PARIS — Under siege from unions opposed to the sale of Printemps to Qatari investors, the management of the French department store chain on Tuesday unveiled a slew of measures designed to reassure its staff and pave the way for the transaction, due to be concluded in the next few months.
This story first appeared in the May 29, 2013 issue of WWD. Subscribe Today.
Printemps, which does not regularly publish revenues, reported that sales rose 5.7 percent in the 2012-13 financial year, and forecast revenues would hit the symbolic threshold of 2 billion euros, or $2.56 billion at current exchange, by 2017.
The retailer posted sales of 1.5 billion euros, or $1.95 billion, between April 2012 and March 2013, despite a morose economic climate in France, where sales of women’s ready-to-wear fell by 2.8 percent in 2012. Dollar rates are calculated at average exchange rates for the periods to which they refer.
Underscoring the positive implications of the planned sale, Printemps chief executive officer Paolo de Cesare confirmed that the Qatari investors have pledged not to cut any jobs for two years, putting to rest union fears that the change in ownership will result in several hundred layoffs.
“It’s really exceptional. It never happens in a change of control that you get these types of reassurances,” he told WWD.
Printemps has offered a pay increase of 3 percent this summer as part of its annual salary negotiations with staff, he added.
De Cesare noted the new owners have backed a five-year expansion plan, worth 270 million euros, or $346 million, which is expected to create 500 jobs. As reported, the retailer plans to open three Printemps stores, in addition to two units for its urban apparel chain Citadium, in the next few years.
“This is a plan we were working on before and that was the basis for the Qataris to buy Printemps. They like the plan, they like the vision, so they fully endorsed the plan that we had,” he said.
Via the Luxembourg-based investment fund Divine Investments SA, or Disa, the still-unidentified group of Qataris plans to acquire a 70 percent stake from Deutsche Bank’s RREEF and the remaining 30 percent from Italy’s Borletti Group.
Unions have criticized the financial conditions of the deal as opaque and called for the public prosecutor to launch a probe into the transaction. De Cesare countered that Printemps had communicated all relevant information, including the name of the buyer, to union representatives as part of the mandatory consultation process.
Union officials could not immediately be reached for comment.
“It’s a prerogative of the unions to take whatever action they want, so I will not comment on their activities,” de Cesare said. “What I can tell you is that we have been incredibly transparent, to the point that we believe that we have provided the highest level of information ever provided in a change of control.”
He said the consultation was in the last stages and the sale plan would then be submitted to France’s Competition Authority.
“This is a step that can take up to a month, and then it’s closed, so now depending on how it works with the summer break, we might finish around summer or immediately after the back-to-school period,” de Cesare added.
The executive lamented that a series of reports about the sale on French Web site Mediapart had created confusion about the future of the retail chain. Printemps said Mediapart’s report that the new owners plan to turn its stores into luxury shopping malls was “entirely false and contrary to its strategy and its commitments.”
De Cesare said that as part of its repositioning as a luxury retailer, Printemps had worked hard to defend the “uniqueness” of the department store and the coherence of the offer.
“We have created unique concepts like Maria Luisa, relaunched the private label, brought incredibly innovative brands that were not distributed in France, so [turning stores into luxury shopping malls] would really go against everything we have done,” he said.
He credited the retailer’s upscale repositioning with boosting sales by 35 percent in the last three years.
Revenues for the 2012-13 financial year were fueled by the Paris flagship on Boulevard Haussmann, which posted a 14 percent rise thanks to the strong growth of sales to foreign visitors. Sales in the chain’s regional stores decreased by 3.2 percent, due in part to renovations in Strasbourg, Toulon and Rennes.
Overall, sales of accessories were up 11.9 percent, while beauty posted a 3.2 percent rise and rtw a 1 percent increase, Printemps reported.
De Cesare revealed overall sales rose 10 percent in the first half but only increased 2 to 3 percent in the second semester, mainly because of a change in government in China that ushered in measures to curb conspicuous consumption. Business has since rebounded.
“We had an exceptionally strong weekend for Mother’s Day [on May 26], so we are now at plus 7 percent in April-May,” he noted.
While sales to tourists rose by more than 30 percent last year, they are expected to increase by a more modest 10 to 20 percent in 2013-14.
Nonetheless, de Cesare said Printemps is targeting sales growth of 6 to 7 percent for the current financial year. It is banking on the positive impact of recent renovations to its fashion floors at the Haussmann flagship, and a strong sales start at the store it plans to open in the Carrousel du Louvre in Paris in February.