Groupe Go Sport will continue to reduce the number of SKUs and suppliers, currently consisting of 600 different companies. However François Neukirch, a former Décathlon executive who launched its Quechua and Tribord private labels and joined the French retailer as its new chief executive a few days ago, did not want to commit himself to a specific level for the company’s own private label business.

In commenting on its poor financial results, he said he wants to open up the retail space in Go Sport stores for more “theatrical” product displays that will appeal to consumers, and that he wants to continue to work closely with certain brands. Go Sport has already reinforced its collaboration with ASICS, Adidas and Nike around certain products, events and campaigns, but its sales of private label items increased by 17 percent in the first half of this year, representing nearly 30 percent of its total turnover.

After the meeting with the analysts last week, he also indicated that Rallye had no immediate plans to sell its controlling stake to Vivarte, a former employer of Neukirch, or anyone else, or to expand Go Sport into new markets, in spite of very positive results in Poland. The priority, he said, is to improve Go Sport’s operations in France. The implementation of an SAP platform by mid-2008 should help to improve their lagging profitability.

In a market that is estimated to have grown by about 1 percent in the first half of this year, the French chain of full-line sporting goods stores booked sales declines of 0.8 percent in absolute terms and 2.1 percent on a comparable basis, after two years of strong growth. In particular, the unusual weather conditions provoked drops of 5 percent in apparel and 8 percent in the outdoor segment. Team sports sales naturally went down from the levels reached before the World Cup of football last year.

Instead, its sister athletic footwear chain, Courir, continued to expand and enjoyed sales increases of 9.8 and 9.6 percent, respectively, racing past Foot Locker in the country. The growth rates in the re-fitted stores of the chain were 15 percentage points higher than in the others. Courir benefitted in particular from higher inventory turns, higher sales of accessories and higher sales of special make-ups, which have come to represent 60 percent of its turnover.

Outside France, Go Sport grew by 0.8 percent in Belgium, but with a 3.8 percent decline on a same-store basis. The Polish chain of Go Sport stores instead recorded a 29.2 percent sales increase in euros and a 27.7 percent increase in zlotys, with a 20.0 percent jump on a same-store basis in the local currency. The number of SKUs has been cut by 15 percent and private label has risen to 18 percent of the turnover.

The group reported a net profit of €7.2 million for the six months, compared with net loss of €8.5 million in the year ago-period, on 2.3 percent higher total revenues of €357.7 million. The gross margin improved by 30 basis points to 38.2 percent, but while earnings before amortization and depreciation (EBITDA) turned positive at €1.5 million, compared with a breakeven situation a year ago, the operating results after these items (EBIT) showed a loss of €8.1 million, as compared to a loss of €9.8 million in the year-ago period.

The net profit was achieved thanks to the sale of Go Sport’s remaining real asset assets for €45.9 million, which reduced net debt by €40 million and generated a capital gain before tax of €18.3 million in the first half.

The group opened only five new stores and closed eight others in the first half. It ended the period with a total of 371 stores with a sales surface of 279,511 square meters, including 204 Courir shops with 22,588 sqm..

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