X5 Retail Group

X5 Retail Group
Traded as LSE: FIVE
MCX: FIVE
Industry retail
Founded 2006
Headquarters Moscow, Russia
Key people
 Igor Shekhterman, Stephan DuCharme
Revenue ₽1,295 bn[1]
₽57.75 bn[1]
₽31.39 bn[1]
Number of employees
 250 874[2]
Website x5.ru/en/

X5 Retail Group is a leading Russian food retailer.[3][4]

The Company operates several retail formats: proximity stores under the Pyaterochka brand, supermarkets under the Perekrestok brand and hypermarkets under the Karusel brand.

The Company’s global depositary receipts are listed on the London Stock Exchange (LSE) and the Moscow Stock Exchange (MSE).[5]

History

In 1995, the first Perekrestok store was opened in Moscow. In 1999, Pyaterochka retail chain was founded and the first store was opened in Saint Petersburg. In 2005, Pyaterochka completed an IPO on the London Stock Exchange.

X5 was founded in May 2006 after the merger of the Pyaterochka and Perekrestok retail formats[6]. In 2008, X5 acquired the Karusel hypermarket chain.

Other major acquisitions included: 82 Paterson supermarkets (2009)[7][8][9], more than 660 Kopeyka stores (2010)[10][11][12], 103 Pokupochka stores in the Samara region (2014)[13][14], 104 stores owned by the Rosinka Group in Southwest Russia[15] and 100 stores owned by the Soseddushka retail chain in the Orenburg region[16][17] (2015) and 99 Polushka stores in Bashkortostan (2018).[18][19][20] In 2018, X5 GDRs started trading on the Moscow Exchange.[5]

Shareholder structure

In 2018, X5’s shareholder structure is as follows: CTF Holdings S.A. (structure of Alfa Group): 47.86%; Intertrust Trustees Ltd (Axon Trust): 11.43%; X5 Directors: 0.06%; treasury shares: 0.01%, shareholders with less than 3%: 40.63%.

Dividend policy

In 2017, the Company approved its dividend policy.

The key principles of the dividend policy are as follows[21][22]:

1) The dividend policy sets a target payout ratio of at least 25% of X5 Retail Group’s consolidated IFRS net profit, provided that the Company’s financial position allows for it.

2) When considering a dividend proposal to the General Meeting of Shareholders, the Supervisory Board will be guided by a target consolidated net debt/EBITDA ratio of below 2.0x, in line with the Company’s financing strategy. The ultimate decision on payment of dividends will always be subject to approval of the General Meeting of Shareholders.

Management

In 2012, Stephan DuCharme was appointed the Company’s CEO and the Chairman of the Management Board.[23][24]

In 2015, Igor Shekhterman was appointed as the Company’s CEO and Stephan DuCharme appointed as the Chairman of Supervisory Board.[25][26][27]

Retail formats

Supermarket Perekrestok in Sankt-Peterburg

Each of the Company’s brands offers a unique customer value proposition and targets key parts of the Russian consumer population. This multifaceted strategy enables X5 Retail Group to capture a significant portion of the growth that is forecast for each of the three largest segments of Russia’s food retail market.

Pyaterochka

Pyaterochka is the Company’s largest retail format, with 11,225 proximity stores as of December 2017 serving customers in convenient locations in around 2,500 cities and towns across Russia. The Pyaterochka CVP appeals to a wide swath of the Russian population, with a large assortment of fresh goods and a loyalty programme launched in 2017 that offers personalised promos based on each individual customer’s shopping behaviour.

Perekrestok

The Perekrestok supermarket format is Russia’s oldest and largest. Now undergoing a large-scale refurbishment and expansion programme, Perekrestok offers a wide assortment of high-quality goods, including a growing range of exclusive and private-label lines.

Karusel

Karusel focusses on compact hypermarkets located within city limits that appeal to rational shoppers and customers looking to stock up their household in one shopping trip. With a significant offering of in-house production, private-label and non-food goods, every Karusel aims to meet a wide array of customer needs.

Activities

Operational and financial results

As of 31 December 2017, the Company operated 12,121 stores, including 11,225 Pyaterochka proximity stores, 638 Perekrestok supermarkets, 93 Karusel hypermarkets and 165 convenience stores. The Company operated 39 distribution centers and 3,144 of its own trucks across the Russian Federation.

Key financial indicators
Parameter / Year 2013[28][29] 2014[29][30] 2015[30][31] 2016[1][31] 2017[1]
Revenue, Russian Rouble, million Increase 534 560 Increase 633 873 Increase 808 818 Increase 1 033 667 Increase 1 295 008
Gross profit, Russian Rouble, million Increase 130 348 Increase 154 982 Increase 198 390 Increase 249 985 Increase 308 938
Gross profit margin, % Increase 24,4 Increase 24,5 24,5 Decrease 24,2 Decrease 23,9
EBITDA, Russian Rouble, million Increase 38 350 Increase 45 860 Increase 55 233 Increase 76 267 Increase 96 193
EBITDA margin, % Increase 7,2 7,2 Decrease 6,8 Increase 7,4 7,4
Operating profit, Russian Rouble, million Increase 25 296 Increase 28 288 Increase 34 449 Increase 45 631 Increase 57 758
Operating profit margin, % Increase 4,7 Decrease 4,5 Decrease 4,3 Increase 4,4 Increase 4,5
Net profit, Russian Rouble, million Increase 10 984 Increase 12 691 Increase 14 174 Increase 22 291 Increase 31 394
Net profit margin, % Increase 2,1 Decrease 2,0 Decrease 1,8 Increase 2,2 Increase 2,4
Liquidity update
Parameter / Year 2013[28][29] 2014[29][30] 2015[30][31] 2016[1][31] 2017[1]
Total debt, Russian Rouble, million, incl.: Decrease 110 523 Increase 130 986 Increase 144 215 Increase 156 033 Increase 194 296
Short-term debt, Russian Rouble, million Decrease 30 680 Decrease 15 834 Increase 42 670 Increase 45 168 Increase 58 674
Long-term debt, Russian Rouble, million Increase 79 843 Increase 115 152 Decrease 101 545 Increase 110 865 Increase 135 622
Net debt, Russian Rouble, million 102 912 Increase 105 363 Increase 135 257 Increase 137 843 Increase 166 691
Net debt/EBITDA 2,68х Decrease 2,30х Increase 2,45х Decrease 1,81х Decrease 1,73х
Number of stores (As of 31 December 2017)
Brand / Year 2008[32] 2009[33] 2010[34] 2011[35] 2012[36] 2013[37] 2014[38] 2015[39] 2016[40] 2017[41]
Pyaterochka 848 Increase 1 039 Increase 1 392 Increase 2 525 Increase 3 220 Increase 3 882 Increase 4 789 Increase 6 265 Increase 8 363 Increase 11 225
Kopeyka - - 660 - - - - - - -
Perekrestok 207 Increase 275 Increase 301 Increase 330 Increase 370 Increase 390 Increase 403 Increase 478 Increase 539 Increase 638
Karusel 46 Increase 58 Increase 71 Increase 77 Increase 78 Increase 83 Decrease 82 Increase 90 Increase 91 Increase 93
Convenience store Express[42][43] - - 45 Increase 70 Increase 134 Increase 189 Increase 209 Decrease 187 Increase 194 Decrease 165

Partnership projects

Pyaterochka in Volzhsk, Mari El

In 2013, X5 Retail Group kicked off a programme to attract sublessees, and by the end of 2017, over 29,000 retail outlets were opened in X5 stores by 5,500 private enterprises.[44][45] With 5,000 sublessees, Pyaterochka leads the way in the number of partners accounting for over 8% of its total selling space. More than 3,000 of them are farmers and small and medium-sized enterprises selling food and children’s goods and providing everyday services near the cash desks outside Pyaterochka’s shopping area or inside as a shop-in-shop.

In April 2017, X5 Retail Group launched a cooperation project with the Central Union of Consumer Societies of the Russian Federation (Centrosoyuz).[46][47][48] The COOP-Pyaterochka format has the potential to add up to 1,000 stores over a three-year period. The parties have also agreed to open to 5,000 Pyaterocka-based shop-in-shop corners by 2021 to sell farmers’ and consumer cooperatives’ products.

In June 2017, X5 Retail Group, Acmero Capital Limited and Marathon Group partnered up to develop universal Passenger Service Centres at airports and bus and railway stations.[49][50] They plan to open around 600–1,000 Passenger Service Centres by the end of 2021. Such centres are expected to feature a Pyaterochka grocery store, a pharmacy, a café, a ticket booth, an ATM, and a payment terminal, etc.

IT and innovations

In October 2016, X5 Retail Group launched GoCargo for online booking of cargo transportation services.[51][52] GoCargo enables senders to place transportation orders and distributes them among registered private carriers and transport companies based on the cargo location and the shipping address. The parties exchange legal documents using the EDI technology.

In June 2017, X5 Retail Group and the Internet Initiatives Development Fund (IIDF) launched a specialised retail accelerator, with the Petrovich and Sportmaster chains among its partners.[53][54][55] Start-up companies joining the IIDF accelerator programme are able not only to attract from RUB 2 mn to RUB 25 mn of investments from the fund, but also to get advice from X5 experts and test their business ideas on X5’s anonymised database of over 3 bn purchases.

In November 2017, X5 introduced machine learning to bolster targeted marketing at the Perekrestok supermarket chain, and developed personalised offers for all members of the Perekrestok Club loyalty program.[56][57] The company leverages machine learning to group customers into segments based on common features and create offers for them. The system analyses groups of customers and designs personalised marketing campaigns based on demographic and several hundred behavioural factors, such as: frequency of purchases and ticket size, customer preferences, lifestyle fundamentals, acceptable price levels, favourite product categories and preferred shopping hours. Customer sensitivity to offers is predicted using various analytical models. In addition, the system picks out the most efficient communication channels for a target audience and automatically generates marketing messages.

In December 2017, Mail.Ru Group and X5 launched a partnership in online advertising targeting and assessing its impact on offline sales in certain stores. MyTarget platform clients gain access to X5’s anonymised data on consumer behaviour with a view to enhancing the accuracy of ad targeting and linking ad impression data with sales performance at the Pyaterochka, Perekrestok and Karusel chains.[58][59]

In February 2018, X5 launched an online service that helps real estate owners to calculate the average rent at any location where Pyaterochka has a presence. The service also enables landlords to offer premises or a property for lease or sale instantly, if the property meets all the criteria for store opening, or offer a land plot for building a store.[60]

In May 2018, X5 successfully completed a large-scale project to automate the processes of demand and replenishment planning at both stores and at Perekrestok and Karusel distribution centres. To this end, the Company redesigned its core logistics, marketing and sales processes, and introduced an end-to-end system of supply chain management, boosting forecast accuracy by 17% and increasing on-shelf availability of products by 5%. The Company also reduced inventory levels by 13%.[61][62]

In May 2018, X5 introduced automated detailed planogramming for hypermarkets. It factors in store equipment characteristics, customer preferences, historical data on inventory turnover by type of product, assortment by category, packaging size and type, etc. After three months of its use, the system boosted sales by up to 10.5% in some categories.[63][62]

In June 2018, X5 started implementing video analytics and computer vision technology based on neural networks and artificial intelligence. It speeds up control of store layouts and the number of products on shelves by a factor of ten, and reduces the number of people leaving the store without a purchase and shrinkage levels by 10% and 20%, respectively.[64][65]

Logistics

X5 started implementing its logistics separation strategy in 2013, with a view to splitting product flows for convenience stores, on the one hand, and supermarkets and hypermarkets, on the other hand.

As at 31 December 2017, X5 Retail Group operated 39 distribution centres spanning 1.1 million sq m, including 27 centres catering to Pyaterochka and 12 centres serving the super- and hypermarket formats (Perekrestok and Karusel).[41]

As at 31 December 2017, X5’s fleet comprises 3,144 owned trucks.[41]

References

  1. 1 2 3 4 5 6 7 "X5 adjusted EBITDA margin remains stable at 7.7% in 2017" (PDF). X5 Retail Group. Retrieved 2018-03-31.
  2. ↑ "Annual Report 2017" (PDF). X5 Retail Group. Retrieved 2018-03-31.
  3. ↑ "X5 overtakes Magnit as Russia's No.1 retailer by sales". Reuters News Agency. Thomson Reuters. Retrieved June 17, 2018.
  4. ↑ "Russia's Magnit falls further behind X5 as sales growth falls". Reuters News Agency. Thomson Reuters. Retrieved June 17, 2018.
  5. 1 2 "X5 announces start of listing of its global depositary receipts on Moscow Exchange". London Stock Exchange plc. Retrieved June 17, 2018.
  6. ↑ "Company Overview of Pyaterochka Holding N.V." Bloomberg L.P. Retrieved June 17, 2018.
  7. ↑ "X5 Retail Group to buy Patterson Supermarket chain". TV-Novosti. Retrieved June 17, 2018.
  8. ↑ "X5 Retail Group buys Paterson supermarket chain". MarketWatch, Inc. Retrieved June 17, 2018.
  9. ↑ "X5 Retail Group completes aquisition [sic] of Paterson". IndiaRetailing.com. Retrieved June 17, 2018.
  10. ↑ "X5 to buy Kopeyka". TV-Novosti. Retrieved June 17, 2018.
  11. ↑ "Consolidation to unfold across Russian retail sector". TV-Novosti. Retrieved June 17, 2018.
  12. ↑ "X5 Retail to acquire Kopeyka discounter chain". IndiaRetailing.com. Retrieved June 17, 2018.
  13. ↑ "X5 completes integration of over 100 Pokupochka stores into the Pyaterochka chain". PMR Ltd. Sp. z o.o. Retrieved June 17, 2018.
  14. ↑ "X5 successfully completes integration of acquired Pokupochka stores into the Pyaterochka retail chain". ACORT. Retrieved June 17, 2018.
  15. ↑ "X5 Retail Group acquires more than 100 stores in southwestern Russia". PMR Ltd. Sp. z o.o. Retrieved June 17, 2018.
  16. ↑ "X5 Retail Group Announces Acquisition Of 100 Soseddushka Stores". European Supermarket Magazine. Retrieved June 17, 2018.
  17. ↑ "Svijet: X5 Retail Group preuzela 100 Soseddushka radnji" (in Bosnian). Altermedia d.o.o. Retrieved June 17, 2018.
  18. ↑ "X5 Continues Russian Expansion With Acquisition Of 99 Ufa Stores". European Supermarket Magazine. Retrieved June 17, 2018.
  19. ↑ "X5 acquires 99 stores in Bashkortostan". Financial Times. Retrieved June 17, 2018.
  20. ↑ "Russia's X5 Retail Group buys 99 stores of Ufimsky Gastronom". PRIME. Retrieved June 17, 2018.
  21. ↑ "Russia's X5 Retail Group approves dividend policy". Reuters News Agency. Thomson Reuters. Retrieved June 17, 2018.
  22. ↑ "X5 Supervisory Board approved dividend policy". Financial Times. Retrieved June 17, 2018.
  23. ↑ "DuCharme, Stephan". Reuters News Agency. Thomson Reuters. Retrieved June 17, 2018.
  24. ↑ "«I did not come here to do cosmetics» - Stefan DuСharme, CEO of X5 Retail Group". «Vedomosti» newspaper (in Russian). Retrieved June 17, 2018.
  25. ↑ "X5 Retail CEO Stephan DuCharme Resigns Upon Finishing Turnaround". European Supermarket Magazine. Retrieved June 17, 2018.
  26. ↑ "X5 nominates a new CEO". The Institute of Grocery Distribution and IGD Services. Retrieved June 17, 2018.
  27. ↑ "X5 Retail Group CEO Stephan DuCharme To Step Down". RTTNews. Retrieved June 17, 2018.
  28. 1 2 "X5 Retail Group releases 2013 Annual Report" (PDF). X5 Retail Group. Retrieved June 17, 2018.
  29. 1 2 3 4 "X5 Retail Group releases 2014 Annual Report" (PDF). X5 Retail Group. Retrieved June 17, 2018.
  30. 1 2 3 4 "X5 reports 27.6% revenue growth in 2015" (PDF). X5 Retail Group. Retrieved June 17, 2018.
  31. 1 2 3 4 "X5 reports 2016 adjusted EBITDA up 33.8% on the back of 27.8% revenue growth" (PDF). X5 Retail Group. Retrieved June 17, 2018.
  32. ↑ "Annual Report 2008" (PDF). X5 Retail Group. Retrieved June 17, 2018.
  33. ↑ "Annual Report 2009" (PDF). X5 Retail Group. Retrieved June 17, 2018.
  34. ↑ "Annual Report 2010" (PDF). X5 Retail Group. Retrieved June 17, 2018.
  35. ↑ "Annual Report 2011 (Online version)". X5 Retail Group. Retrieved June 17, 2018.
  36. ↑ "Annual Report 2012" (PDF). X5 Retail Group. Retrieved June 17, 2018.
  37. ↑ "Annual Report 2013" (PDF). X5 Retail Group. Retrieved June 17, 2018.
  38. ↑ "Annual Report 2014" (PDF). X5 Retail Group. Retrieved June 17, 2018.
  39. ↑ "Annual Report 2015 (Online version)". X5 Retail Group. Retrieved June 17, 2018.
  40. ↑ "Annual Report 2016 (Online version)". X5 Retail Group. Retrieved June 17, 2018.
  41. 1 2 3 "Annual Report 2017 (Online version)". X5 Retail Group. Retrieved June 17, 2018.
  42. ↑ "X5 puts up Perekrestok Express for sale". Deutscher Fachverlag GmbH. Retrieved June 17, 2018.
  43. ↑ "X5 Retail To Sell Perekrestok Express Stores In Moscow". European Supermarket Magazine. Retrieved June 17, 2018.
  44. ↑ "5,5 тысяч партнеров X5 разместили в магазинах компании 29 тысяч торговых точек (Over 29,000 retail outlets were opened in X5 stores by 5,500 private enterprises)" (in Russian). Rambler News Service. Retrieved June 17, 2018.
  45. ↑ "Субарендаторы открыли в магазинах X5 более 29 тысяч точек (Over 29,000 retail outlets were opened in X5 stores )" (in Russian). Retail.ru. Retrieved June 17, 2018.
  46. ↑ "X5 Retail EDR : Centrosoyuz project may open up to 1,000 new stores over next three years". Surperformance. Retrieved June 17, 2018.
  47. ↑ "X5 Retail In Cooperation Deal With Centrosoyuz To Open Up To 1,000 New Stores". RTTNews. Retrieved June 17, 2018.
  48. ↑ "Russian X5 Plans 1,000 Franchised Stores by 2020". Deutscher Fachverlag GmbH. Retrieved June 17, 2018.
  49. ↑ "Russia's X5 to open 600-1,000 retail centres by 2021". Deutscher Fachverlag GmbH. Retrieved June 17, 2018.
  50. ↑ "X5 Unveils New Transport Hub Concept". Deutscher Fachverlag GmbH. Retrieved June 17, 2018.
  51. ↑ "X5 Retail Group Launches New Cargo Transportation Service GoCargo". European Supermarket Magazine. Retrieved June 17, 2018.
  52. ↑ "GoCargo: how X5 Retail Group leverages "uberization" of cargo traffic". Retail-Loyalty.org. Retrieved June 17, 2018.
  53. ↑ "X5 Retail Group announces strategic partnership with IIDF". X5 Retail Group. Retrieved June 17, 2018.
  54. ↑ "X5 Retail invests in "smart shop", and Innovation". Baker-Group.Net. Retrieved June 17, 2018.
  55. ↑ "In the 12th Accelerator FRII included 32 company". BiToBi. Retrieved June 17, 2018.
  56. ↑ "X5 Retail Develops Targeted Marketing Technology". European Supermarket Magazine. Retrieved July 24, 2018.
  57. ↑ "Russia: X5, Magnit and Lenta round up". The Institute of Grocery Distribution and IGD Services Limited. Retrieved July 24, 2018.
  58. ↑ "X5 Retail Group and Mail.ru Team up". Deutscher Fachverlag GmbH. Retrieved July 24, 2018.
  59. ↑ "X5 and Mail.Ru patner to measure targeted online advertising impact". Verdict Media Limited. Retrieved July 24, 2018.
  60. ↑ "Russian Federation: Pyaterochka to provide rent-calculation tool for 63 regions". SyndiGate Media Inc. Retrieved July 24, 2018.
  61. ↑ "X5 Retail Group Introduces Automated Planograms To Boost Sales". European Supermarket Magazine. Retrieved July 24, 2018.
  62. 1 2 "X5 invests to optimise stores". The Institute of Grocery Distribution and IGD Services Limited. Retrieved July 24, 2018.
  63. ↑ "Russia's X5 Retail Group Introduces Automated Supply Chain Solution". European Supermarket Magazine. Retrieved July 24, 2018.
  64. ↑ "X5 To Roll Out Computer Vision Technology To Support Planogram Control Process". European Supermarket Magazine. Retrieved July 24, 2018.
  65. ↑ "X5 Retail Group and Magnit announce strategic moves". The Institute of Grocery Distribution and IGD Services Limited. Retrieved July 24, 2018.
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