Marinopoulos, Greece’s largest supermarket chain and Carrefour franchisee, is teetering on the brink of bankruptcy risking 13,000 jobs
For now, the grocer has gained temporary protection from its creditors and has until September 21 to restructure – a mammoth task given that it owes €1.3bn (£1bn) to banks and suppliers.
The group’s problems reflect Greece’s economic turmoil and government ministers have met with Marinopoulos’ owners, concerned that its collapse would add to already sky-high unemployment and hit local farmers and food producers.
While a stay of execution has been granted, a full bankruptcy seems inevitable. It would leave approximately 2,000 suppliers unpaid, to all intents and purposes, and lead to the collapse of the company’s 858-strong store portfolio covering hypermarkets, supermarkets, convenience and cash-and-carry stores, which employ around 13,000 people.
At the heart of the problem is an attempt by Marinopoulos to reach an agreement with its many creditors over a proposed streamlining of its business.
The proposal was due to receive official consideration in September, but numerous disagreements between creditors as to what shape any rescue package might take have put this increasingly in doubt.
Loan and supplier repayment obligations have been steadily mounting in the past year. Following a €35m (£29.9m) cash injection, the Carrefour franchisee restarted regular payments to suppliers in November 2015.
However, its total debt is today reported as being €1.32bn. Despite a degree of restructuring already being undertaken – including a deal for joint control of its big-box division with supermarket chain Sklavenitis – it appears unlikely that Marinopoulos will be able to streamline operations any further and satisfy its creditors, while remaining a viable entity.
Suppliers in firing line
The writing has been on the wall for Marinopoulos for some time now. Following Carrefour’s withdrawal from their joint venture in 2012, the Greek operator was bullish about its prospects, talking up deeper expansion into neighbouring Balkan markets and even making merger and acquisition moves to increase its footprint beyond the saturated Attica region.
However, when Planet Retail visited Athens earlier this year, a Carrefour store tour revealed barely-stocked shelves, typically with one facing of products that failed to disguise the paucity of the offer.
Should Marinopoulos crash and burn, the impact will be felt most acutely by its suppliers. The monies due to them are unsecured debts.
Of course, it may be that any potential purchaser of the failed business might assume at least a portion of the debt burden, but even that scenario is unlikely to see obligations met in full.
Worse, it appears that those creditors least unhappy with Marinopoulos’ proposed direction of travel are the more powerful institutions like the banks.
This would obviously be a cataclysmic shock to suppliers, not only in Greece, but also in Bulgaria, Macedonia and Albania, where Marinopoulos also functions under the Carrefour banner.
Given the market-leading position of Marinopoulos, a collapse would likely see many suppliers struggle to survive. This is particularly true in a domestic economic environment that continues to be utterly challenging for most players involved.
Greece is a market riven with uncertainty at present, while grocery retail has been clinging to a cliff edge since the start of the Eurozone crisis. Whether the Greek government will permit such an iconic national retailer to disintegrate in this manner may well be a further ingredient in the mix, however, given the potential dent to the national confidence it might produce.
- Howard Lake is a senior editor at Planet Retail