Privalia sells Dress For Less to its management and focus back in core markets

Spanish online fashion outlet Privalia has sold its German business Dress For Less to its current management for a sum that remains undisclosed. The German subsidiary has not but enhanced Privalia´s red numbers in the last couple of years.

Following what some in the trade have defined as an erratic expansion policy, Privalia entered the German market with the purchase of local online fashion site Dress For Less in 2011. The Spanish retailer paid a considerable 120 million euros, of which were paid 85 in cash and the rest in shares of Privalia.

Only four years later, Dress For Less return to the hands of its former owners and current managers, Mirco Schultis and Holger Hengstler.

Back in the day, market value of Dress For Less was 27 million euros. However, Spanish Privalia was highly interested in entering such an attractive market as the German one, so they paid far way more than that as proof of goodwill.

Privalia ends 4-year relationship with Dress For Less

This ends the four-year commitment of the Spanish parent company Privalia SA, which had already announced in July its intentions to strategically focus more on their core business with shopping clubs in Spain, Italy, Mexico and Brazil.

"We are very pleased to have quickly found a solution in order to continue our business as usual. The management team will remain in unchanged composition, "said Antonio Gonzalo, CEO of Privalia and, until now, Managing Director of Dress-for-less GmbH.

Dress For Less was established by Mirco Schultis in 1999. A year later, Holger Hengstler joined them as second managing director. At the end of 2007, the private equity firm Palamon Capital Partners from Edinburgh acquired a majority stake in the firm. 2011 bought the Spanish-based shopping club Privalia on the German company.

However, the poor performance of the business of Drees For Less in 2014 has forced to make certain allowances for all the goodwill and rendering unrecoverable, with the consequent impact on the income statement, highlights German press.

Since the birth of Privalia in 2006 to date, the company has been financed through seven rounds of fundraising, thanks to which managed to raise 286 million of various groups of investors. In its short existence, the company has not closed a single exercise with black numbers and already accumulated consolidated losses of 200 million.

In 2014, group sales rose from 364 million euro to 414 million, with deficit soaring from 1.9 million euro to 126.8 million, mostly due to the poor performance of the German subsidiary.