France's Fnac makes 2013 profit

France's Fnac makes 2013 profit


The leading French cultural product chain Fnac may have turned the corner financially, even though markets are expected to remain difficult this year, the company warned yesterday (27th February).

It reported a small net profit of €15m for 2013, against a loss of €142m in 2012, and a 13.3% increase in current operating income to €72m, after two years of losses. The fourth quarter was particularly buoyant for sales. After dropping 5.1% for the first nine months of the year, they rose for the first time in three years by  0.6% in the last three months. 

This is the first good news since c.e.o. Alexandre Bompard took up his post four years ago, and launched his Fnac 2015 strategic plan in July 2011 to develop its franchise operations with small outlets in train stations, airports and small town centres, and medium-sized outlets in local commercial areas.

 By the end of December, new format outlets totalled 20 in France, of which five had been added last year, and one of each type had been opened in Lisbon. This brought the total number of stores to 176 at the end of 2013, including 108 in France, up from 170 and 103 a year earlier. The chain’s first outlet in the Middle East will open in Qatar in the autumn under franchise with Darwish Holding. 

The company saved €55m last year as part of its plan to cut costs by €80m in 2013-2014, and has fared better on the stock market than feared when parent company Kering, formerly PPR, took it public last June. “We have attracted a large number of new investors, especially Anglo-Saxon,” Bompard told the French economic daily Les Echos.

The gloomy note was the drop in group sales of 3.8% to €3.9bn for 2013 as a whole. Figures released for the first time since the company is publicly quoted showed that book sales dropped 1.5% in real terms to €452m from €459m in 2012. But demand for new product lines, such as games and toys, home and design, stationery and no-contract mobile phones was “highly satisfactory” in 2013.

 Although domestic sales dropped 2.7%, Fnac claims to have outperformed the French market. It gained 0.5 point in market share for cultural products and 0.6 point for technical products, and said the growth of Internet sales picked up in the second half. Elsewhere, sales fell by 4.2% in Spain and Portugal at constant exchange rates,  1% in Brazil and 5.6% in "other countries", including Belgium and Switzerland.