On a special meeting of the board of directors yesterday, luxury goods company PPR has decided to spin off culture and electronics chain Fnac and list it on the stock market in the course of next year. At the same time, things are finally moving ahead for another of PPR’s subsidiaries that has long been waiting for a buyer: mail order unit Redcats (which includes La Redoute).
Fnac on the stock market in 2013
PPR bought Fnac eighteen years ago, but put the chain up for sale 3.5 years ago after the company decided to focus entirely on the luxury goods segment (with its brands like Gucci, Yves Saint-Laurent and Bottega Veneta) and sports (Puma). However, selling Fnac in a period of crisis, declining sales of CDs and growing competition from the Internet turned out to be not as easy as it looks.
A flotation should finally solve the issue, much like it did for Carrefour and its former discount branch DIA. Current shareholders will receive Fnac-shares that can be traded freely on the Paris stock exchange. Though the PPR board of directors have confirmed their plans last night,staff and shareholders still need to give the green light at a general meeting in May 2013. Fnac’s stock market launch is therefore not expected before the summer of next year.
Transformation plan Fnac 2015
Meanwhile, chairman Alexandre Bompard can continue the implementation of his transformation plan “Fnac 2015”, which includes a wider assortment (including vacuum cleaners and kitchen appliances), small outlets in stations and airports, and financial cuts (including a reduction of staff).
The plan has been relatively successful so far: while the market is facing a decline by 3.6%, Fnac has managed to reduce the decrease to one percent. PPR assumes that a flotation should give the new management enough time to put the chain back on the right track, without the pressure of a new owner expecting short-term results.
What about La Redoute?
Fnac is not the only subsidiary facing spin-off: for quite some time, PPR has also been trying to sell Redcats, the group comprising La Redoute and other mail order companies. After fruitless attempts to hive off Redcats in its entirety, PPR decided last summer to sell the group in different parts.
According to Le Figaro and Les Echos, PPR will announce at the latest on October 25 that Redcats branches OneStopPlus and Golf Warehouse will be sold to an American private equity firm. Cyrillus and Vertbaudet (courted by the Zannier group of Tartine & Chocolat, IKKS), the Scandinavian branches and La Redoute will probably not be sold before 2013.
PPR started to exit the “classic” retailing business when it sold department store chain Printemps in 2006. Last year, furniture chain Conforama followed suit.