“Operationally, thanks to the continued process of making the business more efficient, in part by making the store network more efficient, we saw a 25% improvement in our performance against 2010. For the whole of 2012 we expect an improvement in the operating performance by up to 50% against last year,” says Radu Lotrean, founder of insolvency firm Casa de Insolventa Transilvania (CITR), the company in charge of Leonardo’s judicial reorganization.
But Lotrean is reluctant to give details on when the return to profit could occur. The last profitable year for the Bihor-based retailer was 2007, when Leonardo’s profit amounted to EUR2.5 million. In the years that followed the company turned to losses that exceed EUR70 million during 2008-2011. In 2009, the year when the company filed for insolvency, it made losses of EUR53.2 million.
After almost 15 years on the local market, Leonardo went insolvent in 2009 pressured by creditors, after the company had reached its peak turnover in 2008, at around 500 million lei (around EUR136 million), more than twice the current turnover.
In the company’s best year by turnover, Leonardo had over 250 stores – 180 in Romania, 64 in Hungary and five each in Bulgaria and the Republic of Moldova. Leonardo has been one of the retailers to make the most drastic cuts in the number of non-performing stores, closing down stores held abroad as well as tens of local ones.
In November last year representatives of CITR announced that Leonardo had closed down all its subsidiaries on neighboring markets, which between 2007 and 2008 would bring the company around 50% of its EUR135 million revenues in 2008.
But the company resumed its expansion in 2011 and now owns 143 stores, all of which are in Romania, according to the Leonardo website. As for future expansion plans, Radu Lotrean says the retailer continues to look for spaces with potential. But he doesn’t offer details on the number of stores that could open by the end of this year.
“Our policy is to focus on sizeable projects, with good customer traffic. We area also targeting major cities where we don’t have stores yet.”
For this year, Lotrean expects a similar turnover in 2012 to the 2011 one, i.e. of around EUR60 million.
(English version by Daniela Stoican)