By  on January 27, 2010

MILAN — Gruppo Coin SpA said Tuesday it expects to become the country’s largest clothing retailer following the acquisition of the Upim clothing chain in December, and to reach consolidated revenues of 2 billion euros, or $2.8 billion at current exchange, in the next three years.

“This is an extraordinarily important operation for Gruppo Coin,” said chief executive officer Stefano Beraldo, pointing to Upim’s 149 directly operated stores, more than 2.2 million square feet of selling space, most often centrally located in top Italian cities, and 2009 revenues of 430 million euros, or $597.7 million at average exchange rates. Beraldo said between 10 and 20 Upim stores will be converted into Coin units by 2011. By August, around 60 Upim stores will morph into points of sale dedicated to Coin’s brand OVS Industry. Upim also counts more than 200 franchised stores, which will maintain their original banners. The group will reach a total of 900 stores.

Beraldo said Coin plans to capitalize on Upim’s potential. “Sales at Upim have so far been unsatisfactory, with a gross margin below 50 percent hurt by heavy discounting, a debt of 150 million euros [$208 million], and high fixed costs,” said Beraldo.

To help complete the acquisition, former Upim shareholders have agreed to inject 15 million euros, or $21.2 million, in the group. The banks Upim is indebted to will cut their credit by 30 percent and Pai Partners, which controls Coin, together with Beraldo and other managers, also provided fresh cash totaling 39 million euros, or $55.2 million. “We are not raiders, we’re here for the long run and believe in this company, which counts 10,000 employees,” said Beraldo.

Coin will develop new concept stores and formats for Upim and will launch a Web competition, which includes a 10,000-euro, or $14,000, award, to conceive a new Upim logo. Iconic designer Elio Fiorucci, whose Love Therapy line is available atOVS, will be part of the jury that will determine the best design.

New product categories, from eyewear and travel bags to footwear and coffee, are also expected to help expand Upim. “It’s a return to the concept of the emporium, but more modern, because every area will be managed by companies that are the best in their categories, with corners and shop-in-shops,” said Beraldo.In 2008, Gruppo Coin, which is listed on the Milan Stock Exchange, reported sales of 1.14 billion euros, or $1.67 billion at average exchange rates. On Tuesday, Coin shares closed up 8.49 percent at 4.44 euros, or $6.28. Upim is not a public company

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