Lafuma’s reorganization shuffles and cuts jobs

By

Olivier Guyot

Published
Jun 13, 2013

As FashionMag Premium’s story from April 15 indicated, the Bordeaux Court of Appeals decision to cancel the Employment Protection Plan for 38 employees at Oxbow could be a double-edged sword. Any breather employees of the surf brand got was in fact quite short.

As part of the presentation of its interim results, the Lafuma group announced on June 10 the establishment of a new employment protection plan that includes cutting 83 positions at Oxbow and shutting down that division’s logistics unit. Earlier this year, the company employed about 140 people.

And this is not the only radical decision announced by the group based in Southern France. Under pressure from the new major shareholder, the Swiss group Calida, who took over the 15.2% share of the former CEO Philippe Joffard and his family, the group announced a drastic plan that is being referred to as “strategic.” The moves come on the heels of plummeting results.

On the first half year ended in late March, the group posted revenues of less than 103 million euros versus 122 million euros for the same period last year. Current operating income fluctuated from a profit of 5.3 million euros to a loss of 4.3 million euros. The company’s debt has more than doubled to over 36 million euros. And while it has kept afloat a net profit at least of one million euros, the net result group share posted an alarming loss of 60 million euros. This figure takes into account “a total depreciation of the brand and residual goodwill of Oxbow of 37.1 million euros.”

The group says that “the furniture activity (under the Lafuma brand) as well as the Eider and Millet brands (apparel and mountain equipment) have continued to post operating profits, in an environment that is not as deeply impacted by the economic crisis.”

So the group is concentrating on Oxbow, whose sales fell 35%, but also on the Lafuma Outdoor business, “also unprofitable.”

Lafuma Outdoor goes to Annecy

In addition to the Oxbow job protection plan, management announced another plan for Lafuma that foresees cutting 78 positions and the transfer of 46 jobs to Annecy, France.

The group’s profitable furniture business will remain in Anneyron in the Southwest of France. The reorganization plan is betting on regrouping Lafuma’s outdoor and mountain business with Millet and Eider in Annecy on the same site. Only the furniture business will stay in Anneyron in France’s Drôme department. And the Oxbow unit will remain in Merignac, France.

"These 3 operating divisions would be entirely independent, only sharing logistics and IT services. This new organization would make the Group more effective in employing its technical expertise for Outdoor and Mountain activities, and confirm its potential on the international front. (...) For this plan to succeed, the Group has confirmed its intention to proceed with a significant capital increase in the framework of a refinancing plan presently under negotiation with banking partners.”

Management is in negotiations with its banking partners for the roll out of this plan. The increase on capital could allow Calida to acquire a 29% stake in Lafuma.

Even with the backlog for the autumn-winter 2013 collection, the group does not have many illusions about its upcoming financial figures. The decline in sales is expected to continue but to slow down in the second half of 2012-13 and the following quarter. “This decline will significantly affect the group result for fiscal 2012-13,” said Lafuma in a press release.