Consul is running out of time – Newspaper Kommersant No. 242 (7443) dated 12/28/2022
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One of the oldest sellers of Swiss watches and jewelry may leave the Russian market. The structures of the network “Consul” are threatened with bankruptcy according to the statements of Sberbank. The company’s difficulties began even before 2022 due to increased competition in the market and were exacerbated by the collapse of Swiss watch imports in Russia and the economic crisis, experts say.
Sberbank notified of its intention to apply to the court for bankruptcy of the structures of the Konsul chain of Swiss watches and jewelry stores, found “Kommersant” in the information register on the Fedresurs portal. Among the companies are LLC Consul Rus, which owns the Consul brand, LLC Business Consultant, LLC Consul on-line, LLC Rusyuvelir, LLC Shops Consul. The size of the debt in the messages is not disclosed.
According to the Unified State Register of Legal Entities, Consul Online, Rusyuvelir and Consul Stores are owned by Alexander Konovalov and Maria Ivanilova. And Consul Rus is owned by Business Consultant, the main owner of which, in turn, is the Swiss Sanzi.uhrenbeteiligungs.ag. Shares in several Consul companies are pledged to Sberbank. Sberbank declined to comment. The Consul did not answer Kommersant’s questions.
According to its own data, the Consul chain of Swiss watches and jewelry stores has existed since 1989. The chain’s retail stores now operate in Moscow, St. Petersburg and Samara, and there is also an online store. Among the brands in the range are Breitling, Frederique Constant, Raymond Weil, TAG Heuer. According to its own data, today the network includes about five boutiques.
Mikhail Burmistrov, CEO of Infoline-Analytics, notes that Consul’s problems began back in 2021 against the backdrop of increasing competition from Mercury Group and worsened in 2022 due to the almost complete cessation of supplies of imported watch brands. After the outbreak of hostilities in Ukraine, Rolex, Swatch Group (brands Swatch, Omega, Longines, Tissot), Richemont, Audemars Piguet and LVMH stopped delivering products to the Russian Federation. According to the Federation of the Swiss Watch Industry, since the beginning of the conflict by July 2022, exports to Russia have decreased by 98.3% year-on-year. In 2021, the export of Swiss watches to the Russian Federation grew by 35.3%, to more than €260 million, follows from the data of the federation.
Eduard Utkin, General Director of the Guild of Jewelers of Russia, says that in most cases, bankruptcy procedures for jewelry chains with a large credit burden are associated with a drop in turnover and difficulty in paying off debt. Lawyer and co-founder of atLegal law firm Nikolai Titov clarifies that not only the lack of funds to fulfill creditors’ claims, but also a delay in their execution in the amount of at least 300 thousand rubles can become the basis for bankruptcy. for a period of three months. Roman Makarov, a lawyer at NSP Law Firm, adds that many bankruptcies of jewelry chains in the past years were also associated with the receipt of significant tax claims in terms of VAT and other mandatory payments.
As Mikhail Burmistrov notes, the peak of demand for Swiss watches and other luxury goods in Russia occurred at the end of February and March 2022. But today, in the context of a sharp strengthening of the ruble and the outflow of part of the wealthy population, the demand of Russians has shifted in favor of buying abroad, primarily in the UAE, the expert adds.
According to Eduard Utkin, in general, a difficult situation is developing in the Russian jewelry industry, including due to rising metal prices. The situation is aggravated by the transition from January 1, 2023 to a common taxation system for all companies in the jewelry industry, which could lead to an increase in the number of bankruptcies in the industry, the expert warns.
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