Agrokor Agrokor Sells Velpro Centar in Čitluk
Croatian Agrokor is reducing its network of Velpro wholesale centres by selling its branch located in Čitluk in Bosnia and Herzegovina. As Brotnjo.info reports, local competitor Mališić will take over operations under its own cash & carry banner.
Only at the beginning of last year Agrokor decided to develop its wholesale arm in Bosnia and Herzegovina, bringing together the five existing outlets as a separate legal entity. According to Agrokor’s corporate website Velpro currently operates 24 stores in Croatia, eight in Serbia and five in Bosnia and Herzegovina.
Sebastian Rennack (Senior Retail Analyst)
Opinion Throwing Off Ballast
Retail behemoth Agrokor has set sail and is gaining speed after floating in dangerous waters for several months. After intense efforts to keep the company afloat amongst tug-of-wars between political factions and the growing interference of creditors, outlines of the long-announced strategic restructuring are now finally emerging. Helmsman Ante Ramljak is increasingly making hard, market-oriented decisions after defending his position at the wheel. Safeguarding Slovenian Mercator’s independence through canny reshuffling of shareholdings and prescribing a strategic downsizing programme for Konzum in Croatia, Ramljak’s focus has now turned to the remaining problem child, Bosnia and Herzegovina.
We assume that Agrokor’s Bosnian operations are a particular burden on the group’s results, considering that sales densities across all Agrokor sales lines in the country are – according to LZ Retailytics data – at half or less compared to those of its Croatian counterparts. In our opinion, the recently created Bosnian subsidiary has not yet reached sufficient market coverage to become profitable. Therefore, we consider it only a matter of time before Velpro in Bosnia closes its doors again. Particularly since Agrokor has said that its strategic priority for the banner is the Adriatic coast region, with a special focus on tourist areas. Taking into account the significantly lower profitability levels for all Agrokor banners in the country, we also expect to see the retailer scaling down the operations of its more than 250 Konzum stores before rebranding them under the Mercator banner, as already reported earlier by LZ Retailytics.