A lesson in recovery for firms

The recent acquisition of the Kotsovolos electrical goods retailing chain by British group Dixons has again highlighted basic issues for the Greek market. What matters is not so much the picture and the accompanying impressions as entrepreneurship, that is, whether a firm has a business plan which it can implement and bring results. The lesson is important in many ways and many listed firms must study it. Kotsovolos, for which Dixons is paying a price well above its stock market value, is essentially a product of the period after 1999, when the stock market overheated; the firm made mistakes and sustained sizable losses but went on to implement a rehabilitation program which included closure of outlets, investment that improved productivity and the rebooting of finances on a healthier footing. It grew thanks to raising capital on the stock market but managed to limit the cost of rapid expansion. It also gainfully tapped some advantages it already possessed. Its network of outlets proved efficient – with some exceptions, the firm tapped banks’ thirst for more consumer loans, it was the authorized representative of top brands with goods in demand and it already had Dixons as a strong foreign minority partner. Some of the advantages may have been coincidental, but then again, few things happen by chance in companies. The important thing is that we have an example of an enterprise that managed to extricate itself from a crisis. This know-how is useful, if not to all, to at least one in three listed firms. Most of them still live under the influence of the past, hoping to solve new problems in the old ways, while – most importantly – sticking to the old valuations of themselves. This fixation on the past is perhaps the most important obstacle casting a shadow on their future.