Zentrasport, the Austrian partner of Sport 2000, has decided to adjust its strategy in Central and Eastern Europe, including halting its regular business in Hungary. Its existing retail partners in the country will continue to receive Sport 2000’s exclusive brands and branded special make-ups, but all other supply activities will now be in the hands of the Hungarian retailers themselves.
According to Florian Schönleitner, the group’s marketing director, the decision does not only reflect the economic crisis, which has apparently hit Hungary more than its neighboring countries. Schönleitner points out that the group’s offer, which is outdoor-oriented in summer and ski-dominated in winter, does not perfectly meet the needs of the fashion-driven Hungarian market.
In contrast, Sport 2000’s offer works very well in the Czech Republic and Slovakia, the other foreign countries that the Austrian Sport 2000 covers, where the consumers’ demands are more similar to those in Austria. Currently, Sport 2000 has 14 partners in Hungary who operate 15 doors. In the Czech Republic the group counts 27 partners with 50 outlets and in Slovakia 12, with 23. Sport 2000 Austria also holds the license for Poland, but currently has no activities there.
Back at home, Zentrasport failed to convince its members to put up fresh money to secure future growth. In late April, Sport 2000 held an extraordinary meeting aiming to change its statutes. The idea was to increase the common capital stock provided by the members. In troubled times, Schönleitner explains, it is necessary to have a substantial share capital in order to improve the group’s standing with the banks.
Even though a majority of the retailers voted in favor of the plan, the assembly failed to reach the required majority of two-thirds. Management thinks there was not enough time to convince the members of that step. According to Schönleitner, the company called the meeting hastily to ensure that it was held before the end of the fiscal year, which was ending on April 30. Zentrasport is owned 100 percent by its 184 affiliated Austrian retailers.
At the meeting it was announced that Gerhard Etz, the chairman of the supervisory board, resigned because of ill health. Etz was replaced by Manfred Zernig, another Austrian retailer, on an interim basis until the next regular assembly in fall. In the meantime, the headquarters re-arranged its internal operations in the sense that the units in charge of advertising and marketing were merged, the same as what was done with the purchasing of hardgoods and apparel. Most recently, Zentrasport laid off eight employees.