Magnit Company News - Further gross margin contraction led to profitability miss
Yesterday, Magnit released weaker than expected unaudited 4Q 19 IFRS results, missing both our and Interfax consensus expectations on EBITDA (10.9% and 16.8%, respectively) and net income (17.0% and 39.7%, respectively) mostly due to unexpected gross margin contraction qoq, while its revenue was in line with expectations. Another negative surprise came from the inventory turnover which became worse yoy, while we were expecting the opposite. On a positive note, LFL traffic became positive for convenience stores for the first time since 3Q 16, which may suggest that customers started to appreciate Magnits updated customer value proposition. The company has issued a guidance for 2020e which implies a significant slowdown in store openings and net selling space growth.
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