“If this situation continues, our profit margins will take heavy reductions, because OBI is currently covering the depreciation of the leu without raising the selling price. The prices remained at the November’s level, while the national currency plummeted 15%”, sadi Quinzi.
In these circumstances, OBI’s manager is taking into account the likelihood of two possible scenarios for the DIY market in 2009. “Both scenarios are strictly linked to the currency exchange rates: if the leu steadies at its actual value, the do-it-yourself market is set to take the heaviest losses in the second half of 2009, and if the bearish trend of the leu continues at the same pace of the last three months, the difficulties will whip into shape in 2010”, said the head of OBI Romania.
“If the investment plans of the Romanian market’s newcomer are not affected by the shaky economic climate, the expansion of OBI chain in Romania might be put off by the real estate woes. “OBI’s investments in Romania are almost fully financed from own resources, and this is why the financial crisis will not change our expansion plans in the domestic market. However, this expansion might be put off by real estate market’s pitfalls”, Quinzi added.
Apart from the opened stores in 2008, OBI plans to set up two more units in first half of 2008. “We plan on opening two more stores (in Arad and Pitesti) until April. The investment in the two units will amount to about 10 million euros”, said the country manager of OBI Romania, adding that for 2009, the retailer’s investment budget is between 25 and 50 million euro.
Although OBI store in Bucharest was opened no sooner than late November last year, the representative of the DIY retailer says the sales of the unit beat the company’s expectations. “In Romania, as in the rest of Eastern European countries, the construction materials account for the utmost sale volume, while in Western European countries, the home decorations have a more significant share. Even if we will record considerable declines in construction materials, the loss will be compensated by the growth in products for renovation, as people prefer to refit their homes by themselves rather than using the services of specialized firms”, Quinzi thinks.
Currently, OBI Romania has 500 employees, and after the opening of the two locations scheduled for this year, the workforce will increase by 300-400.
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