Company Announcements

1st Quarter Results

Source: RNS
RNS Number : 5105W
Lenta International PJSC
26 April 2021
 

Press Release | St. Petersburg | 26 April 2021


 

Lenta's Q1 2021 adjusted Retail Sales increased by 6.9% and Online Sales by 674%

 

Q1 2021 Operational and Financial Highlights1

•  The Q1 2021 year-over-year comparison was materially impacted by the extraordinarily high base effect for the March 14-31, 2020 period, when last year's COVID-19 bulk buying began in earnest. Adjusting for this effect, Retail Sales growth amounted to 6.9% and LFL Sales growth was 7.3%

•  In Q1 2021, unadjusted Retail Sales increased by 1.5% y-o-y to RUB 105.9 billion

•  Unadjusted LFL Sales growth for the full Q1 2021 quarter was 1.3% with an Average Ticket growth of 11.6% and a customer Traffic decline of 9.3%

•  Lenta continued with the rapid roll-out of its online channel, which is now available in all 89 Russian cities where the company operates. As a result, Online Sales and Online Orders grew by 674% and 871% y-o-y respectively in Q1 2021, to RUB 3.8 billion and 2.2 million orders

•  In Q1 2021, Lenta added 1 store on a net basis, bringing the total number of retail stores to 394 and the Total Selling Space to 1.52 million square meters as of 31 March 2021

•  Gross Profit was RUB 23.4 billion, an increase of 2.4% y-o-y, which resulted in a Gross Margin of 21.8%, an improvement of 26 bps y-o-y

•  SG&A expenses amounted to RUB 21.6 billion, or 20.1% of Total Sales, an increase of 217 bps y-o-y, driven by investments into preparing Lenta for growth, salary indexation in LFL stores and new store openings, investments into online, COVID-19 and other one-off related expenses

•  EBITDA was RUB 6.7 billion in Q1 2021, and Lenta's EBITDA Margin was 6.2%

•   LTM Net Debt to EBITDA ratio stood at 1.7x as of March 31, 2021

 

 

St. Petersburg, Russia, 26 April 2021: Lenta IPJSC (MOEX & LSE: LNTA), one of the largest retail chains in Russia, today announces its operational results and unaudited financial highlights for Q1 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 started 2021 with a firm financial foundation for growth and a clear strategy focused on value creation. In the first quarter of 2021, Lenta improved its Gross Margin to 21.8% and grew its Online Sales more than sevenfold. Adjusted to exclude the high base effect of 14-31 March 2020, our Q1 2021 Total Sales growth was a healthy 6.9%.


We have already made some exciting progress on new strategic initiatives aimed at expanding our online business and strengthening our multi-format offering. We just recently launched our new Mini Lenta proximity store format, which enables us to get closer to our customers and to offer a tailored range of quality products at segment-leading prices alongside a unique customer experience. The new format will operate to the same high standards that customers have come to appreciate from Lenta's hypermarkets and supermarkets.
 

While the external environment still presents challenges as a result of the COVID-19 pandemic, Lenta has continued to adjust swiftly to meet and exceed the expectations of our customers when it comes to product quality and selection, as well as ensuring a safe shopping experience."

 

 

 

1. Please note that all Financial Highlights are based upon IAS 17 figures.

 

 

 

1st Quarter - LFL RESULTS2

 

Q1

Q1

Q1

 

 

Sales

Average Ticket

Traffic

 

 

 

 

 

Total Retail

 

1.3%

11.6%

-9.3%

Hypermarkets

 

1.9%

10.9%

-8.1%

Supermarkets3

 

-5.0%

11.3%

-14.7%

 

 

 

 

 

1st Quarter - OPERATING RESULTS (Year-over-Year)

 

Q1 2021

Q1 2020

Change

% Change

 

 

 

 

 

Total Sales (RUB millions)

107,312

106,004

1,308

1.2%

Retail Sales

105,881

104,352

1,528

1.5%

Hypermarkets

96,190

94,553

1,637

1.7%

Supermarkets3

9,691

9,800

(109)

-1.1%

Wholesale

1,431

1,652

(221)

-13.4%

 

 

 

 

 

Average Ticket (RUB)

1,126

1,021

105

10.3%

Hypermarkets

1,249

1,134

115

10.1%

Supermarkets3

571

522

49

9.4%

 

 

 

 

 

Number of Tickets (millions)

94

102

(8)

-8.0%

Hypermarkets

77

83

(6)

-7.6%

Supermarkets3

17

19

(2)

-9.6%

 

 

 

 

 

Total Retail Stores (eop)

394

380

14

 

Hypermarkets

254

249

5

 

Openings

1

0

1

 

Closing

1

0

1

 

Supermarkets3

140

131

9

 

Openings

2

0

2

 

Closing

1

0

1

 

 

 

 

 

 

New Selling Space (sqm, eop)

3,499

0

3,499

 

Hypermarkets

2,899

0

2,899

 

Supermarkets3

600

0

600

 

 

 

 

 

 

Total Selling Space (sqm, eop)

1,522,097

1,489,229

32,868

2.2%

Hypermarkets

1,403,687

1,378,581

25,106

1.8%

Supermarkets3

118,410

110,648

7,762

7.0%

 

 

 

 

 

Total Online Sales (RUB, millions)

3,813

493

3,320

673.9%

 

 

 

 

 

Total Online Orders (thousands)

2,152

222

1,931

871.4%

 

 

 

 

 

Cities of Online Operation

 

 

 

 

Online Partners

89

21

68

 

Lentochka

84

1

83

 

Click & Collect

89

0

89

 

 

2.    LFL Results do not include 29-Feb-2020

3.    Supermarkets include one new proximity store opened in Q1 2021

4.    "eop" refers to "end of period"

 

 

Q1 2021 Monthly - OPERATING RESULTS

 

 

 

 

January

YoY

YoY

March

YoY

 

 

 

 

 

 

 

Total Sales (RUB millions)

33,893

9.4%

34,767

2.4%

38,652

-5.9%

Retail Sales

33,607

9.4%

34,264

2.8%

38,009

-5.7%

Hypermarkets

30,505

10.2%

31,190

3.2%

34,495

-5.8%

Supermarkets3

3,102

2.0%

3,075

-0.3%

3,514

-4.4%

Wholesale

286

13.8%

502

-21.6%

643

-15.5%

 

 

 

 

 

 

 

Average Ticket (RUB)

1,105

17.4%

1,169

16.5%

1,109

-0.1%

Hypermarkets

1,221

17.0%

1,297

16.3%

1,232

0.0%

Supermarkets3

570

15.0%

583

15.5%

561

0.0%

 

 

 

 

 

 

 

Number of Tickets (millions)

30

-6.8%

29

-11.7%

34

-5.6%

Hypermarkets

25

-5.8%

24

-11.3%

28

-5.9%

Supermarkets3

5

-11.3%

5

-13.7%

6

-4.3%

 

 

 

 

 

 

 

Total Retail Stores (eop)

392

 

393

 

394

 

Hypermarkets

253

 

254

 

254

 

Openings

0

 

1

 

0

 

Closing

1

 

0

 

0

 

Supermarkets3

139

 

139

 

140

 

Openings

0

 

0

 

2

 

Closing

0

 

0

 

1

 

 

 

 

 

 

 

 

New Selling Space (sqm, eop)

(2,883)

 

5,782

 

600

 

Hypermarkets

(2,883)

 

5,782

 

0

 

Supermarkets3

0

 

0

 

600

 

 

 

 

 

 

 

 

Total Selling Space (sqm, eop)

1,515,715

1.8%

1,521,497

2.2%

1,522,097

2.2%

Hypermarkets

1,397,905

1.4%

1,403,687

1.8%

1,403,687

1.8%

Supermarkets3

117,810

6.5%

117,810

6.5%

118,410

7.0%

 

 

 

 

 

 

 

Total Online Sales (RUB, millions)

1,164

994.8%

1,285

831.8%

1,364

448.9%

 

 

 

 

 

 

 

Total Online Orders (thousands)

687

1263%

714

974%

752

618%

 

 

 

 

 

 

 

Cities of Online Operation

 

 

 

 

 

 

Online Partners

89

 

89

 

89

 

Lentochka

83

 

83

 

84

 

Click & Collect

89

 

89

 

89

 

                   

 

 

 

 

 

 

 

 

 

 

3.  Supermarkets include one new proximity store opened in Q1 2021

 

 

 

Operating Results Commentary

 

Adjusted for the extraordinarily high base effect of 14-31 March 2020 due to last year's COVID-19 bulk buying, Lenta's Retail Sales growth in Q1 2021 amounted to 6.9%. Adjusted LFL Retail Sales Growth was 7.3%. Adjusted Q1 2021 Hypermarket LFL Sales increased by 8.3%, while Adjusted Supermarket LFL sales decreased by 1.9%.

 

Lenta's Retail Sales in Q1 2021 increased by 1.5% compared to Q1 2020. This increase was driven by a 10.3% growth in Average Ticket size during Q1, which was offset by an 8.0% decrease in customer Traffic. Lenta stores, especially Hypermarkets, continued to show good performance in Q1 2021, further proving the resilience of the Hypermarket format in the current environment. The Hypermarket format delivered 1.7% growth in Retail Sales, as a result of a 10.1% increase in the Average Ticket size, which was offset by a 7.6% decrease in customer Traffic. Our Supermarket format posted a 1.1% decrease in Retail Sales, as a result of an increase in the Average Ticket size of 9.4% and a decrease in customer Traffic of 9.6%.

 

During Q1, LFL Retail Sales grew by 1.3% as the Average Ticket size increased by 11.6%. LFL customer Traffic decreased 9.3% during Q1, reflecting consumers' continuing preference to shop less frequently amid the continued COVID-19 environment. Hypermarket LFL Retail Sales were up 1.9%, driven by a 10.9% increase in the Average Ticket size offset by an 8.1% decrease in Traffic. Lenta's Supermarkets Q1 LFL Retail Sales fell by 5.0%, while Average Ticket was up 11.3% and Traffic decreased by 14.7%.

 

Lenta's share of online sales continued to grow in line with broader market trends, as the COVID-19 pandemic accelerated the ongoing trend of preference for grocery delivery. At the same time, sales of healthy lifestyle products have demonstrated steady growth as a result of the pandemic's effect on customer behavior.

 

In Q1 2021, Lenta's fast-growing online sales platform, which offers services across all core customer missions, continued to be an engine of growth for the company. Total Online Sales during the period amounted to RUB 3.8 billion, an increase of 674% year-over-year, while Total Online Orders were up 871% and amounted to 2.2 million. During the quarter, Total Online Sales represented 3.6% of Lenta's Total Sales. The company's own Lentochka express delivery service now represents 38% of Online Sales. Both Online Sales and Online Orders demonstrated strong month-on-month improvements in January through March 2021.

 

The company already operates its own Click & Collect platform in all 89 cities where it operates physical stores. In Q1 2021, the company added four new cities to its Lentochka offering, bringing the total number of cities to 84. In addition, Lenta works with its online partners in all 89 cities where it operates. Lenta's internal analysis continues to confirm that Lentochka delivered incremental sales and did not materially cannibalize existing revenue streams.
 

Lenta opened one new hypermarket and two new supermarkets during Q1 2021. Lenta also closed one hypermarket and one supermarket during the reporting period, bringing the total number of Lenta stores at the quarter end to 254 hypermarkets and 140 supermarkets.

 

 

 

 

Q1 2021 Key Financial Results

IFRS 16

 

IAS 17

RUB million

Q1 2021

Q1 2020

Change

 

Q1 2021

Q1 2020

Change

 

 

 

 

 

 

 

 

Total Sales

107,312

106,004

1.2%

 

107,312

106,004

1.2%

 

 

 

 

 

 

 

 

Gross Profit

23,493

22,958

2.3%

 

23,431

22,875

2.4%

Gross Margin (%)

21.9%

21.7%

   23 bps

 

21.8%

21.6%

26 bps

 

 

 

 

 

 

 

 

SG&A

(21,210)

(18,647)

13.7%

 

(21,563)

(19,001)

13.5%

SG&A as % of Total Sales

19.8%

17.6%

217 bps

 

20.1%

17.9%

217 bps

 

 

 

 

 

 

 

 

EBITDAR

8,599

10,738

-19.9%

 

8,325

10,656

-21.9%

EBITDAR Margin

8.01%

10.13%

-212 bps

 

7.76%

10.05%

-229 bps

Rent as % of Total Sales

0.23%

0.24%

      -1 bps

 

1.55%

1.45%

10 bps

 

 

 

 

 

 

 

 

EBITDA

8,347

10,479

-20.3%

 

6,666

 9,124

-26.9%

EBITDA Margin

7.8%

9.9%

-211 bps

 

6.2%

8.6%

-240 bps

 

 

 

 

 

 

 

 

Operating Profit before impairment

3,479

5,862

-40.7%

 

2,853

5,426

-47.4%

Operating Profit Margin before impairment

3.2%

5.5%

-229 bps

 

2.7%

5.1%

-246 bps

Reversal of impairment (impairment)

(9)

42

 

 

(9)

42

 

 

 

 

 

 

 

 

 

Operating Profit

3,470

5,904

-41.2%

 

2,844

5,468

-48.0%

Operating Profit Margin

3.2%

5.6%

-234 bps

 

2.7%

5.2%

-251 bps

Net Interest Expense

(1,788)

(2,396)

-25.4%

 

(1,119)

(1,710)

-34.6%

(Net FX loss)

(27)

(387)

-93.0%

 

(5)

(217)

-97.7%

Profit Before Income Tax

1,656

3,121

-46.9%

 

1,720

3,541

-51.4%

 

 

 

 

 

 

 

 

Net Income

1,265

2,854

-55.7%

 

1,317

3,190

-58.7%

Net Income Margin

1.2%

2.7%

-151 bps

 

1.2%

3.0%

-178 bps

                   

 

Total Sales rose by 1.2% year-over-year in Q1 2021, supported by retail sales growth, online development, growing participation in Lenta's revamped loyalty program and a noticeable trend of trading up.

 

In Q1 2021, Gross Profit (IAS 17) increased by 2.4% year-over-year and Gross Margin increased by 26 bps to 21.8%. This was driven by better supply chain management, as well as improved shrinkage and stock provision.

 

EBITDA (IAS 17) for the period decreased by 26.9% to RUB 6.7 billion, mainly due to the absence in Q1 2021 of the spike in sales seen in the previous year, but also as a result of investments into preparing Lenta for growth, salary indexation in LFL stores and new store openings, online business growth, COVID-19 expenses and other one-off related expenses.

 

Operating Profit before impairment (IAS 17) amounted to RUB 2.9 billion in Q1 2021.

 

 

 

 

 

Selling, General, and Administrative (SG&A)

IFRS 16

 

IAS 17

RUB million

Q1 2021

Q1 2020

Change

 

Q1 2021

Q1 2020

Change

 

 

 

 

 

 

 

 

Payroll and related taxes

8,492

7,374

15.2%

 

8,492

7,374

15.2%

as a % of Total Sales

7.9%

7.0%

96 bps

 

7.9%

7.0%

96 bps

Depreciation and Amortization

4,868

4,616

5.5%

 

3,813

3,697

3.1%

as a % of Total Sales

4.5%

4.4%

18 bps

 

3.6%

3.5%

 7 bps

Lease Expenses

252

259

-2.7%

 

1,660

1,532

8.4%

as a % of Total Sales

0.2%

0.2%

-1 bps

 

1.5%

1.4%

 10 bps

Utilities

1,396

1,305

7.0%

 

1,396

1,305

7.0%

as a % of Total Sales

1.3%

1.2%

7 bps

 

1.3%

1.2%

 7 bps

Store Operations

2,286

2,130

7.3%

 

2,286

2,130

7.3%

as a % of Total Sales

2.1%

2.0%

12 bps

 

2.1%

2.0%

 12 bps

Professional Fees

1,112

983

13.1%

 

1,112

983

13.1%

as a % of Total Sales

1.0%

0.9%

11 bps

 

1.0%

0.9%

 11 bps

Advertising

1,259

1,051

19.8%

 

1,259

1,051

19.8%

as a % of Total Sales

1.2%

1.0%

18 bps

 

1.2%

1.0%

 18 bps

Other

1,545

929

66.3%

 

1,545

929

66.3%

as a % of Total Sales

1.4%

0.9%

56 bps

 

1.4%

0.9%

 56 bps

Total SG&A

21,210

18,647

13.7%

 

21,563

19,001

13.5%

as a % of Total Sales

19.8%

17.6%

217 bps

 

20.1%

17.9%

 217 bps

SG&A excluding D&A

16,342

14,031

16.5%

 

17,750

15,304

16.0%

as a % of Total Sales

15.2%

13.2%

199 bps

 

16.5%

14.4%

210 bps

 

 

Total Selling, General, and Administrative expenses (IAS 17) increased by 13.5% year-over year to RUB 21.6 billion and amounted to 20.1% of Total Sales. This was driven by a combination of factors, including investments into preparing Lenta for growth, salary indexation in LFL stores and new store openings, online business growth, COVID-19 expenses, and other one-off related expenses.

 

Lenta remained focused on creating a safe store experience for both employees and customers in Q1 2021, and this resulted in COVID-19 related expenses increasing to RUB 295 billion, compared to zero in Q1 2020. Expenses included purchases of masks, gloves, thermometers, and disinfectants.

 

Advertising costs during Q1 2021 were up 19.8% year-over-year, due to a shift from offline to online channel marketing spend.

 

Professional fees, which include consulting, legal and auditor fees, as well as bank commissions for acquiring services, rose by 13.1% in Q1 2021.

 

 

 

 

 

 

Q1 2021 Cash Flow Statement

 

IFRS 16

 

IAS 17

RUB million

Q1 2021

Q1 2020

Change

 

Q1 2021

Q1 2020

Change

 

 

 

 

 

 

 

 

Profit before income tax

1,656

3,121

-46.9%

 

1,720

3,541

-51.4%

Net adjustments for loss on disposal of assets, impairment, depreciation & amortization, and other

6,689

7,311

-8.5%

 

4,979

5,536

-10.1%

Movements in Working Capital

 (7,081)

 (5,777)

22.6%

 

 (6,959)

 (5,624)

23.7%

Cash generated from operating activities

1,264

4,655

-72.8%

 

 (260)

3,453

-107.5%

Net Interest & Income Taxes Paid

 (2,679)

 (3,764)

-28.8%

 

 (2,000)

 (3,078)

-35.0%

Net cash (used in) / from Operating Activities

 (1,415)

891

-258.8%

 

 (2,260)

375

-702.7%

Net cash (used) in Investing Activities

 (3,069)

 (2,094)

46.6%

 

 (3,077)

 (2,103)

46.3%

Net cash (used) in Financing Activities

 (1,426)

 (60,780)

-97.7%

 

 (573)

 (60,255)

-99.0%

Net (Decrease) in Cash & Cash Equivalents

 (5,910)

(61,983)

-90.5%

 

 (5,910)

 (61,983)

-90.5%

 

 

 

CAPEX in Q1 2021 amounted to RUB 3.2 billion, an increase of 51.1% year-over-year, and was focused on new hypermarket and supermarket construction, as well as distribution center construction and IT investments.

 

Net cash used in Financing Activities in Q1 2021 was lower than in the previous year, as Lenta had taken the opportunity in Q1 2020 to repay several credit lines.


Free Cash Flow for the Q1 2021 amounted to RUB -5.4 billion, which was RUB 3.7 billion lower than in the previous year, mainly due to lower EBITDA in Q1 2021.

 

 

Q1 2021 Debt Position and Leverage

IFRS 16

 

IAS 17

RUB million

31-Mar-21

31-Dec-20

 

31-Mar-21

31-Dec-20

 

 

 

 

 

 

Gross Debt

112,720

        113,394

 

78,475

78,952

Long-term Debt

47,920

          45,941

 

47,920

45,941

Short-term Debt

30,555

          33,011

 

30,555

33,011

Lease Liabilities (IFRS 16)

34,245

          34,442

 

-  

-  

Cash & Cash Equivalents

15,899

          21,809

 

15,899

21,809

Net Debt

96,821

          91,585

 

62,576

57,143

LTM Net Debt / EBITDA ratio

 

 

 

1.7x

1.5x

 

 

As of March 31, 2021, Lenta's Gross Debt (IAS 17) had decreased to RUB 78.5 billion. The company's LTM Net Debt to EBITDA ratio stood at 1.7x at the end of Q1 2021, compared to 2.2x at the end of Q1 of 2020 and 1.5x at year-end 2020.

 

Lenta's interest coverage ratio at the end of Q1 2021 stood at 6.0x.
 

 

 

FY 2021 Guidance

 

In line with the company's performance in Q1 2021, Lenta Management reiterates the following FY 2021 Guidance provided at the company's Capital Markets Day on March 18, 2021:

 

·    Selling Space Growth: at least 100k sqm

·    EBITDA Margin: above 8%

·    CAPEX: up to 5% of Sales
 

 

Q1 2021 Conference Call

 

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, 26 April 2021. 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: 5638180 ("Lenta Q1 Results Call")

 

Russian Federation: +7 499 609 1260 (local access)

8 800 100 9471 (toll free)

 

UK: +44 (0)330 027 1846 (local access)

0800 031 4838 (toll free)

 

USA: +1 334-777-6978 (local access)

800-367-2403 (toll free)

 

Participants are encouraged to register approximately 5-10 minutes prior to the start of the call.

 

 

 

 

 

 

For further information, please visit www.lentainvestor.com or contact:
 

Lenta
Mariya Filippova
Head of Public Relations and Government Affairs

maria.filippova@lenta.com

Lenta

Timothy Post
Investor Relations Officer

timothy.post@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 March 31, 2021 operated 254 hypermarkets and 140 supermarkets in 89 cities across European Russia with more than 1.5 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 13 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.

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
QRFEAPLSAFEFEFA
image