It’s an amazing transformation. Eight years after La Redoute was taken over by a group of CEOs for a symbolic euro, Nathalie Balla and Eric Courteille, the former mail order company from Roubaix will fall into the hands of the Galerie Lafayette group this summer, for a total value of 1.2 billion euros. In 2017, the Moulin-Houzé family, which owns department stores, acquired the first tranche of 51% of the share capital for a level almost ten times lower, at 140 million. It was then agreed that the final acquisition could take place as early as 2022 according to a formula that is very attractive to shareholder managers: the better the operating profit (Ebitda) for the past fiscal year, the higher the multiplier for calculating the value of the company will be. However, it reached nearly 100 million last year, five times what it was in 2019.
When Covid speeds up remission
Oddly enough, buyers did not want to limit this amount, or even smooth the results over several years to establish their equation. It must be said that in 2017, Roubaix, famous for its large catalog, is still recovering. Three years ago, the Kering Group, its former owner, sold it to duo Balla-Courteille after pumping in nearly 500 million euros to cover losses, modernize the logistics and fund the departure of 1,178 employees out of 3,437. The rise of Amazon in France raised fears of an inevitable decline of the brand Which was born in 1837 when the three Swiss had already disappeared from the scene.
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But in the spring of 2020, the explosion of Covid, with non-essential stores closed for several weeks and then travel restrictions, gave an unexpected boost to La Redoute, which is well positioned in its own brand of home equipment. AM.PM . From 2019 to 2021, its turnover increased from 850 million euros to more than 1.1 billion. By tightening expenses, Nathalie Balla and Eric Courteille are improving profitability and increasing the leverage for acquisitions, to reach 12 times EBITDA, or 1.2 billion euros. A staggering amount they can claim from 2022, at least for the remaining half to be obtained, by exercising their right of transfer. This is clearly what they decided before leaving the company at the beginning of the year. Since March, Philippe Husey, Chairman of the Board of Directors of Galeries Lafayette, is chairing La Redoute and Philippe Perlan, is the Managing Director.
Hundreds of millions of euros to share
Thus, the two rates, who own 60% of the shares, will have received approximately 200 million euros each at the end of the acquisition by Galeries Lafayette. This amount also includes the sale of Relais Colis to the Walden family for approximately €18 million. For their part, about thirty CEOs combined together in Man R own 24% of the share capital. They will receive between 2 and 10 million euros depending on the amounts invested. As for the employees, they were able to put a few hundred euros into the buyout company’s investment fund which owns 16% of the company. On average, 1,300 employees who set out to venture individually will receive €80,000. “I had no confidence, I was afraid of losing money,” admitted one of the unionists, who also denounced the bonus banned in recent years. But last year, employees earned the equivalent of a month and a half salary in profit sharing thanks to the company’s good results.
Recovery not yet confirmed
This unexpected recovery, in less than a decade, raises questions. On the other hand, the earnings gap between managers, executives and employees is staggering. Especially since the buyers have only invested a few tens of thousands of euros to keep the majority of the capital. “Obviously, these are not disguised salaries, so the tax on their capital gains is set at 30%, under the flat tax, in fact at 34% considering the amount,” notes Entrepreneurs Legal Counsel Jeremy Goceran. Watch a little bit of Natalie Bala. According to the documents recorded during the sale in 2014, the leader resided in France. From now on, she is a resident of Belgium. So it is not subject to tax. On the other hand, the new owner may be wondering how robust the recovery will be while sales of La Redoute, like e-commerce in general, are declining. It will take two or three years for Galeries Lafayette to truly know if the story of a former mailman who became a unicorn is not a fairy tale.