Club Med Founders Quit in Huff

The founders of Club Mediterranee quit Friday in a dispute over the direction of the French resort chain, which reported a big loss for the first half of its fiscal year.

Serge Trigano said that he and his father, Gilbert, who co-founded the firm in 1950, had resigned from the supervisory board after a dispute with Philippe Bourguignon, who heads the management board.

Bourguignon took over from Serge Trigano in February after turning Disneyland Paris, Mickey Mouse’s French outpost, into Europe’s top tourist attraction.

Grand Cayman-based Club Med said it lost $68 million in the six months ended April 30, largely because of a $104-million restructuring charge, and said it may take more charges later this year.

Bourguignon said he wanted to revitalize the company that pioneered all-inclusive, fun-in-the-sun holidays but preserve its culture and concept.

But Trigano told Europe 1 radio that the company’s chic worldwide holiday villages risked turning into “Mickey [Mouse] clubs” and it was time for the founders to get out.

“The new team has its own methods, which are not mine,” he said.

He suggested that the Trigano family planned to launch a rival holiday club chain, addressing a different audience, such as older people.

Club Med, synonymous with holiday villages for three generations of European tourists, took a $135-million restructuring charge last year and lost about $123 million.

It posted operating profit of about $14 million in the first half ended in April, but that was wiped out by interest payments and the charge.

“The Triganos focused on the product. Bourguignon sees that it’s a good product but poorly sold,” said analyst Antoine Nodet at French brokerage Natexis. He and several other brokers raised their ratings on the stock to outperform.

“The Club has fantastic potential, which is under-exploited today due to multiple weaknesses,” Bourguignon said in a letter to shareholders. “Club Med is a great brand. It needs to preserve its culture but change its operating methods.”

Club Med said sales rose 2% to $644 million from $629 million, largely because of a stronger dollar and higher prices that offset sluggish demand. Despite the loss, its financial situation remains “healthy” with debt of $396 million and $578 million in shareholder equity, it said.