X5 Group (previously known as X5 Retail Group and commonly known as X5) is Russia's largest food retailer. In 2012, the organization of X5-Retail Group LLC was liquidated, and in 2018 X5 Group LLC was opened.
The company operates several retail formats: convenience stores under the Pyaterochka brand, supermarkets under the Perekrestok brand, and hypermarkets under the brand, as well as the Perekrestok.ru online market, the 5Post parcel, and Dostavka.Pyaterochka and Perekrestok.Bystro food delivery services.
The company's global depositary receipts are listed on the London Stock Exchange (LSE) and the Moscow Stock Exchange (MSE).
Its share of the food retail market rose up from 47th to 42nd place among the world's Top-250 retailers in the Global Powers of Retailing 2020 and took 11th place in the Top-50 fast-growing global retailers (according to Deloitte); it was ranked 41st among the Top 50 Global Retailers (according to Kantar Consulting).
In March 2021, after trials at 52 supermarkets, the group (in partnership with Visa and Sber) launched 'pay with a glance' biometrics at self-service checkout terminals in its supermarkets and convenience stores. The facial recognition payment system is expected to be expanded to 3,000 X5-owned stores by the end of 2021.
History In 1995, the first Perekrestok store was opened in Moscow. In 1999, the Pyaterochka retail chain was founded, and the first store was opened in Saint Petersburg. In 2005, Pyaterochka completed an IPO on the London Stock Exchange.
X5 was founded in May 2006 after the merger of the Pyaterochka and Perekrestok retail formats. In 2008, X5 acquired the Karusel hypermarket chain.
Other major acquisitions included: 82 Paterson supermarkets (2009), more than 660 Kopeyka stores (2010), 103 Pokupochka stores in the Samara region (2014), 104 stores owned by the Rosinka Group in Southwest Russia and 100 stores owned by the Soseddushka retail chain in the Orenburg region (2015) and 99 Polushka stores in Bashkortostan (2018), as well as 85 stores Telezhka, Tverskoy kupets and Volny kupets in four regions (2019). In 2018, X5 GDRs started trading on the Moscow Exchange.
Shareholder structure X5's shareholder structure is as follows: CTF Holdings S.A., 47.86%; Intertrust Trustees Ltd (Axon Trust), 11.43%; X5 directors, 0.10%; treasury shares, 0.01%; shareholders with less than 3%, 40.60%.
Dividend policy In 2017, the company approved its dividend policy.
The key principles of the dividend policy are as follows:
1) The dividend policy sets a target payout ratio of at least 25% of X5 Retail Group's consolidated IFRS net profit, provided that the company's financial position allows for it.
2) When considering a dividend proposal to the General Meeting of Shareholders, the Supervisory Board will be guided by a target consolidated net debt/EBITDA ratio of below 2.0x, in line with the company's financing strategy. The ultimate decision on payment of dividends will always be subject to approval of the General Meeting of Shareholders.
2017 dividends amounted to RUB 21.6 bn and 2018 dividends amounted to RUB 25 bn, whereas the planned figure for 2019 is RUB 30 bn.
Management In 2012, Stephan DuCharme was appointed the Company's CEO and the Chairman of the Management Board.
In 2015, was appointed as the Company's CEO and Stephan DuCharme appointed as the Chairman of Supervisory Board.
Offline-retail formats Each of the company's brands offers a customer value proposition and targets parts of the Russian consumer population. This strategy enables X5 Retail Group to capture a portion of the growth that is forecast for each of the three largest segments of Russia's food retail market.
Pyaterochka
Pyaterochka is a retail chain of proximity food stores.
Pyaterochka launched a new store refurbishment program in 2019. The new Pyaterochka will offer almost twice as many fresh products in a selling area of around 150 sq m, which is about half of the sales floor. Vegetables, fruits, and some of the perishable items are laid out in the dedicated fresh zone. The rebranded Pyaterochka sells an assortment of ready-to-eat meals and has an area where customers can have coffee or fresh orange juice and charge their devices. An in-house bakery made it possible to expand the amounts of bread and pastry.
In 2019, the Pyaterochka retail chain consisted of 15,354 stores with a turnover of RUB 1.37 trn.
Perekrestok
Perekrestok is a retail chain of food supermarkets.
In May 2019, Russia's largest smart kitchen was launched for producing semi-prepared foods for stores, allowing a 2.5-fold increase in the ready-to-eat and ready-to-cook range under the Perekrestok Chef brand in the company's supermarkets.
In February 2020, Perekrestok began rolling out a new store concept. Among the highlights of the new concept are updated interior and exterior designs, as well as a selection of new services offered in-store. The new Perekrestok concept includes frequent purchases of ready-to-eat and ready-to-go products. About 50% of the selling space will be dedicated to fresh categories (fruits, vegetables, dairy products,cheese, deli meats, as well as fresh fish and meat) or salad bars, bakeries and cafés. A special area will be focused on the health food category.
Perekrestok is Russia's largest supermarket chain, consisting, at 2019 closing, of 852 supermarkets with a turnover of RUB 273 bn.
Karusel
Karusel is a retail chain of hypermarkets specializing in food.
In 2019, Х5 Retail Group announced its decision to transform the Karusel hypermarket chain within two years: - 34 stores to become large format supermarkets managed by the Perekrestok retail chain by the beginning of 2021; - 20 stores to close by 2022; - 37 hypermarkets to continue operating under the Karusel brand.
At the end of 2019, the Karusel retail chain had 91 hypermarkets with a turnover of RUB 87 bn.
Chizhik In October 2020, X5 Group launched a new hard discounter "Chizhik" in Moscow and in Balashikha with expectations of its federal expansion. A year after, 27 Chizhik hard discounters were opened in Moscow and in Moscow Oblast with 70 expected, in regions as well, by the end of the year 2021. In 2022, X5 Group announced 3000 Chizhik stores would be opened in 3 years.
Online retail and services In addition to the retail chains, X5 Retail Group manages the Perekrestok.ru online supermarket and the Dostavka.Pyaterochka and Perekrestok.Bystro food and 5Post parcel delivery services.
Perekrestok.ru In 2017, the Perekrestok.ru online store was introduced in Moscow and, in October 2018, in St Petersburg.
A dark store combines features of a traditional store and a warehouse: it is not intended for making purchases, but the merchandising display is similar to that of a store. In contrast to a traditional warehouse, a dark store services online orders, and goods are displayed individually.
+ Perekrestok.ru online supermarket results Parameter / Year 2018 2019 Net revenues, Russian Rouble, million 1 290 4 310 Number of orders, thousand 408 1 367 Average bill, Russian Rouble 3 526 3 584
As of 31 December 2019, the online supermarket had two dark stores in Moscow and one dark store in St Petersburg.
Food delivery services The Dostavka.Pyaterochka express delivery service was launched in 2019; orders are collected at Pyaterochka stores. For the project, the company developed its own software covering all the project's operational and auxiliary processes. The IT system is integrated into the Х5 Retail Group infrastructure, allowing new stores to be connected to the service in just a few hours and goods balances to be monitored virtually in real-time. There is a patented system in operation for collecting orders at a store, which cuts assembly time considerably and optimizes staff work. As of April 2020, the service was live in Moscow, Skhodnya, Lyubertsy and Kazan.
The Perekrestok.Bystro express delivery service was started up in 2020, with orders being collected at Perekrestok supermarkets. The software is similar to the IT system used by the Dostavka.Pyaterochka service. As of April 2020, the service was operating in Moscow.
5Post 5Post is a subdivision of X5 Retail Group, a developing service for delivering orders from online stores and marketplaces to the company's stores. In the summer of 2018, the subdivision started opening the first lockers and order collection points.
In June 2019, X5 Retail Group and the Unitrade customs broker developed an end-to-end service for foreign online stores. Partners pick up orders from the online store warehouses in China, bring them to Russia, clear them through customs, and deliver them to the X5 distribution centre in Novosibirsk. Then 5Post delivers the parcels to stores.
At the end of 2019, 5Post was managing 12 sorting facilities at Х5 Retail Group distribution centres and 8,000 postamats and order collection points. During 2019, over five million parcels were delivered to clients.
Activities Market position The company's market share by revenues at the close of 2019 was 11.5%. The closest competitor was Magnit, with a food retail market share of 7.6% (together with non-food and non-retail business – 9.6%).
+ Share of the food retail market The company / Year 2013 2014 2015 2016 2017 2018 2019 X5 Retail Group 5,5 % 5,9 % 6,3 % 8,0 % 9,5 % 10,7 % 11,5 % Magnit 5,8 % 6,9 % 6,8 % 7,4 % 7,5 % 7,7 % 7,6 % DKBR 1,8 % 2,1 % 2,9 % 3,6 % 3,9 % 5,1 % 5,7 % Lenta 1,5 % 1,8 % 1,8 % 2,1 % 2,5 % 2,8 % 2,5 % Auchan 3,9 % 3,1 % 2,8 % 2,9 % 2,2 % 1,9 % 1,5 % 1. Magnit's revenues include those from food formats only 2. In 2013–2014, only the share of Dixy Group was calculated; in 2015–2017—the aggregate of Dixy Group and Krasnoe & Beloe, not including the Bristol alcoholic beverages markets; in 2018–2019—DKBR (in January 2019, Dixy Group merged with the Bristol alcoholic beverages markets and Krasnoe & Beloe chains)
Operational and financial results As of 31 December 2019, the company operated 16,297 stores, including 15,354 Pyaterochka proximity stores, 852 Perekrestok supermarkets, and 91 Karusel hypermarkets, the Perekrestok.ru online supermarket (two dark stores in Moscow and one dark store in St Petersburg), and the 5Post delivery service for online store and marketplace orders (8,000 postamats and order collection points).
+ Key financial indicators Parameter / Year 2013 2014 2015 2016 2017 2018 2019 Revenue, Russian Rouble, million 534 560 633 873 808 818 1 033 667 1 295 008 1 532 537 1 734 347 Gross profit, Russian Rouble, million 130 348 154 982 198 390 249 985 308 938 369 720 425 798 Gross profit margin, % 24,4 24,5 24,5 24,2 23,9 24,1 24,6 EBITDA, Russian Rouble, million 38 350 45 860 55 233 76 267 96 193 107 628 122 585 EBITDA margin, % 7,2 7,2 6,8 7,4 7,4 7,0 7,1 Operating profit, Russian Rouble, million 25 296 28 288 34 449 45 631 57 758 58 154 60 251 Operating profit margin, % 4,7 4,5 4,3 4,4 4,5 3,8 3,5 Net profit, Russian Rouble, million 10 984 12 691 14 174 22 291 31 394 28 642 25 908 Net profit margin, % 2,1 2,0 1,8 2,2 2,4 1,9 1,5
+ Liquidity update Parameter / Year 2013 2014 2015 2016 2017 2018 2019 Total debt, Russian Rouble, million, incl.: 110 523 130 986 144 215 156 033 194 296 207 764 227 933 Short-term debt, Russian Rouble, million 30 680 15 834 42 670 45 168 58 674 60 435 74 755 Long-term debt, Russian Rouble, million 79 843 115 152 101 545 110 865 135 622 147 329 153 178 Net debt, Russian Rouble, million 102 912 105 363 135 257 137 843 166 691 183 396 209 331 Net debt/EBITDA 2,68х 2,30х 2,45х 1,81х 1,73х 1,70х 1,71х