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63-717: The DIXY main competitors are X5 Group , Magnit , Metro AG , Auchan and others. The company was founded in 1992 in Saint Petersburg and began its expansion in 1999 when it opened a store in Moscow and from there began to expand to other regions of the country. The company delisted from the Moscow Exchange in 2017. On July 22, 2021 PJSC Magnit completed the purchase of the DIXY retail chain, which manages 2,477 stores in Russia. The brand

126-441: A retention ratio . This formula, essentially, applies a perpetuity formula to the current dividend, set to grow at a sustainable rate . Strictly, it is then to be applied only to “mature “companies. Further, an implication as regards policy, is that (per the formula) dividends are paid only where investors’ required return - i.e. cost of equity , k e - is greater than the company’s sustainable growth rate . Conversely while

189-402: A corollary is that the dividend decision will also affect the value of the company . The underlying argument is that capital retained will be invested by the firm in its profitable opportunities, whereas dividends paid to shareholders are invested elsewhere. Here, the firm's achievable rate of return , r , is proxied by its return on equity ; while its shareholders' required rate of return

252-839: A corollary, the CSS theory is seen to provide management with (some) guidance on dividend policy - more directly in fact than other approaches, such as the Walter model and the Gordon model. In fact, CSS reverses the traditional order of cause and effect by implying that company valuation ratios drive dividend policy, and not vice versa. The theory provides an explanation as to why some companies pay dividends and others do not: When redistributing cash to shareholders, management can typically choose between dividends and share repurchases . In most cases dividends are taxed higher than capital gains , and thus investors - and management - would typically be expected to select

315-564: A digital parcel delivery platform. The solution used information systems to bring together postamats, sorting facility and warehouse equipment. For deliveries within Russia, online stores and marketplaces deliver to the X5 distribution centres, while the retailer picks up cross-border deliveries at the Customs. The platform has a capacity of up to one million dispatches a day. In November 2017, X5 introduced machine learning to bolster targeted marketing at

378-443: A dynamic Debt-to-equity ratio . The CSS theory does not have 'invisible' or 'hidden' parameters such as the equity risk premium , the discount rate, the expected growth rate or expected inflation. As a consequence the theory can be tested in an unambiguous way. Low-valued, high-leverage companies with limited investment opportunities and a high profitability, use dividends as the preferred means to distribute cash to shareholders, as

441-524: A higher tax rate as compared, e.g., to capital gains ; see dividend tax and Retained earnings § Tax implications . Here, per the Modigliani–Miller theorem , as below: if there are no such disadvantages - and companies can raise equity finance cheaply, i.e. can issue stock at low cost - then dividend policy is value neutral; if dividends suffer a tax disadvantage, then increasing dividends should reduce firm value. Regardless, but particularly in

504-461: A later stage. Practical and theoretical considerations will inform this thinking. In setting dividend policy, management must pay regard to various practical considerations, often independent of the theory, outlined below. In general, whether to issue dividends, and what amount, is determined mainly on the basis of the company's unappropriated profit (excess cash) and influenced by the company's long-term earning power: when cash surplus exists and

567-1781: A particular period are not up to the mark). The theory followed the observation that companies often set their long-run dividends-to-earnings target as a function of expected NPV positive "projects" (see capital budgeting ). Expressed as a model, two parameters are considered: the target payout ratio and the rate at which current dividends adjust to that target: D t = D t − 1 + ρ ⋅ ( D t ∗ − D t − 1 ) = D t − 1 + ρ ⋅ ( τ ⋅ E t − D t − 1 ) = ρ ⋅ τ ⋅ E t + ( 1 − ρ ) ⋅ D t − 1 = ρ ⋅ D t ∗ + ( 1 − ρ ) ⋅ D t − 1 {\displaystyle {\begin{aligned}D_{t}&=D_{t-1}+\rho \cdot \left(D_{t}^{*}-D_{t-1}\right)\\&=D_{t-1}+\rho \cdot \left(\tau \cdot E_{t}-D_{t-1}\right)\\&=\rho \cdot \tau \cdot E_{t}+(1-\rho )\cdot D_{t-1}\\&=\rho \cdot D_{t}^{*}+(1-\rho )\cdot D_{t-1}\end{aligned}}} where: When applying this model to U.S. stocks, Lintner found ρ ≃ 30 % {\displaystyle \rho \simeq 30\%} and τ ≃ 50 % {\displaystyle \tau \simeq 50\%} . The above implies some symmetry. However, in reality,

630-617: A pilot store for the future project. In March 2019, X5 became a resident of the Innopolis Special Economic Zone and opened an X5 Development Centre. In October 2018, Х5 Retail Group opened a laboratory store at a Pyaterochka proximity store for testing the possibility of introducing new technologies. At the store, technologies for ESL, video analysis , smart shelves, digital information panels, self-scanning and payment scenarios, and other smart store technologies are all being tested under "field conditions". In November 2019,

693-543: A second laboratory store was opened at a Perekrestok supermarket. In June 2019, X5 Retail Group, together with the Israel-Russia Chamber of Commerce (IRCC), launched the X5 Retail-Tech Challenge start-up competition. In July 2019, X5 started selecting start-ups from Estonia , Latvia and Lithuania . In October 2019, X5 Retail Group summed up the results of a competition of start-ups held jointly with

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756-468: A share repurchase. However, for some companies share repurchases lead to a reduction in EPS, and it in those cases the company would select to pay dividends. From the CSS theory, then, it can be derived that debt-free companies should prefer repurchases whereas companies with a debt-equity ratio larger than should prefer dividends as a means to distribute cash to shareholders , where Companies may then "target"

819-427: A significant portion of the growth that is forecast for each of the three largest segments of Russia’s food retail market. Pyaterochka is a retail chain of proximity food stores. Pyaterochka launched a new store refurbishment program in 2019. The new Pyaterochka will offer almost twice as many fresh products in a selling area of around 150 sq m, which is about half of the sales floor. Vegetables , fruits and some of

882-402: A stock buyback, in both cases increasing the value of shares outstanding. Alternatively, some companies will pay "dividends" from stock rather than in cash; see Corporate action . There are several schools of thought on dividends, in particular re their impact on firm value. A key consideration will be whether there are any tax disadvantages associated with dividends: i.e. dividends attract

945-518: A target consolidated net debt / EBITDA ratio of below 2.0x, in line with the Company’s financing strategy. The ultimate decision on payment of dividends will always be subject to approval of the General Meeting of Shareholders. 2017 dividends amounted to RUB 21.6 bn and 2018 dividends amounted to RUB 25 bn, whereas the planned figure for 2019 is RUB 30 bn. In 2012, Stephan DuCharme was appointed

1008-470: A turnover of RUB 1.37 trn. Perekrestok is a retail chain of food supermarkets. In May 2019, Russia’s biggest and most up-to-date smart kitchen was launched for producing semi-prepared foods for stores, allowing a 2.5-fold increase in the ready-to-eat and ready-to-cook range under the Perekrestok Chef brand in the company’s supermarkets and also boosted quality. In February 2020 Perekrestok has begun

1071-412: Is built on the assumption that, although in a perfect market there is no information asymmetry , in practice the firm's management will be better informed than the market in estimating the true value of the firm. (See Efficient-market hypothesis .) It has some support in game theory , constituting a form of " signaling game ". Note that the concept of dividend signaling has been contested. At

1134-423: Is documented by empirical research. The dividend signaling hypothesis posits that a company's announcement of an increase in dividend payouts constitutes an opportunity to signal to the market that the firm is "better off than the average". Increasing a company's dividend payout may then predict (or lead to) favorable performance of the company's stock in the future. (See also Earnings guidance .) The theory

1197-413: Is not needed by the firm, then management is expected to pay out some or all of those surplus earnings in the form of cash dividends or to repurchase the company's stock through a share buyback program. At the same time, although the decisioning must weigh the best use of those resources for the firm - i.e. investment needs and future prospects - it must also take into account shareholders' preferences, and

1260-695: Is proxied by the firm's cost of equity, or k e . Thus, if r < k e then the firm should distribute the profits in the form of dividends; however, if r > k e then the firm should invest these retained earnings. The value of the company, then, may be seen as the present value of the return on investments made from retained earnings, and a theoretical value is expressed as: P = D + r ( ( E − D ) / k e ) k e {\displaystyle P={D+r((E-D)/k_{e}) \over {k_{e}}}\,} where The model assumes, at least implicitly, that retained earnings are

1323-561: Is similar to the IT system used by the Dostavka.Pyaterochka service. As of April 2020, the service was operating in Moscow. 5Post is a subdivision of X5 Retail Group, a developing service for delivering orders from online stores and marketplaces to the company’s stores. In the summer of 2018, the subdivision started opening the first lockers and order collection points. In June 2019, X5 Retail Group and

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1386-497: Is that capital used in paying out dividends will be replaced by new capital raised through issuing shares. The latter will increase the number of shares, diluting earnings , and hence lead to a decline in share price. Thus any increase in firm value because of the dividend payment (e.g. per the Gordon model , as below, where value is a function of dividend ) will be offset by the decrease in value due to raising new capital. In contrast to

1449-433: Is the current stock price; g {\displaystyle g} is the constant growth rate in perpetuity expected for the dividends; r {\displaystyle r} is the constant cost of equity capital (k e ) for that company; D 1 {\displaystyle D_{1}} is the value of dividends at the end of the first period, which may be substituted with earnings multiplied by

1512-716: The Internet Initiatives Development Fund (IIDF) launched a specialised retail accelerator , with the Petrovich and Sportmaster chains among its partners. Start-up companies joining the IIDF accelerator programme are able not only to attract from RUB 2 mn to RUB 25 mn of investments from the fund, but also to get advice from X5 experts and test their business ideas on X5’s anonymised database of over 3 bn purchases. In May 2018, X5 and Innopolis University launched joint work on scientific research projects, in particular on

1575-728: The London Stock Exchange (LSE) and the Moscow Stock Exchange (MSE). Its share of the food retail market rose up from 47th to 42nd place among the world’s Top-250 retailers in the Global Powers of Retailing 2020 and took 11th place in the Top-50 fast-growing global retailers (according to Deloitte ); it was ranked 41st among the Top 50 Global Retailers (according to Kantar Consulting ). In March 2021, after trials at 52 supermarkets,

1638-539: The Spanish Institute for Foreign Trade (ICEX). In July 2019, the Sberbank venture fund, Fort Ross Ventures and X5 Retail Group signed an agreement on strategic partnership in innovation, exchange of technologies and looking for start-ups. In December that year, X5 Retail Group and start-up accelerator Orange Fab started a joint programme for seeking and introducing innovations in Russia. In April 2019, X5 launched

1701-485: The enterprise value of a firm is unaffected by how that firm is financed : i.e. its value is unaffected by whether the firm is funded by retained earnings , or whether it raises capital by issuing shares or by selling debt . The dividend decision, relating to both equity financing and retained earnings, is, in turn, value neutral. Here, shareholders are indifferent as to how the firm divides its profits between new investments and dividends. The logic, essentially,

1764-519: The health foods category. Perekrestok is Russia’s largest supermarket chain, consisting, at 2019 closing, of 852 supermarkets with a turnover of RUB 273 bn. Karusel is a retail chain of food hypermarkets. In 2019, Х5 Retail Group announced its decision to transform the Karusel hypermarket chain within two years: - 34 stores to become large format supermarkets managed by the Perekrestok retail chain by

1827-568: The 5Post delivery service for online store and marketplace orders (8,000 postamats and order collection points). In 2013, X5 Retail Group kicked off a programme to attract sublessees , and by the end of 2017, over 29,000 retail outlets were opened in X5 stores by 5,500 private enterprises. With 5,000 sublessees, Pyaterochka leads the way in the number of partners accounting for over 8% of its total selling space. More than 3,000 of them are farmers and small and medium-sized enterprises selling food and children’s goods and providing everyday services near

1890-521: The Company approved its dividend policy . The key principles of the dividend policy are as follows: 1) The dividend policy sets a target payout ratio of at least 25% of X5 Retail Group’s consolidated IFRS net profit, provided that the Company’s financial position allows for it. 2) When considering a dividend proposal to the General Meeting of Shareholders, the Supervisory Board will be guided by

1953-634: The Company’s CEO and the Chairman of the Management Board. In 2015, Igor Shekhterman  [ ru ] was appointed as the Company’s CEO and Stephan DuCharme appointed as the Chairman of Supervisory Board. Each of the Company’s brands offers a unique customer value proposition and targets key parts of the Russian consumer population. This multifaceted strategy enables X5 Retail Group to capture

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2016-513: The Perekrestok supermarket chain, and developed personalised offers for all members of the Perekrestok Club loyalty program . Dividend policy Dividend policy , in financial management and corporate finance , is concerned with the policies regarding dividends ; more specifically paying a cash dividend in the present, as opposed to, presumably, paying an increased dividend at

2079-520: The Perekrestok.ru online store was introduced in Moscow and, in October 2018, in St Petersburg. A dark store combines features of a traditional store and a warehouse: it is not intended for making purchases but the merchandising display is similar to that of a store. In contrast to a traditional warehouse, a dark store services online orders and goods are displayed individually. As of 31 December 2019,

2142-870: The Rosinka Group in Southwest Russia and 100 stores owned by the Soseddushka retail chain in the Orenburg region (2015) and 99 Polushka stores in Bashkortostan (2018), as well as 85 stores Telezhka, Tverskoy kupets and Volny kupets in four regions (2019). In 2018, X5 GDRs started trading on the Moscow Exchange. X5’s shareholder structure is as follows: CTF Holdings S.A.,47.86%; Intertrust Trustees Ltd (Axon Trust), 11.43%; X5 directors, 0.10%; treasury shares, 0.01%; shareholders with less than 3%, 40.60%. In 2017,

2205-729: The Unitrade customs broker developed an end-to-end service for foreign online stores. Partners pick up orders from the online store warehouses in China , bring them to Russia, clear them through customs and deliver them to the X5 distribution centre in Novosibirsk . Then 5Post delivers the parcels to stores. At the end of 2019, 5Post was managing 12 sorting facilities at Х5 Retail Group distribution centres and 8,000 postamats and order collection points. During 2019, over five million parcels were delivered to clients. The company’s market share by revenues at

2268-482: The above, under the dividend discount model , and particularly the “Growth model” of Myron J. Gordon , the value of the firm (or at least its equity) is explicitly a function of dividends paid. Here investors are seen to prefer a “bird in the hand”: i.e. dividends are certain as compared to income from future capital gains. The resultant valuation formula thus returns value as the present value of “all” future dividends: where: P {\displaystyle P}

2331-534: The amount of equity finance that would be needed for these investments; it will also confirm that the cost of retained earnings is less than the cost of equity capital. If appropriate, it will then use its retained profits to finance capital investments. Finally, if there is any surplus after this financing, then the firm will distribute these residual funds as dividends. Although absent of any explicit link to value, such an approach may, in fact, impact share price: This policy will attract investors who appreciate that

2394-597: The beginning of 2021; - 20 stores to close by 2022; - 37 hypermarkets to continue operating under the Karusel brand. At the close of 2019, the Karusel retail chain had 91 hypermarkets with a turnover of RUB 87 bn. In October 2020, X5 Group launched a new hard discounter “Chizhik” in Moscow and in Balashikha with expectations of its federal expansion. A year after, 27 Chizhik hard discounters were opened in Moscow and in Moscow Oblast with 70 expected, in regions as well, by

2457-417: The capital markets by changing policy abruptly; see below re signaling. As regards shareholders: As a general rule, shareholders of " growth companies " would prefer managers to retain earnings so as to fund future growth internally (or have a share buyback program) whereas shareholders of value or secondary stocks would prefer the management to distribute surplus earnings in the form of cash dividends. Re

2520-707: The cash desks outside Pyaterochka’s shopping area or inside as a shop-in-shop. In April 2017, X5 Retail Group launched a cooperation project with the Central Union of Consumer Societies of the Russian Federation (Centrosoyuz). The COOP-Pyaterochka format has the potential to add up to 1,000 stores over a three-year period. The parties have also agreed to open up to 5,000 Pyaterocka-based shop-in-shop corners by 2021 to sell farmers’ and consumer cooperatives ’ products. In November 2021, X5 Group and Alfa-Bank launched joint financial service “X5 Bank”, 49,99% each held by

2583-493: The close of 2019 was 11.5%. The closest competitor was Magnit , with a food retail market share of 7.6% (together with non-food and non-retail business – 9.6%). As of 31 December 2019, the Company operated 16,297 stores, including 15,354 Pyaterochka proximity stores, 852 Perekrestok supermarkets and 91 Karusel hypermarkets, the Perekrestok.ru online supermarket (two dark stores in Moscow and one dark store in St Petersburg) and

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2646-461: The company in January 2023 is about 26 thousand people. 100% of the shares of DIXY Holding Limited (Cyprus) belong to JSC "Thunder". The Chief Executive Officer is Yuri Semenov. X5 Group X5 Group (previously known as X5 Retail Group and commonly known as X5 ) is Russia's largest food retailer . In 2012, the organization of X5-Retail Group LLC was liquidated, and in 2018 X5 Group LLC

2709-401: The company is enjoying growth in excess of other comparable firms (and k e ) then it should not pay dividends, instead, funding its capital requirement with retained profits. John Lintner provides an explicit formula for determining dividend policy; it is particularly relevant to a publicly traded company . A key model-assumption is that management will consider two factors in determining

2772-559: The company's staff as of January 2023 is about 26 thousand people. As of January 16, 2023, the Group operated 2,650 stores, including 2,209 Dixie discounters and 441 First-Time franchisees. The geography of the Group's activities extends to three federal districts of Russia — the Central, Northwestern (discounters "Dixie") and the Far Eastern (franchisees "First thing"). The number of employees of

2835-405: The dividend amount, with both indicating higher dividends correspondingly. The first is the net present value of future earnings; the second is the sustainability of these earnings. At the same time, any policy must recognize that investors will prefer to receive their dividend with (some) certainty, and thus, if possible, management will maintain a constant rate of dividend (even if the results in

2898-414: The end of the year 2021. In 2022, X5 Group announced 3000 Chizhik stores to be opened in 3 years, despite so called “cannibalization” which means audience loss in other stores of X5 group, attracted by Chizhik. In addition to the retail chains, X5 Retail Group manages the Perekrestok.ru online supermarket and the Dostavka.Pyaterochka and Perekrestok.Bystro food and 5Post parcel delivery services. In 2017,

2961-481: The firm is trying to employ its capital optimally (and will require fewer new stock issues with correspondingly lower flotation costs ); it also delays (or removes) the payment of the secondary tax on dividends; see Retained earnings § Tax implications . At the same time, however, such a policy may result in conflicting signals (see above) being sent to investors. It also represents an increased level of risk for investors, as dividend income remains uncertain, and

3024-473: The former, for example, the thinking is dividend payments, and share price, will be higher in the future, (more than) offsetting the retainment of current earnings. See Clientele effect . Regarding both: Management must choose the form of the dividend distribution, generally as cash dividends or via a share buyback . Various factors may be taken into consideration: where shareholders must pay tax on dividends , firms may elect to retain earnings or to perform

3087-410: The group (in partnership with Visa and Sber ) launched ‘pay with a glance’ biometrics at self-service checkout terminals in its supermarkets and convenience stores. The facial recognition payment system is expected to be expanded to 3,000 X5-owned stores by the end of 2021. In 1995, the first Perekrestok store was opened in Moscow . In 1999, Pyaterochka retail chain was founded and the first store

3150-438: The online supermarket had two dark stores in Moscow and one dark store in St Petersburg. The Dostavka.Pyaterochka express delivery service was launched in 2019; orders are collected at Pyaterochka stores. For the project, the company developed its own software covering all the project’s operational and auxiliary processes. The IT system is integrated into the Х5 Retail Group infrastructure, allowing new stores to be hooked up to

3213-459: The only source of financing, and that k e and r are constant; given these assumptions, the approach is subject to some criticism. Under a Residual Dividend policy, dividends are paid out from "spare cash" or excess earnings ; this is to be contrasted with a "smoothed" payout policy. A firm applying a residual dividend policy will evaluate its available investment opportunities to determine required capital expenditure , and in parallel,

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3276-481: The perishable items are laid out in the dedicated fresh zone. On top of that, the rebranded Pyaterochka sells a wide assortment of foods to go and ready-to-eat meals and has a special area where customers can have coffee or fresh orange juice and charge their gadgets. An in-house bakery made it possible to expand the offering of bread and pastry. In 2019, the Pyaterochka retail chain consisted of 15,354 stores with

3339-482: The progression of dividends is asymmetric: increases in dividend are usually small and frequent, while decreases (including cutting the dividend altogether) are large and infrequent. The capital structure substitution theory (CSS) describes the relationship between earnings, stock price and capital structure of public companies. The theory is based on the hypothesis that management "manipulates" capital structure such that earnings per share (EPS) are maximized. As

3402-419: The prototype/pilot phase and 14 projects were implemented. Х5 considers technological solutions for four key retail spheres: customer experience , operations in stores, supply chain and back office. Х5 is focusing particularly on smart shelving projects, flexible pricing systems, robotisation , automation of quality and freshness control for foodstuffs, and goods tracking. In June 2017, X5 Retail Group and

3465-512: The relationship with capital markets more broadly. As regards the firm: If there are no NPV positive opportunities, i.e. projects where returns exceed the hurdle rate , and excess cash surplus is not needed, then management should return some or all of the excess cash to shareholders as dividends. However, potentially limiting any distribution, the firm's overall finances, liquidity, and legal / debt covenants in place will also be of relevance. Management may also wish to avoid "unsettling"

3528-463: The retailer and by the bank with 0,02% owned by “Alfa Investments”. X5 Bank is a part of X5 Group strategy to be represented at every step of customer journey from product to purchase. Х5 entered the innovations market in 2017: by July 2019, Х5 innovations had drawn in over 800 start-ups. Four hundred solutions underwent thorough assessment by business experts and some of them progressed to the business modelling phase. More than 100 start-ups advanced to

3591-567: The roll-out of new store concept. Among the highlights of the new concept are updated interior and exterior designs, and a selection of new services offered in-store. The new Perekrestok concept is designed to meet the needs of today's customers, including frequent purchases of ready-to-eat and ready-to-go products. About 50% of the selling space will be dedicated to fresh categories ( fruits , vegetables , dairy products , cheese , deli meats , as well as fresh fish and meat ) or salad bars , bakeries and cafés . A special area will be focused on

3654-410: The same time, however, the theory is still used by some investors, and is supported by empirical studies showing that a firm's share price may increase significantly upon announcement of dividend increases, despite the cost inherent in the dividend tax . Walter's model holds that dividend policy is a function of the relationship between the company's return on investment and its cost of equity ;

3717-425: The second (more realistic) case, other considerations apply; see Corporate finance § Dividend theory . The Modigliani–Miller theorem states that dividend policy does not influence the value of the firm. The theory, more generally, is framed in the context of capital structure , and states that — in the absence of taxes, bankruptcy costs, agency costs , and asymmetric information, and in an efficient market —

3780-460: The service in just a few hours and goods balances to be monitored virtually in real time. There is a patented system operating for collecting orders at a store; this cuts assembly time considerably and optimises staff work. As of April 2020, the service was live in Moscow , Skhodnya , Lyubertsy and Kazan . The Perekrestok.Bystro express delivery service was started up in 2020, with orders being collected at Perekrestok supermarkets. The software

3843-599: Was opened in Saint Petersburg . In 2005, Pyaterochka completed an IPO on the London Stock Exchange. X5 was founded in May 2006 after the merger of the Pyaterochka and Perekrestok retail formats. In 2008, X5 acquired the Karusel hypermarket chain. Other major acquisitions included: 82 Paterson supermarkets (2009), more than 660 Kopeyka stores (2010), 103 Pokupochka stores in the Samara region (2014), 104 stores owned by

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3906-533: Was opened. The company operates several retail formats: convenience stores under the Pyaterochka brand, supermarkets under the Perekrestok brand, and hypermarkets under the Karusel supermarket  [ ru ] brand, as well as the Perekrestok.ru online market, the 5Post parcel and Dostavka.Pyaterochka and Perekrestok.Bystro food delivery services. The company's global depositary receipts are listed on

3969-410: Was retained and the business continued to operate as a separate legal entity. In 2022 the company's revenue in Russia amounted to 107 million rubles. As of January 2023, the Group operated 2,650 stores, including 2,209 Dixy discounters and 441 First Business franchisees. The geography of the Group's activities covers three federal districts of Russia - Central, North-Western and Far East. The number of

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