The director of Slovenian Mercator, Toni Balažič, believes that now is not the right time to sell the retail chain, a point he warned the majority owners of the company about last year.
– “The process of selling Mercator under these circumstances will be difficult to implement, and we clearly warned shareholders about this back in the autumn of last year,” said Balažič on Friday in an interview for the Telekom Slovenije portal.
He added that Mercator is facing increasingly strong competition, declining revenues, a high level of indebtedness, and excessive costs, so the business needs to improve in order for the company’s value to increase.
The current management has already taken measures in this direction that are yielding results and the situation is improving, but ‘the bride must be beautified before she gets married,’ Balažič said, suggesting to the consortium of shareholders, who recently embarked on a new attempt to sell a majority stake in Mercator, that the timing for such a move is not right.
He noted that Mercator operates profitably in the Slovenian market despite declining consumption. Additionally, although it is relatively highly indebted, Mercator has no issues with current liquidity, meets its obligations, and is in constant contact with banks to improve its financing structure.
He emphasizes that Mercator is a healthy company, but carries some problems that date back to the past when it expanded significantly and entered businesses that do not represent its core activity, which the current management aims to change by implementing a cost-cutting and rationalization policy.
– “Our core business in Slovenia still generates profit. Our problems arose due to business diversification and poor decisions from the past. At that time, high indebtedness was possible with cheap loans, under the assumption that consumption would continuously grow and that the economic conditions would be maintained. However, times have changed, and therefore Mercator must change such a flawed business strategy,” said Balažič.
