Could you specify a little about your company, Grupo Cortefiel, and about the brands you represent?
A.V.D.A.: “At the moment, Grupo Cortefiel has about 1800 shops in 62
countries: Cortefiel, Springfield, Women’secret, Fifty Factory (outlet) and Pedro
del Hierro. We also had Milano, but recently we ended that brand. We run the European stores
ourselves and we work with countrywide franchise deals for the shops
outside of Europe.
In the beginning, Cortefiel was all we had: a fashion assortment for men
and women of age 35 and older. Springfield originally sold leisure
sports clothing for men in their twenties, but in 2006 they added a women’s
department with Springfield Women. Women’secret added lingerie and night
attire in a playful and young design for the most common sizes. They aim at an excellent age group: apparently women in in their mid-twenties spend more and are very loyal to their brand.
Today we belong to the top three of fashion groups in Europe. Inditex
and H&M are one and two; Grupo Cortefiel is next in line.
Celio and Mango have a comparable turnover to ours.”
What is your biggest challenge? Which parts of the world do you still want to invest in?
A.V.D.A.: “Latin America is moving fast, especially in Chile,
Argentina, Mexico and Peru. Brazil lags a bit because of high taxes, and Colombia is struggling as well.
Russia is growing fast with 200 new shops over the next three years. We
have just signed an agreement with China for 800 new stores over the next five
years, but – of course – some reservation is in order here as things still have to be put in motion. I am however quite
confident that we will exceed 3000 shops in the next five years.”
“Closing our own factories was a big shock”
How did Grupo Cortefiel grow so fast?
A.V.D.A.: “I joined the group in 2003, so i can only talk as of then.
I was contacted by the founders, the Cortefiel family, when I was general manager of H&M for Belgium and Luxembourg, and was responsible for
the training and coaching of the new country manager of Austria. Two
years later, in 2005, I had already lifted the EBITDA from 87 million to 143 million.
When i started, the group was mainly a Spanish company with a
big hunger for expansion. Cortefiel had 900 shops back then, of which the
majority was profitable – but most of the international shops were not. I
decided to close the German stores, which had a loss of
11 million euro. Other countries were below par as well, which resulted
in the dismissal of all country managers.
We needed to refocus on
the essentials. I sold perfume chain Douglas, which was franchised
in Spain and Portugal, and all of the six factories in Hungary (one), Spain (two) and Morocco (three). This came as a big
shock for the family.”
So you started making drastic cuts right from the start?
A.V.D.A.: “Indeed, but it was like taking a step back to be able to jump further. My assignment was
easy: get a EBITDA of 120 million. The family wanted to sell the company for 1.2
billion euro, but that was impossible with a turnover of 87 million. In 2005
we already exceeded expectations with a EBITDA of 143 million euro.
I closed the factories because the group was obliged to purchase there, so these factories were not up to the competition and because of that, we
lost a very important margin. The reason we weren’t internationally
successful, is that we bought chains with a completely different concept
than ours. The consumer didn’t understand why the collection changed
after a takeover, with the aforementioned results.
In the end, the family was happy with these drastic changes since I
reached their objective. When I started in this group in 2003, a share
cost 5 euro (which made the company worth 400 million), in 2005 it was
up to 14.5 euro (or 1.2 billion for the entire company).”
What happened next?
A.V.D.A.: “In 2005, the private equity firm CvC bought the shares for 17.9
euro per share, but since another 45% of the shares were still available on
the market, two rivals arrived. Two other private equity firms, Permira
and Pai joined forces and the three private equity firms came to a
consensus with 31% each.
The management bought in for 7% and I bought 2% and was appointed
CEO of the group. I was convinced of the success: had it gone wrong, I had lost all my money and on top of that, I would have had a
sky-high debt to the bank. It was all or nothing! Luckily things turned
out well: in those golden years for the economy, we reached an
EBITDA of 200 million in 2007.
Together we – investment funds and management – had invested 70 million
euro out of our own pocket, the rest of the money was a loan. It was a big risk, but it paid off. We did feel it however when the
crisis hit in 2008: banks got more powerful and we needed to
renegotiate. The banks demanded extra management and I became president
of the board of directors. Despite the severe economical crisis, which
also mercilessly hit Spain, the group kept on growing.
Today we are fighting for every euro, dollar or yen. We are ready for new
growth: either with the current shareholders, or in another
composition. With private equity, every day can differ from the next: they
are all doomed to be sold eventually… but to be honest: we are a nice
bride now!”
Scan yourself in second life
With the increasing globalization, do you still see retail opportunities
for companies in the Benelux? International players like Forever 21,
Abercrombie & Fitch, Inditex and H&M have a big impact.
A.V.D.A.: “As far as Europe is concerned, you have a wave every
decade. First there was the Dutch wave with C&A and Kreymborg, then there was a Scandinavian wave with Bestseller, H&M, Ikea and
Peak Performance. Later a Spanish wave arrived with Inditex, Grupo
Cortefiel and Mango; while now there is an American wave.
The Americans will arrive
in Europe in full force, with the internet working in their advantage as well.
Take Abercrombie for instance: that is not a retail brand, but a hype.
They open some flagship stores to create a buzz and the rest is done
through the internet.
And after the American wave, maybe Asia will follow. I suppose they will not
actually change anything, they will just buy existing concepts and produce them cheaper. Still, I think Japan might start retailing internationally. No
matter what, the future will be interesting.
They all will have to keep in mind that taking a local concept and internationalising it is not easy. JBC, which I
know very well through my board function, has a good local concept that
takes to local trends. Take their cooperation with Studio 100 for
example, you can’t bring that to another country. When you are a strong
local player, you have to cherish that position. Should Bart Claes (JBC)
ever have plans to go international, he will have to use a completely
different concept, like through a takeover. At least, that is my personal
opinion.”
You are very active on the web. Do you see worldwide differences in online approach?
A.V.D.A.: “We took our first online steps in Spain and Portugal. Soon
we will tackle the rest of Europe’s online market, but I can not put a time
frame on that. There are important logistical differences. Back
in the days, logistics was decentralized: five trucks for five concepts.
Now only one truck is being used. Grouping this was a good move. This evolution is
interesting, because you need to put the necessary attention to it.”
Do you lie awake at night because of the multi-channel concept?
A.V.D.A.: “The multi-channel concept will definitely have its impact on
the image of shops. Scandinavia and England are absolute pioneers in
online shopping, while we are still technological immigrants. Our children on
the other hand are ‘technological natives’; everything will shift because
of them. The whole buying-concept will change: everything will revolve
around m-tail. The new generation is lost without their mobile phone: they use it to go online – not to call any more. Online
presence won’t suffice: companies will have to create a virtual presence that
goes a lot further: clothing tips, eating tips, lifestyle tips etc.
In Japan you can already scan and compare prices immediately.
Bestseller’s shops were ahead of their time: only now are we
starting to move towards window shopping. We are leading a second life in
which we scan ourselves and don’t have to go into a fitting room
anymore. The expansion of stores will evolve in the other direction as
well: stock size will decrease. If your desired item is not available
in the store, we will ship it straight to your address the very next
morning.
We are not there yet; right now we have our hands full with our
core business. If you are always running behind on your competition, you
lose yourself. Still, we do stay very alert!”
“A woman always buys!”
You are in the fashion business. In what way did women change your outlook on retail?
A.V.D.A.: “That is a difficult question! Fashion is offered by demand.
The whole buying movement is controlled by women ever since the start of
mankind. But there is some development there:
look at perfume stores, where men’s departments are created successfully.
Sometimes they even boom with 300,000%! Men are obviously still in the
race.
This is a very interesting evolution, but for now we are still focusing on women. They still control the biggest part of the fashion
portfolio and their buying behaviour is unique: when a woman feels bad,
she buys to compensate; but when she feels good… she buys as well!
Beautiful, isn’t it? If you put a box of clothes in a shop for 2 euro a
piece, a woman can go through it for hours, while a man wouldn’t even take the
time to look at it. That says it all… Even online
it is the woman who buys the most.”
How do you decide on the fashion line you want to expand? What’s the rotation speed?
A.V.D.A.: “We go about it just like H&M: with small changes. We design
and keep on the existing line for 80%. We attend all the fashion shows,
where we spot new trends, which we then expand in our collection.
Zara
goes about it completely different: they buy small amounts through
subcontractors. Inditex then modifies them where necessary, looks at what works
and produces it in large quantities. They are unique with their speedy
supply chain.”
How would you estimate the crisis?
A.V.D.A.: “The crisis is different in each country: in Belgium, we are only at
the beginning of the crisis. We were without
government for two years, with more money being spent than coming in. Belgium
did not take its precautions and we are only now realizing that. The cost
of cars is rising and suddenly there are extra taxes: the consumer
feels the crisis in his pocket. I predict the crisis will
remain for another two years, with an all time low hitting us in 2013.
The Netherlands will find a way around it. Spain is already at its all time low, but will have climbed out by the end of the year. The
wheat is divided from the chaff, as you can tell by the expensive houses on
the Spanish market at the moment. If you buy now, you will make money
in the future.”
