TIDMLNTR TIDMLNTA
RNS Number : 2614N
Lenta Ltd
28 January 2016
LENTA SALES AND OPERATING HIGHLIGHTS FOR THE FOURTH QUARTER AND
FULL YEAR ENDED 31 DECEMBER 2015
St-Petersburg, Russia; 28 January, 2016 - 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 fourth quarter and twelve months
ended 31 December 2015.
4Q 2015 Operating Highlights:
-- Total sales grew 26.2% in 4Q 2015 to Rub 75.1bn (4Q 2014: Rub 59.5bn);
-- Like-for-like ("LFL")(1) sales growth of 6.1% vs. 4Q 2014;
-- LFL traffic growth of 4.3% combined with a 1.8% increase in LFL ticket;
-- 18 hypermarkets and five supermarkets opened during the fourth quarter of 2015;
-- Total store count reached 172 stores as at 31 December 2015,
comprising 140 hypermarkets and 32 supermarkets
-- Total selling space increased to 882,383 sq.m. as at 31
December 2015(2) (+25.8% vs. 31 December 2014); and
-- Number of active loyalty cardholders(3) increased to 8.4m
(+29% y-o-y) with approximately 92% of transactions in the fourth
quarter made using the loyalty card.
FY 2015 Operating Highlights:
-- Total sales grew 30.3% in 2015 to Rub 252.8bn (2014: Rub
194.0bn) in line with the Company's sales growth guidance;
-- LFL sales growth of 9.1% vs. 2014;
-- LFL traffic growth of 3.9% combined with a 5.0% increase in LFL ticket; and
-- 32 hypermarkets and eight supermarkets opened during 2015
exceeding the Company's guidance of at least 30 hypermarket
openings.
Material events in 4Q 2015 and after the reported period:
-- Lenta opened a new distribution center ("DC") in
Yekaterinburg in October - its first DC in the Ural federal
district;
-- Moody's Investors Service upgraded Lenta's credit rating to "Ba3", outlook "stable";
-- In October 2015 Lenta successfully completed a primary
capital increase of 21.1 million new GDRs via an accelerated
bookbuild, raising gross proceeds of US$150 million;
-- National Rating Agency (NRA) confirmed Lenta's National Scale
Rating at "A " with "positive" outlook;
-- Lenta has signed an amendment to Rub 4.6bn loan agreement
with the European Bank for Reconstruction and Development (EBRD)
due December 2022 reducing the margin over 3M MosPrime;
-- Lenta signed a Rub 5bn three-year revolving loan facility
with Russian Agricultural Bank; and
-- Lenta signed a Rub 7bn three-year unsecured loan facility with Rosbank at a fixed rate.
[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) After the adjustments to reported selling space described
below
(3) Cardholders who made at least 2 purchases at Lenta during
the 12 months to 31 December, 2015 are considered active
Lenta's Chief Executive Officer, Jan Dunning commented:
"The fourth quarter of 2015 was the most challenging period of
the year - for the industry and for us. We faced a very difficult
economic environment and had a busy schedule with a lot of new
hypermarket openings and the launch of our supermarket format in
Saint-Petersburg. I am delighted to highlight that Lenta's team
managed to open 32 hypermarkets in 2015 with 18 stores opened in
the last quarter - this is a record high number of hypermarkets
opened by the Company in a single year. We also successfully opened
our first four supermarkets in Saint-Petersburg and will extend our
geographical footprint while still continuing rolling out this
format in Moscow.
The macro and consumer environment remained difficult with
increasing pressure on customer incomes and continuing high
inflation. Consumers continued trading down focusing on lower
volume of purchases, being price-sensitive and promo-oriented.
Combined with saving patterns and high base for comparison in the
second part of November and December this led to a reduction of
average basket size.
Lenta's pricing and offering proposition, including tailored
promotions, continued to be attractive to customers and resulted in
strong LFL traffic growth of 4.3% in the fourth quarter - well
above the level of the third quarter and the first nine months
period of 2015.
As a result, we were able to deliver strong full year sales
growth of 30.3% on the back of 25.8% y-o-y selling space
growth.
Based on the unaudited management accounts we expect Adjusted
EBITDA margin for the full year of 2015 to improve compared to the
result of 2014."
Lenta Store Developments
In the fourth quarter of 2015, Lenta opened 18 hypermarkets:
four owned standard stores in Chelyabinsk, Kemerovo,
Saint-Petersburg and Surgut, one leased standard store in Nizhniy
Novgorod, eight owned compact stores in Chelyabinsk, Moscow,
Krasnoyarsk, Kaluga, Orenburg, Saint-Petersburg, Ufa,
Khanty-Mansiysk, four leased compact stores in Saransk, Tula,
Stavropol and Irkutsk and one leased supercompact store in Penza.
In the same period the Company opened an owned supermarket in
Moscow and its first four leased supermarkets in Saint-Petersburg,
taking the total number of stores to 172 (140 hypermarkets and 32
supermarkets).
Lenta strengthened its position in all key regions of presence
(Moscow, Saint-Petersburg, North-West, Center, Volga, South, Ural
and Siberia), the largest share is represented by Siberia with
around 20% of total selling space as of December 31, 2015. In
December Lenta opened the geographically most distant store in its
network in Irkutsk, located approx. 5,700 km from Lenta's
headquarters in Saint-Petersburg. The Company entered six new
cities in the fourth quarter of 2015 and is now present in 69(4)
cities. Out of the total 32 new hypermarkets opened in the year of
2015, 13 stores were opened in seven cities with more than one
million inhabitants. Lenta added 101,425 sq.m. of new selling space
in the reported quarter. Total selling space as at 31 December 2015
increased to 882,383 sq.m., up 25.8% year-on-year.
As As Net As As
at at change Change at at Net Change
31 31 (%) 31 31 change (%)
Dec Dec Dec Dec
/ 4Q / 4Q / FY / FY
2015 2014 2015 2014
Number
of stores 172 132 40 30.3% 172 132 40 30.3%
Hypermarkets 140 108 32 29.6% 140 108 32 29.6%
Supermarkets 32 24 8 33.3% 32 24 8 33.3%
Number
of new
stores(5) 23 29 -6 -20.7% 40 45 -5 -11.1%
Hypermarkets 18 21 -3 -14.3% 32 31 1 3.2%
Supermarkets 5 8 -3 -37.5% 8 14 -6 -42.9%
Total selling
space (sq.m.) 882,383 701,148 181,235 25.8% 882,383 701,148 181,235 25.8%
Hypermarkets 848,872 674,587 174,285 25.8% 848,872 674,587 174,285 25.8%
Supermarkets 33,511 26,561 6,950 26.2% 33,511 26,561 6,950 26.2%
Total selling
space added
(sq.m.)(5) 101,425 131,348 -29,923 -22.8% 188,059 195,484 -7,425 -3.8%
Hypermarkets 97,456 123,682 -26,226 -21.2% 181,324 180,747 577 0.3%
Supermarkets 3,969 7,666 -3,697 -48.2% 6,735 14,737 -8,002 -54.3%
(4) According to Lenta's methodology for calculating number of
cities of presence, since 1 May 2015 all cities located in Moscow
City and the Moscow region are shown as Moscow, and all cities
located in the Leningrad region and St. Petersburg are shown as St.
Petersburg.
(5) Within the reported period
Adjustments to reported selling space
Lenta has made some adjustments to the selling space of the
operating hypermarkets and supermarkets across the country which
resulted in reduction of 6,824 sq.m. in selling space (-0.8%),
giving total selling space of 882,383 sq.m. as of 31 December 2015
announced on the date of this report. These adjustments were
related to store reconstruction, refurbishment, renting out excess
selling space to third parties or turning it into production areas
to support centralization of own in-store produced food. As a
result of these measures selling space was reduced at some stores,
but increased at others. The most significant change in the selling
space was related to the standard format hypermarket in Vladimir
(acquired in December 2014) where selling space was brought in line
with Lenta's business concept - from 9,058 sq.m to 6,252 sq.m. All
the changes are reflected on the Company's website at
http://www.lentainvestor.com/en/about/lentas-geography/our-hypermarkets
and
http://www.lentainvestor.com/en/about/lentas-geography/our-supermarkets.
As at As % of total
31 Dec 2015 selling space
at
31 Dec 2015
Selling space
adjustments
(sq.m.) -6,824 -0.8%
Hypermarkets -7,039 -0.8%
Supermarkets 215 0.6%
Lenta's Operating Performance
Continuing selling space additions and LFL growth supported
overall sales growth of 26.2% for the fourth quarter of 2015. Total
sales amounted to Rub 75.1bn in the fourth quarter, compared to Rub
59.5bn for the same period last year.
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