What’s in the cards for Portugal’s investvar?
Published: 11 February, 2010
Investvar, Portugal’s biggest footwear company, has a general meeting on Feb. 8 where shareholders and creditors will decide its future, but it seems that its new MoveOn project will not go ahead. They will have two or three different options, but Jorge Pereira da Costa, Investvar’s new president, did not provide details, saying the projects are confidential and have to be voted on first.
The previous chief executive of Investvar, Pedro Ribeiro da Cunha, who was designated by Portuguese Economics Minister Manuel Pinho last March, had said that the new MoveOn banner, created to replace Aerosoles, would have allowed the company to be profitable in 2011 and have record sales in 2012.
Investvar decided to stop licensing the Aerosoles brand from the American Aerogroup for Europe, Africa and the Middle East, starting in April 2010, and to launch instead the new MoveOn brand, which was presented at the GDS and Micam shows last September. At issue were the heavy conditions imposed by the North American group for Investvar to keep the license, which would have meant losses for the Portuguese manufacturer. As it turns out, the MoveOn brand name is the property of Artur Duarte and several former agents and distributors of the Portuguese Aerosoles line in Europe, like those in Italy, Greece, Israel, the Netherlands and Scandinavia, have decided to switch over to the American Aerosoles line, partly becausethe brand name is better known. Pereira da Costa, who previously ran A.T. Kearny’s Portuguese office, is also a partner at Roland Berger, the German consulting firm that has been working with Investvar recently. It has spurred the outsourcing of 90 % of the company’s production to India and the lay-off of 200 workers, and advised Investvar to sell sole manufacturing and stitching operations in Portugal whose production costs are 30% higher than in India.
We understand that Ilpe, the Italian manufacturer of soles, has decided in principle to take full ownership of Investvar’s sole manufacturing unit, in which it had a shareholding. The reorganization plan will almost certainly involve splitting the company into two distinct business areas - commercial and industrial – as previously planned. The banks, which already support a debt of more than €40 million, will play a main role in Investvar’s recovery, and the five bigger Portuguese banks – CGD, Santander/Totta, BES, Millennium and BPI – have already indicated that they are willing to convert debt into equity. The Aerosoles stores owned by the Portuguese company in Europe and its Pallio retail chain in France may be sold. The previous reorganization would have had Duarte, founder and major shareholder of Investvar, keeping the industrial segment, with a contract to manufacture about 80 % of the MoveOn line for the first two and a half years. But the sale of some of the three Investvar plants in Portugal – one in Esmoriz and two in Castelo de Paiva – is now more likely.
The new plan will probably mean that the group will concentrate on manufacturing for other big clients such as Marks & Spencer. The new set-up should help avoid bankruptcy proceedings, with the banks taking up also the group’s outstanding financial obligations to Aerogroup (€1.5 million) and to an Italian shoe manufacturer, Ka&Ka (€500,000). Investvar currently has 120 stores in the Europe and about 650 employees, 420 of whom entered a six-month period of layoffs on Jan. 4, though it could end next month.
