VendexKBB - Never heard of it
Shopping for clothes, consumer electronics, sports goods or in a department store, you are probably putting a few coins into the hands of VendexKBB, the Netherlands best kept retailing secret. John Scott reports.
Fancy a shop in the Netherlands?
Well, there is always the department stores Bijenkorf or Vroom & Dreesmann. Slightly down market, but usually packed, is Hema. Expecting a baby? Check out Prenatal. Sports stuff, or what about Perry Sports? Or electronics? Try Dixons, It's or Prijs Topper. Bit of do-it-yourself? What about Praxis. Or just want some new togs? Try out Hunkemoller, M&S mode or Claudia Straeter.
Besides the fact these are all shops you can go to in Holland - and in some cases elsewhere in Europe - they are all owned by the same company, VendexKBB.
Forming a retail giant
Royal VendexKBB is relatively new, formed with the merger of Vendex and Koninklijke Bijenkorf Beheer in 1999, but both companies have a rich historical pedigree, dating back over a hundred years.
Vendex has its origins in Vroom & Dreesmann, a store founded in 1887, while KBB sprang from the store of the same name, Bijenkorf, in 1870.
The group has more than 2,500 stores, representing 27 different chains, operating in six countries, including FAO Schwartz, the famous US toy chain, and employs 54,000 people.
Dutch boom helping retailers
You would think that with the Dutch economic boom during the past couple of years that VendexKBB would be raking in huge amounts of cash. Surely consumers with their pockets stuffed with guilders would be shopping until they dropped?
But that is far from reality.
Vendex alone posted a profit of more than half a billion euros in its 1997 financial year, on sale of more than 4 billion euros. But For 2000, the combined group saw net income of just 160 million euros, on sales valued at 4.6 billion euros.
Part of the reason was due to one-off contributory factors in 1997 for Vendex and that following the merger, Vendex span off its holding in Vedior and the Vendex food group.
But most of the problem is to do with VendexKBB's over reliance on the rag trade. Fashion is a notoriously fickle business and what might be trendy one year, or even one season, might well get the cold shoulder from customers the next.
VendexKBB's middle market fashion chain Kreymborg, which had lost money in every year bar one since 1994 was closed last year. In October, VendexKBB sold its Kien fashion chain to the Swiss fashion group Vogele, while in December the group announced that it would transfer its Amci fashion chain to the Dutch group Cool Cat.
The company has shifted its emphasis within the fashion group to more strongly profiled and highly profitable fashion chains with an international potential such as Claudia Straeter, Hunkemoller, and M&S Mode.
At the same time, the company has been expanding into electronics distribution.
Last year it bought It's while VendexKBB's Dixons unit has been buying local rivals such as Modern Electronics.
Another drain on the group has been FAO Schwartz. While the toy store might enjoy legendary status in the US, it posted a loss in 2000.
What the experts say
"We maintain our hold rating as results were not convincing and the valuation is a fair reflection of the growth opportunities," analysts at ING Barings said.
They also said that given the strong growth of the Dutch economy, sales growth in the department stores was disappointing.
ABN Amro analysts were just as unenthusiastic about the future fortunes of VendexKBB.
"It will be increasingly difficult to maintain the growth momentum in the Netherlands as we expect top line growth to slow a bit and synergy benefits (from the merger of Vendex and KBB) will be more difficult to achieve," the ABN Amro analysts said.
With growth opportunities limited in its saturated Dutch, and to a lesser extent Belgian, home markets, VendexKBB is eyeing European expansion.
"The department store formats, the DIY activities and three already internationally successful fashion specialty stores have the realistic potential to participate internationally," VendexKBB said at the release of results recently.
"For the other formats the geographic ambitions are more limited, but there are plenty of opportunities in the Benelux home market."
The company will soon launch Claudia Straeter and Hema in Germany. While Claudia Straeter is seen as a distinct winner, there are concerns about Hema, because of its status as a low-end retailer selling everything from food, to clothes and gardening equipment.
VendexKBB said it would launch one or two Hema stores in Germany to test the market.
The group also said it wanted to play a leading role in the consolidation of the European retail market, meaning that it was eyeing a big take-over or merger.
The group said that despite the economic slowdown outside the Netherlands, there had been no impact on local consumer sentiment. The group sees full year results in 2001, better than those of 2000.
This scribe argues that if the group has only posted modest growth in the past few years when consumer sentiment was booming, results this year could well disappoint.
25 April 2001