X5 Group (Пятерочка). Годовой отчет за 2021 год

31.4

2017

28.6

2018

25.9

2019

39.2

2020

STRATEGIC REPORT

OVERVIEW

2021 KEY HIGHLIGHTS

Operational and Financial highlights

Net retail sales,

RUB bln

Operational highlights

Financial highlights (pre-IFRS 16)

Revenue,

RUB bln

Number of stores

EBITDA,

RUB bln

Selling space,

ths sqm

Gross profit,

RUB bln

Number of orders in online businesses

Net profit,

RUB bln

1,287

2017

12,121

2017

96.2

2017

5,480

2017

1,295

2017

308.9

2017

1,525

2018

107.6

2018

14,431

2018

6,464

2018

409

2018

7,239

2019

122.6

2019

1,728

2019

16,297

2019

1,533

2018

369.7

2018

7,840

2020

1,382

2019

1,973

2020

145.1

2020

8,410

2021

2,194

2021

17,707

2020

161.0

2021

1,734

2019

425.8

2019

19,121

2021

7,941

2020

1,978

2020

487.2

2020

23,889

2021

2,205

2021

553.4

2021

48.5

2021

23.9%

7.4%

7.0%

7.1%

7.3%

2.4%

1.9%

1.5%

2.0%

2.2%

7.3%

24.1%

24.6%

25.1%

14.3%

CAGR 2017-2021

11.3%

CAGR 2017-2021

14.2%

CAGR 2017-2021

15.7%

CAGR 2017-2021

12.1%

CAGR 2017-2021

13.7%

CAGR 2017-2021

11.5%

CAGR 2017-2021

Net profit

Net profit margin

EBITDA

EBITDA margin

Gross profit

Gross profit margin

2021 operational and financial
performance overview

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STRATEGIC REPORT

OVERVIEW

CHAIRMAN’S STATEMENT

Chairman’s statement

I am proud to say that we continue to deliver results:
X5 remains the #1 player in Russia’s food market,
growing in line with our targets while also maintaining
profitability. Our key banners Pyaterochka and
Perekrestok continued to deliver healthy growth and
profits in 2021, increasing trading space with 1,263 and
57 new stores, respectively. Meanwhile, we ramped up
the rollout of our new hard discounter format, Chizhik.
Building on promising results since the launch of this
new format in 2020, we aim to operate more than three
thousand Chizik stores by 2025. We value customer
feedback as the key driver of these developments;
it allows us to continuously meet customer needs
by piloting new store formats and value propositions.

X5’s digital businesses continued to grow thanks
to the Company’s focus in this area in 2021. Following
explosive growth in 2020, Vprok.ru Perekrestok,
express delivery and 5Post continued their expansion,
driven by sustainable changes in consumer behaviour
towards online shopping. Throughout 2021, even in the
face of fierce competition, our digital businesses
continued to grow with revenue rising by 140% year-
on-year. By the end of the year, more than 1,600 stores
in 50 regions of Russia offered express delivery.

To meet consumer needs and support our leading
market positions, we continued to adapt the customer
value propositions of our core formats, integrate new
omnichannel offerings and expand our ability to be
with customers at every stage of their shopping
journey. Several important milestones were achieved
in 2021 to further strengthen X5’s CVP for shoppers:
the launch of the Food.ru media platform, the
acquisition of Mnogo Lososya dark kitchens, and the
launch of X5 Bank branded financial services that
are integrated into Perekrestok and Pyaterochka
loyalty programmes.

In this 2021 annual report, X5 Group reports
on another challenging year in which X5 Group
continued to grow its business in the new reality
of COVID-19, with consumer behaviour being impacted
by both safety-related and macroeconomic factors.
In the context of the pandemic and difficult market
conditions with strong competition, we maintained
our focus on X5’s long-term strategy, which aims
to strengthen the existing businesses while growing
our digital capabilities and omnichannel presence.

First of all I would like to thank our employees for their
commitment to providing consistently high-quality
service for our customers while ensuring a reliable
and safe shopping experience. Our team’s
commitment to putting the customer at the centre
of everything we do, and our ability to adapt quickly
helped X5 to continue to perform in line with
its strategic targets in 2021.

We are happy to report on the increasing importance
of X5’s sustainability efforts in 2021. As part of our
commitment to corporate social responsibility and
transparency, we released our first Sustainability
Report in accordance with GRI Standards in May.
In September, the remit of the Innovation and
Technology Committee was expanded, and it was
renamed the Sustainable Development and Innovation
Committee to strengthen the focus of the Supervisory
Board on environmental, social and governance
matters. Through the work of this committee, the Board
closely monitors X5’s progress against the medium-
and long-term goals set out in X5's sustainability
strategy. I am pleased to say that the Company has
made excellent progress and is ahead of schedule at
meeting some of its 2023 targets, particularly in the
area of CO2 emissions.

The management team deserves our recognition
for successfully integrating ESG targets into X5’s
business processes, at the same time delivering
continued revenue growth while maintaining margins
in an increasingly competitive and complex
environment. This team helps us to adjust our strategy
to constantly evolving customer needs, maintaining
the core pillars that build value over the long term
while adapting to the dynamic market we operate in.

As an important part of our ESG work, we continue
to seek ways to improve and enhance our corporate
governance standards in line with international best
practices and the evolving needs of the Company and
of society. The Supervisory Board seeks to operate as
a team and to be a partner to management in
supporting the Company’s successful and sustainable
growth. The common theme in our discussions with
management was ensuring that the decisions taken
would prioritise long-term value creation for the
Company and all its stakeholders.

That said, 2021 was a year of significant change in the
Supervisory Board itself: at the annual General
Meeting of Shareholders, Karl-Heinz Holland stepped
down, while at the same time we welcomed Richard
Brasher and Alexander Tynkovan as new board
members. We would like to thank Karl-Heinz for his
significant contribution to the Company. Today,
only in the first half of the new year, the Board has
undergone further changes as a consequence
of current events: it is with deep regret that we had
to see Mikhail Fridman, Stephan DuCharme, Richard
Brasher, Geoff King and Michael Kuchment step down
in March. We thank Mikhail, Stephan, Geoff and Michael
for their invaluable contribution and counsel over many
years, and Richard for his dedication and commitment
despite pandemic-related travel restrictions during his
short term in office.

I would like to conclude by saying that it is a great
honour that the Supervisory Board decided to elect
me as its Chair, and I would like to thank the Executive
Board and, again and above all, all employees across
our businesses for their continued efforts to make
2021 another year of progress. Looking ahead I am
confident that the entire X5 team’s strong
commitment to the success of this business will
continue to be of paramount value for our customers,
despite the disturbing times we are living in.

Peter Demchenkov

СHAIRMAN OF THE SUPERVISORY BOARD

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Business model

Our business model aims to create
value for stakeholders at every step,
from our cooperation with suppliers
to the corporate centre and onto our
online and offline business operations.

In today’s highly competitive environment, it is
essential to ensure the efficiency and effectiveness
of every part of our business model, and to maintain
a constant focus on delivering the best for our
customers.

The management and operations of our offline and
digital businesses are decentralised to enable the
greatest possible degree of flexibility to respond to
customer needs, while also leveraging the advantages
of scale in terms of purchasing power, IT and
digitalisation as well as some overlap in logistics.

While marketing and loyalty programmes are highly
independent between businesses, we use a unified
ID system (X5.ID), as well as shared big data and IT
infrastructure. All operations are run based on
SAP ERP.

In terms of logistics, we run our own operations, with
Company-operated distribution centres accounting
for 96% of centralised deliveries to stores in 2021.

Share of centralised deliveries
to stores from Company-operated
distribution centres in 2021

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STRATEGIC REPORT

OVERVIEW

BUSINESS MODEL

During 2021 we continued to develop X5’s supplier portal,
which helps to centralise all communications, transactions
and paperwork. We also share our big data capabilities with
suppliers, enabling them to access insights about sales and
promo efficiency.

X5 Group’s Corporate Centre manages shared business
infrastructure like IT systems, innovation and big data
functions, logistics management, internal controls, as well
as business support functions, corporate finance, risk
management and reporting. Overall strategic guidance and
best practice sharing is also handled by the Corporate
Centre.

Food.ru provides consumers with inspiration and
information as they discover and plan their food shopping
and cooking. With recipes and advice, as well as
integration into X5 services like Vprok.ru Perekrestok and
express delivery, Food.ru is often the entry point for
customers of X5 Group’s offline and digital businesses.

Efficient and reliable logistics operations are critical to
delivering the quality products and assortment that our
customers expect across our operations, both in offline and
digital. We are improving operations with advanced route
planning technologies and driver awareness monitoring
systems, while also leveraging our extensive infrastructure
to build new businesses like 5Post, a last-mile parcel
delivery service.

Suppliers

Supply chain infrastructure

Offline businesses

Digital businesses

Corporate Centre

Media
platform

We are constantly developing the CVPs of our offline
business to meet changing customer needs and address
new segments of the market. While we are refurbishing
Pyaterochka and Perekrestok stores in line with new
concepts, we have also begun the full rollout of the entirely
new Chizhik hard discounter format.

Express delivery

Vprok.ru
Perekrestok

5Post

Mnogo
Lososya

7,083

Suppliers

Share of top 30 suppliers
in revenue

Regions

Darkstores

Regions

16.9

THS

Pickup points

835

Light trucks

3.3

MLN

MAU

Regions

5.7

THS

Parcel lockers

MLN

Orders fulfilled

Dark kitchens

(including two
franchisees)

17,972 Pyaterochka proximity stores

in 67 regions

990 Perekrestok supermarkets

in 46 regions

72 Chizhik hard discounter stores

in 4 regions

33 Karusel hypermarkets

4 direct
import hubs

4,654 Company-
owned trucks

47 distribution
centres to support
offline stores

36 dark stores
to support digital
businesses

406.8 stores
per DC

6.36 sqm selling
space per 1 sqm
of DC space

0.23 Company-
owned trucks per
store

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STRATEGIC REPORT

OVERVIEW

BUSINESS MODEL

Digital businesses

As of 31 December 2021, express delivery
service was available from 1,611 stores
(923 Pyaterochka stores, 30 Pyaterochka
dark stores, 655 Perekrestok supermarkets
and 3 Karusel hypermarkets) in 50 regions,
compared with 992 stores and 13 regions
a year earlier.

In Q4 2021, the number of orders for express
delivery was 69.8 thousand per day
(including Okolo), with a delivery time
of c. 60 minutes and an average ticket
of RUB 1,527 at Pyaterochka and RUB 1,775
at Perekrestok, up 4% and 1% year-on-year,
respectively. The daily number of fulfilled
orders during Q4 2021 peaked in December
at 114 thousand on the busiest days.

In addition to five large dark stores (three
in Moscow, one in St Petersburg, one in
Nizhny Novgorod), Vprok.ru Perekrestok
opened its first small dark store in Moscow
to provide fast delivery service to its
customers.

In Q4 2021, Vprok.ru Perekrestok’s revenue
increased by 23.1% year-on-year. The total
number of Vprok.ru Perekrestok orders
increased by 14% year-on-year and reached
1.5 million in Q4 2021. The average number
of daily orders in Q4 2021 reached
16.1 thousand. The average Vprok.ru
Perekrestok basket in Q4 2021 increased by
8.1% year-on-year, reflecting further
expansion in the assortment to 72 thousand
SKUs.

In Q4 2021, 5Post’s e-commerce delivery
service revenue increased by three times
year-on-year. Orders fulfilled by 5Post
reached 12.2 million in Q4 2021, with
16.9 thousand pickup points and 5.7
thousand multi-parcel lockers. Parcel lockers
in operation. Pickup points in stores generate
additional LFL traffic of up to 2%–3%.

The Mnogo Lososya ready-to-eat digital
service, which became part of X5 Group
in late March 2021, continued expanding. As
of the end of December, it was operating
50 dark kitchens (including two franchisees),
compared with 42 dark kitchens at the end
of September.

In Q4 2021, Mnogo Lososya’s net sales
reached RUB 397 million, up 31.9% quarter-
on-quarter with an average ticket of
RUB 1,728 in Q4 2021.

Express delivery

Vprok.ru Perekrestok

5Post

delivery service

Mnogo Lososya

Revenue increase in 2021

y-o-y

41.5

Revenue increase in 2021

y-o-y

Revenue increase in 2021

y-o-y

31.9

Net sales increase in Q4 2021

q-o-q

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Pyaterochka

Chizhik

Perekrestok

Karusel

operates conveniently located proximity

stores and is Russia’s largest food retailer on a stand-
alone basis, with 17,972 stores as of 31 December 2021
and net retail sales of RUB 1.8 trillion in FY 2021.
The first Pyaterochka was opened in 1999 and today it
has stores in 67 regions of Russia. The format’s main
focus is on being Russia’s trusted source for affordable
and high-quality food. At the same time, the new
Pyaterochka store concept offers customers and
employees a modern and comfortable shopping
experience, while Pyaterochka express delivery lets
customers get the goods they need delivered to their
door from a nearby store. Pyaterochka had 47.1 million
loyal customers in 2021 and serviced on average
13.8 million customers every day.

Pyaterochka

is the largest supermarket business

in Russia, with 990 stores as of 31 December 2021 and
net retail sales of RUB 349 billion for FY 2021.
Perekrestok was also Russia’s first supermarket chain,
established in 1995. With innovative technologies that
improve the customer experience, Perekrestok offers
customers a top-class food retail experience.
Perekrestok had 14.4 million loyal customers in 2021 and
serviced on average 1.7 million customers every day.

Perekrestok

is X5 Group’s new hard discounter format and

was operating 72 stores as of 31 December 2021, with
net retail sales of RUB 2.9 billion for FY 2021. The new
everyday low-price (EDLP) concept focuses on
a limited assortment of essential goods, with a high
share of private labels that have been developed with
the help of customer feedback. This customer
engagement has helped generate trust in the new
low-price brand. Chizhik serviced on average
16 thousand customers every day.

Chizhik

, established in 2004, operates compact

hypermarkets that are usually within city limits. With
the development of e-commerce businesses in Russia,
much of hypermarkets’ non-food space has become
obsolete, and customers are opting to do more of their
food shopping locally. In 2019, X5 Group decided to
downsize the format by closing and/or transferring
suitable stores to Perekrestok management.

Karusel

17,972

Number of stores

+7.6% y-o-y

Number of stores

18 growth y-o-y

Number of stores

-41.1%

7,048

THS

SQM

Selling space

+7.7% y-o-y

990

Number of stores

+6.1% y-o-y

THS

SQM

Selling space

21 growth y-o-y

1,794

RUB

BLN

Net retail sales

+12.3% y-o-y

128

THS

SQM

Selling space

-42.3%

2.9

RUB

BLN

Net retail sales

59 growth y-o-y

81.7

Share of X5 Group’s
net retail sales

0.1

Share of X5 Group’s
net retail sales

1,099

THS

SQM

Selling space

+8.4% y-o-y

31.7

RUB

BLN

Net retail sales

-43.0%

349

RUB

BLN

Net retail sales

+13.4% y-o-y

1.4

Share of X5 Group’s
net retail sales

15.9

Share of X5 Group’s
net retail sales

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X5 Group (Пятерочка). Годовой отчет за 2021 год - часть 2