Russian retailer Lenta has posted a 0.6% decline in like-for-like sales in the third quarter of its financial year, resulting from a 0.3% decline in LFL traffic and basket size respectively.
The group’s reported sales were up 12.5% to RUB 100.8 billion (€1.35 billion) in the quarter, the group said.
Ten new supermarkets were opened during the third quarter of 2018, while two supermarkets were closed, leaving the group with 354 stores as of the end of September 2018.
Over the first nine months of the year, like-for-like sales were up 2.9%, with total sales rising by 16.1%.
Below Expectations
“Sales growth of 12.5% in the third quarter came below our original expectations and reflects the economic pressure on consumers,” commented Lenta chief executive Jan Dunning.
“Lenta continues to win new customers in both formats, demonstrating the attractiveness of our customer offer. However, consumers are in a saving mode, shopping less frequently and buying less per visit. These trends have continued and even accelerated in October.”
Dunning added that the retailer will seek to “keep improving our offer, assortment, and marketing activities in an effort to offset the weak economy and to support our customers.”
Operational Efficiency
Noting that the “long-term fundamentals” of Russian food retail remain attractive, Dunning added that the group will focus more on operational efficiency in the near-term, as well as cash generation.
“We therefore plan to grow selling space at a significantly slower pace in 2019 which will result in positive free cash flow,” he said.
“We also believe that Lenta’s current market valuation understates the fundamental value of the business, and that this provides an attractive opportunity to create value for shareholders through a buyback programme while maintaining our strong balance sheet with conservative leverage.”
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine
