Centrofarm has already revised budget 33 times this year

Centrofarm, the network of pharmacies whose business stood at
16 million euros in the first half of this year, has rethought most
of its expenses, which could allow it to make profit in the second
half, after 1.5 million-euro losses in the first six months.
“We negotiated discounts for drugstore openings with our
suppliers, we reconsidered consumables and also looked at the
marketing budget. Salaries are the only thing we did not touch,”
said Dorin Catana, the company’s general manager.
Centrofarm operates 60 pharmacies, half of which are located
in malls, and is currently employing approximately 500 people. Most
locations are rented, and, after negotiations conducted in two
stages since the beginning of the year, the company got landlords
to lower the rent by 25% on the average. The company is not paying
any rent for some of its stores located in malls.
“We are trying to cut losses. It was the only solution to
avoid closing the respective stores,” Catana says.
Centrofarm posted 46% higher turnover in the first half of
this year, compared with the corresponding period of 2008, but the
growth pace has slowed down over the last few months.
“Sales were slower in September. We had expected 6% growth,
but it was below 1% (compared with August i.e.), which took us by
surprise,” Catana said.
He adds that there is not a single explanation for this
decline in sales, with each store coming up with “its own version”
of it. “There were declines in traffic, and in the average cash
receipt,” Centrofarm’s boss explains.
Centrofarm has closed three stores since the beginning of the
year, but is keeping an eye on others, too. On the other hand, it
is considering opening three more.
The company is currently working on next year’s budget and
says that so far, the 2009 spending and revenue budget has reached
version number 33. However, the revenue threshold this year will be
10% lower than initially estimated.
“This year has been really strange. Each exchange rate or
legislative change brought about new changes in turn. We would
modify the exchange rate to 4.3 RON/EUR and get a result. We saw
the euro going up, we went to 4.5 RON and get another. We had to
look at expenses again. The Health Ministry was taking steps that
had an impact on us directly, we looked over the budget again. Any
1% change can mean millions (of RON i.e.),” Catana added.