Russian Retailer Magnit to Add 10,000 Stores Within Five Years
OAO Magnit (MGNT), Russia’s largest food retailer by market value, plans to open almost 10,000 stores in the next five years, or more than five a day on average.
Magnit wants to double the number of convenience stores to 12,000 by the end of 2017, and to quadruple the number of hypermarkets to 500, the Krasnodar, southern Russia-based retailer said in e-mailed response to questions. The company also seeks to boost the number of cosmetics stores to 4,000.
Magnit, controlled by billionaire Chief Executive Officer Sergey Galitskiy, has doubled its store network in the last three years, while the shares have risen more than 150 percent. Magnit has a market value of about $21 billion in London, exceeding French retailer Carrefour SA’s (CA) $19.5 billion.
Magnit’s long-term targets look aggressive and may require about $12.8 billion of capital spending during the next five years funded by a sale of new shares, Mikhail Terentiev, an analyst at Otkritie Capital, said in a note today.
The retailer plans to use cash flow and borrowing in equal proportions to fund growth, Vedomosti reported today, citing Magnit CEO Sergey Galitskiy. Capital spending will be as much as $1.8 billion this year, the company said in the e-mail, without disclosing plans for future years.
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