Lenta third-quarter sales growth slows on Russia food-Import Ban
By Bloomberg
Lenta Ltd., a Russian hypermarket operator backed by U.S.
private-equity fund TPG Capital, reported slower revenue growth
after the government's ban on some food imports hurt September
sales.
Third-quarter revenue increased 33 percent to 48.5 billion ($1.2
billion) rubles, St. Petersburg-based Lenta said today in a
statement. The gain was less than the second quarter's 39 percent
jump because of the import restrictions, rising food- price
inflation and currency shifts, Lenta said.
President Vladimir Putin in August prohibited purchases of certain
food products from the European Union and the U.S. to retaliate for
sanctions against Russia over the Ukrainian conflict. The policy
contributed to an acceleration of food- price inflation to a
three-year high of 11.4 percent in September that, combined with
lower oil prices, triggered the ruble's sharpest quarterly
weakening since 1999.
Demand has dropped for products including fresh fish and cheeses as
the import ban caused "hyperinflation" for those foodstuffs, Chief
Executive Officer Jan Dunning said in a phone interview. "We see
fewer customers buying salmon after the price has gone up 40
percent to 45 percent."
The company also had a "difficult" start to October, as "there is
change in the customer behavior we have to analyze, and there is an
inflationary impact on our sales," Dunning said. "Still, we feel
confident to confirm the guidance for full-year sales growth of 34
percent to 38 percent."
Stock Falls
Lenta fell as much as 2.2 percent to $9.60 as of 10:01 a.m. in
London. The global depositary receipts, which began trading in
February in the only large Russian initial public offering this
year, slid below their IPO price this week.
The retailer is making efforts to find more local suppliers and
move away from buying abroad, Dunning said. The company is trying
to keep most of its debt in rubles to match its revenue currency.
The retailer is seeking to double its selling space over three
years in Russian market, where there's a lower level of modern
retail formats per population than in western Europe.
X5 Retail Group NV, whose largest shareholder is billionaire
Mikhail Fridman, also posted reduced sales growth in September
versus August after the import ban. Billionaire Sergey Galitskiy's
OAO Magnit, Russia's biggest retailer, maintained its sales-growth
pace in September.