Hema owner to sell part of its store portfolio to franchisees
Marcel Boekhoorn, the Dutch entrepreneur who acquired retailer Hema in October, is planning to sell part of the retailer’s store portfolio to franchisees.
According to financial newspaper Het Financieele Dagblad (FD), Boekhoorn wants to invest the sale profits in the acceleration of Hema’s international expansion, the newspaper reported, based on information from anonymous sources.
Sources told the newspaper that an average store can generate between €1 million and €1.5 million. However, according to them, it is unlikely that Hema will sell its most profitable stores, which are located in big cities. This means that the retailer will probably sell the smaller stores, located in smaller cities and towns, which will generate less income, the FD reports.
In addition to the sale of the stores, sources said that Boekhoorn also plans to sell Hema’s own bakery that currently operates from seven locations across the Netherlands, distributes to most Hema stores and employs 350 people. The bakery department made Hema famous for its tompouce, a Dutch cream pastry that also inspired the 2016 T-shirt collection to celebrate Pride Amsterdam.
At the moment, of the 545 Hema stores in the Netherlands, 261 shops are already owned by about 100 franchisees. In previous years, under former owner Lion Capital, Hema entered into conflict with its franchisees, which resulted in several lawsuits. At the time of the sale to Boekhoorn’s Ramphastos Investments, Hema said that it had made new agreements with the Association of Affiliated Companies (Vereniging van Aangesloten Bedrijven, VAB), the franchisees of Hema, including agreements in regard to e-commerce. Hema said that "the retailer and the VAB are aware that cooperation is the only way to move forward." All ongoing lawsuits were then withdrawn, as were the cancellation of franchise contracts.
The sale of Hema stores to franchisees will most likely start in January 2019, when the acquisition of Hema from Lion Capital to Boekhoorn’s Ramphastos Investments will be formally completed. According to FD, it is the first time that Hema has offered to sell (part of) its own store portfolio.
Boekhoorn’s arrival did not remain unnoticed. Earlier this month, Dutch media reported that four Hema executives would leave the retailer within the following nine months. Hema said at the time that it chose to cut the management board to simplify the structure of the company in order to operate more effectively. Prior to that, it was reported that Boekhoorn had already taken the first steps to reduce Hema’s debt: following the acquisition, €100 million in loans were repaid and €40 million were put in the retailer’s own capital.
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