Lenta's revenue growth slows to 20.2% in Q3
MOSCOW. Oct 20 (Interfax) - Lenta, a major Russian retailer, increased revenue by 20.2% year-on-year to 75.4 billion rubles in the third quarter of 2016.
The company's revenue growth in the third quarter slowed from 21.8% in the previous quarter.
Lenta said its sales rose 21.3% to 215.5 billion rubles in the first nine months of 2016.
Like-for-like (LfL) sales rose 4.3% in Q3 2016 (compared with 4.9% in Q2) on a 4.2% increase in the average ticket. LfL traffic edged down 0.1% in Q3 (1.4%).
Sales in the hypermarket segment were up 19.5% to 72.1 billion rubles. The average ticket increased 3.3% in Q3 2016 (versus 2.8% in Q2) to 1,166 rubles. Traffic increased 15.7% in the segment (17.7%).
Hypermarket LfL rose 4.3% in Q3, on the strength of a 4.2% increase in the average ticket and nil growth in traffic.
Hypermarket sales in 9M 2016 grew 20.6% to 205.8 billion rubles, while LfL sales were up 4.9% on 3.5% ticket growth and 1.3% traffic growth.
Lenta CEO Jan Dunning said the company was pleased with the results, achieved despite the high comparison basis in the third quarter of 2015, the rapid fall in food inflation since the beginning of the year, and continuing pressure on customer purchasing power.
"In this challenging environment, customers continue to be price sensitive and bargain oriented. Lenta's low price, value led proposition is well positioned for this. For example, this has led to a record high penetration of promotional sales in the total basket even though Lenta's overall promotional activity remained stable," Dunning is quoted in the press release as saying.
"We have also noticed further stabilization of purchasing trends with gradual improvement in the average number of articles per basket and average price per article as well as non-food sales growth," he said.
Since the beginning of the year, trading down has stabilized - the average number of items per basket improved quarter-on-quarter for the third quarter in a row but remained slightly negative year-on-year. Changes in the product mix (change of average price per article) were in positive territory for the second consecutive quarter, Lenta said.
Sales in the supermarket segment rose 37.7% in Q3 2016 to 3.315 billion rubles. LfL sales were up 4.4% including a 3.4% increase in the average ticket and a 1% increase in traffic.
In 9M 2016, the supermarket segment boosted sales 37.9% to 9.7 billion rubles. LfL was up 5.2% (average ticket up 2.3%, traffic up 2.9%).
Lenta opened 26 new stores in January-September, including 16 hypermarkets (eight in Q3) and 10 supermarkets. Selling space increased 22.3% to 963,370 square meters as of the end of September.
Lenta confirmed its 2016 expansion plans. "We are well on track to deliver at least 40 new hypermarkets this year, and expect to beat our ambitious target to double selling space in the three years to December 2016," Dunning said.
The number of supermarket openings in 2016 is expected to be at least double 2015 and Lenta expects to maintain a similar or higher rate of growth in 2017 and beyond, the company said.
Lenta has already secured all the sites required to meet its hypermarket opening goals for 2017 and has started working on the 2018 pipeline, it said. Capex in 2016 is expected to total 45 billion-50 billion rubles.
Total drawn debt was 77.2 billion rubles as of the end of September. Lenta also had 46.4 billion rubles in undrawn short- and long-term facilities and a cash balance of 2.1 billion rubles. The average effective cost of debt declined to 11.71% in Q3 2016 from 12.33% in Q2. Based on the current MosPrime level and actions taken to optimize Lenta's loan portfolio, the average effective cost of debt is projected to decrease to 11.35% in Q4 2016. Lenta will continue to seek additional opportunities to reduce the average cost of debt in the current year, it said.
Lenta is the biggest hypermarket chain in Russia by selling space and the fifth biggest by revenue. The company had 197 stores in operation at the end of September, including 155 hypermarkets and 42 supermarkets.