The retailer launched three new retail projects

The largest Russian clothing retailer in terms of number of stores, Sela, has launched three new retail projects: Fruit&Foot shoe stores, Sela Mix accessories stores, and Sela Kids children's goods stores. Since the summer, Sela has been negotiating the sale of a blocking stake to Capital International, Templeton and Aurora Russia funds, and new formats can make it more attractive to investors, experts say.

Natalya Chinenova, director of the company's Moscow office, told Kommersant about Sela's new projects. Pilot mono-brand stores Fruit&Foot and Sela Mix were recently opened in the St. Petersburg shopping center "Felicita", confirmed the manager of the development company "Makromir" (manages the center). Stores of new formats will occupy an area of 30-70 square meters. m (standard Sela is usually located on 250-300 sq. m). Investments in each without product content and rental costs - $0.7-1.5 thousand per 1 sq. m. m. Rent for such areas costs a minimum of $600 per 1 sq. m. m per year, says Ms. Chinenova. Sela independently plans to open about ten stores of new concepts in St. Petersburg and up to twenty in Moscow, and then will sell franchises.

The concept of Sela Kids was invented back in 2004, but then the project was frozen, says Natalya Chinenova. The first Sela Kids was opened in Krasnodar as a franchise, the second in Moscow in the Airbus shopping center this summer. Shops with an area of about 100 sq. m are aimed at children under 12 years old. Investments in one store with product content amount to $60-70 thousand; in total, Sela plans to open 30 such points in Moscow and St. Petersburg.

Sela Corporation was founded in 1991 in St. Petersburg as a clothing manufacturer. Now it unites 540 own and franchise stores of affordable clothing Sela in the CIS. In 2006, it received a license from the French Kookai to open women's clothing stores of the same name. Revenue in 2007, excluding franchisees, according to our own data, was approximately $250 million.

According to Natalya Chinenova, all new Sela projects should reach payback in 1.5 years - the company will finance them from its own funds, without borrowing. In the summer, Sela owners Arkady Pekarevsky and Boris Ostrobrod negotiated the sale of 25-30% of the network to the American group Capital International and a number of other funds, including Aurora Russia and Templeton. (see "Kommersant" dated July 14). Aurora Russia Investment Director Oleg Bystranov says that his fund remains interested in this investment, since “Sela is a leader in the mid-price segment of clothing retail.”

One of Sela's auditors claims that the deal with Capital International was prevented by the financial crisis. According to him, the fund noted "the high profitability of sales of the Sela children's line." “Perhaps their review caused the emergence of new concepts,” suggests Kommersant’s interlocutor. Arkady Pekarevsky himself admitted to Kommersant that, before attracting a financial partner, he wants to “carry out a reorganization and test new projects.”

Managing partner of Advance Capital Oleg Senkov says that having several concepts will make it easier for Sela to attract investment. According to Fashion Consulting Group CEO Anna Lebsak-Kleymans, the promise of Sela’s new strategy has already been proven by many major global retailers, in particular GAP, which is also developing children’s retail GAP Kids and Love accessories stores. Since the names of the new networks use the already well-known Sela brand, “they will not require additional advertising investments,” she argues. But shoe retail seems like a “risky project” to her. But, according to Natalya Demidova, general director of the National Shoe Union, shoe retail is not consolidated at all: clothing markets in 2007 accounted for almost 50% of all shoe sales in the country, which are estimated at $10-12 billion (annual growth by 10-15%).

Kristina Kommersant-Busko

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