Hutchison's retail arm takes over 83 Drogas outlets in Latvia and Lithuania Li Ka-shing's retail firm AS Watson has made its first foray into eastern Europe, with the acquisition of an 83-outlet health and beauty chain in Latvia and Lithuania, extending the tycoon's international business empire to 42 countries. Watson, the retail and consumer manufacturing division of Hutchison Whampoa, yesterday announced it had acquired the 11-year-old chain Drogas in the Baltic states for an undisclosed price. Latvia, Lithuania and Estonia, the wealthiest of the former Soviet republics, with a combined population of 7.3 million, became members of the European Union last month. The announcement comes three weeks after Hutchison posted a HK$13.7 billion gain from the sale of its remaining 20 per cent stake in a mainland consumer-goods joint venture to partner Procter & Gamble. It was a useful sum to help offset losses in the group's third-generation mobile-phone business, forecast to hit as much as $22 billion this year. Jonas Kan, an equity research director at Daiwa International Research Institute, said losses at the parent company had not stopped Watson from eyeing expansion opportunities worldwide. 'The group is quite aggressive in its acquisitions,' Mr Kan said. A Watson spokeswoman said Drogas was profitable, with turnover reaching 22.7 million lat (HK$327 million) last year. 'The acquisition will contribute profit to the group immediately,' she said. Watson operates close to 3,700 retail stores in Asia and Europe, making it the largest health and beauty retailer outside North America. Watson said Drogas operated 59 stores in Latvia, giving it 30 per cent of the Latvian market. It operates 24 stores in Lithuania. The spokeswoman quoted a survey conducted by Euromonitor in 2002 ranking eastern Europe as the world's fifth-largest health and beauty market, on sales of US$9.9 billion. Western Europe was the world's biggest with a market size of $51.7 billion, followed by North America at $48 billion, Asia at $42 billion and Latin America with $17 billion. Watson significantly expanded its retail portfolio in Europe through the acquisition of the Dutch-based Kruidvat Group in 2002 for Euro1.3 billion (HK$12.38 billion). This followed its purchase of Savers Health & Beauty chain in Britain in 2000, the retailer's first entry into the European market. Last year, Watson's earnings before interest and tax jumped 124 per cent to HK$2.3 billion on turnover of $63.08 billion, mainly due to the inclusion of a full-year contribution from the Kruidvat Group. Expanding empire Li Ka-shing's international business now spans 42 countries The acquisition is the group's first foray into eastern Europe Watson operates close to 3,700 retail stores in Asia and Europe
