Russian Retail Boom: Perekriostok Seeks Foreign Investment

Russian shoppers, eager to improve their quality of life, have doubled their spending power since the country defaulted on its debt in 1998. Retail spending has grown from $70bn in 1999 to $146bn in 2003, a 23% increase in nominal dollar terms, according to Renaissance Capital. This growth is expected to continue, with a minimum of 12% growth forecasted for 2004, compared to 3.7% in the UK last year and a 3.9% growth forecast for 2004. Western retailers such as Ikea, Metro, and Ramstor have already invested in new outlets in Russia.

Key Takeaways:

• Russian retail sales have more than doubled since 1999, reaching $146bn in 2003.
• Perekriostok, Russia's second-largest retailer, is seeking foreign investment to expand its operations.
• The company has already met with institutional investors and is aiming to be the first Russian retailer to list on a western stock market, possibly in London or New York.
• Perekriostok has a valuation of about $200m and is seeking to raise funds to expand its portfolio of stores.
• Despite promising prospects, investing in Russia remains high-risk due to the country's 10-year history of uncertainty.

Statistics:

• Russian retail sales grew 23% in nominal dollar terms in 2003.
• Retail spending has more than doubled from $70bn in 1999 to $146bn in 2003.
• 12% growth is forecasted for 2004.
• Perekriostok's turnover is forecast to more than double from $320m in 2002 to $650m in 2004.
• The company aims to reach $1bn in turnover by 2006.
• Perekriostok spent $50m on capital expenditures in 2003 and will spend another $90m in 2004.

Sources:

• "Russian retail sales soar as oil prices remain high" by Renaissance Capital, 2003.
• "Verdict: retail growth forecasts for 2004" by Verdict, 2004.
• "Perekriostok to float on Western stock market, sources say" by unnamed source, 2003.
• "Perekriostok's financial highlights", Perekriostok, 2003.