Magnit Sales Growth Slows Amid Increased Competition in Russia

OAO Magnit (MGNT), Russia’s largest retailer, said sales growth slowed in September amid increased competition and as new stores took business from old ones.

Revenue last month rose 28 percent to 46.2 billion rubles ($1.42 billion), the Krasnodar, Russia-based company said today in a statement. That compares with growth of about 31 percent for January through August.

The sales missed estimates because of price deflation and a 1.4 percent decline in the number of customers visiting the stores in the third quarter, according to Mikhail Terentiev, an analyst at Otkritie Capital. Management paid more attention to profit margins rather on adding customers, he said.

“Witnessing tougher competition as well as stronger cannibalization effect of our stores in July-September this year, we have focused on operating efficiency and paid less attention to traffic,” Magnit’s billionaire Chief Executive Officer Sergey Galitskiy said in the statement.

Food-price deflation was 0.7 percent in the third quarter compared with 0.7 percent inflation in the same period a year earlier, Magnit said. Customer numbers at convenience stores, which account for three-quarters of Magnit’s sales, fell 1.8 percent at outlets open at least a year.

Magnit fell 0.2 percent to $65.85 at 8:22 a.m. in London, where the stock has its main listing.

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