By divesting Fnac, PPR will move forward with its luxury brands.
Mark Brohan , Research Director
PPR SA, once a multi-billion online retailer and one of the biggest web merchants in Europe, continues to streamline its retail and Internet operation.
In order to concentrate on its new focus of lifestyle and sporting goods brands such as Gucci, Bottega Veneta, Yves Saint Laurent, Puma and others, PPR will spin off Fnac into a separate organization by 2013.
PPR, No. 5 in the Internet Retailer Top 400 Europe, will make Fnac, a multichannel retailer of consumer electronics, books, music, games and related merchandise headquartered in France, an independent organization available for sale to interested outside parties including certain PPR shareholders, says CEO François-Henri Pinault. PPR has yet to identify any buyers.
“Being independent and granted with autonomous resources, Fnac will be better positioned to fully achieve its growth potential, led by its current, committed and talented management,” Pinault says. “In parallel, this project will enable our group to pursue its transformation and to fully focus on the development of its apparel and accessories brands.”
Fnac, which generated e-commerce sales of about $577.3 million in 2011, or about 11% of the company’s total revenue of about $5.24 billion, was already operating under a cost containment plan PPR launched in January.
By spinning off Fnac, PPR will be free to concentrate on building up its sports and luxury brands online under a new relationship with Yoox Group. Yoox, No. 69 in the Internet Retailer Top 400 Europe, is an apparel retailer and e-commerce services provider based in Italy. Under the joint venture deal announced in August that will be 51% owned by PPR and the rest by Yoox, the two companies will build a business that will expand the e-commerce operation of PPR’s luxury and sports apparel brands, including in China.
“This project represents a major step forward in our refocusing and transformation into a worldwide apparel and accessories leader in the luxury and sport and lifestyle segments,” Pinault says.
Fnac, which operates 152 stores in Belgium, Brazil, France, Italy, Morocco, Portugal, Switzerland, Morocco and elsewhere, is the latest brand to be spun off or closed by PPR. In 2011, PPR also began discontinuing its Redcats retail and e-commerce brand, which includes Redcats USA, No. 34 in the Internet Retailer 2012 Top 500. PPR now continues to fund its Redcats operation though it now classifies the unit on the books as a discontinued operation.