Ermes Department Stores Plc has reached an agreement to transfer the operations of its four ERA department stores to Gencom Ltd, a Nicosia-based company, for a nominal sum of €1.

The decision forms part of Ermes’s wider strategy to exit loss-making ventures and improve its financial health.

The agreement has already been approved by Ermes’s board of directors, though it remains subject to clearance by the Cyprus Commission for the Protection of Competition and the fulfilment of several additional conditions.

As part of the transaction, the long-term lease agreements linked to the department stores will be transferred to Gencom.

The buyer will also assume outstanding purchase orders valued at approximately €4.5 million for the Spring-Summer 2025 season.

Moreover, Ermes confirmed that the existing staff of the department stores will be retained under the new ownership.

All fixtures, furnishings and equipment will also be handed over, along with the UNIQUE customer loyalty programme.

In addition, any stock on the premises at the time of completion will be transferred to Gencom under a consignment agreement.

Support services will continue to be offered by Ermes until the end of 2025. These services will be provided in exchange for an agreed fee.

The decision to divest the department store activity comes after sustained operating losses. In 2024 alone, the segment recorded losses of €1.3 million.

The company said a turnaround would require substantial investment and increased working capital, resources that the board decided not to allocate to this part of the business.

Following the transaction, the company expects to record an accounting gain of €1 million from the transaction.

This is primarily due to the reversal of provisions in line with IFRS 16 accounting standards relating to leases.

It was also noted that Ermes did not seek an external valuation or advisory support for the transaction.

However, the board considered the price to be fair and reasonable given current market conditions.

The company confirmed that the transaction does not involve any interests held by the issuer’s secretary or by any “designated person” under the Cyprus Securities and Stock Exchange Law.

According to Ermes, the agreement is expected to positively impact its financial standing and be beneficial for the CTC Group and its shareholders.

The company, which has been active in both retail and wholesale trade since 2002, described the move as a necessary step in its business restructuring efforts.