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O'Key Sees Da! Outperform As Russians Embrace Discounters

Published on Jan 28 2021 10:28 AM in Retail tagged: Featured Post / Russia / Discounters / O'KEY / Da!

O'Key Sees Da! Outperform As Russians Embrace Discounters

Russian retailer O'Key Group said that its Da! discount banner posted a 42.2% rise in net retail revenue in the fourth quarter of its financial year, driven by a 23.5% like-for-like revenue increase and a 15.1% increase in selling space.

Overall, O'Key reported a 6.0% increase retail revenue in the quarter, with like-for-like revenue rising by 4.2%. Its hypermarket division was up 1.6%, or 1.8% on a like-for-like basis.

The group continues to pivot its operations more towards the fast-growing Da! banner, opening a net 13 new stores under the brand in the fourth quarter, bringing the total number of new openings to 118 at the end of 2020.

Discounter Focus

In a statement, it said that it expects 'discounters will remain the main driver of growth going forward', and that Da! now accounts for 15% of the group's total revenue.

"With its strong value-for-money proposition, carefully selected product offering based on the ‘fresh’ and own brands portfolio, and focus on ‘everyday low prices', Da! continued to capitalise on a growing long-term trend towards cost-conscious consumption," said Armin Burger, O'Key chief executive.

"[In full-year 2020], Da! showed record top-line growth for the last three years – net retail revenue rose by 45.3% YoY, with an impressive 27.8% LFL increase driven by both basket and traffic growth.”

On the group's hypermarket division, Burger added that the group is implementing a transformation programme across the portfolio, "aiming to anticipate market trends and further increase our attractiveness to customers in a fast-changing consumer environment.”

Online Growth

The Russian retailer has also increased the capacity and efficiency of its online and e-commerce platforms, with sales through its delivery service rising 30% year-on-year, and reaching 1.6% of total group revenue over the 12-month period.

"We see great potential for further development and continue to invest in our own e-commerce business focusing, first of all, on Moscow and St.-Petersburg as key cities of our presence," said Burger.

The final quarter of the year was also notable for the group, as it listed its GDRs on the Moscow Exchange, as well as retaining its initial listing on the London Stock Exchange.

Overall, commenting on the group's full-year performance, Burger said, “We are pleased with our results in what has been such a challenging year. Our business model, combining modern hypermarkets, uniquely positioned discounters and a developed online platform, proved its flexibility and resilience in a turbulent macroeconomic environment caused by the pandemic."

© 2021 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.

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