Galeries Lafayette has announced its intention to subsidiaries 22 of the department stores in its French network, principally located in small and medium-sized cities, to Financiere Immobiliere Bordelaise. This transaction is aimed at advancing the transformation in the company's business model while reinventing its department store network in France.
The company has taken several measures over the past three years to achieve this strategic objective, which included enhancing the network's digital capabilities, kicking off an extensive remodelling programme, rolling out "Galeries Lafayette Outlet" format, closing the two largest loss-making stores or relocating stores in places where potential was declining.
The plan would bring the company one step closer to its objective, as the resulting arrangement would step up operational agility and involve teaming up with a partner that is committed to boosting local sales momentum in the subsidiaries stores and has the skill to do so, leveraging its longstanding expertise in business property and redevelopment in French city centres. Galeries Lafayette is already familiar with this operating arrangement: it operates five subsidiaries department stores - in Beziers, Langon, Menton, Perpignan and Rennes - today. This project would also enable the company to keep its extensive national coverage, which one of its hallmarks and a differentiating factor in the omnichannel strategy it is deploying.
By the end of this transaction, which would involve transferring the 22 department stores' businesses and buildings, Galeries Lafayette would operate 28 department stores of its own and 27 subsidised ones.
This plan, which should be completed in the second half of 2018, will notably be submitted to Galeries Lafayette's employee representatives for consultation. The transaction will have no impact on the jobs of the 900 employees concerned, and they will retain most of the conditions and benefits they enjoy today.
Commenting on this announcement, Galeries Lafayette and BHV Marais Chief Executive Officer Nicolas Houze said, "Since 2014, we have made a number of important strategic moves based on our three key levers - digitalisation, internationalisation and network reinvention - to embark our model on a deep-reaching transformation and thereby adapt to our customers' new expectation while realising our vision, i.e building a responsible omnichannel retail leader with French roots and international outreach. We are beginning the last phase of our Ambition 2020 plan and the structural transaction we are announcing today is geared to serving this vision. It is an exciting opportunity for these 22 stores to tap into fresh momentum. They can count on Financiere Immobiliere Bordelaise's experience and expertise for this new stage in their development, and they can continue to rely on the Galeries Lafayette brand's strength. As a committed employer, we are standing by our teams throughout the project, and working closely alongside our employee representatives."
