MAGNIT PJSC: Magnit expands discounter pilot

DJ Magnit expands discounter pilot

MAGNIT PJSC (MGNT) 
Magnit expands discounter pilot 
 
24-Sep-2020 / 10:00 MSK 
Dissemination of a Regulatory Announcement, transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
 
Press Release | Krasnodar | September 24, 2020 
 
Magnit expands discounter pilot 
******************************* 
 
Krasnodar, Russia (September 24, 2020): Magnit PJSC (MOEX and LSE: MGNT; the 
   Company), one of Russia's leading retailers, announces the opening of two 
       new stores under the Moya Tsena ["My Price"] banner in Lipetsk and in 
   Nekrasovskaya village in Krasnodar region. By the end of the year, Magnit 
                                     plans to expand the pilot to 10 stores. 
 
The first three stores in the new experimental format opened their doors in 
July 2020 in Samara and Kamyshin in Volgograd region and Staraya Kulatka 
village in Ulyanovsk region. These discounters replaced existing Magnit 
convenience stores that did not fully meet CVP requirements but fit well for 
the discounter concept. In three months since the start of the pilot, two 
discounters-the ones in Staraya Kulatka and Samara-have demonstrated a sales 
increase of 8% and 5% respectively driven mainly by traffic uplift of 17% 
and 11% respectively[1]. A lower average ticket compared to a convenience 
store is due to a narrower assortment predominantly featuring first price 
products. The third store is currently in the ramp-up stage and is also 
showing improved performance. 
 
Operating results of the trial stores indicate that in the short time after 
opening, Moya Tsena discounters have become one of the most visited stores 
in their catchment areas among various store formats operated by other 
companies. The key drivers of the growing consumer interest to discounters 
are highly attractive pricing policy, focus on the most in-demand products, 
and quality of customer service, as well as unique format features in their 
location. The biggest impact on sales comes from the dry foods category. The 
pilot stores demonstrate higher inventory turnover (by 30-40%) and lower 
shrinkage (by 3.5 p.p. on average compared to results before reformatting). 
 
By the end of 2020, in addition to the five existing stores, Magnit plans to 
open another five Moya Tsena discounters in different locations, including 
cities with over 1 million population. The Company will closely monitor 
customer feedback during next several months of the pilot. If the results 
are positive, Magnit will finalize CVP for the format and decide on whether 
to scale it. 
 
Magnit discounter concept implies a store with a selling space of up to 300 
sq. m offering limited assortment (around 1,800 items) of primarily of first 
price products, private labels and economy packs. At the same time, the 
Company maintains its focus on offering high-quality fresh products demanded 
by customers. The format policy is based on offering customers everyday low 
prices ("EDLP") without promotions. The pilot stores follow simple zoning 
principles and have only basic equipment setup. This, however, does not 
affect the level of customer service, which remains high and meets all the 
requirements to a modern affordable store. The concept also implies an 
optimized staffing level compared to the convenience store, and requires 
much less capital expenditures for opening. 
 
"The initial performance of our discounters tells us that we're moving in 
the right direction, and that our new offer is very attractive for the 
customer. It's too early to speak about the overall efficiency of the 
format, as three stores is too small of a sample to judge. That's why we're 
currently looking for suitable locations for new openings based both on our 
existing stores and in new facilities,"-commented Jan Dunning, Magnit's 
President and CEO. 
 
                                    For further information, please contact: 
 
Dmitry Kovalenko 
 
Director for Investor Relations 
 
Email: [e-mail] 
 
Office: [phone] 
 
Dina Chistyak 
 
Director for Investor Relations 
 
Email: [e-mail] 
 
Office: [phone] x 15101 
 
Media Inquiries 
 
Email: [e-mail] 
 
Note to editors: 
 
   Public Joint Stock Company "Magnit" is one of Russia's leading retailers. 
  Founded in 1994, the company is headquartered in the southern Russian city 
  of Krasnodar. As of June 30, 2020, Magnit operated 38 distribution centres 
  and 20,894 stores (14,581 convenience, 472 supermarkets and 5,841 drogerie 
       stores) in 3,710 cities and towns throughout 7 federal regions of the 
                                                         Russian Federation. 
 
  In accordance with the reviewed IFRS 16 management accounts results for 1H 
    2020, Magnit had revenues of RUB 763.4 billion and an EBITDA of RUB 86.9 
     billion. Magnit's local shares are traded on the Moscow Exchange (MOEX: 
    MGNT) and its GDRs on the London Stock Exchange (LSE: MGNT) and it has a 
                                 credit rating from Standard & Poor's of BB. 
 
Forward-looking statements: 
 
This document contains forward-looking statements that may or may not prove 
accurate. For example, statements regarding expected sales growth rate and 
store openings are forward-looking statements. Forward-looking statements 
involve known and unknown risks, uncertainties and other important factors 
that could cause actual results to differ materially from what is expressed 
or implied by the statements. Any forward-looking statement is based on 
information available to Magnit as of the date of the statement. All written 
or oral forward-looking statements attributable to Magnit are qualified by 
this caution. Magnit does not undertake any obligation to update or revise 
any forward-looking statement to reflect any change in circumstances. 
 
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[1] Performance of the pilot discounters in the first three months versus 
the period before reformatting 
 
ISIN:           US55953Q2021 
Category Code:  MSCU 
TIDM:           MGNT 
LEI Code:       2534009KKPTVL99W2Y12 
OAM Categories: 3.1. Additional regulated information required to be 
                disclosed under the laws of a Member State 
Sequence No.:   84763 
EQS News ID:    1135985 
 
End of Announcement EQS News Service 
 
 

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September 24, 2020 03:00 ET (07:00 GMT)