Perry Sport, the leading Dutch sports retailer, is to be acquired by Unlimited Sports Group (USG), a company that already owns Aktiesport, a much more aggressive Dutch banner, and several licenses. The new owners have ambitious expansion goals although the two retailers jointly cover a large swathe of the Dutch sporting goods business, with an estimated national market share of up to 18 percent. They also have some activity in Belgium and Germany.
At the higher end of the market, Perry Sport consists of 42 stores with an average size of 1,000 square meters including six mega-stores in the Netherlands and one outlet opened in Belgium last year. Aktiesport is spread around the Netherlands with 110 smaller stores that have an average size of about 150 square meters. It owns another three outlets in Belgium and is expanding fast in Germany, where it opened 17 stores over the last two years. Figures provided by the two companies separately place their combined sales at €159 million, consisting of €89 million for Perry and €70 million for Aktiesport.
USG is a joint venture between the two Dutch investors who formerly owned Aktiesport, and Bencis Capital Partners, a Dutch private equity firm. The coimpany has obtained a majority of the voting rights in the new business. Along with Aktiesport and Perry, USG includes a wholesale division consisting of the Benelux license for Le Coq Sportif and Maui & Sons, as well as the Benelux and German licenses for Admiral and Athlete, a small American brand.
The acquisition of Perry Sport was partly explained as a defensive move, since it was known that the leading retailer was for sale, with the risk that it may have landed in the hands of aggressive players. However, there is also a strong upside to the tie-up, which forms a retail group with complementary banners and a wholesale business that should strongly benefit from the integration of Perry Sport.
To begin with, generous funds committed by Bencis Capital Partners should enable Aktiesport to speed up its stores openings. The chain aims to open up to 40 new doors to reach 170 outlets in the Netherlands as quickly as possible, and it has set itself a target of 80 stores in Germany over the next 5 years. The results of the Belgian outlets apparently aren’t encouraging management to step deeper into that market.
At the same time, USG’s management will be looking at further acquisitions to complete its portfolio of retail banners. While Perry and Aktiesport cover opposite ends of the sports performance market, the joint company is keen to add a retailer specializing in sports lifestyle. It would be a neat sales outlet for Le Coq Sportif, among others.
Perry is being sold off by Retail Network, a vehicle set up by CVC Capital Investments in 2002 to acquire a flurry of non-food retailers spun off by Vendex KBB, a Dutch retail conglomerate. Retail Network has since cashed out of most of these retailers, including Hans Anders, an optical retail chain, and Scapino, a footwear chain.
Retail Network has been investing heavily in Perry, through extensive store relocations and refurbishing. The retailer has several successful private labels - INQ, Wildebeast and Spex - which account for about 35 percent of its sales. Thanks to sharp marketing investments Perry has also sealed collaboration agreements with the Dutch Olympic Committee and the Dutch football association (KNVB). The strength of the banner enabled Perry to lift its comparable sales by 2.2 percent in a sharply declining market in 2005. As the market is apparently picking up again this year, Perry’s sales are expected to rise by 15 percent on a comparable basis.
For the time being USG has pledged to retain the management, the distinct identities and the infrastructure of the two retail networks. Aktiesport has been run and turned around over the last three years by Steve Preston, former international chief at Umbro and buying director at JJB Sports. The company operates from Reeuwijk, close to Utrecht, while Perry Sports is based in Aalsmeer, south of Amsterdam, under the leadership of Jan Willem ten Brink.
Sealed at an undisclosed price at the beginning of August, the proposed deal yet has to be approved by the Dutch competition authorities.