Signa Sports United (SSU), while bracing for less-than-stellar FY23 results impacted by macroeconomic headwinds and high industry inventory levels, is taking steps to generate €100 million in Ebitda savings by FY25 and less operational complexity in FY24 that will return it to profitable, long-term growth. Meanwhile, the Germany-based e-commerce company, which believes the worst of market disruptions happened in H1, has secured a €150 million financing commitment from Signa Holding GmbH to fund operations and investments into FY25.
Despite easing supply chain pressures, market oversupply combined with tightening macroeconomic conditions weakened SSU’s consumer demand in H1, particularly in non-core markets. The parent of WiggleCRC and TennisExpress reported an adjusted Ebitda loss of €59 million against a loss of €15 million in Q2 as total revenues slipped by 23.5 percent to €195 million and gross margin slid to 22.5 percent from 36.1 percent in the year-ago period. Additionally, the number of long-term SSU customers for its bike, tennis, outdoor and team sports segments declined by 14.7 percent to 6.1 million as the number of net orders dipped by 27 percent to 1.5 million. But the net average order value (AOV) rose by 2.5 percent to €105.7 for the period ended March 31.
“In response to the demand outlook in the near-term, we have conducted a comprehensive strategic repositioning of the business with the aim of enabling a return to profitable growth and positive cash flow,” said SSU CEO Stephan Zoll in a statement.
Part of SSU’s effort includes trimming its SKU count to reduce operational complexity and renewing its focus on lean operating processes to accelerate cost savings starting in FY24. However, the group is continuing to monitor the mergers & acquisition pipeline with the aim of eventually broadening its reach and enhancing its owned brand portfolio.
The current FY23 financial outlook calls for a 9 to 11 percent year-over-year revenue drop, an adjusted Ebitda margin of -16 to -18 percent and negative free cash flow in the range of €250 to €270 million.
