Sport Zone, the leading sporting goods retail chain in Portugal, has entered the Indian market through a franchising partnership with Trent, a retail company belonging to the big Tata Group. Trent has opened a Sport Zone store in Bangalore and plans to add four more by the end of 2016.
Sonae Group, the publicly quoted company that owns Sport Zone, has been expanding outside the relatively narrow borders of Portugal for quite some time, especially through its shopping centers. Sport Zone already has a strong presence on the Spanish market. The company also has a joint venture in the Canary Islands. It recently opened a franchised store in Ceuta, the autonomous city on the north coast of Spain.
Meanwhile, Sonae has decided to inject new equity of €25 million into its Spanish subsidiary to reinforce its capacity to invest. Noting that its profitability has been improving in Spain over the past two years, an executive of the company denies a report that it has an accumulated loss of about €100 million over the past three years.
At the end of 2014, Sport Zone had a total of 80 stores in Portugal, with an average sales surface of 825 square meters, and 37 in Spain with an average of 1,043 sqm.
Sport Zone is one of several specialty retail chains managed by Sonae Group through a business unit, Sonae SR. With an indicated turnover of €219 million, Sport Zone made up for 17 percent of Sonae SR's revenues, which grew last year by 6.6 percent to €1,290 million, but its sales in Spain rose by only 2.2 percent to €317 million.
Sonae Group's consolidated turnover grew by 3.2 percent to €4.97 billion, generating an underlying operating margin before amortization (Ebitda) of 7.6 percent. Sonae SR broke even in 2013 in terms of Ebitda, and they improved to 1.2 percent of sales in 2014.
Sonae SR raised its total sales in 2014 to €930 million in Portugal, up from €877 million in the previous year, generating higher Ebitda of €48 million. Its turnover in other countries grew to €359 million from €333 million, but Ebitda on these operations was negative. No breakdown was given for Sport Zone.