Russian discount retail chain Fix Price recently started trading on the Moscow Exchange through an initial public offering (IPO) — the latest to join the Russian listings frenzy — which valued the company at over $8.3 billion. The IPO, which raised approximately $1.7 billion, was the largest by a Russian company listing in the London exchange since 2017.
Fix Price, whose business model is similar to Dollar Tree, Inc. in the U.S., has flourished in recent years amid a slump in living standards that has elbowed Russians toward discount retailers. The chain has a range of about 1,800 products and operates more than 4,200 stores across Russia and the former USSR.
As global coordinators and bookrunners wrap things up, investors looking to get a slice of this discount retail chain can start preparing for this new IPO now.
Fix Price Financial History
Fix Price set out in 2007 with a vision to disrupt the Russian retail space. Having pioneered the variety value retail business model in Russia, Fix Price is now an undisputed market leader accounting for 93% of the market share and over 4,200 stores throughout Russia and the neighboring countries, all stocking about 1,800 products across approximately 20 product categories.
Besides its own private labels, Fix Price also sells products from smaller local suppliers and leading global brands. The retail chain offers its customers a unique and constantly refreshed product assortment of non-food, drugstore and food goods at multiple low fixed price points.
In 2020, the company recorded revenue of 190.1 billion rubles ($2.6 billion) and a net profit of 17.6 billion rubles. Its like-for-like sales have risen at double-digit rates each quarter for about 16 consecutive quarters.
Fix Price strives to offer outstanding value through its uncompromising “everyday low price” strategy across 8 highly competitive price points, all of which are under 249 rubles ($3.4). As of December 31, 2020, 80% of Fix Price’s assortment was priced under $1.3.
Fix Price Potential
The success of Fix Price’s IPO — so far the largest by a Russian retailer — represents a milestone not just in the company’s history but also in the development of Russian capital markets. Benefiting from the global shift toward value in consumer demand, Fix Price has over the past few years grown its revenue at a rate of 30% annually and boasts a market totaling over 240 million people.
Despite going public recently, Fix Price’s fundamentals are strong, built on an acyclical business model that combines high growth rates with attractive returns to its shareholders. Its diversified product mix satisfies various customer needs, and in 2020, sales were split roughly 1/3 consumables and 2/3 general merchandise and encompassed over 20 profitable categories.
Fix price’s assortment strategy is also based on constant rotation in its product offering. While at any point the retailer carries 1,800 products in its assortment, it’s constantly replenished and refreshed. The company launches approximately 40 to 60 new products every week, most of which are either seasonal or driven by the latest retail trends.
It’s an exciting time to be a variety-value retail leader, and there’s great optimism about many more years of profitable expansion yet to come.
How to Buy Fix Price IPO Stock
Follow this quick step-by-step guide on how to get started with Fix Price IPO stock.
- Pick a brokerage.
The first step to trading an IPO stock or buying and selling shares altogether is to open an account with a brokerage. With Fix Price listing on the Moscow and London exchanges, it’s important that you look for international brokers who have access to these exchanges. Not every U.S.-based broker will let you trade foreign markets.
International market access is just the tip of the iceberg when choosing your preferred broker. Other factors to consider include:
• Educational and research offerings: If you’re still new to the IPO trading bandwagon, you’ll want to look for a broker that complements your little trading knowledge with a vast collection of educational resources and research offerings. While you can still conduct your own independent research, having it done for you is an added advantage.
• Commissions and fees: As most brokers seek to entice customers with a move away from commission trading, some still charge commissions when trading international markets. While this may be the only way to access international markets, you don’t want the fees and commissions eating into your profits.
• Robust trading platform: Since brokers are tasked to fulfill your buy and sell orders, you want to work with a broker that provides a robust trading platform. Whether it’s via a mobile app or desktop platform, you want the ability to trade with the click of a button. This should also include the availability of real-time prices and charting capabilities, all bundled in an easy-to-use interface.
- Decide how many shares you want.
Once your brokerage account is up and running, you need to decide the number of shares of Fix Price stock you want to buy. This, of course, will depend on your risk tolerance and budget. You don’t have to sweat over buying an exact number of shares since most brokers now let you buy fractional shares based on the dollar amount you want to invest.
- Choose your order type.
After deciding how many shares of Fix Price stock you want to purchase, you’ll need to choose the type of buy order to place. Common order types include:
• A market order lets you buy a security at the best available price given in the market at the moment you send your order for execution. If there are other pending orders that were placed before yours, it may take more time for your order to process depending on the stock’s liquidity and volumes of your trade.
• A limit order allows you to specify the maximum price you’re willing to pay when buying a share of a stock. A limit order is filled only when the stock’s market price reaches the limit price you entered. While execution isn’t guaranteed, a limit order can help you set a predetermined price at which you want to buy a security.
• A stop order is executed as a market order when the stock you’re buying passes a certain price. Stop orders are typically used to limit losses or to protect profits for a security that has been sold short.
Depending on your broker, you may access more advanced order types.
- Execute your trade.
After choosing your order type, hit the Submit button and relax. Be sure to review the order since your broker won’t take responsibility for any errors. Your broker will fill your order based on your instructions.
Best Online Brokers
Still not narrowed down your choice of brokers? Start with Benzinga’s recommendations for the best brokers to trade IPO stocks.
Are International IPOs a Safe Haven?
Buying recent IPO stock Fix Price can provide some exposure to the international markets, except your choice of broker can be a deal-breaker. Be sure to choose a broker who has access to international exchanges. And with Fix Price committing to further growing its network and offering its winning proposition to millions of new customers, this Russian’s largest dollar-store chain can be a good portfolio diversifier.