Intersport clearly outperformed the market in 2008 as its affiliated retailers raised their total sales by 4.2 percent to €8.9 billion. About 3.2 percentage points of the growth could be attributed to the addition of new stores, so the organic growth of the Intersport network came down to about 1 percent. That was still better than the overall European sports retail market, which declined by about 1 percent according to preliminary figures.
Furthermore, central settlements, stock sales and other sales that went through the national Intersport licensees went up by 6.6 percent to €4.35 billion, covering 97 percent of the retailers’ product requirements. On the other hand, sales of private-label items by the affiliated retailers declined by 3.2 percent to about €1.5 billion, accounting for 17 percent of their retail sales. The biggest drops occurred in the leisure segment, which is not a major focus at Intersport. Furthermore, several major brands reduced their own prices to become more competitive.
Assuming that the European market reached a level of €37 billion last year (we think it was higher), Intersport claims that its share of the market rose to 21 percent last year, compared with 19 percent in 2007.
While the growth in the affiliated retailers’ sales slowed down in the fourth quarter of 2008, especially in the winter equipment segment, it picked up again strongly in January, as previously reported, due to the abundant snowfall throughout Europe. April was a good month, too, because of nice and warm spring weather. Overall, Intersport’s retail sales were up by 6.5 percent in the first four months of 2009, but with different patterns in the different countries.
Sales in Turkey doubled last year, but so far this year this emerging market suffered like those of Russia, Hungary and Romania from the devaluation of their national currencies against the euro. The market environment remains challenging also in Italy and Spain. Instead, other emerging markets such as Slovenia, Croatia and Serbia have continued to record strong growth along with Greece and several mature markets such as Germany, France, Austria, Switzerland and the Scandinavian countries.
The outlook for the balance of the year remains uncertain, however. Although retailers have drastically reduced their stocks over the last six months, they are generally placing orders later and they have been very cautious in their orders for fall/winter 2009-10, says Franz Julen, chief executive of Intersport International Corporation. They are concentrating on fewer brands and partners that are willing to take a certain shared stock risk by granting higher re-order possibilities.
Julen continues to feel that in sports retailing the weather is and remains more important than the economic situation, and that consumers continue to spend money on sports in spite of the economic crisis, while disinvesting from the more volatile leisure/lifestyle segment of the market. They are also less willing to buy big-ticket items such as the more expensive bicycles and fitness equipment.
Intersport apparently benefited last year from its concentration on the performance segment of the sports market. The affiliated retailers’ sales increased briskly throughout the first three quarters of last year, particularly in football, running, outdoor and fitness, which are key areas for Intersport, as well as in winter clothing and accessories.
Thanks to the Euro 2008 football championships, total sales of football products reached a new annual record of €810 million, 14 percent higher than the score attained in the World Cup year of 2006.
The total number of stores in the Intersport network grew last year to 5,224 units, following the opening of 175 new stores. As reported a few weeks ago, Intersport is expanding into new markets outside Europe, strengthening its presence in the Middle East and entering Korea and the U.S. Its partner in Dubai, Al Futtaim, has just opened the first Intersport store in Kuwait. Therefore Intersport is currently represented in 37 countries compared with 34 last year.
