Company retains major retail brands

Ermes Department Stores Plc on Wednesday provided additional details regarding its strategic direction and ongoing operations, following the transfer of its ERA department store activity to Gencom Ltd.

The company’s latest statement, published on the Cyprus Stock Exchange (CSE), builds on a story originally published on May 9, concerning the disposal of its department store operations to Gencom for a nominal fee of one euro.

Ermes confirmed that, moving forward, its business activities will continue to include the operation of well-known fashion and lifestyle retail stores such as Next, OVS, Springfield, Women’secret, and Glow, alongside its food and beverage (F&B) segments, Ergon Deli + Café and Ergon To Go.

The company highlighted that its most significant remaining assets include these ongoing business operations, relevant inventory, and equipment essential to their functioning, as well as intra-group balances.

It reiterated that the disposal of the ERA department stores forms part of a broader strategic restructuring plan.

The main objectives of this plan are to liquidate non-core assets, reduce outstanding liabilities, and streamline operational management.

According to the announcement, the move is expected to positively impact the company’s operating profile by reducing cost and complexity, improving transparency, and aligning more closely with the company’s strategic priorities for responsible financial management and regulatory compliance.

The company further noted that the transition has been carefully managed to avoid any disruption to customer service or business partner relationships.

“All necessary measures have been taken to ensure that the disposal is carried out in a way that does not disrupt customer and partner service, ensuring the smooth continuation of operations where required,” the company stated.

It also clarified that the sale remains subject to regulatory approval by the Cyprus Commission for the Protection of Competition, as well as the fulfilment of other conditions outlined in the original agreement.

In the meantime, Ermes said that no final decisions have yet been made regarding any new business initiatives or future strategic directions.

It stressed that a comprehensive and conclusive view of the company’s financial affairs will only be possible after the full completion of the divestment process and related transactions.

As previously announced on May 5, 2025, the company expects to finalise the audit and publication of its financial statements for the year ended December 31, 2024 by the end of September 2025.

It should be noted that the agreement with Gencom Ltd includes the transfer of long-term lease agreements, outstanding purchase orders of approximately €4.5 million for the Spring–Summer 2025 season, all fixtures and equipment, as well as the UNIQUE customer loyalty programme.

Existing ERA store employees will be retained under Gencom’s ownership, while support services from Ermes will continue through the end of 2025 in exchange for a pre-agreed fee.

Ermes previously confirmed that the transaction would result in an accounting gain of €1 million, primarily due to the reversal of lease provisions under IFRS 16 accounting standards.

The board did not seek an external valuation or advisory services for the deal but assessed the price as fair and reasonable given current market conditions.

Ermes described the sale as a necessary step in its business transformation, saying it will strengthen its financial position and bring broader benefits to the CTC Group and its shareholders.