Russia's Yandex winds down e-grocery in Paris, hints at London exit

(Reuters) - Russian internet giant Yandex is gradually winding down the Paris operations of its e-grocery service Yango Deli, a spokesperson said on Thursday, citing poor performance and hinting that an exit from the London market could follow.

The service, which aims to deliver grocery orders within 15 minutes using darkstores - dedicated warehouses that cater only to online clients - also operates in Israel and under a different brand in its primary market of Russia.

"Yango Deli is gradually suspending its ultra-fast grocery delivery operations in Paris," a Yango Deli spokesperson said. "This was a pilot project with a small number of darkstores, and it has underperformed our internal targets."

The spokesperson also said its London unit was the subject of interest from other parties.

"The ultrafast delivery market in London is highly competitive and we see a considerable amount of interest in our business there, including from peers," the spokesperson said, adding that they couldn't give further details.

A source familiar with the matter said discussions about closing the Paris operation, which launched last summer, have been underway since early February, with the decision focused on performance.

In London, where the service began in autumn last year, the source said Yango Deli was looking at several scenarios, one of which is a possible sale, for preserving what the team has achieved.

The company operates five dark stores in London, with around 2,500 SKUs (stock keeping units). Customer retention is as high as 40%, which Yango Deli said is around 1.5 higher than the market average, according to its own estimates.

The London unit is operated locally by Deli International Limited, a UK company.

YANDEX WOES

Nasdaq-listed and registered in the Netherlands, Yandex and its subsidiaries have so far avoided Western sanctions that have crippled Russia's access to global financial systems and supply chains.

Former Deputy CEO Tigran Khudaverdyan quit after the European Union imposed individual sanctions on him, something Yandex said it had been shocked and surprised to learn.

The EU has criticised Yandex for warning Russian users looking for news about Ukraine on its search engine of unreliable information on the internet.

Meanwhile, the company has flagged that it lacks funds to cover a potential convertible bond redemption due to a trading suspension of its Nasdaq-listed shares, while earlier in March a data leak exposed personal user data on its food delivery app, Yandex.Eda.

(Reporting by Reuters; Editing by Kirsten Donovan)

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