Five years after closing down all of its international business, Castro Model Ltd. (TASE: CAST) is renewing it - this time in Canada. Sources inform "Globes" that Castro has concluded an agreement with a Canadian businessman who was a partner in the Urbanica fashion chain for the sale of Castro fashions in a Canadian chain, and for a possible opening of a chain of stores in Canada.
The plan is consistent with the declaration by Castro CEO and controlling shareholder Gabriel Rotter following the decision to close down the company's international activity: "I do not rule out the possibility that we will return to overseas business. We will do our homework, and I think you will see Castro overseas, possibly not in the same format."
Castro began its international operations in 2003 with the aim of becoming an international brand in Europe and East Asia. As part of this plan, the company opened stores in Romania, Germany, Switzerland, Russia, Ukraine, Kazakhstan, and Thailand. Castro shut down its business in Romania in 2009, and in Ukraine and St. Petersburg a year later. Castro liquidated all its business in Russia in 2011, with 10 stores closing down.
Castro began operating in Germany in cooperation with German company Heine. This partnership was unsuccessful, and Castro became the sole owner of the business in 2009, after receiving NIS 22 million in compensation from Heine. Following unsuccessful attempts to revamp its activity in Germany, Castro decided to close down its business there.
Rotter said at the time that Castro had expected its business in Germany to break even by 2012, but then realized that this would not happen. "We knew we were going to finance losses until the business was established. The plan was to break even by 2012, but unfortunately, Europe entered a financial crisis - a scenario we had not taken into account. Because we reached the conclusion that the business would not break even in the near future, we decided to sell it. Had it been in a different place, it might have succeeded," Rotter explained. At the same time, Castro also closed its stores in Switzerland.
Castro's foreign activity cost it tens of millions of shekels in losses, but in view of its past experience, it appears that its overseas development will be more cautious this time. Castro said in response, "The company will work in cooperation with the Canadian manufacturer to sell the company's items in the Canadian chain."
Published by Globes [online], Israel business news - www.globes-online.com - on December 28, 2016
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