Russian Retail - Solving an Economic Puzzle
Average wage growth of 8.2% in 2Q17, as reported by the State Statistics Service, captures only large corporates. But wages of employees at smaller companies and those who work under-the-table have been falling, which explains why retail sales growth has been lagging official wage growth in recent quarters. As the economy recovers, this gap should narrow, and nominal income growth - which captures wages at both large and small corporates - should climb from 2.0% in 2Q17 to 4.7% in 4Q17 and to 5.1% in 2018, in our view. This will translate into top-line growth for our covered food retailers, should ease promo hunting and potentially lead to trading up. X5 Retail Group is our top pick and Lenta is also a BUY, whereas we downgrade Magnit to HOLD (on recent stock performance), and we also have a HOLD on Dixy Group and SELL on O'Key.Dixy Group OAO is a Russian Federation-based company, which is engaged in the retail industry. Dixy Group OAO and its numerous subsidiaries comprise Dixy Group. Dixy Group of companies are involved in the retail sale of food products and household supplies. The Company offers a wide range of products through its shop chain, such as grocery, beverages, bakery, sanitary and household products, among others. The Company's brands are Dixy, Viktoria, Megamart, Kvartal, Cash, among others. It operates domestically on the territories of in Moscow and Moscow region, Saint-Petersburg and Leningrad region, Yekaterinburg and Sverdlovsk region, Chelyabinsk and Chelyabinsk region, Kaliningrad and Kaliningrad region, among others.
Sberbank CIB Investment Research is a research firm offering equity, fixed income, economics, and strategy research. It covers analysis on all aspects of Russia’s capital markets, issues and industries. The firm analyzes trends in Russia and combines local knowledge with a global perspective. It processes macroeconomic data, market and company-specific news, stock quotes and other information for providing research reports. The firm provides details and latest prices on the most traded names and most traded paper on all segments Russian market. In strategy research, it provides thematic research, tips and descriptions of the methodology used to evaluate companies.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.