X5, Magnit and Dixi cautious about new store openings

Leading Russian retail chains have become more cautious about opening new stores and many companies have abandoned high-cost projects. Anna Kareva, Investor Relations Manager at X5 Retail Group, said: "The return on investment period for hypermarkets is at least three years, while smaller stores on leased premises produce a return in just two or three months." X5 will halve its capital expenditures in 2009, to USD500 million. Kareva says: "In approving new projects, we shall give preference to small-format stores, primarily the Pyaterochka discount chain, and we shall mostly be using leased premises." Magnit and Dixi will adopt a similar strategy in 2009. Magnit's investment forecast for 2009 has been cut from USD750-800 million to USD660 million. It will open 10-15 new hypermarkets rather than the 17 planned earlier although the company is likely to focus on small grocery stores with the opening of 350-400 stores, rather than the 250 previously planned. Dixi Vice President Ilya Yakubson says his company is focusing on stores that yield a return within 18 months. Meanwhile, Sedmoi Kontinent has said that it is prepared to spend at least USD140 million on development in 2009 - but only for stores where construction began in 2008.

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