After recent takeover of Billa by Spar, another major acquisition in Croatia’s retail sector is in the works.
Muller drugstore chain is in the final stages of negotiations to take over Kozmo, according to unofficial information confirmed by several sources. However, the main protagonists of the story have not officially commented on the issue. Muller ignored reporters’ requests for comment, while Agrokor, which owns Kozmo, said they would not comment on the issue, reports Jutarnji List on December 23, 2016.
According to people informed about the situation on Croatia’s drugstore market, the sale of Konzo has been certain for some time and is not unexpected. When someone operates for five years with negative business results, reduces the number of locations and fires employees, it is evident there is no hope because it is a bad project with a wrong strategy. Despite large investments, the company has lost its focus. In addition, insiders point out that Agrokor has repeatedly announced they would focus instead on its core business.
“Kozmo has been making losses for years mainly because its stores are at bad locations. Muller would probably completely change Kozmo’s approach, which means it would keep the few locations which are profitable and strategically important to them, and shut down the rest”, said Dragan Munjiza, the owner of the Jakov Viktor consulting firm and former CEO of Konzum.
Since its establishment in 2005, Kozmo has changed owners several times. It was founded by Agrokor, which in 2009 sold the company to Nexus. The aim was to strengthen Kozmo against its strongest competitor, Drogerie Markt (DM). In the meantime, Muller also entered Croatian market, and Bipa also appeared. Kozmo was part of Nexus for five years, and then it returned to Agrokor. However, in the last five years, Kozmo’s loses have grown year by year.
According to its official website, Kozmo today has a network of about 70 outlets and more than 400 employees. It operates in 17 counties, with most significant market shares in Dubrovnik-Neretva County, Lika-Senj County, Istria County and Požega-Slavonia County.
In the drugstore business, only DM and Muller are profitable, while Bipa and Kozmo post loses. The biggest company by revenue is DM, which in the past fiscal year increased its net profits by 8.4 percent compared to the year before. Due to the good results, the company has increased its staff, and it currently employs 1,159 people with an average salary of 9,201 kuna, which grows every year. Muller last year increased its revenues and net profits by more than eight percent compared to 2014. Last year, they hired 50 people, and the average net salary of 4,435 kuna has not changed much in recent years.
Bipa increased revenues and reduced net loss by more than 20 percent. However, it is still in the red. Despite this, it hired 24 employees last year, and the average salary was 4,517 kuna. New data about Kozmo are not available, but in 2014 the company had a net loss of more than 64 million kuna. That year, they employed 449 people with an average salary of 3,675 kuna.
The market is now virtually in the hands of the two biggest competitors – DM and Muller. “We monitor everything which is happening in the market, and we will continue to be vigilant. The time will tell whether we will benefit from changes in the market”, said Mirko Mrakužić, director of DM in charge of Croatia, Bosnia and Herzegovina, Macedonia and Montenegro.
In any case, the whole retail trade sector in Croatia is undergoing major changes, which was also seen a few days ago when SPAR announced that it would take over Billa stores in Croatia.
