Mysterious Buyer of M.video

Mysterious Buyer of M.video

Photo: https://commons.wikimedia.org

Back in April, Said Gutseriev announced that he had found buyers for M.video and would close the deal after fulfilling a few formalities. The summer passed, but the only news about the Gutserievs' retail chain is his resignation from the company's board of directors and how the bosses are making hair of the innocent junior staff stand on end.

'I Don't Believe it!'

Hectic atmosphere has been observed in M.video, the largest Russian consumer electronic retail chain by revenue and the first and the only publicly traded company in its market sector, listed in Moscow Exchange. First, the day before, it became known that the main beneficiary Said Gutseriev who controls about 60% did not join the new board of directors of M.Video.

At first glance, this news does not look suspicious as this is what all or almost all billionaires under sanctions do in order not to harm their business. But let's remember what the businessman said in April, announcing that M.Video was being prepared for sale. He said that “he planned to stay on the group's board of directors for the period required by the new investors to ensure continuity of corporate governance practices.”

Since Said Gutseriev is not on the board of directors, it turns out that the investors have adopted all the “practices”? It seemed to be impossible to find any references to these mysterious investors ready to risk dozens of billions of rubles (Eldorado, falling under a corporate umbrella, alone cost Gutseriev 45 billion rubles ($773.51 mln). Is it possible to hide a cat in a bag for such a long time taking into account personnel changes (for example, a graduate of the Russian Diplomatic Academy, Alexei Sukhov, has taken the place of CEO Enrique Fernandez, and Anna Garmanova has become the financial manager) and the old team actively leaving the retailer? Why haven't any of the “unnamed Russian investors”, shareholders, or simply directors of a thousand stores let it slip, or even anonymously hinted at M.videos buyer? Who and what is there to hide if the new investors have already entered the company and there is no longer any need for Said Gutseriev to keep ear to the ground? There are leaks from much less important companies in Russia. It turns out that the Gutserievs are either good at keeping secrets or, as stage director Konstantin Stanislavsky said, “I don't believe it!”

Corporate Governance Practices

The “corporate governance practices” Said Gutseriev has been teaching investors since April are worth a closer look. Anonymous Telegram channels and forums are full of complaints from rank-and-file employees of the M.video group of companies about how the new management make their hair stand on end.

In Yekaterinburg, for example, the new boss harassed salespeople so badly that many of them preferred to look for a new job rather than suffer humiliation.

Overtime (200 hours a month with 110 paid hours), swearing, apologizing on camera for misspelling a manager's name and sending it to the general chat room (so that others do not get caught), and a signature “thing,” the Stalin Recommends campaign are on the list of complaints. According to the campaign, every employee should post videos and photos from the store on his page in social networks and put up a gif with Stalin, who has hearts instead of eyes.

Of course, the salespeople tried to get through to the head office with their complaints, but the staff of the Moscow branch has no less problems. The consultants who used to earn 100,000 rubles ($1 718.9) are now getting 35,000 ($601.62) rubles with all the extra charges. While they have to pull a double, the amount of work has not decreased and the number of employees dissatisfied with the optimized pay has also grown. Earlier, there were two or three people at the stockroom looking for an order, but now there is only one. The monthly norm for storekeepers was reduced from 180 hours to 164-154, and the payment per hour is 172 rubles ($2.96.)

At M.video in Krasnoyarsk, employees are sent either on vacation or on weekends, which can last four or five days. These days off are not paid for. In addition, the group started saving on electricity, making it obligatory to turn off the lights in empty rooms. Otherwise, a worker has to write an explanatory letter. The equipment, including air conditioners, has to be turned off overnight.

According to the information on the thematic websites, it still seems that at M.video Said Gutseriev organized decent working conditions only for himself. Of course, the company’s management has different opinion.

Hope in Investor

In general, the informational background left behind by the son of a much more famous businessman, the principal shareholder of the Safmar industrial-financial group, Mikhail Gutseriev, could obviously have been better. Gutseriev Sr. got into retail quite by accident and decided to save Tekhnosila, once a well-known seller of household appliances, which was drowning in debt. Soon, it became clear that there was little prospect of competing alone in the rapidly growing Internet retail market, and the takeover of Eldorado and Mir Video (M.video) happened. This is how the M.video retail chain for the sale of household appliances and electronics was formed, with a market share of about 25%, which already allowed it to dictate its pricing policy for a whole range of goods.

At the same time, few people had any complaints against Mikhail Gutseriev, although his business life was full of different events, from a criminal case of illegal entrepreneurship and money laundering to the reorganization of Binbank. Sadly, the “corporate governance practices” of Gutseriev Jr. will long be remembered by tens of thousands of employees of such a major retailer. It is very likely that the words of Mikhail Gutseriev that there cannot be a family business in Russia because it is looked upon as a Mafia syndicate turned out to be prescient. But there is hope that soon there will be customers and consultants coming in M.video again with joy and good humor. Said Gutseriev promised to close the deal with a new investor as early as this year. If there is such, of course.

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