SPORTING GOODS sports FOR BUSINESS outdoor LEADERS IN THE active lifestyle GLOBAL SPORTING GOODS INDUSTRY REPORT in robust shape after tweaks in #27 FEBRUARY 11, 2019 assortment ecathlon regained traction last year with in Nishinomiya, between Kobe and Osaka, in CONTENTS D a global sales increase of 9.2% to €12,353 March 2019. The new Japanese store in Tokyo Decathlon in robust shape after million, as it moved into six more countries will open about 2,500 square meters in tweaks in assortment...... 1 while diversifying its store formats and April. Gresvig files for bankruptcy...... 2 upgrading its offering. Decathlon continued to diversify its private XXL clearing inventory after rough The French-based retailer said its sales labels as well, ending up with no fewer than moved up by 9.1% in constant currencies. It year...... 3 added 136 stores to end up with 1647 in 57 for handball and Kuikma for , and just Stadium Group bucks the trend...... 5 countries. Online sales accounted for about added83 brands. Fencit It created for fencing. Offload for rugby, Atorka JD slams competition office’s 8% of the turnover. Its strongest performers in 2019 were preliminary decision against After a dip of 5% in Decathlon’s French Quechua, Domyos and B’Twin, its own brands Footasylum buy...... 5 sales to €3.14 billion in 2018, the group’s Signa expands with Internetstores and turnover in its largest market moved up as Nabaiji for . SportScheck...... 7 again by 3% in 2019. It added ten stores and for outdoor sports, fitness and cycling, as well Signa and Central Group team up for boasted a comparable store sales rise of 2.3%. Globus offer...... 8 While comparable store sales weren’t avail- Nike farming out Latin American able for the entire group in 2019, Decathlon distribution...... 9 - considers more ber of receipts issued increased by 8% to 428 restructuring amid North American million,confirmed implying that they that were the positive. average Theshopping num weakness...... 10 basket slightly increased. Buoyant quarter for ...... 10 Arnaud Gauquelin, who leads Decathlon working on and in , suggested in a statement that the $3 billion target ...... 11 retailer has backtracked on radical changes Columbia surpasses $3 billion sales.12 in its offering two years ago, by buying more Fenix ready to benefit from such as . infrastructure investments...... 14 from“These the leading efforts tobrands improve that our support commercial traffic, Among the countries where Decathlon Coronavirus hits Chinese sales and offering will continue in 2020 through part- achieved the strongest comparable store sales production...... 15 nerships with other international brands, to are and . complement our exclusive products,” said Decathlon ended the year with 309 stores Gauquelin. in , up 15 compared with the end of Decathlon declined to provide an update 2018. The group said earlier today that 130 OTHER NEWS stores had been closed, along with Chinese Alpargatas (p6), Bergans (p14), Brooks 14.6% to €828 million in 2018. production sites, due to the health situation. on its operating profit, which contracted by Running (p6), Callaway (p6), , Japan, Vietnam, , and A delay of 15 days has built up for production Goose (p13), CCM Hockey are the six countries where Decathlon and deliveries in these sites, but Decathlon (p7), Descente (p6), started operating in 2019. Adding production pointed out that the area affected by the shut- sites and franchised retailing in four markets, downs accounts for just 3% of the group’s (p6), Hydro Flask (p14), Implus (p8), the group said it operated in 69 countries last global production. Sverige (p4), Johnson year. The European standout was , Outdoors (p13), Kathmandu (p13), Decathlon said it was projecting a similar where Decathlon opened 16 stores last year. Mizuno (p6), Moncler (p13), Nautilus number of openings in 2020. It’s adding at As previously reported, Decathlon’s sales in (p16), OIA (p14), O. Mustad & Son (p8), least two blue pins to its global map, with store Germany already reached €528 million in Outnorth (p4), Patagonia (p14), Peloton openings in Kazakhstan and . 2018. The company is building a distribu- (p16), Sports Direct (p4), Sport-Tiedje Tokyo is another destination for Decathlon (p16), Technogym (p16), The North this year, when the Olympics will be taking meters near Berlin, to support its rapid expan- Face (p8), Topper (p7), Under Armour place in the Japanese capital. Decathlon has sion.tion center and offices of about 45,000 square (p8), Vaporfly (p9), Vista Outdoor (p13) been sourcing bicycles and other products The group invested in “proximity” stores in Japan for many years, it started trading that are often convenient for urban customers online in 2016 and opened its initial store and for omni-channel purposes. Among the

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latest formats is Mon P’tit Decat’, a small and Decathlon United mobile store with the appearance of a con- platform with many other stakeholders. Store numbers 31/12/19 tainer, that was placed in Paris, Bordeaux and intend to turn Decathlon.ski into a full-fledged- France 324 Marseille, in mountain and sea resorts. Other mented between Van Rysel, Decathlon’s small stores in Reims and Nice were opened brandA more of road specific bikes, partnership and Campagnolo. was imple This China (1) 309 with an offering focusing on just a few sports. led to the launch of the Rosso limited edition, 171 Decathlon boasted that it invested €555 which generated 1.25 million views on social million in 2019. It was the year with the sec- media. It consisted of 30 bikes with frames 124 ond-largest annual investment, after €620 weighing just 850 grams. Germany 80 million in 2018. The annual average stands Some of the investments are going to sus- at €490 million for the last ten years. tainability. In France, Decathlon has a target to India 76 In October, Decathlon purchased a major- have installed solar panels at 80 of its stores, 59 ity stake in Alltricks, a French online retailer to cover about half of its electricity consump- specialised in cycling and running products. tion. It’s aiming to use more trucks using fuel 58 Two months later it bought trademark rights made with renewable resources, among many U.K. 45 other efforts. 37 equipment. Decathlon has a rental program for back- to AnotherDita, a leading interest supplier of 15% wasof field acquired hockey in packs under the Forclaz brand and even wants 36 October in e-Liberty, a leading French ski pass to take part in the circular economy. Under 34 aggregator. The deal led to the formal launch its second-hand project, products returned of Decathlon.ski in November, in partnership by customers are reconditioned and sold in Brazil 31 between e-Liberty and Decathlon as well as stores with discounts of 10% to 30%, partic- 27 Genairgy, a company specialised in sports ularly for skis and bikes. 24 travels and sports tech. It enables Decathlon’s Most encouragingly for Decathlon, it French and international customers to sim- regained its status as the most popular retailer 23 plify their ski pass and equipment reser- in France, in an annual survey conducted by 23 vations at French resorts, but the partners OC&C. n 20 Morocco 15 Mexico 12 Gresvig files for bankruptcy Thailand 10 n a major upheaval for the Norwegian sports exacerbated discounting in the Norwegian 9 I market in the last months, as G-Sport stores 9 insolvency early last week, reporting debt of struggled to get rid of inventories. 7 aboutindustry, 1.1 billion the Gresvig Norwegian kroner group ($119m). filed for The insolvency proceedings involve the Gresvig is the company behind the G-Sport 95 stores owned by Gresvig. The company 6 and G-Max stores in , and the partner said that the stores remain open and the 100 Intersport franchises are not affected. Colombia 6 amid rough competition in the Norwegian 5 market,for Intersport due to in over-capacitythe country. The as filing well comes as an District Court apparently came out of the blue alarmingly warm start to the winter. forThe most bankruptcy employees. filing at Heggen and Frøland Canada 5 Statistics Norway (SCB) estimates that The largest shareholder in Gresvig, Sunde 5 the entire market was down by 3.5% for is reportedly owed NOK 600 million ($65m). the year, and by 4.3% in the fourth quarter. Sunde has accumulated one of the largest for- 4 This compares with an estimate from Norsk tunes in Norway, on the back of the family’s 4 Sportsbransjeforening, the Norwegian indus- shipping business. Israel 4 try association, that sales of the larger chains Olav Nils Sunde, chairman of Gresvig’s increased by 3.4% in 2018. board, said in a statement that the group has 4 In an indication of the shift in the Norwegian supported Gresvig “through ups and downs” , Tunisia, , Indo- 3 market, the organisation estimates that the since 2006 and it strongly backs the decision nesia, Senegal, USA seven largest players reaped sales of NOK 14.2 to work more closely with Intersport. , , Congo, 2 billion ($1.5bn) in 2018, equivalent to 71% But he adds that Sunde invested more than , Ukraine, Vietnam of the entire market. That joint turnover is NOK 1 billion in the last three years, and the Ghana, Ivory Coast, , estimated to have declined by nearly 8.6% in cost structure is not sustainable. “We cannot Cambodia, Lithuania, Sri justify providing the company with additional 1 Lanka, Kenya, Japan, Algeria, and 3.7% in the third. resources without a fundamental change in Malta, Serbia theThe first performance quarter of 2019, may have1.45% been in the temporar second- the Group’s total costs,” he says. “Today’s cost ily worsened by Gresvig’s decision last year to level is simply not adapted to market condi- TOTAL 1647 ditch the G-Sport brand and switch entirely to tions.” Source: Decathlon, excluding franchises (1) includes Intersport instead. As others observed, this Lars Kristian Lindberg, Gresvig’s managing and

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director, said that it has reached an agreement as online retailers. with bankers to make sure the stores remain As estimated by Norsk Sportsbransjeforening, every single quarter since 2003, save for the XXL commanded a share of 33% in the sales Hansen says the market has been growing chance to implement a new business model generated by the seven largest Norwegian then, it was more stable than declining. This andopen. hopefully He said this identify should another give the grouppotential the players in 2018. It was ahead of Gresvig, which bullishfirst quarters perspective of 2014 probably and 2017 led retailers– and even to owner. had a share of 29% for all of its sports retail over-purchase, aggravating the inventory sit- Lindberg said the group has taken a raft formats, amounting to about NOK 4.1 billion uation. of measures to tackle the cost structure, ($443m). Next were Sport 1 with 19%, Stadion which was burdened by onerous leases, but with 8% and Coop with 6%. Gresvig and XXL have suffered from a shift in Hansen added that leading retailers such as Even after the changes, the retailer suffered easily ahead with a share of 32.2%, against online retailers as well as the proliferation of anit didn’t EBITDA manage loss ofto finaliseNOK 250 the million restructuring. ($27m) 23.0%Just five for yearsits largest earlier, rival. in 2013, XXL Gresvig surpassed was outletsales channels. stores and He brandsmentions selling the rise directly of pure to last year. “It’s like scooping up a boat with Gresvig in 2017. consumers. Another unfavourable factor was an oversized hole in the hull,” he said in a the exchange rate of the Norwegian krone, statement. Norsk Sportsbransjeforening, said Gresvig’s which has swung by about 20% in the last For many years Gresvig was the leading announcementTrond Evald comesHansen, after managing a period ofdirector unbri- years. n player in the Norwegian sports retail business, dled expansion for the Norwegian market, but it has come under attack from XXL as well which boasts outstanding sales per capita.

XXL XXL clearing inventory after rough year FY 2019 (NOK m, %) XL is launching a “massive” clearance 115 million for the same quarter last year. FY 2019 Change X sale, after a warm start to the winter that But after the write-down, XXL ended up with sharply reduced its comparable sales in the negative EBITDA of NOK 246 million ($26.6m) SALES 8,992 - 5.1% fourth quarter and led to an inventory write- and a net loss of NOK 358 million ($38.7m). Norway 4,148 - 10.6% down of no less than 385 million Norwegian XXL said in a conference last Friday that the Sweden 2,558 - 4.5% kroner ($41.6m). inventory write-down was partly motivated The Nordic retailer said last week that its by its strategic move to reduce the number of 1,766 + 3.0% sales contracted by another 22% to about products on offer, and to work with fewer sup- 49 - 36.7% NOK 600 million ($64.8m) in January. The pliers. The lower purchasing volumes reduced Austria 470 + 29.6% inventory glut was compounded by continued bonuses from suppliers by NOK 72 million. XXL’s unchanged target is to work with ADJ. EBITDA 875 +61.7% conditions in any of the largest Nordic cities inventories of NOK 25 million ($2.7m) per ADJ. EBITDA warm weather – there were hardly any winter 9.7% + 4.0 pp where the group operates. store. Other measures to improve the perfor- MARGIN The clearance comes after a sales decline of 9.8% to NOK 2,319 million ($250.5m) in the marketing. EBITDA 490 - 9.4% last quarter, amounting to a comparable sales manceAmong are the cost speakers reductions at the and conference more efficient was Norway 676 - 11.6% decline of 12.2%, with downturns in all of its markets. They were somewhat mitigated by Altor, who became the retailer’s largest share- Sweden 99 - 41.1% store openings, since XXL ended the year with holderHugo Maurstad, last year. XXL chairman and partner at Finland 139 +40.4% 86 stores around Norway, Sweden, Finland XXL should continue to invest under and Austria, up from 82 at the end of 2018. the leadership of Pål Wibe, who has been Denmark - 11 2018: - 10 As it previously warned, XXL was hurt by appointed as chief executive (read Sporting Austria - 55 2018: - 70 the weather as well as hefty price competi- Goods Report #25) and will start at the begin- EBITDA tion, some of it caused by Gresvig’s decision 5.4% - 0.3 pp to switch G-Sport stores to Intersport. Europris for the last six years. MARGIN Black Friday sales delivered stronger mar- ningAnother of April. arrival He has is Andrébeen chief Sjåsæt, executive who will at NET INCOME - 297 2018: 237 gins but on lower volumes. This particularly become strategy and business development applies for online sales, which were down by director and a member of the executive man- STORES 86 + 4 21.3% to NOK 408 million ($44.1m) for the Norway 36 - quarter. Nordic markets The upside in XXL’s performance is that 2019 Sporting Goods Sales (%) Sweden 27 + 1 measures implemented last year led to an - Norway Sweden Finland Finland 15 +2 gin, up by 1.5 percentage points to 6.0% for Q4 - 4.3% - 4.2% - 5.2% Denmark - - theincrease quarter. in the adjusted operating profit mar Without the inventory write-down, FY19 - 3.5% - 0.7% - 0.3% Austria 4 +1 adjusted EBITDA slightly increased to NOK Source: XXL ASA, referring to SSB (Norway), SCB Source: XXL ASA 139 million ($15.0m), compared with NOK (Sweden) and TMA (Finland)

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