Rimi Latvia headed into black

  • 2007-07-25
  • From wire reports

PROFIT HUNGRY: Rimi's general manager says the chain's period of expansion is over, and it's now time to start raking in the cash.

RIGA - The food and fast movement goods retail chain Rimi Latvia plans to break into profit next year, Rimi Baltic's general director Antonio Soares told Lietiska Diena in an interview. He said that due to a focus on expansion and growth, it was impossible to achieve profitable results for the chain until now.

"Our mission in the Baltic states is to grow as fast as possible, as well as to be stable and yield return to the parent company. Most of our stores are new, they were opened not more than a year ago," he said. He added that it is usual in opening up new stores to take time to grow the sales. New stores tend to always make a loss, and Rimi Latvia during the past year has opened many hypermarkets. They still haven't reached the level of sales that yields a profit.

The time for development is even more important with large stores. "The low price store Super Netto can reach full capacity within six months, while hypermarkets like Galerija Azurs need more time," says Soares.
"We have to think of productivity all the time. It could be achieved only through centralized logistics, as well as centralized production," says Soares, adding that more emphasis will be placed on self-service stores in the future and, possibly, with self-service cash registers that could be introduced in Latvia next year.
Rimi Baltic plans to open small shops in the future as well as open three more hypermarkets, one in Riga and two outside Riga. "The regions have space not only for the small shops, and regional centers cannot complain about a lack of people during the weekends; we plan to open larger shops there. At present we are discussing land issues," said Soares. Rimi Latvia will invest 15 million lats (21.4 million euros) in development this year, while next year investment is planned at 20 million lats.

In 2006, Rimi Latvia posted 429.3 million euros in sales, which was a 23.9 percent increase over 2005. Consolidated turnover of the Rimi Baltic Group in 2006 was up 20 percent compared to 2005, reaching 970 million euros. Rimi Latvia currently has 90 retail outlets, while the total number of Rimi Baltic stores covering the Baltics is 207.
Rimi Baltic, founded in 2005, is fully owned by Swedish-controlled ICA Baltic, which used to own a 50 percent stake in Rimi Baltic and now has bought another 50 percent from the Finnish concern Kesko Group, which formerly managed Citymarket and Supernetto as well as the Rimi stores.
Rimi Baltic claims a 16 percent market share and says it is the second largest food retailer in the Baltic food retail market.