A combination of factors, including an estimated 4 percent drop in the French sporting goods market for the first four months of this year, is cited by management for the 8.2 percent drop in the Go Sport Group’s sales to €310.7 million during the first half of 2010, ended on June 30. Other factors were the recent problems in Poland, the poor performance of the French national team in the Fifa World Cup, the shift of the logistics to a new distribution center between February and May, a later start-up of the summer sales, some store closures, and the temporary shutdown of 29 stores for a major renovation that should be completed next month, in time for the back-to-school season.
On a comparable store basis and in constant currencies, sales declined by 11.1 percent at Go Sport’s French stores, by 5.2 percent at its Polish stores and by 5.8 percent at the stores of Courir, the group’s athletic shoe retail format. Sales in Poland increased during the first quarter, but the presidential airplane crash in April and the floods that subsequently affected the country canceled all the gains. In France, Go Sport’s comparable store sales would have declined by only 7.3 percent and those of Courir would have been stable if the summer sales had started at the same time in both years.
On the other hand, the group was able to improve gross margins thanks to better inventories and a wider range of exclusive brands, special make-ups and private-label items. They grew by 2.1 percentage points to 40.4 percent. Nevertheless, the lower sales turnover led to an operating loss before amortization (Ebitda) of €1.1 million, compared with a profit of €3.8 million in the same period a year ago. Operating losses before interest (Ebit) increased to €12.4 million from €2.2 million. Net debt was reduced, but net losses went up to €15.2 million from €5.0 million because of higher net charges.
Unlike Sports Direct International in the U.K. (see article below) and the French Sport 2000 store network, Go Sport did not suffer too much from the early defeat of the national football team in the World Cup. While it sold fewer French shirts that expected, it managed to cancel orders in time under its supply contract with Adidas. In fact, it sold many Algerian and Portuguese shirts as well.
Company officials are optimistic about the effects of the current renovation program, started last September, as it is based on new concepts that have been successfully tested at two pilot stores, one for the Go Sport chain and another for Courir. In both cases, sales levels have been about 15 percent higher than in the rest of the store network. The Go Sport stores that have been converted to the new format so far represent more than 25 percent of the chain’s total turnover.
For Go Sport, the new concept revolves around five clearly defined areas where the banner has agreed to work closely with specific brands in a number of stores: with Reebok and Nike in the Miss Go (young women) section, which will be available in 38 stores by the end of this year; with Adidas for Go Foot (football – 61 stores); with Arena for Go Swim (71 doors); with Nike for Go Run (63 stores); and with Adidas, Airness and Puma for Go Man (men’s, for a total of 38 stores by year-end). A trial will start soon for a new Go Kid corner.
The new Go Sport format has also been successfully introduced in Poland. Other elements of the new store layout will be rolled out throughout the Go Sport network over the next three years.
More immediately, company officials expect benefits from their cooperation with the brands, positioning the Go Sport group more strongly as a clear alternative to Décathlon. Some new benefits should start to flow in during the coming fall/winter selling season from contracts signed with most of the 57 suppliers approached by ISRD, the new Swiss-based purchasing platform set up last November together with Sport 2000 France. Besides better margins on some products, the contracts are understood to cover cooperation in merchandising, advertising and exchange of sell-out information.
Officials of Go Sport and Courir are also eager to introduce or reintroduce new international brands, as they have recently done with Everlast and Prince at Go Sport and with Bensimon, Kawasaki, Feiye and Nike’s new 6.0 range at Courir. Go Sport wants to conclude exclusive contracts with other brands besides Ellesse and Airwalk, in order to more precisely address specific segments of the market. For example, Go Sport has a national six-month exclusive on Reebok’s new range of EasyTone shoes.
The group did not open any new stores in the first half of this year. Instead it closed 11 corporate stores, including the last Moviesport store, and 10 franchises. The store network at the end of June comprised a total of 371 stores. The corporate stores included 126 Go Sport stores in France and 23 in Poland, with an average selling area of 1,590 m², and 175 Courir stores in France, with an average surface of 118 m².
Go Sport and Courir further developed their franchising activities during the period, notably in Belgium, Dubai, Jordan, Guadeloupe and Martinique, but Go Sport’s master franchisee in Saudi Arabia has closed 10 stores. At the end of June, the group had 45 franchised stores in a dozen countries. The stores in the Middle East are being serviced from a new dedicated logistic platform in Dubai. A franchised operation in Romania should be added soon.
