Possible sale of Dutch retailer Hema cancelled by Belgian investment company

By

Shomara Roosblad

Published
Jun 6, 2018

The possible sale of Dutch retailer Hema has been canceled by Belgian investment company Core Equity Holdings.

The investor called off the earlier oral agreement because too large of a share of the online sales flows to the franchisees of Hema, reported Dutch newspaper De Telegraaf, citing sources.

Core Equity Holdings argued that Hema’s franchise contracts are anachronistic. Currently, if the retailer sells an article via its online shop, a large part of the income is received by the store located in the customer's residential postal code. However, Core Equity Holdings claims that, as a result of the current model, the web store is not profitable, the newspaper reports.

The web store has proven to be an important source of income for the retailer.  In 2017, online sales increased by 31%, compared to 2016.

However, there has been disagreement between Hema and the Vereniging Aangesloten Bedrijven Hema (Association of Affiliated Hema Companies) about the retailer’s online policy for some time now. Hema believes that the franchisees want to benefit from online sales, but do not want to contribute to the costs. Several lawsuits are currently conducted on how the costs and benefits of the web shop should proceed.

Hema first announced that it was looking for a new owner in September 2017. At the time, the retailer said: “[Hema] is well-positioned to benefit from the future growth potential ahead, supported by a strong Benelux business and successful international expansion.”

In recent months, Hema has announced a number of new stores as well as the expansion to new markets, including Austria and the Middle East. Many Dutch stores have been re-modeled according the introduction of an ‘international model’.

Hema is currently owned by London-based investment company, Lion Capital, who purchased the chain in 2007 for €1.1 billion. Earlier reports said that Core Equity Holdings was willing to acquire the chain for 1 billion euros.