FASHION RETAIL: Apranga Readies to Bring New Brand. Inditex Again?

01 Jul 2011 • by Natalie Aster

Vilnius-listed Apranga fashion retail group is transferring its earlier declarations to bring new brands to the Baltics from paper to practice. In May, it started a new company named Apranga MLT. In a stock market filing, the biggest fashion retailer in the Baltics says the new company is linked "to a new project whose details will be revealed later after the signing of a franchise contract."

Rimantas Perveneckas, CEO of Apranga Group, says to news2biz that "the project will go beyond Lithuania and into the whole Baltic region, as all our franchise schemes do." Naturally, he would not reveal the name of the new incoming brand but news2biz tried to read some signs in order to guess the name.

Apranga's main franchise partner is Spanish Inditex, the world's biggest fashion group with net sales topping EUR 12.5bn in the 2010 financial year. Apranga already represents four of Inditex's best-selling brands in the Baltics (Zara, Bershka, Pull & Bear and Stradivarius) that are run by separate subsidiaries for each brand in each of the Baltic countries. The names of these subsidiaries clearly show which brand they operate, for instance 'B' in Apranga BPB LT stands for Bershka, or 'P' in Apranga PLT stands for Pull & Bear.

So, chances are that 'M' in Apranga MLT stands for Massimo Dutti (LT is, of course, for Lithuania), one of Inditex's major brands with 530 stores (of which 140 are franchised – the highest franchise exposure rate in the group) in 50 countries. The brand targets inde pendent, urban and cosmopolitan men and women.

In 2010, Massimo Dutti ranked third among Inditex's brands by net sales (EUR 0.9bn) after Zara and Bershka but was more profitable than the two largest concepts. Apranga Group enjoyed an 8% sales growth in Q1 2011 to LTL 86m (incl. VAT) as the Baltic private consumer market kept emerging from a deep recession; EBITDA improved by 29% to LTL 6m y/y. Sales expansion rates varied from 5% in the biggest market Lithuania (LTL 56m) to 8% in Latvia (LTL 20m) to a high 35% in Estonia (LTL 10m). The chain now numbers 116 stores in the three markets.

Online platform too, but when?

Meanwhile, in Europe Inditex is busy moving onto online retail. In February, it added Scandinavia to a group of markets where customers can buy the flagship Zara brand clothing online. This group now covers 16 European markets. The company also plans to take all of its brands online during 2011.

"Inditex will progressively extend Zara online sales to all the countries where the brand is present. In H2 2011, we will start online sales in the United States and Japan, two of the world's most important markets for e-commerce. Having said this, we cannot give a precise date when online sales will begin in the Baltics," was a comment sent to news2biz from Inditex's communications unit. "I think the main e-commerce problem with our region is the small size of the markets and, consequently, high logistics costs," Apranga's CEO Perveneckas comments.

Clothing popular online buy

  • The number of people that ever bought goods and services online in Lithuania nearly doubled to 21% during the last two years, according to TNS LT, a market research firm.
  • At least 17% of Lithuanians make an online purchase every month.
  • Tickets to various entertainment or sports events and clothing, footwear and accessories are the two most popular online product categories (32% of all purchases each), TNS LT says, followed by home appliances (21%).

The above news abstract has been taken from a bi-weekly newsletter to professionals doing business in Lithuania "news2biz – Lithuania".

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