11th Apr 2008 07:00
X5 Retail Group N.V.11 April 2008 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN X5 RETAIL GROUP N.V. REPORTS 61% NET RETAIL SALES* GROWTH IN USD TERMS FOR Q1 2008 Amsterdam, 11 April 2008 - X5 Retail Group N.V., Russia's largest food retailerin terms of revenue (LSE ticker: "FIVE"), published today its retail sales andexpansion results for the first quarter of 2008. Q1 2008 Highlights • 61% year-on-year growth in USD terms in net retail sales to USD 1,775.1 mln; • 49% year-on-year growth in RUR terms in net retail sales to RUR 43,064 mln; • 29% LFL sales growth in RUR terms; • 62 stores added on net basis; • 30.1 thousand square meters of net selling area added on net basis; Lev Khasis, X5 Retail Group CEO, commented: "We are pleased to report that strong sales growth momentum continued into thefirst quarter of 2008, with LFL sales exceeding management expectations. Ourmarket leadership, regional diversification and multi-format strategy enabled usto take advantage of positive macroeconomic performance and the rise in consumerspending. We believe that our strong presence in each of the key three formatsis crucial for the continuing success of the Company and see further expansionin hypermarket segment as a strategic priority going forward." Antonio Melo, X5 Retail Group Chief Operating Officer, added: "Sales growth of 61% that we recorded reflects our ability to digest and adaptto changing consumer preferences. We are continually improving the valueproposition we offer to the market and consequently benefit from enhancedcustomer loyalty. Thus, in response to consumer demand we are adding two new store concepts to ourservice offering. We are launching a new supermarket concept under the GreenPerekrestok brand in order to widen our customer base and to tailor our productsand services to the growing high-end consumer segment. We have also developed anew hypermarket concept that we intend to roll out throughout regions of ouroperations under the Mercado Supercenter brand, building on the successfulexperience of European retailers, while adapting to the needs and expectationsof Russian consumers." Net Retail Sales Performance Net Retail Sales Dynamics by Format USD mln Q1 2008 Q1 2007 % change y-o-y Hypermarkets 128.7 76.7 68%Supermarkets 638.6 407.5 57%Soft Discounters 1,007.8 617.1 63%Total Net Retail Sales 1,775.1 1,101.3 61%RUR mlnHypermarkets 3,123.0 2,018.3 55%Supermarkets 15,491.9 10,718.8 45%Soft Discounters 24,449.1 16,233.4 51%Total Net Retail Sales 43,064.0 28,970.4 49% Total net retail sales for the first quarter 2008 increased by 61% in USD terms(49% in RUR terms) to USD 1,775 mln. All three formats contributed to animpressive sales surge, with soft discounters and hypermarkets demonstratingparticularly strong growth. Gross Retail Sales Analysis** Like-For-Like*** Stores Performance (please see Appendix I for detailed LFLperformance) Q1 2008 Total LFL, % Traffic, % Basket, %Hypermarkets 29 15 13Supermarkets 34 17 17Soft Discounters 26 6 20X5 Retail Group Total 29 10 19 Gross Retail Sales Dynamics Gross Retail Sales, RUR mln LFL, % Expansion, % Total change %, excl. FX Hypermarkets 29 26 55Supermarkets 34 10 45Soft Discounters 26 25 51Total Gross retail sales 29 20 49FX Effect 12Total Change Y-O-Y, % 61 For the first quarter 2008, LFL sales surged 29% in RUR terms, composed of 10%increase in traffic and 19% increase in average basket, which underlines X5'sability to capitalize on growth in income per capita and consequent upgrade ofspending pattern by Russian consumers. Expansion brought additional 20% interms of growth. Hypermarkets For the first quarter 2008, hypermarket sales surged 55%, excluding FX effect.This growth came as a result of a 29% increase in LFL sales with 26% added bynon-LFL stores. LFL sales growth was very strong both in the regions and inMoscow on the back of growing consumer spending and improved hypermarket valueproposition helped by successful promotional campaigns. Stronger performance ofstores opened after 31 March 2007 and addition of a new hypermarket in Voronezhin the first quarter this year contributed to strong results of non-LFL stores. Supermarkets For the first quarter 2008, supermarket sales grew by 45%, excluding FX effect,as a result of 34% surge in LFL sales and 10% coming from expansion.Impressively strong LFL results are mainly due to outperformance of supermarketslocated in Moscow and St. Petersburg. We are proud to report that supermarkettraffic in Moscow and St. Petersburg posted impressive growth of 20% and 19%,respectively, which once again underscores our leading positions in these coremarkets. Soft Discounters In the first quarter 2008 soft discounter sales grew by 51%, excluding FXeffect, as a result of a 26% surge in LFL sales and 25% coming from expansion.The strongest LFL growth in the soft discounter format was demonstrated byregional stores (up 48%) due to continuing excellent performance of stores inUrals. Despite the fact that St. Petersburg remains a very competitive market,the Company's soft discounters continued reporting positive traffic there withtotal LFL reaching 15%. Expansion As of Net Added % change, 31 Dec '07 31 March '08 in Q1 '08 y-o-ySelling Space, sq.m.Hypermarkets 59,963 64,111 4,148 7%Supermarkets 191,730 196,102 4,372 2%Soft Discounters 357,517 379,084 21,567 6%X5 Retail Group Total 609,210 639,297 30,087 5%# of StoresHypermarkets 15 16 1 7%Supermarkets 179 183 4 2%Soft Discounters 674 731 57 8%X5 Retail Group Total 868 930 62 7% In the first quarter 2008, X5 Retail Group N.V. added net 62 stores, including57 soft discounters, four supermarkets and one compact hypermarket (in Voronezh)with a total net selling space of 30.1 thousand sq. m. This takes into account2.8 thousand sq.m. that were closed during the quarter (five soft discountersand one supermarket) and includes 28 stores purchased as a result Kama-Retailacquisition (9.3. thousand sq.m. in net selling space). As a result, at 31 March 2008, X5 Retail Group N.V. operated 930 company-managedstores, consisting of 731 soft discounters, 183 supermarkets, 15 compacthypermarkets and one full-size hypermarket store, with the total net sellingspace of 639.3 thousand sq. m. (please see Appendices IV and V for detailedinformation on store opening progress). Tactical M&A Transactions & Franchises Buy-Out Update In the first quarter 2008 X5 Retail Group has started the integration andrebranding of Korzinka and Strana Gerkulesia stores, which is expected to becompleted in the second quarter for most of the discounters and in the thirdquarter for all supermarkets. As we have announced on 5 March 2008, X5 plans torebrand its full size hypermarket in Lipetsk purchased within the Korzinka dealto Mercado Supercenter by 30 June 2008. In April 2008 X5 Group acquired 100% of the business and assets of Kama Retailcompany - a Pyaterochka franchisee in the Perm region. As a result, X5 boughtout 28 soft discount stores in Perm and the Perm region with a net selling areaof 9.3 thousand sq.m. for a total consideration of approximately USD 18 million,including debt. The total area of purchased stores is 19.9 thousand sq.m, outof which 1.9****thousand sq.m. are wholly owned. This was the second deal inthe execution of the Group's strategy of selective franchisee buy-out instrategically important regions. Franchisee Store Operations During the first quarter 2008 the Group's franchisee store network was expandedby net 23 soft discounter stores. As of 31 March 2008, franchisees operated 711stores across Russia and Kazakhstan in total, including 8 Perekrestok and 703Pyaterochka stores. X5 Retail Group does not consolidate franchisee stores'sales. The Group receives royalty payments from franchisees and reports them asother revenue. --------------------------------------------------------------------------------------------------------------------- * Net retail sales represent revenue from operations of X5 managed storesexcluding VAT. This number differs from total net sales that also includerevenue from franchisees and other revenue. The total net sales number will bereported along with the Q1 2008 financial results. Numbers provided in this press-release are preliminary andunaudited. Q1 2007 exclude results of operations of Korzinka and StranaGerkulesia, while Q1 2008 net retail sales exclude results of operations of KamaRetail. For your reference, Korzinka and Strana Gerkulesia net sales for Q12007 were USD 29.2 mln and USD 19.5 mln respectively. ** In this section all sales dynamics analysis is based onRUR-denominated gross sales (including VAT, excluding FX). Net sales RUR growthrates may immaterially differ due to effective VAT rate. *** Like-for-like calculations contained are comparisons of revenue(including VAT denominated in the local currency) between two periods generatedby the relevant stores. The stores that are included in like-for-likecomparisons are those that were in operation for at least a full month prior tothe beginning of the more recent period and for each month in that period. Thelike-for-like comparison for each store takes into account the revenue generatedby that store during the same months it was in operation in each period; therevenue of all the relevant stores in the relevant months is then aggregated foreach period and compared. Revenue is included for each store only from thefirst day of the month following the month that store was opened or acquired.For example, the like-for-like comparison of revenue between 2007 and 2006 wouldinclude the revenue of a store that was opened or acquired on 15 October 2006,and the revenue to be compared would be the aggregate revenue generated by thatstore in November and December of each year. **** One store under a financial leasing arrangement with a buy-out option Appendices I. LFL Store Performance by Format and Region II. Net Retail Sales Performance by Region III. Average Ticket and Number of Customers IV. Net Selling Space Addition by Format and Region V. Net Store Addition by Format and Region VI. Financial Calendar for 2008 Note to Editors: X5 Retail Group N.V. is Russia's largest food retailer in terms of sales. TheCompany was created as a result of a merger between Pyaterochka (soft discounterchain) and Perekrestok (supermarket chain) on 18 May 2006. As of 31 March 2008, the Group had 731 Company managed soft discount storeslocated in Moscow (321), St. Petersburg (249) and other Russian areas (161), 183Company managed supermarkets across Central Russia and Ukraine, including 108stores in Moscow (Moscow region and Yaroslavl region), and 16 Company managedhypermarkets. As of 31 March 2008, X5's franchisees operated 711 stores across Russia andKazakhstan. In accordance with preliminary unaudited data, the Group's net sales for thefull year 2007 reached USD 5,320 mln, an increase of 53% year-on-year. Grossprofit for the period totaled USD 1,404 mln, EBITDA amounted to USD 479 mln.Full year 2007 net income reached USD 141 mln. X5 Retail Group N.V.'s net retail sales for the first quarter 2008 surged 61% inUSD terms and reached USD 1,775 mln. Forward looking statements: This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identifiedby the fact that they do not only relate to historical or current events.Forward-looking statements often use words such as" anticipate", "target", "expect", "estimate", "intend", "expected", "plan", "goal" believe", or otherwords of similar meaning. By their nature, forward-looking statements involve risk and uncertainty becausethey relate to future events and circumstances, a number of which are beyond X5Retail Group N.V.'s control. As a result, actual future results may differmaterially from the plans, goals and expectations set out in theseforward-looking statements. Any forward-looking statements made by or on behalf of X5 Retail Group N.V.speak only as at the date of this announcement. Save as required by anyapplicable laws or regulations, X5 Retail Group N.V. undertakes no obligationpublicly to release the results of any revisions to any forward-lookingstatements in this document that may occur due to any change in its expectationsor to reflect events or circumstances after the date of this document. For further details please contact Anna Kareva Elena Cherkalova IR Director PR Manager Tel.: +7 (495) 502-9751 Tel: +7 (495) 950-5577 e-mail: [email protected] e-mail: [email protected] Appendix I: LFL Store Performance by Format and Region***** Q1 2008 Total LFL, % Traffic, % Basket, %Moscow & the Moscow RegionHypermarkets 27 9 18Supermarkets 39 20 19Soft Discounters 34 9 26Total 36 13 23 St. Petersburg & North-WestHypermarkets 0 0 0Supermarkets 32 19 13Soft Discounters 15 1 14Total 17 3 14 RegionsHypermarkets 30 19 11Supermarkets 21 11 10Soft Discounters 48 21 27Total 28 16 13 X5 Retail GroupHypermarkets 29 15 13Supermarkets 34 17 17Soft Discounters 26 6 20X5 Retail Group Total 29 10 19 Appendix II: Net Retail Sales Performance by Region USD mln Q1 2008 Q1 2007 % change y-o-y Moscow & the region 980.2 619.3 58%St. Petersburg & North-West 466.4 327.6 42%Other regions 328.5 154.4 113%Total Net Retail Sales 1,775.1 1,101.3 61%RUR mlnMoscow & the region 23,780.3 16,290.4 46%St. Petersburg & North-West 11,315.0 8,619.0 31%Other regions 7,968.7 4,061.1 96%Total Net Retail Sales 43,064.0 28,970.4 49% Appendix III: Average Ticket and Number of Customers Q1 2008 Q1 2007 % change, y-o-yX5 Average Ticket, USD 11.5 9.3 23%Hypermarkets 18.3 15.2 20%Supermarkets 14.0 11.5 21%Soft Discounters 9.9 8.0 24%X5 # of Customers, mln 176.6 134.0 32%Hypermarkets 8.1 5.8 39%Supermarkets 52.2 40.1 30%Soft Discounters 116.3 88.1 32% Appendix IV: Net Selling Space Addition by Format and Region As of Net Added % change, 31 Dec '07 31 March '08 in Q1 2008 y-o-y Moscow & the Moscow Region Hypermarkets 17,189 17,189 - 0%Supermarkets 107,555 110,370 2,815 3%Discounters 175,101 181,330 5,229 3%Total 299,845 307,890 8,045 3% St. Petersburg & North-WestHypermarkets - - - -Supermarkets 24,061 23,633 -428 -2%Discounters 135,006 137,273 2,267 2%Total 159,067 160,906 1,839 1% RegionsHypermarkets 42,774 46,922 4,148 10%Supermarkets 60,114 62,098 1,984 3%Discounters 47,410 61,481 14,071 30%Total 150,298 170,501 20,203 13% X5 Retail GroupHypermarkets 59,963 64,111 4,148 7%Supermarkets 191,730 196,102 4,372 2%Discounters 357,517 379,084 21,567 6%X5 Retail Group Total 609,210 639,297 30,087 5% Appendix V: Net Store Addition by Format and Region As of Net Added % change,# of Stores 31 Dec '07 31 March '08 in Q1 2008 y-o-y Moscow & the Moscow RegionHypermarket 4 4 - 0%Supermarket 105 108 3 3%Discounter 309 321 12 4%Total 418 433 15 4% St. Petersburg & North-WestHypermarket - - -Supermarket 19 18 -1 -5%Discounter 244 249 5 2%Total 263 267 4 2% RegionsHypermarket 11 12 1 9%Supermarket 55 57 2 4%Discounter 121 161 40 33%Total 187 230 43 23% X5 Retail GroupHypermarkets 15 16 1 7%Supermarkets 179 183 4 2%Soft Discounters 674 731 57 8%X5 Retail Group Total 868 930 62 7% Appendix VI: Financial Calendar for 2008 Date Event April 11, 2008 Q1 2008 Trading Update Release, Conference Call & Analyst Meeting April 17, 2008 TBC Audited FY 2007 IFRS Results Release, Conference Call May 29, 2008, TBC Q1 2008 Unaudited Financial Results Release July 10, 2008, TBC Q2 & H1 2008 Trading Update Release September 23, 2008, TBC Q2 & H1 Audited IFRS Results Release October 9, 2008, TBC Q3 2008 Trading Update Release November 25, 2008, TBC Q3 2008 Unaudited Financial Results Release ***** Based on RUR-denominated gross sales (including VAT, excluding FX). Netsales RUR growth rates may immaterially differ due to effective VAT rate. Like-for-like calculations contained are comparisons of revenue(including VAT denominated in the local currency) between two periods generatedby the relevant stores. The stores that are included in like-for-likecomparisons are those that were in operation for at least a full month prior tothe beginning of the more recent period and for each month in that period. Thelike-for-like comparison for each store takes into account the revenue generatedby that store during the same months it was in operation in each period; therevenue of all the relevant stores in the relevant months is then aggregated foreach period and compared. Revenue is included for each store only from thefirst day of the month following the month that store was opened or acquired.For example, the like-for-like comparison of revenue between 2007 and 2006 wouldinclude the revenue of a store that was opened or acquired on 15 October 2006,and the revenue to be compared would be the aggregate revenue generated by thatstore in November and December of each year. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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