Rallye, the parent company of Groupe Go Sport, reported on July 25 that the French sporting goods retail group entered into exclusive negotiations on July 22 to sell its Polish retail stores to Sportmaster, the leading sporting goods retailer in Russia, following the receipt of a binding takeover offer. It thus confirmed an exclusive report posted two days earlier on the French sport-guide.com website.

The proceeds from the sale will be reinvested in the transformation of the Go Sport chain in France, a process that began at the start of this year under a new president, Philippe Favre, and a new general manager, Brice Garnier. According to Rallye, Go Sport's sales in France went up by 4.9 percent on a same-store basis in the first half of this year, generating a profit, thanks to the repositioning of the banner.

Globally, Groupe Go Sport posted a 0.4 percent sales increase to €305 million in the first six months of this year, with a rise of 2.1 percent at constant currencies and on a same-store basis. Adding the sales of a growing number of franchisees in France and abroad, the total business volume went up by 7 percent to €328 million.

As of June 30, 2019, the retailer operated 349 stores, of which 33 are in Poland and 49 in other countries outside of France. The group, which had retreated many years ago from the Belgian market, has been developing a growing network of franchises in France as well as in emerging markets, including most recently India. In May last year, it acquired Endurance Shop, a chain of 60 specialty running shops in France.

Rallye, which filed for voluntary insolvency a few weeks ago, suffered a reduced net loss of €71 million from continuing operations in the first half of this year on consolidated net sales of €18.1 billion, most of which came from its chain of supermarkets, Casino. Saddled by a net debt that reached €2.92 billion at the end of June, Rallye realized a capital gain of €170 million from the sale on Feb. 28 of Courir, the profitable and growing chain of athletic footwear stores owned by Go Sport, for €283 million to an investment group, Equistone Partners Europe.

The 33 Go Sport stores in Poland, two of which were opened last year, generate an annual turnover of around €60 million. While complaining about intense competition and new regulations on store closings on Sundays, Go Sport also launched a new Polish web store in 2018.

Go Sport's Polish retail network has been built up by the French group since its takeover in about 2005 of ten stores formerly belonging to the bankrupt Italian Giacomelli Sport group. Giacomelli was once the leader in the Polish sporting goods market, which is now dominated by other players like Decathlon, which has 53 stores in the country, and Martes Sport, the leading local retailer with more than 300 stores.

The acquisition of Go Sport Poland, which has yet to be approved by the Polish anti-trust authority, would open a new market for Sportmaster, which has been anxious to become more international, as we have previously reported.

An official of Sportmaster said his company views Poland as an attractive market for further development, with a good consumption culture, growing purchasing power and an active population that is strongly engaged in sports. Once the deal is closed, it will prepare a three-year business plan to improve all the major aspects of the business, aiming to make it more attractive and more efficient.

We estimate that the Polish sporting goods market is worth between €1 billion and €1.5 billion a year at retail.

With annual sales of more than $1.4 billion, Sportmaster runs 520 stores in Russia and other countries that previously belonged to the Soviet bloc, including Ukraine and Belarus. Its recent development in China has been more difficult than expected.