Refurbished stores at Russian retailer Magnit are showing an 8% to 10% increase in like-for-like sales, driven by higher average basket sales, a leading retail analyst has said.
Artur Galimov of Sova Capital was commenting following the hosting of a virtual store tour by the retailer and a call with Ruslan Ismailov, the retailer's chief operating officer.
As Galimov wrote in a briefing note, the retailer's refurbished stores 'mainly benefit from increased sales of mid-price and high-price products to higher income customers, as well as increased spending by regular customers'.
Magnit has managed to 'speed up' the amount of tine it takes to refurbish a store, from 20 days to between 10 and 12 days, 'which enables the retailer to keep customers from switching to shopping at competitors'.
To date, the retailer has refurbished around 5,000 convenience stores and 1,000 drugstores across its estate.
Magnit is also 'making progress' with its local assortment and private label ranges, Galimov noted, with the company currently working with around 3,000 local suppliers, and sales of local products accounting for 30% of sales, or 50% in selected categories in some regions.
Private label share currently stands at around 10% of sales, but this rises to 16% when in-house production is taken into account, and as much as 50% in certain categories, such as bread.
The virtual store tour, of the retailer's new convenience format in Krasnodar, 'featured an attractive layout, convenient navigation, some innovative technological solutions and a generally pleasant ambience,' Galimov wrote.
'The retailer has made some progress in reducing its average refurbishment period, achieving a better sales mix in renovated stores and improving offering in local assortment and private label goods'.
There was also an update on trading in July and August, with July seeing 13.7% revenue growth and a 7.2% increase in like-for-like sales, and August coming in 'somewhat weaker', with sales dynamics below the 2020 average.
Last month, Magnit announced 16.0% revenue growth in the first half of its financial year, and EBTIDA margin of 7.0%.
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