Ermes Department Stores Plc has sold four of its department stores in the ERA chain to Gencom Ltd, a group of companies based in Nicosia.
The transaction, which has a value of €1, shows that Ermes has decided to stop making a loss in a part of the business.
The agreement has already been approved by the Ermes Board of Directors and is currently being reviewed by the Cyprus Competition Protection Commission. There are also some conditions that need to be met for the transaction to be completed.
The main points of the contract are:
- All the long-term rental agreements for shops will now be handled by Gencom.
- All department store staff will be moved under the new owner's management.
- Moving equipment, furniture and a special programme to make customers loyal.
- Move €4.5 million of expected orders for the spring/summer 2025 season to Gencom.
The inventory balances held in Ermes' warehouses are being transferred to Gencom Ltd on a consignment basis.
As part of the agreement, Ermes will continue to support the new owner until the end of 2025 for a fee, providing the services necessary for a smooth transition and stabilisation of operations.
It is worth noting that Ermes, which has been operating in retail and wholesale since 2002, decided to sell four department stores of the ERA chain (ERA Mall of Cyprus Nicosia, ERA Apollon Limassol, ERA Zenon Larnaca and ERA Korivos Paphos) after the division lost €1.3 million in 2024. Management thought that to make a profit again would need a lot of money and extra working capital, which was thought to be too difficult.
When the deal is done, the company will make a profit of €1 million, mainly because of the reversal of provisions as required by IFRS 16 Leases. The board has not checked the deal with an outside expert, but they think the terms are fair given how the market is at the moment.
The company is sure that the deal will make its finances better, make the most of its assets and have a good effect on Ermes and its shareholders in the long term. We don't know what the new owner has planned for the department stores yet. However, it is known that the Gencom Ltd consortium includes two Greek companies that specialise in selling clothes, shoes and cosmetics. These companies are Geniki Emporiki S.A. and Notos Com.