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Vivarte SA, formerly Groupe André, is Europe's leading retail footwear group and a major force in the continent's retail clothing sector as well. Based in France, the company has built an empire of more than 2,500 stores under a dozen names, and in several countries, including Spain, Switzerland, Poland, Hungary, and the Czech Republic. Vivarte's retail offering is separated into four major categories: discount shoe stores and discount clothing stores, both generally located in out-of-town shopping centers; and downtown shoe stores and downtown clothing stores. Vivarte's retail formats include André, the company's flagship retail shoe name; Kookaï, the popular downtown young women's fashions chain, with more than 550 stores; La Halle aux Chaussures, a discount format with more than 500 stores and the single leading shoe seller in France; Creeks, which emphasizes jeans and youth fashions; La Halle, formerly La Halle aux Vêtements, the leading discount clothing chain in France; Besson, a shoe chain; and Caroll, a downtown women's fashion chain. Other retail formats include Minelli in San Marino and Fosco and Merkalzados in Spain. Shoe sales account for 49 percent of the company's revenues; clothing sales generate 44 percent of sales. France remains the company's primary market, with some 93 percent of the group's sales; of these, more than 70 percent are generated through out-of-town locations. While Vivarte contracts out nearly all of its shoe manufacturing needs, the company maintains a single production facility, in its historic home of Nancy. Quoted on the Euronext Paris stock exchange, Vivarte has come under control of an investment group headed by Nathaniel Rothschild, who, with some 30 percent of the company's stock, took over as its chairman in early 2003.
Founding a French Shoe Icon in the 1890s
When Groupe André became Vivarte in 2001, the company already had more than 100 years as a pioneering French retailer. The company, however, started out as a shoe manufacturer, founded in 1896 by Albert Lévy as Manufacture Nancienne de Chaussures, based in the Alsace region town of Nancy. Lévy soon specialized in producing quality, low-priced footwear. In 1903, the company opened its first store, in Paris. The following year, Lévy invented a new shoe brand, André (a popular first name at the time).
The company, which came to be called Chaussures André, stepped up its interest in the retail market and began building a retail network--including using trucks as part of a fleet of "mobile" stores. Fixed retail stores, however, remained a company priority, and by the outbreak of World War I, the company's network had grown to nearly 60 stores. The Paris market represented nearly half of the company's total stores, and the company's sales topped 500,000 pairs per year.
André built its success based on a commitment to quality at low prices. The company also produced a wide range of shoe models for the women's, men's, and children's market, and the company's stores featured as many as 250 different shoe models. Another interesting feature of the group was its insistence that its branch stores be operated by married couples--who were required to live above the stores.
The importance of Paris to the company's growing operations was underscored in 1919 when the company moved its headquarters to the capital city. By then, André had already shown a flair for public relations, highlighting its commitment to quality by promising free replacements for any defective shoes it might sell. By the beginning of the 1930s, the company was selling some three million pairs of shoes per year, despite the economic crisis of the time.
In 1932, the company teamed with Marcel Bleustein-Blanchet, the "father" of French advertising then at the start of his career. Bleustein-Blanchet convinced the Lévy family of the need to advertise, and developed what was to become an icon in French advertising history, the slogan "André, le chausseur sachant chausser." Based on a well-known French tongue twister, the slogan proved a huge success, making André one of the best-known brand names in France. It also helped boost sales, which doubled by the middle of the 1930s, topping six million pairs in 1935. By then, André had become the largest shoe seller in France, with 130 stores in its network. It was also one of the country's largest footwear manufacturers, with seven production facilities in operation. With the death of Albert Lévy in 1935, the company came under the leadership of his son, Georges.
Postwar Retail Emphasis
André's growth came to a halt with the German occupation of France during World War II. The company was forced to rebuild following the war. Joining that effort was Jean-Louis Descours, who became the company's finance director in 1947. By the end of the 1950s, Descours had become the driving force of the family-owned company, and by the mid-1960s had succeeded in outmaneuvering the heirs to take control of André. Under Descours, Chaussures André expanded to become not only France's leading shoe seller, but also the world's second largest footwear retailer.
Descours was named chairman of André in 1960. By then, the company had managed to rebuild much of its network, which had expanded to some 148 stores. Yet the company remained a relatively small business, despite the notoriety of its brand name. Under Descours, André began taking steps to rejuvenate its image, launching a renovation program for its stores. At the same time, the company set to work on its footwear line, fashioning a more youthful image for its models.
Descours had long been inspired by U.S. retailing methods and throughout the 1960s he began adapting these to Chaussures André. As part of this development, Descours began reorienting the company from that of a footwear manufacturer with a retail operation, to that of a footwear retailer with manufacturing capacity. The company's new emphasis on its retail operations led it to begin sourcing its footwear from third-party manufacturers, especially those located in other countries with lower wage scales. By the 1980s, the company's manufacturing base had slimmed down to just two plants; by the beginning of the next century, the company had only one production facility in operation.
Descours had correctly recognized the potential of a new development in the French retail scene, that of the creation of stores within stores, which, coupled with the birth of the large-scale hypermarket, provoked a huge shift in the French retail sector. In 1963, André began opening its first stores in the new shopping centers. In this, the company adopted another U.S. strategy, that of opening several stores under different names in a single location in order to capture a wider variety of consumer. At the same time, the company, which until then owned its predominantly city center-located stores, inaugurated its own franchise network. This move enabled the company to bring its brand name to smaller towns and markets.
By the mid-1960s, with both the company's footwear sales and retail network expanding rapidly, Descours turned again to the United States for inspiration, and began plans to build a new, state-of-the-art distribution facility. Opened in 1966, the facility utilized computer technologies and automated handling equipment that gave the company a capacity of some 15 million pairs of shoes per year.
The boost to the company's operations led it to begin seeking new horizons. In 1967, André began a drive to establish itself on the international market. In that year, the company established a new subsidiary, André International, and began setting up operations in Germany, Italy, Belgium, and as far away as Canada. The company's international sales were eventually to build to some 20 percent of total revenues by the end of the 1980s.
Acquisition Fever in the 1980s
Meanwhile, André continued its program of reducing its manufacturing operations in favor of its growing retail network, which neared 500 stores by the end of the 1970s. The company's growth led it to restructure its operations in 1980, creating a number of independent divisions as the company looked forward to more expansion in the next decade.
At the beginning of the 1980s, Descours appeared to have caught acquisition fever, as he led a transformation of the company from one centered around its historic core of André footwear stores to a multi-brand group of not only shoe stores, but clothing stores as well. One of the first of the company's acquisitions came in 1981, when it acquired Jallatte, a French maker of safety work shoes. Under André, that business boosted production to some three million pairs per year. In 1984, the company struck again, acquiring mid-priced retailer Minelli. The following year, André added three more businesses, Dressoir, Raoul, and the upscale François Pinet.
By then, however, André had found a new vocation, the discount sector. The discount retail shoe store format had begun gaining a growing share of the U.S. footwear sector by the end of the 1970s, and by the beginning of the 1980s had begun enjoying similar success in Belgium as well. Descours recognized the format's potential in the French market, and in 1981 the company unveiled a new retail format, La Halle aux Chaussures. Located in a rundown warehouse in Dombasle, outside of Nancy, the first Halle store, with its bare-bones presentation and discounted shoe prices, was an instant hit with French shoppers.
André quickly rolled out the Halle format across France, and by 1984 the company already counted 75 Halle aux Chaussure stores. In that year, the chain, which previously had presented shoes simply according to size, now rearranged its presentation according to type of client. The move helped to further boost the discount chain's sales. By 1987, the Halle aux Chaussures network had swelled to 250 stores. In that year, the company began a chainwide renovation program, designed to homogenize the store format across the network. By 1991, La Halle aux Chaussures had become the leading retail footwear chain in France and the largest discount footwear retailer in Europe.
In that year, Chaussures André changed its name to Groupe André, in recognition of the company's transformation during the 1980s. Not only had André expanded its footwear operations to include several store formats and brands, it also had made the leap into a new retail category, that of clothing. The company's first step in this new market came in 1984, when it launched La Halle aux Vêtements, bringing to clothing what it had brought to the shoe sector. Initially, the company's move into clothing came in partnership with Nouvelles Galeries. When that company entered the discount clothing sector with its own retail format, however, André took over the purchasing operations of La Halle aux Vêtements. By the beginning of the 1990s, La Halle aux Vêtements had succeeded in capturing the lead in the discount clothing sector--and André bought out the Nouvelles Galeries struggling discount chain. The success of the La Halle format in France led the company to expand its discount operations internationally. In 1987 the company opened its first La Halle stores in Switzerland and Merkalzados stores in Spain.
In the late 1980s, André began extending its clothing reach. In 1987, the company acquired Adolphe Lafont, the leading retailer of work clothing and uniforms in France. In 1988, the company moved into the ready-to-wear sector, acquiring knitwear retailer Caroll. The following year, the company bought a 35 percent stake in the youth-oriented Creeks brand, which also brought it control of jeans brand Liberto. In 1990, the company boosted its Creeks holding to majority control.
That same year, the company acquired a 50 percent stake (later raised to 100 percent) in fast-rising Kookaï, one of the leading retailers in the young women's ready-to-wear sector. Last, the company bought Spot, a chain of 45 discount clothing stores. Meanwhile, André attempted to enter the accessories sector, acquiring Creations Modelia, which manufactured and retailed leather goods under the Didier Lamarthe label. The company also had boosted its position on the international scene, notably through the formation of a joint venture with the United Kingdom's Sears PLC to combine the two companies' shoe store networks in The Netherlands and Germany.
New Name for the New Century
Groupe André's spending spree led it into trouble in the early 1990s, particularly through its Creeks chain, which slumped into losses. By the mid-1990s, the company itself, now with nearly 2,300 stores under 12 different formats, was experiencing both losses and stagnating sales. In 1995, the company began a vast restructuring drive, selling off a number of its holdings, including Jallette and Didier Lamarthe, and the upscale François Pinet, while restructuring its money-losing Creeks chain. The company, which by then had ended its joint venture with Sears, also faced heavy losses in its Germany operations, and these were sold off as well. By the end of 1996, the company had posted losses of nearly FFr 1 billion (approximately EUR 150 million) on sales of FFr 10 billion. By 1998, the company began attacking its difficulties with its poorly aging André chain, shutting some 76 of the chain's 316 stores.
André continued to struggle in the latter half of the decade. Nonetheless, the company once again began expanding through acquisition, buying up the Besson retail shoe chain in 1998 and the San Marino shoe chain in 2000. By then the company, which had withdrawn from Dutch and German markets--dropping the company's total retail network by half--renewed its international growth, moving into the Czech Republic in 1998 and Hungary in 1999, which joined the company's existing operations in Poland, first established in 1993. Nonetheless, international sales now formed less than 10 percent of the group's total sales.
At 83 years old, Jean-Louis Descours had still not put into place a clear successor. At the same time, the group's store formats, especially its historic core André stores, were struggling against the rising success of such trendy competitors as Zara, HM, Benetton, and others. With its stock price depressed and losses continuing, Groupe André suddenly found itself the target of corporate raiders, particularly pension funds led by Guy Wayser Pratt and Nathaniel Rothschild. By 2000, the pair had succeeded in gaining control of the company, ousting Descours.
With new management in place, the company began to restructure around four primary divisions. While maintaining the bulk of its store names, the company combined a number of these, regrouping its discount shoe network around the single La Halle aux Chaussures name, combining the Spot stores into the La Halle aux Vêtements chain, and merging the Liberto brand into the Creeks chain. At the same time, the company set out to revitalize its stores, especially the André store chain.
In 2001, the company changed its name, becoming Vivarte. In that year, also, the company returned to profitability, posting a net income of EUR 47.9 million on sales of EUR 1.92 billion. Yet, with its share price remaining undervalued, the company's major shareholders became impatient, and in January 2003, Nathaniel Rothschild, just 31 years old, was named as the group's chairman. With a commitment to providing shareholder value, the new management promised to introduce a new era of profitability to the company.
Principal Subsidiaries: Anaïs; Anbil Future; André; André Ceska Sro (Czech Republic); André International BV (Belgium); André Polska (Poland); Caroll International; Compagnie Européenne de la Chaussure; Compagnie Vosgienne de la Chaussure; Creeks; Finançière Agora; Financière de Gergovie; Kookaï; La Halle Hungaria (Hungary); La Halle Vêtements; Minelli; Mod 2000.
Principal Competitors: Industria de Diseno Textil SA; Heinrich Deichmann-Schuhe GmbH und Co.; C and J Clark Ltd.; Salamander AG; Manufacture Française de Chaussures Eram SA; Macintosh Retail Group NV; Alexon Group PLC; Blacks Leisure Group PLC; John David Sports PLC; Osuusliike Elanto; Ludwig Gortz GmbH und Co.; Stylo PLC; Karl Vogele AG; Hettlage KGaA Neuried Kr; Compar SpA; Quick-Schuh Handelsgesellschaft mbH und Co. KG; Nilsson Group i Varberg AB; Prenatal SA; WEW Group PLC; Coflusa SA; Sorelle Ramonda SpA.
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