Delta Distribution, the biggest ceramic tile distribution firm domestically, is set to close six of the 29 stores of its network next year and lay off around 100 employees due to the shrinking ceramic tile consumption and to its failure to secure a foothold in the western region of the country. "Next year, we'll close six stores, in Arad, Oradea, Baia-Mare, Galati and Targu-Mures, where we haven't gained a foothold as we entered too late. We'll keep only the stores in the cities where we have a solid position," stated Dragos Bonea, chairman and majority shareholder of Delta Distribution.
The company this year posted a dramatic sales growth slowdown due to the falling investments in the real estate sector, the main growth driver of the ceramic tile market.
Thus, whilst in 2007 the company posted 44.6m-euro turnover, up 50% year-on-year, in 2008 turnover will be flat. "The market went well until September, but then followed a dramatic downward trend. This is why turnover will be flat compared with last year and will drop next year due to business reconfiguration and market decline," explains Bonea.
The company operates through three units-retail, distribution to DIY stores and the unit in charge with projects, but in 2009 will focus on retail as the real estate market is falling and developers are reluctant to start new projects.
The company will open a store called Delta Concept Store in Razoare area in Bucharest by yearend, in which it invested some 6m euros, including the acquisition of the land. The company is also carrying out a 2m-euro investment in a similar store in Iasi.
"In the new store in Bucharest, we'll organise events for architects and builders to promote the newly-launched products. Moreover, we've launched our own ceramic tile brand, called Decogres, with which we'll tackle the medium segment. We've created our own concepts, to be prepared by several producers we're collaborating with," says Bonea. As a matter of fact, the company will give up selling cheap products, focusing instead on the sale of medium and luxury ceramic tiles.
The ceramic tile market will revolve around 186m euros this year, up by only 10-12% from last year, below the 25-30% estimates the main players launched early this year.
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