Eurotorg LLC (“Eurotorg” or the “Company”), the largest food retailer in Belarus, announces its unaudited operating results for the three months (2Q 2018) and six months ended 30 June 2018 (1H 2018).
Operating highlights for 2Q 2018 and 1H 2018
- In 2Q 2018 net retail sales increased by 11.3% year-on-year (“y-o-y”) to BYN 1,003 mn (net retail sales in USD terms2 increased by 4.5% y-o-y to USD 501 mn). In 1H 2018 net retail sales increased by 11.4% y-o-y to BYN 1,936 mn (net retail sales in USD terms increased by 6.2% y-o-y to USD 974 mn).
- As of 30 June 2018, the Company operated 627 stores with total selling space of 300.3 thousand square metres (“ths sqm”).
- In 2Q 2018 Eurotorg added 107 net new stores with 19.8 ths sqm of selling space. Since the beginning of 2018 the Company has added 127 net new stores with 21.8 ths sqm of selling space.
- In 2Q 2018 the Company further expanded its regional presence, entering 68 new cities and towns across Belarus (225 cities and towns covered as of 30 June 2018). Since the beginning of 2018 Eurotorg has entered 82 new cities and towns across Belarus.
- Like-for-like (“LFL”) sales growth accelerated to 4.8% in 2Q 2018, compared to 0.6% in 2Q 2017, driven by an increase in both LFL traffic and the LFL average ticket. LFL traffic was positive in 2Q 2018, at 1.3% (-9.7% in 2Q 2017), while the LFL average ticket grew by a solid 3.5% in 2Q 2018 (11.4% in 2Q 2017), continuing to expand at a faster pace than food inflation.
- Strong LFL sales growth of 5.9% in 1H 2018 was driven by growth of LFL traffic (0.4%) and a considerable increase in the LFL average ticket (5.5%).
Strategic highlights for 2Q 2018
- Eurotorg accelerated its expansion programme with a 20.6% increase in the number of stores (627 as of 30 June 2018 vs. 520 as of 31 March 2018) and a 7.1% increase in selling space (300.3 ths sqm as of 30 June 2018 vs. 280.5 ths sqm as of 31 March 2018).
- The Company continued to focus on developing its smaller formats: the average selling space of stores opened in 2Q 2018 was 153 sqm. Almost all of the new added stores (104 out of 107) were opened in leased premises, in line with the Company’s strategy of asset-light expansion.
- Sixty-one of the 107 new stores added in 2Q 2018, or 57%, were opened in rural areas, in line with the Company’s strategic goal of providing modern retail services to replace traditional formats across underpenetrated settlements.
- The Company launched a number of personalised marketing initiatives, including advanced churn management. Customers were segmented based on big data analysis of consumer behaviour, and smart personalised offers delivered to increase brand loyalty and drive traffic across pilot stores.
Eurotorg CEO Andrei Zubkou said: “The second quarter of 2018 saw a continued pick-up in the pace of LFL sales growth and further robust expansion of our retail operations. Operational performance remained strong, with net retail sales increasing by 11.3% during the period and breaking through the billion-BYN mark for the first quarter in the company’s history, and like-for-like sales up by 4.8%. In line with our strategy of tapping into demand in smaller settlements across Belarus, we continued to focus our expansion on rural areas.
“I would also like to highlight that in May 2018, GlobalCapital named Eurotorg the Most Impressive Debut Issuer in Emerging Markets in its annual Bond Awards. This award from GlobalCapital both provides well-deserved recognition of our team’s hard work and highlights Belarus’s economic and investment potential.”