The supermarket chain managed to realize growth in nearly every area last year. The number of stores increased, revenues went up, and the number of visitors to the store formulas increased as well. Over 2014, Magnit achieved a revenue of 19.8 billion dollars, an increase of 9.18 percent compared to 2013. The gross profit ended up over 10.6 percent higher, at 5.7 billion dollars.
Falling shares
In December, the supermarket’s share price fell quickly, after the management had adjusted the revenue forecast for that month downwards. Founder and director of the chain Sergey Galitsky then lashed out at investors. “I don’t know what investors are fantasizing about, but if they want returns of sixty or seventy percent, they should go to Las Vegas instead of Magnit.” The Russian supermarkets seem to be able to evade the crisis for now. The discounters’ revenues are increasing in particular. Due to the lowering purchasing power, more and more Russians are going to the cheaper discounters.
Magnit has a good position in this situation. “Magnit is the safest name because it operates as a discounter,” Barclays analyst Boris Vilidnitsky told the Financial Times. “If Russians can’t afford to shop at Magnit, they can’t afford any food.”
In December, the supermarket’s share price fell quickly, after the management had adjusted the revenue forecast for that month downwards. Founder and director of the chain Sergey Galitsky then lashed out at investors. “I don’t know what investors are fantasizing about, but if they want returns of sixty or seventy percent, they should go to Las Vegas instead of Magnit.” The Russian supermarkets seem to be able to evade the crisis for now. The discounters’ revenues are increasing in particular. Due to the lowering purchasing power, more and more Russians are going to the cheaper discounters.
Magnit has a good position in this situation. “Magnit is the safest name because it operates as a discounter,” Barclays analyst Boris Vilidnitsky told the Financial Times. “If Russians can’t afford to shop at Magnit, they can’t afford any food.”
More stores
Magnit includes several store formulas: from wholesaler to chemist and from convenience stores to hypermarkets. All in all, the retail chain has 9711 stores, 1618 of which first opened last year. The convenience stores are by far the biggest, with 8344 of the stores falling into this category. So it’s no surprise that the convenience stores provide the biggest contribution to revenue: 15 billion dollars. More remarkable is that the hypermarkets, of which Magnit has 190 in Russia, provide 3.6 billion in revenue.
Magnit includes several store formulas: from wholesaler to chemist and from convenience stores to hypermarkets. All in all, the retail chain has 9711 stores, 1618 of which first opened last year. The convenience stores are by far the biggest, with 8344 of the stores falling into this category. So it’s no surprise that the convenience stores provide the biggest contribution to revenue: 15 billion dollars. More remarkable is that the hypermarkets, of which Magnit has 190 in Russia, provide 3.6 billion in revenue.
American credit rating agency Standard & Poor’s (S&P) gave the Russian supermarket chain a higher rating last month: BB+. In general, a higher rating signifies a safer investment, so these companies or institutions can make more money on the capital markets. “We think Magnit’s growth will continue in the next two years, and that the supermarket will get a larger market share in the supermarket sector,” according to S&P.
