April 20, 2017 / 3:30 PM / 10 months ago

Russia's Lenta trims store capex guidance with eye on acquisitions

MOSCOW, April 20 (Reuters) - Russian food retailer Lenta on Thursday trimmed its store opening capex guidance, citing the need to have cash in hand for possible acquisitions.

* The company has reviewed its 2018 new store opening programme and has decided to shift some pre-investments in 2018 stores from H2 2017 into H1 2018.

* As a result, 2017 capex guidance has been reduced to 30-35 billion roubles ($534-623 million) from 40 billion roubles.

* The total number of new stores planned for 2018 is not affected, but the proportion opened in H2 2018 will be higher than previously planned.

* Shifting capex from H2 2017 to H1 2018 will reduce leverage, providing more financial flexibility if small acquisition opportunities appear later this year or next year.

* “There is a continuous offer of small chains, small individual stores or small hypermarket businesses,” Jan Dunning, Lenta chief executive officer, told a conference call with analysts.

* The company saw total sales grow 17.2 percent year on year in Q1 2017 to 77.9 billion roubles.

* Like-for-like sales decreased 1.7 percent year on year with LFL traffic down 2.0 percent and LFL ticket up 0.3 percent.

* Sales growth came under pressure from falling inflation, one day less in February than last year, higher competition between its own stores due to rapid expansion in cities with existing Lenta presence.

* “We hope to see some improvement in the environment later in the year and are putting sales initiatives in place to capitalize on this to deliver a pick-up in sales growth,” Dunning said. ($1 = 56.2150 roubles) (Reporting by Maria Kiselyova; Editing by Elaine Hardcastle)

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