PARIS — With the closing of one of its landmarks, France's department stores are weathering a season of turbulence compounded by an economy troubled by high unemployment and weak consumer spending.
La Samaritaine, the LVMH Moët Hennessy Louis Vuitton-owned department store overlooking the River Seine, has told workers it would stay shut as long as six years because it would be a fire hazard to stay open.
Management has pledged to "maintain" the contracts of its 750 employees through October 2006, while trying to find them work elsewhere or placing them in new positions in the French luxury group.
Analysts said the shutdown would be but a ripple on the bottom line of LVMH. The conglomerate had sales of 12.6 billion euros, or $15.7 billion at average exchange, last year.
But it is almost certain to breed unrest in a country notorious for its social protests. Paris' Socialist mayor, Bertrand Delanoe, got involved last month by promising his support to save jobs. And the workers' committee at another LVMH-owned department store, Le Bon Marché, said it had filed a complaint because of a lack of management transparency, questioning how LVMH would relocate its workers from the Samaritaine to Le Bon Marché.
There also has been upheaval at other department stores in France weakened by competition with fast-fashion chains.
Galeries Lafayette, which operates its flagship on the Boulevard Haussmann in Paris, recently shuttered five of its stores in the French provinces because they weren't making money. Meanwhile, Galeries was divided by a bitter takeover fight between its two founding families — the Moulins and the Meyers — which the Moulins won by teaming with French bank BNP Paribas.
Down the street at Printemps, which is owned by luxury conglomerate PPR, takeover rumors have surfaced regularly since the beginning of the year. PPR, which also owns Gucci Group, has denied it is seeking to sell the store because it isn't profitable enough.
Meanwhile, BHV, an Ali Baba-like bazaar that sells everything from hardware to sportswear, has said it will spend 45 million euros, or $54.4 million at current exchange, to revamp as it tries to stave off its declining sales.
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