“We have closed down non-profitable stores and relocated free-standing stores where [customer] traffic was on the decline. By the end of the year we expect turnover of EUR14 million and an operating result close to breakeven,” said Amalia Buliga, general manager of the bookstore chain owned by businessman Octavian Radu.
In the first half of 2010 Diverta asked for its insolvency with debts of over EUR10 million and investment loans of EUR8.5 million. At the time the company operated 62 stores which covered 24,000 square meters.
The company is now in judicial reorganization, which means it has to pay debts to creditors and become more efficient. The reorganization will end in May next year, according to the information provided.
Diverta has now reached 31 stores that cover an overall 12,000 sqm.
Employees are down to 250 from 400 before the insolvency.
Diverta returns to Magheru Boulevard
Although it closed down stores, Diverta’s management decided to return with a store on Magheru boulevard in central Bucharest, opposite from where it used to have a store in the former Eva building.
The recently opened store covers 300 sq m and entailed a EUR50,000 investment. The store sells books, as well as toys and stationery.
Amalia Buliga says she expects revenues of EUR200,000-350,000 after the store’s first year of functioning.
The most profitable store remains the 1,800 sq-m store in Vitan shopping center.
EUR30 is the average amount a customer leaves in a store
“A customer leaves on average EUR30 in a Diverta store. We have adjusted prices and have had many promotional offers lately.”
Books contribute 35% to overall sales, while toys bring 15%, stationery 20% and media products 12%, while gift-related products account for the rest.
“Our biggest sales are in September and December, when revenues are twice as high as in a regular month. This summer demand was lower than last summer,” she said.
At present sales of the Diverta chain are registered to Pro Express Retail, which last year had a turnover of 70 million lei, according to Finance Ministry data.
Diverta’s reorganization plan was approved last year by the company’s creditors, including the financing bank. Creditors are more likely to recoup the debts owed to them in this way than through bankruptcy.
The overall debts that creditors have to recoup from Pro Express Retail amount to EUR23 million, of which Alpha Bank has to recoup EUR11.5 million and Piraeus Bank almost EUR0.9 million, according to the creditors’ table.
(English version by Daniela Stoican)