This new business plan is driving businessmen PioFrancesco Borghetti and Ni Lesh Sajnani, Kenvelo shareholders, ever closer to the model of the leader of the local fashion market, Inditex. Spanish-held Inditex is present in Romania with seven brands. Unlike Inditex, which owns all the seven brands, Kenvelo shareholders got the Lee Cooper franchise for Central and Eastern Europe and signed a partnership with Germany’s Tom Tailor.
In the case of Lee Cooper, this is a market re-entry, after LCR Jeans, which held the license of Lee Cooper stores domestically, went insolvent insolvency two years ago. At that moment, the stores were closed down. At its peak, the network had 30 stores, with EUR11 million in sales.
Philippe Besadoux, 52, the man who has been running Kenvelo’s Romanian operations for almost three years, and will handle the two new brands, as well, says that by late 2013 Lee Cooper network may reach 30 stores in Romania again, should all go well. “The brand is already known, so we may open 10 stores per year,” he says.
Kenvelo is also known in Romania after a presence of around a decade. It is also one of the largest chains in the field, with around 50 stores. Inditex is the largest fashion retailer, with 55 stores, and is set to reach 70 by yearend. Kenvelo would have reached the same level had it not restructured its business in recent years.
“We closed all the unprofitable stores,” says Besadoux. He says he came here with the mission of reorganizing the Romanian business, which he did. He slashed jobs and closed around 20 stores.
However, he will not stop here with the development of Kenvelo brand, either. He wants to reach 60-70 stores. As in the case of the other two brands, “everything depends on opportunities and economic development”.
Despite the falling consumer spending, he says he felt it was worth bringing two new brands on the Romanian market as it will rebound.
On September 1, the company started developing the two new store chains. Seven Lee Cooper stores (five in Bucharest, one in Constanta and one in Oradea) have already been opened and three more (Timisoara, Constanta and Craiova) are scheduled by yearend. The plan is to reach 30 stores in about three years. The same goes for Tom Tailor.
The company’s strategy is to open mainly in malls, but it does not rule out freestanding stores.
Besadoux explains that each store costs EUR100,000 on average and that funding comes from shareholders. In the future, he does not rule out the possibility of working with banks or foreign investors because “we believe there is potential on the Romanian market”.
As for revenue, the company expects EUR25 million for Kenvelo alone, from EUR22.5 million last year. When it comes to Lee Cooper and Tom Tailor stores, the only figure provided is the average income per square meter, of EUR5,000. The stores of the two brands have around 100 square meters.
Besadoux also says the three brands will not cannibalize one another as they target different clients.
(English version by Catalina Apostoiu)