Damartex announces the sale of Afibel
Damartex announced today that it has signed an agreement to sell Afibel, its Golden Age brand and pioneer in plus-size fashion, to CTFI, a group specializing in the manufacture and distribution of personal and household goods.
This sale is part of the new strategic plan of the Group: Dare. Act. Impact. 2026, announced in September 2023, to enable the Group to focus its efforts and investments on a more limited number of brands.
The transaction, which preserves jobs at the Villeneuve d’Ascq site, was subject to the usual consultation procedures with employee representative bodies, and was approved by the Lille Métropole Commercial Court on February 14, 2024.
Messrs COHEN commented: “The CTFI Group is delighted to have finalized the acquisition of Afibel, a major player in ready-to-wear home shopping. With the support of the seller Damartex, this acquisition will enable CTFI to expand its brand portfolio. Synergies with the group’s other companies will offer new opportunities for growth and development, while maintaining our commitment to excellence and customer satisfaction. Groupe CTFI is delighted with this strategic acquisition and looks forward to working with Christine Bocquet, Afibel’s Managing Director, and all the company’s employees.”
Patrick Seghin, Chairman of the Damartex Board of Management, added: “The sale of Afibel is an important step towards our objective of refocusing the portfolio to which we are committed as part of our new roadmap, and represents an opportunity for the brand to pursue its development while benefiting from the expertise of CTFI’s teams. This transaction also demonstrates the Group’s active and rigorous management in implementing its strategic orientations aimed at delivering on its financial commitments”.
Business in Line with Previous Quarters, First Steps in Rolling Out the New Strategic Plan
Damartex closed the first half of the 2023/2024 financial year with sales of €292.9 Mn, down -11.6% on the previous year at like-for-like and actual exchange rates. Against a resolutely unstable backdrop of persistently high inflation, declining purchasing power for both households and businesses, and weak economic growth, second-quarter sales came to €183.6 Mn, down -13.3% at like-for-like and actual exchange rates. The UK market in particular continued to slow down significantly, impacting the Group’s brands in this region.
In a declining market undergoing radical transformation, the Fashion division posted sales of € 226.7 Mn for the first half, down -9.9% at both actual and like-for-like exchange rates. Second-quarter sales were down -12.3% at actual exchange rates (-12.4% at like-for-like exchange rates).
The Damart brand reported a -13.1% fall in sales for the quarter at like-for-like and actual exchange rates compared with the same period last year. This trend is explained by the fall in footfall, as observed in the apparel market.
Xandres, positioned as an “affordable luxury” brand, once again put in a fine performance in the quarter, with sales up +9.0% at actual and like-for-like exchange rates.
The Home & Lifestyle division, impacted by a sector suffering from a loss of confidence and household budget cuts, ended the quarter with sales of €29.4 Mn, down -16.8% at actual exchange rates (down -16.9% at like-for-like exchange rates). Sales at 3Pagen and Coopers of Stortford, which are sensitive to the economic climate, ended the second quarter with sales down by -16.3% and -17.3% respectively at actual exchange rates.
The Healthcare division, which includes Almadia, Santéol and MSanté, posted second-quarter sales of €8.8 Mn, down -16.3% at both actual and like-for-like exchange rates, despite a good performance from the service business of the Santéol and MSanté banners, respectively up +15.5% and +15.8% at actual exchange rates. In line with the first quarter of the year, the division is temporarily impacted by the ongoing operational integration within Almadia, the new entity, resulting from the recent merger of the Sédagyl and Médical Santé brands.
In a market environment that is still uncertain and economic activity marked by a decline in household consumption, Damartex is continuing its tactical steering to adjust its level of activity to the macroeconomic context and is continuing to focus its efforts on rolling out its new Dare. Act. Impact 2026 strategic plan.
The Group is sticking to its commitments and continuing to manage its business with commercial agility and caution, both in terms of expenditure and cash flow.
Damartex announces that it has entered into exclusive negotiations with the CTFI group for the sale of Afibel.
As part of its new strategic plan Dare. Act. Impact. 2026, Damartex announced in September 2023 its intention to put its Afibel business up for sale, in order to focus its efforts and investments on a limited number of brands.
The proposed transaction is subject to the usual consultation procedures with employee representative bodies. It is expected to be finalised in the first quarter of 2024
By making CSR one of the 4 pillars of its new strategic plan “Dare. Act. Impact. 2026”, the Group is determined to place its social responsibility at the heart of its business model.
The ambition is to make Damartex a profitable, sustainable Group that is useful to our society and our planet, and committed “On Seniors’ Side”.
Our challenge, as the Group CSR department, is to make our Change Our World programme a real compass to guide the decision-making of our teams and enable the Group to become a company recognised for its responsible performance.
Our ambition is not to change the world, but to make our contribution around our 4 commitments:
- to reduce our environmental impact
- to conduct our business responsibly
- to promote the company’s human capital
- to be a good corporate citizen
These commitments are being translated into concrete action at a time of upheaval in consumer behaviour, marked by a growing demand for transparency and more responsible products and services.
Despite difficult economic conditions, we have maintained our momentum this year, and our combined efforts have enabled us to implement high-impact projects for and with all our stakeholders.
It is therefore with sincerity, pride and, at the same time, a great deal of humility that we present, through this declaration of extra-financial performance, the results achieved this year in transforming our business model in depth towards a more responsible model and meeting the expectations of our stakeholders.
The year 2022-2023 has been a year of unique challenges and opportunities for Damartex in a shrinking economic context, particularly impacting the Silver Economy. It is with a sense of determination and resilience that I share with you an overview of our journey over the past year.
Aware of the headwinds the Group has had to face, this year’s financial results bear the mark of this difficult economic reality. However, despite these challenges, our teams have shown remarkable strength. The creativity, determination and commitment of our employees have been the pillars of our adaptability. We have been able to react quickly to market fluctuations in this complex environment by focusing on our operational priorities, such as proactive purchasing management, a savings plan to serve the business, dynamic inventory disposal and refinancing as part of a conciliation procedure.
Strongly committed to its ambition of becoming a European reference in the Silver Economy, the Group has structured the next stages of its development in its new 3-year strategic plan:
Dare. Act. Impact. 2026
The roadmap will be guided by four complementary themes:
- Delivering Financial Performance
- Innovative Brand Experience
- Change Our World
- Shared Leadership
After 2022/2023, a year dedicated to securing the Group’s future, Damartex will focus on implementing its strategic plan and continuing to manage its business rigorously so as to continue to cope with economic downturns.
We are convinced that our future success will depend on our ability to adapt to the profoundly changing economic environment. We remain committed to our employees, our customers/patients and our values, while looking for ways to innovate and invest in the future.
While the economic environment calls for caution, the Damartex Group has a number of important assets at its disposal, including the deployment of the new strategic plan “Dare. Act. Impact. 2026” strategic plan, and the quality and commitment of its employees. With its sights firmly set on the future, Damartex has all the resources it needs to become a leader in the Silver Economy.
Its raison d’être “On Seniors’ Side” remains at the heart of the Group’s actions.
A Year Dedicated to Securing the Group’s Future. Launch of the New Strategic Plan
Damartex ended the 2022/23 financial year with sales of €650.4 Mn, down on the previous year (-9.5% at actual exchange rates, -9.0% at like-for-like exchange rates), still impacted by the unfavourable macroeconomic environment and the contraction in consumption observed in certain markets, particularly in Great Britain.
The Fashion Division’s sales came to €498.4 Mn, down -6.9% at actual exchange rates, despite a good performance from the store channel (+9.3%) and the Xandres banner (+22.1%).
The Home & Lifestyle division posted sales of €111 Mn, down -24.8% at actual exchange rates, still affected by the fall in demand for home items, particularly in the UK.
The Healthcare Division maintained its excellent growth momentum, posting a solid performance with sales of €41.1 Mn, a significant increase of +14.3% at actual exchange rates. During the financial year, the Group concentrated on integrating the acquisitions made in this division.
The Group’s operating EBITDA came to €-0.9 Mn, compared with €8.9 Mn last year, reflecting the fall in activity over the financial year.
With inflation still high and continuing to weigh on both demand and costs, the Group has implemented strict steering of its marketing costs, while maintaining commercial efficiency. More generally, Damartex has continued to manage its business very rigorously, by making impactful operational and strategic decisions. Against this backdrop, priority was given to securing the Group’s future.
Operating EBITDA came to €+3.9 Mn for the Fashion Division, reflecting the robustness of Damart and the dynamism of Xandres, and €-8.9 Mn for the Home & Lifestyle Division, as a direct consequence of the general fall in demand, while the Healthcare Division posted an operating EBITDA of €+4.1 Mn, thanks to a business less exposed to the economic conditions.
The Damartex Group ended the 2022/23 financial year with a net loss of €‑32.6 Mn.
The net financial position was €-81.9 Mn as of the end of June 2023 (against €‑48.0 Mn as of the end of June 2022). While the Group is vigilant in view of the current environment, it is nonetheless maintaining the investments necessary to achieve its ambitions, focusing mainly on digitalizing its activities.
The Working Capital Requirement stood at €31.6 Mn at end-June 2023, virtually unchanged from the previous year. This level reflects both the adjustment of purchases to demand and the net improvement/reduction in inventory levels, thanks to the Group’s proactive and efficient steering.
Considering the impact of the economic situation and the Group’s transformation momentum, the Management Board will not propose the distribution of a dividend at the Annual General Meeting scheduled for 16 November 2023.
OUTLOOK AND NEW STRATEGIC PLAN :
As it is firmly committed to its ambition of becoming a European reference in the Silver Economy, the Group has structured the next stages of its development in its new 3-year strategic plan: DARE. ACT. IMPACT. 2026
This roadmap is built around four main complementary areas:
- Delivering Financial performance: Many initiatives will be put in place to optimize the operational profitability of each division. In this context, the Group has decided to put the Afibel business up for sale to concentrate its efforts and investments on a limited number of brands. In July 2023, the Sédagyl & Médical Santé brands were merged within the new Almadia entity to provide a single, comprehensive ageing-in- place offering. With its experience of steering in time of crisis, the Group has also launched a cost-cutting plan that will generate annual savings of €9 Mn.
- Innovative Brand Experience: Across its three divisions, the Group will focus its investment on developing the image and influence of its brands to create a resolutely innovative customer-patient experience.
- Change Our World: as it is aware of its social role, Damartex is stepping up its current momentum to achieve its ambition of reducing its carbon footprint by 25% by 2026.
- Shared Leadership: The Group is paving the way for a different kind of leadership, based on autonomy and shared responsibility.
After this year of transition/security, Damartex intends to continue its proactive and rigorous management of its activities to continue to face up to cyclical crises and to guarantee its long-term future.
Damartex today announces the completion of its restructuring operations with its legacy banking partners and the Despature family group, its reference shareholder1 .
The injection of new liquidity and the restructuring of the Group’s debt were finalized with today’s completion:
- Damartex’s legacy banking partners have made available to it state-guaranteed so-called “Resilience” loans totalling €35 Mn in principal;
- refinancing of existing RCF lines2 with a new syndicated revolving credit facility for a total principal amount of €120 Mn;
- the provision to Damartex by its reference shareholder of a shareholder loan totalling €8.5 Mn in principal;
- the continuation of overdrafts granted to Damartex totalling €21 Mn in principal; and
- the confirmation of documentary credits for a principal amount of €10.5 Mn, splited between Damart SAS and Damartex UK Ltd.
These transactions were carried out in accordance with the agreement signed by the Group, its legacy banking partners and its reference shareholder on 19 July 2023 and approved by the Lille Métropole Commercial Court on 28 July 20233.
1 Through J.P.J.D. SCA, which held 55.25% of the Company’s share capital and 62.51% of its voting rights as of 30 June 2023.
2 Refers to the RCF (Revolving Credit Facilities) credit lines totalling €120 Mn with four French banks, which were fully drawn down on the date the agreement was signed.
Restructuring Existing Debt and Securing New Financing.
Damartex announces the signature on 19 July 2023 of an agreement with its legacy banking partners and its reference shareholder on the restructuring of its current financial debt and the securing of new financing.
Against a difficult macroeconomic backdrop of war in Ukraine, inflationary pressure and the energy crisis, the Group posted consolidated sales of € 650.4 Mn in the 2022/2023 financial year, down -9.5% at actual exchange rates on the previous year. The slowdown in business was felt in every quarter of the year.
Anticipating a cash crunch in the first quarter of the 2023/2024 financial year, Damartex has stepped up the measures already implemented to reduce costs and optimize its cash position, including by increasing the use of cash pooling.
At the same time, the Group proactively engaged in discussions with its banking partners and reference shareholder as part of a conciliation procedure to secure existing financing and negotiate the terms of new financing, which resulted in a conciliation protocol, the main terms of which are set out in the appendix.
Patrick Seghin, Chairman of the Management Board, said: “I would like to thank Damartex’s legacy banking partners and the Despature family group, our reference shareholder, for their confidence and support in restructuring our financial debt and securing new financing. This will enable us to deal with the current situation and give the Group the visibility it needs to implement its new strategy, which we will present on 6 September 2023.”
As part of the conciliation process currently underway, the Company has appointed a financial expert to carry out an independent review of its business plan. As a result of this work, which is by its nature exceptional given the context, the Company is publishing below the estimated results for the financial year ending 30 June 2023 and the forecasts for the current financial year for certain financial aggregates considered relevant for investors. These indicators are provided solely for the purposes of transparency and equivalence of information and therefore should not and cannot be assimilated to profit forecasts within the meaning of Commission Delegated Regulation (EU) 2019/980 of 14 March 2019, nor do they constitute Group guidance.
Taking into account a cautious view of economic conditions, ongoing efforts to reduce costs and manage cash, and the implementation of its new strategic plan, the
- €0 Mn and €-1 Mn and a cash position of around €-75 Mn. In accordance with the published financial calendar, the annual results will be published on 5 September 2023 after the close of trading.
- €655 Mn, consolidated EBITDA of around €17 Mn and operating cash flow generation (before financing and investments/divestments) of around €19 Mn.
The above-mentioned forecasts are based on data, assumptions and estimates considered reasonable by the Group at the date they were drawn up. These data, assumptions and estimates may change or be modified as a result of uncertainties linked in particular to the economic or financial environment.
The occurrence in particular of one or more of the risks described in the 2022/2023 Annual Report could have an impact on the Group’s business, financial situation, results or prospects. The Group therefore gives no undertaking or guarantee that the data presented herein will materialize.
The main terms of the protocol are as follows:
- the provision to Damartex by its partner banks of state-guaranteed so-called “Resilience” loans totalling €35 million in principal, with a 12-month grace period on principal and interest and an option for Damartex to opt for a further 12-month grace period on principal;
- the refinancing of the existing RCF lines by a new syndicated revolving credit facility made available to Damartex by its four banks, for a total principal amount of €120 million, unsecured, maturing in 24 months, with an option to extend for a further 6 months subject to the Group meeting certain thresholds;
- the provision to Damartex by the Despature family group, its reference shareholder, of a shareholder loan totalling €8.5 million in principal, of which :
- €3.5 million in principal will be repaid on the business day following the maturity date of the new syndicated revolving credit facility, subject to its full and effective repayment; and
- two instalments of €2.5 Mn each in principal (i.e. €5 Mn in total) will be repaid on the business day following the final maturity date of the “Résilience” state-guaranteed loans, subject to their full and effective repayment, one of the instalments being repayable on the business day following each principal repayment date of the “Résilience” state-guaranteed loans, the other instalment being repayable in fine;
- the continuation of the overdrafts granted to Damartex by two banks, for a total principal amount of €21 million, for a period of 24 months; and
- confirmation of documentary credits, in the principal amount of €10.5 million, granted by a banking institution, split between Damart SAS and Damartex UK Ltd, for a period of 24 months.
Under the terms of the documentation relating to the new syndicated revolving credit facility provided for in the protocol, and until full repayment of the sums due under this facility (i.e. July 2025 or January 2026 as the case may be), the Company has undertaken not to (i) propose a dividend distribution to the General Meeting or (ii) repay the principal of the reference shareholder loan.
The entry into force of the protocol remains subject to the finalization of the credit documentation and the judgement of the Lille Métropole Commercial Court approving the protocol in accordance with the provisions of article L. 611-8 II of the French Commercial Code, which are expected to occur by the end of July 2023.
 See the press release dated 20 July 2023, available online at www.damartex.com, relating to consolidated sales for the 2022/2023 financial year.
 Proceedings opened by the President of the Commercial Court of Lille Métropole in favour of the Company, of Damart SAS and of D.S.B. SARL on 25 April 2023.
 Refers to the RCF (Revolving Credit Facilities) credit lines totalling €120 Mn with four French banks, which were fully drawn down on the date the protocol was signed.
 Through J.P.J.D. SCA, which held 55.25% of the Company’s share capital and 62.51% of its voting rights as of 30 June 2023.
A Continued Momentum of Agility Against a Still Deteriorated Backdrop.
Damartex ended the 2022/2023 financial year with sales of €650.4 Mn, down against the previous year (-9.5% at actual exchange rates, -9.0% at like-for-like exchange rates), still impacted by the unfavourable macroeconomic environment and the contraction in consumption observed in certain markets, particularly the UK. After a first half down on the previous year, the Group posted sales of €285.8 Mn in the second half, down -9.9% at actual exchange rates (down -8.9% at like-for-like exchange rates).
In the fourth quarter, business slowed again, particularly in the Fashion and Home & Lifestyle divisions. Despite a Healthcare division boosted in particular by the excellent performance of Santéol, Damartex closed its final quarter at €131.9 Mn, down -8.5% at actual exchange rates (down -7.9% at like-for-like exchange rates).
Sales for the Fashion division totalled € 498.4 Mn for the 2022/2023 financial year, down -6.9% at actual exchange rates (-6.5% at like-for-like exchange rates). Despite buoyant in-store sales, which rose by +8.7%, the Damart brand posted a -5.9% decline in sales at actual exchange rates, affected in particular by a fall in mail-order sales and, more generally, consumer spending. Afibel posted sales down -21.8% at actual exchange rates. Driven by its brand positioning, Xandres continued to enjoy sustained growth, with sales up by a substantial +22.3% at actual exchange rates over the full year.
The Home & Lifestyle division continued to be severely affected by the deterioration in the macroeconomic environment, posting sales of
€ 111 Mn, down -24.8% at actual exchange rates over the financial year (-23.9% at like-for-like exchange rates).
Lastly, the Healthcare division posted sales of €41.1 Mn, up +14.3% at actual exchange rates and +14.7% at like-for-like exchange rates. Driven by Santéol, a homecare provider specializing in respiratory assistance, which posted growth of +51.5% at actual exchange rates over the 2022/2023 financial year, the Healthcare division turned in a fine performance over the year as a whole, confirming its relevance.
In a degraded economic and commercial environment that continues to have a negative impact on sales, Damartex continues to demonstrate agility and rigour in the management of its activities, costs and cash flow, as demonstrated by the signing of an agreement on the restructuring of its current financial debt and the securing of new financing1 .
In view of the current situation, the Group anticipates an impact on its results and profitability for the financial year ending 30 June 2023, as detailed in the press release on the refinancing agreement1 .
At its annual results presentation on 6 September 2023, Damartex will unveil its new strategic plan to support the Group’s development.
1See the press release on the refinancing agreement published today and available on the Damartex website.