Can Baumax dig itself out of a hole? |

Can Baumax dig itself out of a hole?

Can Baumax dig itself out of a hole?
ZDROJ: CC BY-SA 3.0: Jozef Kotulič, Wikimedia

Jan Šindelář
Daniel Novák

Struggling Do-It-Yourself chain Baumax is making big changes to repair its fortunes. Billionaire Jiří Šimáně and his rival Uni Hobby chain say they may have the fix for its Czech stores.

Austria - based DIY and home improvement network Baumax has confirmed its exit from Hungary and the start of a new market model and investments to be rolled out in the Czech Republic, Austria and Slovakia.

The change of direction comes at a time when the company is shrinking its business and, according to some information, is for sale. The Baumax stores in the Czech Republic have caught the eye of Jiří Šimáně who is behind the rival Uni Hobby chain.

Seeking a new path to prosperity, Baumax, among other moves, is introducing e-shops that are run in close relation to the ‘brick-and-mortar’ stores. It is a concept which Uni Hobby is also working on. Baumax has successfully delivered a pilot project under its new market model in Tulln, Austria. The changes will be brought to the Czech Republic and Slovakia this coming autumn. Baumax describes its domestic market of Austria, along with the Czech Republic and Slovakia, as strategic markets which it does not intend to abandon. “Baumax is not planning to exit the Czech Republic,” said a spokesperson for the company, Monika Voglgruber.

Such an assertion does not, however, apply to other countries in which the chain operates. Its goodbye to Hungary, for instance, was said in January. “Due to a difficult situation we must gather our strengths in other countries and unfortunately that meant a farewell to Hungary,” said Chairman of the Board of Directors at Baumax Michael Hürter.

Last year, Baumax sold its business branches in Romania and Bulgaria. “A decision on the future of Baumax in Croatia will be made next month,” the company added. The opportunity to acquire Baumax’s Czech business, meanwhile, would boost entrepreneur
Šimáně. His Uni Hobby chain currently has to rely on organic growth to expand. Šimáně said no negotiations for an acquisition were under way and that his information was that Baumax was not on the market. If it did come on to the market, then we would have an interest,” he told E15 daily. Also ready to pounce is Germany-based DIY group OBI, according to German daily Lebensmittel Zeitung. It is said that OBI has already been in discussions with the creditor banks of Baumax and has presented a takeover offer together with Italian investment bank Mediobanca. Baumax declined to comment on these claims.

Znojmo retail park sold to Belgians
Austria’s Baumax has begun to shed non-core assets. The company recently sold a retail park in Znojmo for an undisclosed price. “It is one of the quality retail parks, which Baumax owned due to the realised synergies and other effects it produced for its stores. A foreign investor presented a very good offer which Baumax did not refuse,” said Petr Kozojed, Head of Investments at Professionals, a real estate agency which assisted Baumax during the sale. The new owner of the retail park is a Belgian company.

Events at the company correspond to the fact that its owner, Karlheinz Essl, last year had to sell part of his art collection. Reasons behind the sale included the debts of Baumax which, according to the latest available information, have grown to 390 million euros. At the operating level, the company in 2013 suffered losses of nearly 45 million euros. More recent financial results are not yet obtainable.

Baumax cannot claim to be doing any better in the Czech Republic – its biggest market apart from Austria – than it is elsewhere. In 2013 in this country, it slumped to losses exceeding CZK 471m. Its revenues for the year dropped 10 percent to CZK 3.9bn compared to the 2012 performance.

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