Lenta reports of total sales grew 16.3% in 2Q 2017 to Rub 85.6bn

Lenta sales and operating highlights for the second quarter ended 30 une 2016

St-Petersburg, Russia, 2017-Jul-20 — /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 second quarter ended 30 June 2017.

2Q 2017 Operating Highlights:

  • Total sales grew 16.3% in 2Q 2017 to Rub 85.6bn (2Q 2016: Rub 73.6bn);
  • Like-for-like (“LFL”)1 sales growth of (2.0%) vs. 2Q 2016;
  • LFL traffic growth of (2.9%) combined with a 0.9% increase in LFL ticket;
  • Seven supermarkets opened during the second quarter of 2017;
  • Total store count reached 254 stores as at 30 June 2017, comprising 195 hypermarkets and 59 supermarkets;
  • Total selling space increased to 1,173,416 sq.m as at 30 June 2017 (+27.1% vs. 30 June 2016); and
  • Number of active loyalty cardholders2 increased to 11.5m (+23% y-o-y) with approximately 94% of transactions in the second quarter made using the loyalty card.

1H 2017 Operating Highlights:

  • Total sales grew 16.7% in 1H 2017 to Rub 163.5bn (1H 2016: Rub 140.1bn);
  • LFL sales growth of (1.8%) vs. 1H 2016;
  • LFL traffic growth of (2.4%) combined with a 0.6% increase in LFL ticket;
  • Lenta started expansion of its supermarket format in Novosibirsk with three stores opened in 1H 2017; and
  • Four new hypermarkets and 11 supermarkets were opened during 1H 2017 while one supermarket was closed.

Material events in 2Q 2017 and after the reported period:

  • Lenta completed placement of Rub 5.0bn 3-years bonds with semi-annual coupon and an interest rate of 8.7%;
  • Lenta issued 98,217 new ordinary shares (491,085 GDRs) under Management Incentive Program (MIP) and Long-Term Incentive Program (LTIP)3. As a result share capital increased to 97,416,963 shares (487,084,815 GDRs);

Lenta’s Chief Executive Officer, Jan Dunning commented:
“Lenta continues to deliver rapid growth, with sales up by 16.3% in the second quarter of 2017 despite the challenging macro environment. Although growth in the reported quarter was slightly below the first quarter of this year we are encouraged by recent trends – after disappointing trading in April which was impacted by abnormally cold weather, growth in May was in line with the quarterly average while June results were very strong with a return positive LFL sales growth which has continued into July.

While Lenta continued gaining new customers ahead of sales, rapid expansion in the cities with existing presence resulted in higher cannibalization effects. These effects were especially visible in St. Petersburg due to the acquisition of Kesko’s food retail business in late 2016. We are very happy with the performance of our new ex-Kesko stores – ramp-up is accelerating, reaching over 30% same-store sales growth in June4, a clear demonstration of the attractiveness of Lenta’s customer proposition. Of course, this growth also put additional pressure on our other stores in the region.

During the quarter the team launched several new initiatives to stimulate sales, including improvements in marketing and communications, category management and our loyalty program. We are pleased with the impact of these efforts, which helped deliver LFL sales growth in June back into positive territory and we hope to continue this momentum in the second half of the year.”

Lenta Store Developments

In the second quarter of 2017, Lenta opened seven supermarkets: three leased supermarkets in Moscow, three leased stores in Saint-Petersburg and one owned supermarket store in Novosibirsk. Total number of stores reached 254 (195 hypermarkets and 59 supermarkets).

In the reported quarter Lenta added 5,815 sq.m of net selling space. Total selling space as at 30 June 2017 increased to 1,173,416 sq.m, up 27.1% year-on-year.

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 30 June 2017 are considered active
3 31,744 shares (158,720 GDRs) under LTIP are held as treasury shares
4 The stores acquired from Kesko are not included in Lenta’s LFL panel. Calculation of same-store sales is made based on the period when the stores were owned by Kesko.


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Source:: Lenta