Groupe Smalto, the Paris-based fashion house that took over Stephane Kélian two years ago, is looking at the possible acquisition of Robert Clergerie, another major shoe manufacturer in the Romans area of France, which is saddled by a heavy debt load, but it could not be determined whether other candidates are interested in the takeover. More details on the issue should be announced soon.

Clergerie and Groupe Smalto would not comment on their discussions. A French investment company, SG European Private Equity Partners, bought an 80 percent stake in Clergerie in 1999, and it has been looking for a new investor for some time. With annual sales of about €30 million, Clergerie, which trades also under the Fenestrier label, is only a bit larger than Kélian. It still employs about 200 persons in Romans, with no layoffs lately.

For its part, Kélian has already gone through a major reorganization under Smalto’s ownership that has lowered its annual revenues, but also its losses. A few days ago, Kélian announced the elimination of a further 80 employees at its factory near Romans, leaving 140 persons. Kélian is looking at various alternative sources of production for its main line, but it has already decided to shift to China a large portion of the manufacturing for its lower-priced Mosquitos line, which is being made mostly in Spain and Portugal.

Kélian is projecting a reduced loss, said to be likely to approach €4.5 million, on relatively stable sales of about €23 million for the financial year ending next March 31. Sales of the Spring/Summer 2004 collection were stable. The company suffered from late deliveries at the start of the current Fall/Winter season, particularly on the US market, but they became normal in October and the sell-through has been very good lately. Spring/Summer 2005 orders are up.

The company will step up its marketing efforts and launch a new store concept in Paris next year. The French market accounts for 60 percent of sales under the Kélian brand and 90 percent for Mosquitos. The company is selling much less than before in Germany, where it closed all its stores, but it hopes to rebound in that market following the recent appointment of a new German agent, Sonya Canning. Kélian is doing very well in Russia, where it has 5 franchised stores, and in Japan, where the number of shop-in-shops is due to increase from 3 to 5 shortly. Sales are said to be satisfactory at Kélian’s three stores in the USA, but the company is looking for a good agent to develop its North American wholesale business with the department stores and key specialty retailers. It’s also looking at various opportunities in China, Hong Kong, Korea and other Far East markets.