Business failures point to worsening economic climate

Business failures are succeeding each other, while indicators of business and consumer confidence are at their lowest levels since 1995, according to a study released yesterday by the Foundation for Economic and Industrial Research (IOBE). Yvonni Stores, Greece’s third largest cosmetics retail chain and a minor supermarket chain, Antonopoulos, have already declared bankruptcy. Two more bankruptcies were rumored to have taken place yesterday, affecting the «Nostimo» company, owners of the Musses chain of dried fruits and nuts, and the Avgerinopoulos Group’s Beauty and Diet chain, which employs 1,600 people. The latter made a half-hearted effort to deny the rumors, saying that it is «in the interest of our employees, at the time, to avoid a climate of instability.» Yvonni Stores’ bankruptcy did not surprise the market, since the chain had been facing liquidity problems for several years. However, the company is in the midst of a court dispute with a holding company said to be controlled by the Hondos family, owners of the largest cosmetics retail chain, which has recently opened two superstores in the center of Athens. Yvonni Stores’ difficulties had led its shareholders to conclude a preliminary deal, at the beginning of 2000, to transfer a majority of shares to the holding company. Before that, they had tried, unsuccessfully, to sell the stake to the Papaellinas cosmetics group. However, Yvonni’s shareholders changed their minds and went to court, asking that the preliminary deal be voided. The company had a total of 10 stores, eight of which were franchises. The Antonopoulos bankruptcy, announced on Saturday, is the result of tough competition in the retail sector. It is the first supermarket chain to close in the past two decades. The chain’s small number of stores and, in particular, the fact that all its stores were rather small by supermarket standards, never made it an attractive target for a takeover as happened with other small and medium-sized retailers. The «Nostimo» company is controlled by the Papadimitriou brothers, former owners of nuts processing and packaging firm Alexander, whose factory ceased production in 1997. Prior to that, they had even envisaged listing Alexander’s on the Athens Stock Exchange. They then created the Musses retail chain, which had grown to 40 outlets by the end of 2001. Of these, only 10 were company-owned; the rest were franchises. Five of the 10 company-owned outlets have already closed. The brothers envisaged expanding the retail chain into Italy, but financial reality rapidly caught up with them. IOBE, a research foundation affiliated to the Federation of Greek Industries (SEV) announced yesterday that the economic climate index had fallen to 100.7 in Greece, the fifth such fall in a row. Although higher than the comparable index for the European Union (which stood at 98.2), the economic climate index was at its lowest point since 1995. The index is a combination of four sub-indices: a consumer confidence index and business expectations indices in industry, retail commerce and construction. Of these, consumer confidence and business expectations in construction improved, but business expectations in industry and retail fell steeply.

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