A new, unnamed strategic investor is in line to take over majority control over the Gresvig Retail Group, according to our sources. The second-largest Norwegian sporting goods retailer, which recently decided to rebrand all its stores to the Intersport banner (SGI Europe Vol. 30 N° 29+30 of Aug. 29, 2019), filed for bankruptcy proceedings a few days ago, for an apparent multitude of reasons in a market where per capita consumption of sporting goods is the highest in Europe.
Besides other factors (see our analysis of the Norwegian sports market), an unseasonably mild autumn/winter season, where Oslo was covered by snow for only a few weeks through Christmas, has reduced consumer demand and bloated the already high inventories across the whole Norwegian sports retail market. This has caused a liquidity problem that would have required extra financing from Gresvig’s controlling shareholder, ON Sunde Investments, which didn’t want to inject more money into the company after it contributed losses of 1.3 billion Norwegian kroner (€128m-$140m) over the past 10 years.
According to preliminary, unaudited figures, Gresvig posted negative Ebitda of NOK 250 million (€24.6m-$26.9m) in the past year, up from a negative level of NOK 232 million in the prior year, while its revenues declined to NOK 3.2 billion (€314m-$344m) from NOK 3.5 billion. That doesn’t include the revenues of the company’s franchisees, who manage about 100 stores. Gresvig directly owns 95 stores.
The current bankruptcy proceedings are intended to reduce Gresvig’s debt prior to the change of ownership. The law office of Ro Soillersnes, the trustee in the case, didn’t want to say anything at this stage about its discussions with the creditors, but it seems that suppliers will not have to suffer too much in a settlement of their dues. The two biggest creditors are ON Sunde itself, which is owed around NOK 600 billion (€58.9m-$64.5m) and a Norwegian bank, DNB, with NOK 500 billion (€49.1m-$53.8m).
Anyhow, there have reportedly been no order cancellations since Jan. 15 as Gresvig’s warehouses are full of products through the end of the current season, and many suppliers have been taking credit insurance to deal with the difficult market.
The reduction of the debt, currently at NOK 1.1 billion (€108m-$118m), will be accompanied by a major reorganization plan, which is likely to continue the work already undertaken under Gresvig’s new chief executive, Lars Lindeberg, who came on board in November 2018. Besides the recent decision to drop the G-Sport banner and to concentrate on the Intersport banner, Gresvig has been developing a new omni-channel strategy and started renegotiating leases for some of its directly owned stores.
