Agrokor Group reports a 12% decline in sales in 2017 for the retail and wholesale business segment – that primarily consists of the Konzum banner - to reach HRK 31.2mn (€ 4.2mn). Although profitability reported an improvement of 19% following some cost optimisation changes, and closure of unprofitable stores in the same year.
Ceased supplier trading in first half of 2017 started decline in sales…
Agrokor attributed the drop in the retail and wholesale revenue to the ceasing of trading by some suppliers due to issues of invoice payments by Agrokor. This led to an increase of out-of-stocks – increased to up to 16% share SKUs, well above the average of 2%. As a result, product unavailability impacted traffic and spend in Konzum stores.
…while stores close in second half of 2017 continued negative impact
Toward the end of the year, Agrokor focused on reducing costs and boosting margins to provide liquidity for debt repayment. The cost optimisation plan led to the closure of unprofitable stores in Croatia and closure of the wholesale business – Velpro – in Bosnia-Herzegovina, and to focus on sales area optimisation to drive sales per square meter.
Re-appointment of Agrokor’s administrator following concerns
In February 2018, a new state administrator, Fabris Peruško, was appointed to Agrokor alongside a deputy role, Irena Weber. Fabris Peruško was part of the finance and restructuring team that stabilised Agrokor’s small format business, Tisak. It was reported that this follows concerns by an Agrokor association of minority shareholders, and public concern, over the fee and conflict of interest of the previous administrator, Ante Ramljak, regarding the handling of the company’s stabilisation process.
Croatian court extends Agrokor administration till July 2018
The Commercial Court of Zagreb has issued a decision in April 2018 to prolong the administration proceeding of Agrokor by another three months in line with the pre-agreed arrangement to apply for an extension. The prolongation was requested by creditors looking to finalise a debt settlement plan that is expected by July 2018. The settlement plan will include establishing a new corporate structure for Agrokor Group and a clear debt repayment process.
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Amin Alkhatib, Retail Analyst CEE, IGD International: based in London, UK, Amin is responsible for shaping IGD's research in Central and Eastern Europe; as well as contributing to IGD's broader European research programme. Follow me on Twitter @Amin_IGD for further insight on the region’s retail landscape.