To avoid a total collapse of La Halle, hit by the closure of all of its stores due to Covid-19, the Vivarte retail group has opened a ”safeguard procedure” with the Paris Commercial Court. The aim is to restructure the debt of the big French chain of low-priced shoe and clothing stores, as Vivarte forecasts that they will lose €106 million in sales between March 15 and May 11, when the retail lockdown in France is due to end for the time being.
On April 23, the court-appointed receivers of the safeguard procedure indicated that they would assist the company in its search for expressions of interest from market players for the resumption of its activity, should La Halle not be able to present a rescue plan on its own.
In agreement with the company, they have set May 25, 2020 as the deadline for filing investment or recovery projects guaranteeing the continuation of the activity, ”with the broadest possible scope.”
Vivarte pointed out that La Halle was also recently affected by many negative factors such as a difficult shoe market in France, unfavorable weather and the “yellow vests” protest movement.
The management said the move will ensure the survival of the company by giving it the chance to continue its activities, to protect all of its employees and its various partners and service providers.
Under the procedure, operations will continue as normal: the stores will resume their activity as soon as the containment measures are lifted, and jobs will be maintained. On the other hand, the payment of all debts contracted prior to the opening of the procedure is suspended. So is the restructuring plan that La Halle announced last February, which involves cutting 101 jobs at its logistics department and headquarters.
La Halle is by far the biggest asset of Vivarte. The safeguard scheme does not concern Caroll or Minelli, the two remaining retail banners owned by the Vivarte group, which sell clothing and footwear, respectively.
La Halle went through a restructuring process in 2017 with the closure of 135 stores. In 2015, it had already closed 175 stores. It ended the 2018/19 fiscal year through August in better shape, with encouraging signs of recovery, such as a 2.5 percent increase in apparel sales. Nevertheless, overall revenues declined by 3 percent to €847 million from the previous year as it continued its restructuring program, shutting down many points of sale and converting many others to a hybrid format offering shoes and clothing.
With its portfolio of shoe and apparel retail chains reduced to only three banners, Vivarte registered a sales decrease on a same-store basis of 5.3 percent in its 2018/19 fiscal year. Under the management of Patrick Puy, who was appointed chief executive in October 2016, the group has divested 14 retail chains in the last three years, including André, which is now in bankruptcy proceedings, and Besson, which was competing directly with La Halle. Most recently it sold two other shoe retail chains, Cosmoparis and San Marina,
As a result of these disposals, the group ended the last fiscal year in a relatively good shape financially. Together, its three remaining chains generated Ebitda of €40.4 million on revenues of €1.2 billion.
Puy said that La Halle must eventually reduce its network of stores by more than 200 units to around 600, adding that he hopes to retain 3,500 to 4,000 jobs. The company currently employs 5,500 people.