Russia's Magnit trims sales forecast in battle for shoppers

* Sees 2015 sales growth at lower end of 26-28 pct range

* Q3 sales up about 22 pct y/y after 28 pct growth in Q2

* EBITDA margin down to 11.2 pct from 12.4 pct a year ago (Adds CEO comments on sales growth expectations, expansion)

By Maria Kiselyova

MOSCOW, Oct (HKSE: 3366-OL.HK - news) 23 (Reuters) - Russia's biggest food retailer Magnit said on Friday it expected full-year sales growth to come in at the lower end of its forecast range amid intense competition for consumers squeezed by an economic downturn.

Magnit, which has more than 11,300 budget convenience stores in Russia, has proved relatively resilient but has not escaped totally unscathed as shoppers have tightened belts in the face of a weak rouble and high inflation.

In the third quarter, revenue growth slowed and its core profit margin slipped from a year ago as the company had to cut prices to remain attractive to cash-strapped shoppers.

"For now, consumers have a more aggressive approach to prices than two years ago and this will continue for quite a long time because wages are not growing and inflation has been rather high," said Sergey Galitskiy, Magnit Chief Executive Officer and its biggest shareholder.

"We see that consumers are very selective about stores and are very focused on price," Galitskiy told a conference call.

The company sees sales rising in 2015 by about 26 percent - "plus/minus 0.5 percentage point", Galitskiy said. That would be at the lower end of a 26-28 percent forecast range.

Russian budget hypermarket chain Lenta has also recently lowered its 2015 sales growth forecast to 29-33 percent from 34-38 percent, citing the volatile consumer and economic environment.

In the third quarter, Magnit's net sales rose 21.7 percent year-on-year to 235.6 billion roubles ($3.8 billion), slower than 27.6 percent growth in the second quarter.

The margin on earnings before interest, tax, depreciation and amortisation (EBITDA) was 11.2 percent, down from 12.4 percent in the third quarter of 2014, Magnit said.

The drop was mainly a result of price cuts, as well as accelerated expansion, said Natalya Kolupaeva, analyst at Raiffeisenbank in Moscow.

Magnit has said it will open at least 1,350 budget stores in 2015, its biggest increase in a single year.

Kolupaeva reiterated a "buy" rating on Magnit stock, saying the company was on track to be close to the upper end of its full-year EBITDA margin forecast range of 10.5-11.3 percent.

Galitskiy reiterated that forecast and said Magnit planned to open more than 1,000 convenience stores next year but the pace of expansion could slow in 2017.

"If we feel we cannot manage this mass, we will stop because our management is sharply focused on profitability," he said.

Magnit said its quarterly EBITDA rose 10 percent to 26.5 billion roubles, while net profit climbed 26 percent to 18 billion roubles, lifted by a one-off gain. ($1 = 62.0680 roubles) (Additional reporting by Anastasia Lyrchikova; Writing by Maria Kiselyova; Editing by David Clarke)