MAGNIT PJSC (MGNT)
29-Apr-2021 / 09:59 MSK
Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Magnit Reports 4.1% LFL Sales Growth and 7.0% EBITDA margin in 1Q 2021
Krasnodar, Russia (April 29, 2021): Magnit PJSC (MOEX and LSE: MGNT; the Company), one of Russia's leading retailers, announces its 1Q 2021 operating and unaudited financial results.
net retail sales growth
1Q 2021 Key Operating and Financial Highlights
lfl sales growth
"The first quarter results were in line with our internal expectations. In January, February and the first half of March, sales were exceptionally strong across all formats and channels despite trading against a prior year base that included a spike in sales driven by consumer stockpiling during the nationwide lockdown. LFL sales grew 4.1% in the first quarter of 2021, supported by further improvements in mature stores. We continue to grow market share and gain customers from competitors. Our confidence that these improvements are now baked in and permanent remains intact. We are on track to deliver on our published plans.
Although the macro and consumer environment remain volatile, we continue to see a gradual improvement in profitability, delivering sustainable 7.0% EBITDA margin in 1Q 2021.
We continue to be guided by our key priorities - improvements in our customer value proposition and operating efficiency, smart returns-driven expansion and store redesign to deliver further profitability gains. Development of the wider Magnit eco-system is progressing well with new services available now via Magnit Pay. We have also expanded our e-commerce pilots and are pleased with the first results.
Magnit's financial position remained very stable with further optimization of the working capital cycle and low debt burden. Our strong capital discipline underpinned the recent Board decision to pay a second tranche of dividends for the full year of 2020 in the amount of about RUB 25 billion."
total amount of dividends recommended by the board to be paid
hard disounters in operation
Key Events in 1Q 2021 and after the Reported Period
1Q 2021 Operating Results
Total Net Retail Sales, million RUB
Number of Tickets, mln
Average Ticket, RUB
Stores and Selling Space
Number of Stores (EOP)
Store Openings (Gross)
Store Openings (Net)
Total Selling Space (EOP), th. sq.m
Selling Space Addition (Net), th. sq.m
1Q 2021 LFL Results
LFL composition, %
High Base and Leap-Year Effect
LFL Sales Growth
Net Retail Sales Growth
2.5 months 2021 (January 1st - March 14th, 2021)
0.5 months 2021 (March 15th - 31st, 2021)
1Q 2021 adjusted for leap-year effect
1Q 2021 adjusted for leap-year and stockpiling effect
LTM sales density improvement y-o-y
Total sales in 1Q 2021 grew by 5.8% y-o-y to RUB 397.9 billion.
Net retail sales in 1Q 2021 grew by 6.3% y-o-y (or 7.5% y-o-y adjusted for the leap-year effect) driven by a combination of 4.5% selling space growth and 4.1% LFL sales growth.
Net retail sales growth continued to outpace selling space growth on further improvement of sales densities. Overall sales densities in 1Q 2021 improved by 0.5% q-o-q and 5.3% y-o-y while in the Company's main convenience store format these improved by 7.0% y-o-y.
of selling space is already matured
lfl average ticket growth in 1Q 2021
High base effect due to the beginning of the pandemic in the middle of March 2020 had a significant impact on the dynamics within the reported quarter. March last year was the strongest month with the record high double-digit LFL sales growth due to stockpiling effect. As a result, net retail sales growth during first 2.5 months reached 9.1% while starting from the 15th of March, sales growth started to decelerate and stood at -4.6% for the rest of the month bringing the 1Q average to 6.3%.
All regions showed solid positive LFL sales growth with Siberian, Caucasian and Central regions delivering the strongest results.
LFL sales growth continued accelerating during first 2.5 months of the reported quarter and reached 7.3% being almost in line with previous quarter average. High base effect of last year resulted in deterioration of LFL sales growth starting from the week of March 15th to -7.7% for the rest of the month.
Mature stores continued to be the main driver of the Company's strong LFL performance with 288 stores entering LFL panel in 1Q (incl. 116 convenience stores and 172 drogeries). Only 5.9% of Magnit's selling space is currently in the ramp-up phase with 94.1% already matured.
As in the previous quarters, average ticket was the main driver of LFL sales growth. This reflects continued trend of lower frequency of visits overcompensated by strong basket growth driven by increased spending per visit.
LFL average ticket growth in 1Q 2021 was 14.9% predominantly due to growing number of articles per basket, continued 'trading up' purchases and on-shelf price inflation. 'Trading up' effect was driven by ongoing assortment improvements and inflow of more affluent customers from other chains. Shelf price inflation peaked in February and started decelerating since March.
LFL traffic growth in 1Q 2021 declined to -9.4% driven by the high base of the previous year (4.0% in 1Q 2020). Already in January and February 2020 (pre-COVID months) LFL traffic demonstrated solid growth on positive response of customers to operational improvements and initiatives and then accelerated further driven by increased frequency of visits during stockpiling in March.
1Q results came without any acceleration of promo intensity. Promo share as a % of sales went down vs previous quarter and remained flat y-o-y on the back of more normal shopping patterns and different marketing tactics leading to a shift from "bulk" to personalized actions. Despite lower promo intensity q-o-q, sales growth continued accelerating during first 2.5 months of the reported quarter.
Fresh fruits and vegetables remained the fastest growing category on continuous improvements of assortment and on-shelf availability.
of loyalty program active users
Magnit's cross-format loyalty program continued to gain popularity among customers during the period - the number of active loyalty card users exceeded 46 million. Company-wide, the share of tickets using the loyalty card was 54% with penetration in sales of 68%. The loyalty program continues to deliver positive cross-format gains with sustainable growth of customers visiting 2+ store formats (42% of Magnit customer base at the end of the reporting period).
of total net retail sales generated by convenience segment
Store Network Development and Performance by Format
The convenience segment generated 77.3% of total net retail sales in the reported quarter. In 1Q 2021 Magnit accelerated its expansion program y-o-y and opened (gross) 241 convenience stores (145 in 1Q 2020). The Company continued its efficiency campaign and closed 54 convenience stores vs 173 store closures in 1Q 2020. As a result, Magnit added 187 stores (net) during the reported quarter, bringing the total number of convenience stores to 15,098. The selling space growth of convenience stores was 4.4% y-o-y resulting in the total selling space of this format of 5,169 thousand sq. m. as of March 31, 2021. Sales in the convenience format grew by 7.2% driven by LFL sales growth of 4.9%. LFL traffic growth decelerated to -9.5% on high base effect. LFL average ticket growth remained strong and stood at 15.9% overcompensating negative LFL traffic growth.
of total net retail sales generated by supermarkets
The share of supermarkets was 12.9% of the Group's net retail sales in the reported quarter. During 1Q 2021 the Company opened one supermarket resulting in the total number of supermarkets of 471. Selling space across this format decreased by 0.4% y-o-y as 6 supermarkets were closed during last four quarters and stood at 943 thousand sq. m. This resulted in net sales growth of -1.7%. During first 2.5 months of the reported quarter, supermarkets delivered strong trading in a positive zone with acceleration vs previous quarter. However, the last two weeks of March distorted the quarter performance as supermarkets had the highest base effect due to stockpiling last year which, to a great extent, happened in the large formats. LFL traffic was flat q-o-q and stood at -11.4% while LFL average ticket growth decelerated to 12.1% which was not enough to compensate negative LFL traffic. As a result, LFL sales growth in supermarkets stood at -0.7%.
of total net retail sales generated by drogerie
annual GMV runrate
The share of drogerie format as a proportion of the total net retail sales increased to 9.0% in the reported quarter vs 8.6% a year ago. During 1Q 2021 Magnit opened (net) 148 cosmetics stores and added 32 thousand sq. m. of selling space delivering a 9.0% y-o-y increase in selling space, the highest across all formats. Driven by this increase in selling space and LFL sales growth of 4.3%, sales grew 11.5% representing again the strongest performance among all Magnit's store formats. LFL traffic growth was negative of -6.9% well compensated by strong 12.0% LFL average ticket growth.
During 1Q 2021 Magnit continued its renovation program and redesigned 88 convenience stores and 12 supermarkets resulting in the combined share of refurbished and new stores at: 73% for convenience stores, 32% for supermarkets and 57% for the drogerie format.
Magnit began testing e-commerce services in the second half of 2020. In total, Magnit currently runs seven online delivery projects, both independently and in cooperation with partners.
Magnit fulfils around 9,500 orders a day. The run rate for Magnit's online channel stands at RUB 4.1 billion based on the last week of March.
Among all these pilots, convenience store-based express delivery has the highest sales and shows the best growth dynamics.
Average ticket for Magnit's own delivery service is c. RUB 1,400 which is approx. 3.8 times higher than in the convenience stores (RUB 372 in 1Q 2021). This is mostly due to a larger number of items per basket.
Magnit's e-commerce services today cover over 1,300 stores in 58 regions and 94 cities, with around 60% of the current revenue generated outside Moscow and Saint-Petersburg. During 2021, the Company plans to expand online delivery adding at least 1,500 convenience, drogerie and large-format stores in more than 50 regions across Russia.
1Q 2021 Monthly Operating Results
Total net retail sales, RUB million
Number of tickets, million
Average ticket, RUB
Number of Stores (EOP)
Store Openings (Gross)
Store Openings (Net)
Total Selling Space (EOP), th. sq. m.
Selling Space Added (Net), th. sq. m.
sales growth in january 2021
Strong sales momentum continued since the start of 2021 with January delivering solid LFL sales growth in line with 4Q 2020 average. Sales growth also remained double-digit (10.7%).
In February strong trend continued with further acceleration of LFL sales above January and above 4Q 2020 average. Net retail sales growth in February was 7.4%. Adjusted for the leap-year effect, net retail sales growth in February would be 11.3%. January and February 2021 came on a much stronger base with mid-single digit LFL sales growth in the same months last year.
During first two weeks of March, LFL sales growth demonstrated further acceleration vs previous months. Starting from March 15th, sales dynamics was hit by the high base effect. As a result, net retail sales growth in March decelerated to 1.8% driven by negative LFL sales growth offset by 4.5% selling space growth.
Financial Results for 1Q 2021
Gross Margin, %
SG&A, % of Sales
EBITDA pre LTI
EBITDA Margin pre LTI, %
EBITDA Margin, %
EBIT Margin, %
Net Finance Costs
FX Gain/ (Loss)
Profit before Tax
Net Income Margin, %
in 1Q 2021
y-o-y reduction of shrinkage
ebitda margin in 1Q 2021
Net income margin
in 1Q 2021
Total revenue in 1Q 2021 increased by 5.8% to RUB 397.9 billion. Net retail sales in 1Q 2021 grew by 6.3% y-o-y to RUB 387.9 billion.
Wholesale revenue in 1Q 2021 decreased by 11.2% y-o-y to RUB 10.0 billion with 2.5% proportion of total sales.
Gross Profit in 1Q 2021 increased by 9.3% to RUB 93.1 billion with a margin increase of 74 bps y-o-y to 23.4% as a result of improved commercial terms, lower shrinkage and favorable format mix. This was partially offset by slightly higher supply chain costs as well as ongoing investments into Magnit's loyalty program with higher penetration. Format mix had a positive impact on gross margin, with the share of high-margin drogerie business growing from 8.6% in 1Q 2020 to 9.0% in 1Q 2021 and the share of lower margin wholesale segment decreasing as a percent of sales y-o-y. Promo intensity was flat y-o-y with some seasonal reduction compared to the previous quarter.
Supply chain costs increased y-o-y due to continuous increase of on-shelf availability and higher transportation costs. Growth of transportation tariffs in China impacted domestic transportation tariffs.
Alongside with the growing share of fresh products and overall improvement of on-shelf availability shrinkage as a proportion of sales decreased further by 61 bps y-o-y driven by ongoing optimization of supply chain processes, renegotiation of quality standards with suppliers and other initiatives.
SG&A costs improved by 10 bps to 20.5% as a percent of sales. This was achieved as a result of lower depreciation and rent costs as well as positive operating leverage effect partially offset by negative effect coming from stores in the ramp up phase, higher packaging, raw materials and marketing costs.
Personnel costs as a percent of sales increased by 3 bps y-o-y on the back of acceleration in store openings started in 4Q and their ramp-up period offset by growing productivity and retention rate. Staff turnover continued to improve during the period driven by on-going automation of business processes.
Rental costs as a percent of sales decreased by 6 bps y-o-y driven by higher sales density, improved lease terms with landlords and closing of inefficient stores. This was achieved despite the increased share of leased selling space to 78.3% in 1Q 2021 vs 77.3% a year ago.
Depreciation as a percent of sales reduced by 31 bps y-o-y as most of the newly opened stores were leased while the number of store refurbishments in the reported quarter decreased by more than twice (288 store were refurbished in 1Q 2020 vs 100 in 1Q 2021).
Advertising expenses increased by 9 bps y-o-y on higher marketing activities including loyalty campaigns and digital marketing.
Packaging and raw materials expenses increased by 12 bps y-o-y reflecting the ongoing provision of means of sanitary protection to customers and employees during the COVID-19 pandemic.
Other costs including utilities, repair and maintenance, bank and tax expenses remained broadly flat as a percent of sales y-o-y.
Total costs incurred as a result of the Company's response to COVID-19 in 1Q 2021 amounted to approximately RUB 0.3 billion and consisted mainly of personal protection means and safety procedures (reflected in other operating expenses).
As a result, EBITDA was RUB 27.7 billion with a 7.0% margin - 91 bps y-o-y expansion - due to strong gross margin dynamics and strict cost control. LTI expenses in the reported period stood at 0.08% of sales - as a result EBITDA margin pre-LTI was in line with the reported EBITDA margin of 7.0%.
Net finance costs in 1Q 2021 decreased by 31.7% y-o-y (or 36 bps) to RUB 2.6 billion due to the lower cost of debt and total amount of borrowings. As a result of continued focus on financial efficiencies, the cost of debt further reduced to the historical low level of 5.9% (89 bps y-o-y or 18 bps q-o-q). This has also led to further improvement of the debt profile with increased share of long-term borrowings to 98% and debt maturity of 21 months.
In 1Q 2021 the Company reported FX loss in the amount of RUB 0.2 billion related to direct import operations.
Income tax in 1Q 2021 was RUB 3.3 billion. Effective tax rate has normalized to 23.3%.
As a result, net income in 1Q 2021 increased by 158.8% y-o-y and stood at RUB 10.9 billion. Net income margin increased by 162 bps y-o-y to 2.7%.
Financial Position Highlights (IFRS 16)
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Short-term borrowings and short-term portion of long-term borrowings
y-o-y optimisation of inventories
Despite ongoing improvement to on-shelf availability, the increased share of drogerie format by 42 bps as a percent of net retail sales, supplier inflation and total sales growth of 5.8%, inventories decreased by RUB 12.2 billion vs March 31, 2020 and stood at 211.2 billion. This was driven by a number of projects launched in 2020 including reduction of slow-moving items, assortment harmonization and IT solutions aimed at better on-shelf availability and promo forecasting.
Trade and other payables reduced by RUB 5.1 billion vs March 31, 2020 and stood at RUB 138.3 billion due to inventory reduction vs previous year, while payment days increased. This was partially offset by slight improvement of accounts receivables by 2.9% to RUB 12.2 billion as a result of ongoing optimization initiatives including weekly tracking of overdue debts and clearing activities as well as launch of electronic document flow with suppliers.
Debt Composition and Leverage
March 31, 2021
December 31, 2020
March 31, 2020
Total Debt, RUB billion
Net Debt, RUB billion
Net Debt, RUB billion
as of March 31, 2021 (IAS 17)
Gross Debt remained almost flat vs December 31, 2020. Following dividend payment for 9M 2020 in the reported quarter cash position stood at RUB 6.6 billion. As a result, Net Debt increased by 33.2% to RUB 161.7 billion.
The Company's debt is fully RUB denominated matching revenue structure. 98% of debt portfolio was long-term with 21 months maturity. The Net Debt to EBITDA ratio was 1.4x as at March 31, 2021 vs 1.1x as at December 31, 2020.
Capex in 1Q 2021 increased by 15.9% to RUB 8.3 billion. This was driven by acceleration of expansion program (407 store openings on gross basis in 1Q 2021 vs 321 in 1Q 2020). Capex is expected to pick up in the next periods in line with the calendarization of the store opening and redesign process.
FY 2021 Guidance
Magnit confirms its full year store opening, redesign and capex guidance published on February 4th, 2021.
In 2021 Magnit plans to open around 2,000 stores of different format on gross basis as part of its organic expansion and redesign about 700 stores. Capital expenditures are expected in the amount of RUB 60-65 billion.
Note to editors
Public Joint Stock Company "Magnit" is one of Russia's leading retailers. Founded in 1994, the company is headquartered in the southern Russian city of Krasnodar. As of March 31, 2021, Magnit operated 39 distribution centers and 21,900 stores (15,098 convenience, 471 supermarkets and 6,331 drogerie stores) in 3,770 cities and towns throughout 7 federal regions of the Russian Federation.
In accordance with the audited IFRS 16 results for FY 2020, Magnit had revenues of RUB 1,553.8 billion and an EBITDA of RUB 178.2 billion. Magnit's local shares are traded on the Moscow Exchange (MOEX: MGNT) and its GDRs on the London Stock Exchange (LSE: MGNT) and it has a credit rating from Standard & Poor's of BB.
This document contains or may contain forward-looking statements that may or may not prove accurate. For example, statements regarding expected sales growth rate and/or store openings are forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from what is expressed or implied by the statements. Any forward-looking statement is based on information available to Magnit as of the date of the statement. All written or oral forward-looking statements attributable to Magnit are qualified by this caution. Magnit does not undertake any obligation to update or revise any forward-looking statement to reflect any change in circumstances.
 LFL calculation base includes stores, which have been operating for 12 months since its first day of sales. LFL sales growth and average ticket growth are calculated based on sales turnover including VAT.
 Convenience Stores include convenience stores and small pilots such as Magnit City and My Price
 Supermarkets include Magnit Family supermarkets and Magnit Extra superstores
 Other Formats include pharmacies and stores located at Russian Post offices
 Excluding VAT
 Net retail sales of the last four quarters divided by the average selling space at the end of the last five quarters
 Period of 1st January - 14th March 2021 compared to the same period of 2020
 Excluding VAT
 LTI - Long-Term Incentive Program
 Inventory turnover days = ((inventories as of 31.12.2020 + inventories as of 31.03.2021)/2/cost of goods sold for 1Q 2021) x 90