X5 Corporate Center · RUS:X5

X5 Corporate Center — X5 Retail Group — Investor Day (October 2014)

23 slides from X5 Corporate Center's investor day presentation, Oct 29, 2014

  1. Slide 1: Disciplined Growth From Back-to-Basics Focus

    “Disciplined Growth From Back-to-Basics Focus” Stephan DuCharme, CEO X5 Capital Markets Day 2014 Moscow, Russian Federation 29 October 2014 X5 RETAIL GROUP

  2. Slide 2: Introduction

    INTRODUCTION )XSRETAILGROUP © Tiamépowwa fonepznpecron Mx

  3. Slide 3: Current X5 Context

    CURRENT X5 CONTEXT  Effective multi-format business model delivers improved customer focus and growth  Good progress with back-to-basics initiatives  Disciplined investment in growth drivers  Product range and availability  Store refurbishments  Store openings  Despite potential challenges, m

  4. Slide 4: Russian Macro Environment

    RUSSIAN MACRO ENVIRONMENT Increasingly Challenging Macro Environment Positive Trends Negative Trends  Food Inflation outpacing general cost  Low GDP Growth, Declining inflation Investment and Ruble Devaluation  Low Unemployment  Declining Consumer Spending  Russia – Structurally Strong Fiscal P

  5. Slide 5: Consumer Trends

    CONSUMER TRENDS  Evolving Russian Consumer – shopping habits and preferences not fully formed, open to innovation  Stable Consumer Confidence Index – despite challenging environment  Increase in household debt/interest payments – affecting consumer spend (predominantly “white goods”)  Private La

  6. Slide 6: Customer Oriented Value Propositions

    CUSTOMER ORIENTED VALUE PROPOSITIONS “YOUR NEIGHBORHOOD STORE FOR DAILY SHOPPING NEEDS”  4,342 stores at 30 September 2014; Average check: 289 RUB (Q3 2014)  Avg. net selling space, 350 sq. m.; formats: 150-300 sq. m. / 300-400 sq. m. / 400-600 sq. m. / 600-800 sq. m. “RUSSIA’S FAVORITE, HIGH QUAL

  7. Slide 7: X5 – Where We Stand Today

    X5 — WHERE WE STAND TODAY )XSRETAILGROUP © Tiamépowwa fonepznpecron Mx

  8. Slide 8: No Change in Strategy & Priorities

    NO CHANGE IN “STRATEGY & PRIORITIES” Strategy Leverage our scale and multi-format value proposition to capture greater wallet share by providing the best customer experience in the dynamic Russian food retail market Strategic Priorities  Build the right management team  Create effective multi-form

  9. Slide 9: Strategic Focus: Creating Value for Key Stakeholders

    STRATEGIC FOCUS CREATING VALUE FOR KEY STAKEHOLDERS  “Improving Value Propositions”  Deliver sustainable growth  Drive customer loyalty  Improve ROIC  Improve customer feedback  Clear strategy and KPI’s  Energize loyalty programs  Consistent/trusted delivery  Meet standards in all locations

  10. Slide 10: The Right Team…

    THE RIGHT TEAM… Change  Leaders and change agents to complete transformation in Agents: 2014 and drive X5’s strategic ambitions “Top 100” Technical:  Functional expertise to support “best-in-class” Supply Chain/ Operations/IT operations  X5 ambassadors and the faces of our Retail: formats working

  11. Slide 11: Corporate Culture & Communication – X5-nitsa

    CORPORATE CULTURE & COMMUNICATION – X5-NITSA Click to start video 11

  12. Slide 12: The Right Strategy…

    THE RIGHT STRATEGY… Capture A Greater Share Of The Customer’s Wallet X5 2005 – 2012 X5 NOW Marketing/Category Marketing/Category Marketing/Category Management Management Management Operations Operations Operations Logistics Logistics (ex transportation) (ex transportation) Expansion Expansion Expans

  13. Slide 13: Completing the Turnaround…

    COMPLETING THE TURNAROUND… Completing the Turnaround in 2014 Status Value proposition meeting customer 29 October 2014 10 expectations – continue accelerating 9 refurbishments and store expansion (Sales, LFL & Selling space) ~90% of X5 8 revenue 7 6 Value proposition and store concept Growth 5 redef

  14. Slide 14: Establishing a Track Record

    ESTABLISHING A TRACK RECORD Net Sales Growth, % y-o-y Net Selling Space Growth, % y-o-y 23.1% 14.2% 12.9% 12.3% 12.1% 16.6% 13.9% 11.9% Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Sales Densities, th.RUB/sq.m.(1) Total LFL Sales Growth, % y-o-y 13.3% 258 260 262 267 8.1% 6.3% 3.9% Q4 '13

  15. Slide 15: Market Opportunity

    MARKET OPPORTUNITY X5RETAILGROUP © Tiamépouxa <fenepsxpecton x 15

  16. Slide 16: Grocery Retail Market Development in Russia

    GROCERY RETAIL MARKET DEVELOPMENT IN RUSSIA Grocery retail is expected to grow 7-8% p.a. midterm; adding ~1T RUB incremental every year CAGR CAGR (05-13) (13-20f) RUB •Positive socio-economics since 2005 (Low unemployment and positive real wage growth) •Fast development of modern retail universe fro

  17. Slide 17: Russian Grocery Retail Market Dynamics

    RUSSIAN GROCERY RETAIL MARKET DYNAMICS There is a power shift from Traditional Trade to Modern Trade with Federal Chains being the main driver RUB ……….... Federal Chains will grow by +5T RUB incremental from 2013 to 2020 Note: Federal players are Magnit, X5, Auchan, METRO, Lenta, O’Key, Dixy, 7 Cont

  18. Slide 18: Top-5 Share of Grocery Retail Globally in 2013

    TOP-5 SHARE OF GROCERY RETAIL GLOBALLY IN 2013 The top 5 grocery retailers in Russia are 21% of the market (vs. 60-70% in established markets) Market leader sales Second player sales 1.4 1.9 1.6 1.1 1.7 3.3 1.1 1.8 Source: Company Reports, Planet Retail. Euromonitor 18

  19. Slide 19: Strategic Plans

    STRATEGIC PLANS )XSRETAILGROUP © Tramépouxa cfenepznpecron M5 19

  20. Slide 20: Expansion Opportunities

    EXPANSION OPPORTUNITIES Modern Retail Selling Space To Grow By ~9 Million Sq. M. Over Next 5 Years Lighter colored regions = less store concentration; grey regions = no current presence Expansion Strategy  Defend and expand “home” core regions  Expand in other regions and build critical mass  Tar

  21. Slide 21: Strategic Focus

    STRATEGIC FOCUS  Creating shareholder value by improving customer value propositions Creating Stakeholder  Focus on customers and stores Value  Increase sales densities  Focus on operating efficiencies  Improve profitability and returns  Increase employee engagement and develop corporate cultu

  22. Slide 22: Thank You for Your Attention

    THANK YOU FOR YOUR ATTENTION 22

  23. Slide 23: Disclaimer

    DISCLAIMER This presentation does not constitute or form part of and should not be construed as an advertisement of securities, an offer or invitation to sell or issue or the solicitation of an offer to buy or acquire or subscribe for securities of X5 Retail Group N.V. or any of its subsidiaries or

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