It was just a brief release sent out through ASA/OTS, the Austrian news agency, but it hit the Austrian sporting goods industry like an earthquake a few days ago. In the release, Sport Eybl & Sports Experts, the country's leading retailer in the sector, announced that it is about to cut 250 jobs, representing 11 percent of the total staff of 2,200 people.
The second message was equally surprising. Ewald Halbedl, the chain's so-called chief restructuring officer, announced that Eybl is looking through the Deloitte consultancy for new partners to raise the group's equity capital, which currently in the hands of the Eybl family. Décathlon declined to comment on speculation in the Austrian press that it may want to take over the chain, but the rumor seems to be far-fetched: Décathlon doesn't seem keen to invest in the Austrian or Swiss markets and is not used to entering new markets through acquisitions. There are doubts whether Intersport Austria would have the financial muscle to lift such a weight, while the denial from Germany's Intersport came right away. Its president, Klaus Jost, told this publication that no one has approached his organization to take action in the Eybl case.
Rolf Frischknecht, the group's director, explained that the chain has to react to changing conditions in the market that have had their impact on Eybl. Frischknecht mentioned the increasing importance of e-retailing and cautious consumers who are spending less on luxury goods or higher-priced consumer goods. Therefore, the management is calling for a team that is smaller and fit to react to the changes in the market.
The market leader apparently needs money because reportedly its equity capital ratio of just about 10 percent is widely considered too small to face uphill fights in the market successfully and to be fit for further investments. In its last financial year ended Aug. 31, Sport Eybl & Sports Experts posted sales of €389.5 million, or 4 percent less than in the previous year. Nevertheless, Eybl continued to spend on four new doors, lifting the total number of stores to 58. This happened at a time when the Austrian sporting goods market was widely believed to be well-filled with potent retail players even though the market as a whole was not growing.