Gresvig, the former leader in the Norwegian sports retailing sector, announced a new cooperation with Intersport International Corp. (IIC) and its decision to rebrand all its stores as Intersport. Its remaining G-Sport and G-Max stores will be converted to the Intersport banner between now and the middle of 2019. Its 20 Sportshuset stores, which became outlet stores last year, will become Intersport Outlet stores.
The move is actually the second step in a process that began last year, after continued losses, with the conversion of all the group's former franchised G-Sport stores to the Intersport banner. As a result, the number of G-Sport and G-Max stores has been reduced from 145 to just over 110 and the number of Intersport stores was raised from 75 to 104. It will be easier to complete the process now that Gresvig owns the remaining G-Sport and G-Max stores.
Furthermore, an unspecified number of Intersport flagship stores will be established in Norway's major urban areas, but Gresvig's new chief executive, Lars Kristian Lindberg, declined to confirm a report that the total number of stores is planned to grow from around 220 to 270 by the end of next year. Lindberg, who previously occupied a high position within the Rema 1000 supermarket chain in Norway and Denmark, took the place of Pål Heldrup Rasmussen last November.
Gresvig will work with IIC to develop a new store concept, an integrated omni-channel strategy and category management, in line with the new Intersport 2.0 strategy. The collaboration with IIC is expected to boost its offering of private label items and special make-ups by major brands, to improve the supply chain and to develop new loyalty programs.
There is also a plan to build up closer cooperation with Intersport organization in other Nordic countries, establishing synergies through category management. This makes sense in view of the fact that many brands have a single sales and marketing set-up for the whole region.
The new strategy appears to be mainly, though not entirely, a reaction to the growing dominance of the Norwegian sporting goods market by XXL ASA, which overtook Gresvig as the market leader in 2017. According to the latest data from Sportsbransjen, the Norwegian sporting goods industry association, XXL's share grew to 32.5 percent last year, while that of Gresvig declined to 29.3 percent from 29.4 percent in the previous year.
XXL, which has the advantage of operating also in other markets, in contrast with Gresvig, has been gradually expanding with its mega-store format, offering low prices on a vast range of branded products. It has also boosted sharply its online sales, as we have been reporting on a quarterly basis.
For its part, XXL recently complained about strong price competition in Norway. According to Lindberg, the purchasing behavior of customers has changed, and Gresvig, XXL and other sports retailers are also suffering from the competition generated by the growing direct-to-consumer sales of leading sports brands as well as from Amazon and other e-tailers.
In contrast, Gresvig has complained about persistent operating problems with the implementation of its own e-commerce solution, which led to a loss of online and offline sales, combined with bulging inventories, during 2017 and through most of 2018. The company launched a new website last November, and the cooperation with Intersport should help it to develop a better online offer.
The competition with XXL and a new discounter, Sport Outlet, led to the demise last year of MX-Sport, a small Norwegian buying group affiliated with Sport 2000 International (SGI Europe Vol. 29 N° 31+32 of Oct. 5, 2018). Reportedly, a larger Norwegian voluntary group of independent retailers that operated 215 stores at the end of last year, Sport 1, has been more successful in implementing its own click-and-collect system. Its share of the Norwegian sporting goods market has risen from 15.6 percent in 2014 to 19.4 percent in 2018.
Gresvig's total sales, including those of its franchisees, still grew by 3.2 percent last year to 4,169 million Norwegian kroner (€416.6m-$462.0m). Operating revenues rose slightly to NOK 3,505.5 million. However, the group's operating losses before amortization (Ebitda) grew to NOK 232.5 million (€23.2m-$25.8m) from NOK 50.5 million in the previous year due to close-out sales and extraordinary charges of NOK 248 million (€24.8m-$27.5m) related to the start of its reorganization.
Observers wonder whether Gresvig's parent company, ON Sunde Investments, wants to give it one last chance to make a profit and whether it wants to “dress the bride” before its sale to an institutional or strategic investor. Gresvig has contributed total losses of NOK 1.3 billion (€129.9m-$144.1m) in the past ten years, and it represented last year only 16 percent of its gross asset value.
All of ON Sunde's other major subsidiaries made a profit last year, led by the Color Line, which is Norway's leading cruise and ferry operator, with six ships connecting seven ports in Norway, Germany, Denmark and Sweden. Representing 58 percent of ON Sunde's gross asset value, it had Ebitda of NOK 1,217 million (€121.6m-$134.9m) in 2018 on a turnover of NOK 5,141 million (€513.7m-$569.7m).