Hema hoping to find greener pastures at Walmart in the USA

Photo: Georges Hanna / Shutterstock.com

After a questionable quarter, Hema is hoping to find greener pastures in the US and Canada. The Dutch department store company will be collaborating with Walmart, no less.


Towards 50 stores in Canada

The chain will be moving to America under the name Hema Amsterdam. In the US, Hema will be collaborating with Walmart, which will be selling its products online, and in Canada there will actually be proper physical stores. In and around the province of Ontario, the first franchise outlets will be opened this year. They will be run by a local Canadian partner. There will also be shop-in-shops in all the biggest Walmart hypermarkets.

The Canadian outlets will be designed according to the same concept Hema uses in France. That means there will be no food on offer, according to De Telegraaf. Eventually, Hema CEO Tjeerd Jegen believes there could be as many as 50 stores in Canada.


Walmart made its own advances

In the US, Walmart is said to have contacted Hema directly, offering to market itself as a brand through the online platform of the world's biggest retailer. "Walmart wants to have new brands of its own that can be sold at unbeatable prices, so as to compete with Amazon," Jegen told De Telegraaf. It looks like Walmart is willing to pay to announce the brand in the US as well.

The step onto the American market is a historical one, "because our founders Leo Meyer and Arthur Isaac discovered unit price stores there for the first time almost a century ago". It also fits the strategy of Jegen and new owner Marcel Boekhoorn to turn Hema into a real brand that's also for sale on other platforms. Currently, the chain's products are already for sale through Wehkamp in the Netherlands.


Turnover is receding, especially in Belgium

Hema's American experiment may also be brought on by the growth deceleration on the domestic markets. While net turnover ended at 298.7 million euros in Q1 of 2019 (a 2.5% increase), comparable turnover decreased by 0.3%.

In the Netherlands, like-for-like turnover stagnated and in France it increased, the retailer announces. There was a decrease in Belgium, but CEO Jegen believes this is because the chain had generated an exceptionally high turnover in the previous year. In the most recent period (which ended on July 1st), comparable turnover was positive both for the Dutch market and combined international activities.


Loss accumulates due to heavy debt load

Online sales increased by 17%. With that, e-commerce delivers an important contribution to Hema's turnover growth again, according to the chain. The new distribution centre for online orders has also been fully operational for a few months now.

The chain recorded a net loss of 10.7 million euros in the first quarter (2 million of which is due to a new accounting system). Most of that loss is the result of the high interest rate on the 750 million-euro debt load brought on by former owner Lion Capital. Jegen stresses that a weaker first quarter is a traditional phenomenon. EBITDA was 5.2% lower.