The future of 26 Galeries Lafayette franchised branches in France, operated by businessman Michel Ohayon, is hanging in the balance as the Bordeaux trade court prepares to rule on Ohayon’s proposed continuity plan. This decision, expected to be announced today, will have significant implications for approximately 1,000 employees. The stores sought protection last year following the liquidation of the Camaïeu fashion chain and financial difficulties faced by two other Ohayon-owned retailers, Go Sport and Gap France. If the court rejects Ohayon’s plan, the Galeries Lafayette branches could potentially go into receivership. It remains to be seen whether the court will issue its ruling today or postpone it for a later date.
The employee representatives of the stores have expressed their disapproval of Ohayon’s plan. In response, store management initiated an internal survey to allow employees to individually voice their opinions. The court-appointed representatives are now awaiting the positions of Ohayon’s creditors, including Galeries Lafayette, before making any official statements. The 26 stores in question are situated in various French towns and currently employ approximately 1,000 individuals.
Concerns are mounting among the employees regarding potential job losses, with many losing sleep over the uncertainty of the situation. It is worth noting that one-fourth of Hermione’s employees are over the age of 55, and women represent 85% of the staff. Ultimately, the Galeries Lafayette group’s stance will significantly influence the outcome for the employees, although lawyers for Galeries Lafayette and Financière Immobilière Bordelaise, Ohayon’s holding company, have remained silent and have yet to comment on the matter.
According to the unions, the proposed plan for exiting the protection procedure includes selling the Pau store and waiving 70% of credit claims in order to reduce Hermione’s liabilities, which amounted to €153 million by the end of 2023. Additionally, the plan forecasts an 11% revenue growth in 2024. However, employees are hesitant to believe these projections due to several years of declining revenue. In 2023 alone, sales were 10% below budget, and the committee has expressed concerns about cash flow issues and disruptions in inventory. The committee has also criticized management fees and the rising costs of rent imposed by subsidiaries of FIB.
In addition to the fate of the Galeries Lafayette branches, the Bordeaux trade court will also evaluate the situation of FIB, which filed for receivership a year ago due to substantial debt. FIB, which owns various other properties, including hotels, has faced liquidation demands from the Bank of China. A decision regarding FIB’s future is expected to be reached by the end of February.
Useful links:
– Galeries Lafayette website
– FashionUnited: Franchise News
