New shops send Magnit sales soaring

Moscow: Russian grocer Magnit said sales rose sharply in March from February after it doubled the number of new store openings, and signalled better performance at older stores due to price cuts.

March net retail sales rose by 31.5 per cent in rouble terms year-on-year to 17.76 billion roubles (Dh2.22 billion) after a 28 per cent rise in February, Magnit said in a Monday statement.

Magnit, operator of a rapidly expanding network of local discount grocery stores and hypermarkets, opened 47 stores in March against 24 additions in February.

Some Russian retailers are seeing double-digit sales growth despite the still wobbly economic climate as they aggressively open new stores in anticipation of future recovery, while mature stores recorded much more moderate growth rates amid an industry-wide battle for price-conscious customers.

Magnit said first-quarter like-for-like sales rose 2.86 per cent year-on-year, which analysts said was an improvement from the previous period.

"We see the results as slightly positive, as the first quarter shows higher sales growth and improved like-for-like quarter-on-quarter," Uralsib analyst Natalia Smirnova said.

On the rise

Magnit's Moscow-listed shares were trading 0.05 per cent higher by 1118 GMT, outperforming upmarket rival Seventh Continent and the broader MICEX index, which was down 0.2 per cent.

Rival X5 Retail Group reported a 7 per cent rise in first-quarter like-for-like sales across its formats on Friday, with discounters recording a 17 percent growth rate in like-for-like sales.

"Activity is on the rise," Magnit spokesman Oleg Goncharov said, adding that same-store sales were better than in the fourth quarter thanks to price-cutting initiatives and positive trends in consumer activity.

Analysts estimate fourth-quarter like-for-like sales dynamics were negative. Magnit did not disclose the figure saying only that 2009 like-for-like sales were up 4.14 per cent.

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