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LENTA SALES AND OPERATING HIGHLIGHTS FOR THE SECOND QUARTER

ENDED 30 JUNE 2014

Robust sales growth of 39.0% and LFL of 14.1% with selling space increased by 37.2%

St-Petersburg, Russia; 15 July, 2014- 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 second quarter ended 30 June 2014[1].

2Q 2014 Operating Highlights:

· Total sales grew 39.0% in 2Q 2014 to Rub 46.3bn (2Q 2013: Rub 33.3bn);

· Like-for-like ("LFL")[2] sales growth of 14.1% vs. 2Q 2013;

· LFL traffic growth of 6.1% combined with a 7.6% increase in LFL average ticket;

· Three hypermarkets and four supermarkets opened during the second quarter of 2014;

· Total of 96 stores as at 30 June 2014, comprising 82 hypermarkets and 14 supermarkets;

· Total selling space increased to 543,800 sq.m. as at 30 June 2014 (+37.2% vs. 30 June 2013);

· Active loyalty cardholders[3] increased to 5.7m (+37% y-o-y) with approximately 90% of transactions in the second quarter made using the loyalty card.

· 4.1% increase in average hypermarket ticket to Rub 1,095 (2Q 2013: Rub 1,052)

1H 2014 Operating Highlights:

· Total sales grew 38.3% in 1H 2014 to Rub 85.9bn (1H 2013: Rub 62.1bn);

· LFL sales growth of 13.8% vs. 1H 2013;

· LFL traffic growth of 6.1% combined with a 7.3% increase in LFL average ticket;

· Five hypermarkets and four supermarkets opened during the first half of 2014.

Lenta's Chief Executive Officer, Jan Dunning commented:

"Lenta continued to successfully implement its strategy for growth during the second quarter of 2014. Total sales growth accelerated to 39%, through a combination of 14% like-for-like growth and a 37% year-on-year increase in selling space. More and more customers are recognising the improvements we are making to our offer - in product assortment, pricing, promotions and the targeted use of our unique loyalty programme - and this was reflected in both like-for-like traffic growth of over 6% and a 37% increase in active loyalty card holders.

Importantly, in addition to maintaining our strong trading momentum, we have continued to build Lenta's development pipeline, including investments in our distribution and supply chain, to underpin our long-term growth ambitions. We are confident of delivering this year's programme of 24 new hypermarkets and 15 new supermarkets, adding more than 30% to our total selling space. Next year's store opening programme is also progressing well and we reconfirm 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 second quarter of 2014, Lenta opened three hypermarkets (two owned standard format stores in Krasnoyarsk, Siberia and near Zelenograd in the Moscow region and one rented compact format store in Ryazan, Central Region), taking the total number of hypermarkets to 82. The Company also opened four rented supermarkets in Moscow and the Moscow region, bringing the total number of supermarkets to 14. Since the beginning of the year Lenta has opened five hypermarkets and four supermarkets. Total selling space as at 30 June 2014 increased to 543,800 sq.m., up 37.2% compared to the end of the first half of 2013.

While further openings of hypermarkets and supermarkets are planned in 3Q 2014, most openings in the second half are planned, as usual, for the fourth quarter of the year.

Lenta's Operating Performance

Continuing robust LFL growth and selling space additions resulted in acceleration of overall sales growth to 39.0% for the period. Total sales were Rub 46.3bn in the second quarter of 2014, compared with Rub 33.3bn for the same period last year.

Lenta implemented new tools developed as part of its "Big Data" customer insights initiative to reach customers with special, tailored offers on an individual basis. In the second quarter of the year, sales were supported by local digital activities to enhance traffic in selected stores, including the first activities in supermarkets in Moscow and the Moscow region. The number of active loyalty cardholders increased to 5.7 million as at 30 June, 2014 (+37% y-o-y).

Lenta's distinctive hypermarket model continues to prove its value to customers, resulting in LFL sales growth of 14.1% in the second quarter, supported by strong LFL traffic growth of 6.1%. The average LFL ticket increased by 7.6% to Rub 1,131 due to inflationary effects and improving product mix, partly offset by investments in pricing and promotions. All regions demonstrated robust LFL growth with healthy increases in customer traffic and basket size.  

Lenta's expansion resulted in an increase in the number of new maturing stores included in the LFL store base for comparison - during the first half of 2014 ten hypermarkets and one supermarket entered the LFL panel, including one hypermarket and the first supermarket in the second quarter.

The average hypermarket ticket in the second quarter increased to Rub 1,095 (+4.1% compared to the second quarter of 2013), somewhat less than the increase of 7.7% in the LFL average hypermarket ticket due to the increase in the proportion of younger stores which typically have slightly lower ticket size than mature stores.

Total customer traffic was up 36.9% in the second quarter of 2014 compared with the same period of the previous year, comprising 30.3% growth in hypermarket traffic and around a twenty-fold traffic increase in Lenta's new supermarket format, which was launched in April 2013.

The performance of Lenta's supermarkets in the second quarter of 2014 was ahead of our expectations in terms of sales, traffic and average ticket, despite the relative immaturity of the stores (just one store out of 14 had been operating more than a year as at 30 June, 2014). The supermarket format's share of Lenta's total sales increased to 2.5% in the quarter, up from 0.1% in the second quarter of 2013.

Guidance

Given first half openings and progress in the construction of new stores, Lenta confirms its initial guidance of 24 hypermarket and 15 supermarket openings in 2014. The Company expects these store openings to translate into an increase of at least 30% in total net selling space for 2014. We have also made good progress in building our new site pipeline and maintain our long-term target to double net selling space over the three years to December 2016. Based on second quarter results and successful execution of our store opening programme, we expect sales growth in the range 34-38% for the full year 2014.

Over the last 12 months, Lenta has invested heavily in expanding its store base, opening 22 hypermarkets and 13 supermarkets, including 14 hypermarkets in the fourth quarter of 2013. The proportion of younger stores, which typically have lower sales and higher costs as a percentage of sales than mature stores, has therefore increased significantly. As a result of this expansion, total SG&A expenses rose significantly faster than sales in the first half of 2014. SG&A expenses as a percentage of sales in LFL stores remained stable, reflecting our continued focus on productivity. We have also continued to work on improving our price positioning and the strength of our promotional offers, as we did last year, and continue to benefit from improvements in supplier conditions, supporting our growth. We expect the balance of these dynamics to result in a different shape to the evolution of this year's EDITDA margin for Lenta. Specifically, for the first half it will mean an adjusted EBITDA margin as a percentage of sales for the first half of 2014 around 1.2 percentage points below the level of the same period of last year. During the second half we anticipate that Lenta's EBITDA margin will both reap the benefits of the step up in investment in growth as well as be supported by the annualisation of last year's second half margin reduction. We believe that the combination of these elements will contribute positively to our EBITDA margin for the second half of 2014. Lenta will report first half 2014 financial results in detail on 4 September 2014.

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 82 hypermarkets in 47 cities across Russia and 14 supermarkets in Moscow and the Moscow region, with a total of approximately 544,000 sq.m. of selling space. The average Lenta hypermarket store has selling space of approximately 6,400 sq.m. The Company operates four distribution centres that service hypermarkets and one dedicated to supermarkets.

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 27,800 people as of 31 December 2013.

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.