X5 Drops as Magnit Overtakes Retailer by Revenue: Moscow Mover

X5 Retail Group NV (FIVE) declined after sales growth slowed, opening the way for OAO Magnit (MGNT) to overtake it as Russia’s biggest retailer by revenue.

X5 Retail lost as much as 2.3 percent and slid 0.5 percent to $17.62 by the close in London, its first drop in five days. The number of shares traded was about 300,000, equivalent to 37 percent of the three-month daily average.

X5, controlled by billionaire Mikhail Fridman’s Alfa Group, posted an 8.1 percent increase in first-quarter sales to 126 billion rubles ($4.1 billion), according to a statement today. That compares with growth of 8.6 percent in the fourth quarter. Earlier this week, Krasnodar-based Magnit said its quarterly sales rose more than 30 percent to 131 billion rubles.

“Magnit has been far more successful,” Natalia Smirnova, an analyst at Deutsche Bank AG, said by phone from Moscow. “X5 over the past few years saw operational problems, they lost customer traffic. They were less aggressive at opening new stores.”

Since a London initial public offering in 2008, Magnit has tripled its store network to more than 7,000, building new outlets from scratch in Russia’s regions. In 2011, Magnit exceeded the market value of X5, which had expanded by acquiring rivals including Karousel an Kopeyka.

“In the last two years, X5 has been having problems in digesting its acquisitions and managing stores, which led to customer outflow,” Ivan Kushch, an analyst at Moscow-based VTB Capital said by phone. “Magnit was set to overtake it by sales sometime this year.”

Magnit has surged 76 percent in the past 12 months, giving it a market value of about $23 billion. X5 is worth $4.8 billion after falling 21 percent over the same period.

“I’m afraid to be found immodest, but for the first time over the last 15 years after opening of the first store we have become the leader in the food retail sector by sales,” Magnit’s billionaire owner, Sergey Galitskiy, said in a statement today.

To contact the reporters on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net; Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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