The year 2009 is an exception, though, and can be considered a crisis year because things changed suddenly and completely compared with the boom days. A balance set in in 2010-2011, the businessman said, adding it could be regarded as normal under the circumstances.
“We can say about 2009 that it was a crisis year, a year when economic figures worsened a great deal, when significant cost adjustment was needed. Now, even though purchasing power remains low and competition strong, one has to conduct one’s business under the circumstances. The last few years have been linear, therefore there is more predictability than back then,” says Filip Schwartz.
The linearity of the 2009-2011 was disrupted by the political feuds of recent months, which had an impact on the economy. The main effect was the heavy fluctuation of the exchange rate, and the leu lost significant ground to the euro.
“The problems of the last few months did not show in consumer spending; an explanation for this can be the discount period. The business sector, however, was hit by the leu depreciation, which will show in the profit and loss account. We’re not talking leu/euro exchange rate here, but also the leu/dollar rate, which is very important for our industry regardless of the manufacturing place.”
Otter Distribution imports in Romania two of the world’s best-selling shoe brands, Clarks and Geox.
The businessman says the dollar is the main currency in the footwear industry for both acquisitions of leather and manufacturing of soles.
Schwartz, 41, was born in Bucharest and started the footwear business in Romania almost two decades ago. He owns 97% in Otter, while Vilma Schwartz owns the rest, according to Trade Registry data.
Otter Distribution posted EUR16.5 million revenue last year and includes five retail chains: Otter (33 multi-brand stores), Aldo (4 mono-brand stores), Geox (4 mono-brand stores), Clarks (2 mono-brand stores) and Promenade (3 multi-brand stores). Aldo is the latest addition to Otter’s portfolio, after the Romanian entrepreneur took over the franchise from businessman Octavian Radu. This brand is different from the rest of the group, as it relies on design for sales and therefore is not a competitor for the other Otter brands, Schwartz says.
“The turnover will increase because of this acquisition. Looking at the network, the only month of like-for-like growth was April. We posted decline in all the other months, but the decline was manageable at 5% to 15%.”
The decline showed in the number of customers and in the cash receipt value.
Filip Schwartz says this is due to the fluctuating exchange rate, low purchasing power and economic stagnation. He explains that with a weaker leu, it is only natural that consumers earning their income in lei and paying installments in euros should have a lower purchasing power.
“We hope the next few months to be similar to those in the first half in terms of sales. In other words, we hope for peace and quiet in the economy and politics, because this is the only way to boost the country’s credibility.
Stability in the economy and politics should help Otter Distribution end the year with more than EUR18 million in revenue, which means growth of 10%.
“We are looking at every expansion opportunity. We don’t turn down any space where we can open a store that can turn a profit in a reasonable amount of time.”
The company has opened an Aldo, a Clarks and two Promenade stores in Bucharest. The list of planned openings includes a Promenade in Focsani and Otters in the malls to be inaugurated in Ploiesti, one of which developed by AFI and the other by Carrefour in partnership with NEPI.
(English version by Loredana Fratila-Cristescu)