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Vendex International N.V.

Vendex International N.V.

P.O. Box 7997
1008 AD Amsterdam
The Netherlands
31 20 549 0500
Fax: 31 20 646 1954
or
Vendamerica Inc.
104 Field Point Rd.
Greenwich, Connecticut 06830
U.S.A.
(203) 629-4676
Fax: (203) 629-2273

Public Company
Founded: 1887
Operating Revenues: NLG 10.4 billion
Employees: 78,500
Stock Exchanges: Amsterdam

Vendex International N.V. is one of the largest retail operations in The Netherlands. The Vendex empire is vast, with 1,660 retail outlets including food stores, large department stores, and specialty stores in jewelry, sporting goods, photography and electronics, pet products, hard goods, fashion, and home furnishings. The company also has substantial business interests in maintenance services, temporary-help services, insurance, and real estate. In addition to its extensive holdings throughout the Netherlands, Vendex operates businesses in France, Belgium, Germany, Spain, Sweden, and the United States.

The founders of the company that eventually became Vendex, Willem Vroom and Anton Dreesmann, had extensive retail experience, having clerked in various food stores and dry goods stores for years. After the two young men met they formed a close friendship; ambitious and energetic, they decided to open a department store of their own. When the first Vroom & Dreesmann retail store opened in downtown Amsterdam in 1887, bundles of soap and candles, swatches of clothing material, and brooms were just some of the items sold by the new company to the general public.

From that date to the beginning of World War I, Vroom & Dreesmann department stores expanded throughout The Netherlands. Both of the founders came from close-knit families, and the two men were able to convince their relatives to operate each new store that was opened. The stores were typically co-owned by Vroom & Dreesmann and the chosen relative, but individually managed by the relative, who was given a great deal of autonomy. Vroom & Dreesmann relied heavily on the idea of familial responsibility to assure the success of each new store.

The First World War and the Second World War hurt the company not only in loss of revenue but also in loss of personnel to the tragedies of both conflicts. Yet Vroom & Dreesmann continued to grow. People still needed soap, shoes, and toilet paper, and Vroom & Dreesmann stores were there to provide these necessities, although without the direction of the founders, who had passed away some time before.

Throughout the 1950s and into the 1960s, Vroom & Dreesmann department stores operated within a highly decentralized corporate structure. During the early 1960s, the Vroom & Dreesmann group decided to impose some order on the company by organizing the stores by region, in a first step toward a more centralized and more efficient operational structure. In 1973 the regional groups merged to form a united Vroom & Dreesmann Group. Anton Dreesmanns grandson, who was also named Anton Dreesmann, became chairman of the newly restructured company.

With a Ph.D. in Economics and Law, and having taught as a professor at the University of Amsterdam, Anton Dreesmann was well prepared to assume the leadership of Vroom & Dreesmann. He immediately began to overhaul the organization and administration of the firm, implemented standardized operating procedures, and initiated a bold expansion strategy. Seeking to diversify from the traditional department store business, Dreesmann moved into the fields of food retail, fashion, banking, hardware retail, jewelry retail, maintenance services, mail order services, employment services, catering services, and electronic retail. The acquisition of such well-known firms as Kreymborg, Claudia Strater, Edah, Staal Bankiers, Vedior, Vedelectric, Siebel, and Nederlands Talen Institut was financed most through debt.

During the late 1970s, the government in The Netherlands revised the corporate tax structure as a means of financing social programs, and companies such as Vroom & Dreesmann were faced with a significant increase in their taxes. In response, Dreesmann began seeking overseas partners and acquisitions. He established a U.S. subsidiary, Vendamerica, to analyze trends in American retailing, and in 1978 he negotiated a major agreement with Dillards Department Stores. According to the agreement, Vroom & Dreesmann paid approximately $24 million for more than one million non-voting shares of stock; in return, Dreesmann was made a member of Dillards Board of Directors. In 1979 Dreesmann purchased Ultralar, a major Brazilian department store chain.

During the 1980s, Dreesmann continued to pursue an aggressive expansion strategy, although at a somewhat slower pace. In 1980 he attempted to acquire 50 percent of W. R. Graces retailing operations. Grace, one of the largest conglomerates in the United States, was initially receptive to Dreesmanns overtures, but after months of intense negotiations, the two companies could not reach a mutually satisfactory agreement. During the same year, Dreesmann expanded into the Far East by purchasing a three percent interest in UNY, one of Japans largest retailers, which operated numerous superstore and specialty store outlets. Other notable purchases during this time included a 50 percent stake in the Brazilian branch of the Sears department store chain and the acquisition of Perry Sports, one of the largest and most successful sports retail store chains in The Netherlands.

From 1982 through the remainder of the decade, the company focused on implementing a comprehensive reorganization plan. This involved organizing the companys businesses into separate operating divisions, with the retail trading division comprising food stores, department stores, specialty fashion, specialty hard goods, and specialty home furnishings, and the business services division comprising maintenance services, employment services, and miscellaneous services. The divisions were under the direction of the holding company, which changed its name to Vendex International B.V. in 1985. Throughout these changes, Anton Dreesmann remained firmly in control of the company, especially since the Dreesmann family retained a majority of the firms stock.

Revenues and profitability continued to grow as a result of Dreesmanns expansion strategy. In 1987 Vendex acquired a 50 percent interest in B. Dalton, a huge bookstore chain in the United States, and a 32 percent stake in the College Book Stores of Barnes & Noble, another large American retail bookseller. Vendex also acquired numerous European companies in unrelated industries, including a Belgian furniture store chain and a Dutch travel agency.

By the late 1980s, however, Vendex was experiencing serious financial problems. Having concentrated for years on its highly successful expansion strategy, the company failed to adapt to changes in the domestic market, especially in the retailing industry. This, combined with a slowdown in the Dutch economy, led to declining sales. The companys heavy debt load and high interests rates also contributed to significant losses in certain sectors of its business. Compounding these problems was the poor health of Dreesmann, who suffered a series of debilitating strokes.

In 1988 Dreesmann appointed Arie Van der Zwan to take his place as chairman of Vendex. Van der Zwan, also an economics professor, began to improve the companys operational efficiency by taking drastic measures, which included layoffs of almost 18 percent of the companys retail employees. Dreesmann was furious. Highly regarded for his employee relations policiesand called Uncle Anton by his workers Dreesmann returned to Vendex despite his failing health. He immediately fired Van der Zwan, and implemented his own reorganization and revitalization strategy.

In 1990 Dreesmann selected Jan Michiel Hessels to succeed him as chairman of Vendex. Hessels had obtained a law degree from the University of Leiden and had extensive administrative experience in companies such as Akzo, Delimaatschappij, and Deli Universal. Hesselss assignment was to revitalize the company through a three-pronged strategy: divest unprofitable, non-core businesses; restructure the retail department store division by concentrating on improved profitability and domestic acquisitions; and reduce corporate debt.

In 1990 Vendex discontinued almost all of its operations in Brazil, including its retail department store operations, banking operations, and hard goods retail operation, primarily due to declining profits and the instability of the Brazilian economy. The company also disposed of some holdings in banking, mail order services, and real estate operations within The Netherlands and reduced its interest in Barnes & Noble, the U.S. bookstore chain. In 1991, after its American home center retail store chain, Mr. Goodbuys, filed for Chapter 11 bankruptcy, Vendex ceased all operations of the company. Vendex sold its shares in Dillards department stores, reaping a healthy profit from its investment, and reduced its share in Software, Etc., another American investment.

Hesselss strategic moves paid off handsomely. Vendex Internationals total income increased from NLG 164 million in 1990 to more than NLG 340 million in 1995. Part of this improvement resulted from an increase in profits reported by Vroom & Dreesmann department stores, which shot up from NLG 7 million in 1990 to NLG 86 million in 1995, and by an improvement in the companys debt-to-equity ratio, which decreased from 234 percent at the end of 1991 to just 48.4 percent in 1995.

In 1995 Vendex reported that approximately 72 percent of net sales and nearly 75 percent of its operating income came from its retail division, while the remainder was derived from the business services division. The company operated a total of 655 food stores and 121 franchise pet food retail stores, and had more than 11 percent of the total food retail market in The Netherlands. Edah, the companys largest retail food store chain, which operated medium-sized supermarkets, was listed as the third-largest food retail store in the country in 1995.

Vendex Internationals department store operation was led by Vroom & Dreesmann, which had a 40 percent share of the total department store market in The Netherlands. With 62 stores across the country, Vroom & Dreesmann department stores sold a wide variety of merchandise, including clothing, toys, and telecommunications equipment. The companys specialty store operations were equally diverse, with product lines including lingerie, camping accessories, jewelry, and home furnishings. Companies within the Vendex specialty retail family included such well-known names as Kreymborg, Kien, America Today, Perry Sport, the Siebel Group, and Kijkshop/Best-Sellers.

Vendexs business services operation was led by Cemsto, the largest cleaning service firm in the country, which had more than 11,000 employees. Most of Cemstos cleaning services were contracted by large buildings, housing corporations, and other business enterprises. Vendexs Employment services sector operated 474 offices throughout The Netherlands, Belgium, Luxembourg, France, and Germany. Vedior International, which provided employment services such as helping people find temporary jobs or training the long-term unemployed to find work, was considered one of the most innovative firms in the field.

With Hessels firmly in control, Vendex Internationals future looks bright. The company continues to grow within a small geographical area by adapting to the changing conditions of the European marketplace. As long as management remains flexible, and Vroom & Dreesmann retains its pre-eminent position among department stores, Vendex International will continue to be a Dutch success story.

Principal Subsidiaries

Edah; Konmar; Basismarkt; Dagmarkt; Battard; Eda Belgium; Eda France; Pets Place; Vroom & Dreesmann; Kreymborg; Hunkemoller; Kien; Claudia Strater; America Today; Perry Sport; The Siebel Group; Kijkshop/Best-Sellers; The Dixons Group; The Stoutenbeck Group; Cemsto; Holland Partners; Eijssink; Van Heusden; Zidkenhuis Diensten Groep; Tecso Antoine Petit; Restoplan (50%); Nedsafe; Receptionelle; Dick van Troost; Eventure; Groene Team (50%); Domesta; AVO; ASB/Vedior; Dactylo; Project Partners; Compuhelp; Gregg; ASB Interim; Intertra France; Regit France; ADHOC Germany; Markgraaf; F.A.A.; Bakker Continental.

Thomas Derdak

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