TxM wins battle with SAP
Retail & leisureThe company generated PLN 377.8 mln in revenue last year, with an operating profit of PLN 16.7 mln and a net operating profit PLN 13.1 mln. The results achieved were in line with financial forecasts. This year TxM management has plans to extend its network in Poland and abroad. In 2016 the company’s sales in Poland grew by 1.1 pct and its profit from domestic sales by PLN 5.4 mln. TxM’s losses abroad also grew, by PLN 2.8 mln. One reason for this was the expenditure required for the expansion of the chain. At the end of the year the company operated 11,400 sqm of retail space in Romania – a 790 pct increase on the previous year. In Poland TxM holds 84,600 sqm (an increase of 15 pct y-o-y) and 4,400 sqm in the Czech and Slovakian republics (an increase of 24 pct y-o-y).
This year the company is planning to start up an online shop for the Romanian market. Last year its Polish online operations generated a turnover of PLN 9.4 mln, 47 pct more than the previous year.
The company has had to invest in enlarging its distribution centre. “Basically, our warehouse in Mysłowice couldn’t cope with so many outlets, as a few years ago it was originally designed to supply 500 stores. Its size has now been doubled,” explains Lech Przemieniecki, the CEO of TxM.
The company has been integrating the SAP system into its operations since January. The system will process orders from suppliers, stock in shops, warehouse operations, price management, accounting and controlling. The company has experienced problems with the new system, mainly in terms of low stock replenishment, which impacted sales volumes in January and February. “January and February’s sales were not as good as we had expected. The system blocked the stock replenishment. As soon as we iron out such problems, we should be able to achieve some spectacular successes. The stock replenishment issue should be resolved in Q2,” says Mr Przemieniecki.
With new store openings planned for Romania, in Poland a number of outlets will be closed due to decreasing customer turnover in some locations. Some will be moved to other locations, while others will be renovated and a new concept introduced. “The size of the stores may increase, but the number will remain the same because of relocations to bigger areas,” adds of the CEO of TxM. The opening of a single TxM store requires expenditure of app. PLN 200,000–300,000.
“The Czech Republic is a difficult market because it is saturated, specific and mature. It was intended to be our testing ground before entering Romania. So we opened small format shops there but failed to compete effectively with Pepco and Kik,” admits Lech Przemieniecki. The company is aiming to generate profits from the Czech market this year. “We are negotiating cost-cutting, but have not ruled out closing more stores,” explains the company’s CEO. These closures could take place in early Q2. “We would like to make the cost of the closures as low as possible. Such closures have already been deducted from our 2016 results. They shouldn’t have a significant impact, if any, on the figures for 2017,” explains Lech Przemieniecki.
The company prefers their stores to be franchises. “We are transforming the stores now and app. two-thirds of them are franchises. The more, the better. This model has been proven to work well in Poland because we have this enterprising spirit. Moreover, this model only has advantages. It is more difficult to be an entrepreneur in the Czech Republic, and they are virtually non-existent in Romania. Currently Romania is promoting micro-businesses among its citizens, so perhaps soon it will be possible to open franchises,” explains the company’s CEO.
In 2016 TxM Group generated PLN 377.8 mln in revenue –. 20 pct more than the previous year. Its gross margin increased by 22.6 pct to PLN 158.1 mln. Cost of sales and general management, in turn, grew by 30.8 pct to PLN 141.4 mln. As a result, in 2016 the group developing a network of discount clothes shops made a profit from sales amounting to PLN 16.7 mln, i.e. PLN 4.2 mln less than the previous year. The operating profit came to PLN 16.6 mln, down from PLN 21 mln in 2015, while its EBITDA amounted to PLN 22.9 mln (PLN 25.2 mln the previous year). In 2016 TxM Group generated PLN 13.1 mln of net profit (PLN 16.1 mln in 2015).
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