Galeries Lafayette keen to keep growing after buoyant 2023

In 2024, the total revenue of the Galeries Lafayette group, combining the results of its French and international stores, is expected to grow back to the value achieved in 2019. This is the scenario outlined on June 13 by Nicolas Houzé, CEO of the family-owned group. Houzé’s forecast is based on the group’s performance in 2023, when revenue increased 8% over 2022, and on its encouraging start to 2024.

“We usually say little about our revenue figures. In 2023, we generated €3.645 billion in sales between our [directly owned] branches and our franchisees in France and abroad. In 2019, sales were €3.850 billion. We are confident. We’re planning to grow by approximately 4% this year, which would allow us to return to our pre-pandemic levels,” said Houzé.

A renewed buoyancy that Houzé said is going hand in hand with profitability, after the group, between fiscal 2020 and 2021, “lost several billion euro in revenue owing to more than 200 days of closures across those two years.” In both 2020 and 2021, the Galeries Lafayette’s sales volume barely exceeded €2 billion. This had an impact on strategy, as the group had to cope with a change in its customers’ national composition, and a complete upheaval in consumption habits.

Houzé said that the group has tackled these challenges by investing approximately €400 million, a good part of them spent on modernising its stores over the past four years. Galeries Lafayette has notably renovated its flagship branch, known as ‘Coupole’ (dome), on boulevard Haussmann in Paris. When the branch was closed during the pandemic, the group upgraded the lighting fixtures and air conditioning, and carried out structural work, for example renovating the dome. Then, in recent years, it tweaked the store lay-out and the product categories sold on its various floors. Between 2019 and 2024, the Haussmann district in Paris benefited from some €100 million in investment by the Galeries Lafayette, while other brands operating locally spent a similar figure to upgrade their retail premises. The group has also renovated some of the 18 other stores it operates directly in France, completing the Nouvelle Galerie project in Annecy and the Cap 3000 branch in Saint-Laurent-du-Var. It also overhauled its logistics operations and developed a new website, which was launched at the start of 2024.

Three investment priorities

Houzé said that three projects that were initiated in recent years “have enabled us to grow back to the current level. An omni-channel strategy is the inevitable answer to the expectations of our connected customers.” He indicated that customer satisfaction, which the group regularly measures, is one of the priorities. Product selection is the second priority, the focus being on “creative, ethical products.” In this respect, the Restore section has reportedly generated sales worth €90 million in 2023, attracting a younger clientèle. Finally, the third priority relates to improving the group’s performance and corporate organisation, in order “to boost the profitability areas that enable us to reinvest in our stores and our operations, projecting Galeries Lafayette into the future.” The group is for example testing and deploying AI solutions in the administration department, and to improve the relationship with international customers.

In 2023, the group’s Haussmann flagship in Paris, with its various sections dedicated to womenswear, menswear, cuisine (the Gourmet section) and Asian customer groups, generated a revenue of €1.9 billion, 10% of which via omni-channel solutions. The flagship’s growth was driven by a selection of brands and services consistent with a customer profile that has changed considerably compared to the prevailing clientèle in the store’s most successful years, when Chinese tourists accounted for over a third of its customers.

“Since 2021, we have observed that the presence of French customers has markedly increased. They remain the Haussmann branch’s primary customer cluster, accounting for 40% of the total. Another 40% of customers come from around the world, and about 20% hail from China, but these are individual customers while, before the pandemic, they mostly came in groups. We have a well-balanced clientèle,” said Houzé.

The other directly owned Galeries Lafayette stores in France, 18 of them, chiefly outside Paris, have posted double-digit growth with a revenue of approximately €850 million. Last year, Galeries Lafayette sold its other department store brand, BHV, to the Société des Grands Magasins group, in order to concentrate on its main asset. Instead, 2023 was a year of upheaval for the 37 Galeries Lafayette stores run by franchisees. Though many of them have solid owners, the stores run by the HPB group, the property of embattled Bordeaux businessman Michel Ohayon, have been a constant source of concern for employees, business partners and suppliers, as well as the Galeries Lafayette group itself.

“There have been difficulties during 2023 and in early 2024. Then, a [recovery] plan was approved [by the Bordeaux trade court], and relations have normalised. We have resumed normal operations with this franchisee. Some of its stores are based in cities where consumers are struggling somewhat, we don’t know what their future will be, but the stores are stocked up and operational. Relations are back to normal,” said Houzé.

€400 million investment

Outside France, the prospects are rosier. The group said that its overseas business now accounts for a revenue share of approximately 10%, via stores run jointly with partners, for example in China, where Galeries Lafayette has teamed up with Hopson, and in the Middle East. The plan is for this share to grow to 15% by 2028. Five to eight new branches are on the cards in China. Franchising agreements are being negotiated in Saudi Arabia, in Doha (Qatar) and most notably in India, where partnering with the Aditya Birla group would greatly boost the business.

“We are especially focused on India right now, because the first store is expected to open next year. It’s a 9,000-square-metre period building in the Fort district of Mumbai, where we’ll be able to showcase more than 200 international and local brands. It’s being renovated by a team of architects. It will be the first Galeries Lafayette store in India, and in 2026 we are planning to open another one in New Delhi,” said Houzé.

Projects are thinner on the ground in terms of French franchisees, though a partner will open a new Galeries Lafayette branch in Nîmes. The group did however claim to be looking at investments totalling €400 million for the next five years. Outside Paris, the Lyon-Bron store is currently being upgraded and will re-open at the end of the year, although renovation work on its associated shopping arcade will continue for more than twelve months. The group’s other major project outside Paris is the renovation of the store on rue Sainte-Catherine in Bordeaux, whose budget is several tens of millions of euro. Paris will not be left out however, as renovation work on the menswear building will begin next year, there too with a budget of several tens of millions of euro. The group will still have substantial funds available to expand its organisation, and for other types of investments.

In 2024, Galeries Lafayette is celebrating its 130th anniversary, coinciding of course with the Paris Olympics. It is no surprise then that the birthday celebrations won’t kick off before the end of the year. Twenty designers have been working on special anniversary products, and a raft of promotions are on the cards. Olympics-related footfall might benefit the Champs-Elysées branch, whose first few years have been tough, but the Games are expected to have an initially negative impact on the Haussmann flagship. “We’re expecting a revenue loss in July and August of between 5% and 10%. But we’re sure that such a planetary event will give a fresh boost to Paris’s visibility, and will prompt more tourists and customers to visit the city. We talked about it with our British colleagues, who noticed that business in London slumped during the 2012 Olympics, only to accelerate afterwards. We think we’ll be able to offset the expected downturn by the end of the year,” concluded Houzé.

This post-Olympics momentum is therefore set to help the French group grow back to its pre-pandemic results.