Both Intersport and The Athlete's Foot (TAF) recorded very strong sales increases at the retail level in the first quarter of 2015, and they are both entering new markets. Intersport International Corp. (IIC) has signed new franchising agreements for the Intersport banner in Algeria, Indonesia and the Philippines. TAF, which belongs to IIC since the end of 2012, is also entering Algeria and Finland. It is moving back into France and Russia.
The two banners are helping each other with their geographical expansion. TAF's long-standing partners in Indonesia, MAP Aktif Adiperkasa, and in the Philippines, Planet Sports, have renewed their master franchising contracts with TAF. Both partners have agreed to add further TAF stores and to open the first Intersport stores in their respective countries next year, focusing on a new specialist concept for running and fitness, called Intersport Run & Fit, that will be introduced in several European countries in the second half of 2015.
TAF had a strong presence in France and Russia a long time ago, when it was still the property of Rallye. After a long absence from those countries, the leisure-oriented athletic footwear chain is going to have a presence there again later this year, starting from the back-to-school period, through the French and Russian Intersport organizations. The latter one is steered by the Kesko group, a loyal partner of Intersport in Finland, which is also going to open TAF stores in its home market as master franchisee for the banner in both countries.
In recent months, IIC's Dutch, Danish and Greek partners opened many TAF shops, as previously reported. The 50 Coach stores in the Netherlands have been converted to the TAF format. The Greek Intersport licensee, Fourlis, has opened two TAF stores in its home country and one in Turkey. The biggest member of Intersport Danmark, OBI Sport, has opened three TAF stores in Denmark. Discussions are taking place with potential new TAF master franchisees in various other European countries.
In Algeria, a leading sports retailing group, Great Way, has agreed to introduce both the Intersport and TAF banners in its country. In the next few months, it will convert five of its own existing Parcours stores to the TAF format and two of its existing City Sport stores to the Intersport format. It will also open two new Intersport stores later in the year. Great Way operates 10 City Sport stores and five athletic speciality Parcours stores in Algeria, in addition to its fashion business. All Parcours and City Sport stores will be converted to TAF, Intersport or the non-sports related banners of Great Way.
Meanwhile, IIC has reported an 8.4 percent increase to about €2.6 billion in the retail sales of the affiliated Intersport stores around the world for the first three months of this year. The strongest growth was recorded in China, where Intersport scored a 68 percent increase on a same-store basis from the same period a year ago. The first three stores are profitable now. Noting that there is still room for further improvement in the country, Franz Julen, chief executive of IIC, said that the gradual improvements being achieved by the licensee in Southern China with its ten existing stores is helping Intersport in its negotiations with possible licensees for other territories of that big country.
Internationally, Intersport stores also performed generally well in April and May, said Julen, predicting an increase of between 4 and 5 percent for the full year, as long as the months of November and December are better than in 2014. It's unlikely that they will be worse in any case.
As we have previously reported, Intersport booked a sales increase of 2 percent to €10.5 billion in 2014, with growth of 3 percent on a currency-neutral basis, because of unseasonable weather conditions in January, February and in early autumn. As many of the group's 5,500-odd stores are heavily dependent on winter sports, the weather partly offset the positive effects of the Fifa World Cup and double-digit increases in running and fitness.
The important outdoor category remained stable last year, but Julen noted a major recovery since last March, especially for the more affordable products sold under Intersport's private McKinley label. Football boots sold just as well as a year ago in the first few months of 2015, but the biggest recovery took place in winter sports, thanks to good snow conditions almost everywhere. The overall business was good in Germany, Canada, France and the Nordic countries. It continued to improve in Italy and Spain. Only Switzerland suffered a decline, due to the strength of the national currency.
Julen attributed some of the progress made in Europe lately to intensified cooperative advertising campaigns that were conducted in February together with the major brands in the areas of football, fitness and running. Intersport will also be responsible for the sales in the stadium and the fan zone during the final match of the Champions League in Berlin on June 6, with 13 stores in the stadium and a superstore at the Brandenburg gate.
According to Ingmar Kraak, CEO of TAF, strong collaboration with key brands has also been beneficial for TAF, whose retail sales grew by 7.5 percent last year to €280 million across the 25 markets in which the banner operates. Other positive factors have been – and still are - a clearer positioning for the banner in sports lifestyle and growing consumer demand for sneakers and other athleisure products across the globe. In the first four months of 2015, TAF's growth further accelerated to a 9.4 percent rate on a local currency basis.
