The board of Intersport International Corp. (IIC) had already decided one year ago to initiate a search for a new owner of The Athlete’s Foot (TAF), the sports lifestyle footwear banner that it acquired in 2012. The Swiss-based owner of the big Intersport brand has finally picked the Arklyz Group, founded in Switzerland in 2018, to take over 100 percent of the TAF business along with the trademark rights and all the existing franchising agreements.
IIC explains this strategic move with a desire to focus on strengthening Intersport’s core business in sports performance retailing. Steve Evers, CEO of IIC, explained to us that the business had become more complex because of the digitalization of the sector and other factors that have absorbed many of its human and financial resources.
He added that IIC and Arklyz have agreed to work together in the future, sharing back-office facilities and buying. Arklyz will retain all the personnel employed by TAF in Amsterdam and Atlanta, Georgia. The two entities will continue to work together in part because many Intersport franchisees around the world manage TAF stores as a complementary operation, working in many cases with the same brands including major players such as Nike and Adidas.
Nike recently went on record on the CBS TV network as supporting the development of TAF in the U.S., where it currently has about 50 franchised stores, because of its strong appeal to local ethnic minorities.
Founded in 1971 in Pittsburgh, Pennsyvania, TAF has gone through many changes of ownership since then. Its store fleet declined strongly from a peak around the year 2000 of 800 stores – including 300 corporate stores in the U.S. – down to 420 stores when IIC bought it.
Without reaching an originally set target of 1,000 stores in the medium term, TAF has been expanding again since then to a network of 564 stores in 32 countries around the world. Thanks in part to investments by Intersport’s licensees, the number of stores in Europe has grown from 18 to more than 100. Because of Covid, TAF’s retail sales declined by 9 percent to around $400 million last year, in spite of the development of e-commerce.
The business has remained very profitable, said Evers. IIC said that TAF’s retail sales in the first five months of 2021 were 47 percent higher than in the corresponding period of 2020, and up by 14 percent as compared to 2019. IIC and Arklyz have agreed not to disclose the financial details of TAF’s takeover, which is set to be finalized at the end of July.
The two companies know each other well as Arklyz acquired a couple of years ago Intersocks, a major producer of functional sports socks that supplies IIC’s own private labels and has licensing deals with major brands such as Head, Nordica and Salomon. It sells about 25 million pairs a year to around 150 clients, according to Arklyz’ website.
Little else could be learnt by the time of going to press about Arklyz or its owner and CEO, Param Singh. Intersocks appears to be the biggest asset, representing the majority of its annual estimated revenues of more than $600 million. The company also has distribution deals with Crocs, Implus, Spenco and other brands in various European countries. It manages 30 Crocs stores in five countries and Crocs’ web store in Poland.
“With Arklyz, a strong operative investor was chosen among different interested parties to ensure that TAF can continue to grow rapidly and successfully,” said IIC in its press release. We have asked Arklyz to tell us something about its business plan.