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
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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: dmitry_kovalenko@magnit.ru
Office: +7 (861) 210-48-80
Dina Chistyak
Director for Investor Relations
Email: dina_chistyak@magnit.ru
Office: +7 (861) 210-9810 x 15101
Media Inquiries
Email: press@magnit.ru
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
(END) Dow Jones Newswires
September 24, 2020 03:00 ET (07:00 GMT)
