LNTA.L Regulatory News (LNTA)

LENTA SALES AND OPERATING HIGHLIGHTS FOR THE FOURTH QUARTER AND FULL YEAR ENDED 31 DECEMBER 2014

St-Petersburg, Russia; 29 January, 2015- Lenta Ltd, (LSE, MOEX: LNTA / "Lenta" or the "Company") one of the largest retail chains in Russia, is pleased to announce the Company's consolidated sales and operating results for the fourth quarter and full year ended 31 December 2014[1].

4Q 2014 Operating Highlights:

· Total sales grew 30.6% in 4Q 2014 to Rub 59.5bn (4Q 2013: Rub 45.6bn), including stronger December sales growth;

· Like-for-like ("LFL")[2] sales growth of 7.6% vs. 4Q 2013,including double-digit LFL sales growth in December

· LFL average ticket growth of 5.6% combined with a 1.9% increase in LFL traffic;

· 21 hypermarkets and eight supermarkets opened during the fourth quarter of 2014;

· Total of 132 stores at 31 December 2014, comprising 108 hypermarkets and 24 supermarkets;

· Total selling space increased to 701,150 sq.m. as at 31 December 2014 (+38.7% vs. 31 December 2013) significantly exceeding initial guidance of +30%; and

· Number of active loyalty cardholders[3] increased to 6.5m (+35% y-o-y) with approximately 90% of transactions in the fourth quarter made using the loyalty card.

FY 2014 Operating Highlights:

· Total sales grew 34.5% in 2014 to Rub 194.0bn (2013: Rub 144.3bn), in line with Company sales growth guidance provided at time of IPO in February 2014;

· LFL sales growth of 10.6% vs. 2013;

· LFL average ticket increase of 6.0% combined with LFL traffic increase of 4.4%; and

· 31 hypermarkets and 14 supermarkets opened during 2014, significantly exceeding the Company's guidance of 24 hypermarket openings.

Material events in 4Q 2014 and after the reported period

· Lenta completed the acquisition of three Bimart hypermarkets in Central Russia (two stores in Ivanovo and one in Vladimir);

· Lenta signed a Rub 11.5bn five-year unsecured credit facility with UniCredit Bank to finance its on-going investment programme.

Lenta's Chief Executive Officer, Jan Dunning commented:

"Lenta further extended its track record of rapid growth during 2014, opening a record 31 hypermarkets and 14 supermarkets and increasing net selling space by 39%. Execution by our development and operational teams was more reliable than ever, despite the rapid pace of expansion. This performance significantly exceeded our guidance of 24 new hypermarkets in 2014.

Consumers' budgets are under increasing pressure and Lenta's low price-low cost business model positions us well to meet these changing customer needs. We adapted effectively to the new more turbulent environment with changes in our assortment, pricing and promotions, enabling the company to accelerate full year sales growth from 31.3% in 2013 to 34.5% in 2014. This is the highest growth rate amongst publicly quoted retailers for the second consecutive year. We had strong LFL sales growth of 10.6% for the full year, LFL food sales growth was significantly higher at 12.1%, while non-food was under pressure. Based on the unaudited management accounts we expect Adjusted EBITDA margin for the full year of 2014 to exceed the current analyst consensus.

It is clear that the economy will face further challenges in 2015. Lenta will continue to focus on improving value for our customers and increasing productivity. Our team has developed a very strong pipeline of projects for the upcoming years, but we will closely monitor market conditions and optimise our store opening programme as appropriate to maintain high returns in combination with a healthy balance sheet. Having added around 195,000 sq.m. of selling space in 2014 we remain on track to meet our long-term target of doubling net selling space over the three years to December 2016."

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

Lenta Store Developments

In the fourth quarter of 2014, Lenta opened 21 hypermarkets, taking the total number of hypermarkets to 108. The Company also opened eight rented supermarkets in Moscow and the Moscow region, bringing the total number of supermarkets to 24.

During the twelve month period Lenta opened 31 hypermarkets (23 owned hypermarkets and eight rented stores) and 14 rented supermarkets. Hypermarket openings included 15 standard, 13 compact and three supercompact stores. One new store was opened in St.Petersburg, four stores in Moscow, seven stores in the Central region, five stores in the Volga region, four stores in the South, seven stores in Siberia and three stores in the Urals. The Company entered 15 new cities in 2014 and is now present in 60 Russian cities. Lenta added 195,483 sq.m. of new selling space, which is 46.4% greater than the figure for 2013. Total selling space as at 31 December 2014 increased to 701,150 sq.m., up 38.7% y-o-y.

Lenta's Operating Performance

Continuing selling space additions and robust sales in LFL stores resulted in an overall sales growth of 30.6% for the fourth quarter of 2014. Total sales amounted to Rub 59.5bn in the fourth quarter, compared to Rub 45.6bn for the same period last year. Lenta finished the reported quarter strongly with 34.3% sales growth in December and double-digit LFL sales growth. January 2015 also started strongly with sales growth and LFL growth similar to December of the previous year.

In the fourth quarter of the year Lenta continued to implement digital activities to reach customers with special offers tailored on an individual basis to enhance traffic. The number of active loyalty cardholders increased to 6.5 million as at 31 December, 2014 (+35% y-o-y).

LFL sales growth of 7.6% in the fourth quarter was supported by average LFL ticket increase of 5.6% to Rub 1,258 due to inflationary effects partly offset by a reduction in the number of items per basket. LFL traffic growth was 1.9%.

Lenta's expansion resulted in an increase in the number of new maturing stores included in the LFL store base for comparison. During 2014, 19 hypermarkets and six supermarkets entered the LFL panel, including six hypermarkets and two supermarkets in the fourth quarter.

The average hypermarket ticket in the fourth quarter increased to Rub 1,241 (+3.2% compared to the fourth quarter of 2013), lower than the 5.6% increase in the LFL average hypermarket ticket due to the increase in the proportion of younger stores. As of 31 December 2014 the share of selling space younger than three years increased to 59% compared to 48% as the year-end of 2013 and the share of stores operating less than one year increased to 29% compared to 26% a year ago. The same trend was visible in the supermarket format, where the average ticket in the fourth quarter increased by 7.4% to Rub 596 compared to 9.4% increase in LFL average ticket.

Total customer traffic increased by 29.1% in the fourth quarter of 2014 compared with the same period of the previous year, comprising 24% growth in hypermarket traffic and around a 2.9 times increase in traffic at Lenta's new supermarket format, which was launched in April 2013.

The performance of Lenta's supermarkets in the fourth quarter of 2014 was in line with expectations despite the stores' relative immaturity (only 10 stores out of 24 had been operating for more than a year as at 31 December, 2014). The supermarket format demonstrated robust LFL sales growth of 14.5% for the fourth quarter and 17.2% for the full year. Importantly, LFL sales per square meter of supermarkets now exceeds the Lenta average. The supermarket format's share of Lenta's total sales increased to 3.4% in the quarter, up from 1.4% in the fourth quarter of 2013 and to 2.8% for the full year of 2014 compared to 0.6% in 2013.

Guidance

The Company will provide 2015 guidance on 12 March 2015, together with our 2014 audited IFRS financial results.

About Lenta

Lenta is one of the largest retail chains in Russia and the country's second largest hypermarket chain (in terms of 2013 sales). The Company was founded in 1993 in St. Petersburg. Lenta operates 108 hypermarkets in 60 cities across Russia and 24 supermarkets in Moscow and the Moscow region, with a total of approximately 701,150 sq.m. of selling space. The average Lenta hypermarket store has selling space of approximately 6,200 sq.m. The Company operates four hypermarket 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 35,100[5] people as of 31 December 2014.

The Company's management team combines a mix of local knowledge and international expertise coupled with extensive operational experience in Russia. Lenta's largest shareholders include TPG Capital, the European Bank for Reconstruction and Development and VTB Capital Private Equity, all of whom are committed to maintaining high standards of corporate governance. Lenta is listed on the London Stock Exchange and on the Moscow Exchange and trades under the ticker: 'LNTA'.

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 at the date of this announcement. Save 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.