Magnit plans massive expansion in 2011
Magnit is considering holding a secondary public offering in the fall of 2011 to raise at least USD500 million to finance its investment programme, Kommersant Business reported.
Magnit, which has the largest number of retail outlets in Russia, intends to invest USD1.5 billion in opening 800 convenience stores, about 200 drugstores under the Magnit Cosmetic brand and up to 55 hypermarkets in 2011, the retailer said. In contrast to this, Auchan has announced it will be opening fewer stores than planned in 2011, as it is hard to find suitable land.
Magnit's aggressive development strategy has prompted the company to resort to new borrowing, as the grocer registered a negative free cash flow of USD790.5 million last year. The retailer opened 800 supermarkets and neighbourhood stores and 27 hypermarkets last year, whereas its rival X5 has expanded its store network by around 480 stores.
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