Lundhags is a rather special family-owned Swedish company that has gone through several stages of development. After establishing a strong reputation for itself as a supplier of sturdy outdoor boots, it began marketing some special long-distance ice skates – a sort of clap-skates that the company calls Nordic skates – and it has diversified most recently into other products including sports apparel, a sector in which its new owners have plenty of expertise.
Lundhags is being taken over by Norwin, a new mini-conglomerate set up by EQT Partners, a high-profile Swedish private equity company, to group with two Swedish clothing suppliers bought at the end of 2006, Melka-Tenson and Five Seasons. Last Spring, it sold the Melka part of the business to a British menswear company, BMB, allowing Norwin to concentrate on sports apparel.
Specializing in winter sports clothing, Five Seasons had annual turnover of around 150 Swedish kronor (€15.9-$23.4) at the time of the acquisition, slightly higher than the Tenson brand, and a higher exposure to the Nordic markets. For this reason, Tenson has decided to trade on the Finnish market through Five Seasons’ own sales organization in that country. Tenson is much more present in the Benelux countries, which recently represented as much as 60 percent of the brand’s sales.
Other synergies are being contemplated in foreign distribution as well as sourcing, but for the moment Tenson and Five Seasons continue to be managed separately, with their own administration and sales force. While looking for other possible acquisitions in the Nordic sporting goods market, Norwin plans to do the same for Lundhags for the foreseeable future, while sharing useful experiences with the two other members of the mini-conglomerate.
Tenson is still in a recovery mode. It became profitable last year after the restructuring measures implemented by a new chief executive, Hans-Olof Ljungqvist. The company moved last month into a new head office in Gothenborg after several changes in management and staff. It recruited a new product manager from the fashion retail business and two new designers, and it changed its sales team.
As for Lunghags, a company stuck in the middle of Sweden, it has come out of two rough years due to the warm weather in Sweden, which drastically reduced sales of its clap-skates. Three years ago the Swedish market for such products had reached 50,000 pairs and Lundhags sold about 15,000 of them, produced on the island of Blidö in Stockholm. During the dramatic Fall/Winter 2006/07 season, however, Lundhags’ skate sales fell to only about 7,000 pairs, although their average prices have increased, with some models costing the equivalent of €430 a pair at retail.
Lundhags has re-invented itself by investing more in its apparel range, which now makes up about 40 percent of its sales, compared with 20 percent for boots and 40 for equipment, from backpacks to skates. This helped the company to reach sales of about 58 million SEK (€6.2m-$9.0m) for the fiscal year ended last August, up from 48 million SEK the year before.
The company has also returned to healthy profits, thanks to the growing sales as well as to cost reductions. Lundhags sharply cut the production of its outdoor boots in Järpen, the small town where the company has its head office and a store. While the plant used to turn out about 9,000 boots per year, production in Järpen has been reduced to 3,000 boots, employing just four people, while the rest of the manufacturing was shifted to Portugal. On the other hand, the production of the skates was moved from Blido to Järpen.
International expansion is part of the company’s new strategy, where its affiliation with Norwin should help to play a positive role. Lundhags has enjoyed robust growth in Norway and Finland for both boots and apparel, and it has now identified some 100 highly specialized stores in the Benelux and Germany where it has drawn interest through these products.
The company's foreign expansion strategy has been backed up by its presence at the OutDoor fair at Friedrichshafen, where its new bamboo shirts attracted a lot of attention, and by its new membership in the Scandinavian Outdoor Group, which organizes joint promotion for Scandinavian brands.
Before Norwin’s investment, the Lundhags family owned 85 percent of the company that carries its name. The balance was in the hands of Bernt Söderman, a former general manager. Jan Lundhags, the brand’s founder, stepped aside shortly after a fire ravaged Lundhags’ plant in Järpen in 1998. One of his sons, Jan Anders, has taken over the management, and another four family members are strongly involved in the business. While Jan’s other son Mats Hakan takes care of footwear development; his brother Pär is in charge of logistics; his wife Ingalill supervises customer service; and his daughter-in-law, Monica, deals with key accounts.
