Supermarkets -6.5% 9.1% 2.0% 2.5% -1.8% 0.7%
Drogerie Stores -0.7% 6.2% 5.5% 5.5% -0.6% 4.9%
Trading Performance
4.6%
Total sales in 2Q 2021 grew by 9.6% y-o-y to RUB 424.3 billion. Net retail sales grew by 9.1% y-o-y,
LTM sales driven by a combination of 6.3% selling space growth and 5.2% LFL sales growth.
density[6]
improvement
y-o-y
Net retail sales growth continued to outpace selling space growth on further improvement of sales
densities. Overall sales densities in 2Q 2021 improved by 1.0% q-o-q and 4.6% y-o-y while in the
Company's main convenience store format these improved by 5.9% y-o-y.
LFL sales growth accelerated from 4.1% in the previous quarter to 5.2% in 2Q 2021 predominantly driven by
the strong performance of mature stores. 107 stores entered LFL in 2Q (including 41 convenience stores,
65 drogeries and 1 supermarket). Only 7% of Magnit's selling space is currently in the 'ramp-up' phase
with 93% already matured.
93% In the reported quarter the structure of LFL sales growth has changed compared to five previous
consecutive quarters. Strong LFL traffic growth driven by firstly inflow of new unique customers and then
of selling by rising visit frequency, became the main contributor. Magnit continued gaining customers from
space is traditional retail and other market players. This comparable performance peaked in end-March and started
already easing since April, resulting in 10.0% LFL traffic growth vs 9.4% decline in 1Q 2021.
matured
LFL average ticket decreased by 4.4% due to the strong comparable performance. The only contributor to
the reduction in average ticket was a reduction of the average number of items per basket as consumer
behavior started normalizing after abnormal patterns and strong forward buying during periods of
lockdown. After its peak in February, on-shelf price inflation corrected slightly and stabilised in the
second quarter. Ongoing trading up was another positive driver of the ticket growth. These effects were
observed in the beginning of the reported quarter with gradual normalization month-on-month, leading to
both positive LFL traffic and ticket development in June supported by trading up and healthy inflation.
10.0%
A decline in the overall average ticket in April-May was again a result of a strong performance during
lfl traffic the prior period, however from June growth returned combined with positive y-o-y growth of customer
growth in 2Q visits (see Appendix).
2021
Acceleration of revenue and LFL sales growth versus the previous quarter was delivered despite
promotional share as a % of sales remaining flat compared to the previous quarter and was up y-o-y due to
weaker comparatives, normalizing shopping patterns and efficient seasonal promotional campaigns supported
by favorable weather conditions and the timing of the domestic tourist season.
50 mln During the reported quarter the number of active loyalty card users exceeded 50 million. Company-wide,
the share of tickets using the loyalty card was 50% with sales penetration of 65%. The loyalty program
of loyalty continues to deliver positive cross-format gains with sustainable growth of customers visiting 2+ store
program formats (41% of Magnit customer base at the end of the reporting period).
active users
Store Network Development and Performance by Format
The convenience segment generated 78.4% of total net retail sales in the reported quarter. In 2Q 2021
78.4% Magnit accelerated its expansion program both q-o-q and y-o-y and opened (gross) 308 convenience
stores (94 in 2Q 2020). The Company continued its efficiency campaign and closed 58 convenience
of total net stores vs 107 store closures in 2Q 2020. As a result, Magnit added 250 stores (net) during the
retail sales reported quarter. The selling space growth of convenience stores accelerated to 6.4% y-o-y. Sales in
generated by the convenience format grew by 9.7% driven by LFL sales growth of 5.7% and selling space growth of
convenience 6.4%. LFL average ticket growth was negative and stood at -4.4% against strong comparatives. LFL
segment traffic increased 10.5%, overcompensating negative LFL average ticket growth.
Supermarkets generated 12.5% of the Group's net retail sales in the reported quarter. During 2Q 2021
12.5% the Company opened one supermarket and closed three stores. Redesign program is gaining traction with
24 supermarkets being refurbished in 1H 2021 vs 5 in 1H 2020. The pace of redesign in the 2H 2021 is
of total net expected to remain intact. Selling space across this format remained almost flat y-o-y. LFL sales
retail sales growth reached 2.0% vs -0.7% in the previous quarter, driven by strong LFL traffic recovery to 9.1%.
generated by As a result, net retail sales growth of supermarkets improved to 3.0% in the reported quarter.
supermarkets
The share of drogerie format as a proportion of the total net retail sales increased to 8.5% in the
8.5% reported quarter vs 8.1% a year ago. During 2Q 2021 Magnit opened (net) 196 cosmetics stores and
added 40 thousand sq. m. of selling space, delivering a 11.2% y-o-y increase in selling space, the
of total net highest across all formats. Driven by this increase in selling space and LFL sales growth of 5.5%,
retail sales sales grew 14.1% representing again the strongest performance across all Magnit's store formats. LFL
generated by average ticket growth was slightly negative at -0.7% well compensated by 6.2% LFL traffic growth.
drogerie
During 2Q 2021 Magnit continued its renovation program and redesigned 131 convenience stores and 12
supermarkets resulting in the combined share of refurbished and new stores at: 74% for convenience
stores, 34% for supermarkets and 59% for the drogerie format.
E-commerce
Magnit has been testing e-commerce services since the second half of 2020. The Company currently runs
a number of online delivery projects, both independently and in cooperation with partners (express
delivery, regular delivery, e-pharma, cosmetics and partnerships).
Magnit fulfils around 15,000 orders a day. The run rate for Magnit's online channel stands at RUB 7.6
billion based on the last week of June.
7.6 Average ticket for Magnit's own delivery service is c. RUB 1,200 including VAT which is approx. 3.4
times higher than in the convenience stores (RUB 353 including VAT in 2Q 2021). This is mostly due to
RUB billion a larger number of items per basket.
annual GMV
runrate
Magnit's e-commerce services today cover over 2,000 stores in 62 regions and 106 cities, with 61% of
the current revenue generated outside Moscow and St. Petersburg. By the end of 2021, the Company
plans to have over 4,000 stores across all formats covered by e-commerce services including Magnit's
own delivery and partnerships in more than 50 regions across Russia. Financial Results for 2Q and 1H 2021 (IAS 17)
RUB mln 2Q 2021 2Q 2020 Change 1H 2021 1H 2020 Change
Total Revenue 424,341 387,323 9.6% 822,230 763,361 7.7%
Retail 413,693 379,174 9.1% 801,592 743,959 7.7%
Wholesale 10,648 8,149 30.7% 20,638 19,403 6.4%
Gross Profit 99,501 94,337 5.5% 192,571 179,522 7.3%
Gross Margin, % 23.4% 24.4% -91 bps 23.4% 23.5% -10 bps
SG&A, % of Sales -20.4% -20.4% -2 bps -20.4% -20.5% 4 bps
EBITDA pre LTI[7] 30,600 30,482 0.4% 58,603 53,570 9.4%
EBITDA Margin pre LTI, % 7.2% 7.9% -66 bps 7.1% 7.0% 11 bps
EBITDA 30,250 30,476 -0.7% 57,928 53,220 8.8%
EBITDA Margin, % 7.1% 7.9% -74 bps 7.0% 7.0% 7 bps
EBIT 17,739 18,676 -5.0% 34,695 30,137 15.1%
EBIT Margin, % 4.2% 4.8% -64 bps 4.2% 3.9% 27 bps
Net Finance Costs -2,790 -3,497 -20.2% -5,371 -7,274 -26.2%
FX Gain/ (Loss) 634 1,005 -36.9% 444 -824 -153.9%
Profit before Tax 15,583 16,185 -3.7% 29,768 22,039 35.1%
Taxes -3,509 -3,342 5.0% -6,820 -4,995 36.5%
Net Income 12,073 12,843 -6.0% 22,948 17,044 34.6%
Net Income Margin, % 2.8% 3.3% -47 bps 2.8% 2.2% 56 bps
For 2Q and 1H 2021 financial results in accordance with IFRS 16 - see Appendix
23.4%
Gross margin
in 2Q 2021
Total revenue in 2Q 2021 increased by 9.6% driven by net retail sales growth by 9.1% and wholesale
revenue increase by 30.7%. Wholesale operations accounted for 2.5% of total sales on the back of recovery
of HORECA consumption.
Gross Profit in 2Q 2021 increased by 5.5% y-o-y to RUB 99.5 billion with a margin of 23.4% as a result of
better promotional margin, lower shrinkage and favorable format mix. This was partially offset by
slightly higher supply chain costs and higher penetration of Magnit's loyalty program. Format mix
positively impacted gross margin, with the share of Magnit's high-margin drogerie business growing to (MORE TO FOLLOW) Dow Jones Newswires
July 29, 2021 02:59 ET (06:59 GMT)
