PARIS — French books and electronics retailer Fnac said Friday it would cut 500 jobs and drastically reduce spending as part of a plan to generate savings of 80 million euros, or $102 million at current exchange, this year to counteract weakening sales.
The measures come on the heels of the retailer’s “Fnac 2015” strategic turnaround plan, unveiled by chief executive officer Alexandre Bompard in July in response to tough conditions in its principal markets.
“It is only by implementing its cost-savings plan and its ambitious development program that Fnac will be able to regain its competitiveness and its ability to generate sustainable growth. In this way, it will reaffirm its position as a reference in its markets,” Bompard stated.
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The executive was recruited in late 2010 and charged with turning around Fnac ahead of its planned sale by PPR, which is shedding its retail activities to focus on its luxury and sport and lifestyle divisions. No calendar has been defined for the sale.
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Fnac store sales fell 5.4 percent in 2011 as households tightened their purse strings in anticipation of a fresh recession, the company said. “Given the increased pressure on its margins and the limited room for maneuver in its pricing structure, Fnac expects its annual current operating income to decrease by half,” it stated.
Among the planned cost-cutting measures are: a drastic reduction in routine expenditures; the renegotiation of leasing costs for its 156 stores, and a review of technical services contracts to obtain better terms. Fnac will freeze hiring and cap wages, and cut 310 jobs in France and 200 elsewhere.
Fnac plans to open at least 10 new outlets worldwide in 2012, but is mulling a withdrawal from Italy. “In Italy, where the environment is no longer conducive to Fnac-owned stores, the company is evaluating all possible options, and will make a decision at some point during the financial year,” it said.