Sinking Retailer

Work Tales - Why did I mention uncertain time & new frontiers in my previous blog? Well, it’s because of this piece of news which was released to the public recently.

...Europe's largest retailer, the World’s second biggest retailer has picked industry veteran Georges Plassat as its next boss, signaling key shareholders may back another attempt to fix its ailing hypermarkets rather than push for a break up. Plassat, the 62-year-old head of private equity-backed retailer Vivarte, will replace Lars Olofsson, who faced mounting criticism over a series of profit warnings that hammered the French group's shares down 43 percent over the past year. "The reference shareholders have been hesitating between restructuring the group or breaking it up. Plassat is the man of a restructuring," said one analyst who declined to be named, referring to French's top investors -- French tycoon Bernard Arnault and U.S. private equity firm Colony Capital. Speculation has long swirled that Olofsson's departure could herald the breakup of this French company, with the possible sale of its faster-growing emerging market businesses. "This French company has lost the confidence of its managers, staff, suppliers and shareholders. Appointing a respected retailer at its helm polishes up the image of the board, which some critics have accused of conducting a short-term financial strategy," CM-CIC analyst Christian Devismes said. Olofsson's main response was The Planet, a costly revamp of the stores that has so far not yielded the necessary results and is likely to be scaled down in March amid a worsening economic climate. A new CEO might pursue an alternative strategy for the hypermarkets, like downsizing them, slashing prices to lure back cash-strapped shoppers who think that the French products are too expensive and investing more in e-commerce, analysts said. "The appointment of Plassat should be viewed as a big win for the French," said Natalie Berg, director of global research at Planet Retail. "He is a seasoned retail executive with the non-food experience that the French vitally needs." However, she said Plassat faced an uphill struggle in a world where giant stores are out of fashion and you need to give shoppers a good reason to make that out of town trip…

Oh boy, here we go again…