Britain's Debenhams has high hopes for Russia

By Nastassia Astrasheuskaya

MOSCOW, Oct 5 (Reuters) - British department store group Debenhams expects to generate a fifth of its overseas sales by 2015 in Russia, which is set to become Europe's biggest retail market.

Debenhams, which has been increasing sales at home despite a recession there, returned to Russia in September, six years after pulling out of the country because it was losing money.

Russia is Europe's second-biggest retail market with sales of $621 billion last year, according to data consultancy Euromonitor, and is on track to become the biggest by 2013/14.

"Russia should be a massive success story for anyone who comes here," Francis McAuley, the company's international director told Reuters on Thursday, five weeks after opening a Debenhams store outside Moscow.

"Yes, it's volatile but everyone's volatile in the world right now. I have high hopes for Russia."

International retailers have long been trying to establish themselves in Russia, though many have struggled. France's Carrefour pulled out after only four months in 2009.

Debenhams, Britain's No. 2 department store group by sales behind John Lewis, has about 170 domestic stores and franchises in 27 countries including India and China.

McAuley said Russia could generate 20 percent of Debenhams' international turnover, which includes all sales outside the UK.

Foreign markets account for a fifth of its total 3 billion pounds of ($4.85 billion) yearly sales.

McAuley said he expected sales levels from a store in central Moscow to be similar to one in central London.

The company, which has franchises in Russia, has no plans to launch its own operation in the country. It expects to have seven more stores in Moscow in the next five years and is in final negotiations on two of them, McAuley said.

He said centrally located stores would be four times as profitable as the one just opened in Belaya Dacha, just outside the capital.

($1 = 0.6186 British pounds)

(Reporting By Nastassia Astrasheuskaya; Editing by Erica Billingham)

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