Results of 2017 Priorities for 2018

Transcription

1 Results of 2017 Priorities for

2 Highlights of 2017 Growth: Opened a record number of Convenience stores: 1,825 gross Profitability: Magnit remains one of the most profitable publicly traded food retailers in the world Innovation: For the third year in a row, Forbes magazine ranked Magnit amongst the world s 100 most innovative companies Improved Customer Value Proposition (CVP) Distinguished CVP for hypermarkets and Magnit Family stores Launched Magnit Family stores in a new concept Developed new Geographical Information System (GIS) for evaluating opening criteria for new stores Accelerated refurbishment program for Convenience stores Strengthened the Sales Team in HQ and in the regions Opened first Drogerie store with integrated pharmacy 2

3 Results of 2017 Revenue bn RUR +6,4%, YoY Earnings surprises Forecasted Actual Food inflation* 4,6% 1,1% Competition New stores of main competitors, which overlap with Magnit stores Q16 2Q 3Q 4Q 1Q17 2Q 3Q 4Q EBITDA bn RUR, EBITDA margin 7,75% 11,95% 10,67% 9,67% 7,86% 9,65% 7,23% 7,38% Total Magnit Convenience stores, which overlap with our main competitors Adjustment to new Convenience stores due to tougher internal requirements for openings on 1 st Jan on 1 st Jan Days for store refurbishment Q16 2Q 3Q 4Q 1Q17 2Q 3Q 4Q * According to Rosstat, food inflation for the last 12M (Jan Dec 2017) was 1,1 % Y-o-Y vs 4,6 % for the same period in the previous year 3

4 Expansion Highlights 120 mln 66 2/ 3 Expansion in selling space in 2017 Russians served by Magnit store network Regions of presence Of the Russian territory New store openings Gross New store openings Net Total num. of stores EOP Moscow, south-western district Convenience stores Hypermarkets Magnit Family Drogerie stores incl. pharmacies Central Ural Distribution centers 2 37 Trucks Contribution to growth of selling space +2% +10% 4

5 Guidance for 2018 Openings gross Convenience stores Refurbishments % Sales growth Y-o-Y Drogerie stores incl. pharmacies 700 Positive LFL sales Hypermarkets 5 by 3Q18 Magnit Family 15 5

6 CAPEX Priorities for bn RUR 40% Store openings 22% Store refurbishments 20% Vertical integration 13% Logistics system 5% IT and digital 6

7 Priorities for Accelerate profitable growth Attract new customers Retain existing customers Improve the overall brand image Keep focus on efficiency 4. Improve the in-store atmosphere Launch redesign Build effective marketing, in order meet customer expectations Create and develop new sales channels 7. Develop digital channels for customer communications 7

8 Expansion Overview 8

9 Expansion Priorities Strategic goals Remain the largest retail chain in Russia by geographic scope Act as a logistics operator 1 Actions Expand to new regions 12% of new store openings in new regions of Siberia (Krasnoyarsk Krai, Khakassia, Altay, Novosibirsk region, Kemerovo region and Tomsk region) Strategic partnership with the largest real-estate developers Engage in tactical M&A retail chains (164 stores) were acquired target is up to 400 stores Enhance logistics Focus on automatization Expand to new regions Develop technologies Roll-out the GIS for selecting optimum store locations Develop mobile workplace for higher productivity of regional staff Centralize decision-making on new store locations selection 9

10 Convenience Store Overview 10

11 Convenience Store Overview Fresh products. Everyday shopping missions. Close to home at the lowest prices. 846 bn RUB Key Categories Revenue in % 89% Fresh Dairy Sausages Share of format in Share of food Magnit s revenue in sales 53% 326 m 2 Share of refurbished Average selling Vodka Confectionery Poultry stores in 2018 space 11

12 Convenience Store Priorities Strategic goals Actions Lead in share of fresh among competitors Offer lower prices for key categories than competitors do Use selling space smartly Maintain high operational efficiency Focus on fresh products through incentives, equipment, pricing, increased stock and supply Unify assortment for store clusters Adjust product range depending on location (coffee, bakery, chilled meat, ready-to-eat products) Ensure the presence of core federal products and increase the share of local assortment Increase the share of key categories in assortment Target promotions for ticket growth Optimize the use of selling space, increase product range through higher density of products per sq. m., and install new equipment Open stores with a minimum selling space of at least 250 sq. m. 12

13 Hypermarket Overview 13

14 Hypermarket Overview Compact hypermarket on the way home. Medium purchase with the minimum time spent. 146 bn RUB Key Categories Revenue % 80% Fresh Meat Seafood Cheese Share of format in Share of food Magnit s revenue in sales m 2 Spirits Baby care Culinary Laundry New store openings Average selling in 2018 space 14

15 Hypermarket Priorities Strategic goals Serve as the nearest hypermarket to shopper Maintain perception of the cheapest hypermarket in Russia Offer the best price-quality ratio in culinary Actions Open test hypermarket in a new concept in the 2 nd half of 2018 Adapt assortment to local preferences Increase density of products per sq.m. Involve top international suppliers (Mars, PepsiCo, etc.) in win-win collaborations Improve the quality of in-store production Enhance the range of non-food products Differentiate hypermarkets promo-offer from other stores 15

16 Family Supermarket Overview 16

17 Family Supermarket Overview Convenient supermarket with favorable prices, comfortable customer service and the best offer for fresh products. 60 bn RUB Key Categories Revenue % 84% Fresh Meat Prepared food Bakery Share of format in Share of food Magnit s revenue in sales m 2 New store openings Average selling Wine Beer Beauty Culinary in 2018 space 17

18 Family Supermarket Priorities Strategic goals Differentiate from hypermarkets by acting as a value supermarket Ensure convenient and fast shopping Actions Roll-out the new concept and refurbishment of existing Family supermarkets Adapt assortment depending on location Work-out distinctive strategy for seasonal products Focus on fresh products, prepared food, and bakery Rethink lay-outs and implement planograms based on customer decision tree Rotate promotions on a weekly basis 18

19 Drogerie store Overview 19

20 Drogerie store Overview All necessary health, home, and beauty goods within walking distance 79 bn RUB Key Categories Revenue Make-up Pet food Laundry 7% Share of format in Magnit s revenue m 2 Baby care Hygiene Skin care Pharmacy New store openings Average selling (gross) in 2018 space 20

21 Drogerie store Priorities Strategic goals Actions Work-out the concept of drogerie store combined with pharmacy Differentiate service through development of excusive brands and private labels Integrate pharmacies into drogerie stores Enlarge exclusive assortment and brands in cosmetics, hygiene, baby care products Extend product range and increase incremental sales by adding some food categories, (e.g. snacks and soft drinks) Develop digital communication channels, (e.g. web-site, mobile application, and bloggers) 21

22 Efficiency Opportunities 22

23 Efficiency Opportunities Construction costs Reducing costs for new store openings (including refurbishment) Staff costs Increasing personnel productivity. Attraction of supplier s merchandisers. Utilities expenses Implementation of energyefficient technologies Cost leadership Shrinkage costs Logistics costs Increasing efficiency of distribution centers and transport companies Lease expenses Matching rental inflation with food inflation. Offering lessees with unoccupied space 23

24 Strategic Projects Private labels Differentiation of entry-price and value for money brands Net Promoter Score (NPS) measurement Focus on friendly service Loyalty program Vertical integration Production facilities and agriculture Talent development 24