New strategy of Detsky Mir for 2012-2016

2011-11-03



The Board of Directors in Detsky Mir Group, a large Russian retailer of children’s goods, has signed a new development strategy for the next five years, according to which the company store count is to double from the current 134 units, as well as double yearly revenue (RUB 20bn ($664.4m) in 2010). The strategy is to help the company to improve its financial condition – since 2007 the company has reported negative financial results.

To reach the state goals, the company intends to grow goods turnover by a minimum of 30% and reduce the assortment from 80,000 to 45,000 SKUs. This is to allow them to order directly from producers, avoiding intermediaries. In addition, the company intends to improve its logistics scheme, as well as the display of goods in the stores.

In H1 2011, Detsky Mir reported a net loss of RUB 870m ($28.9m) and revenues of RUB 9.2bn ($305.6m). As reported by Retail Update Russia, Moscow city authorities are to cover the debt commitments of Detsky Mir if the company defaults during the next three years. The city authorities will provide RUB 1.2bn ($37.4m) annually in government guarantees to Detsky Mir-Tsentr, the operator of Detsky Mir stores, until 26 May 2015 in return for the retailer’s shares, property and land rental rights.