Tok&Stok’s CEO Confirms Talks with Mobly and Emphasizes Cash Management Focus

In an exclusive interview with Bloomberg Línea, the founder of the furniture retailer Ghislaine Dubrule discusses why she decided to return to the CEO position and what the next steps are for the turnaround

Ghislaine TokStok
September 21, 2023 | 10:18 AM

Bloomberg Línea — After a challenging first semester, which included a bankruptcy request from a supplier, the closure of 17 stores, and the restructuring of a R$350 million debt ($71.13 million), the Brazilian retailer Tok&Stok says the worst is behind them, and they are already generating cash flow, reflecting operational improvements. A proposal for a merger with the competitor Mobly (MBLY3) is still on the table, said Tok&Stok’s co-founder and CEO, Ghislaine Dubrule, in an exclusive interview with Bloomberg Línea.

In August, Brazil’s largest furniture and home decor retailer announced the return of its founder, Ghislaine Dubrule, as CEO, after the American fund Carlyle made a R$100 million investment. The private equity firm controls Tok&Stok in conjunction with SPX Capital.

IPOs Back? New Wave of Offerings Sets a ‘Higher Bar’ for Newcomers

The new CEO of Tok&Stok said the company has “everything to turn the game around” and admitted, for the first time, that the company is in talks with Mobly’s founders about the next steps, including a possible business combination.

“We have ongoing conversations. Just as we have spoken with other companies at other times, and Mobly also claims to be talking to other players. But there is no agreement between the two companies and no significant progress in that direction yet,” said the CEO.


Rumors of negotiations between the two companies and a potential agreement have been circulating in the market since the beginning of the year. In a relevant fact released on March 10, Mobly informed the market that it had talked to Tok&Stok about a possible merger. This happened before the company completed the debt restructuring and the founder returned to the helm. More recent statements from Mobly have indicated that discussions between the companies exist, but there is no more advanced understanding for a potential merger.

Carlyle’s decision to inject capital into the traditional retail network paved the way for the extension of the R$350 million debt with some of the country’s largest banks. The company was released from making payments for two years, according to a market statement in late June.

According to market sources, a potential merger would make sense in terms of synergies, such as negotiations with suppliers, and business complementarity. Tok&Stok has a physical store-focused operation targeting the A and B classes, while Mobly, a native digital company, serves the C class and has an omnichannel operation and logistics considered more efficient.


On the other hand, there are obstacles, such as transaction terms: although Tok&Stok is larger in size and revenue, it carries a debt of R$350 million, while Mobly has no debt and had R$167 million in cash at the end of the second quarter.

“The retail sector is going through a period of weaker demand. It is possible to see large players reviewing their strategies and adjusting their investments according to the current scenario,” said Tok&Stok’s CEO about the current context of the furniture sector, with higher average tickets and credit dependence, which became more expensive with the Central Bank’s interest rate hike.

Dubrule explained that the investments made in recent years did not bring the expected results or generated greater cash flow pressure in a more challenging market environment.

“We were never at real risk of bankruptcy, as reported by some media outlets. We went through adjustments like other companies did, and that included the successful renegotiation of our financial debt, as well as the renegotiation of other contracts,” said the network’s founder.


Tok&Stok was founded in 1978 by the couple Ghislaine and Régis, who had just arrived from France. In 2012, the family sold 60% of the company to Carlyle for R$700 million but remained in the operation.

Since then, the company has had successive CEOs who were unable to execute the plan to take the company public (IPO), as initially planned to exit the American private equity fund.

In recent years, investments were made to create an online sales operation that could be integrated with Tok&Stok’s strong point, physical stores, but the results fell short of expectations, and the company’s debt got out of control.


Read the interview with Tok&Stok’s CEO, who agreed to answer questions via email

You are one of the founders of the company, whose control was sold more than ten years ago. What motivated you to return to the helm?

After being away from the helm for six years, returning to lead Tok&Stok is more than special. Alongside my husband, who founded the company, I have been involved in its management since its inception, and as CEO, I led it from 2012 to 2017. The passion and the revival of the emotional memory that the brand carries throughout its 45 years are some of my main motivators in this new phase. Additionally, my return is also due to our strategy focused on going “back to basics,” as announced a few months ago, in which I aim to reinforce our extremely successful management model for over 40 years. My return comes at a time when we want to strengthen our focus on operations and our customers even more.

Will the furniture and decoration market take a while to recover its sales performance?


The retail sector is going through a period of weakened demand. We can see major players revising their strategies and adjusting their investments according to the current scenario. The decoration market had one of its peaks during the pandemic but suffered a natural decline afterward. We are reassessing our next steps and understanding how to attract customers who, due to the economic situation, do not have high purchasing power and still prefer experiences over material goods after the period of isolation.

There are rumors in the market about a potential business combination with Mobly. Is that accurate?

We have nothing to add beyond what Mobly has already disclosed to the market. We have ongoing conversations, just as we have spoken with other companies at other times, and Mobly itself claims to be in discussions with other players. However, there is no agreement between the two companies and no significant progress in that regard so far.


A supplier even requested bankruptcy from the company. Was there really such a risk without Carlyle’s injection?

We were never in real danger of bankruptcy, as reported by some media outlets. We went through adjustments as other companies did, including the successful renegotiation of our financial debt and other contracts. Ultimately, the shareholders’ injection of capital brought more stability to Tok&Stok by making it financially balanced. Now, we are in an ongoing effort to make our operation more efficient, and the initial results are already very encouraging in these early months of new management.

What were the main factors that led Tok&Stok into a financial crisis? Were there management mistakes?


The company’s financial deterioration was influenced by a combination of many factors, including macroeconomic challenges such as a weakened economy, a rapid increase in interest rates, rising inflation, and more. However, it was also influenced by specific situations in our sector. After the surge in furniture and home goods consumption during the pandemic, demand quickly reversed. We can say that the pandemic made the scenario more complicated and uncertain, which had a negative impact. On the other hand, we can say that the significant investments we made in recent years did not yield the expected results and created more cash flow pressure in a more challenging market environment. I would highlight the relocation of our Distribution Center from Jandira (SP) to Extrema (MG) and heavy investments in technology to accelerate digital transformation. In any case, there is no single explanation, and we believe we have everything it takes to turn the situation around.

What will be your priority agenda for this semester leading the company?

My main focus is on cash management and improving operations. We are dedicated to developing areas such as simplifying our organizational structure, improving process management in stores, operational efficiency at our distribution center, and a focus on profitable digital transformation, emphasizing our omnichannel presence and using agile and robust systems to ensure excellence in customer service. All of this while continuing to focus on our collection, which has always attracted the public by offering affordable design and solutions for the entire home.


What will be the role of the marketplace and its weight in generating cash?

Over the past few years, we made a significant move to strengthen our e-commerce and omnichannel approach. However, our physical stores have always been and remain extremely important for the customer experience. The physical experience is our strong suit, and when integrated with the digital experience, it provides the best experience for our customers. Our focus is on our operations, focusing on omnichannel, rather than marketplaces.

Will the company close more stores or lay off staff to adjust operations?


An important part of our restructuring process was closing 17 unprofitable stores. Despite this move, we maintained a physical presence in all the states where we were already operating, and now, our 51 stores are operating positively. With operational efficiency improvements, we are in a new phase that already shows positive cash flow in 2023. We have already made all the necessary operational adjustments, and for the future, we are focused on new strategies for our business recovery.

Will there be a need for new investments if cash generation does not improve in the next quarters? We do not anticipate the need for new investments.

What changes in C-level positions do you plan to make in this turnaround?

Currently, we do not foresee any changes in the C-level structure. This change was already made several months ago, and we now have a strong and competent team to manage the company in this new phase.

Read Also:

Which Latin American Countries Are Among the World’s Top 20 for Crypto Adoption?