HN: Zoot sunk by runaway expenses
There were hints that the Czech e-commerce site Zoot.cz was running into difficulties long before the company admitted its difficulties, according to the daily Hospodářské noviny. An in-depth article on the company reveals that one of its major creditors, Raiffeisenbank, lost patience with the company and sold its loan to the investment group Natland. That company now holds over CZK 150m in Zoot receivables, but claims its goals is to get the company back on its feet. "We're prepared to provide operational finances," says Natland's boss Tomáš Raška. "It's definitely not just pure speculation on the debt market on our part."
HN reports that Zoot owes the sports retailer Hanza Sport more than CZK 200,000, but that problems in their relationship didn't emerge until last fall. Doke, a hat producer, is in similar difficulties, according to its director Petra Joanidu. "We have two overdue invoices with them for more than CZK 100,000. They have our goods and they continue to sell them," she told HN. Zoot was given a 3-month amnesty from insolvency proceedings by a Prague court at the end of January. It's thought unlikely that all of its debts will ultimately be paid, while bondholders who invested around CZK 230m in recent years are also likely to come up short.
Citing sources close to the company, HN reports that the company was swamped by its inability to control expenses. Along with a poorly handled expansion program (its Romanian operations have already been shut down), the article reveals that up to 75 percent of its orders were returned by customers, who took full advantage of the free service.