BIM, Migros, and Carrefour have reported double-digit sales growth for the first half of 2018. We expect the strong revenue growth to continue in the second half due to increased inflation in the grocery market, driven by the drastic decline of the Turkish Lira.
BIM and Migros report good financial results
Inflation has been over 10% so far in 2018, boosting retailers’ revenue. BIM reported a 23.9% increase in year-on-year sales growth, to TRY14,768m (€2,141m). Its like-for-like revenue growth was 14.2%, driven by a 13% growth in basket spend.
Migros reported a similar growth rate, at 20.3% year-on-year, with revenue reaching TRY8,463m (€1,227m). It is aiming to maintain the 20% revenue growth for the rest of the year. Both retailers grew in line with the market and maintained their market shares.
Top retailers continue to invest in store openings
BIM increased its capital expenditure by 32.4% to TRY441m (€64m) while Migros’s grew by 75% to TRY271m (€39m). In the first half of 2018 BIM opened 446 stores, see it operate 7,211 outlets at the end of H1. However, the discounter revised down its guidance for 2018 from 730 to 651 store openings.
Migros opened 134 stores, a number that includes the acquisition of 73 Makro Market outlets. In total, it operated 2,011 outlets at the end of the half year. The retailer plans more than 200 store openings in the second half of the year.
Carrefour’s performance improved
The retailer reported revenue growth of 10.7% to TRY2,388m (€343m) for the first half of 2018. Its performance improved in comparison to the same period in 2017 when its sales grew by 3.5%. Carrefour closed 32 unprofitable stores and opened 19 stores. It also has another 50 store openings in the pipeline for the rest of the year.
Suppliers and shoppers will absorb price rises
Turkey's national bank has revised its inflation forecast up for 2018, following a drastic drop in the Turkish Lira. The fall in the currency has raised the price of imported goods. Inflation is expected to remain at double-digit levels in 2018 and into 2019. As a result, retailers may be looking for cheaper goods among their domestic suppliers. They are likely to ask suppliers to absorb some of the price increases, while some level of price inflation will have to be passed onto shoppers.
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