The Swedish sports apparel company is deploying its brand in several markets in the Asia-Pacific region. This comes as the company continues to enjoy buoyant growth, with a sales increase of 18 percent to about 980 million Swedish kronor (€111.7m-$150.7m) last year.
So far Japan is the only Asian market where Craft is sold, but it will be introduced in several others in the next months. In China, the company has teamed up with Trek, the famous bicycle brand. The Swedish brand will be sold in China through the distribution network established by Trek for its bicycles, including several single-brand stores. Furthermore, the two companies are jointly sponsoring the Leopard cycling team, which features an impressive array of high-profile cyclists.
In South Korea, the brand will be handled by Seven Summit, a distributor specializing in bicycles and outdoor gear. In Taiwan, Craft's partner is Antarctica, a specialist in outdoor products. Australia and New Zealand will be covered by Urdi, the Australian distributor of Didriksons and X Socks. Another new market for Craft is South Africa, where it has partnered with The Bicycle Company. All these distributors will start delivering Craft products in the second half of the year. Separately, Craft is preparing to set up a 50-50 joint venture for the Russian market with Sultrade, the Finnish company that sells Speedo, Umbro, Craft and other brands in Finland and neighboring countries. The Russian office of this company will employ several staff members from Scandia Trade, Craft's current distributor in Russia, and will start in a few weeks.
These investments fit with a five-year plan developed by Magnus Månsson, former chief executive of Tretorn, who moved to the helm of Craft last September. The plan calls for Craft's sales to be roughly doubled in the next five years.
The growth enjoyed by Craft in 2010 was fueled by a sales jump of 35 percent in the Benelux countries and a rise of about 30 percent in Germany, following more focused market penetration strategies. The Craft unit in the Benelux region has concentrated on cycling and underwear, and it has become more prominent by sponsoring hugely popular speed skating events in the Netherlands.
Craft is owned by the Swedish-based New Wave group, along with Cutter & Buck, Seger and several other operations in sports, fashion, gifts and corporate apparel. After a strong fourth quarter, the Swedish group's sales for the full year increased by 4 percent to SEK 4,243 million (€483.5m-$652.3m), a rise of 9 percent in constant currencies.
The Sport & Leisure unit's sales jumped by 7 percent to SEK 1,702.8 million (€194.0m-$261.8m) for the year, driven by the recovery of Cutter & Buck in the U.S. market and a strong performance in the Nordic countries. Craft and Seger expanded in most of their markets, but other smaller brands in the same unit saw their sales decline.
The group's gross profit margin ended up at about 47.1 percent, roughly in line with the previous year, excluding non-recurring costs. Margins were affected by shortages of promotional apparel during most of the year, after capacity was reduced in 2009. The group therefore had to compensate customers with more expensive alternative products, and to spend more on freight.
The New Wave group nearly doubled its operating profit to SEK 327.6 million (€37.3m-$50.4m) for the full year, which it regarded as just about acceptable. The Ebitda of the Sport & Leisure unit surged to SEK 220.1 million (€25.1m-$33.8m), compared with SEK 124.5 million in 2009.
The company ended the year with net income of SEK 221.5 million (€25.2m-$34.1m), up from SEK 87.8 million in 2009. Its financial position has markedly improved and become solid again, enabling it to target renewed expansion.
