German retailer faces mutiny in Russia – media

German retailer faces mutiny in Russia – media

The Russian management of German DIY retailer OBI have rebelled against the parent company over its decision to leave the country, business daily Vedomosti reported on Sunday.

The majority shareholder of the chain – the German holding OBI GmbH – announced that it was shutting up shop in Russia on March 8, joining hundreds of other foreign companies that decided to pull out amid Western sanctions. According to Vedomosti, the decision provoked an open confrontation between the local management of the chain and the parent company.

Despite the closure announcement, OBI stores remained open across Russia for nine more days, until March 17. In late March, procurement director of OBI Russia, Maxim Suravegin, announced that all of the chain’s stores would reopen within two weeks, after the company had dealt with “a technical glitch.” The parent company in Germany dismissed this as speculation and restated that the stores would remain “permanently” closed, “contrary to reports from Russia.”

According to Vedomosti, the German owners blocked the IT system that enabled operations in its Russian subsidiaries, cutting the staff off from personal email, servers, and cash registers. “The team is now fighting to continue operations in Russia,” an ex-sales director of OBI Russia told Vedomosti.

Among the possible solutions to the problem, the outlet said, is the sale of local assets by the German holding to a third party or to the top Russian managers of the chain. According to the newspaper’s sources, the majority shareholder was ready to sell its stake for a nominal price of €1 ($1.09), but the deal fell through because the foreign management left Russia. Other options would be to transfer the business into Russian trust management, or liquidation.

OBI in Russia is undergoing a “monstrous experiment” – a “self-capture of the business by the management and nationalization from within,” said Ivan Fedyakov, director of the market research agency INFOLine, who believes that a new legal entity will be able to use the OBI brand, seal new supply contracts, and leave debts to old legal entities.

OBI entered the Russian market in 2003, opening 27 stores across the country. According to business outlet RBC, as of early March, the chain employed nearly 4,900 people which constituted 10% of OBI’s total staff worldwide. As of Tuesday, the OBI stores in Russia remain closed due to “technical reasons,” according to an announcement on OBI Russia’s website.

For more stories on economy & finance visit RT's business section

Source: www.rt.com

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