Russia: Lenta 1Q2017: total sales grew 17.2%

St-Petersburg, Russia, 2017-Apr-21 — /EPR Retail News/ — Lenta Ltd, (LSE, MOEX: LNTA / “Lenta” or the “Company”) one of the largest retail chains in Russia, is pleased to announce the Company’s consolidated sales and operating results for the first quarter ended 31 March 2017.

To download the full press release, please click here

1Q 2017 Operating Highlights:

• Total sales grew 17.2% in 1Q 2017 to Rub 77.9bn (1Q 2016: Rub 66.5bn);
• Like-for-like (“LFL”)1 sales growth of (1.7%) vs. 1Q 2016;
• LFL traffic growth of (2.0%) combined with a 0.3% increase in LFL ticket;
• Four new hypermarkets and four supermarkets opened during the first quarter of 2017 while one supermarket was closed;
• Total store count reached 247 stores as at 31 March 2017, comprising 195 hypermarkets and 52 supermarkets;
• Total selling space increased to 1,167,601 sq.m. as at 31 March 2017 (+30.3% vs. 31 March 2016); and
• Number of active loyalty cardholders2 increased to 11.1m (+25% y-o-y) with approximately 93% of transactions in the first quarter made using the loyalty card.

Material events in 1Q 2017 and after the reported period:
• The Company signed lease contracts with the ADG Group real estate development company to open 36 supermarkets (approx. 47,000 sq.m of total space and 30,300 sq.m of selling space) in Moscow shopping and entertainment centers in 2018-2019; and
• Lenta started expansion of its supermarket format in Novosibirsk with two stores opened in 1Q 2017.

Lenta’s Chief Executive Officer, Jan Dunning commented:

“The macro and consumer environment for food retail remained challenging in the first quarter of 2017. While Lenta stores continue to win customers from competitors, sales growth came under pressure due to a combination of falling inflation, changes in customer behaviour, one day less in February and our own rapid expansion which resulted in expected higher cannibalization effects. We hope to see some improvement in the environment later in the year and are putting sales initiatives in place to capitalize on this to deliver a pick-up in sales growth.

Customer numbers are running ahead of sales growth in both new and LFL stores, but as expected, cannibalization effects increased due to our rapid expansion in cities with existing Lenta presence. Consumers continued trading up in our stores for the second consecutive quarter, but this was offset by historically low on-shelf inflation and lower volume as customers reduced their food spending to compensate for pressure on their budgets. We see some stabilization of customer’s promo sensitivity, supported by the attractiveness of Lenta’s offering and low inflation. Visit frequency declined across much of the food retail sector – Lenta traffic improved compared to the previous quarter, but still remained in a negative territory.

We continue rolling-out new supermarkets in Moscow, St.Petersburg and the Central region3 and, as planned, started expanding the format in Siberia with two successful store openings in Novosibirsk. Our store opening guidance for 2017 and our long-term growth targets are unchanged, but we have decided to shift some store openings planned for 2018 into the second half of the same year which in combination with more predictable and efficient construction cycles will enable us to reduce capital expenditure in 2017. This will result in reduced leverage and provide more financial flexibility in case small acquisition opportunities appear in the future.”

About Lenta
Lenta is the largest hypermarket chain in Russia (in terms of selling space) and the country’s fifth largest retail chain (in terms of 2016 sales). The Company was founded in 1993 in St. Petersburg. Lenta operates 195 hypermarkets in 78 cities across Russia and 53 supermarkets in Moscow, St. Petersburg, Novosibirsk and the Central region with a total of approximately 1,168,324 sq.m of selling space. The average Lenta hypermarket store has selling space of approximately 5,700 sq.m. The average Lenta supermarket store has selling space of approximately 900 sq.m. The Company operates seven owned distribution centres.

The Company’s price-led hypermarket formats are differentiated in terms of their promotion and pricing strategies as well as their local product assortment. The Company employed approximately 45,689 people as of 31 December 2016.

The Company’s management team combines a mix of local knowledge and international expertise coupled with extensive operational experience in Russia. Lenta’s largest shareholders include TPG Capital and the European Bank for Reconstruction and Development, both of which are committed to maintaining high standards of corporate governance. Lenta is listed on the London Stock Exchange and on the Moscow Exchange and trades under the ticker: ‘LNTA’.

A brief video summary on Lenta’s business and its Big Data initiative can be seen here.

For further information please visit http://www.lentainvestor.com/en/ or contact:

Lenta
Anna Meleshina,
Public Relations & Government Affairs Director
Tel: +7 812 363 28 53
E-mail: anna.meleshina@lenta.com

Anastasia Kuznetsova,
Corporate Communications Manager
Тel: +7 (812) 336 39 97
E-mail: a.kuznetsova@lenta.com

FTI Consulting
Leonid Fink
Tel: +44 7497 783 705
E-mail: Leonid.Fink@fticonsulting.com

Jenny Payne
Tel: +44 20 3727 1000
E-mail: Jenny.Payne@fticonsulting.com

Forward looking statements:
 
This announcement includes statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking statements can be identified by the fact that they do not only relate to historical or current events. Forward-looking statements often use words such as “anticipate”, “target”, “expect”, “estimate”, “intend”, “expected”, “plan”, “goal”, “believe”, or other words of similar meaning.
 
By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, a number of which are beyond Lenta’s control. As a result, actual future results may differ materially from the plans, goals and expectations set out in these forward-looking statements.
 
Any forward-looking statements made by or on behalf of Lenta speak only as at the date of this announcement. Save as required by any applicable laws or regulations, Lenta undertakes no obligation publicly to release the results of any revisions to any forward-looking statements in this document that may occur due to any change in its expectations or to reflect events or circumstances after the date of this document.

To view the full press release, please click here

1 Lenta’s stores are included in the LFL store base starting 12 months after the end of the month in which they are opened
2 Cardholders who made at least 2 purchases at Lenta during the 12 months to 31 March 2017 are considered active
3 The Company has included three supermarkets located in the Kaluzhskaya oblast in the Central region

SOURCE: Lenta

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