Azernews.Az

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.