French-based DIY retailer Bricostore, a part of the Bresson group, last year posted profit worth around 27 million euros, amid turnover worth 180m euros from its 8-store network in Romania.
"Although we expanded outside Bucharest, where profit margins are smaller, last year we managed to maintain the same profit rate as in 2006 - around 15%," says Isabelle Pleska, general manager of Bricostore Romania. She believes the company's growth rate will stay at 30% this year, which could bring Bricostore network sales to 234 million euros by year-end.
The company has budgeted a similar profit rate for the first few months of 2008, however, Pleska anticipates significant cost increases across the network.
"This year, we expect wage increases to stand at 20-30%, similar to the level posted in 2007. Property taxes, which are very unpredictable, will in turn increase," explains Bricostore's manager. According to INS (National Statistics Institute) data, the average net salary in the trade sector stood at 256 euros last year, up 38% (in euros) on 2006.
Bricostore's marketing costs have increased by 20-30% this year on 2007, because of the higher fees charged by media channels that are used by the company.
On the local market, another challenge faced by retailers lies in the high prices on the real estate market. "We slowed down our expansion last year, because of the rent levels. We cannot expand at all costs, because making a profit is essential to network development," says Pleska.
In the medium term, the company targets a 20-store network, with sales expected to reach 500 million euros by 2011, according to previous estimates made by officials of the French group Bresson. Pleska targets 5 new stores this year, and a similar number of stores in 2009, however, in the medium term the network could return to the slower expansion rate of around 3 new units per year.
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