While publishing the results for Vivarte's financial year ended in August, which showed major reductions in losses and indebtedness, its chief executive, Patrick Puy, said that a general manager will take over its operational management from spring 2019, while he will retains his position as president of the French group. He didn't say whether the candidate has already been found or if the search is still ongoing.
Evidently, Puy feels that he has basically accomplished his mission as the company's “doctor.” Vivarte now has six retail chains and will soon have only two of them. When he arrived in October 2016 at the request of the institutional investors that had acquired control of the group, Vivarte consisted of 16 retail banners and brands. His two years at the head of the company were marked by a series of store closures and asset disposals aimed at reducing the company's bulging debt.
Vivarte narrowed its net loss to €122 million from a loss of €305 million for the prior year. The company's debt declined to about €302 million as of Sept. 6, after accounting for the proceeds from the sale of Besson, compared with €437 million one year earlier and €1,080 million at the end of 2016. It expects to make a profit in the current financial year.
After the recent sale of its André and Besson chains of shoe stores and the Naf Naf brand of women's clothing, the group announced on Nov. 5 that it also will be selling its three remaining shoe retail banners – Minelli, San Marina and Cosmoparis – in the course of the next weeks. In the past financial year, these three chains generated sales of €129 million, €110 million and €20 million, respectively.
Their departure will leave the group with only two retail chains: La Halle and Caroll. The first one is a chain of suburban low-priced garment stores for the whole family that also sells footwear, with a combined annual turnover of around €1.2 million. Caroll is a very profitable chain of urban women's fashion stores, and there is speculation that it may be sold as well to pay back the remaining debt, although its results have been improving recently.
These two chains represented about 80 percent of Vivarte's turnover from continuing operations in the financial year through August. La Halle, which operates in the low-priced segment of the market, was born in 2016 from the blending of two Vivarte chains that were specializing in shoes and apparel: namely, La Halle aux Chaussures and La Halle aux Vêtements.
La Halle saw its sales decline by 2.5 percent last year on a comparable store basis, reaching a level of €873 million. Its profits doubled, thanks to the shutdown of about 20 unprofitable stores and the establishment of combined offerings of shoes and clothing at 60 of its remaining 835 stores.
The revenues of Vivarte's urban retail chains reached €498 million last year. The Minelli and Cosmoparis chains of shoe shops showed a sales increase, while San Marina suffered a sales decline of 9 percent. Caroll experienced an unfavorable trend in its revenues lately but its website recorded a 30 percent increase over the past six months.
The group also confirmed last month that it was expecting to complete the sale of a brand of sportswear, Chevignon, by the first quarter of 2019. The buyers will be the Royer Group, which would thus diversify from its core footwear business into apparel, and to two other French investors, Stephen Collaert and Thierry Le Guenic.
Puy said on Dec. 20 that Vivarte is now a “normal” group. The conglomerate completed its financial year through August with a turnover of €1.4 billion – excluding Naf Naf, Merkal, André and Chevignon – and Ebitda €50.7 million. With Besson, the Ebitda would have been €87 million. The final figures for the previous financial year showed sales of €1.8 billion and Ebitda of €84 million.
The management pointed out that Vivarte continued to strengthen its financial position, despite a difficult market for footwear and ready-to-wear apparel, with a view to finalizing its debt reduction plan, launched in 2016, before the first maturity of its loans falls due date in October 2019.
One of Vivarte's institutional investors, Oaktree Capital Management, has reportedly become its controlling shareholder, and it is contemplating a possible return to the stock exchange for the company. In view of this, the management is maintaining its investment plan to ensure the development of its flagship operations, with a budget of €38 million allocated to La Halle and Caroll for the current financial year.
The related modernization program is aiming in particular at obtaining a more agile organization of the company's logistics in order to develop online sales, which now contribute to only 2 percent of sales, and to increase the turnover by 30 percent by 2023,
Vivarte intends to speed up an international franchising program that it has just started for La Halle, targeting in particular countries in Eastern Europe and Africa. It has found a master franchisee for 65 stores in Switzerland.
Over the last three years, Vivarte invested nearly €100 million in the modernization of its stores, the digitalization of its brands and the optimization of logistic processes.