X5 maintains 2013 growth forecast
MOSCOW. Aug 15 (Interfax) - X5 Retail Group, which owns the Pyaterochka chain of discount grocery stores, the Perekrestok chain of supermarkets and the Karusel chain of hypermarkets, has left its 2013 growth forecast unchanged, to the surprise of a number of analysts.
X5 continues to expect revenue to rise 11% in 2013, CFO Sergei Piven said during a conference call on Thursday.
CEO Stefan Ducharme previously said the company would be disappointed if revenue grew less than 11% in 2013.
X5 reported revenue growth of 7.9% (to 240.3 billion rubles) in the first half of 2013. Growth should be higher in the second half, which has traditionally been a stronger time of year for retailers. For example, last year X5 saw revenue grow 7.2% in the first half but 8.3% for the full year.
X5 had its lowest revenue growth in the second quarter in the month of June, when revenue grew just 7.2% compared with 8.2% in May and 8% in April, the company said in a presentation. Like-for-like sales declined 1.2% in June compared with growth of 0.1% in May and nil in April.
The company does not expect sales to accelerate significantly in July-August and the second half looks to be difficult, CFO Piven said. Nonetheless, he said, the company has the potential to meet its revenue target.
X5 launched a pilot project to refresh the Pyaterochka discounter format, the segment with the most stores. There are currently 23 of the renovated stores operating in Moscow, St. Petersburg and the Urals, six of which have been totally modernized. At the end of August the company plans to launch the program in the Central and Northwest regions. X5 projects that the rejuvenated Pyaterochka format will improve the chain's image, and help it to increase turnover and like-for-like sales, Piven said.
The company has also reassigned management along product lines in the discount chain: beverages, fresh, groceries, private label, regional products and marketing and support, he said.
It is also working on a strategy for developing logistics and the supply chain over the next three years. Piven said the company would provide more detail about the improvements already made and its plans during the company's investor day in October.
The CFO confirmed the forecast for the EBITDA margin in 2013 (7%) and the planned capital expenditure (30 billion rubles).
X5 had capex totaling $229 million in the first half, of which 70% went to finance the addition of new stores. Another 20% was spent to renovate existing retail locations and 10% was spent on logistics, IT and other projects.
