Russia's O'Key Sees Q1 Sales Decline Due To Supermarket Selloff
Russian retailer O'Key Group said that its group net retail revenue for the first quarter declined by 6.9% year-on-year, due to the group selling off its supermarket business to X5 Retail Group at the end of last year.
Group net retail revenue, adjusted for the sale of the supermarket business, decreased by 0.7% year-on-year.
The business posted quarterly sales of RUB 39.84 billion (€0.52 billion), down from RUB 42.8 billion the previous year.
Other factors that impacted the group's performance were the closure of hypermarkets in Cherepovets and Sterlitamak in Q2 of last year, the temporary closure of a hypermarket in Moscow in the third quarter, and 'growing competitive pressures', the company said.
However, its Da! Discount chain, which is the focus of much of the company's investment at present, saw its net retail revenue rise by 35.9% to RUB 2.9 billion, with traffic up 32% and average basket size rising by 3.0%.
Like-for-like sales at Da! were up 15.9%, compared to a 1.6% decline at its O'Key hypermarket business.
'Remaining focused on the improvement of the hypermarkets price perception in Q1 2018, the company continued to enhance the quality of marketing initiatives and promotional assortment zoning,' O'Key Group said in a statement.
'The share of announced promotions increased by almost 10% year-on-year to 27% as at the end of Q1 2018, attributable to more proactive communication with customers.
'The company continues to put considerable effort into enhancing the customer value proposition in line with the ‘best value for money’ concept and increasing the overall efficiency of business processes.'
© 2018 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.