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Mac Fash<br />
Mac Fash branches are located primarily at<br />
out-of-town sites close to hypermarkets. Mac<br />
Fash offers a basic rather than a full range, including<br />
all traditional sectors such as ladies’<br />
outerwear, men’s and children’s clothing. Items<br />
sold by this outlet chain are in the lower price<br />
range and belong predominantly to mainstream<br />
fashion trends. During the period under review,<br />
the number of outlets remained at 45 with selling<br />
space totaling 37,830 m² (up from 37,644 m²).<br />
<strong>METRO</strong> <strong>AG</strong> has meanwhile sold its 100-percent<br />
stake in Mac Fash.<br />
Footwear Centers<br />
Aggressive cut-price policy; new store image<br />
with three merchandising concepts<br />
In order to underpin its market position as the<br />
leading footwear discounter, Reno redefined<br />
its price and advertising strategy. At the same<br />
time, the program aimed at expanding cost<br />
leadership was stepped up.<br />
Through two differing POS presentations in 469<br />
outlets (up from 408) on a total of 287,197 m²<br />
(up from 270,693 m²), the division is pursuing<br />
a graduated strategy of every day low prices.<br />
“Pay-less” is an outlet chain firmly positioned<br />
in the low price range; it benefits from downtown<br />
locations well frequented by customers,<br />
and is to be found in Germany, Austria, and<br />
Switzerland. The traditional Reno merchandising<br />
concept operates at a somewhat higher price<br />
level than Pay-less, though still well below<br />
the market average. At larger Reno footwear<br />
centers, the product assortment is supplemented<br />
by reasonably priced textile goods<br />
and children’s clothing.<br />
50<br />
Apart from Germany, Reno also operates its<br />
stores in Austria, France, Hungary, and Switzerland.<br />
As of January 1, 1996, Reno acquired a 30-percent<br />
stake in Mayer Schuh GmbH. The Mayer<br />
outlets complement the Reno concept with<br />
footwear ranges of higher quality combined<br />
with well-developed services.<br />
Sales from over-the-counter and footwear<br />
mail order business amounted to DM 816 million.<br />
At the footwear centers, sales increased<br />
only marginally despite expansion owing to<br />
lower average prices. On a same-space basis,<br />
over-the-counter sales dipped by 2.4 percent.<br />
Further scaling-down of mail order business<br />
continued in 1996 as planned.<br />
Result from ordinary operations down<br />
The new pricing and advertising concept did<br />
produce the desired turnover figures in fiscal<br />
1996. However, because of the new cut-price<br />
policy accompanied by a reduction in the gross<br />
margins, the result from ordinary operations<br />
dropped from DM 50 million to DM 24.9 million<br />
in 1996.<br />
Capital expenditure<br />
Additions to tangible assets resulting from outlet<br />
network expansion amounted to DM 10.1 million.<br />
A 30-percent stake in Mayer Schuh GmbH<br />
was also acquired.<br />
Reno franchise system branching out<br />
In order to reduce fixed costs, Reno is pressing<br />
ahead with the conversion to independent franchisees.<br />
In fiscal 1996, a total of 113 branches<br />
were transferred to the Reno franchise system.
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