Shrinking Russian Wages Weigh on Magnit's Margins

PJSC Magnit, the Russian retailer that has dropped 9 percent from this year’s high in April, will probably report lower profit margins when it posts second-quarter results Wednesday as a slump in sales amid shrinking wages and real disposable incomes curbed growth, according to Barclays Plc and ZAO Raiffeisenbank.

While Magnit has expanded its selling space at a record level, revenue growth has declined in each month this year except May as Russians earn less money and price inflation slows. That could lead to a 110 basis-point drop in second-quarter gross margin from a year earlier, according to Boris Vilidnitsky, an analyst at Barclays in London.