Signa Sports United (SSU) aims to strengthen its position in e-bikes and tennis in its core European market while implementing a similar approach in the U.S. through a combination of organic growth, mergers and acquisitions and third-party services, according to a presentation (direct PDF download) at the Jefferies Investor Conference on June 20, where SSU was represented by Stephan Zoll, chief executive officer, and Alexander Johnstone, chief financial officer. In 2021, the German company acquired Tennis Express and Midwest Sports to enter the U.S. tennis market and is now near the top of the country’s e-com tennis sales. The two companies are expected to be merged within the next 12 months, after which a “relationship ecosystem” will be introduced, similar to SSU’s European model of contracting with coaches and federations as equipment distributors. Regarding the bicycle market, specifically hired experts are already starting to build a localized business in the U.S.
Globally, SSU is currently almost four times above the size of the next leading e-tailer for bicycles and twice the size of the next biggest tennis supplier in terms of sales. Europe accounted for 64 percent of total sales, followed by the U.K. at 20 percent and the U.S. at 8 percent. Bicycles accounted for 61 percent of sales, followed by tennis at 19 percent, outdoor at 13 percent and team sports at 8 percent. E-bikes will continue to be a significant growth driver for the group, which is already the largest full bike e-tailer globally with ~300,000 units in fiscal 2021. The average order value of e-bikes is five times that of regular bikes, and the company’s own brands account for 30 percent of its e-bike sales. SSU pointed out that the world’s top three e-bike retailers control only 6 to 7 percent of global sales, with the rest spread among about 50,000 other vendors. The company is eyeing the remaining 2,000 brands in the market as potential pieces in its strategies for mergers and acquisitions and third-party services. SSU cited a 2021 Boston Consulting Group study it commissioned that found 62 percent of consumers seek out an “online sports specialist” when “shopping for equipment-intensive sports.”
SSU sees revenue increases from a trifecta of organic growth, M&As and expansion into third-party services. Organic growth was 25 percent last year compared to 15 percent growth for the overall market as SSU brands gained market share, and further growth is expected. Inorganic growth is focused on geographic expansion and growing the portfolio of DTC brands by offering ad sales to brand partners. Starting in the second half of the fiscal year, SSU plans to allow brand partners to sell through a bike-specific marketplace. Both models will increase margins by leveraging the large online infrastructure the company has already built for its direct sales.
