Babolat continues to record single-digit sales increases in its initial core business of tennis strings, while its all-out diversification into tennis racquets, balls, shoes and clothing is supporting the brand’s image and sustaining a continuous double-digit improvement in total revenues. Racquets have come to represent 50 percent of the French company’s turnover, compared with 17 percent for strings and about 4 percent for stringing machines.
The consolidated turnover is expected to reach €85 million for the financial year ending next Aug. 30, as compared to €70 million the year before, driven by a higher than anticipated 30 percent increase in sales of tennis racquets and by a growing penetration of its highly technical tennis footwear line, which is co-branded with Michelin. Moreover, the company’s profitability, marked last year by a net margin of 8-9 percent, will remain quite high by industry standards.
With deliveries of 750,000 racquets in the 12-month period ended last Aug. 30, up 10 percent from the previous year, Babolat came out as the third-largest player in the world market after Wilson and Head. The company claims the leadership in Japan, where its products are distributed by Sumitomo Rubber, the strong Japanese licensee for Dunlop balls. With regard to Europe, Sports Marketing Surveys estimates that Babolat is the second-largest supplier of tennis racquets in Italy and Spain in terms of value, #3 in France and Germany, and #4 in the UK.
Babolat is on target with its shoe program, first launched in Europe in 2003, as it is going for deliveries of about 450,000 pairs this year. Co-branded with Michelin, the well-known French tire specialist, its tennis-specific shoes are now offered in more than 500 of the 800-odd doors that carry its other products in France, and similar progress is being recorded in other countries. In the USA, where the footwear line was launched last year, it is sold in one-quarter of the 400 stores that sell its strings.
Somewhat like Prince, which is enjoying a strong comeback, Babolat is generally perceived as a reliable specialist in the tennis sector, unlike the two more universal majors. Thanks in part to its partnership with Michelin, it has a very interesting story to tell. To this end, Babolat recruited one year ago its first dedicated international marketing manager, Marie Bernard, who came from Unilever.
Babolat spends about 10 percent of sales on communication, with some 80 percent of the total going into sponsorships. Its products are endorsed by about 20 percent of the top 100 players in the ATP Tour and the Women’s Tennis Association. Its best-known testimonial is Andy Roddick, whose contract with Babolat runs until 2009, but Lacoste dresses him up.
Babolat sells a few T-shirts and other similar complementary items, but unlike Lacoste or Sergio Tacchini, it has no intention to diversify into clothing in any big way, partly because it doesn’t want to be perceived as a sports lifestyle brand. Its focus is one of technical performance, although the management is aware that it has to have some less technical products to become a meaningful brand in the more mainstream U.S. market. Last year Babolat launched specific lines of clothing through licensees in two important markets – through Descente in Japan and through its distributor in Brazil, called Sporting Goods.
One of the challenges ahead is to expand sales in the USA. The company sold only 100,000 racquets in the USA last year. It also introduced cheaper models of stringing machines specifically for the U.S. market.
Another challenge is to make a strong statement in badminton, where Babolat ranks as a distant #2 after Yonex. Its badminton line is distributed well in China. Later this year it will be distributed also in Japan, after a tough certification process over the past two years.
