TIDMLNTR TIDMLNTA
RNS Number : 7555C
Lenta PLC
21 October 2020
Press Release | St. Petersburg | 21 October 2020
Lenta Reports Retail Sales Growth of 4.6% in Q3 and 7.9% in 9M
2020
-- Retail Sales increased by 4.6% year-over-year to RUB 102 billion in Q3 2020, on the back of mixed trends as Lenta
continued to adapt to changing customer behavior
-- LFL Sales growth remained strong at 3.0% in Q3 2020 with Average Ticket growth of 9.2% and customer Traffic
decline of 5.7%
-- Online Sales grew to RUB 1.3 billion in Q3 2020, an increase of 551% year-over-year, serving customers across 82
cities
-- Lenta added 6 stores on a net basis (2 new hypermarkets and 5 new supermarkets with 1 supermarket closure) in Q3
2020, bringing the total number of retail stores to 386 and Total Selling Space to 1.49 million square meters as
of 30 September 2020
-- On 2 September, Vladimir Sorokin was appointed Lenta's new Chief Executive Officer
St. Petersburg, Russia, 21 October 2020: Lenta PLC (MOEX &
LSE: LNTA), one of the largest retail chains in Russia, today
announces its Q3 2020 Operational Results. A conference call with
the CEO and CFO to discuss these results is scheduled for today
(see below for dial-in details).
Vladimir Sorokin, Chief Executive Officer:
"While 2020 has been an unprecedented year for the retail
industry, I am extremely proud of how swiftly and efficiently Lenta
has adapted to the ever-evolving market conditions due to Covid-19.
At all times we have made the safety and well-being of our
employees and customers our highest priority. These measures have
paid off as local authorities didn't close any of our stores and
consumers felt it is safer to shop at Lenta. As a result, some
customers made Lenta their store of choice and spent more at our
stores. Together with our resilient business model this approach
translated into strong results in the first nine months. Retail
Sales were up by 7.9% compared with the same period last year
thanks to an 11.4% growth in Average Ticket. Like-for-Like Retail
Sales grew by 5.9%, driven by an 11.5% increase in the
Like-for-Like Average Ticket.
Lenta's online offering also continues to add value to our
customers' lives. We have made robust progress during 2020 in
expanding the geographic coverage of our own Lentochka express
delivery service and our new Click & Collect program. We
believe that Lenta is uniquely positioned for online food retail as
it already has a large store network in 88 cities with a wide
assortment of 25,000 SKUs. As a result, we do not need to build
expensive dark stores.
During 2020, Lenta has again proven itself to be resilient and
adaptable to changes in consumer behavior. That said, there is
further scope to fine-tune the business model in response to shifts
in demand patterns and the external environment. I appreciate that
an updated strategic plan is long awaited, but the focus for the
last several months has understandably been on steering Lenta
through a turbulent period and ensuring safe and uninterrupted
access to stores for our customers. We look forward to unveiling a
new long-term growth strategy early next year.
In the interim, we will remain focused on the key factors that
affect the choices our customers make daily, such as an attractive
and relevant assortment that emphasizes quality rather than
quantity and is a great value for money proposition for a wide
range of consumer groups."
3rd Quarter - LFL RESULTS Q3 Q3 Q3
Sales Average Ticket Traffic
Total Retail 3.0% 9.2% -5.7%
Hypermarkets 2.7% 8.8% -5.6%
Supermarkets 5.6% 12.3% -5.9%
3rd Quarter - OPERATING RESULTS (Year-over-Year)
Q3 2020 Q3 2019 Change % Change
Total Sales (RUB millions) 104,397 100,396 4,000 4.0%
Retail Sales 102,260 97,750 4,510 4.6%
Hypermarkets 93,345 89,608 3,737 4.2%
Supermarkets 8,915 8,142 772 9.5%
Wholesale 2,137 2,646 -510 -19.3%
Average Ticket (RUB) 1,050 966 84 8.7%
Hypermarkets 1,169 1,073 96 8.9%
Supermarkets 508 459 49 10.6%
Number of Tickets (millions) 97 101 -4 -3.8%
Hypermarkets 80 83 -4 -4.4%
Supermarkets 18 18 -0 -1.0%
Total Retail Stores (eop) 386 375 11
Hypermarkets 250 246 4
Openings 2 1
Closing 0 -1
Supermarkets 136 129 7
Openings 5 0
Closing -1 -3
New Selling Space (sqm, eop) 12,184 -2,881 15,065
Hypermarkets 8,306 -866 9,172
Supermarkets 3,878 -2,015 5,893
Total Selling Space (sqm, eop) 1,494,251 1,470,056 24,195 1.6%
Hypermarkets 1,379,234 1,362,390 16,844 1.2%
Supermarkets 115,017 107,666 7,351 6.8%
Total Online Sales (RUB, millions) 1,311 201 1,110 551.5%
Total Online Orders (thousands) 736 87 649 748.3%
Cities of Online Operation
Online Partners 82 10 72
Lentochka 26 0 26
Click & Collect 13 0 13
9 Months - LFL RESULTS 9M 9M 9M
Sales Average Ticket Traffic
Total Retail 5.9% 11.5% -5.1%
Hypermarkets 5.4% 11.4% -5.4%
Supermarkets 11.1% 15.4% -3.7%
9 Months - OPERATING RESULTS (Year-To-Date)
9M 2020 9M 2019 Change % Change
Total Sales (RUB millions) 321,372 299,607 21,764 7.3%
Retail Sales 315,707 292,581 23,125 7.9%
Hypermarkets 287,562 267,368 20,194 7.6%
Supermarkets 28,145 25,214 2,931 11.6%
Wholesale 5,665 7,026 -1,361 -19.4%
Average Ticket (RUB) 1,085 974 111 11.4%
Hypermarkets 1,203 1,081 123 11.4%
Supermarkets 542 477 65 13.7%
Number of Tickets (millions) 291 300 -9 -3.1%
Hypermarkets 239 247 -8 -3.4%
Supermarkets 52 53 -1 -1.8%
Total Retail Stores (eop) 386 375 11
Hypermarkets 250 246 4
Openings 2 4
Closing 1 2
Supermarkets 136 129 7
Openings 8 1
Closing 4 7
New Selling Space (sqm, eop) 5,022 5,905 -883
Hypermarkets 665 8,925 -8,260
Supermarkets 4,357 -3,020 7,377
Total Selling Space (sqm,
eop) 1,494,251 1,470,056 24,195 1.6%
Hypermarkets 1,379,234 1,362,390 16,844 1.2%
Supermarkets 115,017 107,666 7,351 6.8%
Total Online Sales (RUB,
millions) 3,181 642 2,538 395.1%
Total Online Orders (thousands) 1,576 269 1,307 485.0%
Cities of Online Operation
Online Partners 82 10 72
Lentochka 26 0 26
Click & Collect 13 0 13
1. LFL Results do not include 29-Feb-2020
3Q Monthly - OPERATING RESULTS
July YoY August YoY September YoY
Total Sales (RUB millions) 36,420 11.2% 34,209 0.8% 33,768 0.2%
Retail Sales 35,712 11.8% 33,551 1.5% 32,998 0.7%
Hypermarkets 32,678 11.6% 30,688 1.1% 29,979 0.1%
Supermarkets 3,034 14.2% 2,862 6.6% 3,018 7.8%
Wholesale 708 -12.8% 658 -27.2% 770 -17.2%
Average Ticket (RUB) 1,067 11.4% 1,037 7.8% 1,045 6.9%
Hypermarkets 1,185 11.4% 1,153 8.0% 1,168 7.3%
Supermarkets 514 12.6% 498 9.9% 511 9.5%
Number of Tickets (millions) 33 0.4% 32 -5.8% 32 -5.8%
Hypermarkets 28 0.2% 27 -6.4% 26 -6.8%
Supermarkets 6 1.4% 6 -3.0% 6 -1.5%
Total Retail Stores (eop) 381 384 386
Hypermarkets 248 248 250
Openings 0 0 2
Closing 0 0 0
Supermarkets 133 136 136
Openings 1 3 1
Closing 0 0 1
New Selling Space (sqm,
eop) 1,157 2,803 8,224
Hypermarkets 0 0 8,306
Supermarkets 1,157 2,803 -82
Total Selling Space (sqm,
eop) 1,483,224 1.0% 1,486,027 1.3% 1,494,251 1.6%
Hypermarkets 1,370,928 0.9% 1,370,928 0.9% 1,379,234 1.2%
Supermarkets 112,296 3.0% 115,099 6.9% 115,017 6.8%
Total Online Sales (RUB,
millions) 379 522% 397 531% 535 591%
Total Online Orders (thousands) 207 689% 228 735% 302 806%
Cities of Online Operation
Online Partners 68 72 82
Lentochka 3 5 26
Click & Collect 13 13 13
Operating Results Commentary
Lenta's Retail Sales in Q3 2020 increased by 4.6% compared to Q3
2019. This increase was driven by an 8.7% increase in the Average
Ticket size during Q3, which was offset slightly by a 3.8% decrease
in customer Traffic. The Hypermarket format delivered 4.2% growth
in Sales, as a result of an 8.9% increase in the Average Ticket
size, which was partially offset by a 4.4% decrease in customer
Traffic. Our Supermarket format posted 9.5% growth in Sales,
reflecting an increase in the Average Ticket size of 10.6% and a
decrease in customer Traffic of 1.0%.
The exceptionally strong trading dynamics of Q2 2020 carried
over into the month of July, as consumers continued to consistently
visit their store-of-choice and spend more per shopping trip than
they did pre-COVID. July Sales were also positively impacted by the
fact that some types of non-food retailers were still closed.
However, in the months of August and September the trading dynamics
changed and customer Traffic slowed down year-over-year due to a
number of factors, including: customers visited a wider range of
stores; they migrated out of the big cities to their summer
residences where Lenta has less of a presence; they spent less than
normal on back-to-school purchases; and we had lower than normal Q3
sales of some seasonal non-food products due to the lack of
inventory, as a result of unprecedently strong demand and sales of
these products during Q2 and July. At the same time, many consumers
continued to trade up, which partially offset the negative dynamics
observed in August and September.
During Q3, LFL Retail Sales grew by 3.0% as the Average Ticket
size increased by 9.2%. LFL customer Traffic decreased 5.7% during
Q3, reflecting consumers' continuing preference to shop less
frequently during the post-lockdown period. Lenta's Hypermarkets
posted Q3 LFL Retail Sales growth of 2.7% with the Average Ticket
size up 8.8% and a decrease in customer Traffic of 5.6%. The
Supermarket format delivered a particularly strong performance in
Q3 with LFL Retail Sales up 5.6%, driven by a 12.3% increase in the
Average Ticket size offset by a 5.9% decrease in customer Traffic.
9M 2020 LFL Retail Sales growth of 5.9% was supported by an 11.5%
increase in the Average Ticket size partially offset by a 5.1%
decrease in customer Traffic.
Lenta opened two new hypermarkets and five new supermarkets
during Q3 2020. Lenta also closed one supermarket during the
reporting period, bringing the total number of Lenta stores at the
quarter end to 250 hypermarkets and 136 supermarkets.
Lenta continues to develop its fast-growing online sales
channel. The company served online customers across 82 cities by
the end of 9M 2020 resulting in RUB 3.2 billion of Total Online
Sales, which represented a 395% year-over-year growth rate. Lenta
continues to develop its own express delivery service, Lentochka,
which is presently operating in 26 cities across Russia with more
on the way. Lenta has created partnerships with more than 20
delivery companies to fulfill online orders from its extensive
store network. Lenta also launched a pilot in June for a new Click
& Collect service, currently operating in 13 cities, with plans
to eventually roll it out across the entire store network.
According to our internal analysis, it appears that online channels
did not cannibalize offline store sales but, rather, added
incremental and new revenues.
COVID-19 Response: In Q3, Lenta remained committed to
prioritizing the safety and well-being of its customers and
employees during this challenging period. The COVID-19 response
team that was formed in March continues to coordinate Lenta's
effective response to this ongoing pandemic. Lenta has worked
closely with its suppliers throughout the crisis to ensure its
shelves remained sufficiently stocked with both food and non-food
products to meet increased demand. Comprehensive health and safety
measures that were introduced in March across Lenta's business
remain in place to ensure the ongoing safety of our employees and
customers in our stores.
Q4 2020 Outlook
The remainder of 2020 will be largely determined by COVID-19
dynamics and characterized by a high degree of uncertainty. At this
point, we expect a partial return to the one-stop-shop behavior
which we saw in Q2 with customers limiting both the frequency of
shopping trips and the number of different stores they visit. As a
result, the Average Ticket will likely continue to be higher than
normal. At the same time, it is impossible to predict the severity
and duration of the COVID-19 dynamics in Q4.
2020 Guidance
Lenta expects its Total Selling Space to increase by
approximately 3% in 2020. This figure reflects our decision to
focus on improvements in store performance and operational
efficiency. Nonetheless, Lenta continues to look for attractive
growth opportunities for expansion in hypermarkets and supermarket
locations, as well as the fast-growing online food retail and
delivery sector.
In 2020, Lenta is continuing its work in optimizing SG&A
expenses. The Company expects that the implementation of priorities
set for this year will result in a full-year 2020 EBITDA Margin
above that of full-year 2019.
The Company will have overall lower investments in organic store
expansion and supply-chain infrastructure when compared to 2019.
Nonetheless, Lenta will increase its spending on IT, digital
marketing, and other projects aimed to upgrade and enhance the
customer experience in its stores, as well as, drive operational
efficiency. For full-year 2020, Lenta plans an investment in
capital expenditures that will amount to approximately 3% of its
Total Sales (previous guidance: 4%).
The Company expects that current plans for expansion and capital
expenditures, as well as, further efforts to optimize Operating
Cash Flow, will result in positive Free-Cash-Flow generation in
2020.
Q3 Conference Call
The Lenta Management Team will host an investor and analyst
conference call at 16:00 Moscow time (14:00 London, 09:00 US
Eastern Daylight Time), on Wednesday, 21 October 2020. On the call
will be Vladimir Sorokin (CEO), Rud Pedersen (CFO), and Tim Post
(IRO).
To participate in the conference call, please use the following
dial-in details:
Conference ID: 9125402 ("Lenta Q3 2020 Operational Results
Conference Call")
Russian Federation: +7-499-609-1260 +7-800-100-9471 (toll-free)
United Kingdom: +44-330-027-1846 +44-800-031-4838 (toll-free)
United States: +1-334-777-6978 +1-800-367-2403 (toll-free)
Participants are encouraged to register approximately 10 minutes
prior to the start of the call.
For further information please visit www.lentainvestor.com or
contact:
Lenta Lenta
Mariya Filippova Timothy Post
Head of Public Relations and Government Investor Relations Officer
Affairs timothy.post@lenta.com
maria.filippova@lenta.com
EM (International Media Inquiries)
Lenta@em-comms.com
About Lenta
Lenta is the largest hypermarket chain in the Russian Federation
and the fourth largest food retailer. The Company was founded in
1993 in St. Petersburg and currently operates 250 hypermarkets and
136 supermarkets in 88 cities across Russia with almost 1.5 million
square meters of selling space. The average Lenta hypermarket has
approximately 5,500 square meters of selling space, while the Lenta
supermarket averages 800 square meters. The company operates 12
distribution centers throughout Russia. Lenta is listed on both the
London Stock Exchange and Moscow Exchange, trading under the
ticker: 'LNTA'
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 of the date of this
announcement. Except 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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