MGNT.L Regulatory News (MGNT)

37.7%

TOTAL REVENUE growth

1Q 2022 Key Operational and Financial Highlights

12.0%

lfl sales growth

23.1%

gross margin

835

pharmacies

covered by magnit online drug reservation service

Key events in 1Q 2022 and after the Reported Period

Average Ticket

Traffic

Sales

Total (Magnit excl. Dixy)

11.1%

0.8%

12.0%

Convenience Stores

10.8%

1.0%

12.0%

Supermarkets

11.0%

-4.0%

6.6%

Drogerie Stores

16.4%

2.8%

19.7%

1Q 2022

1Q 2021

Change

Change, %

Total Net Retail Sales, million RUB

534,824

387,899

146,925

37.9%

Magnit

460,746

387,899

72,847

18.8%

Convenience Stores[4]

358,232

299,942

58,290

19.4%

Supermarkets[5]

53,751

50,115

3,636

7.3%

Drogerie Stores

45,927

35,011

10,916

31.2%

Other Formats[6]

2,836

2,831

5

0.2%

DIXY

74,078

n/a

n/a

n/a

Convenience Stores

70,525

n/a

n/a

n/a

Supermarkets[7]

3,554

n/a

n/a

n/a

Number of Tickets, mln

1,357

1,103

254

23.0%

Magnit

1,179

1,103

76

6.9%

Convenience Stores

991

922

69

7.5%

Supermarkets

76

79

-3

-3.5%

Drogerie Stores

105

94

11

12.1%

Other Formats

6

8

-1

-16.8%

DIXY

178

n/a

n/a

n/a

Convenience Stores

173

n/a

n/a

n/a

Supermarkets

5

n/a

n/a

n/a

Average Ticket[8], RUB

394

352

42

12.1%

Magnit

391

352

39

11.1%

Convenience Stores

361

325

36

11.1%

Supermarkets

707

636

71

11.2%

Drogerie Stores

436

373

64

17.1%

Other Formats

428

357

70

19.7%

DIXY

416

n/a

n/a

n/a

Convenience Stores

408

n/a

n/a

n/a

Supermarkets

709

n/a

n/a

n/a

1Q 2022

1Q 2021

Change

Change, %

Number of Stores (EOP)

26,605

21,900

4,705

21.5%

Magnit

24,234

21,900

2,334

10.7%

Convenience Stores

16,620

15,098

1,522

10.1%

Supermarkets

468

471

-3

-0.6%

Drogerie Stores

7,146

6,331

815

12.9%

DIXY

2,371

n/a

n/a

n/a

Convenience Stores

2,333

n/a

n/a

n/a

Supermarkets

38

n/a

n/a

n/a

Store Openings (Net)

528

336

192

57.1%

Magnit

608

336

272

81.0%

Convenience Stores

430

187

243

129.9%

Supermarkets

-2

1

-3

-300.0%

Drogerie Stores

180

148

32

21.6%

DIXY

-80

n/a

n/a

n/a

Convenience Stores

-79

n/a

n/a

n/a

Supermarkets

-1

n/a

n/a

n/a

Total Selling Space (EOP), th. sq.m

9,235

7,606

1,629

21.4%

Magnit

8,405

7,606

799

10.5%

Convenience Stores

5,797

5,169

627

12.1%

Supermarkets

935

943

-8

-0.8%

Drogerie Stores

1,645

1,460

185

12.7%

Other formats

28

33

-6

-16.9%

DIXY

830

n/a

n/a

n/a

Convenience Stores

757

n/a

n/a

n/a

Supermarkets

73

n/a

n/a

n/a

Selling Space Addition (Net), th. sq.m

238

109

129

n/a

Magnit

200

109

91

n/a

Convenience Stores

161

80

82

n/a

Supermarkets

-2

2

-4

n/a

Drogerie Stores

41

32

9

n/a

Other formats

0

-4

4

n/a

DIXY

37

n/a

n/a

n/a

Convenience Stores

39

n/a

n/a

n/a

Supermarkets

-1

n/a

n/a

n/a

6.2%

LTM sales density[9] improvement y-o-y

21.4%

selling space

growth y-o-y

Trading Performance

Total sales in 1Q 2022 grew by 37.7% y-o-y to RUB 547.7 billion. Net retail sales grew by 37.9% y-o-y, driven by a combination of 21.4% selling space growth and 12.0% LFL sales growth. Net retail sales achieved by the stores under the Magnit brand accelerated to 18.8% from 15.6% in 4Q 2021 driven by LFL sales growth in the mature outlets and higher selling space growth.

Net retail sales growth continued to outpace selling space growth on further improvement of sales densities. Overall sales densities in 1Q 2022 (excluding stores under the Dixy brand) improved by 2.0% q-o-q and 6.2% y-o-y while across the Company's main convenience store format these improved by 1.7% q-o-q and 6.8% y-o-y.

Net retail sales growth demonstrated strong monthly performance and exceeded 30% in January and February 2022. In March 2022 net retail sales grew sharply to 49.2% driven by accelerated inflation and stockpiling effect when customers were stocking up with dry food and essentials.

Selling space growth increased further from 20.0% in the previous quarter to 21.4% in the reported quarter, driven by accelerated organic expansion and the Dixy acquisition (2,477 Dixy stores added in 3Q 2021 but consolidated from July 22nd, 2021). Selling space growth adjusted for the Dixy acquisition accelerated to 10.5% compared to the previous quarter, reflecting 59% increase y-o-y in the number of store openings per quarter (649 in 1Q 2022 compared to 407 in 1Q 2021 on gross basis).

LFL sales growth accelerated further from 9.9% in the previous quarter to 12.0% in 1Q 2022 predominantly driven by strong forward-buying effect in March. 373 stores entered LFL panel in 1Q (including 212 convenience stores and 161 drogeries). Only 7% of Magnit's selling space is currently in the 'ramp-up' phase with 93% already mature.

All regions showed robust LFL sales growth with North-West and Siberian regions delivering the strongest results.

LFL sales growth in the reported quarter was driven by strong LFL average ticket growth of 11.1% due to higher number of SKUs in the average customer basket and acceleration of inflation. LFL traffic turned positive and stood at 0.8% driven by continued inflow of unique customers gained from other players, and frequency of visits. Starting from March when customers were stocking up on dry food and essentials, traffic growth accelerated mainly on the back of increased visit frequency.

Revenue and LFL sales growth accelerated versus previous quarter despite gradual decline of promo activity starting from the second half of March.

Cosmetics and detergents were the fastest growing categories in the reported quarter as customers were stocking up with essential non-food items.

61 mln

of loyalty program cardholders

During the quarter the number of loyalty programme cardholders reached 61.1 million. Company-wide, the proportion of tickets using the loyalty card was 55% with sales penetration of 68%. During peak days of the quarter it reached 58% and 72% correspondingly. The loyalty programme continues to deliver positive cross-format gains - 44% of Magnit's customer base at the end of the reporting period (compared to 43% in the previous quarter) visit 2+ store formats. Average ticket of the active user is 1.8x higher vs transaction without loyalty card.

12.0%

LFL sales growth in Magnit convenience in 1Q 2022

Store Network Development and Performance by Format

The convenience segment within the Magnit brand generated 67.0% of total net retail sales in 1Q 2022. In the quarter Magnit more than doubled its expansion programme y-o-y and opened (gross) 459 convenience stores (241 in 1Q 2021). The Company continued its efficiency campaign and closed 29 convenience stores compared to 54 stores a year ago. Magnit added 430 convenience stores (net) during the quarter. The selling space growth of convenience stores picked up to 12.1% y-o-y, driving a 19.4% acceleration in sales in the format driven by LFL sales growth of 12.0% and selling space growth of 12.1%. LFL sales growth was driven by LFL average ticket growth of 10.8% while LFL traffic growth was 1.0%.

4.9%

y-o-y improvement of sales density of supermarkets in 1Q 2022

Magnit supermarkets generated 10.1% of the Group's net retail sales in the reported quarter. During 1Q 2022 the Company did not open new supermarkets and closed two stores, focusing on improvement of sales density of the existing network. Selling space across this format remained almost flat y-o-y. LFL sales growth of the large format stores accelerated from 3.1% in the previous quarter to 6.6% in 1Q 2022. This was driven by 11.0% average ticket growth and 4.0% traffic decline. Traffic reduction slowed down compared to the previous quarter but was still impacted by the ramp-up phase of the reopened stores after redesign campaign which accelerated last year (16% of large format store portfolio has been redesigned in 2021). As a result, net retail sales growth of supermarkets improved to 7.3% in the quarter.

12.7%

y-o-y selling space increase in drogerie in 1Q 2022

13.9%

share of the Dixy stores in the total net retail sales in 1Q 2022

9.2

RUB billion

GMV in 1Q 2022

The sales contribution of Magnit's drogerie format represented 8.6% of total net retail sales. During 1Q 2022 Magnit opened (net) 180 cosmetics stores. Selling space increased by 12.7% y-o-y or by 185 thousand sq. m. Driven by this increase in selling space and LFL sales growth of 19.7%, sales grew 31.2% - the strongest performance across all Magnit's store formats. LFL traffic growth turned positive and stood at 2.8%. LFL average ticket growth accelerated to 16.4% driven by higher number of items per basket when customers were stocking up with non-food essentials. On-shelf inflation in the drogerie format was in line with food formats.

During 1Q 2022 Magnit continued its renovation programme and redesigned 157 Magnit and 5 Dixy convenience stores as well as one drogerie. This resulted in the combined share of refurbished and new stores across Magnit brand at: 79% for convenience stores, 45% for supermarkets and 63% for the drogerie format.

The share of Dixy stores in the Group's total net retail sales reached 13.9% in the first quarter including 13.2% of Dixy convenience stores. In the reported period eight convenience stores were opened, while some stores were transformed into Magnit branded outlets, resulting in 2,371 stores and 830 thousand sq. m. of selling space as at March 31, 2022. On pro-forma basis, Dixy stores demonstrated strong LFL sales dynamics, in line with Magnit business, driven by mature stores, despite high comparison base and strong sales density overall.

E-commerce

Magnit has been developing e-commerce services since the third quarter of 2020. The Company currently runs a number of online delivery projects, including own delivery and partnerships (express delivery, regular delivery, e-pharma, cosmetics and partnerships).

Total e-commerce GMV (incl. VAT) in the reported period was RUB 9.2 billion compared to RUB 0.9 billion in 1Q 2021.

During 1Q 2022, the average number of orders per day reached 91,297. In the end of March number of daily orders exceeded 100 thousand.

The average ticket across all online services was c. RUB 1,116 including VAT. This average ticket is approximately 2.7x higher than in the convenience stores (RUB 413 in 1Q 2022). This is mostly due to a larger number of items per basket. The average ticket within Magnit own delivery service was RUB 1,270.

Magnit's e-commerce services today cover over 7,303 offline stores and 21 dark stores in 66 regions and 410 cities, with 71% of the current revenue generated outside Moscow and St. Petersburg. The largest and fastest growing segment is express delivery, where orders are expected to be fulfilled within 60 minutes.

1Q 2022

1Q 2021

Change

Change, times/%

GMV, billion RUB

9.2

0.9

8.3

10.6x

Number of orders per day (average)

91,297

9,500

81,797

9.6x

Average ticket incl. VAT, RUB

1,116

1,100

15

1.4%

Number of stores covered, EOP

7,303

1,300

6,003

5.6x

274

My Price discounters as at march 31, 2022

Discounters

Magnit started piloting discounters in July 2020 as a response to the fast changing economic environment. The concept is aimed at price-sensitive consumers who frequently make minor purchases of traditional goods or stock up on products.

As at March 31, 2022 the Company had 274 operating 'My Price' discounters compared to 33 stores a year ago. During the reported quarter Magnit opened 84 stores including 72 new outlets and 12 stores reformatted from convenience stores.

Average ticket at My price discounters increased by 14% y-o-y and stood at RUB 338. LFL sales growth of outlets reformatted from convenience stores reached 50%.

Recent Trading

Total sales growth and LFL sales growth in April 2022 month-to-date run ahead of the 1Q average but below March. Customer environment has normalized and shopping patterns returned to normal without stockpiling effect. Within the structure of LFL sales, traffic is stabilizing while average ticket growth continues to accelerate on higher y-o-y inflation (which started decelerating from its peak levels in March).

IAS 17

IFRS 16

RUB mln

1Q 2022

1Q 2021

Change

1Q 2022

1Q 2021

Change

Total Revenue

547,708

397,889

37.7%

547,708

397,889

37.7%

Retail

534,824

387,899

37.9%

534,824

387,899

37.9%

Wholesale

12,883

9,990

29.0%

12,883

9,990

29.0%

Gross Profit

126,752

92,039

37.7%

126,764

92,042

37.7%

Gross Margin, %

23.1%

23.1%

1 bps

23.1%

23.1%

1 bps

SG&A, % of Sales

-20.1%

-20.2%

9 bps

-18.8%

-18.8%

-4 bps

EBITDA pre LTI[10]

37,865

28,003

35.2%

61,400

45,452

35.1%

EBITDA Margin pre LTI, %

6.9%

7.0%

-12 bps

11.2%

11.4%

-21 bps

EBITDA

37,662

27,678

36.1%

61,197

45,127

35.6%

EBITDA Margin, %

6.9%

7.0%

-8 bps

11.2%

11.3%

-17 bps

EBIT

22,600

16,956

33.3%

30,299

23,160

30.8%

EBIT Margin, %

4.1%

4.3%

-14 bps

5.5%

5.8%

-29 bps

Net Finance Costs

-3,700

-2,581

43.4%

-13,666

-10,164

34.5%

FX Gain/ (Loss)

-4,997

-190

n/a

-5,215

-211

n/a

Profit before Tax

13,902

14,186

-2.0%

11,419

12,785

-10.7%

Taxes

-2,997

-3,311

-9.5%

-2,498

-3,031

-17.6%

Net Income

10,905

10,875

0.3%

8,921

9,753

-8.5%

Net Income Margin, %

2.0%

2.7%

-74 bps

1.6%

2.5%

-82 bps

23.1%

Gross margin

in 1Q 2022

6.9%

ebitda margin in 1Q 2022

2.0%

Net income margin

in 1Q 2022

Total revenue in 1Q 2022 increased by 37.7%. This growth was underpinned by net retail sales growth of 37.9% and wholesale revenue growth of 29.0%. Wholesale operations accounted for 2.4% of total sales.

Gross Profit in 1Q 2022 increased by 37.7% y-o-y to RUB 126.8 billion. Gross margin remained flat y-o-y at 23.1% as a result of favourable product and format mix offset by higher shrinkage. Promotional intensity was flat y-o-y with some deceleration starting from the second half of March.

Shrinkage as a proportion of sales increased by 24 bps y-o-y predominantly driven by consolidation of Dixy business with higher shrinkage and losses of fruits & vegetables in transit due to supply-chain disruption in March.

SG&A costs decreased by 9 bps y-o-y to 20.1% as a percent of sales due to lower personnel expenses and positive operating leverage effect. This was partially offset by accelerated expansion and redesign with a higher share of stores in the ramp-up phase and growth in other costs (faster y-o-y growth of online services and bank expenses).

Personnel costs as a percentage of sales decreased by 24 bps on the back of continued productivity improvements and ongoing automation of business processes.

Bank expenses as a percentage of sales increased by 7 bps y-o-y due to growing share of non-cash payments.

Advertising expenses decreased by 5 bps y-o-y on lower marketing activities.

Rental costs as a percentage of sales increased by 4 bps y-o-y driven by consolidation of Dixy stores predominantly located in the Moscow and Saint-Petersburg regions with higher rent rates, acceleration in store openings and, subsequently, larger number of stores in the ramp-up period as well as higher share of leased selling space. The share of leased selling space increased to 80.7% in 1Q 2022 vs 78.3% a year ago. Despite the above-mentioned factors, rent expense of Magnit's standalone business decreased as a percentage of sales thanks to higher sales density, improved lease terms with landlords and the closure of inefficient stores.

Repair and maintenance, packaging and raw materials, utilities, depreciation and tax expenses as a percentage of sales remained broadly flat y-o-y.

As a result, EBITDA was RUB 37.7 billion with a 6.9% margin. A decrease of 8 bps y-o-y was driven by consolidation of Dixy business with lower profitability.

Net finance costs in 1Q 2022 increased by 43.4% y-o-y to RUB 3.7 billion (but were slightly lower in absolute terms q-o-q) due to the higher cost of debt and total amount of borrowings. The Company increased its total debt by RUB 152.5 billion during the last twelve months, by obtaining bank loans and bond issuance. These supported the Company's accelerated expansion and the acquisition of Dixy last year.

As a result, average cost of debt increased y-o-y to 8.8% (284 bps y-o-y and 233 bps q-o-q). 79% of the Company's debt profile is represented by long-term borrowings and bonds with an average maturity of 15 months.

In 1Q 2022 the Company reported FX loss of RUB 5.0 billion related to direct import operations because of FX fluctuations.

Income tax in 1Q 2022 was RUB 3.0 billion. The effective tax rate stood at 21.6%.

As a result, net income in 1Q 2022 remained flat y-o-y and stood at RUB 10.9 billion. Net income margin decreased by74 bps y-o-y to 2.0%.

RUB mln

March 31, 2022

December 31, 2021

March 31, 2021

Inventories

231,356

224,873

211,241

Trade and other receivables

15,618

11,727

12,171

Cash and cash equivalents

92,402

73,399

6,575

Long-term borrowings and loans

146,868

205,287

144,022

Trade and other payables

239,235

240,771

163,868

Short-term loans and borrowings

173,827

65,139

24,205

12.6

DAYS

Y-O-Y OPTIMISATION OF INVENTORIES[11]

Inventories increased by RUB 20.1 billion (+9.5% y-o-y) compared with March 31, 2021 and stood at RUB 231.4 billion on the back of total sales growth of 37.7%. Adjusted for the Dixy acquisition, inventories of the Magnit's standalone business reduced substantially. This was driven by a number of ongoing projects, including the reduction of slow-moving items, assortment harmonization and IT solutions that are aimed at better on-shelf availability and promotion forecasting.

Trade and other payables grew by RUB 75.4 billion compared with March 31, 2021 and stood at RUB 239.2 billion, driven by higher sales and improved payment days. Accounts receivables increased by RUB 3.4 billion vs March 31, 2021 and stood at RUB 15.6 billion mainly due to higher sales.

March 31, 2022

December 31, 2021

March 31, 2021

IAS 17

Total Debt, RUB billion

320.7

270.4

168.2

Long-Term Debt

146.9

205.3

144.0

Short-Term Debt

173.8

65.1

24.2

Net Debt, RUB billion

228.3

197.0

161.7

Net Debt/EBITDA

1.6x

1.5x

1.4x

IFRS 16

Net Debt, RUB billion

682.1

653.3

522.8

Net Debt/EBITDA

3.0x

3.0x

2.8x

1.6x

net debt/ebitdaas of march 31, 2022

(IAS17)

As at March 31, 2022 Gross Debt increased by RUB 152.5 billion or 90.6% compared to March 31, 2021 and stood at RUB 320.7 billion. Total debt increased by 18.6% or RUB 50.3 billion versus end of the previous quarter. The Company's cash position increased to RUB 92.4 billion as at March 31, 2022 from RUB 6.6 billion as at March 31, 2021. As a result, Net Debt increased by 41.2% y-o-y to RUB 228.3 billion as at March 31, 2021.

The Company's debt is fully RUB denominated, matching its revenue structure. The Net Debt to EBITDA ratio was 1.6x as at March 31, 2022 vs 1.4x as at March 31, 2021.

Capex in 1Q 2022 increased by 45.2% and stood at RUB 12.1 billion. This was driven by acceleration of the Group's expansion and the store redesign programme (657 store openings on gross basis and 163 redesigns in 1Q 2022 vs 407 and 100 respectively in 1Q 2021).

For further information, please contact:

Dina Chistyak

Director for Investor Relations dina_chistyak@magnit.ru

Office: +7 (861) 210 9810 x 15101

Media Inquiries Twitter

press@magnit.ru @MagnitIR

Note to editors

"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, 2022, Magnit operated 45 distribution centers and 26,605 stores in 3,946 cities and towns throughout 7 federal regions of the Russian Federation.

In accordance with the audited IFRS 16 results for FY 2021, Magnit had revenues of RUB 1,856 billion and an EBITDA of RUB 214 billion. Magnit's local shares are listed on the Moscow Exchange (MOEX: MGNT) and its GDRs on the London Stock Exchange (LSE: MGNT).

Forward-looking statements

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.

January

Change

February

Change

March

Change

Total net retail sales, RUB million

164,921

32.5%

162,858

30.6%

207,046

49.2%

Magnit

141,754

13.9%

140,332

12.5%

178,661

28.7%

Convenience Stores

112,551

16.2%

110,070

14.8%

135,611

26.5%

Supermarkets

16,211

1.6%

16,420

0.3%

21,121

18.7%

Drogerie Stores

12,095

13.0%

12,990

12.7%

20,842

63.0%

Other formats

897

-5.8%

851

-6.6%

1,087

12.5%

DIXY

23,167

n/a

22,526

n/a

28,385

n/a

Convenience Stores

22,052

n/a

21,431

n/a

27,042

n/a

Supermarkets

1,115

n/a

1,096

n/a

1,343

n/a

1Q 2022

1Q 2021

Change

Change, %

Store Openings (Gross)

657

407

250

61.4%

Magnit

649

407

242

59.5%

Convenience Stores

459

241

218

90.5%

Supermarkets

0

1

-1

-100.0%

Drogerie Stores

190

165

25

15.2%

DIXY

8

n/a

n/a

n/a

Convenience Stores

8

n/a

n/a

n/a

Supermarkets

0

n/a

n/a

n/a

Store Closures

129

71

58

81.7%

Magnit

41

71

-30

-42.3%

Convenience Stores

29

54

-25

-46.3%

Supermarkets

2

0

2

n/a

Drogerie Stores

10

17

-7

-41.2%

DIXY

88

n/a

n/a

n/a

Convenience Stores

87

n/a

n/a

n/a

Supermarkets

1

n/a

n/a

n/a

Store Openings (Net)

528

336

192

57.1%

Magnit

608

336

272

81.0%

Convenience Stores

430

187

243

129.9%

Supermarkets

-2

1

-3

-300.0%

Drogerie Stores

180

148

32

21.6%

DIXY

-80

n/a

n/a

n/a

Convenience Stores

-79

n/a

n/a

n/a

Supermarkets

-1

n/a

n/a

n/a