Lifestyle Sports, which has been the leading sports retailer in the Republic of Ireland, suffered a heavy strategic and financial setback earlier this year as it resolved to pull out of the Czech Republic and to close down most of its stores in Northern Ireland. The company acquired the City Sports chain in the Czech Republic in 2007 and intended to use it as a springboard for further expansion in Europe, but it had to shutter its 21 stores earlier this year and to write off this Czech business.
This emerged from a report by the Sunday Business Post on the Stafford Group, which acquired Lifestyle Sports in 2005 and further comprises energy interests, a property firm and a shipping company. The company told the newspaper that it had been hit by costs of €16.4 million to wind down its Czech operation, and another €10 million to close down two loss-making stores in the Republic of Ireland and 11 in Northern Ireland.
The Stafford Group as a whole reported sales of €339 million for the year ending in September 2009, down from €466 million for the previous year. It reported an operating loss of €4.7 million, but this widened to a pre-tax loss of €32 million after the above onetime charges – even though the Czech closures were finalized after the reporting period. The deterioration of the revenues was reportedly attributed entirely to Lifestyle Sports, while Stafford’s oil, fuel and shipping operations performed strongly.
The failure of the Czech operation amounts to a painful retreat for the group. A few months after the takeover of City Sport, the Irish retailer announced that it wanted to pump €150 million into the expansion of Lifestyle Sports, to turn it into one of Europe’s leading sports retailers by 2012. It quickly converted the 22 City Sport stores into Lifestyle Sports, and opened several more. The retailer then started studying the expansion of the chain in Slovakia and Hungary. However, Lifestyle Sports was apparently unable to generate any profit with the format in the Czech Republic – even before the economic downturn began to hit.
The company was targeting sales of €20 million to €25 million in the Czech Republic, but the last report on the matter in the Czech press indicated that the Czech business generated much lower sales of 389.1 million Czech koruna for the year until the end of September 2008, equivalent to about €15.3 million at the time, and that it posted a loss amounting to nearly €1.8 million that year.
Mark Stafford, chief executive of the Irish group, was quoted as saying that it remained committed to its retail business and had opened six stores in Ireland so far this year. The company declined to comment on the causes of the Czech misadventure and its strategy for Lifestyle Sports. The figures published in the retail chart on page 3 for Lifestyle Sports are estimates.
