Rizzo Group, the Swedish retailer which offers suitcases, bags, shoes and accessories, is suspending purchases “to get through the spring” because of a sharp slowdown in activity stemming from the restrictions imposed to combat the Covid-19 pandemic.
In a statement, the company, which is present in Sweden and Norway, is suspending the purchase “of goods and services in order to prioritize payments for ordered and delivered goods and services.” It will also focus on the payment of taxes and wages.
It said that restrictions on international and local travel, a minimum floor space of 10 square meters per person in shops and repeated calls by public authorities to limit store visits “have severely affected retail and especially the fashion and shoe sectors.”
Rizzo added that its stores were especially affected as the company is the largest retailer in suitcases and travel products in the Nordic region. The decline in the footfall in Sweden and Norway has led to promotional activity, which in turn has put pressure on the profit margin and earnings and resulted in the breach of its financial commitments. The company is currently in talks with its creditor bank to obtain a waiver on its covenants.
For 2021, Rizzo has obtained a further deferral from the Swedish authorities regarding the payment of SEK 30 million (€2.96m-$3.52m) of value-added tax and social contributions.
The company will also apply for an extension of the repayment of SEK 26.2 million (€2.59m-$3.08m) in deferrals obtained during 2020, which are currently due by June. It noted that other support measures, such as short-term layoffs and rent support and adjustments have been delayed.
Rizzo explained that the procurement ban will remain in force until support measures are defined and implemented.
The company noted that it has sharply reduced its cost base throughout 2020 and early 2021. It also believes that there is a pent-up demand for its products and expects to be profitable again once customers can return to its stores and that it can increase prices.
During the autumn and winter, Rizzo has converted 70 of its 100 stores in Sweden and Norway to a new format. It expects to have completed the conversion of the whole fleet by early May.
Rizzo Group was previously called Venue Retail Group. Along with the rebranding of its Swedish chain from Accent to Rizzo it introduced a new concept to broaden the stores’ offering. In Norway, the company’s shops continue to operate under the Morris brand.