November 16, 2021 – Varteks has been rescued from sinking once before, and this fashion brand has since become very well known and well respected throughout the Republic of Croatia and beyond. Tomislav Babic says that despite the problems that have arisen again, the company will not abandon Varazdin.
As Novac / Jutarnji / Visnja Gotal writes, the Varteks of Varazdin are emerging again from another crisis. After wage arrears accumulated during the summer months, one of the few remaining textile giants has finally stabilized its business. By selling part of the company’s inactive real estate, the arrears were managed to be paid and raw materials were purchased in order to increase the production capacity of the company.
The coronavirus pandemic has pulled the textile industry into very uncertain waters, so even the biggest have started to need to further streamline their business, among them Hugo Boss, who terminated his contract with the people of Varazdin to sewing top quality men’s suits. Varteks, who is still recovering from large debts incurred by the company’s former management, struggled to terminate his contract with Hugo Boss. All this misery after, just three years ago, it got a new ownership structure and strengthened its position in the market.
If Varteks had not had thousands of square meters of idle properties in an attractive location in Varazdin to his credit, partly along the main Zagreb road, partly tucked away in a quiet family neighborhood, he would hardly have weathered the coronavirus crisis, despite new leadership and loyal employees. Many with significantly better starting positions at the start of the pandemic also failed.
That said, Varteks was once again rescued from the depths and the company’s new fall / winter collection won over audiences and critics alike. Tomislav Babic does not intend to hide his satisfaction:
I am even surprised at the speed at which everything is progressing. The land to the northeast of the complex was sold to the Austrian company SES, a sister company of Spar. There will be a commercial park with several stores. We also have a pre-contract with Kaufland, which can be turned into a full contract very quickly. In addition, the City of Varazdin is interested in an old hall we own, which would be converted into a concert hall if it decided to take it. It is a former tailor’s workshop and the building of a former machine shop, a very interesting architectural building with industrial architecture, for which, in addition to the administration of Varazdin, there are other interested buyers .
I wouldn’t want to talk about numbers and numbers until things are done and finalized. When we sell the office building, the Varteks will be leased, which is more financially viable for us. Varazdin lacks such an office building format and these are all buildings that once enjoyed preliminary curatorial protection as cultural heritage. They will not be demolished, even if they are no longer under protection, but our intention is to preserve the precious heritage anyway. Due to the size and position of this building, it is ideal for, for example, a larger medical practice or a law firm. There are still a few buildings that we will sell as is, with the intention of preserving the industrial design of the complex. There is also state-owned land, which should be turned over to the city of Varazdin for social use, kindergarten, plaza or something else. Basically Varazdin gets a whole new neighborhood in this important location.
Are investors interested in housing?
They show that interest in housing is growing. For this purpose, 50,000 square meters are planned in the western part of the complex, next to a quiet area with family houses. In front of this residential area will be a park of ten thousand square meters, which mainly interests Croatian investors.
What are you going to invest your sales money in?
With the money from the first sale, we paid salaries, paid our taxes, bought fabrics and stabilized the business. We will invest funds from future sales in business development. The delay in pay was due to the coronavirus crisis. The departure of Hugo Boss means a sharp drop in orders, which we cannot offset by our growth. So there was a loss that we will now cover by selling our real estate. Several times, precisely because of the departure of a large foreign client, we interrupted our work, but we did not lay off any of our workers. We will keep them for next year, when we will not have a surplus of workers. Plus, it’s safe to say that we’re probably going to run out of workers. Half of all the money we get will go to the banks, to pay off old debts. We will also work with resale money.
What about the Varteks brand?
We have reorganized production and are filling our capacities with our own production, which was previously carried out for us by subcontractors. The Varteks brand is doing wonderfully, the fall-winter collection is, depending on the interest shown, brilliant. It is the work of old and new, young designers, under the creative direction of Martina Ranilovic Vrdoljak. Many educated young people found jobs with Varteks and moved to Varazdin. The collection for 25 years and over was due out in 2020, however we had to cut most of it because of the coronavirus crisis. People weren’t going anywhere, there was a foreclosure, so sales of coats and suits fell dramatically. Now things are different. People are eager to shop, our collection is awesome, the competition doesn’t have much to show as it is from Asia and the delivery routes are much slower and more expensive. We have our own production here, so we can respond quickly and fill the stores.
What about exports?
We opened two new stores this year in neighboring Slovenia, in Maribor and Ljubljana, which was a courageous decision to open stores amid the pandemic. Lots of Slovenians came to Varazdin because of Varteks and they get good traffic through the online store, so we brought Varteks to them. The last store in Slovenia was closed about ten years ago, and these two new stores are more than enough for now. We also export to Bosnia and Herzegovina, but not too much, and we also export our products under the J. Lindeberg label as far as China. It is to our credit that our products are sold in China. We also export to Germany and Sweden to our partners, and online sales are growing throughout Europe. We are now moving more aggressively towards the direct export of our own branded products. and the price of a luxury product is always sustainable. There are still buyers of luxury goods, and with the coronavirus pandemic, this market has grown. We are only increasing our market share. We started from low positions and we can only conquer markets.
There was also talk of moving the company from Varazdin …
There is no way that will happen. Varazdin developed alongside Varteks, Varteks hails from Varazdin. It is a symbiosis and always will be. While not as important as it used to be, Varteks is definitely staying put in Varazdin. Most of our workers are from Varazdin County and it is an impossible mission to move Varteks at all. Not even near Novi Marof and the old Levi’s factory. Granted, it’s only a thirty minute drive, but we would lose a lot of workers, which is out of the question.
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