In a preliminary statement, Airesis said that the 2019 financial figures of Le Coq Sportif did not meet the Swiss holding company’s expectations, but the management was able to react quickly, putting the necessary adjustments into action.
While Le Coq’s apparel sales grew by 23 percent last year, its footwear sales declined by 10 percent, falling behind the textile turnover. Airesis indicated that it had to take some unpopular models of sneakers in the brand’s spring/summer 2020 collection out of the market, replacing them quickly with new ones. The new styles showed double-digit sales gains, but in the process, the company accepted the reshipment of old products, which were then resold to discounters.
These measures had the effect of lowering sales by between €10 million and €11 million, the gross margin by 4 to 5 percentage points and the Ebitda by between €6 million and €8 million.
In accordance with the company’s “local sourcing” strategy, which has been applied to its French-made apparel, Portugal has become now part of the supply chain, and this should improve flexibility and agility in the production process as well as product quality, said Airesis. We may note that Portugal used to be a major source of footwear for Le Coq Sportif many years ago.
Fortunately for the French sports brand, its sales of clothing jumped by 23 percent last year, with increases in all the markets, and the growth would have been even higher without the “yellow vests” strikes toward the end of 2019.
The apparel collection benefited from the implementation of dedicated Le Coq Sportif corners in many multi-brand sports shops and its showcasing in the brand’s directly owned stores. Sales went up also in the women’s and kids segments, Airesis pointed out.
All in all, Le Coq Sportif posted a 6.9 percent increase in its unaudited turnover to €132 million in the past year, but the gross margin went down by five percentage points to around 45 percent, leading to an Ebitda loss of €1.5 million.
In its press release, dated March 16, the management predicted that the brand will reach an Ebitda margin of at least 4 percent this year on sales of at least €140 million, but this projection probably doesn’t take into account the possible impact of the coronavirus outbreak.