Following a comprehensive investigation, the German Cartel Office has concluded that the planned acquisition of SportScheck by the Austrian-based Signa Retail Group via its Galeria Karstadt Kaufhof subsidiary can go ahead as the new conglomerate resulting from the transaction will have a market share of less than 15 percent in the German sporting goods market.

The anti-trust authority also concluded that Signa will have a market share in the sector of less than 30 percent in any region of Germany. Even its online retail activities, which contribute a lot to the total turnover, suffer from the competition from Amazon and other pure players.

We estimate that the combination of SportScheck and Signa’s existing sports retail operations will produce a group with sales of just under one billion euros in Germany. Aside from SportScheck’s 19 relatively big brick-and-mortar stores in major cities and its strong online retail operations, which together generated sales of €280 million in the year ended in last February, Signa owns 32 Karstadt Sports stores, whose turnover has not been disclosed, and Signa Sports United, a cluster of 80 web stores specializing in different sports categories whose sales are growing rapidly and reached €420 million in Germany and abroad in 2018. On top of that, Signa has become the sole owner of the Karstadt and Kaufhof department store chains, which sell sporting goods as well.

With the acquisition of SportScheck, Signa will become the largest integrated sporting goods retailer in Germany, followed at a distance by the rapidly expanding Decathlon chain in the country, which reported a turnover of €528 million in 2018. It will still remain smaller than the two leading buying groups, Intersport and Sport 2000 in terms of retail sales. SportScheck is the biggest retail member of Intersport Germany, whose management believes that it will continue to work with it for several reasons.

After considering other options, the big Otto Group has decided to sell SportScheck, which it bought in 1991, because of continued losses in spite of big investments and the launch of smart consumer engagement strategies. The purchase price agreed with Signa has not been disclosed.

 

Topics