OREANDA-NEWS. OJSC Pharmacy Chain 36.6 [RTS:APTK; MICEX:RU14APTK1007], the leading Russian pharmaceutical retailer, announces unaudited retail sales and operational results for 4Q and FY 2012 according to the management accounts.

SALES:

Pharmacy Retail Sales increased by 3% in 4Q 2012 and reached RUR 3 959 mln;

In 12M 2012 Pharmacy Retail Sales reached RUR 14 899 mln., which is an increased of 3% in y-on-y terms;

As of the end of 2012 Pharmacy Chain 36.6 operated 842 stores in 24 regions of Russia;

During 12M 2012 49 stores were opened organically and 212 were closed;

As of the 31st of December 2012 Pharmacy Chain 36.6 operated 8 stand-alone optical outlets and 24 additional optical departments within pharmacies.

OPERATIONAL DATA:

As of the 31st of December 2012 Pharmacy Chain 36.6 operated 181 ‘Leko’ stores;

Sales growth at LEKO reached 20% in 4Q 2012, in 12M 2012 sales at ‘LEKO increased by 13% in y-o-y terms;

Consumer traffic in 4Q 2012 increased by 9% at ‘LEKO’ stores. Consumer traffic in 12M 2012 increased by 1% at ‘LEKO’ stores in y-o-y terms;

Like-for-like sales in 4Q and 12M 2012 increased by 2% versus the same periods in 2011, average ticket in 12M 2012 increased by 16% and reached RUR 388;

As of the end of 4Q 2012 Pharmacy Chain 36.6 operates 564 like-for-like stores.

PRIVATE LABEL:

In 12M 2012 the private label sales increased by 48% in y-o-y terms and reached RUR 2 983 mln;

In 12M 2012 a share of private label sales in the total retail pharmacy sales increased by 5 percentage points and reached 18%.

Number of SKUs in active portfolio increased by 2 983 SKU.

Marina Penkova, Chief Executive Officer “MC ‘Pharmacy Chain 36,6’”:

The main priorities of the retail segment in 2012 year were to change the negative trend in consumer traffic and to increase profitability level through the pharmacy chain structure optimization.

To achieve the above objectives the company has taken the following steps: in the beginning of the last year a new brand of pharmacies ‘LEKO’ was launched aiming at the economy market segment. In 2012 year the project resulted in 13% increase in sales, there is a clear sign of improvement as the consumer traffic increased by 9% and sales increased by 20% in the 4Q2012.

Other notable achievement is the Moscow region strong result for 2012 year. Moscow region is the main driver to sales as it occupies over 50% of the retail segment sales. In the 4th quarter 2012 the like-for-like sales in Moscow region increased by 10% and the consumer outflow was stopped - this is a sign of turnaround, especially due to competition increased over the last few years.

Also in 2012 the Company was focused on improving or weeding out non-performing stores. However net number of pharmacies in operation was reduced by more than 160 stores over the year, the company managed to achieve the positive dynamic in sales: growth of 3% can be considered as a supporting sign for further pharmacy chain structure optimization.

In 2013 the company continues to develop pharmacies aiming different price sectors in order to fulfil consumer needs and expectations.

Private label project has shown strong results: in 2012 every second customer of the company purchased private label products. Own expertise and strong value chain allowed the company to further balance assortment portfolio in all categories of Health and beauty products as well as to strengthen its position in the premium segment and in the segment of innovative cosmetic.

The mature private label product portfolio on the Russian retail pharmaceutical market is a strategic competitive advantage ensuring the profitability growth of 36.6.

The company is launching a new loyalty program and implementing it over the whole pharmacy chain in 2013. The new loyalty program allows the company to make specific proposal to consumers providing them with benefits formed individually in accordance with their personal purchase story. The launch of the new program became possible due to the automating process completion and a new pharmacy software introduction that enabled an increase in efficiency of the assortment planning. The new software will facilitate the delivery service development and on-line pre-booking of pharmaceuticals.

In 2013 the Company continues to work closely with the partners and vendors to improve the commercial and credit terms for our purchased goods. Now the Company continues to extract cash from current stocks while simultaneously optimizing the assortment plan.

It is our key priority in 2013 to secure a long term funding solution for our retail business.

Management team is taking all possible steps to improve the overall health of the Company and find a funding solution. As we move further, our focus will remain towards optimizing current operations, rigorously attacking costs, and providing our customers with the products and services they need.