Ceconomy beheaded: after CEO, CFO also quits

Ceconomy, the holding owning electronics chains MediaMarkt and Saturn, has had a bad year: after CEO Pieter Haas’ departure in mid-October, now financial director Mark Frese also quits.

Turnover and profit went down

The results Ceconomy announced on Wednesday are not exactly favourable: the company’s total turnover decreased by 0.9 % to 21.4 billion euros in the past financial year. Turnover from online commerce did rise by 13 % and now represents 12.1 % of the total turnover. The largest portion of the turnover comes from the 432 German stores: together, they bring in 10.34 billion euros. The Netherlands has 49 outlets and brought in 1.581 billion euros (down from 1.59 billion in the year before), the 28 Belgian stores saw their turnover grow from 686 to 701 million euros.

The gross company result (EBITDA) decreased by 63 million euros to 650 million (including 21 million profit contribution from Fnac Darty). The margin on the company result – a yardstick for profitability – comes down to a paltry 1.9 %.

Exit CFO Mark Frese

Even though Ceconomy had already issued two profit warnings earlier this year, its shares plummeted by another 14 % after the release of the latest results. This year alone, about 80 % of the total stock value went up in smoke. The collapsed stock price is bad news, because scaling-up is necessary to remain competitive with the ever growing number of online players, but that implies acquisitions and those require money – which is sorely lacking.

The downward spiral led to the departure of Dutchman Pieter Haas, CEO of Ceconomy since 2014. His tasks were temporarily handed over to CFO Mark Frese, but the German is now also calling it quits. While waiting for a new CEO and CFO, manager Bernhard Düttman is temporarily taking over operational leadership.

Observers see the hand of the wealthy German Haniel family in Frese’s departure. The Haniels hold 22.7% of Ceconomy’s shares, making them the largest shareholder. The family-owned investment company announced last Tuesday that their current CEO Stephan Gemkow will be leaving next summer, even though the 58 year-old executive’s mandate was for at least another three years. He will be replaced by 47 year-old Thomas Schmidt, a family confidant.