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. Last Updated: 07/27/2016

Roditi Witnesses Change in Fortune

London-based Roditi International made its initial foray into Moscow in 1991, a time when Western-style shopping was still a novelty in Russia. A daughter company set up the same year, Roditi-Moscow, helped popularize the cash-and-carry concept in Russia with a string of stores including the elegant Europa Center on Novy Arbat.

But today, the company's 8,000 square meters of prime shopping space on Novy Arbat are nearly empty, and regular customers wonder what to do with the Roditi-cards they bought when business was booming.

The company's change of fortunes began at the end of 1995, when the British partner effectively decided to reduce its holding in the local Roditi operation, which had taken the form of a joint-stock company called AO Roditi.

That left the other major partner, Promstroibank, in the driver's seat, along with a number of minority shareholders such as Rosvneshtorg, Yuvelirprom and the U.S.-CIS Council for Trade and Economic Cooperation.

Jurgen Brendel, managing director of Roditi International, attributed the Moscow company's woes to "poor local management and finance handling."

"It is a pity it had to go this way, because we had lots of opportunities," he said from Roditi International's head office in London. "But we are investors, not retail operators, and we were just unable to find the right management."

Brendel said his firm did not pull out of the partnership, but that its stake in the original Roditi-Moscow was converted into stock of the subsequently formed joint-stock AO Roditi. "We still hold a 20 percent stake in it," he said.

Of Roditi's chain of Moscow stores, only two remain -- the Labyrinth supermarket and the Roditi-Arbat clothing store at Europa Center -- and they are closed for the time being.

A source close to the company, who did not wish to be identified, said the future of the stores remains unclear but confirmed that a recent clearance sale -- ostensibly to clear the way for a renovation -- was intended partly to help pay long-delayed employee salaries.

Since then, several of the company's shops in various parts of Moscow have changed hands, including Dom Tekhniki, the electronics store that was once part of the Europa Center. Inform, the company that has run Europa Center since last spring, has recently terminated its contract with Roditi. Brendel and others involved said the stores should be re-opened soon because of their good profit potential, but he ruled out the possibility that Roditi International would invest more money. He said the company is still owed more than $1 million by AO Roditi.

"It would be a mistake to close down the stores," he said, citing the supermarkets' excellent locations and the enormous investments in promotion and infrastructure. "However, it is now up to Promstroibank, and we are looking to them for a decision."

Commenting on a recent report in Commersant that the bank was aiming to sell its stake, Brendel said: "I think they will find it difficult to sell."

Promstroibank, for its part, is keeping a low profile and declined to answer any questions pertaining to Roditi.