Last week in the retail business was marked by several celebrated initiatives of the state ministries and authorities: cessation of the supermarkets’ night work, state control over the medicine prices, raising the excise duties for alcohol, etc.
Last week it became known that Magnit Ltd. (owns the Magnit network) may perform the largest stock floatation among the Russian companies from the crisis beginning. The retailer hired the investment banks VTB Capital and Morgan Stanley for selling the additional emission at the London stock and Russian RTS and MICEX during this autumn. The network is planning to receive over $300 million for approximately 10% of the shares.
X5 Retail Group N.V. declared the operational results for the second quarter and 1st half of 2009. At the second quarter of 2009 the consolidated net retail receipts increased at 46% in rubles up to 67 826 million rubles and at 7% in USD up to $2100 million in comparison with the same period in 2008. According to the proforma the increase of the net receipts came up to 26% in rubles. In USD terms the net retail receipts decreased at 8% according to the proforma.
The position of the General Director of St.Petersburg network Lenta was offered to Yan Dunning, the head of the Ukrainian Metro Cash&Carry, who has been working at the Russian Metro department for 6 years. His candidacy was discussed during the meeting of company’s board of directors held on June, 30th. The new director will have to speed up the Lenta’s development prevented by the owners’ conflict within the last 2 years. Alexei Bobrov, the present director of Lenta (he’s also the chairman of the network’s board of directors), was appointed for this position in April 2009. Mr Bobrov only mentioned that his contract with Lenta expires at the end of this year.
The Ministry of Economic Development, Investment and Trade of Samara Region suspended the validity of hypermarket Auchan’s license for the retail alcohol trade in the regional center. The authority decided to take such a decision after more than 2000 bottles of counterfeited alcohol were withdrawn at the store. Moreover, the Ministry addressed the Moscow region Arbitrage Court demanding to divest the Samara Auchan store of the alcohol selling license. Last week the hypermarket continued to sell alcohol pleading that they didn’t receive the notification of the license suspension.
On Wednesday, July 8th, started the bankrupt process of Samokhval Ltd., the former retail operator of the group with the same name and lately renamed into Merkuriy Ltd. The name was changed after Samokhval Ltd. filed an application of its own bankruptcy and transferred the retail business along with the trade mark to the new Samtorg Ltd. The creditors began expressing their indignation at the fact that Samokhval’s assets decreased at 4 times within half a year.
The store network “Sem’Ya” entered Petrozavodsk, where they plan to open 11 stores till the end of the year. According to the analysts’ estimates, entering the regions is quite cheaper for the retailers now. The first “Sem’Ya” store in Petrozavodsk will open in July, the rest ones – till the end of the year.
It became known that already in autumn the local public authorities might forbid supermarkets to work at nights and on week-ends. This will probably give the possibility for the small and medium-scale business to develop. Minpromtorg is ready to include the norm of limiting the large stores’ working hours at nights to the bill being prepared right now. This idea was offered by the products’ producers during one of the meetings concerning the trade development held last week by Stanislav Naumov, deputy minister. The deputies of the State Duma also offer to limit the trade networks’ working hours in their variant of the Trade Law. Vladimir Putin, the Russian Prime-Minister, told Minpromtorg to use the productive ideas of this Law.
Vladimir Sadovin, the general director of the supermarket network Azbuka Vkusa, thinks that about 30% of the sellers will loose their job in case the night trade in supermarkets is forbidden. As he clarified, the time period from 11p.m. till 6a.m. comprises about 20% of the whole business. The top selling lasts till 11-30p.m., but the night trade involves the work of many people, which means that if the night trade is forbidden, about 30% of people will loose their job.
Boris Gryzlov, the Speaker of the State Duma, hopes that the Trade Law, which stipulates 2 different drafts – one from the deputies and the other from the Ministry of Industry and Trade of the Russian Federation, will be considered by the Chamber at the beginning of the autumn session. According to Gryzlov’s words, we have all the possibilities to remove the difficulties on the both drafts by September.
The scandal around the Cherkizovskiy market checked in total by 5 enforcement agencies last week continued on Tuesday. Several dozens of Chinese and Vietnamese sellers tried to block the Tschelkovskoe highway as a protest, but were captured by OMON. The law enforcement agencies said that all the arrested would be deported from Russia, and the Cherkizovskiy market would stay closed at least for three more months.
There appeared the information that in order to increase the budget income the government is going to significantly increase the payment rates of the excisable goods consumers from 2010. According to the government’s draft documents, the alcohol excises will be raised at the maximum rate – at 15-30%, those for ethanol, tobacco and automobiles will be raised at the less rate. The government is going to settle the question of establishing the minimum price for alcohol products, changing the system of excise recovering and the final concentration of the market control authorities at Rosalcoholregulirovanie, the authority established not long ago.
Last week it also became clear that the conflict between Euroset and MTS didn’t end: the retailer applied 4 actions at once. As the court’s documents indicate, on July, 3 the Moscow Arbitrage Court registered 3 actions of “TD Euroset” to OAO “Mobilnye Telesistemy” (MTS) and 1 action of “Euroset-Retail” Ltd. to the same operator. The sum of claims is not mentioned in the actions. The actions refer to the question of invalidating the contracts between Euroset and MTS on delivering the iPhone smartphones, the operator’s sim-cards, as well as the question of the mutual offsetting between the companies.
Euroset published its own forecast of the mobile sales volume in 2009. The company suggested the market limiting almost at 40%. However, the trade analysts considered this forecast to be too pessimistic. For instance, Teleforum, whose business is closely connected with the North-West mobile retailer, on the contrary, registered the increase of the sales volume during the first 6 months.
Alexander Malis, the president of Euroset company, said that in the second quarter Euroset’s receipts from sales in Russia (3700 stores) decreased at 5.4% up to 10.943 billion rubles in comparison with the previous quarter, and EBITDA increased from 218.79 million to 610 million rubles. As a result, the EBITDA profitability increased almost at three times – from 1.89% to 5.58%. He didn’t reveal the profits offering to wait for Vympelcom reports, which purchased 49.9% of Euroset in October 2008.
As Alexander Malis, the retailers’ president, informed, Euroset performed the restructing of its main office and dismissed 30% of the staff. According to his words, the restructing was necessary for making the company’s management structure more effective, clear and compact. They had to dismiss several departments for removing the chains, which deprived the management structure of its flexibility. The work of several departments was changed completely. At the same time the restructing didn’t cover the sales consultants.
After moving under control of Alfa-Group, the computer seller Sunrise decided to transfer its business to a new company. All the selling equipment of Sunrise costing 343.9 million rubles doesn’t belong to the network any more; as Alexei Samoilov, the director of EAA Asset Management Consulting, affirmed last week, its new owner is Sunmart Ltd. According to his words, this became known when the bailiffs wished to distrain the property of Sunrise Nedvizhimost Ltd. According to Samoilov’s words, a representative of Sunmart Ltd. met the bailiffs and affirmed that all the equipment belonged to this company, and Sunrise Nedvizhimost Ltd. was renting it. We failed to contact the bailiffs.
The dates of launching the projects of the Swedish company IKEA in Omsk were finally coordinated. IKEA store will start working on July, 14th, and Mega shopping center will be further opened step-by-step.
Ingvar Kamprad, the founder of IKEA, thinks that his company should continue dismissing the staff. IKEA has already limited the number of the working places at about 5000 people. The working places in logistics and production will additionally be limited. This is connected with adapting to the sales, which are rather lower than it was planned, as well as with increasing the effectiveness.
On July, 8th Minzdravsotsrazvitiya published at its web-site and sent for coordinating the bill On drug circulation, which is to replace the valid law On drugs. The separate article of the document is devoted to the state control of prices. It’s planned to control the cost of the so called essential drugs (the list is accepted by Minzdrav every year and includes about 35% of the assortment). In case the bill is accepted, the selling producer prices and the maximum retail and wholesale price markups will be set according to the special method, which is to be set by the government (according to the words of the Federal Tariff Service representative, it’s being developed now).
OAO “Torgovaya Set’ “Aptechka” (the operator of A5 apothecary store network) united its purchases with 4 Moscow networks – “Neo-Pharm”, Hexal, “Stil’ Pharma” and “Gorzdrav” – in order to receive up to 10% discount from the suppliers. In total it will consist of 301 apothecary stores in Moscow and Moscow region. In 2011 A5 might purchase the partners’ business, thus increasing the cost of its company before selling it to X5 Retail Group.
During the annual meeting the shareholders of apothecary network “36,6” changed Michael Obermayer, the independent director in the board of directors, to Victor Vasiliev, the company’s representative. Other members of the board of directors didn’t change. The representatives of Prosperity Capital Managment and Marshall Capital Partners investment funds weren’t able to join it. As the phammarket experts remind, the latter planned to purchase a significant part of “36,6” additional emission. However, following the results of the annual meeting, the deal is either cancelled or postponed for an indefinite time.
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