores in total. This consisted of 886 soft discounters, 209
supermarkets, and 49 hypermarket stores, with total net selling space of 907.2 thousand sq. m.
Franchisee Relationship Update
In first quarter 2009, X5 completed the integration of its former franchisee’s business in the
South of Russia (Agrotorg-Rostov), which was acquired in December 2008. X5 relaunched 21
acquired Pyaterochka stores in Rostov-on-Don and Rostov region, and opened a further four
stores organically. As a result, Pyaterochka’s presence in the area increased from only four
stores to a total of 29 stores within 50 working days.
As at 31 March 2009 the Company’s franchisee store network totaled 586 stores across Russia,
including 543 Pyaterochka and 43 Perekrestok-Express stores.
Logistics Infrastructure Development
In the first quarter 2009 X5 Retail Group added one Distribution Centre (DC) in Voronezh, and
expanded storage capacity of two existing DCs in Nizhny Novgorod and Samara, increasing
overall warehouse capacity by 10.3 thousand sq.m.
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