Groupe André

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Groupe André

28, Avenue de Flandre
75949 Paris Cedex 19
France
1 44 72 38 43
Fax: 1 40 36 44 49

Public Company
Incorporated: 1903 as Chaussure Andre de Paris
Employees: 11,000 +
Sales: FFr 10.37 billion ($2.1 billion) (1995)
Stock Exchanges: Paris
SICs: 5661 Shoe Stores; 5621 Women ’s Clothing Stores; 6719 Holding Companies, Not Elsewhere Classified

Headquartered in Paris, Groupe Andre oversees one of the largest groups of shoe and clothing retailers in Europe, offering products in markets ranging from discount family wear to high fashion styles. In recent years the company has also ventured into the home furnishings market. With outlets primarily in France, the company’s shoe stores include La Halle aux Chaussures (France’s top shoe retailer), and the Chaussland, Andre, Orcade, Minelli, and Françcois Pinet chains. The company’s apparel chains include La Halle aux Vetements, Vetland, Megal 1, Spot, Kookaϊ, Caroll, Creeks, and Liberto. Finally, Groupe Andre includes among its holdings Adolphe Lafont, retailer of menswear, and Didier Lamarthe, a retailer of women’s fine leather handbags. While the company reported net losses of FFr28.9 million ($5.8 million) for the year ended August 31, 1995, which it largely attributed to costs associated with restructuring, consolidated sales rose 5.2 percent for the year.

An Early History of Rapid Growth

The company traces its beginnings to May 1896 when Albert Levy, originally from the Alsace region, opened a small shoe factory on the Rue de Rome in Nancy, 170 miles east of Paris. Four years later, Jerome Levy (the two men shared the same name but were not related) joined him in the business. Albert functioned as the manufacturer and merchant, while Jerome, who previous worked as a notary in Toul in northeast France, served as administrator and financial officer. In 1903, the small company’s first stores were opened in Paris and in the provinces under the name Mathieu. However, a year later, two new stores in Paris bore the name Chaussure Andre de Paris, and the company was known as such until it became Groupe Andre in 1992.

Quickly outgrowing the Rue de Rome factory, Albert and Jerome built an larger factory on the Rue de L’ Abbe Gidel in Nancy in 1910. An existing factory on the city’s Quai Claude Le Lorrain was purchased in 1914. By the outbreak of World War I, Andre boasted 57 stores, more than half of which were in Paris’ most popular neighborhoods. Each shop, about the size of a modest boutique, employed one or two managers and several salesclerks. The inventory was limited: 250 designs, all in the same price range. Nonetheless, the company was already selling 500,000 pairs of shoes each year.

When the war ended, Albert and Jerome decided to move the company’s headquarters to Paris. A six-story building facing the Rue de Soissons offered the spacious office and storage space that the burgeoning company needed. Management offices were set up on the first floor with the inventory filling the lower and upper floors. By 1922, the basement was taken over by the company’s own tannery where, until 1963, thousands of skins were sorted annually. Within a decade, however, shoes were being stacked in every available space; hallways and stairways became impossible to navigate because of the encroaching inventory. To alleviate the overcrowding, the company opened a central warehouse in Pantin, a suburb northeast of Paris. From there, Andre’s products were distributed to 132 shops in France, Algeria, and Tunisia. Unfortunately, Jerome was only able to enjoy the beginnings of the company’s success; he died in 1926.

Economic and Political Forces Challenge Company’s Creativity

The worldwide economic crisis of the 1930s and increased foreign competition forced Andre to revamp its production and sales operations. Assembly lines were instituted at the Gridel factory, a leather sole tannery was opened in Longjumeau, and a heel factory was opened in Chatillon-sur-Seine. By streamlining the manufacturing process, Andre was able to step up mass production and reduce prices. In addition to increasing sales (from 3,200,000 pairs in 1931 to 6,300,000 in 1935), holding the line on prices was a positive public relations move. The company’s advertising tag line, “André le chausseur sachant chausser,” André, the shoemaker who understands feet,” was reflective of the public’s perception of the firm as a friendly, caring one.

Andre’s successes were dampened by the death of Albert Levy’s in 1935. Two members of the second generation were now in charge: Albert’s son Georges stepped in to replace him as president and Jerome’s son Roger was second in command. By the end of the decade, the company’s 132 stores were selling 5,200,000 pairs of shoes each year and had become a force to be reckoned with in the French shoe industry.

German occupation during the Second World War was psychologically and physically devastating to the French. In spite of the upheaval, many companies such as Group Andre hung on tenaciously. A flurry of activity marked Andre’s postwar years. New locations were opened at a rate of three or four per year. In 1947, an aggressive 31-year-old named Jean-Louis Descours joined the company as its real estate, financial, and administrative director. Descours was intrigued by American business practices and quickly embarked on a series of visits to the United States, bringing new ideas back to Andre. By 1960, the company employed 5,500 workers, the three factories in Nancy were producing 3,900,000 pairs of shoes annually, and 161 Andre stores in France and Algeria were selling 7,750,00 pairs to the tune of 150 million francs. The year also marked the death of Georges Levy. Descours succeeded him as president and began an overhaul of the company in earnest.

A New Era Dawns Under Descours’ Leadership

Foremost in Descours’ plans were the modernization of the manufacturing process, contracting production to countries with lower labor costs, expanding the product line, and exporting products to new markets. Descours had been especially influenced by the success of discount retailing in the United States and in Belgium. In spite of the fact that half of Andre’s board of directors opposed the changes, Descours forged ahead with his plans. While French shoppers had already been introduced to discount shopping through so-called hypermarkets, the Andre low-cost centers offered the new concept of self-service. The company’s first discount store, La Halle aux Chaussures (HAC), opened in a dilapidated warehouse in rural Dombasle. Consumers responded so favorably that HAC stores soon appeared in suburban towns and shopping malls. Today 80 percent of the discount shoes, featuring leather uppers with synthetic soles, are manufactured in Europe. Of that, 15 percent are made in Groupe Andre factories. The remaining 20 percent are produced in the Far East.

As part of Descours’ plan for modernizing the manufacturing process, Groupe Andre built new factories in Nancy, Ruptsur-Moselle, Champigneules, and Dombasles in the late 1960s and early 1970s. Not only did the new facilities streamline production, the working conditions were much improved as the company management staff became more aware of employee needs. In 1962, the installation of a computer system revolutionized the company’s inventory control and computer programs were quickly set up to execute accounting procedures, employee compensation plans, and financial reports.

Restructuring and expansion took a toll on the company’s profit margins in the 1970s. Fortunately, a steady rise in sales allowed the company to return to its traditional profit pace by 1978. Acquisitions further added to the company’s growth. Jallate, a leading manufacturer of work shoes and boots was acquired in 1981. Minelli, with a reputation for high-fashion women’s shoes, was purchased in 1984. The Raoul, Dressoir, and Pinet network of designer shoe stores was acquired in 1985. In late 1989, Andre celebrated the opening of its 500th store and the annual sale of 18 million pairs of shoes.

Expanding into Clothing Markets and Making Plans for the Future

The 1980s also signalled Andre’s move into the clothing market with the establishment of La Halle aux Vetements, a chain of low-priced garment stores opened in suburban locations. When asked in a 1993 interview why the company chose to diversify into clothing sales, Descours said that they wanted to avoid saturation in the shoe industry. Once La Halle aux Vetements was established, Groupe Andre further strengthened its position in the clothing marketing with the acquisition of Caroll, purveyor of women’s fashions, in 1988; Creeks-Liberto and Didier Lamarthe in 1989; Kookai, which specializes in young women’s clothing, in 1990 and the discount family apparel chain, Spot, in 1991. By the mid-1990s, Andre was also venturing into the home furnishings market with La Halle a la Maison.

In the mid-1990s, Groupe Andre’s staff of slightly more than 11,000 was relatively young; the average employee age was 32 years. Not only did the company’s fashion products demand a youthful focus, the management welcomed the ideas that younger employees generated. The company offered flexible work schedules and made a practice of promoting from within. By the end of the decade, Groupe Andre plans to create 6,000 additional positions to keep pace with the company’s growth.

By 1992, international operations accounted for 20 percent of the company’s revenue. Continuing this trend, expansion into Eastern Europe was a project just beginning to take shape. In France, Groupe Andre faced increased competition as consumers became more enamored of discount shopping and demanded higher quality. Several of the company’s divisions, notably Caroll and Creeks, suffered financial loses early in the decade, prompting a restructuring designed to decrease over-head and revamp the stores’ collections.

Speculation about Descours’ personal plans occasionally swirled around the business world. Known to be a shrewd businessman with a strong grip on the company’s operations, his holding company, Groupe Jean-Louis Descours, owned a 20 percent interest in Groupe Andre in 1995. Industry analysts predicted that Descours, approaching 80 years old, would engineer a sale of the larger company rather than give up his post. Descours, on the other hand, insisted that he would be replaced from within Groupe Andre and that no one would notice his departure.

Principal Subsidiaries

Adolph Lafont (93%); Andre Facon; Caroll International; Compaignie des Halles aux Textiles; Compagnie Internationale de la Chaussure; Compagnie Internationale du Textile; Creeks (75%); Esprit (80%); Kookai (79%); Kookoo (71%); Vetland.