Slovenia’s Mercator plans Balkan expansion

LJUBLJANA – Slovenia’s largest food retailer, Mercator, said it planned to expand into Bulgaria and the Former Yugoslav Republic of Macedonia by 2006 while consolidating its position in existing markets in former Yugoslav states. «At present, we are looking for (locations in) Skopje and Sofia. These are the more concrete plans,» CEO Zoran Jankovic told Reuters in an interview. «The plan is that if we buy a location this year, we can start building there next year and this means we could open in 2006,» he said. Jankovic said the company was also considering a foothold in Romania and Montenegro, but still has no definite plans there. The group’s investments this year are seen at about 33 billion tolars ($165.4 million), compared to 29 billion in the previous year, with more than half of the investments outside Slovenia. Mercator expects to generate 18 percent of the sales outside Slovenia this year and by 2008 intends to increase this share to 50 percent. Jankovic said Mercator aimed to become the second largest retailer in Serbia and Croatia and the leading one in Bosnia over the next three years. By February 2005 the company plans to open four new supermarkets or malls in Croatia, one near Belgrade and one in the Bosnian capital Sarajevo, while looking for fresh locations in the cities of Mostar and Zenica. «A 15 to 20 percent market share in each country is our target. This is what ensures existence,» he said. Mercator’s present market share in these states is below 5 percent, while the firm’s domestic market share is 42.2 percent. Jankovic declined to comment on the company’s first-half results, which will be released in late August. «It looks very good and the target will be reached,» he said. Mercator sees 363 billion tolars of group net sales this year, up from 331.5 billion in 2003, while the current year’s group net profit target is at 8.1 billion tolars ($40.6 million), up from 5.9 billion a year ago. Jankovic said changes to trade with other southeast European countries following Slovenia’s entry into the European Union in May would not affect the company’s results. «We have two (different) markets now, one in the EU and one in the countries of the former Yugoslavia. Nothing changed (in trading) with Serbia. Prices of some merchandise went up in Croatia, but that is a problem producers must solve,» he said. Shares in Mercator have risen more than 20 percent this year to 39,300 tolars, while the blue chip SBI 20 index has risen 18 percent over the same period.

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