The retailer posted 1.84 billion lei (EUR417 million) sales last year, an increase of almost 27% on 2013. The increase is because of both expansion and like-for-like growth, company officials say.
However, ZF has calculated that average sales per store stood at RON6.7 million last year, lower than in 2013 and the same as in 2008, therefore a six-year low.
Sales per store were calculated without taking into account the opening date of each store. Factors that may affect sales per store are the high number of openings over the last few years, as supermarkets have not had time to reach their potential yet.
“We’ve been seeing like-for-like growth every year since 2010 and we want to preserve the upward trend,” says Daniel Carstea, chief executive officer of Profi.
“The decline (that ZF calculations show i.e.) is because of two things. First of all, we opened a high number of stores last year and they have not been in business for a full year yet. Second, the retail area of the new stores is smaller, and so is their sales potential.”
Carstea was appointed CEO of Profi last year, when he was promoted from the position of chief operating officer. He has been with the company since 2010.
Profi opened more than 70 stores and closed two in 2014, which was its fastest development pace ever. It has at least as many new stores planned for this year, as well, but its representatives say it might open up to 100 stores.
The company has already started this year’s expansion process, so it now has 288 stores compared with 275 at the end of 2014. Profi seeks to grow to 500 stores by the end of 2016.
Enterprise Investors bought the Profi network, which numbered about 60 stores, at the end of 2009 and paid EUR66 million for it. At the time of the takeover, it announced intentions to double the number of stores in three to four years.
ZF estimated the expansion investments planned at the time at EUR45 million to EUR50 million. Today, more than five years later, the number of stores increased by almost five times.
The acquisition of Profi marked the return of the private equity firm to the retail sector after having sold the 21 Artima store chain to Carrefour in 2007.
The company has several store formats, going from 200 square meters to 1,000 square meters in floor space. It has only a few 1,000 square meter stores, though, and its top performers are the 500 to 600 square meter stores, as it has previously said.
As the more and more modern retail stores have opened over the last few years, the available locations have become smaller so sales per store have shrunk, accordingly. Regardless, Profi is aiming for EUR1 billion revenue by the end of 2017, at which time its owner, Enterprise Investors, might have it go public and listed on the Warsaw and Bucharest Stock Exchanges.
“We haven’t felt the crisis in the last four years. As for this year, I don’t expect significant changes. The experience of the last few years has taught us to do our own estimates and not expect help from external factors (the economy in general i.e.),” Carstea said.
Profi will continue to expand in 2015, as will rival Mega Image and each of them might open as many as 100 stores. Profi will grow by opening new stores and buy buying local networks, as previously announced. This has been its business model in the last few years. Expansion will also entail hiring staff.
“We had 7,003 employees at the end of 2014 and will go beyond 8,100 by yearend,” Carstea said. The over 8,000 employees will put Profi among the 15 largest private sector employers in Romania.
(English version by Loredana Fratila-Cristescu)