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Message from the CEO

In October 2017, our company held an IPO on Moscow Exchange becoming the first publicly traded company on the Russian fashion retail market.

Anton Titov
CEO of Obuv Rossii Group

We have achieved such impressing results due to the original business-model, one the most professional teams in our sector and great challenge that the Russian footwear market opens for our company. We intend to further actively grow, consolidate the market and show high financial performance.

Obuv Rossii is one of the few shoe retailers in Russia that has successfully implemented a diversification strategy, developing distinct brands positioned to targeted groups of regular customers. Our company is a leader in the mid-price shoe market and one of the top two shoe companies in Russia, in no small part due to our successful implementation of this strategy over the past ten years [1].

We achieve strong financial results: in 2018, the Group’s revenue increased by 9% year-on-year to RUB 11.55 bln. The company has high efficiency: EBITDA increased by 4.3% year-on-year and amounted to RUB 2.86 bln. The net profit grew by 1.7% year-on-year to RUB 1.33 bln. EBITDA margin accounted for 24.7%.

Obuv Rossii’s successful model consists of several business lines that collectively produce a synergetic effect. The core of our business is retail, which includes both traditional and online sales channels. We take a branding approach and develop all the range of goods presented in our stores — footwear, accessories and related products, — under our own brands. Development of our financial services offering is a key element of our retail strategy: it makes it possible for us to build long-term relationships with customers and to increase our revenue and profit. We also have manufacturing operations, which enable us to develop and offer unique collections of footwear, to test and introduce new technologies and materials and to enter new markets.

The promising business area for our company is development of omnichannel sales model, our own online-stores and online-services for our customers. In 2018 the e-commerce sales grew by 10.3%, their share in the retail revenue reached 13%. In future, the development of our own stores will be a priority for us; in 2018, their share in the total e-commerce sales amounted to 90%.

Modern stores are not just shelves and products; they are multi-functional centres that offer a whole array of services for customers. The lines between retail formats are getting blurred and our retail outlets include shoe salons, collection points for online orders, and service centres where customers can apply for loans, pay for services, make instalment payments, buy insurance, etc. For us, these additional services represent a non-standard loyalty programme that enables Obuv Rossii to further develop long-lasting relations with its customers.

We have already established a successful track record in the capital markets. We are the first publicly traded company on the Russian fashion retail market, as well as Obuv Rossii Group is the first and only Russian shoe retailer to issue bonds. Using different financial instruments, we diversify the sources of finance and enhance our opportunities for financing our business development programmes. Our bonds and shares were included in Moscow Exchange’s Growth Sector — a new trading segment for small- and mid-cap issuers. We remain committed to working together with our existing and future investors.

Looking forward, we are very well placed to continue our growth, and to improve our financial performance. Our growth strategy is supported by the positive trend on the Russian footwear market: according to Discovery Research Group forecasts,for the next five years the market is expected to grow at an average annual rate of 4-6% in volume terms and 7-10% in monetary terms.Our strategic mid-term goal is to significantly increase our market share and become the leader in the Russian footwear market by brand awareness, retail operations, profitability, retail IT infrastructure and level of omni-channel development.

Sincerely, Anton Titov,
CEO of Obuv Rossii Group

[1] According to Discovery Research Group as of 31.12.2018

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