Ermes Department Stores Plc has officially completed the transfer of its ERA department store operations to Nicosia-based Gencom Ltd for a nominal sum of €1. This move, confirmed after an announcement on May 9, is part of a broader strategy aimed at streamlining operations and reducing exposure to loss-making ventures.
The disposal, which was finalised on Monday, comes in the wake of significant financial losses faced by the ERA stores, which reported operating losses of €1.3 million in 2024 alone. Gencom will take over the long-term lease obligations of four ERA stores, alongside supplier purchase orders valued at around €4.5 million for the Spring–Summer 2025 season.
As part of the agreement, all store employees, fixtures, equipment, and the UNIQUE customer loyalty programme have also changed hands. Remaining stock will be provided on a consignment basis, ensuring continuity for customers. Moreover, Ermes will continue to offer essential support services to Gencom until the end of 2025 for an agreed fee.
The completion of this transaction is contingent on clearance from the Cyprus Commission for the Protection of Competition and the fulfilment of other conditions outlined in the original agreement. The board of Ermes opted not to seek an external valuation, asserting that the transaction consideration was fair and reasonable given the current circumstances.
This sale is anticipated to yield an accounting gain of approximately €1 million, primarily due to the reversal of lease provisions under IFRS 16. Ermes has explained that divesting from the ERA stores is a critical step in rationalising its financial standing, as reversing the fortunes of the department store business would necessitate substantial investments in infrastructure and working capital.
Despite this divestment, Ermes plans to maintain its retail presence through other brands, including Next, OVS, Springfield, Women’secret, and Glow, as well as its food and beverage concepts, Ergon Deli + Café and Ergon To Go. The company regards these remaining assets as central to its future business focus.
In its announcement, Ermes emphasised that the disposal was executed in a manner that would not disrupt customer or partner service, ensuring smooth continuity of operations. This strategic move is part of a larger plan to reduce liabilities, simplify management structures, and concentrate resources on areas with growth potential.
Founded in 2002 and a subsidiary of the CTC Group, Ermes is one of Cyprus’s largest retailers. In a related development, shareholders recently approved a special resolution to reduce the company’s issued share capital from €59.5 million, divided into 175 million ordinary shares, to €59.3 million. This reduction follows the cancellation of 500,290 treasury shares acquired under buyback programmes between 2008 and 2009, representing 0.28 per cent of total share capital with a book value of €154,583.
This capital reduction, like the disposal of ERA stores, is subject to court approval under Cypriot company law. Ermes has stated that both the capital reduction and the sale of the ERA department stores reflect its commitment to repositioning itself within a more agile and modern framework. The company also plans to engage in selective expansion, forge international brand partnerships, and innovate retail concepts that align with evolving consumer trends.
