Ermes Department Stores Plc has completed the transfer of its ERA department store operations to Nicosia-based Gencom Ltd for a nominal sum of €1, the company confirmed following its May 9 announcement. 

The disposal, finalised on Monday, forms part of a broader restructuring strategy aimed at streamlining operations and reducing exposure to loss-making ventures. In 2024 alone, the ERA stores recorded operating losses of €1.3 million. 

Under the agreement, Gencom will assume the long-term lease obligations of the four ERA stores, as well as supplier purchase orders worth around €4.5m for the Spring–Summer 2025 season.  

All store employees, fixtures, equipment and the UNIQUE customer loyalty programme have also been transferred, while remaining stock will be provided on a consignment basis. 

In addition, Ermes will continue to provide essential support services to the buyer until the end of 2025, in return for an agreed fee.  

The transaction remains subject to clearance by the Cyprus Commission for the Protection of Competition and the fulfilment of other conditions set out in the original agreement. 

The board of Ermes did not seek an external valuation or advisory opinion but said the consideration was fair and reasonable given current circumstances.  

It added that the sale would generate an accounting gain of approximately €1m, primarily due to the reversal of lease provisions under IFRS 16. 

The company stressed that the divestment would allow it to rationalise its financial position, noting that reversing the fortunes of the department store business would have required significant investment in infrastructure, IT systems and working capital. 

At the same time, Ermes emphasised that its retail operations will continue through brands such as Next, OVS, Springfield, Women’secret and Glow, as well as its food and beverage concepts, Ergon Deli + Café and Ergon To Go. It described these remaining assets as its core business focus going forward. 

“The disposal is carried out in a way that does not disrupt customer or partner service, ensuring the smooth continuation of operations where required,” the company said, adding that the move forms part of a wider plan to reduce liabilities, simplify management structures and focus resources on growth areas. 

Ermes, founded in 2002, is a subsidiary of the CTC Group and one of Cyprus’s largest retailers. 

In a related development, shareholders at an extraordinary general meeting approved a special resolution to reduce the company’s issued share capital.  

The figure will fall from €59.5m, divided into 175m ordinary shares, to €59.3m, following the cancellation of 500,290 treasury shares originally acquired under buyback programmes between 2008 and 2009.  

The cancelled shares represent 0.28 per cent of total share capital and carry a book value of €154,583. 

The reduction remains subject to court approval under Cypriot company law. 

Ermes said both the capital reduction and the ERA disposal reflect its determination to reposition itself within a more agile and modern framework. 

Finally, the company intends to focus on selective expansion, international brand partnerships and innovative retail concepts aligned with evolving consumer trends.