Wildberries' recovery bill could rival quarter of Russia's annual budget deficit
Wildberries lost a significant share of its warehouse capacity in drone attacks (photo: Getty Images)
Ukrainian strikes on Wildberries' logistics hubs have inflicted such heavy losses on the company that rebuilding its network could cost as much as a quarter of Russia's annual budget deficit, according to The Moscow Times and sources cited by The Bell.
Within a few weeks, the company lost about 20% of its warehouse capacity, with at least eight logistics hubs destroyed in Ukrainian strikes. According to the sources, direct losses could exceed 100 billion rubles (about $1.3 billion) and, in the worst-case scenario, reach 200 billion rubles (about $2.5 billion). The marketplace's turnover has already dropped by a quarter due to an exodus of sellers.
Wildberries' problems are compounded by its business model. The company receives payment from buyers immediately but transfers the money to sellers only several weeks later, using the time gap to finance operating expenses and discounts. This model works as long as turnover continues to grow, but once it declines, accumulated liabilities are no longer covered by new incoming funds.
For this reason, the sources expect the company to remain unprofitable for several years, while restructuring the business will require it to increase its debt by at least 1.3 trillion rubles (about $16.4 billion).
Sources cited by The Bell believe the authorities will not allow the marketplace to go bankrupt. Officials are already considering tax holidays and preferential loans for affected sellers, allowing the company to use facilities operated by Russian Post, and possibly extending subsidized loans to Wildberries itself.
The problem is that the state also has limited resources. During the first half of the year, Russia's budget deficit reached 5.7 trillion rubles (about $71.7 billion), one and a half times higher than the annual target, and is projected to grow to 7–8 trillion rubles (about $88–101 billion) by the end of the year. That means the amount needed to rescue Wildberries alone is roughly equal to a quarter of the country's annual budget deficit.
According to Forbes, the Armed Forces of Ukraine have already destroyed at least 17% of Wildberries' warehouse facilities. Over the past two weeks, Ukraine's Defense Forces have attacked the Russian marketplace's facilities almost daily, and the company can no longer conceal the scale of its losses.
Amid these strikes, it has emerged that Wildberries is actively seeking logistics capacity in Kazakhstan. The company has also introduced strict measures to protect against further attacks. Since August 3, employees have been banned from bringing smartphones to work.
