Groupe Zannier S.A. History



Address:
6 bis, rue Gabriel Laumain
75010 Paris
France

Telephone: (+33) 1 44 83 45 45
Fax: (+33) 1 44 83 45 30

Website:
Public Company
Incorporated: 1962
Employees: 1,662
Sales: FFr 2.32 billion ($343.84 million) (1999)
Stock Exchanges: Lyon Paris
Ticker Symbol: 12472.PA
NAIC: 44813 Children's and Infants' Clothing Stores

Company Perspectives:

Groupe Zannier, created by Roger Zannier and his sister Josette Redon, is the world leader in children's clothing, thanks to the balanced presence of its brands in all market segments and all channels of distribution. Through the diversity and the complementary nature of its brands, Groupe Zannier offers its customers a comprehensive range. Key Dates:

Key Dates:

1962:
Roger Zannier and sister Josette Remond open clothing workshop.
1966:
Zannier company specializes in children's clothing and begins wholesale distribution.
1976:
Distribution agreements are made with Paridoc, Carrefour, and Continent.
1983:
Company exits production and launches Z brand name and store format.
1984:
Zannier opens six Z stores and begins building Z franchise network.
1986:
Listing is gained on the Lyon stock exchange.
1988:
Zannier acquires Kickers International.
1990:
Sales top FFr 1 billion.
1991:
Company launches La Boutique de Floriane, and takes over Groupe Poron.
1992:
Sales top FFr 2 billion.
1993:
Kickers licensing agreements for Germany and the United States are effected.
2000:
Company forms joint venture Kickers Worldwide and acquires Génération Y2K.

Company History:

Groupe Zannier S.A. of France is one of the world's leading designers and distributors of children's clothing and footwear. Through some ten brand names, Zannier has captured the full scale of children's clothing, from budget-priced clothing, including the brands Z, 3 Pommes, Alphabet, and MDP to upscale clothing, through brand names Confetti, Floriane, Absorba, Lili Gaufrette, and Chipie. Zannier also owns the brand name Kickers, which in April 2000 was spun off into a joint venture partnership, Kickers Worldwide, with the United Kingdom's Pentland Group (one of the largest Kickers franchisees and owners of brand names Speedo and Ellesse, as well as holder of the worldwide license for Lacoste Shoes). Apart from its collection of brand names, the company also operates and/or franchises several retail chain concepts, including its flagship chain of nearly 300 Z retail stores, as well as 25 Confetti boutiques and 26 La Boutique de Floriane stores in France, Switzerland, Belgium, and Saudi Arabia. In May 2000, Zannier increased its worldwide status through the acquisition of Génération Y2K, the Barclays Private Equity vehicle holding children's clothing brands Catimini, IKKS, and Jean Bourget. The completion of that merger, with a total cost to Zannier of nearly FFr 330 million, will boost Zannier's international organization to more than 700 stores and annual sales of more than FFR 4 billion. Groupe Zannier continues to be led by founder and chairman Roger Zannier and his sister, co-founder and company chief operating officer Josette Redon. The Zannier family continues to hold more than 24 percent of the company, which trades on the Paris stock exchange.

Children's Clothing Specialist in the 1960s

Roger Zannier was just 17 years old in 1962 when, together with sister Josette, he founded a small hosiery workshop in Saint-Chamond in the Loire region of France. The company distributed its production of women's and children's goods to local and regional retailers. By the middle of the decade, the company began to focus its production more and more on the children's market, and by 1966 had transformed itself into a children's clothing company. At that time, Zannier began distributing its production on the wholesale circuit.

Zannier's sales built steadily through the end of the decade and into the 1970s. By 1976, its annual sales had topped FFr 30 million. At that time, the company turned to a relatively new--and booming--market, that of the hypermarchés, combining grocery stores with department stores in a single large surface. Zannier reached agreement with several of the country's large hypermarché groups, starting with Paridoc buyer's central, and then adding the groups Continent and Carrefour to its client list.

In the early 1980s, Zannier underwent a new transformation. Rather than invest in the additional production capacity needed to supply its new large-scale customer base, Zannier decided to abandon its own production and instead turn to third-party contractors for manufacture of its clothing designs. The company also acted as a buyer for nonbranded clothing, which it in turn sold to its retailer clients. In 1983, Zannier boosted this element of its business with the acquisition of Stan, based in Lyon.

At the same time that it abandoned production--joining a trend in the clothing industry worldwide, as the countries of the Far East, with lower wages and less strict regulations, offered low-cost production alternatives; Zannier also joined another growing trend, that of the emphasis on brand name, begun with so-called 'designer clothing' in the late 1970s. Zannier launched its own brand name, 'Z' (pronounced 'Zed' in French) in 1983. The launch of Z was quickly followed by a move into the retail world. In 1984, Zannier opened its first six Z boutiques, while also launching a parallel franchise network. Toward the mid-1980s, the company emphasized franchising over own-store construction for building the Z network. To support the launch of its retail chain, Zannier spent some FFr 6 million on a nationwide advertising campaign.

Zannier's retail wing grew quickly. By 1986 the number of franchised Z stores reached more than 80, a number that topped 135 one year later. To support its growing clothing empire, Zannier moved to new headquarters--and moved again the following year to a 14,000-square-meter facility, yet remaining in its Saint Chamond base. From there, the company launched its first public offering, selling ten percent of its shares on the Lyon stock exchange. To support its rapidly growing network of franchises, company-owned stores, and brands, Zannier stepped up its advertising investments, launching television and print campaigns, while also becoming a prominent sports event sponsor (one of the company's most well-known sponsorships was that of its own bicycle racing team, which raced from 1986 to 1992).

Building a Children's Leader in the 1990s

The public offering enabled Zannier to start to build its clothing empire. The company began multiplying its collection of brand names--in the early years of the 1990s, Zannier included some 23 brand names. Among these was the Kickers brand of children's shoes, which Zannier acquired in 1988, adding that company's annual sales of FFr 150 to Zannier's own--which was growing by as much as 50 percent per year and more during the late 1980s.

Kickers itself had earned a primary position among French shoemakers. The brand had first been introduced in 1970. At that time, its parent company, Raufast et Fils, had been struggling to maintain its sales. The company had long specialized in high-end babies' and children's shoes under the brands Bébé Souple and Doisouple. But Raufast's shoes, so-called 'Sunday shoes,' because they were often reserved for the French family's Sunday outings, suddenly saw its market collapse at the end of the 1960s. The social revolution of the period--and the massive adoption by the world's youth of more informal attire--spelled the end of the 'dress-up' shoes that had been the Raufast specialty.

Nearly bankrupt, the Raufast company searched for a means to save its business. The turnaround came when Danial Raufast, driving one day, spotted a billboard for the musical Hair, with the actors portrayed in colorful clothing and jeans and barefoot. Raufast recognized a need to develop shoes to match the new fashion of the day, and he set to work creating colorful shoes and boots. If retailers were initially wary, sales of the new Raufast shoes--dubbed Kickers--soon took off and established the company, which later adopted the Kickers name as its own, as a preeminent maker of children's shoes not only in the French market, but on the international scene as well. By 1974, the Kickers brand was seeing sales in 70 countries; the company began building its own retail network, expanding its empire to include more than 90 stores by 1980, nearly half of which were located outside of France.

Kickers' initial years as part of the growing Zannier group were disappointing; by 1989, however, Kickers had been successfully absorbed into its parent company's operations and began producing net profits. It also gave Zannier the opportunity to expand the Kickers concept and link it with its own clothing creations, launching its 'Mode de Vie Kickers' ('Kickers Way of Life') line of clothing and accessories.

With Kickers showing strong sales growth (with sales rising more than 40 percent of its previous year), Zannier turned to the acquisition market again, buying struggling Duguy Créations, a specialist in high-end children's clothing based in Nantes. Duguy added some FFr 200 million to Zannier's annual sales--which, by the 1990s, topped the FFr 1 billion mark for the first time and made Zannier the leading children's clothing specialist in Europe. To provide capacity for its growing distribution needs (by the beginning of the 1990s, Zannier was handling some 100,000 clothing items every day), the company opened a new 10,000-square-meter warehouse facility in its Saint Chamond home base.

By the start of the 1990s, Zannier held at least two strong brand names, Z and Kickers, both of which were successfully evolving international recognition as well. To extend its brand name reach, Zannier began licensing its brands to third parties, such as eyewear manufacturer Esiilor and Henon, while purchasing the licenses from others, such as Warner Brothers' cartoon characters and Disney characters, for use in its clothing lines. One of Zannier's brands, Floriane, took the licensing concept still further, using its licensed characters to define their various collections, for example, featuring the Peter Rabbit character on its clothing for the birth to three years old set, while boys from age two and older could choose clothing from the 'Goofy' collection.

Despite the rapidly growing economic crisis of the early 1990s, Zannier continued to see strong growth and to pursue an extensive investment program. The company continued to expand its network of Z franchises, which now neared 200 stores, including a growing international contingent. Zannier also boosted the number of Kickers stores, using the same franchising formula that had brought success to the Z name. A rapid turnaround of Duguy enabled that subsidiary's operations to return to profitability. An expansion of its capitalization brought the company the financial leverage to begin eyeing its next major acquisition.

To prepare for future growth, Zannier underwent a thorough reorganization in 1990, putting into place the Groupe Zannier holding company, which in turn oversaw the activities of seven autonomous subsidiaries, including the Z and Kickers chains. With the reorganization complete, the company could return to its expansion plans.

In 1991, Zannier established a new store concept--La Boutique de Floriane, which the company launched in France, and then in Belgium, Switzerland, and other countries. Zannier also boosted its Z network, opening stores in Canada, Portugal, Greece, and Poland and expanding across the whole of the now-unified Germany. Next, Zannier launched a takeover of rival French company Groupe Poron, which with FFr 750 million in annual sales, added that company's Absorba brand and gave Zannier the world leadership position in the children's clothing market.

The takeover of Poron enabled Zannier's annual sales to top FFr 2 billion by 1992. By then, Zannier had begun a thorough reorganization of Poron, including selling off production facilities in France and Tunisia, slashing Poron's payroll from 2,400 employees to just 400, and trimming its number of brands back to just ten. Meanwhile, Zannier, which reorganized its business structure as a limited liability company, began a revamping of the Z store concept, launching a more modern style, while promoting a policy of pursuing new store openings in the centers of towns and cities. Many--if not most--of Zannier's new store openings were now company-owned branches. By 1994, the number of the company's own stores had topped the number of its franchisees.

If Zannier was becoming disenchanted with the franchise format, its ranks of franchisees were starting to revolt against the company. Among franchisee complaints was the burden of outstanding debt imposed upon each of the stores (reaching an average of some FFr 500,000 per store), a burden created, franchisees claimed, by Zannier's method of stocking the stores, which, as reported by Les Echos, was claimed to be Zannier 'destocking its production and transferring the burden onto the network.' Zannier's response was that much of the store chain's problems were due to the economic recession that had taken on the level of a crisis in France and through much of Europe in the early 1990s.

Indeed, Zannier itself had begun to struggle by 1993. With the major acquisitions of Kickers, then Duguy and Poron, and smaller acquisitions, including that of Baby Relax, from Total subsidiary Hutchinson and Hutchinson, made in 1993, Zannier debt load had begun to topple the company, just as its revenues and net income were slipping in the poor economic climate. The company stepped up its brand licensing, forming a licensing agreement with France's Allemand Industrie, a leading French children's shoe manufacturer, for that company to commercialize Zannier's Kickers and Solaria brands in Germany. A similar arrangement with the Pentland Group, based in the United Kingdom, transferred commercialization and distribution of the Kickers brand for the United States market.

By 1994, Zannier's financial problems had forced it into a restructuring of its holdings, which was to last until the late 1990s and see the company's brand names pared down from its high of 23. Among the brand names the company sold was its Kickers subsidiary, which the company bought back just six months later. The implications of these moves led company chairman Roger Zannier into legal difficulty, when, in June 2000, the company's founder was formally charged with misusing company property, spreading misleading information on the market, and releasing inaccurate company accounts.

The company's reorganization and financial difficulties notwithstanding, Zannier continued to invest in its brands, investing some FFr 115 million in developing its network of Z branch stores, as well as continuing the modernization of its existing branches, carrying out renovations on nearly 50 of its stores in 1993.

By 1996, Zannier had succeeded in reducing part of its debt load, which had soared to nearly FFr 700 million in 1995. The company had also pared down its brand names to just five major brands--Z for the low end, Confetti and Absorba at the midrange, and Kickers and Floriane covering the high end. The company also pursued its strategy of licensing for international expansion, signing up licensees in Taiwan, the Benelux countries, Afghanistan, Pakistan, Lebanon, Korea, Australia, Japan, Turkey, Brazil, Egypt, and other markets. The company also granted the Pentland group the Kickers license for the Canadian market. Meanwhile, Zannier itself continued to pursue the development of its company-owned Z stores, opening more than 20 stores in 1996, half of which were outside of France, as well as a number of Kickers stores.

By the end of 1997, Zannier had succeeded in regaining profitability, posting FFr 88 million in profits on revenues of FFr 1.98 billion for the year, while pushing its debt down to FFr 311 million. Zannier's turnaround continued through 1998, when its sales topped FFr 2.3 billion--including FFr 1.32 billion from Kickers alone--and its net profits climbed to FFr 115 billion. The company once again began looking to build up its portfolio of brands. An attempt to acquire clothing maker Jaccadi failed, in part because that company's franchisees proved wary of Zannier's reputation among its own franchisees. Instead, Zannier launched a new brand, Lili Gaufrette, targeted at the upscale market, and then, in mid-1999, picked up the Chipie brand--based in the town of Carcassonne in the south of France--for some FFr 200 million, making it one of Zannier's largest acquisitions ever. The company promptly set about redeveloping the Chipie image, stating its intention to build up its new brand to the international size of Kickers.

The development of Kickers' international activity had by then grown to such an extent that the company decided to spin off its holdings. In May 2000, Zannier announced that it had agreed with the Pentland Group, which held licensing rights worth some 50 percent of all Kickers sales, to form the joint venture Kickers Worldwide. While Zannier retained ownership of the Kickers brand, Pentland took over its marketing and development, ensuring continuity across its international range.

Just weeks after the Kickers spin-off, Zannier announced a new acquisition, that of the Génération Y2K holding company, organized by Barclays to group French companies Catimini and IKKS and their portfolio of mostly upscale brands. With a shares-and-cash deal valued at more than FFr 300 million, the Y2K acquisition boosted Zannier to a world-leading company with annual sales of more than FFr 4 billion produced through an internationally operating network of more than 700 stores. Despite the legal troubles of company founder Roger Zannier, which hit the news in June 2000, Zannier remained focused on its powerful collection of brand names and committed to its position as one of the world's foremost children's clothing companies.

Principal Subsidiaries: Kickers Worldwide (50%).

Principal Divisions: Chipie; Z; Floriane; Lili Gaufrette; Confetti; 3 Pommes; Alphabet; Absorba.

Principal Competitors: Du Pareil au Meme; The Gap, Inc.; Kids `R' Us.

Further Reading:

  • Epinay, Bénédicte, 'Turbulences dans le réseau,' Les Echos, June 28, 1994, p. 14.
  • Lecoeur, Xavier, 'Le groupe Zannier cherche à relancer son enseigne Z,' Les Echos, December 12, 1999, p. 18.
  • Tieman, Ross, 'Le president du Groupe Zannier mis en examen,' Le Figaro, June 13, 2000.
  • ------, 'Zannier's Latest Baby Chipie Set To Kick In,' Evening Standard, February 15, 2000.

Source: International Directory of Company Histories, Vol. 35. St. James Press, 2001.