OBI Sport, the largest shareholder of Intersport Danmark (IDK) and its largest retail member, is taking over the main central service functions of the Danish buying and franchising cooperative through an outsourcing agreement. It is combining its own operations with those of the group, with effect from May 1. The affiliated retailers, which operate a total of about 170 sporting goods stores, including 86 trading under the Intersport banner, will continue to own them and to manage them.
The new structure, which has been established with the participation of Intersport International Corporation, resembles in some ways that of Intersport Italia, which is owned by its biggest retail member, Cisalfa Sport. The purpose of the new structure is to obtain further operational efficiencies and synergies, and be closer to the market.
Peter Lau Larsen, the 43 year-old general manager of OBI Sport, will run the combined operation. Peter Bedsted, who left as chief executive of Puma Nordic at the end of last year, will act as chairman of OBI Sport. Bedsted also acted for a while as chairman of the Danish sporting goods industry association.
Mikael Kold will continue as chief executive of IDK, managing centralized settlements, the operation of the central warehouse and the seven Intersport and Sport Direct stores owned by IDK. Kold will also work on pursuing the group's expansion in the Danish market, which seems to be ready for further consolidation. Working with a new marketing manager hired last October, Line Lip, the group will invest more in communication. It also plans to develop new omni-channel capabilities.
Among other tasks, OBI Sport will take care of range building, negotiating agreements with the various suppliers. It will handle the logistics, placing its own warehouse at the disposal of all the retail members at a future stage. IDK, which is located elsewhere, will eventually close down its own warehouse. OBI Sport plans to strengthen IT operations as part of a program to make the organization more efficient.
The combination of OBI Sport's personnel with those of IDK will lead to the elimination of ten jobs at IDK and hopefully restore its profitability. Like the two other major Danish groups, Sportmaster and Sportigan, IDK has been losing money in recent years, but it has been generating operating profits and its retail members are generally profitable.
IDK's losses were partly due to big investments in IT and debts stemming from its acquisition two years ago of a bankrupt Danish sports retailer, Sports on Top, which has become more profitable under the ownership of IDK and the management of OBI Sport. The cooperative was weakened by the pullout in 2012 of three retail members with 25 stores who set up their own chain, Sport 24.
The decision to merge operations was taken by all of IDK's shareholders except for two small ones, which are leaving the group. All partners have agreed to share sales data with OBI Sport and to pay the same service fees that they were paying to IDK. OBI Sport will pay the same fees, too.
Indicating that he plans to give the organization a more “retail-driven” approach, Larsen told us that he expects to attract more retail members and partners to the cooperative. Meanwhile, OBI and other current members are planning to open a dozen more stores this year including five franchises under the banner of The Athlete's Foot. Deres Sport, which operates two of them already, remains TAF's franchisee in Denmark.
Two of the new TAF stores were opened by OBI Sport at the end of March and a third one is coming on May 7. OBI has also successfully opened a big new Intersport store in Copenhagen. OBI Sport has demonstrated its dynamism by raising the number of its stores from six to 40 in the last 12 years. Of those, 24 are Intersport stores.
OBI Sport represents more than 25 percent of the retail turnover of the group that it is servicing, whose affiliated retailers had sales after VAT of around 1.3 billion Danish kroner (€174.2m-$196.1m) last year, giving the group an estimated market share of about 15 percent in Denmark.
OBI Sport is the successor company of the previous Intersport Odense, which was a founder and the biggest retail member of Intersport Danmark from the start. It is owned by Peter Lau Larsen and his brother Jacop. They inherited the business from their father, Kurt Larsen, who sold it in 1998 to the former parent company of Gresvig, the Norwegian licensee of Intersport. He then bought it back at a good price in 2003.
The reorganization of Intersport Danmark comes after the acquisition three years ago of its main competitor, Sportmaster, and its affiliated retailers by Nordic Capital. An Icelandic investment consortium led by Arev and Straumur had previously considered the takeover of both Sportmaster and IDK, along with their affiliated retailers, but the investors pulled out of the deal in 2008.