Redcats to boost store network

By Nick Antonovics

PARIS (Reuters) - Redcats, the mail order unit of French retailer Pinault-Printemps-Redoute (PPR), (PRTP.PA: Quote, Profile, Research, Stock Buzz) will more than double its store network as it seeks to counter declining catalogue sales, Chief Executive Thierry Falque-Pierrotin said in an interview on Tuesday.

Redcats sales have been on a declining trend since 2000, but Falque-Pierrotin said the group, which operates in 28 countries through 17 brands, was working to protect operating results by reviewing some operations and expanding others.

Speaking to the Reuters Consumer and Retail Summit in London via telephone, Falque-Pierrotin said Redcats had identified catalogues representing more than 20 percent of its 4.3 billion euros ($5.8 billion) in annual sales as "turnaround situations."

The underperformers could be repositioned, merged with other group brands, developed as "pure players," scaled back, closed or even sold, he said.

He did not name the underperformers, but said they fell outside three other categories: "home shopping leaders," such as La Redoute; "branded retailers"; and "pure players," such as its recently acquired Golf Warehouse unit in the United States.

The "pure players," which represent 2 percent of group sales, were destined to grow, organically or through "tactical acquisitions," he said, citing the United States as a potential market.

At the same time, Redcats would take on competition from traditional retail chains by expanding its store network, mainly in France, and protecting its growing Internet franchise, which now generates close to 40 percent of turnover.

DECLINE IN MAIL ORDER

"I think the traditional mail order business is declining and will continue to decline," said Falque-Pierrotin, explaining Redcats' decision to adjust its business model.

"We will definitely develop a significant store network," he said, noting Redcats already had 100 stores, mostly in France.

Asked if the network could double within three years, he said: "Even more."

New stores were possible under its Cyrillus family clothing chain or So Redoute womens-wear concept and would be expanded either via its own stores or franchises, he said.

He said opening in new markets such as India, China or Russia was not a priority, but Redcats was open to offers from groups wanting to operate franchises, citing similar deals struck for Cyrillus in Japan and Vertbaudet, its childrens clothes catalogue and chain, in Saudi Arabia.

Redcats last year also entered a partnership with German rival KarstadtQuelle KARG.DE, leading some to speculate whether PPR and Karstadt, whose mail order business is struggling, would eventually merge catalogues.

Falque-Pierrotin said there were no plans to merge, but that the addition of Redoute pages to Karstadt's Neckermann catalogues and a joint venture with Vertbaudet in Germany had exceeded expectations and would be developed.  Continued...