X5 4Q 19 - Sales growth decelerated to 11% yoy
X5 reported a slightly negative 4Q 19 trading update with sales growth decelerating to 11% yoy, which was a continuation of the decelerating trend. LFL sales growth remained positive in proximity and supermarket formats, but decelerated compared to previous quarters, affected by slowing food inflation and increasing promo activity. We think that the trading update was slightly negative as while 2019 retail sales were only ca. 1% lower than our forecast, the company mentioned increased promo activity in the sector during the quarter, which may mean gross margin contraction compared to 3Q 19 when the company already saw aggressive promo activity from its peers.X5 Retail Group is a holding company. The main activity of Co. is the development and operation of grocery retail stores. Co. operates a retail chain of soft-discount, supermarket and hypermarket stores under the brand names "Pyaterochka", "Perekrestok" and "Karusel" in major population centres in Russia, including but not limited to Moscow, St. Petersburg, Nizhniy Novgorod, Rostov-on-Don, Kazan, Samara, Lipetsk, Chelyabinsk, Perm, Ekaterinburg and Kiev, Ukraine.
The Institutional Equity Research team of Raiffeisen Bank International AG covers 85 stocks from Austria, Central & Eastern Europe with sell-side research and thus levers our local broker status with excellent company relationships. For corporates in Austria, CEE and Western Europe, we offer co-sponsored research, which includes research coverage and marketing activities to investors. Additionally, through our Spotlight Research product we also shed light on leading European small and micro-caps, seeking greater visibility with investors.
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