Back in 2015-2016. many buyers were concerned that the economy-class footwear market began to decline steadily. Most of all our compatriots were worried about the question: "Why does TsentrObuv close stores in Russia?" In this article we will try to give a detailed comprehensive answer.
"TsentrObuv": a brief reference
So, why is there so great interest in this trading company? "TsentrObuv" was considered the largest network in Russia for the sale of shoes and accessories. The corporation operates under two brands - Centro and TsentrObuv. According to official data, it is registered at Plazia Consulting Ltd, located in Cyprus, which owns 99.9% of the shares. It should be noted that the shareholders of CenterObuv are also Russians - Dmitry Svetlov and Anatoly Gurevich. These citizens own 0.06% and 0.14% of securities, respectively.
The company was opened in 1992. In 2011, it expanded to 598 CenterObuvi stores and 148 Centro outlets. They brought owners an annual profit of 30 billion rubles. And in 2013, the total number of corporation branches in the Russian Federation increased to 1.2 thousand.
As for the further earnings of the corporation, at the peak of its success - in 2014, they amounted to 34.1 billion rubles. Net profit could be called 146.8 million rubles. 95% of the stores were directly managed by the company, and 5% were owned by franchise owners.
“TsentrObuv” became a favorite of the Russians because of one very attractive factor: a wide assortment of inexpensive shoes was presented in the network of its stores in the spirit of the latest fashion trends, but at the same time at a price corresponding to quality. The low cost was explained by the fact that the import of products to Russia was carried out according to "gray" and "black" schemes, minimizing customs costs. But why do they close TsentrObuv?
Crisis, problems and lawsuits
Like many other companies, whose income depended on the ratio of the dollar to the ruble, TsentrObuv started to have problems in the same 2014. First of all, this led to the fact that the corporation was not able to fully realize its main task: to “spin up” to gigantic turnovers, enter an IPO (first public sale of shares), sell its securities and leave the business.
Why did they close TsentrObuv in Moscow, St. Petersburg and other cities? The main reason is the exorbitant debts of the company, which had to raise prices for its low-grade products. In this way, she substantially “cut off” her attractiveness - they came to Centro for pretty, fashionable, but cheap shoes. As a result, demand in physical terms decreased by 20% (2015), and in money terms - by 10% (0.55 trillion rubles). At "TsentrObuv" formed debts to Chinese manufacturers, Russian landlords, problems at customs. The result was a "folding" of points of sale.
Thus, the largest seller of shoes in Russia was in 2014-2015. on the verge of bankruptcy. From the first days of 2015, 160 claims totaling 230 million Russian rubles were received from its counterparties and landlords, including in front of Sberbank, VTB, Gazprombank. That is why it becomes clear why they closed CenterObuv in Yekaterinburg, Moscow, Tomsk and other cities. Let us cite as an example some amounts from lawsuits:
- from the Itella logistics company: 24 million rubles;
- from Moscow Credit Bank and Sandorini: 4.09 million rubles;
- from Ryazan Shopping Mall Limited: 5 million rubles;
- from the Ostrov network: 3 million rubles, etc.
According to SPARK-Interfax, the total debt obligations of the shoe corporation ultimately exceeded 25 billion rubles, of which long-term - 15.3 billion rubles, and short-term - 10.1 billion rubles. In May 2016, criminal proceedings were instituted against the owners of Centro and TsentrObuvi under Art. 159, paragraph 1 of the Criminal Code. They are accused of credit fraud.
In this situation, not only one "TsentrObuv" was not lucky. Compared to the previous year, in 2015 the total number of sales of clothes and shoes decreased by 42%. Cash losses of sellers amounted to 523.4 trillion rubles (19% of normal turnover).
Why did they close TsentrObuv: statistics
According to general information, in 2015, TsentrObuv had to close 250 of its retail outlets in the Russian Federation, and about 100 in the first quarter of 2016. Three out of 33 stores remained in St. Petersburg, eight in Chelyabinsk, 6 stores were closed in Omsk and etc. However, even after this, the corporation remains a leader in the Russian shoe market.
Although representatives of TsentrObuv say that the closure of their outlets is a temporary phenomenon, it is hard to believe in this. According to estimates of sellers in this area? the price of imported shoes in the crisis increased by 20-25%. And this means that even the cheapest pair of Centro ballet shoes is unlikely to ever cost 299 rubles - as in the old days.
Situation abroad
Speaking about why they closed CenterObuv in Russia, one cannot but touch upon the state of affairs of the company in other countries. In preparation for the upcoming public sale of their shares, the owners of the corporation opened their points in several other countries as well. However, nowhere else did “TsentrObuv” get equal to Russian success. Mostly stores, due to lack of demand, closed after a few years. In Poland, TsentrObuv wasted about $ 170 million on a campaign to promote its stores.
Until recently, things were more or less tolerable only in the former Soviet republic - in Ukraine. In this country, since 2011, a certain TradeShoes company has been developing the network. However, the crisis also affected the Ukrainian segment of the shoe market - demand for products decreased by 30-50%, and the number of CenterObuvi stores as a result of this fell from 150 (2015) to 100 (2016)
Official Management Response
To the question "Why did they close CenterObuv in Tomsk, Yekaterinburg, Novosibirsk, Moscow and other cities?" company representatives respond that this process is associated with the planned optimization of the distribution network. They constantly analyze the profitability of all their branches and close the most unprofitable.
The owners themselves do not consider the situation terrible for themselves - the number of closed Russian stores is negligible for their network. TsentrObuv blames the debtors for landlords - the owners of retail space in the conditions of the crisis significantly increased the cost of rent.
Present and Predictions
Forecasts of experts about the imminent bankruptcy of CenterObuv did not materialize. Corporate outlets, albeit in smaller numbers, also function in a number of Russian cities. The crisis in the shoe market was temporary.
In the market of cheap shoes, Centro has a new serious competitor - the Kari distribution network. However, the owners of TsentrObuv do not believe that this company will beat them in terms of the number of stores and the availability of products.
Why did you close TsentrObuv in your city? The crisis was due to this, and with it the increase in the cost of imported shoes, which provoked a decrease in demand for it. As a result, the company was in debt, forcing it to liquidate its stores on a targeted basis.