RAEX (Expert RA) Upgraded Obuv Rossii Rating to ruBBB+
Novosibirsk December 18 2017
RAEX rating agency (Expert РА) upgraded creditworthiness rating of the Obuv Rossii Group to ruBВB+. The rating outlook is stable. Previously, the Company had the ruBBB rating with stable outlook.
The Obuv Rossii Group is one of the two largest footwear retailers in Russia and the leader in the mid-price segment of the Russian footwear market, that includes 521 stores in more than 140 cities of Russia and two production facilities. The rating analysis was made based on consolidated IRFS reports of Obuv Rossii Group.
The key factor underlying the decision of the agency to upgrade the rating is increasing Company’s creditworthiness in large part because of IPO in October 2017, which allowed the Company to attract RUB 5.4 bln after settlements with IPO bookrunners. As a result, the capital doubled as compared to its IFRS level as of 30 June 2017, and the debt load significantly reduced, as a bigger part of the funds were used by the Company to repay current debt burden. This fact had a positive effect on key financial indicators. In addition, internal financial stability of the Company enhanced, and its dependency on short-terms credits decreased.
“Upgrading of our Company’s rating is an important indicator that the correct financial strategy was chosen. This year, Obuv Rossii started IPO, and due to that we have a new quality instrument for long-term financing our development programs,” comments CEO of Obuv Rossii Anton Titov. “Independent high assessment of our creditworthiness is an important instrument when working with the investment society, as it confirms reliability of our Company and fosters the growth of investors’ trust to the business.”
Among the positive factors for the rating, the agency also noted high diversification of sales as a result of the federal range of Company’s activity as well as low dependency on suppliers.
The factors that have a holding effect on the rating are the rather high share of installment sales in the Company’s business model, which, on the one hand, makes it possible to maintain and increase sales, on the other hand, puts pressure on circulating assets; currency risks as a result of the fact that 50% of all purchases are supplied by international suppliers.
The agency notes improved quality of corporate risk management in the Company because of the preparation for IPO: the Company’s Board of Directors includes independent directors, an Internal Audit Committee was formed. In addition, the rating is supported by high reputation of the auditor, information transparency of the Company and high assessment of risk management organization.
According to consolidated IFRS statements, as of 30 June 2017, assets of Obuv Rossii Group made up RUB 14.3 bln, the capital – RUB 5.6 bln, revenue for the period from 30 June 2016 to 30 June 2017 – RUB 10 bln, net profit – RUB 1.3 bln.
 In terms of the number of stores and revenue for the six months of 2017, according to Discovery Research Group