· Consolidated net retail sales increased 48% year-on-year in RUR terms to RUR 111,989 mln and 51% in USD terms to USD 3,826 mln;

· Organic sales increase was 29% in RUR terms while Kopeyka’s Q1 2011 sales contributed approx. 19% to X5’s consolidated Q1 2011 RUR net retail sales growth(2);

· X5’s like-for-like (LFL) sales grew 12% in RUR terms year-on-year;

· Supermarkets performed strongly on trading up trends with Q1 2011 LFL sales growth of 19% on a 9% increase in customer traffic and 10% basket growth;

· 76 stores added on net basis in Q1 2011, including 80 soft discounters, two supermarkets, two convenience stores and closures of eight Kopeyka stores;

· Net addition of selling space totaled 16 thousand square meters.

X5’s LFL sales in the first quarter 2011 increased by 12% in RUR terms, driven by a 4% increase in customer traffic and 8% increase in average basket.

Andrei Gusev, X5 Retail Group CEO, commented: «Sales grew 48% in RUR terms in the first quarter or 29% excluding Kopeyka, led by a strong recovery in supermarket like-for-like sales growth and sustained performance of discounters».

«I am pleased to announce that following a thorough analysis, X5 made the decision to execute Kopeyka integration plan by the end of 2011. The rebranding of an initial 45 Kopeyka stores in the first quarter delivered instant improvements in LFL sales performance, giving us confidence in the value of accelerating the integration timetable», added Mr. Gusev.

In the first quarter 2011, X5 added net 76 stores, including 80 soft discounters, two supermarkets, two convenience stores and closures of eight stores, including eight Kopeyka stores. As a result, total net selling space increased by net 15,944 sq.m.

As at 31 March 2011, X5 Retail Group was present in 52 cities of European Russia, the Urals and Ukraine, operating 2,545 stores in total (1,571 thousand sq.m. in selling space). This includes 1,472 Pyaterochka soft discounters (excluding 45 Kopeyka stores rebranded as Pyaterochka), 303 Perekrestok supermarkets, 71 hypermarket stores (including two Pyaterochka-Maxi stores), 47 convenience stores and 652 Kopeyka stores (including 45 stores rebranded as Pyaterochka).

www.retail.ru

The maker of Pepsi-Cola, Frito-Lay snacks and Quaker oatmeal will also offer to buy the remaining 34 percent of Wimm-Bill-Dann after the first deal closes, as it continues to expand into emerging markets and healthier products.

The deal will make PepsiCo Russia’s biggest food and drink maker and further the trend of U.S. consumer products companies moving into developing markets where an emerging middle class has a growing appetite for branded goods.

“For consumer products companies, you go where the consumers are, and the new consumers are in countries such as Russia and Brazil,” said Frank Aquila, M&A lawyer at Sullivan & Cromwell.

Including $1 billion of debt, Pepsi values the entire Russian company at $5.4 billion, making this the biggest nonfinancial sector deals on record between a U.S. and emerging market company and the biggest-ever deal in the Russian consumer products sector.

Wimm-Bill-Dann’s Moscow-listed shares (WBDF.MM) soared nearly 61 percent to 3,700 rubles, lifting Russian consumer stocks as well. Its U.S.-traded shares rose 27.9 percent. Pepsi shares slipped 0.7 percent to $65.20 in New York trading.

‘RICH, BUT … NOT STUPID’

Analysts questioned the deal’s multiple of roughly 18 times projected 2010 operating earnings.

“It’s pretty rich, but it’s not stupid money, given the growth opportunities it opens,” Morningstar analyst Philip Gorham said, noting that other deals in the sector — such as Coca-Cola Co’s (KO.N) $4.1 billion purchase of Glaceau — have occurred at similar or higher multiples. “So it’s not cheap, but it’s not daft either.”

The acquisition would make Russia, which will host the 2018 World Cup soccer tournament, the top international market for PepsiCo, replacing Mexico.

Pepsi-Cola was the first Western consumer product introduced to the Soviet Union, some 15 years after former leader Nikita Khrushchev tasted it at the 1959 American National Exhibition in Moscow. Pepsi’s move deeper into the region is a vote of confidence for a country recovering from economic volatility from the global downturn.

Wimm-Bill-Dann’s name, which sounds similar to the Wimbledon tennis tournament, was meant to sound like a foreign brand because of the low reputation of Russia-made products at the time, according to Sergei Plastinin, one of its founders. The company’s brands include J-7 juice and Domik v Derevne milk and dairy products.

Most large consumer products makers, from Pepsi to Kraft (KFT.N) to Procter & Gamble (PG.N), are investing billions of dollars in cultivating fast-growing emerging markets like Russia, China and Brazil, as growth at home slows.

“The PepsiCo/WBD deal is likely to boost M&A expectations in the food retail space, in our view, where talk is mounting of global operators seeking to enter Russia,” Nomura analyst Mikhail Terentiev wrote in a research note.

Other top Russian consumer names that could attract outside investors include vodka maker Synergy (SYNG.MM), drugmaker Veropharm (VFRM.MM) and grocery chain Dixy (DIXY.MM), analysts said.

www.reuters.com

By Cross-Atlantic Insight | Publication date: 11/10/2010 | Category: News

The latest report into business-to-consumer ecommerce in Eastern Europe by Hamburg-based market research firm yStats, shows that almost all markets are experiencing strong growth.

Russia was a particularly strong segment, with a growth of 30 percent predicted for all online retail activities in 2010. In Poland, 25 percent of all consumers shopped online in 2009, while revenue generated from online retail accounted for €3.2 billion (£2.80 billion, $4.46 billion). In 2010, yStats predicts an 18 percent growth in Poland, “largely attributed to online auction platforms” and highlights the takeover of polish etailer Merlin.pl by its competitor Empik.com, which is set to establish a Polish equivalent to Amazon. The report also says that Slovakian etailers can expect strong ecommerce growth in 2010, with a predicted rise of 25 percent.

Online shopping was also gathering momentum in the Baltic states. Forty-eight percent of all internet users in Latvia shopped online in 2009, and in neighbouring Lithuania, that figure was 56 percent—up from just 7 percent in 2006. In Hungary, meanwhile, 30 percent of the population still deems online shopping “too risky”.

YStats also noted that in Albania and the former Yugoslav countries of Bosnia-Herzegovina, Croatia, Montenegro and Serbia, few people made online purchases, though shopping online is slowly gaining in popularity.

In a conversation with Retail Update Russia, Retail Solutions General Director Art Vartanian said the postponement of Kopeyka’s IPO was most probably connected with the reported second due diligence. He added that Kopeyka can conduct an IPO at any time in the future, but an offer from such a large retailer as Wal-Mart is rare. Therefore, Kopeyka may test the situation in hopes to receive a better price, although valuations are already quite high, he said.

Wal-Mart announced its interest in Kopeyka in late 2009. However, the companies failed to agree on a price this June and abandoned their talks.

Previously, Russia’s largest retailer, X5 Retail Group, came close to acquiring Kopeyka. The company appealed to the Russian Federal Antimonopoly Service (FAS) to approve the deal in late July, which was estimated at $1.6-1.8m at the time. X5 was permitted to acquire a part of Kopeyka’s assets in September (i.e. Kopeyka Development, Proviant and the Develop Group, which manages Kopeyka’s real estate) and nearly reached a deal. However, Kopeyka recently announced that the company is refraining from making any sales declarations, reportedly due to Wal-Mart’s aforementioned second diligence.

http://www.russiaretail.com

In September 2010 Abercrombie & Fitch operated 1,104 retail outlets all over the world. In H1 2010 the company’s revenues amounted to $1.4bn.

The company was founded in 1892. It operates in the mid-price segment and currently offers such brands as Abercrombie & Fitch, Abercrombie Kids, Gilly Hicks and Hollister.

http://www.russiaretail.com/94456/Abercrombie___Fitch_close_to_entering_Russia.shtml

www.bsr-russia.com

www.retail.ru

www.planetretail.net

With dozens of shopping centres constructed in the past decade, one might think Russia is well stocked with retail outlets. In fact, big retail chains are poorly represented across the country, with smaller ones, what Americans call Mom and Pop stores, struggling to find shop space.

Aleksey Chuikin, general director at Detsky Mir, also says big chains remain a comparatively rare thing in Russia, though they have a potential to increase their share.

“The share of big players in various sectors of retail is now only about 6%. This market is far from consolidation. Obviously the regions are more inclined to develop local brands but large retailers have more power for buying and promotion, so I think up to 70% of all trade will be in the hands of big companies within the next 7 years.”

Property specialists say Russia needs to build more shopping space for large chains and crack down on disorganized outlets and outdoor markets. But Dmitry Potapenko from Management Development group says Russia is wrong to copy Europe.

“The situation in Russia is ridiculous! By building endless malls we are not meeting demand, because our country is fundamentally different. We have large distances and lack trading space in residential areas, but nobody cares about that. Building malls and hypermarkets is more profitable and it’s easier. But we need a diversified retail market with individual outlets and outdoor merchants, only then small business will be able to thrive.”

A third of Russia’s GDP passes across the shop counter, with the country’s trade turnover approaching $500 billion last year. Half of that is spent on food, which is another argument for local shops. For now out of town shopping centres dominate retail construction in Russia and it’s likely to remain at the top of Europe’s construction league.

www.rt.com