Airesis, the Swiss holding company that controls Le Coq Sportif and Boards & More, plunged into losses last year as a result of abundant investments in marketing and human resources for Le Coq as well as restructuring measures at Boards & More.
Airesis’ total revenues were up by about 43 percent to 108.7 million Swiss francs (€66.4m-$90.3m), but this was due to the fact that, in 2005, Le Coq was only consolidated from October. Excluding this effect, sales for Boards & More remained almost exactly stable at CHF 69.6 million (€42.5m-$57.8m), while sales at Le Coq, excluding licenses, crept up almost imperceptibly to CHF 39.1 million (€23.9m-$32.5m).
The Swiss holding company suffered an operating loss of CHF 26.1 million (€15.9m-$21.7m) for 2006, widening the operating loss of nearly CHF 4.8 million reported for the previous year. It ended the year with net losses of CHF 19.2 million (€11.7m-$15.9m), compared with a profit of CHF 2.5 million in 2005.
Le Coq accounted for an operating loss of about CHF 10 million (€6.1m-$8.3m). Headed by former Adidas executives, it saw its payroll more than double to 119 people and its operating expenses jumped by nearly 70 percent to CHF 26 million (€15.8m-$21.5m). The company expects the investments to fully pay off in the mid-term but indicates that the efforts are already beginning to show in its order book. Le Coq’s sales for 2007 are expected to grow at double-digit rates.
Meanwhile Boards & More, the Austrian-based company that groups ownership and licensing rights for several boardsports brands, reported operating losses of about CHF 13 million (€7.9m-$10.8m). This included heavy restructuring charges as the company dismantled its international management structure and replaced it with management teams for each of the brands. Till Eberle has been heading up Fanatic, Ion and North Kiteboarding since the beginning of this year, while Boris Zwettkoff will take over Mistral’s leadership from June.
The adjustments continued in 2007 as Airesis decided to sell off its F2 surfing brand, to further downsize the Boards & More head office and to close down its sales offices in several European countries. Subsidiaries in Germany, Austria, Switzerland, which sold all the Boards & More brands, are being replaced with agencies that each handle a specific brand. The French subsidiary will remain as a legal entity but will otherwise function as an agency. Still, the restructuring costs for Boards & More should be much lower for 2007 than last year.
The investments in both Le Coq and Boards & More were financed through the sale of other assets, including real estate. Airesis, which is partly owned by Robert Louis-Dreyfus, the wealthy former shareholder and chief executive of Adidas, has now divested nearly all its assets unrelated to sports, from toys to information technology, generating net proceeds of nearly CHF 8.6 million (€5.3m-$7.1m) last year.
On the other hand, the costs incurred for the acquisition of Le Coq were slightly reduced last year, when Airesis activated a guarantee on assets. It had agreed to pay CHF 10.4 million (€6.3m-$8.6m) for 70 percent of Le Coq but this price was reduced by CHF 2.3 million (€1.4m-$1.9m) when Airesis successfully argued that the assets it had acquired did not match the value described by the seller. As part of the company’s new capitalization, Airesis’ share in Le Coq has since risen to 84 percent.
The French brand is now valued in Airesis’ books at CHF 30 million (€18.3m-$24.9m), compared with CHF 11 million (€6.7m-$9.1m) for the Boards & More brands. However, Interbrand evaluates the net worth of Le Coq at €40 million as a going concern, and its market value at €90 million.
