Lenta PLC: 1Q 2020 operating resultsSource: EQS
1Q 2020 Operating Highlights:
Events in 1Q 2020 and after the reported period:
"We had a good start of the first quarter, but eventually were faced with exceptional challenges due to COVID-19. Customer behaviour changed significantly in the second half of March. Various measures implemented by the authorities in response to COVID-19 resulted in considerable pressure on our stores as customers stocked up on essential goods.
Our commercial, logistic and operation teams responded well to the challenge. Due to the great commitment from all our employees, we secured the on-shelf availability of essential goods in our stores. At the same time we put a lot of effort into ensuring the safety and well-being of our colleagues and customers, as well as the continuity of our business operations in the most efficient way.
I am very proud of the contribution made by each member of our team during this period and pleased with the results we achieved. For the quarter our LFL sales, adjusted for the Leap Day in February, increased 4.0%. Both our LFL traffic and LFL ticket increased by 2.0%
In the first two months of the year we experienced a strong customer inflow as a result of our own marketing efforts. March sales growth was mainly driven by customer response to COVID-19, which resulted in less traffic, but larger baskets. This trend is continuing in April.
The stocking up of essential goods triggered by COVID-19 also resulted in increased demand for online grocery purchases. Sales through our delivery partners almost tripled in the last weeks of March when compared to the last weeks of February. In response we accelerated our fast-delivery project Lentochka and moved the launch of online ordering through our own website forward.
I am pleased with our strong performance in 1Q. Looking ahead we will face many uncertainties, including further measures the authorities may implement in response to COVID-19, the duration of such measures, continued macro-economic volatility and consequent customer sentiment. We are working with different scenarios to evaluate any impact on our operations and performance. And we continue to focus on our cash discipline and operating efficiency."
Governance. We established a COVID-19 response team, including top management members and functional experts, to monitor, coordinate and track daily actions. The COVID-19 response team cooperates closely with relevant authorities.
Safety and support for employees. We are taking comprehensive measures to ensure the safety and well-being of our employees. This includes, but is not limited to, restricting travel, daily health and temperature checks, remote work for office-based employees, intensified cleaning, making sanitizer available, providing special working regimes for vulnerable employees and providing personal protection equipment and protective barriers between cashiers and customers.
Safety and support for customers. We are taking every effort to ensure our customers continue feeling safe shopping in our stores. Protective barriers were placed at cashier desks and our own culinary sections, as well as visual markings on floors to control the distance between customers. We have equipped our stores with hand sanitizers for employees and customers. In addition, a large-scale communication programme was launched to encourage customers to keep their distance; use self-scanners and check-outs; and, when possible, pay by debit or credit. Additionally, customers with the high average ticket can also order free taxis within a radius of 10 km. We have also launched social initiatives to support vulnerable groups of customers. Elderly people and those at higher risk are encouraged to shop at specific hours. We have dedicated separate checkout lines for them and offered additional discounts as an incentive to visit our stores. A volunteer programme aimed at helping elderly people getting their daily groceries was established, and we support doctors, nurses and other medical workers by providing them with special discounts. We have other initiatives in progress with similar objectives.
Supply-chain. Our key task is to ensure support for our suppliers and maintain the on-shelf availability of food and non-food items. We have increased safety stocks for the essential goods and we are in constant contact with suppliers to ensure this.
Total sales increased 7.0% YoY, reaching
Strong LFL performance, combined with added selling space, resulted in retail sales growth of 7.5% in 2020. Retail sales reached
Hypermarket sales dynamics improved over 4Q 2019 due to an LFL sales growth of 3.2%, the contribution from Leap Day in February and an increase of 1.9% in the format's selling space over the year. As a result, total sales in hypermarkets reached
Supermarket sales increased 14.2% in 1Q 2020, driven by accelerated LFL sales growth, although the selling space decreased marginally by 0.1% YoY. The supermarket share accounted for 9.3% of
Total sales performance
In the 1Q
The continued development of analytical models enabled the Company to improve its product range and promotions effectively, as well as predict and respond to changes in customer preferences. The number of active loyalty cardholders increased to 16.0mn as at
LFL sales performance
LFL retail sales increased 4.0% in 1Q 2020, significantly improving from a decline of 3.6% in 4Q 2019 and despite the high base of 1Q 2019. LFL sales growth was driven by an increase in LFL traffic of 2.0% and LFL ticket growth of 2.0%. During the reported period, five hypermarkets and three supermarkets entered the LFL panel.
LFL sales increased 3.2% in the hypermarket format driven by both higher traffic and an increase in average ticket. LFL traffic increased 0.4% driven by an inflow of new customers. A combination of effective promo-campaigns and in-store communication initiatives contributed to traffic performance. The LFL average ticket increased 2.8% reflecting the attractiveness of hypermarkets for big-basket purchases and one-stop shopping once a week in light of the authorities' response to COVID-19. The increase in number of items per basket, combined with the ongoing trading-up effects in 1Q 2020, offset on-shelf deflation in the same period.
Supermarket LFL sales accelerated in 1Q 2020 to 12.4% when compared with 4.7% in 4Q 2019, driven by both traffic and ticket growth. LFL traffic increased 9.6%, being driven by new customer inflows and higher frequency of visits. The average ticket increased 2.6%, driven by trading-up effects, which offset on-shelf deflation in the format.
LFL sales growth, including Leap Day effect
1Q 2020 monthly operational results
The performance of retail sales has been improving throughout the first quarter with total sales accelerating from 1.3% YoY growth in January to 11.2% YoY in March. The average ticket improved every consecutive month.
Retail sales increased 9.4% in February due to a positive effect from Leap Day and effective promotional campaigns. Traffic increased 10.4%, representing a strong customer inflow coupled with a higher frequency of visits in both formats. The increase in traffic largely offset the lower average ticket, which declined due to the lower number of items per basket when compared to the previous year.
Retail sales growth accelerated to 11.2% in March, mainly due to a change in customer behaviour amid COVID-19. Traffic increased 0.8%, representing a decline of 0.3% in hypermarkets and an increase of 6.2% in supermarkets. While
The Company has been developing several separate projects to serve the increasing demand for online grocery shopping across
Partnership with delivery companies
In 1Q 2020, the number of orders increased 131.5%, mainly due to the expansion of partnerships in 2019 and cities of presence, as well as an increased number of orders due to changes in customer behaviour. As a result, sales through this channel increased by 109.5% YoY and amounted to approximately 0.5% of total sales, vs. 0.3% in 1Q 2019 and 0.2% for all of 2019.
In 1Q 2020,
The pilot project was launched in 4Q 2019 with the opening of two dark stores in urban areas of
Due to changing customer behaviour and significant increased demand for online grocery purchases,
Lenta's Store Base
In 1Q 2020,
COVID-19 and the volatility of the rouble may have a material impact on the performance of the Company in 2020. We continue working with various scenarios to understand the potential impact on
The Company will inform the market in the case of any revision of guidance.
The Company's price-led hypermarket formats are differentiated in terms of their promotion and pricing strategies as well as their local product assortment. The Company employed approximately 48,391 people as of 31 December 2019.
The Company's management team combines a mix of local knowledge and international expertise coupled with extensive operational experience in
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", and 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
Any forward-looking statements made by or on behalf of
 Cardholders who made at least two purchases at
 Adjusted for 29 February due to the
 Additional operating day (29 February) due to the
 FTE (full-time equivalent). Average FTE for FY 2019 was 51,908 employees
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