RUSSIA: X5 gains to outpace Magnit as Russia retailers rebound | Progresiv
Both Russian food retailers, which are traded in London, sank about 30 per cent in 2014 during a broad market sell-off as plunging oil prices and sanctions linked to the Ukraine conflict squelched the economy. X5 has jumped 73 per cent this year as sales rose each month, while Magnit gained 30 per cent amid slowing revenue growth. X5 sells for 15 times projected earnings, compared with a multiple of 22 for Magnit. 
X5, Russia’s second biggest retailer, has the potential to continue to outperform its larger competitor as the company benefits from improvements it has made in logistics, product lines and pricing, according to BCS analyst Marat Ibragimov.
“Magnit has been performing at its peak, while X5 has been making across-the-board improvements in its operational activity, widening product assortment, adjusting prices and renovating its stores, and these factors combined drew more customers in,” Ibragimov said. “If you add the valuation gap to this, you see that X5 is becoming more preferable than Magnit.”
X5 increased its sales by 19 per cent last year, compared with Magnit’s 32 per cent increase. Revenue growth at X5 was less than 10 per cent in 2012 and 2013, allowing Magnit, controlled by the billionaire Sergey Galitskiy, to become the country’s largest retailer. (www.esmmagazine.com)
