The founder of Eldorado is creating a chain of shoe stores

The founder of one of Russia's largest household appliance chains, Eldorado, Igor Yakovlev has taken up a new business: as Kommersant found out, he is investing about $150 million in creating a chain of inexpensive Kari shoe stores in Russia, Poland, Kazakhstan and Ukraine. By the end of 2012 alone, 150 retail outlets should be opened.

A top manager of a Moscow shoe chain spoke about the new project. According to him, Kari stores will sell women's and men's shoes under their own brands, produced to order. The operator became Kari LLC, the company was headed by the ex-finirector of Eldorado Ukraine Valentin Dmitriev, Igor Yakovlev confirmed to Kommersant.

He plans to invest about $150 million in the shoe business in the first year. “Affordable footwear” stores will open in Russia, Poland, Ukraine and Kazakhstan, the first outlets will appear in July, by the end of the year there should be 150 of them, “if suitable premises can be found” (about half are in Russia). The area will be on average 300 square meters. m. The order for the first batch has already been placed in China. “I considered different areas of retail, but I believed in this project,” noted Mr. Yakovlev.

Igor Yakovlev has been eyeing new projects since 2009, his friends say. Then he lost control over Eldorado: the Czech PPF and the Italian Generali signed an agreement to convert part of the network’s loan (approximately $300 million out of $500 million) into a controlling stake (50% plus 1 share) and shares in Mr. Yakovlev’s development projects - Advantage Group and "Real Estate Development". In September 2011, Mr. Yakovlev sold the remaining 50% of Eldorado shares to PPF: the group’s reporting stated that the entire network was valued at $500 million for the deal. After this, he retained ownership of the Eldorado business in Ukraine (91 stores) and 51% of the largest chain of household appliances in Kazakhstan, Sulpak.

The businessman has been interested in shoe retail since about the spring of 2011: he negotiated the purchase of the Obuv.com chain (about 50 stores), market participants said, but the deal did not take place, says one of the sources.

According to Euromonitor, the footwear market in Russia in 2010 grew by 16.5%, to $18.7 billion; in 2011 it was expected to grow to $21.8 billion. In 2012, an increase of 17% is expected. The market capacity in Ukraine, Kazakhstan and Poland is much smaller: according to Euromonitor estimates, $1.78 billion, $998 million and $2.85 billion in 2010, respectively. The Ukrainian market is growing the fastest - by 18% annually, the Polish market is the slowest (less than 2%). All four markets are poorly consolidated. In Russia, the leader is the Tsentrobuv chain (more than 500 stores) with a share of only 3.8% in 2010, followed by sports shoe sellers Adidas (2.4%) and Nike (1.4%). In Poland, the largest network NG2 has only 4.4% of the local market, in Ukraine the operator Intertop has 10%.

The general director of Centrobuv, Andrei Nesterov, warns that clothing and footwear retail is different from the trade in household appliances or food products: experience plays a big role in the formation of successful collections. But the footwear business has high margins: Centrobuv in 2010 showed an EBITDA margin of 20-22%. For the largest grocery retailers, this figure in 2011 did not exceed 8%; for household appliances and electronics chains in the first half of 2011 it was slightly higher than 4%.

Kristina Busko, Pavel Belavin, Ksenia Shamakina

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