Intersport isn't having problems only in Austria, where one of its biggest retail members, Bründl Sports, has decided to stop trading under the Intersport banner as from Sept. 1 (see our previous issue). We have also learnt that Intersport's Russian master franchisee, Johaston, and its franchisees have closed all their former brick-and-mortar stores in Russia and stopped all online sales.
At one point last year, Johaston, a company run by Vladimir Terziev, was reported to be running 18 directly operated Intersport stores in Russia, only one of which was opened by his company in 2018, in St. Petersburg. These had already been closed down by the third quarter of 2018. By that time, there were also 12 franchisees who were running 15 Intersport stores in the country, plus one store of The Athlete's Foot.
Evidently, the strong competition from Sportmaster and other local retailers, combined with a weak market, continued to create problems for the development of the Intersport concept in Russia. According to a Russian consulting agency, Infoline Analytics, eight legal claims have been opened against Johaston, as the company had accumulated debts of 74 million rubles, or about one million euros, with several sporting goods suppliers, including Nike and Puma.
Officials of Intersport International Corporation said they are analyzing the challenging economic and market situation in Russia before evaluating the opportunity to re-start the operation. Intersport's previous master licensee for Russia, the Finnish Kesko group, also had serious problems developing the banner in the country after inheriting the license from Delta Sport in 2011.
After buying the Intersport Russia business, Kesko closed 21 of the existing 36 stores. It subsequently opened six new ones. Kesko, which remains Intersport's licensee for Finland, had been planning to open 51 Intersport stores in Russia by 2019. It only had 21 units in operation by mid-2016, when it transferred the business to Tarziev, after recording impairment charges and restructuring costs of €17.2 million related to the operation in the fourth quarter of 2015.
There were also 11 Intersport franchisees in Russia at the time. A Russian real estate firm, CBRE, said that Intersport had trouble retaining and attracting new franchisees due to the extremely high risks associated with the fluctuations of the Russian currency.
