FNAC announces an 80 million euro cost-savings plan and
Continues the implementation of the 'FNAC 2015' strategy plan
The worsening of the economic crisis over the last six
months has led to a significant decrease in
household spending in Europe, which is affecting Fnac's
markets in all of the countries in which it is present. In
France for example, as with the 'publications' (books,
music, films and games) market, technology goods have
experienced a severe decrease in popularity over the last 9
months, leading to a 15% reduction in sales of
electronic goods since April*. This economic downturn has
caused a significant drop in the Group's 2011 turnover,
of-3.2%, as well as a decrease of 5.4% in the performance of
Fnac store sales. Given the increased pressure on its
margins and the limited room for manoeuver in its pricing
structure, Fnac expects its annual current operating
income to decrease by half. With this in mind, and with
the economic situation not set to improve in the coming
months, Fnac is announcing that a project aimed at
generating savings of 80 million euros over the full year has
today been put forward to the Group's representative
bodies.
This cost-saving project consists of a major programme to
reduce overhead, including:
-A drastic reduction in routine expenditure
-Renegotiation of leasing costs for our entire network of
stores (156)
-A general review of technical services contracts concerning
headquarters, stores and logistics, in
order to optimise terms and conditions.
The project also involves the suspension of recruitment in
all countries, a wage restraint policy and the cutting
of 310 jobs in France. These job cuts will only concern
support functions at headquarters and in stores, which
will largely be reorganised. Sales staff in stores and
the Fnac.com teams, which are at the heart of
Fnac's development strategy, will not be affected by
this project. Fnac would like this to be an exemplary plan
in terms of social support. A plan involving
voluntary redundancies will be put in place and it is
management's priority to encourage staff reassignment
within the Group. This reorganisation is already leading
to the creation of new jobs in the relocation of certain
support functions, which will be offered as a priority
to the employees concerned. At the same time, Fnac will
provide support for all employees who are being made
redundant in their search for employment or further training.
A comprehensive redundancy package will be put forward
and discussed with staff
representative bodies. Outside France, the total
number of positions will be reduced by 200 throughout
the countries in which Fnac is present, by not replacing
those staff who leave. In addition, foreign branches
will be streamlined. For example, the 4 stores in Switzerland
will be run directly from France as of end of 2012. In
Italy, where the environment is no longer conducive to
Fnac-owned stores, the company is evaluating all
possible options, and will make a decision at some point
during the
financial year. These measures, essential for dealing
with the exacerbating economic situation, will be carried out
in parallel with the implementation of the 'Fnac 2015'
strategic plan, which will keep to its
original schedule.
In an effort to inject fresh momentum, the company created
the 'Fnac 2015' plan in July 2011. It aims to identify
growth opportunities and to make the brand more attractive to
customers. This strategy is a response to the underlying
market difficulties faced by Fnac. Thanks to several
strategic partnerships being signed in 2011, important
projects have been initiated and they will be
implemented in 2012. To meet customers' needs in terms of
convenience and availability, the expansion of the store
network will be intensified with the opening of more than ten
new stores (Fnac at Bercy in Paris, points of sale in
train stations and airports, opening of new convenience
formats, amongst others). The Group will also
develop its new in-store products, particularly those aimed
at children and families.
This development will take place within the framework of its
new commercial concept, aimed at making the stores more
attractive to customers by simplifying and improving the
buying experience. Thus this year, Fnac is set to open
20 'Kids' and 24 'Services' spaces, and will be introducing
sections dedicated to SFR phone services in the majority
of its stores. In an effort to win over new clients at a
time when e -commerce is thriving, and to make the most of
the brand's attributes, Fnac will launch its first
fnac.com terminals in stores this year. Fnac will
continue to progressively extend multi-channel flow
(click and mag, click and collect, click and relais
colis (delivery points at convenience stores). In 2012, the
new fnac.com website for mobile devices will be
launched. Fnac will also continue to form a closer
relationship between customer and brand with, notably,
new offers for personalised services.
Alexandre Bompard, Chairman and CEO of Fnac, said:
"It is only by implementing its cost-savings plan and its
ambitious development programme that Fnac will be able
to regain its competitiveness and its ability to generate
sustainable growth. In this way, it will
reaffirm its position as a reference in its markets".
*(source: Banque de France)
About Fnac
Fnac, a subsidiary of PPR, is the leading retailer of
cultural and technology products in France. It employs more
than 17,000 people and operates 158 stores (at December
2011): 85 in France and 73 elsewhere in the world (Belgium,
Brazil, Spain, Italy, Portugal, Switzerland and
Morocco). Its website is one of the foremost BtoC e-commerce
sites in France in terms of the public it reaches, with
an average of 750,000 unique visitors daily. Fnac reported
€4,473 million in sales in 2010.
About PPR
PPR nurtures a group of high-growth global brands distributed
in more than 120 countries. PPR generated revenue of
€14.6 billion in 2010 and had approximately 60,000
employees as of December 31, 2010. The PPR share is listed on
Euronext Paris (FR 0000121485, PRTP.PA, PPFP).
Explore the PPR brand universe at Luxury Goods (Gucci,
Bottega Veneta, Yves Saint Laurent, Alexander
McQueen, Balenciaga, Brioni, Boucheron,
Girard-Perregaux, JeanRichard, Sergio Rossi and Stella
McCartney),Sport & Lifestyle (Puma, Volcom, Cobra,
Electric and Tretorn), Fnac and Redcats.
Gaëlle Toussaint
06.22.77.04.80
gaelle.toussaint@fnac.com
Laurent Glépin
06.08.57.02.82
laurent.glepin@fnac.com
Jennat Kabbaj
06.80.90.93.30
jennat.kabbaj@fnac.com
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