OREANDA-NEWS. December 17, 2010. OJSC Pharmacy Chain 36.6 [RTS:APTK; MICEX:RU14APTK1007], the leading Russian pharmaceutical retailer, announces unaudited sales and operational results according to the management accounts.

Group sales in Q3 2010:

Group’s consolidated sales reached RUR 4 867.5 mln in Q3 2010 versus RUR 4 579.1 mln. in Q3 2009, a 6.3% increase in ruble terms y-o-y;

Pharmacy Retail Sales reached RUR 3 412.6 mln versus RUR 3 528.8 mln in Q3 2009, a 3.3% decrease in ruble terms y-o-y;

Sales of finished goods of the production unit Veropharm increased by 37.8% in ruble terms and reached RUR 1 260.8 mln versus RUR 915.2 mln in Q3 2009.

Other non-core businesses increased by 18.7 % in Q3 2010 in ruble terms compared to the relative period of 2009.

Artyom Bektemirov, CEO, OJSC Pharmacy Chain 36.6:

"Dynamic development of the Company’s production sector, gradual recovery of the medicine out-of-pocket market and the customer demand in consumer sector, as well as the Company’s pricing policy revision intended for the drugs price reduction and private label goods offer expansion in the pharmacies reversed the trend of the dramatic sales decline of 2009 and let the Company reach a considerable consolidated sales growth in Q3 2010".

Still negative Retail segment sales dynamics in Q3 2010 is caused by the operating sales centers reduction (closure of non- performing stores) in 2009 – 1H 2010. This period is currently brought to an end. Thanks to the taken measures, Pharmacy Chain 36.6 succeeded in operating stores efficiency improvement already by the end of Q3 2010. At present the Company aims at gradual chain expansion since 2011 and it has all the necessary prerequisite for it.

Retail:

As of the end of Q3 2010 Pharmacy Chain 36.6 operated 997 stores in 29 regions of Russia.

During Q3 2010 3 stores were opened organically and 5 were closed (14 stores were rebranded and 1 store was reformatted).

As of the end of Q3 2009 Pharmacy Chain 36.6 operated 10 stand-alone optical outlets and 20 additional optical departments within pharmacies.

As of the end of Q3 2009 Pharmacy Chain 36.6 operated 17 ELC stores, 5 of which were opened within Q2 2010.

Early Learning Center revenue consolidated by the Group (which is 50% of the total revenue) reached RUR 51.4 mln, a 49.8% growth in Q3 2010 versus Q3 2009 (RUR 34.3 mln) and a 9.0% growth versus Q2 2010 (RUR 47.2 mln).

Operational data for the retail unit:

In Q3 2010 average check across the network stood at RUR 248, in Moscow – RUR 350, an increase of 8.3% and 6.7% respectively in ruble terms versus Q3 2009.

During 9m 2010 average check across the network stood at RUR 245, in Moscow – RUR 346, an increase of 5.2% and 3.3% respectively in ruble terms versus 9m 2009.

Average store trading square in Q3 2010 is 63.0 sq meters, an increase of 1.0 % versus Q3 2009.

Like-for-like sales in comparable stores:

As of the end of Q3 2010 the Company operates 845 comparable stores.

L-F-L sales growth in these stores reached 5.5% as compared to Q3 2009.

Q3 2010 demonstrated as well a positive tendency of the number of purchases (number of receipts) growth in L-F-L stores compared to the relative period of 2009.

Besides, sales per trading sq.m. in L-F-L stores in Q3 2010 showed a growth, which underlines the achievement of positive results in operations efficiency improvement; the measures taken in this respect will be continuously applied in Q4 2010 and the next year.

Private label:

In Q3 2010 the private label sales reached RUR 300 mln (in comparable stores), which represents a 10.5% growth in ruble terms compared to Q3 2009.

During 9m 2010 the private label sales reached RUR 850 mln (in comparable stores), which represents a 7.8% growth in ruble terms compared to 9m 2009.

In Q3 2010 a share of private label sales in the total turnover reached 9.5% (compared to 8.0% at the beginning of 2010) due to the launch of 128 new SKU and promotion programme of the private label goods.

Number of SKUs has increased by 30.7% from 713 at the end of Q3 2009 to 932 by the end of Q3 2010. Parapharmaceuticals constitute the major part of private label goods assortment; a share of OTC drugs, vitamins and supplements equals to 10% of the private label goods turnover.

Consistently growing number of SKUs and a share of the private label goods in the total turnover attests to the Company’s intention to develop this perspective direction. The Company anticipates that favourable market environment, increasing demand for the private label goods together with the launch of new products will contribute significantly to the retail profitability in Q4 2010.

The cornerstone of the Company’s development strategy in 2011 will be strengthening of the positive tendencies of 2010, i.e.: providing further customer traffic improvement, highly marginal goods sales growth and costs per unit reduction, aimed for the sustained management of the Company’s profit through building- up of quality administration instruments.