Major restructuring looms at Conforama

The distributor is offered for sale by Steinhoff Contribution. Conforama is preparing for about 2,000 jobs. Percy took the file.

Conforama will be one of the major industrial projects of the year. The furniture distributor is heading towards a massive restructuring. It was on sale for six months by its owner Steinhoff. Investment bank Rothschild is taking over the sale, which is supposed to be completed by summer. The South African group hopes to recover between 600 and 700 million euros from Conforama. A price that is difficult to obtain in light of the performance of the group, which recorded “zero margin at the end of 2018,” according to a competitor who obtained the company’s accounts. Especially since French activities, which weigh two-thirds of Conforama, lost more than 100 million euros last year. The inexpensive furniture brand suffers from Ikea and e-commerce. But Steinhoff justifies her ambitions with the value of the walls of the 337 Conforama stores located primarily in France, Spain and Switzerland.

Steinhoff is under pressure from his creditors as accounting irregularities of several billion euros were observed over several years. The South African group is backed by 10 billion euros in debt that hedge funds have bought in part to control and split the group. The American (Mattress) and British (Poundland) subsidiaries have already undergone a major restructuring, while the Austrian activities have been sold off.

Forty stores closed

They are now attacking Konforama. Creditors’ representative, Helen Lee Puig, visited the company’s headquarters last fall and visited the Columbus site. Aware of the difficulties, the Ministry of Economy is closely following the file through the Ministerial Committee for Industrial Restructuring (Ciri), which is evidence that the file is heavy. According to our information, representatives of “Ciri” went to London a few weeks ago to meet Steinhoff’s creditors and negotiate the terms of the Conforama restructuring. The South African group plans to lay off up to 2,500 jobs and close nearly 40 stores. French unions estimate that “between 1,500 and 2,000 jobs will be threatened, a large part of them in France, in exchange for the sale or closure of about twenty stores in France,” according to the employee representative. Conforama has 14,000 employees in Europe, of which 9,000 are in France.

Fundamental restructuring, the extent of which depends on the buyer. According to several sources, several of Conforama’s competitors were contacted last fall. With mixed success. Only his big opponent but he will be interested and will be the favourite. Employees fear this option which could lead to massive restructuring as the two brands are in direct competition. The competition authority will also enforce many store resales.

Steinhoff ready to restructure Conforama

Two other competitors remain: Fnac Darty and Casino. Both groups studied the file but did not appear to be convinced. First Fnac Darty worked hard on this topic last fall. At first he was seduced, he finally gave in, as a close friend of the group explained, for the time being … Strengthening his position in home appliances was the main concern of his Darty brand. But “furniture is a very devastated market and the Conforama brand is less than that,” explains a close friend of the group. Not to mention the many points of sale.

The same note in the casino, clarifies the management of the group. However, its e-commerce company CDiscount seemed interested. They already have a joint purchasing position with Conforama, Mano, in home appliances. The merger would have made it possible to generate more synergies and integrate “Confo!”, a brand new concept, into the casino’s supermarkets. The discount could also have turned some points of sale into stores to establish themselves in physical commerce. But a casino mainly focused on assets to sell to reduce debt.

However, Steinhoff’s chance of getting the asking price is slim. According to several sources, “If the price is too low, the South African group can keep Conforama and restructure it itself before reselling it,” confirms a good expert on the file. At the moment, no information is communicated internally. When called, Steinhoff and Conforama did not want to respond to us. Details are expected at the end of next March, during the Extraordinary Central Business Council (CCE).

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