One Way Sport, the Finnish supplier of cross-country ski poles that has diversified wildly in recent years, expects to come out of insolvency proceedings in a few days' time. A bankruptcy court in Helsinki and its main creditor, a Finnish bank, approved a reorganization program at the end of November that calls for reimbursement of the bank debt within the next six to nine years.
Andreas Bennert, president and majority owner of the company, told us that all the other creditors, who were owed minimal amounts, were asked to file their claims by the end of the December. He says that the court's final ruling is expected to be favorable and should be issued within the next couple of weeks.
The company went through some very rough times in 2015, forcing it to file for insolvency last May after newly appointed officials at the bank asked for an immediate reimbursement of a long-standing loan of €3 million, which could only be repaid in part. However, cost cuts have enabled One Way Sport to generate positive operating results in the past six months, Bennert said, in spite of relatively stable revenues of €14.8 million for the full financial year.
One Way Sport made a big loss in 2015 because of the bankruptcy of its distributors in Norway and the U.S., which were unable to pay for all the merchandise they had received. On top of that, its sales in Russia, which was the company's biggest market, were cut in half to around €4 million because of the economic problems in that country and the devaluation of the ruble. Besides, the weather in Russia, the Scandinavian countries and the rest of Europe did not help, with some very light snow falls.
As previously reported, the company has been trying to diversify, bringing out cross-country skis, which are made by Salomon, and investing in an apparel collection for winter sports as well as cycling, but it will take more time for the brand to achieve a meaningful presence through the year.
One Way Sport has reacted to its financial problems by reducing the number of SKUs in its apparel collection. It is now looking for a single textile licensee or territorial licensees to help share the burden. Bennert indicated that he may be willing to consider a “perfect match” with a strategical financial partner with expertise in clothing, although the company doesn't need an equity injection at this point.
As part of its cost-cutting program, One Way Sport has reduced its staff and stopped a contract for the supply of garments to the French Nordic Ski Federation. It has also terminated its distribution contract with its French distributor, Galsport. Its Swiss distribution contract with Chris Sport has also been shelved, by mutual agreement. The company is looking for new distributors in both countries.
One Way Sport continues to sell its products in Germany and Austria through agents, and it has a new Swedish distributor, LL Agenturea, that will also service the Norwegian market previously covered by Nordic Trade. The deal doesn't include XXL, a big key account with which it is working closely throughout the Nordic countries.
Meanwhile, One Way Sport's joint venture with 361° for the Chinese market is making huge strides, even though it is not expected to generate profits until just before the 2022 Winter Olympics in Beijing. It booked sales of €12 million in 2016, which were not consolidated in the Finnish company's accounts, on the back of their sponsorship agreement with the Chinese Ski Association, which began with the 2014/15 season. There are already about 130 One Way Sport stores operating in China, and ten more are springing up on average every month.
