Russian supermarket chain Lenta's core profit slumped 62% in the first quarter of 2023 on an annual basis, the retailer said, due to weak consumer demand, high inflation and economic uncertainty.
The group said earnings before interest, tax, depreciation, and amortisation (EBITDA) were RUB 2.6 billion (€29 million) during the period, compared to RUB 6.9 billion (€77 million) in the first quarter of 2022.
Overall sales fell 5.8% to RUB 124.6 billion (€1.4 billion), while like-for-like sales were off by 5.6%.
Not 'Satisfied' With The Results: CEO
CEO Vladimir Sorokin said the company was not "satisfied" with the results, attributing the weak performance to "the high base effect of the last year and macro trends, which are having a considerable impact on Russian retail as a whole."
There was "subdued consumer demand amid rising inflationary pressure and a high degree of uncertainty" across the Russian economy, he said in a statement.
Real disposable incomes – a measure of household living standards – dipped 1% in 2022, according to official statistics, as the fallout of Russia's military campaign in Ukraine and the imposition of Western sanctions weighed on the economy.
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Lenta said uncertainty spurred consumers to visit stores less frequently and to buy cheaper or fewer items on each visit.
The company said it would continue to invest in its online business, where sales rose 1.1% on an annual basis to account for RUB 11 billion (€120 million) during the quarter.
Sorokin added, "Taking external factors into account, we are focusing on what we can influence: developing our business and adapting our offer to meet the needs of consumers. We are expanding our product line in lower price segments; actively working on promotions; testing new formats, including hyper-economy; and also continuing to work on cost optimisation."
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