The first stone of Michel Ohayon’s commercial empire also threatens to fall. Camaïeu was liquidated; Go Sport, Gap and La Grande Récré were taken over by rivals at the commercial court after filing for bankruptcy; the Cafés Legal company was sold before meeting this disastrous fate. It is now the turn of the 25 Galeries Lafayette department stores owned by the Bordeaux businessman and their employees to wait with concern to be determined on their fate. This Wednesday, the Bordeaux commercial court is examining the draft exit plan from the safeguard procedure for these businesses, which employ more than 1,000 employees. The judges will have until February 22 to decide on their fate.
The issue has a strong political dimension as these department stores are anchored in the territories of Agen, Bayonne, Caen, Rouen and even Lorient. It is also delicate for the image of the Galeries Lafayette group, which sold these 25 underperforming stores. The group probably did not expect such a debacle when, in 2018 and 2021, Michel Ohayon recovered the business assets, since operated in affiliation (franchise) via the company Hermione Retail, and immediately bought all the premises. Everything is grouped together in its Bordeaux Real Estate Financière (FIB), itself in receivership.
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At the time, the sixty-year-old’s stated ambition was to revitalize downtown businesses in small and medium-sized towns. Five years later, the disillusionment is total. The opening of a safeguard procedure is decided in February 2023 for all of these 25 department stores. A good part of them require major renovations – some being in a “critical state” – rents are high, investments are absent, debt is growing, report staff representatives and other observers of the sector .
On Michel Ohayon’s side, we prefer to remain silent. And for good reason, the next few weeks promise to be decisive. The draft exit plan from the safeguard procedure that he concocted in order to retain control of the 25 department stores suffered a first setback with its rejection by the social and economic committee (CSE) of the stores last week. This opinion is certainly advisory, but it should weigh in its analysis by the Commercial Court. In question? The economic and financial measures envisaged by the businessman to try to keep the stores alive and considered unrealistic. The unions fear a collapse similar to that suffered by the other brands that Bordeaux has bought. “This plan is catastrophic, it is not serious,” says the employees’ lawyer, Stéphane Kadri. For example, it forecasts an increase in turnover of 11% from 2024.”
Above all, Michel Ohayon is demanding from creditors, mainly suppliers, a waiver of 70% of their debt and, for the remaining 30%, payment spread over ten years, according to the employees’ lawyer. These creditors may refuse to comply. Here again, the Galeries Lafayette group is on the front line: as the main supplier, the brand receives royalties for the use of its brand. The total receivables amount to 49 million euros since 2018, according to our information.
In fact, all parties are mainly thinking about the next move. Either the court gives the green light to the safeguard plan and Michel Ohayon, who has not expressed any desire to sell at this stage, succeeds in keeping his stores afloat, or even relaunching. But some observers believe that “this would amount to stepping back to jump better”.
Either the court rejects the plan. The stores would then be placed in receivership with a view to their sale. However, it is difficult to find a buyer for these businesses with an area of 2000 to 4000 m2 located in the centers of small and medium-sized towns, which have been neglected in recent years. The decline in population, strong competition from outlying shopping centers and the rise of online commerce are all factors in the weakening of city center businesses, from boutiques to department stores. Moreover, the Galeries Lafayette group keeps repeating that it has no intention of recovering them. The brand, which initially planned to maintain a territorial anchor with these stores, has initiated a strategy of refocusing its activity in the largest cities.
Enough to raise serious concerns in local communities: at a time when local elected officials and the State are increasing initiatives to maintain commercial activity and thus revitalize city centers, closures would be a very bad sign. “For us it is an extremely serious subject,” explains Clémence Brandolin-Robert, first deputy mayor of Agen, who regularly discusses this issue with Bercy. This is a big issue for commercial and land dynamics. People come downtown because there are Galeries Lafayette.” Agen is home to one of these department stores on borrowed time right in the center. If this business is sold, “the risk is to have a real estate wart in the city center. What would we do to convert 3000 m2?”, worries the deputy mayor, who nevertheless remains confident, because the Agen store has been renovated.
