The brand was at its second attempt to operate in Romania, after the first franchisees closed down in 2008 as sales plummeted by 40% to 50%.
The current franchisees, Andrei Alecu and Adrian Matei, say they made the decision to close the stores after sales went down by 10% in each of the past two years.
“The contract with Hugo Boss has expired and we’ve decided not to renew it for two reasons. First, had we decided to renew the contract, Hugo Boss would’ve asked us to remodel the stores, which would have entailed investments of around EUR800,000. Secondly, sales started falling in 2011, with the decline reaching 10% per annum,” says Alecu.
Andrei Alecu is the son of Marian Alecu, who ran one of the most important restaurant chains in Romania, McDonald’s, for sixteen years. His partner is Adrian Matei, owner of the beverage importer Lerida International.
Future Fashion International, the company held Andrei Alecu and Adrian Matei, opened the first store in Constanta and then came to Bucharest.
The company initially invested EUR2.2 million in the two stores, according to data provided by the stakeholders.
In 2012 and 2013, the company’s revenue dropped, as clients became more cautious when it comes to purchases. Whereas a customer would initially buy six suits in one shopping session and spend up to EUR10,000 on them, in the last two years, the same client would only buy one suit and only if he really needed it.
According to the latest available data, the company ended 2012 with revenue of 5.2 million lei (EUR1.15 million) and losses half the revenue, RON2.8 million. Sales fell again by 10% last year.
Recent years’ declines have pushed the two franchisees to put their expansion plans on hold and now they are also delaying bringing new brands on the domestic market.
“For the moment, we want to analyze the situation and the market before deciding whether we’ll bet further on this field,” Alecu says.
The closing down of the two stores does not mean the brand’s exit from Romania, because its products are also available from the multi-brand retail chain Peek&Cloppenburg, which owns stores in Bucharest and Constanta. (EUR1=RON4.4935)
(English version by Catalina Apostoiu)