OR Group is restructuring

The online marketplace Westfalika, which is part of the OR Group, has temporarily stopped accepting orders. The company explains this by the launch of an anti-crisis program, in connection with which, the Westfalika retail chain, which accounts for 80% of revenue, has become the main sales platform.

In Westfalika social networks, the company announces the temporary closure of its online store, and notes that the online stores of its own Obuv Rossii factory, where you can buy shoes from OR Group's own brands (S-TEP, all.go and Pioneer of Arctic Travel) continue to work.

As part of the anti-crisis program, OR Group is also restructuring its retail network and closing the least profitable stores. Thus, three stores in Naberezhnye Chelny were closed recently, so Westfalika retail is currently not present on the Tatarstan market. The rest of the retail chain is selling off inventory and remnants of collections from past seasons, which "allows you to maintain demand in the current difficult conditions." 

As we wrote earlier, in January 2022, OR Group made the first default on the non-market bond issue BO-07, the main holder of which is Promsvyazbank. Until the end of March, the company fulfilled its obligations to pay coupon income, but in April it made a series of defaults on all traded bond issues. A combination of factors led to the default, including the impact of the coronavirus pandemic on non-food retail, a decrease in traffic and demand, an unstable situation in the financial market, the impossibility of refinancing, high borrowing costs and the company's high debt load. 

“Currently, we are doing everything to overcome the crisis situation in the company,” says Natalia Pauli, PR director of OR Group. - We are implementing an anti-crisis program aimed at maintaining operations, optimizing costs and improving the efficiency of business processes. In addition, OR Group, together with Proxima Capital Group, began developing a debt portfolio restructuring program in mid-February. Over the past two months, a comprehensive analysis of the company's activities was carried out, a new financial model was prepared and, on its basis, the main restructuring parameters were formulated, which include both credit lines and bonded loans. The Group strives to offer an optimal restructuring program that takes into account the business's ability to service debt in the new environment and respects the rights and interests of all parties. Currently, the terms of restructuring are under consideration by the main creditor banks; after receiving acceptance from them, the company will be able to publicly present the program for bondholders.” 

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At the same time, in the current economic and political situation, OR Group sees prospects in the development of sales of footwear of its own production.

“Now certain prospects are opening up for domestic manufacturers, as a number of foreign brands have announced the suspension of activities in Russia. First of all, we are talking about the mid-price segment, in which companies offer the best price / quality ratio and the share of manual labor in production costs is not so large. We work in the segment of casual, semi-sport, outdoor style footwear, which has been especially in demand in the last few seasons, as people have shifted to comfortable shoes. In addition, we follow the concept of "slow fashion" (slow fashion), that is, we develop models that remain relevant for several seasons. Such shoes will be popular, as real disposable incomes and purchasing activity are expected to decline, preferences will shift towards universal models, classic design shoes that can be worn for more than one season,” comments Natalia Pauli. 

However, it points to a number of restrictions for the full development of domestic footwear production in Russia, which have been present on the market in recent years. Among them - the actual lack of infrastructure and many basic production of raw materials, materials, components; limited access to financing for light industry enterprises, inability to obtain investment loans for the development of production projects with long payback periods.

OR Group (formerly Obuv Rossii Group of Companies) develops the Westfalika chain of stores, which presents a wide range of products from different manufacturers and the online marketplace westfalika.ru. The network of sales and service points under the Westfalika brand includes more than 700 objects in more than 295 cities of Russia. The company is included in the list of backbone enterprises in the field of light industry. In 2020, the group's revenue amounted to 10,8 billion rubles, net profit - 0,6 billion rubles, EBITDA - 2,3 billion rubles.