LENTA INTERNATIONAL PJSC TIDMLNTR TIDMLNTA
RNS Number : 0530U
Lenta Ltd
19 October 2017
LENTA SALES AND OPERATING HIGHLIGHTS FOR THE THIRD QUARTER ENDED 30 SEPTEMBER 2017
St-Petersburg, Russia; 19 October, 2017 - 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 third quarter ended 30 September 2017.
3Q 2017 Operating Highlights:
-- Total sales grew 18.7% in 3Q 2017 to Rub 89.6bn (3Q 2016: Rub 75.4bn);
-- Like-for-like ('LFL')(1) sales growth of 0.7% vs. 3Q 2016;
-- LFL traffic growth of (1.5%) combined with a 2.2% increase in LFL ticket;
-- Six hypermarkets and five supermarkets opened during the third quarter of 2017;
-- Total store count reached 265 stores as at 30 September 2017, comprising 201 hypermarkets and 64 supermarkets;
-- Total selling space increased to 1,202,866 sq.m as at 30 September 2017 (+24.9% vs. 30 September 2016); and
-- Number of active loyalty cardholders(2) increased to 11.8m (+20% y-o-y) with approximately 94% of transactions in the third quarter made using the loyalty card.
9M 2017 Operating Highlights:
-- Total sales grew 17.4% in 9M 2017 to Rub 253.1bn (9M 2016: Rub 215.5bn); -- LFL sales growth of (1.0%) vs. 9M 2016; -- LFL traffic growth of (2.1%) combined with a 1.2% increase in LFL ticket; -- Lenta started expansion of its supermarket format in Siberia and Ural regions; and -- 10 new hypermarkets and 16 supermarkets were opened during 9M 2017.
Material events in 3Q 2017 and after the reported period:
-- Lenta signed an agreement to lease 14 hypermarkets in Moscow and Russian regions previously operated under the NASH brand;
-- Lenta reached the milestone of 200 hypermarkets across Russia and opened its first supermarkets in Yekaterinburg; and
-- Analytical credit rating agency (ACRA) assigned Lenta a rating of A+ (RUB). The outlook on the rating is 'Stable'.
Lenta's Chief Executive Officer, Jan Dunning commented:
'Lenta's sales growth accelerated to 19% in the third quarter of 2017. We are pleased with the initial customer reaction to changes we made in our offering, range, marketing and communication which resulted in positive like-for-like sales growth. Although we are still seeing some pressure from deflation and cannibalization, our efforts led to substantial improvements in both like-for-like traffic and ticket growth, which accelerated every month of the third quarter. We are also very pleased with the performance of the stores we acquired from Kesko last year - their sales ramp-up is accelerating, reaching over 60% same-store sales growth(3) in September, giving a very clear demonstration of the attractiveness of Lenta's customer proposition.
We are also satisfied with the pace of expansion in both hypermarket and supermarket format. Supermarkets showed very strong performance in the reported quarter with 5% like-for-like sales growth and we are confident in our ambitious plans to continue rolling-out this format in existing and new cities of presence. Our hypermarket pipeline is progressing well and we recently increased our 2017 target to around 40 hypermarket openings following an agreement to lease 14 former NASH hypermarkets. The ex-NASH stores are now closed for refurbishment and will be reopened under the Lenta brand in November.
[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 September 2017 are considered active
3 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.
During the last few months Lenta's team launched a series of initiatives to further enhance our attractiveness to customers, creating more distinctive features and increasing our competitive advantages. There is still a lot of work to be done, but we are pleased with the initial impact, which helped deliver positive like-for-like sales growth in the quarter - we hope to sustain this momentum over the coming months.'
Lenta Store Developments
In the third quarter of 2017, Lenta opened six new hypermarkets: four owned compact hypermarkets (Kamensk-Uralsky, Tyumen, Astrakhan and Moscow), one leased compact hypermarket (Orenburg) and one owned supercompact store (Orenburg). As a result, Lenta reached the milestone of 200 hypermarkets across Russia. The Company entered one new city and is now present in 79 cities across the country.
During the reported period the Company also opened five new supermarkets: three owned stores in Yekaterinburg, one leased store in Novosibirsk and one leased store in Saint-Petersburg. With the launch of its first supermarkets in the Ural region, Lenta's supermarket network is now present in five regions (comprising Moscow, St Petersburg, Central, Siberia and Ural regions), with a total of 64 stores.
Lenta added 29,450 sq.m of net selling space in the reported quarter. Total selling space as at 30 September 2017 increased to 1,202,866 sq.m, up 24.9% year-on-year, with 24.0% growth in the hypermarket format and 44.0% growth in the supermarket format.
As As Net Change As As Net Change
at at change (%) at at change (%)
30 30 30 30
Sept Sept Sept Sept
3Q 3Q 9M 9M
2017 2016 2017 2016
Number
of stores 265 197 68 34.5% 265 197 68 34.5%
Hypermarkets 201 155 46 29.7% 201 155 46 29.7%
Supermarkets 64 42 22 52.4% 64 42 22 52.4%
Number
of new
stores(4) 11 8 3 37.5% 26 26 - -
Hypermarkets 6 8 -2 -25.0% 10 16 -6 -37.5%
Supermarkets 5 - 5 - 16 10 6 60.0%
Total
selling
space
(sq.m.) 1,202,866 963,370 239,496 24.9% 1,202,866 963,370 239,496 24.9%
Hypermarkets 1,144,650 922,951 221,699 24.0% 1,144,650 922,951 221,699 24.0%
Supermarkets 58,216 40,419 17,797 44.0% 58,216 40,419 17,797 44.0%
Total
selling
space
added
(sq.m.)(4) 29,450 40,508 -11,058 -27.3% 57,853 88,687 -30,834 -34.8%
Hypermarkets 25,697 40,508 -14,811 -36,6% 44,787 81,779 -36,992 -45.2%
Supermarkets 3,753 - 3,753 - 13,066 6,908 6,158 89.1%
(4) Within the reported period
Since the end of the reported period, the Company opened one owned compact hypermarket in Yekaterinburg and three leased supermarkets in Moscow and Saint-Petersburg, giving total selling space of 1,210,245 sq.m as of the date of this announcement.
Lenta's Operating Performance
Selling space additions combined with positive LFL sales growth resulted in overall sales growth of 18.7% for the third quarter of 2017. Total sales amounted to Rub 89.6bn in the quarter, compared to Rub 75.4bn for the same period last year.
Lenta continued to implement digital marketing activities to reach customers, with special offers tailored on an individual basis to enhance traffic and basket size. The number of active loyalty cardholders increased to 11.8m as at 30 September 2017 (+20% y-o-y) and the share of transactions made with the loyalty card was 94%, an increase of approximately 2p.p y-o-y.
A series of initiatives launched in the second and third quarters to increase the distinctive attractiveness of Lenta's offering to customers began to bear fruit, supporting sales growth in both hypermarkets and supermarkets during the reported quarter. These initiatives included changes in assortment, marketing and communication.
Hypermarket sales growth picked up to 18.2% in the third quarter, up from 16.1% in 2Q2017, with an improvement in LFL sales growth offsetting slightly slower selling space growth.
The supermarket format's total sales growth accelerated significantly from 22.4% in 2Q2017 to 30.9% in 3Q2017, driven by selling space growth and strong positive LFL sales growth of 5.0%, an increase of 4.6p.p from the LFL sales growth figure of 0.4% recorded in the prior quarter. The supermarket format's share of Lenta's total sales increased to 4.8% in the reported quarter.
Lenta also continues to demonstrate rapid growth in the Moscow region. Lenta entered the Moscow market in 2013 and now has 36 supermarkets and 14 hypermarkets in the region, representing 8.7% of Lenta's total selling space. Total sales in Moscow grew 35.5% y-o-y during the quarter and the share of this region in the Company's total sales increased to 11.4%.
3Q 3Q Net Change 9M 9M Net Change
2017 2016 change (%) 2017 2016 change (%)
Sales
(Rub,
million) 89,555 75,419 14,136 18.7% 253,086 215,506 37,580 17.4%
Hypermarkets 85,217 72,105 13,112 18.2% 240,662 205,789 34,873 16.9%
Supermarkets 4,338 3,315 1,023 30.9% 12,423 9,717 2,707 27.9%
Average
ticket
(Rub) 1,093 1,100 -7 -0.6% 1,086 1,103 -16 -1.5%
Hypermarkets 1,159 1,159 - - 1,146 1 158 -12 -1.0%
(MORE TO FOLLOW) Dow Jones Newswires
October 19, 2017 02:51 ET (06:51 GMT)
Supermarkets 518 523 -5 -0.9% 541 549 -8 -1.4% Customer traffic (million) 81.9 68.6 13.3 19.5% 233.0 195.4 37.5 19.2% Hypermarkets 73.5 62.2 11.3 18.2% 210.0 177.7 32.3 18.2% Supermarkets 8.4 6.3 2.0 32.1% 23.0 17.7 5.3 29.7%
The average hypermarket ticket in the third quarter remained flat at Rub 1,159, while LFL average hypermarket ticket grew 2.3%, reflecting the large share of stores in the ramp-up phase which are not included in the LFL panel. The average ticket in the supermarket format in the third quarter slightly decreased by 0.9% to Rub 518 compared to a 4.4% increase in the LFL average ticket - as for hypermarkets, the difference reflects the large share of younger stores which are not included in the LFL panel.
Total customer traffic increased by 19.5% in the third quarter of 2017 compared with the same period of the previous year, comprising 18.2% growth in hypermarket traffic and a 32.1% increase in traffic at Lenta's supermarket format.
During the third quarter of 2017, six hypermarkets and one supermarket entered the LFL panel.
LFL sales growth of 0.7% in the third quarter consisted of LFL traffic decline of 1.5% offset by average LFL ticket increase of 2.2%. LFL food sales increased by 1.2% and LFL non-food sales decreased by 2.5%.
LFL LFL LFL LFL LFL LFL
sales average traffic sales average traffic
growth ticket growth growth ticket growth
growth growth
3Q 2017 3Q 2017 3Q 2017 9M 2017 9M 2017 9M 2017
Lenta total
(%) 0.7% 2.2% -1.5% -1.0% 1.2% -2.1%
Hypermarkets 0.5% 2.3% -1.7% -1.1% 1.2% -2.2%
Supermarkets 5.0% 4.4% 0.6% 2.2% 3.1% -0.9%
Lenta continued gaining customers ahead of sales - the number of unique customers outpaced sales growth in both new and LFL hypermarkets and supermarkets. LFL traffic in the reported quarter improved compared to the previous quarters, but still remained in a negative territory in hypermarkets due to cannibalization effects. Supermarkets demonstrated very sizeable improvements in traffic, with LFL traffic growth returning to a positive zone.
The average LFL ticket improved versus the previous quarter despite continuing shelf price deflation. The effects of deflation were more than compensated by the effects of trading up (which continued for the fifth quarter in a row) and the number of articles per basket, which increased for the first time since the beginning of the year.
LFL sales growth of 0.7% in 3Q 2017 was therefore due to a combination of factors - an increase in the number of customers, stronger trading up effects and growing volume offset by cannibalisation from new Lenta stores and on-shelf price deflation.
Guidance
Lenta confirms its 2017 hypermarket opening guidance at about 40 new stores, which includes 14 leased hypermarkets previously operated under the NASH brand. Supermarket opening guidance remains unchanged at about 50 new stores this year. Full year capex guidance is also unchanged at RUB 30-35bn, including investments in renovation of the former NASH stores.
About Lenta
Lenta is the largest hypermarket chain in Russia and the country's fourth largest retail chain. The Company was founded in 1993 in St. Petersburg. Lenta operates 202 hypermarkets in 79 cities across Russia and 67 supermarkets in Moscow, St. Petersburg, Novosibirsk, Yekaterinburg and the Central region with a total of approximately 1,210,245 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 40,383 people as of 30 June 2017(5) .
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 or contact:
5 FTE (full-time equivalent). Average FTE for 1H 2017 was 40,197 employees
FTI Consulting FTI Consulting Russian Media: International Media: Anton Karpov & Victoria Leonid Fink & Jenny Payne Afonina el: +44 7497 783 705 el:+7 495 795 06 E-mail: Leonid.Fink@fticonsulting.com 23 Jenny.Payne@fticonsulting.com E-mail: lenta@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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
TSTLIFSRITLALID
(END) Dow Jones Newswires
October 19, 2017 02:51 ET (06:51 GMT)
Lenta Ltd. published this content on 19 October 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 19 October 2017 07:05:04 UTC.
Original documenthttp://www.lentainvestor.com/en/investors/rns-article/id/1678
Public permalinkhttp://www.publicnow.com/view/23E4FBC6460034BF6BEEEFC3C2D35AEBB930DFD8
