Effective Sept. 1, Intersport Eybl is no longer a member of Intersport Austria, but remains licensee of the red-blue Intersport logo for a period of five years. Eybl was an Intersport member for 42 years, but the structure of the buying group, composed of basically small and medium-sized retailers who had the majority of the votes in the cooperative, has shown that the retailer, by far the largest in the organization, no longer fit into Intersport’s scheme in the Alpine Republic.
The 24,983 Intersport shares that Eybl used to hold and now has returned corresponded to not more than 16 percent of the voting rights at the general assembly of the members. Eybl’s shares have a nominal value of about €1.8 million, basically a pro forma figure that does not reflect the value of the company. Technically, Intersport Austria has repurchased the shares for the same value. The shares will not be sold to other members, but held in treasury.
Eybl’s pull-out from Intersport is not really surprising because it has been coming for a while. It is interesting, though, that Eybl wants to keep the Intersport brand through a licensing deal, whose financial details were not disclosed. In other countries where the group has a strong presence, the major members do not necessarily count on the red-blue logo, including Cisalfa in Italy; SportScheck, Engelhorn Sports and Sport Schuster in Germany; and partially Forzani in Canada. In Austria, things work differently: Peter Wahle, the chief executive of Sport Eybl & Sports Experts AG, also known as EAG, is happy to count on the value of the Intersport brand for years to come.
Intersport International is basically satisfied with the new cooperation and licensing deal: The new cooperation and license agreement between Intersport Eybl and Intersport Austria is considered positive by Franz Julen, who runs Intersport International Corporation and participated in the negotiations between the two sides, as it will put an end to almost eight years of friction between the Austrian cooperative and its largest retailer. The friction was inevitable because Eybl naturally wanted special services and had special needs as the biggest retailer in a cooperative where its voting rights were disproportionately low compared with its size, and compared with Intersport Austria’s other 122 retail members.
Besides, the new contract stipulates minimum buying commitments for Eybl through Intersport Austria, who will continue to handle centralized settlements for Eybl and will get a royalty fee from it for its use of the Intersport banner.
Intersport Austria counts 140 members and buying partners with more than 300 points of sale in Austria, the Czech Republic, Slovakia and Hungary. The group’s entire retail sales were €656.3 million in 2006-07 compared with €643 million the year before. The figures for 2007-08 are coming out soon.
In 2006-07, EAG had sales of €366 million, which came from 22 Eybl stores, 17 Austrian outlets of the rather price-aggressive Sports Experts chain plus one additional outlet in Munich as well as three fashion stores under the Snipes flag. EAG has an estimated market share in Austria of 27 percent. Nine percentage points are represented by Sports Experts, which was not an Intersport member and which will continue without the Intersport banner.
The partial break-up with Intersport Austria is the culmination of a process of clarification and re-positioning that follows a decade during which the Austrian retail landscape has been moved by the ups and downs of the relations within the family that owns EAG, the Eybl-Schwab complex. Eybl was founded in 1931 and a foster-child of the family, Alfred Schwab, eventually founded his own price-aggressive Sports Experts chain. The two companies merged in 1999 and frequently got the attention of the Austrian anti-trust authorities. Schwab was not only the owner of Sports Experts, but also president of Intersport Austria. The system that Schwab established was a complex mix of his own company and the buying-group that was hard even for insiders to understand. Some employees were on the payroll of either Intersport or EAG, but worked for both parties. After Schwab was ousted, it was the clear message of Intersport and its medium-sized members that this system should be discontinued. The breakdown of the system culminated in the latest move: Eybl leaves Intersport.