25 April 2019

1Q 2019 sales and operating results

St-Petersburg, Russia; 25 April, 2019 – 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 2019.

To view the full press release, click here.

1Q 2019 Operating Highlights:

  • Total sales grew 6.0% in 1Q 2019 to Rub 99.0bn (1Q 2018: Rub 93.4bn), including retail sales growth of 9.9% to Rub 97.1bn (1Q 2018: Rub 88.3bn) and wholesales decline of 61.5%;
  • Like-for-like (“LFL”)1 retail sales growth of 5.0% excluding VAT vs. 1Q 2018. This is equivalent to LFL retail sales growth of 5.9% including VAT, due to the recent increase in VAT;
  • LFL retail traffic growth of 3.8% combined with LFL retail ticket growth of 1.2%;
  • One hypermarket was opened during the first quarter of 2019, while one hypermarket and four supermarkets were closed;
  • Total store count reached 375 stores at 31 March 2019, comprising 244 hypermarkets and 131 supermarkets;
  • Total selling space increased to 1,464,461 sq.m as at 31 March 2019 (+5.1% vs. 31 March 2018); and
  • Number of active loyalty cardholders2 increased to 14.8m (+14.2% y-o-y) with around 96% of transactions in the first quarter made using the loyalty card.

Events in 1Q 2019 and after the reported period:

  • Rud Pedersen joined the Company as Chief Financial Officer and became a Director of Lenta Ltd. by virtue of his CFO role;
  • Ruslan Ismailov, who previously served as a Divisional Director was appointed as Supermarket Format Director;
  • Severgroup LLC announced that it has agreed to acquire the equity interests in Lenta owned by TPG and EBRD. These represent approx. 34.44% and 7.47% of the voting rights respectively. The agreed price of US$ 3.60 per GDR is subject to the terms and conditions of separate conditional share purchase agreements, and;
  • Lenta announced the termination of its share buyback programme. Since the initiation of the program, an aggregate of approx. Rub 980.8m has been returned to GDR-holders, through the purchase of 4,552,610 GDRs representing 0.93% of the share capital.

Lenta’s Chief Executive Officer, Herman Tinga commented:

“Lenta delivered a strong retail sales performance in the first quarter of 2019 with total retail sales up by 10%, which was double selling space growth. Lenta’s Like-for-like retail sales growth of 5% was the fastest we have seen in the last three years. Although the economic environment remains weak, we are encouraged by impressive inflows of new customers which enabled this acceleration in like-for-like sales. I am particularly pleased with the rapid progress in our supermarkets where like-for-like retail sales growth accelerated to 22% driven by 19% traffic growth. As expected, wholesales declined in the first quarter and we expect this trend to continue for the rest of 2019, weighing on total sales growth.

Although market conditions are still challenging, we see more and more signs that promotional activity in the market is stabilizing. Lenta’s promotion share was flat in the first quarter – this led to modest on-shelf inflation in March after two years of shelf-price deflation.

Our expansion plans remain unchanged and are focused on selected projects with the most attractive returns. We also closed a small number of underperforming leased stores and expect this to have a positive effect on future profitability.

Whilst some changes may take place among our shareholders, I would like to stress that the Lenta team remains focused on our business and our customers. We have a clear strategy in place and are confident in delivering further improvements in 2019 and beyond.”

Lenta Store Developments

In the first quarter of 2019, Lenta opened one owned compact hypermarket in Kazan with selling space of 5,232 sq.m. The company also decided to close one leased compact hypermarket in Moscow (5,044 sq.m selling space) and four leased supermarkets3. As a result of these store closures, Lenta’s net selling space fell slightly in the reported quarter. Total selling space increased 5.1% y-o-y to 1,464,461 sq.m as at 31 March 2019.

After the end of the reported period the Company opened one supermarket in the Moscow region, bringing the total store count to 244 hypermarkets and 132 supermarkets with total selling space of 1,465,426 sq.m (+5.9% growth y-o-y) as at the date of the Announcement. Lenta retained its presence in 88 cities across the country.

To view the full press release, click here.

For further information please visit www.lentainvestor.com, or contact:

Mariya Filippova
Head of PR&GR
Tel: +7 812 380-61-31 ext.: 1892
E-mail: maria.filippova@lenta.com

Russian Media:
NW Advisors
Anton Karpov & Victoria Afonina
Тel:+7 495 795 06 23
E-mail: lenta@nwadvisors.com

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. The Company has not made any changes to the methodology of LFL calculation; both total sales growth and LFL sales growth are reported excluding VAT as the best measure to evaluate y-o-y performance
2 Cardholders who made at least 2 purchases at Lenta during the 12 months to 31 March 2019 are considered active
3 Two supermarkets in Moscow, one in Noginsk (Moscow region), and one in Gatchina (Leningradsky region) with total selling space of 3,209 sq.m. were closed during 1Q2019