"Flamingo" sees a recovery of the retail market in 2011

A recovery of the retail market is not expected to occur earlier than two years, say the officials of the only retail company listed on the BSE. "Flamingo International" (symbol:FLA), was badly hit by the contraction of the market in the first semester of 2009.

"The retail market shrank 45% in Romania, a drop surpassed only by that of Ukraine"s retail sector. Fortunately, the entire market will see a recovery in the final part of 2009 and in the beginning of 2010, and within 1 or 2 years the upwards trend will resume again, and we could even see the market grow 10%", said Stefan Treiber, CEO of "Flamingo International".

Compared to the first semester of 2008, the total surface of stores operated by the "Flamingo" group dropped from 59,000 sqm to 46,000 sqm, as the company closed 29 stores.

At the same time, the company cut its number of employees from 1,100 to 750, or 32%, of its workforce, and announced plans to further cut its staff by 10%.

"We"ve completed about 80% of our intended number of layoffs. There will be small adjustments, so we will lay off another 10-15% of our employees in the second half of the year," said Dragoş Simion, the Chairman of the Board of "Flamingo International".

The company plans to raise fresh capital to weather the current difficulties. To this end, on Monday shareholders approved an issue of bonds.

• Turnover of 187 million lei in the first semester

The retail market caused a 45% contraction of Flamingo"s sales, to 187 million lei. Company officials estimate that sales in the second semester would amount to 260 million lei.

"The company will no longer be losing money. After the restructuring and the approval of the recapitalization plan, Flamingo International will begin to see better results in particular thanks to support from its shareholders, banks and suppliers", Mr. Treiber says. He added: "I have already noticed a sizeable increase in sales starting in July, namely 30% over the previous month, double the growth rate of the market".

Sales of household appliances and IT&C products performed the best, rising 50% over the previous month.

Trading of "Flamingo" shares was suspended yesterday, with the last price putting the company"s capitalization at 22 million lei.

According to the latest filing, Dragoş Daniel Cinca holds 25.2% of the shares of "Flamingo International", "QVT Fund LP" holds 23% and "Nova Trade" Bucharest holds 14.94% of the shares, with 44% freely floated on the Bucharest Stock Exchange.