Signa Sports United braces for slow first half

Signa Sports United (SSU) calls the current headwinds it’s facing – with consumer sentiment low in its core German and U.K. markets and inventory levels high in general – transitory and believes they should begin to subside in the second half of FY23.

In Q4, SSU suffered an adjusted EBITDA loss of €29 million against €0 million, as the gross margin slipped to 31.6 percent from 37.5 percent. Revenue increased by 28 percent to €300 million from €234 million for the period ended Sept. 30. While the group generated 39 percent year-over-year growth in active customers to 6.7 million, it was plagued with lingering supply constraints across its businesses, particularly in bikes, and building inventory levels. Net average order value (AOV) rose by 7 percent year-over-year in Q4 to €102.1 and was stable at €101.8 at year-end because of better bike availability and supply chain constraints having eased on lower- and mid-priced assortments. 

CEO Stephan Zoll said SSU’s strategic realignment plan – which includes a sharpened focus on core geographies, adapted commercial and operating models to drive efficiencies, and more transaction synergies – will return the group to run rate profitability in FY24. More strategy details will be released soon. 

For the entire FY22, SSU reported an adjusted EBITDA loss of €66 million against a profit of €30 million, as gross margins contracted to 34.7 percent from 38.5 percent. Full-year revenues rose by nearly 31 percent to €1,063 million from €814 million. An annual net loss of €566 million was elevated by a €244 million goodwill impairment charge related to the WCRC acquisition and €122 million in one-time accounting charges related to the group’s IPO. The net loss from continuing operations was €174 million in FY22.

The company intends to reduce its inventory level by €30 to €40 million. 

“We are experiencing significant gross-margin contraction through Q1, as many market participants struggle for liquidity and the environment is increasingly competitive,” CFO Alex Johnstone told analysts. “We anticipate that this will start to reverse as seasonal demand picks up in the spring, summer, and the stock (inventory) situation sequentially improves.”