Lenta : announces guidance for 2017 and long-term targets for 2020

St-Petersburg, Russia; 16 February, 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 guidance for the full year of 2017 and long-term targets for 2020.

Full year 2017 Guidance
• To open about 30 new hypermarkets;
• To open about 50 new supermarkets and add new regions, starting with Novosibirsk;
• To add about 200,000 sqm of total new selling space; and
• Capital expenditures of around RUB 40bn.

Lenta plans to significantly accelerate expansion in its supermarket format during 2017. In keeping with the Company's conservative financial policy and given the recent completion of the acquisition of 11 hypermarkets from Kesko, Lenta has decided to open less hypermarkets organically in 2017 than in 2016, while increasing the number of supermarket openings. The Company continues to see large numbers of opportunities for new hypermarket openings - Lenta's hypermarket pipeline for 2017 is secure and the pipeline for 2018 is well advanced.

Long-Term Targets for 2017-2020
• Become a top-3 multi-format food retailer and the biggest hypermarket player in Russia, enabling further benefits of scale in supplier terms and fixed cost efficiency;
• Continuous focus on profitable growth, carefully balancing capex and returns (target IRR of 20%) with the aim to continue to deliver market-leading returns;
• Maintain healthy balance sheet with conservative approach to leverage;
• Continue investing in management development to ensure Lenta's retail team remains one of the most effective in the industry;
• Double total selling space by the end of 2020; and
• Develop alternative models to add to our growth.

Hypermarket format
• Open organically 150-200K sqm per year, with long-term potential for about 400 additional hypermarkets in target cities;
• Primary focus on Moscow, St. Petersburg and largest cities in medium term - Combined with continuing roll-out to existing and new smaller cities; and
• Capex and cost initiatives to drive returns and enable coverage of smaller catchment areas.

Supermarket format
• Significantly increase number of store openings to deliver around 8x increase in selling space by 2020 (15-20% of total selling space);
• Extend the network around existing DCs starting in 2017; and
• Primarily focus on rent with 20-30% ownership.

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 2015 sales). The Company was founded in 1993 in St. Petersburg. Lenta operates 192 hypermarkets in 77 cities across Russia and 49 supermarkets in Moscow, St. Petersburg and the Central region with a total of approximately 1,151,668 sq.m of selling space. The average Lenta hypermarket store has selling space of approximately 5,800 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'.

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.

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FTE (full-time equivalent). Average FTE for 2016 was 35,677 employees