Lenta

Russian Retail Market 2016

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In 2016, large retail chains grew: Russia’s largest retailers Magnit and X5 Retail Group each opened about 2,000 new stores. Some smaller chains, such as Novosibirsk grocery chain Avoska, Petersburg chain of farm products Girlanda and others, left the market.

A number of companies changed the top management. Alexander Barsukov was appointed a new CEO of Tander (Magnit). Sergei Belyakov replaced Elijah Yakubson as a new president of Dixi retailer, but then a few months later he was replaced by Pedro Manuel Pereira da Silva.

There are reports that Vernij retail chain is selling some of its stores. Although the company denies it, it turned out that a few shops were actually sold to X5 Retail Group.

Meanwhile, retailers explored new markets. For example, many federal companies were interested in opening stores in Grozny, and in February 2016 Lenta retailer opened the first supermarket in the Chechen Republic.

Globus announced that it was going to invest 9 billion rubles in the construction of a retail park near Moscow. Estimated construction period is 2015 – 2020.

Metro Cash&Carry presented a new concept of shops Fasol Express, located at gas stations. The company plans to double the amount of stores every year.

Finnish company Stockmann is leaving the Russian market and closing ten Lindex stores. According to company estimates, the losses amounted to about 78 million euros. Executive Director of the Stockmann was going to resign after the sale of the business in Russia.

In June, Igor Shekhterman, Executive Director of X5 Retail Group, told about the plans of chain development: two most important regions for X5 are Siberia, where it is planned to open 150 stores over the next two years, and South Russia . The first stores are located in Novosibirsk in the stores, previously belonged to Avoska, which was forced to withdraw from the market. The network consisted of 12 stores.

In order to start supplying products to new regions X5 will build new distribution centers. “We have opened 35 distribution centers so far, and we are planning to open around 27 more in five years” – said X5 Retail Group CEO.

In September, premium retail chain Azbuka Vkusa launched a project of biometric payments, now customers can pay by placing a finger on the scanner.

In September, Forbes magazine published the rating of the largest private companies in Russia. Magnit took the first place, followed by X5 Retail Group.

In late October, Kesko Food Russia Holding announced that it would sell 11 K-Ruoka stores in St. Petersburg and Leningrad region to Lenta retailer for 11 billion rubles.

Auchan announced that Atak stores would be rebranded into Auchan store in the next 1,5 year. Also, Auchan in Moscow intends to build the largest distribution center in Europe. The venue will strengthen the retailer’s position in the Central region. In 2017, Auchan plans to increase its investment by almost half – up to 30 billion rubles.

Okey owners, Dmitry Korzhev, Dmitry Troitsky and Boris Volchek, who owned 78.97% of the company, decided to sell their shares. Among the main buyers there are Auchan, Lenta and, according to unconfirmed reports, Magnit.

In December, one of the leading Russian retailer Dixie bought 12 stores from 7th Continent.

www.retail.ru

Lenta Announces the Opening of 11 New Stores Previously Operating under the K-Ruoka Brand

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Lenta, (LSE, MOEX: LNTA) one of the largest retail chains in Russia, is pleased to announce the opening of 11 new stores acquired during the purchase of the Kesko food retail business in Russia (“KFR”), previously operating under the K-Ruoka brand.

10 hypermarkets and one supermarket are opening today in Saint-Petersburg and the Leningrad region, now operating under the Lenta brand.

The total selling space of new Lenta stores is 40,0231sq.m, of which 39,657 sq.m is owned and 2,366 sq.m is rented. In terms of size and layout, the stores are compatible with existing Lenta compact and supercompact hypermarket formats, and all of the store locations are strategically complementary to Lenta’s existing stores in Saint-Petersburg and the Leningrad region. All stores are opened 24 hours, 7 days a week.

These new openings bring the total number of Lenta stores to 180 hypermarkets in 77 cities across Russia and 44 supermarkets in Moscow and St. Petersburg.

Lenta is the largest hypermarket chain in Russia (in terms of selling space) and the country’s fifth largest retail chain (in terms of 2015 sales). The Company was founded in 1993 in St. Petersburg. Lenta operates 180 hypermarkets in 77 cities across Russia and 44 supermarkets in Moscow and St. Petersburg, with a total of approximately 1,089,165 sq.m of selling space. The average Lenta hypermarket store has selling space of approximately 5,800 sq.m. The average Lenta supermarket store has selling space of approximately 1,000 sq.m. The Company operates seven owned distribution centres.

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 34,134 people as of 30 June 20162.

www.eprretailnews.com

Revenue of retailer “Lenta” grew by 33.8%

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FMCG-retailer “Lenta” published results for the first half of 2015. The revenue of “Lenta” grew by 33.8% up to 114.9 billion rubles in the first half of 2015. During the same period of 2014 the revenue was 85.9 billion rubles, LFL sales grew by 11.5% compared to the first half of 2014.

In the second quarter of 2015 the retailer has opened 4 hypermarkets and 3 supermarkets. The total number of stores “Lenta” as of June 30 totaled 143, including 116 hypermarkets and 27 supermarkets.

www.retailer.ru

Russian retail chains showing growth

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Global ratings agency Fitch Ratings has said that Russian food retail chains continue to demonstrate healthy sales growth, despite the food import ban imposed in August against the EU, US and certain other countries.

Most Russian food retailers analysed by Fitch Ratings have managed to adapt to the food import sanction by substituting the imported categories with food from other countries, keeping the mix of food products on the shelves little changed.

Based on financial results by Russia’s three large public food retailers – Magnit, X5 Retail Group, O’Key Group – operating margins are unaffected for now as retailers have been able to pass on the increased costs of some products to customers without altering the product mix materially.

Increasing prices for some food categories (fish, dairy products, fruits and vegetables) as a result of the food import ban are likely to cause customers to seek out lower price substitutes and, in turn, lower sales of non-essentials. These trends are also likely to be reinforced by the overall subdued consumer sentiment in Russia, Fitch said.

The latest quarterly results show LFL revenue growth ranging from nine per cent year-on-year for Lenta Group to 17 per cent year-on-year for Magnit, driven by strong average ticket and traffic growth. Larger store formats, such as hypermarkets and supermarkets, posted slower sales growth in September 2014 compared with smaller formats, as they witnessed some customers trading down to cheaper products and, in some chains, low or even negative traffic growth, Fitch Ratings said.

www.esmmagazine.com

LENTA opens sixteenth supermarket in Moscow

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LENTA, one of the largest retail chains in Russia, announces the opening of the sixteenth supermarket in the Moscow region. New supermarket opened in Moscow at the address: 2A Guryanova Street.
Total area of the store is 1857 sq.m, 50% of which occupied by retail space. Supermarket is open 7 days a week from 8am to 11pm. The stock of goods available at the shop exceeds 6500 items. Along with the wide production range of federal brands, products from local manufacturers are offered to the customers.
For visitors’ convenience, there is a parking area for 70 cars, and the trading ground is equipped with 10 cashier desks.

With the opening of this new hypermarket, the network LENTA includes 87 hypermarkets in 50 cities of Russia and 16 supermarkets in the Moscow region.

www.freshplaza.com

Magnit and Lenta conquering Siberia

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Magnit and Lenta, along with a local chain, Holiday Klassik, will be the key retailers in the region in the future. Their market penetration in the region will grow faster than those like X5 and Auchan, while product availability on their shelves may become better thanks to the investment into distribution centres.

Russia’s leading market player Magnit, which has operated a distribution centre in Omsk since 2012, recently launched a 19,000 square metre leased distribution centre in Novosibirsk. Investment in logistics facilities clearly shows retailers’ focus on the store expansion in Siberia. Magnit opened its first store in Siberia in 2010 and expand the network to 120 by the end of 2013.

St Peterburg based Lenta opened its first hypermarket in Siberia in 2006 and since then it has opened 17 large outlets. In addition to that it opened a 37,500 sq m distribution centre in Novosibirsk last year. The retailer recently opened its first hypermarket in Krasnoyarsk and it is building its sixth store in Novosibirsk while a new store is planned for Novokuznetsk.

Auchan operates two Auchan hypermarkets and two Auchan City compact hypermarkets, X5 runs 25 small stores and one hypermarket while O’Key has five hypermarkets and one supermarket. In contrast to them Dixy Group and Rewe Group have not penetrated the region yet.

www.freshplaza.com

“Green” retailers

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Greenpeace made an annual rating called “Green supermarket” where Russian retailers are rated by the level of contribution in recycling problem solvation. First places were taken by “Auchan” and “Dixy”.

Experts were comparing and estimating 10 biggest supermarket networks – “Auchan”, “Dixy”, Х5 Retail Group, “Lenta”, “O’kay”, “Magnit”, “Holiday classic”, “Maria Ra”, “Sedmoy Continent” , and “Monyetka”. These retailers were estimated by 20 criteria such as receiving packaging for further recycling, reduction of packaging, a possibility of using own packaging for catchweight goods, a presence of goods with ecofriendly packaging.

“Auchan” took the first place due to the opening recycling centers in St. Petersburg and the possibility of buying catchweight goods. “Dixy” was also pointed out because of the presence of recycling centers in Moscow and the sale of original non-disposable bags.

“O’kay”, “Sedmoy Continent”, and “Monyetka” are turned to be at the end of the rating list.

“Unfortunately, even leaders of our list are far from being “green” retailers. However, most of them are changing their policy: refusing from free plastic bags, letting do weighting of fruit and vegetables without packaging, and even opening recycling centers. Directors of stores understand that such actions are attracting attention of new clients and making their stores more competitive on the market,” – Rashid Alimov, a coordinator of “Greenpeace Toxic Program”, said.

www.retailer.ru

Russian retailer Lenta undeterred by Ukraine crisis

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Jan Dunning, CEO of St Petersburg-headquartered hypermarket chain Lenta, says the situation in Ukraine has had no impact on the group, as consumer confidence remains unaffected in Russia.

The breakaway of Crimea from Ukraine marked a key pressure point in the crisis, after the region’s residents voted overwhelmingly in favor of joining Russia.

Dunning said that consumer demand in Russia was unaffected by the ongoing conflict with Ukraine, but that Western sanctions on the country had weakened the rouble. Over the year-to-date, the dollar has risen almost 8.5 percent against the Russian currency. As a result, Lenta was looking to source products from within Russia, or from China.

Also on Thursday, Lenta reported robust sales growth of 37.3 percent for the first quarter, during which the chain opened two new hypermarkets. Dunning said Lenta’s expansion plans were undeterred by the Ukraine-Russia turmoil, with plans to open 24 hypermarkets and 15 supermarkets in 2014.

www.cnbc.com

31% increase in Lenta’s sales in 2013

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Lenta, one of the major Russian grocery retailers, increased its total sales by 31.3% year on year to RUB 144.3bn (€3.03bn) in 2013, according to the company’s IFRS financial report. At the same time, the LFL sales grew by 10%.

What is more, there was a 35% increase in the retail space of the Russian hypermarket retailer Lenta in 2013, and the company has become the most rapidly growing business in this arena among the largest grocery retailers in Russia.

At the end of last year Lenta’s retail space came to 508,000 m² and the company had 87 stores in total. The retailer has opened 31 stores, including 10 supermarkets in Moscow and the Moscow Province. It operates 77 hypermarkets in 45 cities in Russia.

Lenta’s main shareholders are the American investment fund TPG (49.8%), the EBRD (21.5%) and VTB Capital (11.7%). In early February the retailer announced that it intended to enter the London Stock Exchange and the Moscow Exchange by means of IPOs.

www.ceeretail.com

New Lenta store in Perm

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Saint Petersburg retailer Lenta has opened its new store in Perm on December 25, has said Yana Mogileva, a press agent of the retailer.

Initially the opening of the store was postponed several times due to technical problems.

As far as future plans are concerned, the retailer doesn’t plan to open new stores in Perm prior to 2015.

Today Lenta is present in 44 cities of Russia. The official website of the company states that Lenta stores are opened seven days a week. Also, the retailer offers to its customers products at a price not less than 5% below the average market price. It’s specified that Lenta reduces its costs of warehouse storage by placing some of its commodity stocks in salesrooms.

www.retailer.ru