May 26, 2020
French fashion stores - lockdown is one crisis too many
Was Covid-19 one crisis too many for French fashion stores? This is at least what the front page of Les Échos suggests this morning. After the gilets jaunes protests and transport strikes reduced customers already since last year, the pandemic lockdown was the last straw for a sector already in trouble. Chains like Naf-Naf and Alinéa, in business for more than 30 years, went into receivership. The well known shoe brands André and La Halle are under judicial bankruptcy protection. Some experts predict 30% of the country's 40.000 prêt-à-porter fashion shops could be closing down. This does not necessarily mean liquidation, but consolidation and refinancing will most certainly be on the menu. The contraction of retail is most visible in textiles, where a declining trend was already observed for the last ten years. On the other hand, sectors like DIY or games survived the lockdown well.
Banks play a crucial role in this fight for survival. The latest statistics suggest banks offered €21bn in loans to over 100,000 retailers, backed by a third of what the government offered in guarantees. Not everyone is getting a loan, though, and companies in difficulty are likely to find themselves treated differently. For example Conforama, a furniture retailer, found out the hard way when their government-guaranteed loan application was blocked by the bank. Banks do not want to add more debt where a more structural and radical solution is required to make a business sustainable, according to one of the newspaper sources.