After the disposal this year of its André and Besson chains of shoe stores and the Naf Naf brand of women's clothing, which we have already reported, the French Vivarte group announced on Nov. 5 that it will be selling its three remaining shoe retail banners – Minelli, San Marina and Cosmoparis – in the course of the next weeks.

Minelli generated sales of €130 million last year with 143 stores, San Marina €110 million with 187 stores, and Cosmoparis €20 million with 17 stores.

Their departure will leave the group with only two of the 16 retail chains it owned four years ago: 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 an annual turnover of around €1.2 million. Caroll is a very profitable chain of urban women's fashion stores. These assets represent about 80 percent of Vivarte's turnover from continuing operations. 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.

The group said in a press release that there would be separate negotiations for each of the three shoe retail chains it has put up for sale. According to Vivarte's chief executive, Patrick Puy, the buyer in each case will have the financial resources to ensure future expansion.

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.

Observers feel that the main reason for the new divestitures is the need for Vivarte to reimburse a remaining debt load of €400 million by October 2019.

Vivarte has been burdened with debt ever since 2007, when it was acquired in a leveraged buyout by a group of investors led by the Charterhouse fund. In the months that followed, the group acquired a number of retail brands, including Beryl, Accessoire Détente, Accessoire Diffusion, Défi Mode, and Naf Naf. In 2008, the group also made a foray into sporting goods with the purchase of Super Sport. Within a year, however, as the global financial crisis struck, Vivarte had decided to keep only 52 Super Sport stores.

In 2012, Vivarte's management persuaded its creditors to delay the bulk of its reimbursements for three to five years and laid out a new business plan, calling for an increase in annual sales from €3.3 billion to €4 billion with the opening of 1,000 new stores. By that time, with the acquisition of a shoe company, Maloles, Vivarte increased the number of its retail chains to 22.

Having defaulted on a loan covenant in 2013, the group spent much of 2014 renegotiating its debt once more. The plan was to convert €2 billion of debt into company shares, obtain €500 million to finance the development of its retail chains, and end up with an outstanding debt of €800 million. The deal struck in August of that year made Oaktree Capital the new majority shareholder, followed by Alcentra, Golden Tree and Babson. Meanwhile, Richard Simonin replaced Marc Lelandais as chief executive, and the group reduced the number of its chains to 16.

In 2015, Vivarte closed some 200 stores and suffered a decline of 6.5 percent in annual sales. The following year, the number of store closures had risen to 300. Vivarte began 2017 with an experienced company doctor, Patrick Puy, as chief executive and the sale of one of its two factories, Compagnie Vosgienne de la Chaussure (CVC), which may or may not be salvaged (see the Corporate section of our News Briefs). The group sold Pataugas in May, Kookaï in July, and Merkal, a Spanish shoe retail chain that was its only non-domestic asset, in November.

It thereby managed to increase its Ebidta, from €54 million to €84 million, for the first time in five years. Meanwhile, the group's creditors agreed to convert €846 million in long-standing loans into group shares and extend the maturity for a further €572 million in loans.

To justify its new concentration on apparel, Vivarte noted that the French shoe market has been struggling lately. According to the French Shoe Federation (FFC), the industry's turnover of €828.4 million for 2017 was down by 4.5 percent from the previous year, and Vivarte itself reports a decrease of 3.5 percent in its sales of footwear for the financial year ended last August.

The question now is whether the group will also sell off its two other remaining retail assets, or at least Caroll, to pay back the remaining debt of €400 million. According to the French media, the CFDT, a French labor union, suspects that a plan to completely break up Vivarte has been in the works for at least two years. The management insists that it will not, but as recently as January of last year it denied rumors that it was planning to sell André only to reverse course in the following month.