X5 Retail Returns to Profit, Sees Improvement in Spending Toward Year-End
X5 Retail Group NV, Russia’s largest food retailer, swung to a profit in the first quarter after a loss a year earlier when the ruble’s decline against the dollar led to the revaluation of its debt.
Net income totaled $78.9 million, compared with a net loss of $82.1 million, the Moscow-based company said in a statement today. Revenue rose 36 percent to $2.54 billion.
X5, whose chains include Perekriostok supermarkets and Pyaterochka discount stores, opened 27 outlets in the period, mostly discount stores, raising the total to 1,399. The company in December completed the acquisition of the Paterson retailer for $275 million in cash and debt, adding 80 stores to its network.
“We expect consumer spending to begin to show improvement towards the end of the year,” Chief Executive Officer Lev Khasis said in the statement. “This, in combination with new store openings and post-integration contribution from Paterson, should enable X5 to deliver top-line growth in the low-20% range.”
Earnings before interest, depreciation, taxes and amortization increased 10 percent to $178.5 million, with profitability on that basis narrowing by 1.7 percentage points to 7 percent, according to the statement.
“Paterson consolidation and investment in prices at discounter stores” hurt profitability in the quarter, analysts led by Victoria Sokolova at Troika Dialog in Moscow, said in a note to investors yesterday. They have a “buy” recommendation on the stock.