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Fnac making 510 redundant to cut costs

16.01.12 | Barbara Casassus

Fnac, the leading French cultural products chain, will lay off 510 of its 17,000 staff and may pull out of Italy as part of a cost-cutting plan to save €80m a year against a backdrop of shrinking sales.

"The worsening of the economic crisis in the last six months has led to a sharp fall in household consumption, which is affecting Fnac's markets in all the countries where it operates," the chain said in a release on Friday (13th January).

In 2011, the group's sales declined 3.2% overall and 5.4% in its stores following a slump in demand for electronic and other technical products in the last nine months.

Of the job cuts, 310 will be in France and will involve head office and instore support staff. Sales and fnac.com, which are at the centre of the chain's strategic development, will not be affected. The other 200 layoffs across the seven other countries will be through non-replacement of staff leaving. The countries are Belgium, Brazil, Italy, Morocco, Portugal, Spain and Switzerland.

A decision will be taken during the year on whether to withdraw from Italy, where Fnac has "not achieved a critical mass" though its 17 stores, c.e.o. Alexandre Bompard told the French daily le Figaro.

The group will start managing the four stores in Switzerland from France at the end of 2012, will renegotiate rents in its 158 outlets and will revise all technical services to help "drastically reduce" operating expenses.

But the cutbacks will have no impact on the five-year plan Fnac 2015, which was unveiled last July and includes opening 30 new outlets in France, mainly on town outskirts and countries where it is already present.

Several projects have already been initiated, and about 10 openings are planned for this year, including in eastern Paris, railway stations, airports and selected neighbourhoods, the group said. It will also launch new concepts for children and families and internet access in stores.

Fnac parent company PPR has wanted to sell the chain for some time, but has not yet found a buyer.

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