Russian O'key retailer could IPO discounter format Yes!

Russian O'key retailer could IPO discounter format Yes!
Russia retailer O'key could hold an IPO of its discounter format "Yes!" to fund growth
By bne IntelliNews May 15, 2018

Russian retailer O'key could hold an IPO of its discounter format "Yes!" (Da!), CEO of the group Miodrag Borojevic told Reuters on May 14, adding that the offering might take place once the discounters become profitable in the 12-18 months horizon.

Launched in September 2016 currently Yes! counts 67 stores in the Moscow region and several adjacent regions. Either an IPO or a large private investor will provide the funding to needed to boost the expansion of the chain, according to Borojevic. 

The CEO confirmed the developing trend of hypermarket format decline, noting that while currently O'key relies on hypermarkets for 94% of its revenues, this is expected to change in the next 5-10 years as the hypermarket format is losing popularity. Discounters account for only 5% of O'key revenues at the moment. 

While the company lost sales in the hyper- and supermarket segment sales with a 3.5% y/y decline, the sales in discounters jumped 56% y/y in the fourth quarter of 2017. 

O'key reported 1% year-on-year decline in fourth-quarter sales to RUB48.9bn and 1% y/y growth in sales to RUB174.3bn ($3.1bn) for 2017 overall, lagging behind the sales growth numbers posted by bigger rivals Lenta, Magnit, and X5 Group. 

"Overall, we view the results as weak, but expected, by the market, considering the stores base optimization and overall industry trends," Alfa Bank commented on January 26. 

 

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