A series of strategy sessions is in process at Garant Schuh + Mode to discuss the future of the buying group, which is still in Chapter 11 proceedings, including its positioning in the market and the addition of new services. There are proposals to improve the product ranges offered to the retail members and do more consulting on finance, store layout, marketing and information technology. There may be some consolidation in Eastern Europe, such as the integration of its members in the Baltic countries into its Polish subsidiary, but otherwise no major changes are expected in its foreign subsidiaries.
Evidently, Garant officials are slighly afraid of the competition coming from a new buying group, G-Lord. It will start next month, when G-Lord will seriously begin to recruit retail members for the first Spring/Summer 2006 orders. The buying group has hired a total of about 20 persons, including 7 freelancers, to get started, while outsourcing the majority of its services. Instead, Garant still employs more than 200 persons in Germany and abroad. Operations have been streamlined in Germany, where the staff has been reduced to 97 persons, following a sharp reduction in central settlements due to the temporary departure of some key suppliers and the loss of the contract with the SED sports group in France, which involved annual settlements of about €300 million.
Garant confirms that Erika Reinhard, the member of the executive board responsible for purchasing, marketing and other matters, has seen her contract extended for a further three years after its expiration on Apr. 30. On the other hand, it’s unlikely that Kurt Merse, who is still formally the chairman of the supervisory board, will participate in these meetings. Merse, who is under investigation for his role in the acquisition of Salamander and for other alleged dealings, didn’t show up at the GDS fair last month as he always does.
Meanwhile, Garant officials insist that the business is back to normal, at least in Germany, as most of the retail members have remained loyal to the group and most major suppliers have agreed to work again through it. Contrary to a previous report, Mephisto has been doing business again with Garant for several months now. Adidas came back in February and FinnComfort in March. Two other big players, Esprit and Geox, have agreed to resume their cooperation for the Spring/Summer 2006 season.
There is still no visibility on the accounts of Garant. The results for 2004 are not going to be made public until the annual general meeting, which is now scheduled for Aug. 24 – much later than usual because of an intense work on all the elements of the balance sheet. The 2002 and 2003 accounts are being restated, following the discovery of certain past inconsistencies in the reported results. The date for the approval and the final presentation of the individual creditors’ claims by the receiver to the bankruptcy court had to be postponed from last Feb. 24 to next June 24.
The current forecast calls for a drop in central settlements to €700 million for this year from €1.5 billion in 2003 and €1.1 billion in 2004, implying lower revenues for the group. On the other hand, the office of Friedrich Metzeler, the court-appointed receiver, will take about €12 million out of Garant’s accounts for its own services throughout the bankruptcy proceedings, according to a company spokesperson.