Expert RA

Expert RA Awards B + Rating to Obuv Rossii Group of Footwear Companies

September 25, 2008

The Expert RA rating agency has awarded to the Obuv Rossii Group of footwear companies the B+ rating of creditworthiness.

The B+ rating means that the creditworthiness of the Obuv Rossii group of footwear companies is satisfactory, and, on the whole, corresponds to the average level in the given rating class. The parameters of its industrial and commercial activity, financial stability and solvency as well as the company’s level of corporate management generally do not hinder the execution of its obligations. However, some factors are already having a negative impact or may have one on the efficacy of the Company’s activity in the near future. The risk of the company’s total or partial default is assessed as being acceptable.

The positive factors that impact Obuv Rossii’s credit status are the company’s substantial credit capability enabling it to borrow funds for business development, the expanded diversification of sources for external financing of its activity through a growing number of bank partners and its own bill program. The great advantage that Obuv Rossii has is that this group of footwear companies has formed three footwear brands that can capture very wide segments of the market owing their price diversification. The monobrand nature of the holding’s retail marketing network makes it possible to come up with a unique assortment combination of shops with different brands for each target region of their presence. Another advantage of the company is its own production facilities that can quickly respond to fluctuations in consumer preferences”, says Xenia Morozova, Expert RA, the credit ratings sector of the corporate ratings department.

The agency considers the following factors as being negative and preventing the Obuv Rossii group of footwear companies from being awarded a higher rating: risks of developing franchise networks, extra costs of mergers and takeovers resulting from entering new territorial markets. Other deterrents were currency exchange risks during purchases of raw material and finished footwear abroad, a considerable increase in accounts receivable owing to the development of the wholesale direction.

The Obuv Rossii Group of footwear companies plans to expand its networks in perspective regions and to increase the efficacy of the existing shops. To realize the scheduled projects the Group intends to use both loans and its own funds. In the future, the company plans to expand and enlarge its activity through franchise contracts, takeover of regional companies and international cooperation.

The Obuv Rossii Group of footwear companies is a holding consisting of three legal persons: OOO Obuv Rossii (Footwear of Russia) retail and wholesale company, OOO Peshekhod (Pedestrian) retail and wholesale company and OOO Vestfalika-M manufacturing company. The revenues of the holding totaled 1.24 bln Rbl in 2007.