As rumored a few weeks ago, EK/servicegroup, a German buying group based in Bielefeld, is acquiring a 75 percent stake in Euretco, the Dutch buying group to which many stores trading under the Intersport and pther sports banner are affiliated. The stake was previously owned by company managers and Avedon Capital Partners, an investment fund. The remaining 25 percent Euretco remain in the hands of a foundation, the Stichting Administratiekantoor Intres.
The German buying group was already supplying some private label products to Euretco, and it has partnered with other retailers in Austria and Finland.
Euretco is the name of the entity based in Hoevelaken that was formed three years ago through the merger of two buying groups: Intres, which ran Intersport Nederland along with the Coach sports lifestyle banner and operated as a buying group for independent sports retailers; and Euretco, which was the partner for Sport 2000 in the country, the company behind Runnersworld and a buying group for independent stores. The Dutch competition authorities demanded that the merged entity should divest one of the two major sports retailing banners. It currently consists of 75 Intersport stores, 30 Runnersworld stores and 53 former Coach stores that are being rebranded as the Athlete's Foot, as well as independent buying members.
The acquisition by EK is forming a retail service platform for about 4,100 stores in various sectors, with a turnover of €2.2 billion for the buying group and €6.3 billion in retail sales. Both of them have interests in the fashion sector, which could yield some synergies, and EK focuses on complementary sectors from toys to home appliances. Employing about 500 people, the German group services 2,100 members with about 3,000 stores and it reaches annual retail sales in the range of €4 billion. The merger is meant to deal more adequately with intensifying competition and to offer sharper services to retail members. The group will adopt a cooperative structure.
Steve Evers, executive board member at Euretco, told SGI Europe that the acquisition would have little impact on its business in the sports sector. There is a clear understanding with Intersport International Corporation (IIC) that the group will not expand in other countries. Euretco will continue to invest strongly in its sports business and to pursue extra opportunities in other sectors such as fashion and DIY, as well as online retailing, business intelligence, IT and other back office activities.
Evers said the estimated gross turnover for the Euretco members in the sports market reached about €340 million last year, which was an increase of about 2 percent in a much weaker market. Euretco thus estimates its Dutch market share at about 35 percent, with €140 million generated by Intersport stores, compared with €30 million for the former Coach, €20 million for Runnersworld and €150 million for independent buying members. While some independents left last year, about ten stores were added for Coach and Runnersworld.
Eurectco's sports division raised its revenues last year by 5 percent to about €169 million, due to store openings as well as an increase on a comparable store basis. The two other major divisions at Euretco, focusing on fashion and interior decoration, saw their sales decline.
Employing 385 people, the entire Dutch group reported a turnover of €904 million for about 2,000 retailers and their 2,900 stores, down from €922 million in 2013. The whole group's retail sales are estimated in the range of €2.3 billion. On the other hand, the group's operating income before one-off items increased from €5.7 million in 2013 to €8.4 million last year. This was attributed partly to the full takeover of several DYI retailer banners.
For the time being the acquisition should not have any impact on employment. The Dutch arm of the new group will continue to operate as Euretco under the leadership of its chief executive, Harry Bruijniks. Two EK managers are to move into Euretco's supervisory board.