23 April 2020
Lenta has delivered 4.0% Like-for-like retail sales growth in 1Q
St-Petersburg, Russia; 23 April 2020 – Lenta PLC, (LSE, MOEX: LNTA / “Lenta” or the “Company”) one of the largest retail chains in Russia, is pleased to announce its consolidated sales and operating results for the first quarter ending 31 March 2020.
1Q 2020 Operating Highlights:
- Total sales increased 7.0% in 1Q 2020 to Rub 106.0bn (1Q 2019: Rub 99.0bn), including:
- Retail sales growth of 7.5% to Rub 104.4bn (1Q 2019: Rub 97.1bn) driven by strong LFL sales growth
- Wholesale business decline of 16.7%
- Like-for-like (LFL) retail sales adjusted for Leap Day (29 February) increased by 4.0% vs. 1Q 2019 representing
- LFL retail traffic growth of 2.0%
- LFL retail ticket growth of 2.0%.
- Unadjusted LFL retail sales increased 5.7% driven by
- LFL retail traffic growth of 3.4%
- LFL retail ticket growth of 2.3%
- A total of 380 stores as at 31 March 2020, comprising of 249 hypermarkets and 131 supermarkets;
- Total selling space of 1,489,439 sq.m as of 31 March 2020 (+1.7% vs. 31 March 2019);
- Number of active loyalty cardholders increased to 16.0m (+8.0% YoY) with around 97% of transactions in the first quarter carried out using the loyalty programme.
Events in 1Q 2020 and after the reported period:
- Lenta completed its redomiciliation by obtaining a permanent certificate of incorporation in Cyprus
- Lenta took comprehensive operating measures across its business in response to COVID-19
- Lenta launched its own online grocery store in partnership with delivery companies IGoods and Sbermarket.
Lenta’s Chief Executive Officer, Herman Tinga commented:
“We had a good start of the first quarter, but eventually were faced with exceptional challenges due to COVID-19. Customer behaviour changed significantly in the second half of March. Various measures implemented by the authorities in response to COVID-19 resulted in considerable pressure on our stores as customers stocked up on essential goods.
Our commercial, logistic and operation teams responded well to the challenge. Due to the great commitment from all our employees, we secured the on-shelf availability of essential goods in our stores. At the same time we put a lot of effort into ensuring the safety and well-being of our colleagues and customers, as well as the continuity of our business operations in the most efficient way.
I am very proud of the contribution made by each member of our team during this period and pleased with the results we achieved. For the quarter our LFL sales, adjusted for the Leap Day in February, increased 4.0%. Both our LFL traffic and LFL ticket increased by 2.0%
In the first two months of the year we experienced a strong customer inflow as a result of our own marketing efforts. March sales growth was mainly driven by customer response to COVID-19, which resulted in less traffic, but larger baskets. This trend is continuing in April.
The stocking up of essential goods triggered by COVID-19 also resulted in increased demand for online grocery purchases. Sales through our delivery partners almost tripled in the last weeks of March when compared to the last weeks of February. In response we accelerated our fast-delivery project Lentochka and moved the launch of online ordering through our own website forward.
I am pleased with our strong performance in 1Q. Looking ahead we will face many uncertainties, including further measures the authorities may implement in response to COVID-19, the duration of such measures, continued macro-economic volatility and consequent customer sentiment. We are working with different scenarios to evaluate any impact on our operations and performance. And we continue to focus on our cash discipline and operating efficiency.”
Governance. We established a COVID-19 response team, including top management members and functional experts, to monitor, coordinate and track daily actions. The COVID-19 response team cooperates closely with relevant authorities.
Safety and support for employees. We are taking comprehensive measures to ensure the safety and well-being of our employees. This includes, but is not limited to, restricting travel, daily health and temperature checks, remote work for office-based employees, intensified cleaning, making sanitizer available, providing special working regimes for vulnerable employees and providing personal protection equipment and protective barriers between cashiers and customers.
Safety and support for customers. We are taking every effort to ensure our customers continue feeling safe shopping in our stores. Protective barriers were placed at cashier desks and our own culinary sections, as well as visual markings on floors to control the distance between customers. We have equipped our stores with hand sanitizers for employees and customers. In addition, a large-scale communication programme was launched to encourage customers to keep their distance; use self-scanners and check-outs; and, when possible, pay by debit or credit. Additionally, customers with the high average ticket can also order free taxis within a radius of 10 km. We have also launched social initiatives to support vulnerable groups of customers. Elderly people and those at higher risk are encouraged to shop at specific hours. We have dedicated separate checkout lines for them and offered additional discounts as an incentive to visit our stores. A volunteer programme aimed at helping elderly people getting their daily groceries was established, and we support doctors, nurses and other medical workers by providing them with special discounts. We have other initiatives in progress with similar objectives.
Supply-chain. Our key task is to ensure support for our suppliers and maintain the on-shelf availability of food and non-food items. We have increased safety stocks for the essential goods and we are in constant contact with suppliers to ensure this.
Lenta’s Operating Performance in 1Q 2020
Total sales increased 7.0% YoY, reaching Rub 106.0bn, driven by an increase in retail sales of 7.5% and partly offset by an ongoing decline in wholesale business. In 1Q 2020, sales to wholesale customers declined by 16.7% when compared to the first quarter of 2019.
Strong LFL performance, combined with added selling space, resulted in retail sales growth of 7.5% in 2020. Retail sales reached Rub 104.4bn in the reported period versus Rub 97.1bn in the same period of the last year. Traffic increased 5.1%, while the average ticket rose 2.3%, reaching Rub 1,021.
Hypermarket sales dynamics improved over 4Q 2019 due to an LFL sales growth of 3.2%, the contribution from Leap Day in February and an increase of 1.9% in the format’s selling space over the year. As a result, total sales in hypermarkets reached Rub 94.5bn, implying an increase of 6.9% YoY.
Supermarket sales increased 14.2% in 1Q 2020, driven by accelerated LFL sales growth, although the selling space decreased marginally by 0.1% YoY. The supermarket share accounted for 9.3% of Lenta’s total sales, an increase from 8.5% in 4Q 2019.