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mobile apps increased by more than 5-fold y/y to 3.2mn.
M.Video plans to open 500 new stores and enter 100 cities this year from the 1,098 stores it was running at the end of March. However, that is only a 5%
found that once a customer has bought one product using the app they are much more likely to buy a second.
“We are moving from anonymous sales to a loyal customer base. So we use our OneRetail tech to identify the customer
The stock came into focus in June after Russian tycoon Mikhail Gutseriev, the founder of Safmar Group was added
to the EU sanction list. Safmar Group owned 60% of M.Video-Eldorado shares before control was passed to Gutseriev’s son, Said Gutseriev, and the father no longer owns or is involved in the business. Moreover, the minority shareholders, including MediaMarkt that gave up its Russian business to M.Video-Eldorado in exchange for
a 15% stake in the merged company, told Russian press the same week it had no intention of quitting its holding.
"Ceconomy, which owns a 15% stake in M.Video PJSC, does not intend to withdraw from the company's capital due to Mikhail Gutseriyev's inclusion on EU sanctions list" the company told Interfax.
The sanctions on Gutseriev senior are extremely unlikely to have any material impact on M.Video.
The company says that it will invest into capex to continue growing its network but only 20% will go into new openings, whereas 60% will go into IT, and the rest into maintenance. From the cash that is left over 100% of profits will be
“M.Video plans to open 500 new stores and enter 100 cities this year from the 1,098 stores it was
running at the end of March”
space expansion annually, as half of
the new stores will be in a small format (250-square metre Eldorados). This
is a trend in Russia seen across the
retail gamut, where stores are getting smaller and moving to locations that are physically closer to the customers.
"The consumer electronics market is expected to grow at just 5-6% CAGR, reaching RUB2.7 trillion in 2025 (RUB3.1 trillion including services)," Sberbank CIB forecasts. However,
most of the growth will come from
the online channel and the premium segment, where M.Video is strong. “The company should continue to dominate in the market, and sees its share of marketplaces at 10% over the long term,” analysts said in a recent report.
M.Video-Eldorado technology strategy is going to play a key role in the plan, as the really strong sales growth is already coming from online, which doubled in 2020, growing five times faster than the traditional sales.
“The retailer is also going to focus
on retaining existing clients in the OneRetail model. The share of registered customers making purchases through the web/mobile platform is now 42%, and they generate a higher purchase frequency and larger tickets. As the company promotes and enhances OneRetail, the ratio is anticipated
to grow to 84%,” Sberbank said in
a recent research note.
Getting customers to download the app is a key goal, as the company has already
in store at an early stage, when they are just thinking about a purchase. Our customers are more likely to stay with us if we can provide best selection
of models and personalised prices,” said Izosimov.
Switching to online has caught analysts’ attention and BCM GM has marked
the company up to a Buy, calling it
a growth story.
"The bright outlook stems from its 27.6% share of the Russia market via >1,000 branded stores, continued store expansion and innovation
(e.g., introduction of the ONE RETAIL
“Getting customers to download the app
is a key goal, a once a customer has bought one product using the app they are much more likely to buy a second”
concept) to meet changing customer behaviour amid the increasingly online era, accelerated by COVID," BCS GM said in a recent note, adding that retailer’s financials are stable, with
a comfortable debt repayment schedule.
VTB Capital (VTBC) did the same
in May, adding the company to its “most liked” stock recommendations with a Buy recommendation and
a target price for the stock of RUB8,800 per share and an estimated total return of 32%.
paid out as dividends. And as promised, the board recommended a dividend of RUB38 per share for 2H20, making
a total payment of RUB6.8bn ($89mn) of 100% of net adjusted income.
“The results so far in 2021 have been strong and we are confident that we are on track to reach our strategic plans to double GMV to 1 trillion by 2025,” said Izosimov. “The capex will remain less than 2% of the GMV.”
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