Janusz and Krzysztof Piela, the men behind one of the leading sports and outdoor distribution companies in Poland, have reportedly acquired a stake of 13.8 percent each in Intersport Polska, after the Polish retail group became independent from Intersport Germany.
As reported by Reuters, these investments were paired with a reduction of the stake indirectly held by Intersport Germany in Intersport Polska, from 25 percent down to 15.22, following a capital increase.
Intersport Polska is a listed company that operates Intersport stores in Poland as an integrated chain. It was formed in 2005 and formally became a partner of Intersport as a member of Intersport Germany. The German voluntary group owned 25 percent of the shares and voting rights in Intersport Polska through an entity called Intercontact Beteiligungsgesllschaft (ITC).
It was agreed earlier this year that Intersport Polska would become a direct licensee of Intersport International Corporation (IIC). Under this deal, which became effective on March 24, Intersport Polska was given the right to directly purchase private label products, instead of sourcing them through Intersport Germany. The direct licensing agreement further provides Intersport Polska with direct access to strategic brands and other global services.
The upside of this change is that Intersport Polska can purchase products that are more directly aligned with the demand in Poland instead of customer requirements in Germany. It could be most helpful as the Polish Intersport operation is facing competition from keen rivals such as Decathlon as well as Martes Sport, its leading Polish rival.
While the purchases through Intersport Germany allowed the Polish entity to benefit from volume discounts, the bet is that the reduction of these discounts will be more than compensated by extra sales and improved margins. IIC said that it was jointly working out with Intersport Polska all respective strategies and measures to strengthen the business in Poland.
Intersport Polska reported that its sales fell by 4.2 percent to 205.2 million zlotys (€49.2m-$55.0m) in 2016, which was chiefly caused by a drop of 19.6 percent in sales of private labels. This factor alone accounted for about 70 percent of the sales decline for the year. The group's operating profit excluding one-off items (Ebitda) shrank to PLN 5.1 million (€1.22m-$1.37m), down from PLN 1.4 million in 2015. The one-off items included the closure of three stores, ending the year with 35 outlets, and provisions for more store closures this year. Intersport Polska ended 2016 with a net loss of PLN 8.6 million (€2.06m-$2.30m), after a previous loss of PLN 4.4 million in 2015.
The situation didn't improve much at the start of this year, as sales declined by 12.5 percent to PLN 48.3 million (€11.6m-$12.9m) in the first quarter, including a comparable store sales dip of 7.4 percent. The group's Ebitda for the three months fell to PLN 2.4 million (€0.58m-$0.64m), down from under PLN 3.3 million.
It remains to be seen in what way the partial change of ownership will influence the strategy of Intersport Polska. The Pielas are the owners of Larix Sport, a company that distributes Odlo, Meindl, Reusch, Uvex and Killtec in the Polish market. Larix further owns Viking, a brand of caps, gloves, underwear and light outerwear, which is sold in Poland as well as other markets in Eastern Europe and beyond.
The Pielas and Intersport Germany declined to comment on their intentions with regard to their shareholdings in Intersport Polska.