German chain REWE to take over Plus stores

German retail chain REWE Group will take over 146 outlets of the Plus Discount company in the Czech Republic and change their name to Penny Markets, REWE Group, which already runs some 350 discount outlets Penny Market and Billa and Delvita supermarkets in CzechRep, said on its website.

The price for which REWE Group will buy the discount chain Plus from the firm Tengelmann has not been disclosed.

If anti-trust office UOHS okays the acquisition, the number of Czech outlets belonging to the REWE Group will be raised to some 500 and their annual turnover should move around Kc50bn. Thanks to this, REWE Group would significantly strengthen its position on the domestic market.

Last year, REWE Group with estimated sales at Kc31.6bn ranked fifth on the relevant Czech market. The first place with Kc51.1bn sales was taken by German group Schwarz which runs hypermarkets Kaufland and discount shops Lidl on the Czech market.

REWE Group will raise the number of its discount shops in the Czech Republic to 317 after the purchase of the 146 discount shops Plus and will be the strongest player on the Czech discount sales market.

REWE Group's management estimated Monday that after the integration of the Plus shops, the chain of the 317 Penny Market discount shops will have annual turnover at roughly Kc32bn. The number of outlets of rival Lidl was roughly 50 percent lower last year and its sales reached around Kc13bn in 2006.

Czech server iDnes said that the purchase contract was signed on Monday afternoon. Eastern Europe is the key to expansion for REWE Group, board chairman Alain Caparros said, adding that the Czech Republic had a big strategic importance in this respect seen its suitable geographical location.

The management of the firm Tengelmann, which now runs the discount Plus outlets in the Czech Republic, confirmed the agreement Monday. Karl Erivan Haub, the principal shareholder of the Tengelmann group, said that the sale to REWE was made after thorough considerations. Plus Discount has been active in the Czech Republic since the year 1992.

The retail chain Plus had a Kc47.8m loss in the financial year 2006/2007. Its net profit fell by Kc185m to Kc85.3m in the year 2005/2006 already. On the other hand, discount shops Penny Market fare well in the Czech Republic. In 2006, they raised net profit to a record Kc468m from 2005's Kc319.5m. The Penny Market retail chain's sales grew to Kc16bn in 2006 from roughly Kc14bn in 2005.

Tesco and Aldi were also among companies interested to buy the retail chain. Experts have been speculating on Aldi's arrival onto the Czech market for a long time already. Aldi, which has several thousand outlets with food and consumer goods in Europe, will soon open its first shops in Slovakia, Hungary and Poland. It has set up a subsidiary in the Czech Republic.

Plus is the fifth retail chain to leave the Czech market. Julius Meinl quit in 2005 and French Carrefour and Germany's Edeka followed a year later. The chain of 27 supermarkets Edeka and eleven hypermarkets Carrefour was gained by Tesco Stores CR. Julius Meinl shops now belong to the firm Ahold. Billa took over nearly 100 Delvita supermarkets last year.

According to preliminary results, the ten largest retail chains in the Czech Republic raised sales by Kc31.3bn to a record Kc289.1bn last year. They raised their market share from 63 to 66 percent.

Source: praguemonitor.com

Publication date: 3/5/2008

respond to this article    print

Receive the daily newsletter in your email for free | Click here

 

<< back | www.freshplaza.com