Page 42 - bne_Magazine_October_2017

42 I Eastern Europe bne October 2017
Obuv Rossii, the Magnit of shoes, wants to IPO soon. Photos: www.obuvrus.ru
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economy was sliding into recession, as it ran up against its structural constraints. The conflict with the West following president Vladimir Putin’s aggression
in Ukraine just made everything worse. GDP had been running at around 6%
for almost a decade, but as the economy slowed, interest in Russia’s equity market shriveled and the IPO was called off.
Now Titov is back for a second attempt. Obuv has taken in a new investor, oligarch Mikhail Prokhorov, who made his initial fortune running the metallur- gical giant Norilsk Nickel. Titov would not give many details, but said that Prokhorov was a purely financial inves- tor and has a stake of around 25%.
Titov retains his boyish charm and ebul- lient nature – as well as his laser focus on the footwear business.
“The potential for growth in the Russian market is still very high,” Titov told bne IntelliNews in an interview from his headquarters in Novosibirsk. “Shoes wear out and have a life cycle of about two years. Russia’s economy is recover- ing now so people have more money
to pay for things like shoes. In the last two years the public were suffering from a price shock [following the sharp devaluation of the ruble at the end of 2014] but they are starting to recover from that shock now.”
The company declined to discuss details of the upcoming IPO, but bne Intel- liNews' market sources say the float should happen in October and Obuv will sell about 30% of its shares.
These boots were made for sellin’
Financially Obuv has been growing very fast. Sales have recovered from the recent crises and are now growing by about 11% a year, according to Titov. Over the last five years revenues grew by a compound annual growth rate (CAGR) of 31%, the ebitda CAGR has been even faster at a rate of 44%, while the ebitda margin is 25.5% for 2016.
The company had a small setback in August when it reported its first ever fall in retail sales in January-June 2017, thanks to a colder summer than usual