Galeries Lafayette looks abroad as France suffers after attacks

Galeries Lafayette is in talks with potential partners in China and the Middle East to open five new department stores by 2020 as its home market suffers after a wave of Islamist attacks, its chief executive said on Wednesday.

Nicolas Houze, head of the family-owned Galeries Lafayette group that owns retailer BHV Marais, said the attacks had deterred tourists from coming to France and sales fell nearly 6 percent in the first-half to 1.6 billion euros ($1.80 billion).

Footfall and revenue from French shoppers were "nearly stable" at the flagship Haussmann store during the period but footfall and revenue from foreign tourists fell 15 percent when compared to the first-half 2015.

The situation at BHV Marais, which caters to a more local and Parisian crowd, was almost flat, Houze said.

"Security is clearly a global issue in France but Galeries Lafayette and France still make foreign tourists dream and they will come back," Houze told a news conference.

Foreign tourists account for 50 percent of customers at the Haussmann store, with Chinese leading the way, followed by visitors from Taiwan and the United States.

Tourists have shunned France since Islamic State gunmen killed 130 people in an attack in Paris last November, leading to sharp declines in sales for luxury goods makers but also for the capital's retailers, hotels and restaurants. In July, a gunman drove a truck into crowds in Nice, killing 86.

On Tuesday France pledged more aid to help its struggling tourism sector, bringing to 10 million euros its contribution to a campaign to promote the country abroad.

DIFFICULT START TO SEPTEMBER

Commenting on summer trading in France, Houze said: "July benefited from discounted sales but August was calm and September had a difficult start as with the warm temperatures, people rather buy a bathing suit than a down jacket."

Houze said he was confident the group could achieve its goal of doubling profitability by 2020 while keeping annual investments at 150 million euros.

The Galeries Lafayette group also has stores in Berlin, Casablanca, Jakarta, Dubai and Beijing, and plans to open in Doha and in Istanbul in 2018.

Sales at the Beijing store were up 15 percent in the first half while the Dubai store was on track to reach sales of 100 million euros this year, he said.

Galeries Lafayette is also seeking to boost its e-commerce operations. It currently makes 2 percent of its sales online and has a target to reach 10 percent by 2020, Houze said.

Galeries Layette bought e-commerce flash sales site BazarChic last week after acquiring Instantluxe, a French e-commerce site that sells luxury leather goods, jewellery and accessories, earlier this year.

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