After more than one year of discussions and negotiations, the French Vivarte group of shoe and apparel retail chains has sold its only property outside its domestic market, Merkal, a network of more than 220 shoe shops in Spain, to a British private equity fund, OpCapita. The transaction, which is reportedly valued at between €50 million and €70 million for a company that is generating annual sales of around €200 million, also covers Fosco, a profitable Spanish chain of shoe stores in the upper-medium segment of the market that was integrated into Merkal last year.

As previously reported, Vivarte is also trying to find a buyer for André, the big chain of urban shoe stores that was at the origin of the group's development, but the company indicates that its disposal may not occur until next February. On top of that, the group is said to be considering now also the sale of another French chain of 150 low-priced suburban shoes stores, Besson, which reportedly generated last year Ebitda of €40 million on sales of €250 million.

The main reason for these two divestitures is that André and Besson tend to cannibalize two other large networks of shoe stores that Vivarte wants to keep – Minelli in the segment of medium-priced urban shoe retailing and La Halle aux Chaussures in the segment of suburban low-priced shoe retailing.

Vivarte also wants to keep two other shoe retail chains that are positioned differently, San Marina and Cosmoparis, along with three chains of apparel stores. Meanwhile, an experiment with a hybrid format of La Halle for the sale of shoes and clothing under the same roof has produced very encouraging results, producing 15 percent higher revenues than those that are concentrating only on footwear or apparel.

Focusing on six strategic assets, including the brands Caroll and Chevignon in the apparel sector, Vivarte's management expects to solve its financial problems and to obtain a return on the investments made by the institutional investors who have taken over its control. The group had 15 subsidiaries one year ago, including footwear brands like Pataugas and a shoe manufacturing operation, Compagnie Vosgienne de la Chaussure, which is now owned by a German investment fund.

After the closure of 135 discount shoe stores operating under the banner of La Halle aux Chaussures and the divestiture of several other loss-making operations, Vivarte was able to raise its operating results (Ebitda) for the first time in five years during the financial year ended last August. According to preliminary figures, it reached a level of €84 million, up from €54 million in the previous year, in spite of a drop in revenues to €1.8 billion from €2.2 billion due to the recent dismissals.

Patrick Puy, the “company doctor” appointed at the helm of the group one year ago, indicated to the French media that he is targeting Ebitda of €108 million for the current financial year, with a growth of 2.4 percent in the turnover of the remaining operations on a pro forma basis.

The group has a €85 million budget for new investments for the year, focusing on e-commerce, logistics and product innovation.

Puy indicated that the institutional investors who are controlling Vivarte – led by Alcentra, Babson Capital Management, Golden Tree Asset Management, Oaktree Capital Group and Blue Mountain – will probably wish to cash out in two to three years' time, paving the way for its sale to new investors or a return to the stock exchange.