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Financials

Russia's M.Video-Eldorado aims to double GMV to $13.5 bln by 2025

* M.Video-Eldorado plans to double GMV by 2025

* Capex planned at 2% of GMV, CEO tells Reuters

* Dividend payout planned at 100% of net income

* CEO says SPO up to shareholders to decide

MOSCOW, Feb 9 (Reuters) - Russian retailer M.Video-Eldorado plans to double its gross merchandise volume (GMV) to $13.5 billion by 2025, combining its large store network with e-commerce growth, CEO Alexander Izosimov told Reuters ahead of the company’s strategy day on Tuesday.

The consumer electronics retailer’s GMV, an e-commerce metric used to measure transaction volumes, increased by 15.4% in 2020 to 505 billion roubles ($6.8 billion), with a target to hit 1 trillion roubles in 2025.

M.Video operates 1,074 stores across 279 Russian cities and aims to open in at least 100 more within five years.

It also hopes to leverage the potential of Russia’s e-commerce market, which boomed last year as coronavirus lockdowns forced a switch to online shopping, and expand on its 33% online market share in consumer electronics.

“Every retailer on the planet is now trying to figure out how to move forward with the total ‘Amazonisation’ of retail and trade,” Izosimov told Reuters in an interview.

M.Video’s strategy centres on its OneRetail platform, which Izosimov said aims to develop the company’s online and offline presence in a seamless way, tapping into its 19 million active customers.

“Clearly the market has not been penetrated enough,” said Izosimov, anticipating rapid development of online marketplaces and for category specialists, such as M.Video-Eldorado, while banking on physical stores still having a role after the pandemic.

With this in mind, M.Video is scaling down its involvement in e-commerce site Goods.Ru to 10% from 80%, agreeing to jointly develop the project with state-owned Sberbank.

Izosimov believes M.Video can achieve its ambitious growth target organically: “One trillion is the guiding star, and we can deliver it, keeping our EBITDA margin within the historical range of 5-7%,” he said.

M.Video will cap spending at 2% of GMV, he said, implying current annual capex of around $137 million, but reaching up to $269 million should the company achieve its 1-trillion-rouble GMV target.

Shares in M.Video jumped by around 6% on Tuesday after the company announced plans to pay 100% of net income as dividends, a move that Izosimov acknowledged, along with capital structure restrictions, could limit spending.

Asked about a long-time prospect of a possible secondary share offering, Izosimov said: “Restricted liquidity is generally not great for companies.”

“If there is a chance and the right conditions to increase liquidity on the market, (the shareholders) might potentially be ready to do that.”

$1 = 73.9475 roubles Editing by Katya Golubkova; editing by Jason Neely

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