OREANDA-NEWS. June 19, 2008. M.video, Russia's second-biggest electronics retailer, forecast growth of at least 10 percent in same-store sales for the next two years on demand for products such as laptop computers and flat panel televisions.

This year's "double-digit growth" in revenue at outlets open at least a year will be the start of a "long-term three-year dynamic," Chief Executive Officer Alexander Tynkovan said at an investment conference in Moscow organized by Renaissance Capital. "People will be buying new products to replace existing models and would rather borrow than save on televisions."

The Moscow-based company will open 10 outlets in the first half of this year as part of the plan to add 40 stores annually over the next three years, Tynkovan said today. M.video opened five stores in the first three months of 2008, increasing the total to 127 in 50 Russian cities at the end of March.

M.video is expanding its network as Russia's 10th year of economic growth fuels incomes and boosts demand for products from refrigerators to digital cameras. The country's \\$34.1 billion consumer electronics market may grow about 8.8 percent annually through 2012, according to Renaissance Capital estimates.

Accelerating inflation in Russia may help M.video's sales growth because some consumers "don't trust long-term savings" and choose electronic products "as the most affordable investment" as property prices surge, Tynkovan said.

Mobile Phones

M.video in April reported a 77 percent increase in first-quarter revenue to \\$631 million as sales at stores open at least a year rose 32 percent. Digital products and mobile phones are among best-selling goods in the retailer's stores while televisions generate the biggest share of sales, Tynkovan said.

Metro AG's Media Markt electronics chain is M.video's closest rival, according to the executive. Local competitors include the larger Eldorado Group and smaller rival Technosila.

M.video in November sold \\$365 million of shares in an initial public offering to help fund the expansion. Sales may rise 48 percent to \\$2.98 billion this year, according to Natasha Zagvozdina, an analyst at Renaissance who recommends investors buy M.video shares. Profit in 2008 will almost double to \\$56.5 million, she estimated in a Jan. 21 report.

The company had 5.8 percent of Russian consumer electronics sales last year, according to Renaissance.