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Hyparlo benefits from Romanian growth

02-Apr-2004

Focusing on expanding its operations in Romania has helped French retail group Hyparlo offset the impact of the sluggish domestic economy - and clear its debts to free up more cash for further growth, writes Chris Jones.

Hyparlo operates 15 hypermarkets as a franchisee of Carrefour, and like its partner has found the going tough in the French market over the last year with the sluggish economy curbing consumer spending power considerably.

While Carrefour has countered this by rolling out other store formats - discounters and convenience stores - Hyparlo only has the hypermarket format to play with, and has had to adopt a different approach.

 

This has consisted of widespread price cuts throughout its 12 French outlets, lifting sales 2.2 per cent as a result but shaving 7 per cent off its French operating profits at the same time. Total group operating profits nonetheless remained 6.8 per cent higher than in 2002 at €23.6 million.

 

In Romania, sales rose by more than 29 per cent as a result of a second store opening its doors in the capital Bucharest. Hyparlo's Romanian business has already reached break-even, and should progress at an even faster rate in 2005 following the opening of a fourth store there (in Brasov) at the end of the current year.

 

The combined impact of these two very different performances is a 3.4 per cent increase in sales to €942.5 million, at constant exchange rates and excluding new store openings. In actual terms, however, turnover was 6.7 per cent lower than in 2002 as a result of the sale of Hyparlo's Italian unit to Carrefour during that year.

 

Despite the negative impact on sales, the proceeds from this disposal have already been put to good use, eliminating Hyparlo's debts and freeing up €42 million for further expansion, both in Romania and France. No wonder, then, that the company is predicting that sales will almost double in the current year, despite the fact that it sees no sign an improvement in the French economy.

 

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