The return of the founder, Vincenzo Mancini, has had a beneficial effect on Cisalfa Sport, the leading Italian sporting goods retailing group, which has started to generate profits again while improving its sales in spite of strong competition from Décathlon in a declining market.
Mancini had pulled out of the management after selling the majority of Cisalfa's shares to a private equity fund, Investitori Associati, in 2006. In December 2012, he bought back the shares. A few weeks later, he regained the company's helm from the previous chief executive, Marco Giunta, who resigned.
The latest financial results indicate that Cisalfa has accomplished its turnaround. For the financial year ended Feb. 28, the company reported an operating profit before amortization (Ebitda) of €8 million, compared with a loss of €4 million in the previous year. The group's sales declined slightly to €310 million from €315 million, due largely to the shutdown of unprofitable stores.
Cisalfa currently manages 123 stores, including those trading under the Longoni Sport and Germani banners. The chain opened five new stores in 2012, two in 2013 and two more so far this year, but it closed 15 stores in 2012 and nine in 2013. It will have closed five more during the current financial year.
The profits include those of Intersport Italia, a buying group that is controlled by Cisalfa. The sales figures include those of Longoni Sport, the more technical-oriented sporting goods retail chain owned by the group, but they don't include those of the other retail members of Intersport in Italy.
Including Cisalfa's stores, Intersport Italia's retail sales fell by around 5 percent because of the departure of some financially weaker members. As a result, the total number of sporting goods stores affiliated with Intersport Italia is down to only around 410 compared from 450 a year ago, when Bruno Antonioli became its general manager. He continues to serve as purchasing director of Cisalfa. The affiliated stores include 16 Intersport franchises.
Cisalfa made further progress in the first six months of the current financial year, ended in August. Sales reached a level of €148.5 million, €8 million more than in the same period a year ago, in spite of the store closures, and the group generated positive Ebitda of €6 million. Mancini is predicting that it will be able to improve Ebitda further to around €23 million for the full financial year, while Cisalfa's annual sales will grow to between €325 million and €330 million.
Breaking a long silence, Mancini told us that Cisalfa's improved sales and profits can be attributed primarily to the development of a new range of affordable, high-margin private label apparel, designed in Italy and directly sourced by the group at factories in Bangladesh and Cambodia. Mancini said that its entry-level prices are comparable to those of Décathlon's private label collections, but its more fashion-oriented Italian taste is more appealing to Italian consumers.
Under Mancini, the group has set up a product development team of 12 people for its private label collections. Besides its own lifestyle-oriented brand, Best Company, the exclusive items offered by Cisalfa include those developed under exclusive licensing deals with Ellesse, Arena and Maui & Sons. Cisalfa has become the biggest licensee of Pentland's Ellesse brand in Europe. For the past 12 months, it has been selling exclusively a line of fleece and other sportswear items for use outside the pool under the Arena brand. Cisalfa is negotiating another major licensing deal with an important sports brand.
Starting with the spring/summer 2015, Intersport Italia has started to offer some of its internally developed Ellesse and Arena items to other members of Intersport Italia, and some have agreed to take them on as a trial because of their nice margins, in view of a bigger launch for the autumn/winter 2015/16 season. For the same reasons, they are being encouraged to order more private label merchandise from Intersport International including the special make-ups offered by big brands such as Adidas and Nike, which set up showrooms in Intersport Italia's head office in Bologna in June.
Cisalfa continues to sell the private label collections of Intersport International well, especially those marketed under the Pro Touch and McKinley brands. It has an exclusive deal for Champion footwear. It owns an Italian brand of fitness equipment, Carnielli, and markets its treadmills and other products sourced in the Far East.
