Fix Price Founders Get Rich Selling Goods for $3.40 or Less

Sergei Lomakin and Artem Khachatryan made their fortunes selling goods for $3.40 or less.

Their Fix Price Group Ltd., founded in 2007 to provide basic goods at predictable, cheap prices, quickly became a hit among Russian consumers and attracted a Goldman Sachs Group Inc. investment last year. It’s now the nation’s biggest dollar-store retailer, and its initial public offering in Moscow and London is proving just as popular among investors. The company priced 178 million global depositary receipts at the top of a marketed range.

Fix Price Founders Get Rich Selling Goods for $3.40 or Less

The two founders, who together owned 83% of Fix Price before the listing, are now worth $3.6 billion each, according to the Bloomberg Billionaires Index. A representative for the firm didn’t immediately comment on their wealth.

“They are the undisputed leader in the dollar-store segment,” Gazprombank analyst Marat Ibragimov said.

The IPO is poised to be the biggest from a Russian company in more than a decade. The Qatar Investment Authority and funds managed by BlackRock Inc., GIC Private Ltd. and APG Asset Management were cornerstone investors and together committed $475 million, Fix Price said in a statement this week.

Operating on a similar business model as Dollar Tree Inc. in the U.S., Fix Price has prospered as wages in Russia struggled to recover from the 2014 ruble collapse and the coronavirus pandemic sent shoppers flocking to its stores. Sales have increased for 16 consecutive quarters, with the number of outlets doubling in five years.

Fix Price Founders Get Rich Selling Goods for $3.40 or Less

The retailer sells everything from food to cleaning products and cosmetics for less than 249 rubles ($3.40), rotating in about 50 new items each week to appeal to “treasure hunters.” The company now has more than 4,000 stores in Russia and former Soviet Union countries including Belarus, Kazakhstan and Uzbekistan.

Lomakin and Khachatryan were pioneers in embracing the dollar-store model in Russia -- a format that the nation’s biggest grocery chains later replicated. After finishing their studies at the Moscow State Mining University, the pair started selling food and coffee before working as top executives at discount grocer Kopeika, where they were minority shareholders. They sold their stakes in 2007 and launched Fix Price soon after.

During its first three years of operation, Fix Price opened about 100 stores across Russia. It expanded rapidly by franchising its business, reaching more than 1,100 outlets by 2013. Three years later, it opened its first shops abroad with partners in Georgia and Kazakhstan. Goldman Sachs bought a 4% stake from the company’s founders in early 2020.

Fix Price Founders Get Rich Selling Goods for $3.40 or Less

After the ruble collapsed in 2014, Fix Price slashed imports of non-food goods, which represent most of its sales, and introduced price points to protect against currency volatility. The Covid-19 crisis was a further boost for the retailer as consumer incomes shrank 3.5% in 2020 following years of stagnation, and shoppers increasingly sought to spend less. Fix Price’s revenue climbed 33% to 190 billion rubles last year.

“With shrinking incomes, consumers try to avoid shopping in large supermarkets, where you never know how much money you’ll end up spending,” Lomakin said in a November interview.

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