With its portfolio of shoe and apparel retail chains reduced to only three banners – La Halle, Minelli and Caroll – the French Vivarte group has wiped out all its remaining debt of €476.8 million by turning it into shares. Reportedly, the group is now essentially owned by the four institutional investors – Anchorage Capital Group, Alcentra, Ayfin and Oaktree Capital Management – that had already acquired its control in 2014, writing off loans and injecting fresh equity to help reduce its debt from €2.5 billion to €524 million. According to the French daily Le Monde, Anchorage has become the largest shareholder, taking the place of Alcentra.

Excluding the 14 retail chains that have been divested in the last three years, including most recently Cosmoparis and San Marina, the group is in relatively good shape now financially. Together, its three remaining chains generated Ebitda of €40.4 million in the financial year ended on Aug. 31 on revenues of €1.2 billion, down by 5.3 percent on a comparable basis from the previous year.

The group had reported slightly higher Ebitda of €50.7 million on revenues of €1.4 billion for the previous financial year, when it was a little bigger (Shoe Intelligence Vol. 20 N° 23+24 of Dec. 26, 2018). On the other hand, the group said its operating losses after amortization and depreciation (Ebit) declined by 76 percent to €1.5 million in the financial year ended this August.

In the year through August 2018, the net loss had been reduced to €122 million. No figures were given for the bottom line in the past year, but the company evidently paid less interest. Generating free cash flow, Vivarte ended the year with net cash of €178 million.

The remaining operations performed well in the last year. The Minelli chain of shoe shops, which is still in principle up for sale, raised its sales by 30 percent to €124 million in the past financial year, thanks in part to a trading-up process and the development of e-commerce. The Caroll chain of apparel boutiques saw its sales increase by 24 percent to €236 million.

La Halle, a big chain of low-priced shoe and apparel stores, suffered a sales decline of 3 percent to €847 million after a major restructuring program involving the shutdown of many points of sale and the conversion of many others to a hybrid format where shoes and clothing are offered under the same roof. The latter experienced a sales increase of 8 percent, confirming the benefits of the new format.

Vivarte points out that La Halle was affected by many negative factors such as an estimated decline of 4.7 percent in the French shoe market in the past year, unfavorable weather and the “yellow vests” movement in France.

The group made investments of €31.8 million in the past year, and it plans to raise them to €55 million in the current financial year to modernize the stores, develop its omni-channel operations and optimize the logistics. Caroll and Minelli will also develop internationally.

Under the management of Patrick Puy, a forceful company doctor who was appointed in October 2016 at the head of the group, Vivarte has sold the majority of its retail chains including André, Besson, the Spanish Merkal group, Cosmoparis and San Marina in the footwear sector. They have all found new owners.

Puy has been confirmed as president of Vivarte, but three new directors have joined the board following the new change of ownership. He started to create some distance last March when he stopped serving as chief executive as Stéphane Roche was hired to be the group's general manager. He is likely to make some more distance again as he was appointed a few days ago as president of Alès, a French cosmetics group, replacing Frédéric Poux after a few months in the post.

Vivarte's financial saga is coming to an end. It started in 2007 when another investment fund, Charterhouse, carried out a leveraged buying of the company, then called Groupe André, in exchange for €3.4 billion worth of debt.