Lorand Szarvadi, the manager of electronics and home appliances retailer Domo, estimates that no retailer can survive on the market for more than half a year in case sales drop by 50% as it has happened in the automotive sector at the end of last year.
"There is a risk for a decline for us, too, as it was in the automotive industry. Fifty percent would be disastrous because nobody would last longer than six months," Szarvadi said. So far, the top three home appliances retailers in Romania, Altex, Domo and Flamingo posted turnovers close to their revised targets for 2008 and growth compared with the previous year.
The local automotive market witnessed an about 50% decline at the end of the year, despite promotional offers introduced by dealers that entailed 5 to 30% discounts for certain models. At the end of the year, the total decline of car sales stood at 12%; this was the first year of decline since 2000.
The collapse of home appliances retailers in case sales plummet by 50% could be caused by the inability to sustain expenses and replace stocks if there are no revenues for six months.
Domo Retail, held by investment fund Equest Investment Balkans, which took over Bulgarian retailer Technomarket in 2007, estimates it will derive 230 million-euro turnover in 2009, which is 14% more than in 2008, when it posted sales of 202 million euros, below the initial forecast of 250 million euros, announced in mid-year. Results include the sales of the six Technomarket stores opened until the end of last year.
"We are working on a budget and we will not drop the plan of growing to 230 million euros. We rely on the surface area we had at the end of 2008, because we will not see growth of sales per square metre this year," Szarvadi said.
He added the company was currently working on two budget drafts, depending on the exchange rate trend, of between 4.3 and 4.5 RON/EUR.
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