Le Coq Sportif, the French sports brand that was taken over in 2005 by Airesis, a Swiss holding company, is targeting sales of about €250 million in five years after an extensive relaunch in Europe and the USA. Judging from its current orders, it should already double sales to about €50 million in 2007, excluding sales under license that account for the largest share of the brand’s European and South American turnover, while Asian rights are still in the hands of Descente, the Japanese sports company.
To back up the growth, the company’s staff has increased from 23 employees at the beginning of 2006 to some 140 now, partly in connection with the establishment of fully owned sales operations in several countries.
In France, investments by Airesis and a new concept tagged as “pure spirit of sport” have enabled Le Coq to move beyond fashionable shoe stores and to build up a network of about 450 outlets that carry the brand. Its marketing so far has been leaning on Yannick Noah and Sebastien Loeb, a French tennis star and a French car racing champion, and at the beginning of July the company should sign an endorsement deal with Fred Michalac, a highly attractive French rugby player, in connection with the imminent Rugby World Cup. Le Coq Sportif’s management predicts that France will become its largest market in 2008, a position currently occupied by the UK with licensed sales estimated at €40 million.
Le Coq’s takeover of its former partner in Italy and the launch of a full-fledged subsidiary have apparently led to a 50 percent increase in the number of Italian stores buying the brand’s items. The establishment of an Iberian subsidiary, based in Barcelona, yielded even more convincing results, more than trebling the brand’s orders in Spain this year. Portugal was added to the territory of the Spanish subsidiary after Le Coq decided last year not to renew its distribution agreement with Campeao Calcado de Desporto.
Over the next months Le Coq will be trying out several alternative concepts for mono-brand stores of about 100 square meters. While the brand already has two small outlets in Paris and in Varese, Italy, about eight more will be opened in several South European countries.
The second phase of European expansion should come next year with the opening of a German subsidiary. After a few small-scale trials, Le Coq has not been sold there for a few years but it will be initially relaunched through agents later this year. A former agent of the brand in Germany was Karl Heinz Müller, the well-known founder and manager of the Bread & Butter show.
The UK license held by Focus, formerly Gilbert & Pollard, will expire in 2009. Le Coq has started to work more closely with this licensee, leading to the UK introduction of a higher-end fashion range designed by Le Coq Sportif itself. The Benelux remains the brand’s second largest market, with sales of about €20 million through a license with FL Sport (belonging to the same holding company as Aktiesport and Perry Sport, two leading Dutch sports retailers) that will only expire in 2012.
After setting up an American subsidiary in Portland last April, Le Coq will be relaunched in the USA in 2008 as a luxury sports brand, concentrating on fashion and resort outlets. The company has recruited Proper Fools, an agency with showrooms in New York and Los Angeles, to deal with sales on the fashion side, emphasizing the French origins of the brand. Other agents are meant to target stores in high-end resorts, tennis clubs and private fitness clubs. Le Coq is budgeting sales of just $7 million for the USA in 2007 but is targeting an annual level of about $50 million in five years’ time.
Le Coq Sportif USA will employ just a handful of people. It will be headed by Tim McCool, a former executive of Nike, Reebok and Adidas. Kip Meyer has joined from Adidas as a chief financial officer, and Patrick Ouyi, in charge of Le Coq’s tennis unit, will be moving to Portland in August as a marketing manager.
These and other numerous investments caused losses at Le Coq Sportif last year and that should continue this year, but the management predicts that the company will reach an operating margin before amortization (EBITDA) of about 12 percent in the mid-term.
