TIDMLNTR TIDMLNTA
RNS Number : 0252Q
Lenta International PJSC
25 October 2021
Press Release | St. Petersburg | 25 October 2021
Lenta Reports Strong Sales Growth, Positive LFL Retail Sales,
and 8.8% EBITDA Margin
Q3 2021 Operational and Financial Highlights(1)
-- Retail Sales increased by 13.5% y-o-y to RUB 116 billion in Q3 2021
-- LFL Sales increased by 3.5% in Q3, while LFL Average Ticket grew by 4.7%
-- Online Sales grew by 237% y-o-y to RUB 4.4 billion with Online Orders up 231% y-o-y to
2.4 million in Q3
-- Lenta accelerated the rollout of its new Mini format with 36 new stores opened in Q3
-- The company acquired 190 supermarkets and 44 convenience stores.
-- In total, the new stores resulted in an increase of 16% in new selling space(2)
-- EBITDA Margin for Q3 was 8.8%, up 119 bps, y-o-y and EBITDA was RUB 10.4 billion
-- The Net Debt to EBITDA (LTM) ratio stood at 1.9x as of 30 September 2021
-- Lenta completed two M&A transactions: the acquisition of
Billa for EUR 225 million and the acquisition of Semya for RUB 2.45
billion
-- Fitch Ratings upgraded Lenta's credit rating to 'BB+' with a Stable Outlook
St. Petersburg, Russia, 25 October 2021: Lenta IPJSC (MOEX &
LSE: LNTA), one of the largest multi-format retail chains in
Russia, today announces its operational results and financial
highlights for the third quarter and the first nine months of 2021.
A conference call with management to discuss these results is
scheduled for today (see below for dial-in details).
Vladimir Sorokin, Chief Executive Officer:
"Lenta performed well in the third quarter, with retail sales
growth of 13.5% and a firm 8.8% EBITDA Margin. These results
demonstrate that Lenta can pursue and achieve both growth and
profitability, even in a challenging operating environment.
In Q3, we closed two transformative M&A deals and began to
integrate the 234 Billa and Semya stores, 3 distribution centers,
and more than 6,600 employees. These acquisitions will strengthen
Lenta's market positions in Moscow and Perm via locations with
established customer traffic. Importantly, we have not only
acquired Billa 's and Semya's physical stores, but also their
expertise in operating smaller formats. The integration process
will continue into 2022, but we have already made good
progress.
Our online business continues to deliver good results, both in
terms of our own Lenta Online and third-party partnerships, which
are together generating more than 30,000 orders per day. We
recently announced promising agreements to sell our goods online
via the Ozon and AliExpress Russia marketplaces, extending our
reach to an even broader base of customers.
In Q3, we accelerated the roll-out of our new Mini Lenta format,
opening 36 new stores primarily in Moscow, Moscow region, and St.
Petersburg. With each new store we open, we are making improvements
along the way to enhance the customer experience and increase
efficiency.
Altogether, this means we are off to a good start implementing
our new strategy aimed at transforming Lenta into one of Russia's
food retail champions through our superior assortment, excellent
shopping experience, and market-leading customer
individualization."
1. Please note that all Financial Highlights are based upon IAS
17 figures.
2. Including new stores added following the acquisition of
Billa's and Semya's businesses.
Q3'21 Q3'21 Q3'21
Quarterly - LFL RESULTS
Sales Average Ticket Traffic
Total Retail 3.5% 4.7% (1.2%)
Hypermarkets 4.2% 4.6% (0.4%)
Supermarkets (4.0%) 1.1% (5.0%)
3(rd) Quarter - OPERATING RESULTS (Year-over-Year)
Q3'21 Q3'20 Change % Change
Total Sales (3) (RUB millions) 118,238 104,397 13,841 13.3%
Retail Sales 116,066 102,260 13,806 13.5%
Hypermarkets 99,478 93,287 6,191 6.6%
Supermarkets (4) 16,588 8,973 7,615 84.9%
Wholesale 2,171 2,137 35 1.6%
( 3.6%
Average Ticket (3) (RUB) 1,012 1,050 (38) )
Hypermarkets 1,215 1,168 47 4.0%
( 1.3%
Supermarkets(4) 505 511 (7) )
Number of Tickets (3) (millions) 115 97 17 17.8%
Hypermarkets 82 80 2 2.5%
Supermarkets(4) 33 18 15 87.3%
Total Retail Stores (eop) 674 385 289
Hypermarkets 255 250 5
Openings 0 2 (2)
Closing 0 0 0
Supermarkets(4) 419 135 284
Openings 270 5 265
Closing 2 1 1
New Selling Space (sqm, eop) 196,642 12,184 184,458
Hypermarkets 0 8,306 (8,306)
Supermarkets(4) 196,642 3,878 192,764
Total Selling Space (sqm,
eop) 1,725,817 1,494,251 231,566 15.5%
Hypermarkets 1,406,516 1,379,246 27,270 2.0%
Supermarkets(4) 319,301 115,005 204,296 177.6%
Total Online Sales (RUB, millions) 4,415 1,311 3,104 236.8%
Online Partners 2,521 1,187 1,334 112.4%
Lenta Online 1,731 103 1,627 1,572.9%
Click & Collect 164 21 143 683.3%
Total Online Orders (thousands) 2,435 736 1,699 230.9%
Online Partners 1,437 638 799 125.3%
Lenta Online 922 90 833 929.2%
Click & Collect 76 8 67 793.8%
Cities of Online Operation
Online Partners 86 82 4 4.9%
Lenta Online 84 26 58 223.1%
Click & Collect 87 13 74 569.2%
3. Including Semya and Billa results from the date of
consolidation.
4. 36 new Mini Lenta stores, 159 Billa stores and 75 Semya
stores opened/bought through M&A in Q3 2021 are now calculated
as a part of Supermarkets; "eop" refers to "end of period"
9 Months - LFL RESULTS(5) 9M'21 9M'21 9M'21
Sales Average Ticket Traffic
Total Retail 0.6% 2.6% (1.9%)
Hypermarkets 1.2% 2.4% (1.2%)
Supermarkets (5.3%) (0.2%) (5.2%)
9 Months - OPERATING RESULTS (Year-To-Date)
9M'21 9M'20 Change % Change
Total Sales (3) (RUB
millions) 336,325 321,372 14,953 4.7%
Retail Sales 330,974 315,707 15,268 4.8%
Hypermarkets 295,142 287,482 7,659 2.7%
Supermarkets (4) 35,833 28,224 7,609 27.0%
( 5.5%
Wholesale 5,351 5,665 (314) )
( 1.4%
Average Ticket (3) (RUB) 1,070 1,085 (15) )
Hypermarkets 1,224 1,203 21 1.8%
( 3.4%
Supermarkets (4) 525 544 (18) )
Number of Tickets (3)
(millions) 309 291 18 6.3%
Hypermarkets 241 239 2 0.9%
Supermarkets (4) 68 52 16 31.4%
Total Retail Stores (eop) 674 385 289
Hypermarkets 255 250 5
Openings 3 2 1
Closing 2 1 1
Supermarkets (4) 419 135 284
Openings 283 8 275
Closing 3 4 (1)
New Selling Space (sqm,
eop) 207,219 5,022 202,197
Hypermarkets 5,728 665 5,063
Supermarkets (4) 201,491 4,357 197,134
Total Selling Space (sqm,
eop) 1,725,817 1,494,251 231,566 15.5%
Hypermarkets 1,406,516 1,379,246 27,270 2.0%
Supermarkets (4) 319,301 115,005 204,296 177.6%
Total Online Sales (RUB,
millions) 12,307 3,181 9,127 286.9%
Online Partners 7,006 3,002 4,004 133.4%
Lenta Online 4,856 157 4,699 2,994.3%
Click & Collect 445 22 423 1,960.4%
Total Online Orders (thousands) 6,855 1,576 5,279 334.9%
Online Partners 3,913 1,427 2,486 174.2%
Lenta Online 2,743 140 2,603 1,854.5%
Click & Collect 199 9 190 2,160.0%
Cities of Online Operation
Online Partners 86 82 4 4.9%
Lenta Online 84 26 58 223.1%
Click & Collect 87 13 74 569.2%
3. Including Semya and Billa results from the date of
consolidation.
4. 36 new Convenience stores, 159 Billa stores and 75 Semya
stores opened/bought through M&A in Q3 2021 are now calculated
as a part of Supermarkets; "eop" refers to "end of period"
5. LFL Results do not include 29-Feb-2020
Q3 2021 Monthly - OPERATING RESULTS
July YoY August YoY September YoY
Total Sales (3) (RUB
millions) 37,892 4.0% 39,607 15.8% 40,738 20.6%
Retail Sales 37,253 4.3% 38,910 16.0% 39,904 20.9%
Hypermarkets 34,170 4.6% 32,912 7.3% 32,396 8.1%
Supermarkets (4) 3,083 1.1% 5,998 108.1% 7,507 146.9%
Wholesale 639 (9.7%) 697 6.0% 835 8.4%
Average Ticket (3) (RUB) 1,088 2.0% 988 (4.7%) 970 (7.1%)
Hypermarkets 1,216 2.7% 1,200 4.1% 1,230 5.4%
Supermarkets(4) 502 (3.0%) 502 (0.1%) 508 (1.2%)
Number of Tickets (3)
(millions) 34 2.3% 39 21.7% 41 30.2%
Hypermarkets 28 1.9% 27 3.1% 26 2.6%
Supermarkets(4) 6 4.2% 12 108.3% 15 149.8%
Total Retail Stores (eop) 413 581 674
Hypermarkets 255 255 255
Openings 0 0 0
Closing 0 0 0
Supermarkets(4) 158 326 419
Openings 7 169 94
Closing 0 1 1
New Selling Space (sqm,
eop) 2,880 137,991 55,771
Hypermarkets 0 0 0
Supermarkets(4) 2,880 137,991 55,771
Total Selling Space (sqm,
eop) 1,532,055 3.3% 1,670,046 12.4% 1,725,817 15.5%
Hypermarkets 1,406,516 2.6% 1,406,516 2.6% 1,406,516 2.0%
Supermarkets(4) 125,539 11.8% 263,530 129.0% 319,301 177.6%
Total Online Sales (RUB,
millions) 1,291 240.9% 1,422 257.8% 1,703 218.3%
Online Partners 712 101.3% 819 128.3% 989 108.7%
Lenta Online 524 2,457.7% 553 1,634.1% 654 1,179.9%
Click & Collect 54 1,167.4% 50 640.0% 60 502.6%
Total Online Orders (thousands) 717 246.5% 923 249.6% 923 206.0%
Online Partners 406 119.6% 559 140.6% 559 117.8%
Lenta Online 288 1,321.7% 333 948.0% 333 720.1%
Click & Collect 23 1,272.6% 30 744.2% 30 635.1%
Cities of Online Operation
Online Partners 86 86 86
Lenta Online 84 84 84
Click & Collect 87 87 87
3. Including Semya and Billa results from the date of
consolidation.
4. 36 new Convenience stores, 159 Billa stores and 75 Semya
stores opened/bought through M&A in Q3 2021 are now calculated
as a part of Supermarkets; "eop" refers to "end of period"
Operating Results Commentary
In Q3 2021 Total Sales increased by 13.3% to RUB 118 billion.
Lenta's Retail Sales in Q3 2021 increased by 13.5% to RUB 116
billion compared to RUB 103 billion in Q3 2020, driven by 3.5% LFL
Retail Sales growth and 15.5% total selling space expansion both
organically and inorganically. During the third quarter, customer
behavior began reverting back to pre-COVID-19 patterns with regard
to Ticket size and Traffic volume. In Q3 2021 Traffic increased by
17.8%, while Average Ticket size decreased by 3.6% due to the
increasing share of Supermarket Sales in Retail Sales. Wholesale
Sales represented 1.8% of Total Sales and increased by 1.6%
compared to the corresponding period of the previous year.
LFL Sales growth improved quarter-on-quarter from a negative
2.6% in Q2 2021 to a positive 3.5% in Q3 2021, driven by the strong
performance of our Hypermarket format. Total Retail LFL Traffic was
a negative 1.2%. Total Retail LFL Average Ticket increased by 4.7%,
offsetting the negative LFL Traffic.
Our recently relaunched loyalty program continues to have a
positive effect on our results. Throughout 2021, we further
improved our algorithms and marketing in order to achieve more
personalized offers. As of the end of Q3, we had over 20 million
loyalty card users and loyalty cards were used in more than 98% of
sales. Over the next few quarters, we will begin to invite Billa's
and Semya's customers into our loyalty program.
Hypermarket Sales represented 86% of total Retail Sales in Q3
2021. Lenta continued gaining market share in Russia's Hypermarket
segment. Despite increased competition from discounters and
e-grocery, our Hypermarkets delivered strong 6.6% Sales growth,
positive LFL Sales growth of 4.2%, and an increase of 4.6% in the
LFL Average Ticket.
Following the successful acquisitions of Billa and Semya,
Supermarket Sales increased to 19% of total Retail Sales in
September 2021, compared to just 9% in the previous year. In total,
Lenta added 270 new supermarkets and convenience stores, including
159 Billa stores, 75 Semya stores, and 36 Mini Lenta stores. During
Q3, Lenta also closed two underperforming supermarkets. Supermarket
Total Selling Space nearly tripled to 319k square meters. Our
Supermarkets demonstrated significant year-over-year Sales Growth
in Q3 of 85%, driven by acquisitions.
In Q3 2021, Lenta's online channel continued to demonstrate very
strong sales growth. Total Online Sales during the period amounted
to RUB 4.4 billion, an increase of 237% year-over-year, while Total
Online Orders were up 231% and amounted to 2.4 million. The Average
Ticket for Lenta's own online delivery service was RUB 1,877, which
is 54% higher than the Average Ticket in our Hypermarkets. During
Q3 2021, Online Sales represented 3.8% of Lenta's total Retail
Sales.
Financial Highlights
Q3 and 9M 2021 Key Financial IAS 17 IAS 17
Results
RUB million Q3'21 Q3'20 Change 9M'21 9M'20 Change
Total Sales 118,238 104,397 13.3% 336,325 321,372 4.7%
Gross Profit 27,888 23,309 19.6% 77,610 73,850 5.1%
23.0
Gross Margin (%) 23.6% 22.3% 126 bps 23.1% % 10 bps
SG&A (22,661) (20,128) 12.6% (64,764) (58,301) 11.1%
SG&A as % of Total Sales (19.2%) (19.3%) 12 bps (19.3%) (18.1%) (111 bps)
EBITDAR 12,607 9,436 33.6% 33,448 34,554 (3.2%)
EBITDAR Margin 10.7% 9.0% 162 bps 9.9% 10.8% (81 bps)
(1.4
Rent as % of Total Sales (1.9%) (1.5%) (43 bps) (1.7%) % ) (25 bps)
EBITDA 10,356 7,900 31.1% 27,828 29,972 (7.2%)
EBITDA Margin 8.8% 7.6% 119 bps 8.3% 9.3% (105 bps)
Operating Profit before
impairment 6,475 4,238 52.8% 16,331 18,934 (13.7%)
Operating Profit Margin
before impairment 5.5% 4.1% 142 bps 4.9% 5.9% (104 bps)
(Impairment) / reversal
of impairment - (33) - (9) 9 -
Operating Profit 6,475 4,205 54.0% 16,322 18,943 (13.8%)
Operating Profit Margin 5.5% 4.0% 145 bps 4.9% 5.9% (104 bps)
Net Interest Expense (1,298) (1,511) (14%) (3,629) (4,882) (25.7%)
Net FX gain / (Net FX
loss) 141 (70) - (469) (257) 82.5%
Profit Before Income
Tax 5,318 2,624 102.7% 12,224 13,804 (11.4%)
Net Income 4,181 2,184 91.4% 9,544 11,541 (17.3%)
Net Income Margin 3.5% 2.1% 144 bps 2.8% 3.6% (75 bps)
For Q3 and 9M 2021 financial highlights in accordance with IFRS
16 - see Appendix 1
Total Sales rose by 13.3% year-over-year in Q3 2021, supported
by Retail Sales growth of 13.5%, and Wholesale growth of 1.6%. In
Q3 2021, Wholesale constituted 1.8% of Total Sales compared to 2%
in Q3 2020.
In Q3 2021, Gross Profit (IAS 17) rose by 19.6% year-over-year
to RUB 27.9 billion, and the Gross Margin increased by 126 bps to
23.6% due to the better promotional margin resulting from the
revision of promo campaigns and lower investments into the promo,
higher centralization ration as well as positive dynamics of stock
provisions. The growth was slightly offset by higher cashback
expenses.
EBITDA (IAS 17) during Q3 2021 increased by 31% to RUB 10.4
billion, mainly due improved Gross Margin. Lenta's EBITDA margin
remained strong at 8.8% in Q3, an improvement of 119 bps
year-over-year, in line with the company's Guidance for the full
year.
Selling, General, and Administrative (SG&A) expenses
SG&A IAS 17 IAS 17
RUB million Q3'21 Q3'20 Change 9M'21 9M'20 Change
Payroll and related taxes 8,189 7,659 6.9% 24,473 22,566 8.5%
as a % of Total Sales 6.9 % 7.3% (41 bps) 7.3% 7.0% 25 bps
Depreciation and Amortization
(D&A) 3,881 3,663 6.0% 11,497 11,039 4.1%
as a % of Total Sales 3.3% 3.5% (23 bps) 3.4% 3.4% (2 bps)
Lease Expenses 2,251 1,536 46.5% 5,620 4,582 22.7%
as a % of Total Sales 1.9% 1.5% 43 bps 1.7% 1.4% 25 bps
Utilities 1,444 1,257 14.9% 4,091 3,660 11.8%
as a % of Total Sales 1.2% 1.2% 2 bps 1.2% 1.1% 8 bps
Store Operations 2,482 2,205 12.6% 7,172 6,399 12.1%
as a % of Total Sales 2.1% 2.1% (1 bps) 2.1% 2.0% 14 bps
Professional Fees 1,329 1,101 20.7% 3,429 3,121 9.9%
as a % of Total Sales 1.1% 1.1% 7 bps 1.0% 1.0% 5 bps
Advertising 1,563 1,317 18.7% 3,944 3,434 14.9%
as a % of Total Sales 1.3% 1.3% 6 bps 1.2% 1.1% 10 bps
Other 1,522 1,390 9.5% 4,538 3,500 29.7%
as a % of Total Sales 1.3% 1.3% (4 bps) 1.3% 1.1% 26 bps
Total SG&A 22,661 20,128 12.6% 64,764 58,301 11.1%
as a % of Total Sales 19.2% 19.3% (11 bps) 19.3% 18.1% 112 bps
SG&A excluding D&A 18,780 16,465 14.1% 53,267 47,262 12.7%
as a % of Total Sales 15.9% 15.8% 11 bps 15.8% 14.7% 113 bps
For Q3 and 9M 2021 financial highlights in accordance with IFRS
16 - see Appendix 2
In Q3 2021, Total Selling, General, and Administrative expenses
(IAS 17) increased by 12.6%
year-over-year to RUB 22.7 billion. Nonetheless, SG&A as a
percentage of Total Sales decreased by 11 bps to 19.2%. This
decline was mainly driven by lower payroll and related taxes and
D&A as a percent of sales, partially offset by an increase in
lease expenses.
Payroll and related taxes rose by 6.9% year-over-year in
connection with new store openings, two acquisitions, salary
indexation (in Q4 2020), and investment into Lenta Online.
Personnel expenses as a percent of Total Sales declined by 41 bps,
as a result, of higher productivity.
D&A as a percent of Total Sales decreased by 23 bps due to a
higher share of leased premises in Total Selling Space.
Lease expenses rose by 43 bps as a percent of Total Sales,
primarily due to the acquisitions of Billa and Semya, both of which
have a higher percentage of leased versus owned stores in their
portfolios. The share of leased selling space for Lenta overall
increased to 33% in Q3 2021 compared to 25% a year ago.
Store Operations increased by 12.6% year-over-year, mainly
driven by costs associated with new store openings, increased
security costs, as well as, store repairs and maintenance.
Advertising costs during Q3 2021 were up 18.7% year-over-year,
due to investments into growing the online channel.
Cash Flow Statement
9M 2021 Cash Flow Statement IAS 17 IAS 17
RUB million Q3'21 Q3'20 Change 9M'21 9M'20 Change
Profit before income
tax 5,318 2,625 102.6% 12,224 13,804 (11.4%)
Net adjustments for
loss on disposal of
assets, impairment,
depreciation & amortization,
and other 4,834 5,742 (15.8%) 15,574 16,804 (7.3%)
Movements in Working
Capital 1,277 (2,321) - (8,939) (14,082) 36.5%
Cash generated from
operating activities 11,429 6,046 89.0% 18,859 16,526 14.1%
Net Interest & Income
Taxes Paid (1,228) (3,920) 68.7% (4,551) (9,444) 51.8%
Net Cash from Operating
Activities 10,201 2,126 379.8% 14,308 7,082 102.0%
Net cash used in Investing
Activities (23,067) (1,475) (1,463.9%) (27,935) (4,993) (459.5%)
Net cash generated from/(used
in) financing activities (168) (15,289) 98.9% 9,259 (70,848) -
Effect of exchange rates
on cash and cash equivalents 126 43 193.0% (489) 82 -
Net Decrease in Cash
& Cash Equivalents (12,908) (14,595) 11.6% (4,857) (68,677) 92.9%
For Q3 and 9M 2021 financial highlights in accordance with IFRS
16 - see Appendix 3
CapEx in 9M 2021 amounted to RUB 6.5 billion, an increase of 29%
year-over-year. The increase resulted from an accelerated pace of
new organic store openings (52 store openings on a gross basis
during 9M 2021 vs 10 store openings during 9M 2020), completing
construction of new distribution centers, continuing IT development
costs, and expenses related to the integration of Billa stores.
In 9M 2021, Net Cash generated from Operating Activities (IAS
17) amounted to RUB 14.3 billion, up 102%, reflecting business
growth and healthy profitability. The negative change in Working
Capital (IAS 17) of RUB 8.9 billion during 9M 2021, compared to a
negative RUB 14.1 billion in 9M 2020, was mainly due to better
stock movement and higher tax payables on the back of growing
sales.
Net Cash used in Investing Activities increased to RUB 27.9
billion in 9M 2021 from RUB 5.0 billion in 9M 2020, as a result of
the two acquisitions.
In 9M 2021, Net Cash generated from Financing Activities
amounted to RUB 9.3 billion, compared to RUB 70.8 billion used in
Financing Activities in 9M 2020. This dynamic resulted from an
increase in Gross Debt in 9M 2021, as opposed to the debt
repayment, which took place in 9M 2020.
Free Cash Flow for 9M 2021 was a negative RUB 13.6 billion,
which was RUB 15.7 billion lower than Free Cash Flow in 9M 2020,
mainly due to higher Net Cash used in Investing Activities.
Debt Position and Leverage
9M 2021 Debt Position and IFRS 16 IAS 17
Leverage
RUB million 30-Sep-21 31-Dec-20 30-Sep-21 31-Dec-20
Gross Debt 147,183 113,394 88,500 78,952
Long-term Debt 56,938 45,941 56,938 45,941
Short-term Debt 31,562 33,011 31,562 33,011
Lease Liabilities (IFRS
16) 58,683 34,442 - -
Cash & Cash Equivalents 16,952 21,809 16,952 21,809
Net Debt 130,231 91,585 71,548 57,143
Net Debt / EBITDA (LTM)
ratio 1.9x 1.5x
Lenta's cash position at the end of the Q3 2021 was RUB 17.0
billion. Gross Debt increased by RUB 9.5 billion or 12.1% compared
to 31 December 2020 and stood at RUB 88.5 billion as of 30
September 2021. Net Debt increased by RUB 14.4 billion compared to
31 December 2020 and stood at RUB 71.5 billion. All of the
Company's debt has fixed interest rates and is fully Ruble
denominated matching its revenue structure. Lenta's Net Debt to
EBITDA ratio was 1.9x as of 30 September 2021 vs 1.5x as of 31
December 2020.
Strategic Update
Lenta announced its 2025 Growth Strategy at a Capital Markets
Day in March 2021. The new strategy is focused on achieving the
following four goals by the end of 2025:
-- Growth: Double sales to RUB 1 trillion;
-- Profitability: Remain the most profitable Russian food
retailer (by EBITDA margin according to IAS 17);
-- Competitiveness: Be the #1-2 player in arenas where we choose to compete;
-- Returns: Total Shareholder Return (TSR) amongst industry leaders.
Since the unveiling of this plan, the company has embarked upon
several important strategic initiatives and completed two
transformative business acquisitions.
M&A
During Q3 2021, Lenta received all necessary regulatory
approvals and subsequently closed the two M&A transactions
announced earlier in the year, the acquisition of Billa for EUR 225
million and the acquisition of Semya for RUB 2.45 billion.
These two transactions materially strengthen Lenta's market
positions in Moscow, the Moscow region, and Perm via high-quality
locations with established customer traffic, including in central
neighborhoods where Lenta previously had no presence.
-- With the acquisition of Billa stores, Lenta now has a total
food retail market share of approximately 3% in Moscow and the
Moscow region making it the #2 supermarket operator in Moscow.
-- Together with Semya, Lenta now has a total food retail market
share of approximately 7% in the Perm region and maintains #4
position in the Perm region's food retail market.
The newly acquired stores will serve as a platform for faster
and more efficient development of the Lenta Online business in both
geographies. Lenta has already begun fulfilling online orders in
Moscow from Billa stores.
By integrating these businesses, Lenta management sees potential
for synergies in procurement, supply-chain management, cost
savings, back-office functionality, and other business processes.
At the same time, the company will benefit from newly acquired
expertise in small format operations, Billa's Ultra Fresh category
management, and Semya's in-house production excellence.
As of the 25 October, more than half of Billa's supermarkets
have been rebranded to Lenta, and the remaining stores will be
converted to the Lenta brand over the coming months. We use a
"CapEx light" model to minimize renovation costs and speed up the
integration process. Semya's stores in the Perm region are expected
to switch to the Lenta brand in 1H 2022.
Overview of Billa and Semya Operations
As of the end of Q3, the newly acquired Billa retail operations
consisted of 159 supermarkets with a Total Selling Space of 135,908
square meters and had over 4,000 employees.
Billa 3Q'21 3Q'20 9M'21 9M'20
Total Sales, RUB million 9,675 11,399 34,063 35,857
Average ticket, RUB 519 512 555 543
Traffic, thousands 18,641 22,249 61,322 66,019
As of the end of Q3, the newly acquired Semya retail operations
consisted of 31 supermarkets and 44 convenience stores, for a Total
Selling Space of 47,390 square meters and had 2,580 employees.
Semya 3Q'21 3Q'20 9M'21 9M'20
Total Sales (6) , RUB
million 2,866 3,141 9,147 10,012
Retail Sales 2,845 3,132 9,104 9,986
Wholesale 22 9 43 26
Average ticket, RUB 353 332 363 358
Traffic, thousands 8,067 9,438 25,100 27,874
The financial and operational results for Billa and Semya were
consolidated into Lenta's financial and operational results
starting from August 2021 and September 2021, respectively.
Mini Lenta
Lenta launched the new Mini Lenta convenience store format in
March of this year and has steadily accelerated the pace of
openings since then. During the third quarter, Lenta opened 36 new
Mini Lenta stores primarily in Moscow, St. Petersburg, and
Novosibirsk.
Development of the Mini Lenta store format enables Lenta to be
closer to where customers live and covers their small shopping
missions: including quick and spontaneous purchases of dry food,
ready-to-eat meals, and fresh produce.
The average selling space area of a Mini Lenta is 300-700 square
meters, and the stores feature an assortment of 4,400 to 8,700
SKUs. The share of non-food in sales is around 10%. Private Label
constitutes around 17% of Sales in Mini Format. Our Mini Lentas
which are located in areas that have high traffic levels are
equipped with self-service coffee zones, an enhanced ready-to-go
assortment, and bakeries.
In Q3 2021, Mini Lenta Sales reached RUB 622 million, with the
Average Ticket of RUB 399. During the quarter, Lenta started to
test online express delivery from several Mini Lenta stores and
will consider the possibility of scaling this option.
6. Please note that all Semya's Sales results are based upon RAS
figures
FY 2021 Guidance
Considering the two M&A transactions, as well as, the
Company's performance in 9M 2021, Lenta's Management is revising
some of its previously communicated Guidance for FY 2021:
-- Selling Space Growth: +225k sqm, including acquisitions (previously +200k sqm)
-- EBITDA Margin: above 8% (no change)
-- CapEx: Up to 5% of Sales, not including acquisitions (no change)
-- New Store Openings: +125 (only organic growth)
Q3 and 9M 2021 Trading and Strategic Update Conference Call
Dial-in Details
The Lenta Management Team will host an investor and analyst
conference call at 17:00 Moscow time (15:00 London, 10:00 New
York), on Monday, 25 October 2021. On the call will be Vladimir
Sorokin (CEO), Rud Pedersen (CFO), and Tatyana Vlasova (IRO).
To participate in the conference call, please use the following
dial-in details:
Russia +7 495 283 98 58
United Kingdom +44 203 984 9844
United States +1 718 866 4614
Telephone numbers for additional countries can be found at the
webcast URL.
Participant code: 878744 ("Lenta Q3 & 9M Trading and Strategic Update Call")
Audio webcast URL: https://mm.closir.com/slides?id=878744
Participants are encouraged to register approx. 5-10 minutes
prior to the start of the call.
For further information, please visit www.lentainvestor.com or
contact:
Lenta Lenta
Tatyana Vlasova Mariya Filippova
Head of Investor Relations Head of Public Relations and Government
tatyana.vlasova@lenta.com Affairs
maria.filippova@lenta.com
EM (International Media Inquiries)
Lenta@em-comms.com
About Lenta
Lenta IPJSC (LSE and MOEX: LNTA) is a leading Russian
multi-format food and FMCG retailer. The company operates
hypermarkets, supermarkets, and recently launched a new proximity
store format under the brand "Mini Lenta." It also provides
customers the option to shop online via its click-and-collect and
express delivery services. Lenta is Russia's largest hypermarket
operator and the fourth largest food retailer overall by Sales. The
company was founded in 1993 in St. Petersburg and as of September
30, 2021, operated 255 hypermarkets and 419 supermarkets in 88
cities across Russia with more than 1.7 million square meters of
Selling Space. The average Lenta hypermarket has approximately
5,500 square meters of selling space, the average Lenta supermarket
has 800 square meters, and the Mini Lenta format is 500 meters on
average. The company operates 14 distribution centers to supply all
of its stores. 2020 Revenues were RUB 445 billion (approximately
USD 6 billion).
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.
Appendix 1
Q3 and 9M 2021 Key Financial IFRS 16 IFRS 16
Results
RUB million Q3'21 Q3'20 Change 9M'21 9M'20 Change
118,2 336,32
Total Sales 38 104,397 13.3% 5 321,372 4.7%
Gross Profit 27,966 23,389 19.6% 77,773 74,092 5.0%
125
Gross Margin (%) 23.7% 22.4% bps 23.1% 23,1% 7 bps
SG&A (22,266) (19,787) 12.5% (63,591) (57,251) 11.1%
SG&A as % of Total Sales (18.8%) (19.0%) 12 bps (18.9%) (17.8%) (109 bps)
EBITDAR 12,707 9,529 33.4% 33,807 34,814 (2.9%)
162
EBITDAR Margin 10.7% 9.1% bps 10.1% 10.8% (78 bps)
Rent as % of Total Sales (0.3%) (0.2%) (8 bps) (0.2%) (0.2%) (2 bps)
EBITDA 12,367 9,310 32.8% 33,014 34,122 (3.2%)
154
EBITDA Margin 10.5% 8.9% bps 9.8% 10.6% (80 bps)
Operating Profit before
impairment 6,971 4,669 49.3% 17,864 20,242 (11.7%)
Operating Profit Margin 142
before impairment 5.9% 4.5% bps 5.3% 6.3% (99 bps)
(Impairment) / reversal
of impairment - (33) - (9) 9 -
Operating Profit 6,971 4,636 50.4% 17,855 20,251 (11.8%)
145
Operating Profit Margin 5.9% 4.4% bps 5.3% 6.3% (99 bps)
Net Interest Expense (2,219) (2,172) 2.2% (5,930) (6,892) (14.0%)
(Net FX loss) 137 (205) - (452) (477) (5.2%)
Profit Before Income
Tax 4,889 2,259 116.4% 11,473 12,882 (10.9%)
Net Income 3,838 1,893 102.7% 8,943 10,804 (17.2%)
143
Net Income Margin 3.2% 1.8% bps 2,7% 3.4% (70 bps)
Appendix 2
SG&A IFRS 16 IFRS 16
RUB million Q3'21 Q3'20 Change 9M'21 9M'20 Change
Payroll and related taxes 8,189 7,659 6.9% 24,473 22,566 8.5%
as a % of Total Sales 6.9% 7.3% (41 bps) 7.3% 7.0% 25 bps
Depreciation and Amortization 5,397 4,639 16.3% 15,151 13,879 9.2%
as a % of Total Sales 4.6% 4.4% 12 bps 4.5% 4.3% 19 bps
Lease Expenses 340 219 55.3% 793 692 14.6%
as a % of Total Sales 0.3% 0.2% 8 bps 0.2% 0.2% 2 bps
Utilities 1,444 1,257 14.9% 4,091 3,660 11.8%
as a % of Total Sales 1.2% 1.2% 2 bps 1.2% 1.1% 8 bps
Store Operations 2,482 2,205 12.6% 7,172 6,399 12.1%
as a % of Total Sales 2.1% 2.1% (1 bps) 2.1% 2.0% 14 bps
Professional Fees 1,329 1,101 20.7% 3,429 3,121 9.9%
as a % of Total Sales 1.1% 1.1% 7 bps 1.0% 1.0% 5 bps
Advertising 1,563 1,317 18.7% 3,944 3,434 14.9%
as a % of Total Sales 1.3% 1.3% 6 bps 1.2% 1.1% 10 bps
Other 1,522 1,390 9.5% 4,538 3,500 29.7%
as a % of Total Sales 1.3% 1.3% (4 bps) 1.3% 1.1% 26 bps
Total SG&A 22,266 19,787 12.5% 63,591 57,251 11.1%
as a % of Total Sales 18.8% 19.0% (12 bps) 18.9% 17.8% 109 bps
SG&A excluding D&A 16,869 15,148 11.4% 48,440 43,372 11.7%
as a % of Total Sales 14.3% 14.5% (24 bps) 14.4% 13.5% 91 bps
Appendix 3
9M 2021 Cash Flow Statement IFRS 16 IFRS 16
RUB million Q3'21 Q3'20 Change 9M'21 9M'20 Change
Profit before income ( 10.9%
tax 4,889 2,259 116.4% 11,473 12,882 )
Net adjustments for
loss on disposal of
assets, impairment,
depreciation & amortization, ( 2.7% ( 1.6%
and other 7,283 7,482 ) 21,499 21,858 )
Movements in Working
Capital 1,415 (2,310) - (8,938) (14,202) 37.1%
Cash generated from
operating activities 13,587 7,431 82.8% 24,034 20,538 17.0%
Net Interest & Income
Taxes Paid (2,209) (4,595) 51.9% (6,913) (11,480) 3 9.8%
Net cash from Operating
Activities 11,378 2,836 301.2% 17,121 9,058 89.0%
Net cash used in Investing
Activities (23,058) (1,466) (1,472.9%) (27,909) (4,967) (461.9%)
Net cash generated from/(used
in) financing activities (1,354) (16,008) 91.5% 6,420 (72,850) -
Effect of exchange rates
on cash and cash equivalents 126 43 193.0% (489) 82 -
Net Decrease in Cash ( 92.9%
& Cash Equivalents (12,908) (14,595) 11.6% (4,857) (68,677) )
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