After downsizing its operations in Eastern Europe, where the national economies have failed to grow as much as it has initially expected, the big shoe retailing group has decided to get out of the lower end of the market in Austria and to concentrate investments on Humanic, which remains its most profitable and distinctive banner. It's also the most international format: Its 150 stores are located in Austria, Germany and eight other countries all over Central and Eastern Europe, from Poland down to Romania and Bulgaria.

Leder & Schuh has decided to sell its three shoe retail chains in the low and low-medium segments – Jello, Corti and Shoe4You – which have a total of 160 stores and represent about one-third of the total turnover of the group, offering a mix of generic and international brands. Jello and Corti stores have basically the same range, but are located in suburban and urban areas, respectively, and they are all in Austria. The more family-oriented Shoe4You format is present in Austria as well as in Germany.

Jello, Corti and Shoe4You are going to be spun off into separate subsidiaries that will be put up for sale, but there will be no immediate change in purchasing for the spring/summer 2016 season. The three chains are said to be profitable. However, they will need investments to stand up to the competition from big players such as Deichmann and CCC, the Polish-based shoe retail chain that is expanding all over Eastern and Central Europe. No discussions are underway for the moment. As in Italy or France, where they have been involved in the acquisitions of Pittarello and Vivarte, institutional investors may be interested in their takeover.

The management of Leder & Schuh feels that it will get a greater return on investment by focusing resources on the development of a new concept for its large Humanic shoe stores and on the development of their multi-channel capabilities. Heinzpeter Mandl, one of the two chief executives of the group, tells us that there are no plans to internationalize the banner further in the near future. 

The executive pointed out that about 40 percent of Humanic's customers browse through the internet before visiting its stores. Humanic's online store has been enjoying rising sales. Its click-and-collect function and its “Avatar” service have been expanded considerably. We have already reported on Humanic's Avatar system, which allows customers to get the most suitable lasts for their feet and those of their children. It is already being used by more than 100,000 customers.

Leder & Schuh will keep two other shoe retail chains, Stiefelkönig and Dominici, which operate only in Austria. Stiefelkönig, whose results have improved lately, will continue to service the higher segment of the market, but it will become an operational unit of Humanic. Some of the 30 Stiefelkönig stores may be converted to the broader Humanic format. As for Dominici, which takes its name from a former Italian shoe designer, Alvaro Dominici, it will continue to trade with its three boutiques in Austria, concentrating on Italian brands.

The group currently operates a total of 349 stores in ten countries. Last year it closed 19 doors and opened six. Sales remained largely stable on a same-store basis in 2014, but the total turnover dropped slightly to €520.2 million from €533 million in the previous year, in spite of clearly positive trends in Central and Eastern Europe.

Following the restructuring efforts undertaken since 2012, the company managed to generate a positive operating result (Ebit) of €2.4 million last year, compared with a loss of €11.7 million in 2013, but provisions and writeoffs led to a net loss of €11.3 million for the year. The equity ratio remained stable at 22.1 percent.

The management expects to book an operating profit before extraordinary items again in 2015. The first quarter was tough, but April and May have been good.