Le Printemps department store told by French Economy Minister not to suspend supplier payments
Mar 24, 2020
A simple tweet sent in warning. For several days, the Twitter feed of French Minister for the
Economy Bruno Lemaire has been switching between posting information about state financial aid for businesses and statements on solidarity initiatives. But last Friday evening, Lemaire used his Twitter account, followed among others by CEOs and the media, to criticise emphatically, with a post akin to a genuine naming-and-shaming, a decision by the finance division of Parisian
department store Le Printemps. On Thursday, the latter sent its suppliers a letter, which
FashionNetwork.com has obtained, announcing a freeze on invoice payments.
“Like many other retail businesses, we find ourselves in an unprecedented economic and financial position, one that is exceptional, inescapable and unforeseen, and we have no way of predicting when normal operations will resume. Given this extraordinary situation, we would like to inform you that, as of today, all the companies and retail outlets of the Le Printemps group will suspend payment of all their outstanding supplier invoices.”
The Le Printemps group claims to do business with 3,500 brands through its 19 Le Printemps branches, eight Citadium branches, and the Place des Tendances and Made in Design websites. In the 2018-19 financial year, the group generated a revenue of €1.7 billion, and recently it parted ways with CEO Paolo de Cesare.
In Friday evening's tweet, Minister Lemaire said that it held talks with the group’s senior management and that “Le Printemps has pledged to me it will fulfil its obligations to its suppliers and will abide by payment terms, in accordance with the law. In these exceptional circumstances, the government is making sure that public economic order is rigorously upheld.”
France’s DGCCRF to ensure compliance
Le Printemps told FashionNetwork.com it has addressed a new letter to its commercial partners, with more detailed information: “We would like to state that this suspension is only provisional, designed to give us time to define an action plan that will enable us to deal with our stores’ temporary closures, while respecting our commitments. We are putting all our efforts into making this period of uncertainty as brief as possible,” indicated Le Printemps in the letter, without however specifying a schedule.
“The Le Printemps group is highly committed to maintaining a satisfactory relationship with its partners and suppliers, and will do all it possibly can to comply with payment deadlines. The group will make available the means necessary to honour its commitments, with the firm intention of preserving and forging relationships based on trust.”
Le Printemps issued the statement in the wake of the talks with the French Economy and Finance Ministry, after Minister Lemaire had made his position clear. “Some companies think they are exempt from paying invoices due to the health emergency we are experiencing. This is unacceptable and also dangerous for thousands of small and medium-sized contractors and suppliers,” said Lemaire last Thursday, adding that he has asked France’s Directorate-General for Competition, Consumer Affairs and Prevention of Fraud (DGCCRF) to ensure payment terms are complied with.
Last Thursday, the French government also announced the introduction of new regulations to protect credit insurance, setting aside €10 billion.
“Vendor credit is an essential element of business financing, and [in France] it is worth nearly €700 billion each year. Credit insurance, which covers nearly €200 billion in receivables, allows companies to be safeguarded against the risk of default by clients to which they give extended payment terms,” said the French Economy and Finance Ministry in a press release.
“The new regulations will enable companies to continue to benefit from the credit insurance cover they need in order to keep doing business with their small and medium-sized clients in France,” added the Ministry.
Both the Economy and Labour Ministries in France have recently hardened their tone in dealing with business behaviour deemed to be less than public-spirited. Last week, Labour Minister Muriel Pénicaud, reprimanded companies that are resorting to partial unemployment schemes for their employees, without having tried to keep the business going by letting them work from home. It also seems that the French government is starting to stiffen the procedures needed to gain approval for such partial unemployment schemes.
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