The world’s second-largest sporting goods retailer has decided to pull the plug on its long-drawn experiment in the highly competitive U.S. market, due to a series of problems. Back in August, Décathlon was still prepared to make a major investment there by building a 79,000-square-foot superstore in East Woburn, Massachusetts, on the premises of a former W.R. Grace manufacturing plant, but then it was unable to finalize the lease at reasonable conditions, triggering the final decision to get out of the market.
Décathlon started off in the USA in 1999 by acquiring MVP Sports, a regional chain of 20 stores in the Bay State area near Boston, with the plan to expand to 200 doors in the USA by 2009. It was the only case where the French behemoth entered a country by taking over an existing operation, and it didn’t work out from the start, partly because most of the stores were just too small to fit into Décathlon’s big-box multi-sports concept.
The number of stores was reduced to 14 and then three years ago to only four, retaining only the bigger locations. Matthieu Leclercq, son of Décathlon’s founder, quit as president and chief executive of the U.S. operation. Leclercq was replaced then by a company veteran, Philippe Uzan, who was in turn succeeded at the beginning of this year by Juan-Luis Betancourt, a U.S. native in his mid-thirties who worked previously for Reebok and Puma. He was brought into the company nearly two years ago to handle various responsibilities and to become familiar with the group’s methods and processes.
Besides store size and various merchandising issues, all these managers had to deal with other kinds of problems, including steady low margins and increasing competition from some local retailers specializing in hockey or fishing tackle and by large established U.S. chains such as Dick’s Sporting Goods, The Sports Authority and Modell’s.
The biggest problem probably was Décathlon’s inability to implement its special low-cost merchandising concept in the country because U.S. regulatory authorities refused to certify many of its private label products for distribution in the USA, apparently dragging their feet about their technical specifications. Developed in-house with a good price/quality ratio, these private label items are one of Décathlon’s major strengths. The company managed to get a few of them certified, justifying a decision to re-brand the former MVP stores as Décathlon and to launch a small advertising campaign on some Boston TV stations earlier this year. However, while private label represents more than 50 percent of Décathlon’s sales in Europe, it comprised lately only about one-third of the turnover at its four U.S. stores.
Décathlon will try to liquidate all the merchandise at its U.S. stores between October and December. Their shutdown will affect a total of about 240 employees, mostly at the four locations. The stores and the corporate headquarters in Wilmington, Massachusetts will be closed at the end of the year.
Décathlon operates 373 stores worldwide, and it is doing best in three Southern European countries – France, Italy and Spain – where customers appear to be more price-conscious. It has made major forays lately into such countries as China, Hungary, Poland and Russia.
The company’s results for the 1st half of this year could not be obtained, but company officials are predicting sales growth of between 8 and 9 percent for the full year. In 2005 Décathlon’s global revenues increased by 9.4 percent to €3,741 million, with virtually all the growth taking place outside France, whose share of the total turnover declined to 62 percent from 70 percent in 2004. A turnaround has been achieved in Germany and the UK.
