The board of directors of the Swiss Conzzeta group has decided to evaluate proposals for the takeover of its Mammut business unit and some other non-core operations, and to focus on its bigger Bystronic business unit, which deals with the automation and integration of the material and data flow in the cutting and bending of sheet metal.
In justifying the disposal of its outdoor sports operations, Conzzeta said that Mammut “does not have the necessary market access outside Europe to realize its potential in the foreseeable future.” According to a spokesman for the group, 67 percent of Mammut's revenues still come from Europe.
We have already reported on the recent management changes at Mammut's U.S. subsidiary, which may be indicative of difficulties that the company has been facing in this highly competitive market. Similarly, Jack Wolfskin has not been able to break into the U.S. market, and was recently sold to the U.S.-based Callaway Golf group.
Founded in 1862, Mammut has been part of the Conzzeta group since 1982. Under its ownership, it has diversified from climbing ropes into clothing and other products. It has also acquired other outdoor operations, such as the former Ajunjilak (sleeping bags), Toko (ski wax) and the former Raichle (boots), which were then renamed Mammut, to gain scale and form a bigger Mammut Sports Group. The group currently employs almost 900 people.
Conzzeta recalls that it initiated a five-year strategic program in 2016, which has been rather successfully steered by a new chief executive, Oliver Pabst. This program included sharpening the brand, upgrading the collection, and building digital distribution channels to lay the foundations for profitable growth.
In fact, Mammut's recent financial results have indicated good progress in sales and profits, which continued this year. In 2018, Mammut generated sales of 253 million Swiss francs (€230m-$256m), generating an operating profit of CHF 5.2 million (€4.8m-$5.3m). In the first nine months of this year, the division's sales went up by 1.9 percent in reported Swiss francs, while all of Conzzeta's other divisions recorded sales declines. In the first half of the year, the division was the only one that reported an operating loss as well as a sales increase.
Pabst has apparently done a good job at upgrading the Mammut brand and developing its digital capabilities with its Mammut Connect program. It recently became the first outdoor brand using near-field-communication (NFC) technology in its products to interact with retailers and end users through a dedicated app, launched last January.
Depending on the market situation, Mammut's sale should be completed by the end of 2020, says Conzzeta. In addition to Mammut, the group's print finishing (Schmid Rhyner) and foam production (FoamPartner) divisions are also to be sold within a year.
In 2018, Bystronic achieved sales of more than CHF 1 billion (€912m-$1.01bn) and an operating result of CHF 132 million (€120-$133m). It represented 57 percent of the group's revenues and 90 percent of its operating results. With this new focus, Conzzeta says it is taking the next logical step toward becoming a technology-oriented industrial company. It previously divested an automation business in 2014. It then spun off its real estate portfolio into a separate company in 2015 and sold its glass-processing-machinery segment in 2019.
The sale of Mammut would come after the acquisition of Eider by the Korean K2 and amid interesting rumors on the mergers & acquisitions front. Kering, the former owner of Puma, is said to be interested in a possible acquisition of Moncler, for example.
The question now is who will want to take over Mammut. Conzzeta's statement would seem to indicate that it might prefer it to be a strategic investor with a strong position outside Europe, particularly in big markets such as the U.S., China and South Korea.
VF Corp. has indicated that it might be interested in new acquisitions after the recent spin-off of its jeans business, but we wonder whether the parent company of The North Face, Napapijri and other outdoor brands would really be interested in Mammut or Moncler, as either might cannibalize some of the brands in its own portfolio. On the other hand, VF is said to be one of the potential candidates for the acquisition of Golden Goose, a fast-growing Italian brand of distressed sneakers that could be a good match for Vans. More on this in Shoe Intelligence.