Lorand Szarvadi, the founder of the electrical and IT retailer Domo, who acquired the ElectroWorld network in Hungary in an approximately 5 million-euro deal wants to build a company there that could compete with Media Markt, the rival network held by Metro group, on equal footing.
Szarvadi made this acquisition because the Hungarian market only witnessed up to 10% decline in this sector, the same as in Western Europe, compared with the market in Romania where home appliance purchases fell 36% in the first half.
"It was self-funded. It was not a large sum, it was a good deal. I own 60% in the company and the Hungarian partner takes care of the management. We are trying to compete with Media Markt there, the only company with a well-oiled structure," Szarvadi said.
He took over ElectroWorld with the money he got from the sale of 75% in Domo to Equest investment fund for 75 million euros.
ElectroWorld Hungary comprises nine stores, with a 4,000 square metre retail area, and its market share stands at 9-10%, Szarvadi says. Media Markt is the leading electrical retailer, with 22 stores and 26% market share.
"I want to put the experience I've gained to use in Hungary. It is a more developed country because Hungarians are still buying, they did not have the retail slump we did and the solution to this market is a company with an efficient structure," Szarvadi said.
For 5 million euros he took over about 10% of the market, a company with 8 million euros in working capital and annual turnover of about 100 million euros before the onset of the financial crisis. "We want to start making profit in Hungary in 2010," Szarvadi said. He added that the ElectroWorld chain would increase by three stores by the end of the year.
Lorand Szarvadi, 42, is now nearing the end of his term at the helm of TehnomarketDomo (TMD) group on the local market.
