The Seventh Continent retail network released Thursday its operating results for August 2008. In the reporting period, the company’s sales revenue showed upbeat performances and grew by about 37% y-o-y in US dollar terms. However, in our opinion, the retail chain’s operating results are not very important, since they are almost identical to the previous months’ indicators.
Table. Seventh Continent: Key Financials August 2008, USD million
| | August 2007 | August 2008 | Change August 2008/ August 2007 |
|---|
| Sales revenue, incl. VAT, USD mn | 107 | 147 | 37% |
| Moscow region | 86 | 114 | 33% |
| Other regions | 20 | 33 | 65% |
| Total number of stores | 124 | 138 | |
| Selling space, thousand sq.m | 143 | 169 | 18% |
Source: company data, Finam estimates
We are neutral on Seventh Continent’s operating results, which are not likely to have any impact on the company’s stock valuations in the mid term. At the same time, the number of new retail outlet openings is currently very low, which could limit the company’s upside drivers and impair its sales.
In line with our estimates, the fair value of Seventh Continent is USD 21.4 per share, with a 19% downside potential.
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