Exclusive interview of the co-founder of the Foxtrot group Gennadii Vykhodtsev to the Interfax-Ukraine agency on the state of assets, losses, millions of investments in restoration and further vision for the development of business projects

(Updated: clarified number and wording in third paragraph)

Text: Oksana Grishina, Iegor Boltryk

Before we start talking about business, tell us, what was the first day of the war like for you?

Neither that day, nor during the next year, I thought about leaving Ukraine, although I have the right to do so due to my age. And on February 24, my partner Valerii Makovetsky decided to return to Kyiv, and we, as they say, coordinated the first decisions with the team on how to work "Foxtrot" in wartime. A month before the start of a full-scale invasion, Foxtrot managers provided the Supervisory Board with a plan of action in case of an emergency, but no one believed that it would be needed to the end.

What are the first steps in the business to minimize losses?

Even before the war, the evacuation of material assets from the frontline regions to the west of Ukraine began, the supply of goods to Foxtrot stores in the east and south of the country was limited, which reduced the losses that the war later brought. We discussed the dispositions of the management team and the possible relocation of the central office. Prescribed the safety rules for those stores that could work because of the distance from the hostilities. But the war is a force majeure, and we could not foresee the loss of the central warehouse in Gostomel in March 2022. This was the first blow that the business experienced very painfully. Back in 1994, when we were building Foxtrot, I was engaged in logistics tasks, organized transport chains, for the first time in electronics retail, I attracted rail transportation of goods across Ukraine to develop the network in the regions. I know the efficiency of warehouse logistics for the company. Therefore, the destruction of the warehouse in Gostomel and losses of UAH 650 million became very painful for us (the indicated figure is the lost profit, add here the bombed property, the morale of employees who survived the Russian missile strike and occupation - the amount will be many times higher).

How did you act when you were left without a central warehouse?
The reaction to the destruction of the warehouse was part of the anti-crisis actions of the company. First, we gave employees the opportunity to take families to safe places. We moved about 1,500 employees to Lviv, where a central office was opened in one of the stores on the second floor. And then they invited people who returned to their jobs to evacuate the rest of the goods from the east to the west, so that the equipment from the closed stores could be traded in stores that could work. The entire transport fleet that we hired for the relocation of goods went towards safe regions, and in this way we satisfied the already felt commodity hunger. The team evacuated 27,000 cubic meters from east to west. m of goods, having completed almost five hundred auto trips for this. And in the spring, Foxtrot opened a regional warehouse in the Lviv region. Subsequently, we invested UAH 2.3 million as tenants. to a new central warehouse near Kiev, in Kolonshchina, with an area of 22,000 sq. m.

Foxtrot's managers suggested abandoning reserve storage capacity in order to completely switch to centralized operations from one warehouse.

How do you assess the retailer's damage during the year of the war?

We estimate the damage from the consequences of the war at almost UAH 1 billion. 10 stores were looted in 7 regions, and we did not observe the logic of the occupier's actions. So in Kherson, in the center of the city, where active resistance to the invaders took place, the store worked to the last, selling goods for hryvnia at bargain prices. We had a clear position - no cooperation with the invaders. In Energodar, in Kakhovka, representatives of the occupiers immediately came to us, were refused and immediately blocked work. In general, the math in those days looked like this: our managers closed 100 stores in the first days of the war, a couple of weeks later they opened 60 Foxtrots. Now in Ukraine there are 115 Foxtrot stores and an Internet platform of the same name.

Analytics showed that at the beginning of the war, mobile gadgets were the top position, which is associated with the migration of the population due to hostilities. In summer and early autumn, laptops and heaters took the lead. After massive rocket attacks on energy infrastructure in October, demand for charging stations and generators increased significantly. But if we talk about our market in general, consumer behavior has not changed dramatically. The number of military buyers has increased. For them, Foxtrot introduced additional discounts on current promotions and special offers.

How much have you invested in resisting the occupation and strengthening the Armed Forces of Ukraine?

During the year of the war, the business transferred equipment to the defenders in the amount of about UAH 14 million. We are talking about heaters, heat guns, boilers, washing and drying machines, laptops, printers, tablets. Colleagues from the corporate headquarters of "Help to Ours" reported that this was about 8,000 pieces of equipment in the year of the war. Since September 2022, the company has been helping 14 military units of the Ukrainian Air Force operating in the Ukrainian air defense system. Air defenses cover the sky above the heads of peaceful Ukrainians, and the statistics from the commander of the Ukrainian Air Force are impressive: over 650 occupier cruise missiles and more than 610 Iranian strike drones were destroyed in six months. We are very grateful to the defenders of the sky for this work.

Do you receive feedback from the military?

In the electronic corporate «Line of news GKF» and the corporate telegram channel, we post all the kind words that the corporate headquarters records during the transfer of charitable assistance. These are dozens of messages every month, photos from the locations of heat guns that heat military locations, videos of how tablets work to destroy enemy warehouses. Here is information from our employees who serve (we call them #rotaFoxtrota).

There is also official feedback from the defenders and the military leadership. At the end of 2022, the high military command of Ukraine awarded a number of Foxtrot employees. Among those noted are our store manager Oleg Markovich with the call sign "Foxtrot", who was awarded the Order "For Courage of the III degree" by the President of Ukraine for the liberation of Kharkiv region; Oleksiy Zozulya, executive director of the Foxtrot network (badge "For Assistance to the Army" signed by Commander-in-Chief of the Armed Forces of Ukraine Valeriy Zaluzhny). The Minister of Defense of Ukraine Oleksiy Reznikov ordered Gennadii Vykhodtsev to be awarded the medal "For assistance to the Armed Forces of Ukraine": "For a significant personal contribution to the development of the Armed Forces of Ukraine, fruitful and selfless cooperation in protecting the territorial integrity of Ukraine." Recently, the Commander of the Air Force of the Armed Forces of Ukraine handed over the insignia "For Assistance to the Air Force of Ukraine" in the name of Valerii Makovetsky, Chairman of the Foxtrot Supervisory Board. And although these awards are nominal, we perceive them as gratitude to the entire business team that has endured, works and helps our army win.

What is the status of your other investments during the war?

In 2019, we and our partners invested in the construction and operation of solar power plants (assets are managed by Solar Generation). These are three solar power plants: "Soling 1" and "Soling 2" operate in the Nikolaev region, "Soling 3" in the Chernivtsi region.

In 2022, it was in the Mykolaiv region that the solar park of the Solar Generation company (22 MW) was fired from artillery weapons, and a week later - from a helicopter. There was a projectile on the territory, which detonated after repeated shelling. As a result, these green enterprises destroyed about 0.428 MW of installed capacity.

In addition, as a result of the crisis of non-payment for consumed electricity from homeowners and commercial enterprises with the outbreak of a full-scale war, we receive only 16% of the cost of electricity released into the grid. Due to the shelling of the power system, we are losing profits, as power generating enterprises are constantly disconnected from the grid. At the same time, we continue to believe with our partners in the green future of Ukraine, in particular, in the energy sector.

In addition, cooperation continues with the community in the Chernivtsi region, where the Soling-3 solar power plant is a budget-forming enterprise. This year, our experts helped develop a community strategy to attract new investment. With our help, the society received a grant for the installation of solar power plants at social facilities, a German fund was attracted to provide furniture and household items for a local children's health institution, in which families from the east of Ukraine have been living for almost a year.

How does a domestic entrepreneur and investor feel after a year of war?

I would not say confidently, because the war continues and every day carries the risk of losing assets. But there is no feeling of despair. The war removed some semitones, innuendo, left only genuine values. She showed that it is necessary to invest in security and development, because the consumption of peaceful goods is growing at such critical moments.

On the other hand, the perception of injustice and dishonesty has become more acute, especially when faced with their manifestations where European values and the rule of law prevail. I have my own case for this.

Even before the war, we invested in the construction of a plant for the manufacture of medicines in Lithuania in the city of Telshai. The plant, with a planned production capacity of up to 10 million units per year, should give the country's economy 150 jobs and a good incentive for the development of the country's economy. With almost 100% readiness of the plant to start production, the pace of its launch has slowed down significantly.

The reason is the wrecking activity of one of the shareholders for the sake of their own sole interests. In the conditions of war, when we must act cohesively and effectively, this shareholder (by the way, a citizen of Ukraine who left his homeland with the outbreak of hostilities) files his own enterprise with the Lithuanian courts, weaves intrigues with suppliers of production capacities, uses good relations for his own purposes with the Lithuanian establishment. As a result, a reputational crisis for the company and its investors, ambiguous decisions of Lithuanian judges in favor of suppliers, and a slowdown in the start of the plant's operation. But I believe that for Lithuania the rule of law and the restoration of justice are real European values. When the plant in Telshay starts working, it will be part of the overall victory of Ukraine, in which we all believe and everyone is doing everything to bring it closer.

At the end of our conversation, we can't help but ask about plans for the future...

For the retailer "Foxtrot" - to maintain market share, being very adaptable to the conditions of a permanent crisis, reacting correctly to changes in the market situation, which the war taught us.

We will further develop green energy in Ukrainian communities, where our investments have already earned. It is important to develop commercial real estate management so that DEPO't Center shopping centers, which we develop together with regional partners, continue to operate in the regions of Ukraine. After all, these malls in wartime not only received visitors in Chernivtsi, Lubny, Nikolaev, Kropyvnytskyi, Cherkassy and Odessa, taking into account all safety requirements. They became centers of social activity aimed at protecting the independence of Ukraine. Recently I saw the news that the DEPO't shopping center in Kropyvnytskyi opened a photo exhibition with stories of Ukrainians in the occupied Crimea.