X5 Retail Group, a leading Russian food retailer, announced its second quarter financial results today. Although the company experienced higher costs and a weaker margin, both earnings and revenue showed growth.
Net Profit Decreases, but Revenue Rises
During the three months ended June 30, X5 Retail Group reported a net profit of 26.31 billion Russian rubles ($271.2 million), slightly lower than the 26.76 billion rubles earned during the same period last year.
The increase in staff costs and lease expenses contributed to the decline in net profit. Additionally, the gross profit margin declined from 25.8% to 24.4% due to the expansion of the Chizhik hard discounter format into regional markets, the consolidation of Krasny Yar and Slata, and the transformation of Pyaterochka's customer value proposition.
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
X5 Retail Group's EBITDA grew by 1.8% to reach 162.64 billion rubles. This increase was driven by both organic development and mergers and acquisitions. The company's revenue also saw significant growth, amounting to 772.04 billion rubles, compared to 647.95 billion rubles in the previous year.
Strong Sales Performance
Net retail sales for X5 Retail Group rose by 18.9%, driven by a combination of 10.4% selling space growth and 7.8% like-for-like sales growth. The company's digital business sales experienced an impressive 84% year-on-year growth.
Focus on Future Growth
X5 Retail Group's Chief Executive, Igor Shekhterman, emphasized the company's current priority of developing and expanding its Pyaterochka proximity stores and Chizhik hard discounters. He also highlighted the importance of improving efficiency and transforming the existing store base of the Perekrestok supermarket format to increase like-for-like sales.
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