Danish electronics chain in deep crisis – will Elkjøp take over?

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56 stores Danish electronics chain Fona, founded in 1926, seeks reconstruction.

”The background is the recent years’ extremely intense competition where we unfortunately have been squeezed on our earnings to such an extent that we need a time-out,” says Fona in a letter to its customers.

Now, the chain states it seeks a new partner or owner.

Elkjøp Group already owns 40 percent of the chain and is the major supplier, which opens for speculations whether they will overtake the company completely and go for a city center chain in the same way as in Norway and Sweden.

Fona, since  the merger with Fredgaard Radio in 2001 is a chain in the company F Group A / S.

Fona has lost about 30 million DKK per year in 2013 and 2014 – and the loss is most likely not smaller in the financial statements for 2015 as the price war in Denmark has escalated after Expert’s new chain Power was launched and Elgiganten and also other competitors has scaled up.

“I am very sorry that reality for Fona looks as it does, because the employees are not to blame for the situation we have landed in. But we are all fully committed to find the best solution for the company, as Fona is a great company, ” said Michael Kjaer, CEO and Director of F Group, in a press release.

Fona turnover of just under 2 billion. kr. and has 750 employees and 56 stores.  In 2006, the owner of Nordic electronics giant Elkjøp (owner of Elgiganten in Denmark) entered as major shareholder with 40 percent stake in F-Group. Dixons, then DSG international, had a call option agreement to buy the remaining 60 percentstake already in early 2010.

In a letter to its customers on the homepage, Fona says a reconstruction of the company are unfortunately inevitable.

”Together with our advisors, we are therefore reached the conclusion that the solution for Fona may be a new, strong partner or owner who can provide the company capital, thereby ensuring that it can be fed into a strong set.”

Fona says all the stores and online shop will be open as usual and all business and guarantees will go on as usual.

 

 

But Fonas creditors will, so far, not get their money. The largest creditor might be Elkjøp as Fona dropped its outsourced central warehouse in Taastrup west of Copenhagen last year and now gets almost all deliveries from Elkjøp’s central warehouse in Swedish Jönköping.

Elkjøp will therefore have a large impact on what happens next. After the merge between Dixons Retail and Carphone Warehouse in the UK, Elgiganten in Sweden has now converted all Phonehouse stores to a city center and shopping mall concept for multichannel – and the same goes for Elkjøp Express in Norway. Fona might go the same way to sharpen the competition against Expert in Denmark if Elkjøp chooses to take over a larger share of  F-group.