Signa Sports United N.V. reported accelerating its strategic realignment and performance enhancement program in light of continuing macroeconomic headwinds, oversupply in the market and the company’s “severe liquidity and profitability challenges.” In connection with the strategic realignment, Signa Sports is delisting its shares from the NYSE and terminating its SEC reporting requirements.
Torsten Waack van Wasen‘s role as CEO of Internetstores will expand to chief performance officer, joining the Signa management team, with a plan for him to assume the CEO role in the first quarter of 2024. Waack van Wasen is considered a “turnaround specialist.”
Signa Sports United acquired Internetstores in 2016.
The Berlin-based company’s businesses include Tennis-Point, WiggleCRC, Fahrrad.de, Bikester, Probikeshop, Campz, Addnature, TennisPro, and Outfitter.
Signa Sports stated, “The operating environment for the company in the first nine months of FY23 and thereafter was characterized by a continuation of material disruptions which started in the second half of last year. Although some economic indicators across core markets have continued to improve slightly, the demand for the company’s products remains significantly below 2022 and pre-pandemic levels. In addition, inventory levels across the industry remain elevated as market participants still aim to clear excess inventory, resulting in a material adverse effect on the company’s gross margins and increasing negative cash flows.”
Signa Sports said it is responding to “ongoing market dynamics by thoroughly reviewing the company’s operating model.” Due to the challenging macroeconomic environment, a sustained oversupply in the company’s relevant markets and the resulting severe and materially adverse impact on the company’s liquidity and profitability situation, the company’s Board of Directors resolved with management to implement a “strategic realignment, performance enhancement and downsizing program for the company and all of its subsidiaries with the aim of returning the business to profitability and free cash flow breakeven as soon as possible.”
A key focus for the company is “streamlining and rightsizing of underperforming business units, the termination or winding down of non-performing assets and the opportunistic evaluation of disposals of non-core assets.”
The company’s Board concluded that given the limited liquidity and trading volume in its publicly listed shares since the business combination in December 2021, the company’s Board of Directors concluded that the benefits associated with being listed on the New York Stock Exchange (NYSE) “do not justify the costs and demands of management’s time necessary to meet the company’s U.S. regulatory commitments.” Consequently, the company started the process of delisting the company’s shares from the NYSE to become effective on or around October 22, 2023.
To support the accelerated realignment and performance enhancement program, Sigma Sports United’s Board of Directors said it would extend the scope of the duties of Torsten Waack van Wasen, CEO of Internetstores since February 2023, to become part of the company’s management team as chief performance officer (CPO) for the Group.
Torsten Waack van Wasen’s years of restructuring experience include working at Alvarez & Marsal and Alteri Investors.
After the expiration of the contract of the company’s CEO Stephan Zoll, in the first quarter of 2024, Torsten Waack van Wasen will become CEO of the company.
Signa Sports said, “The company’s Board of Directors determined that the accelerated broader strategic realignment and performance enhancement plan, in conjunction with the NYSE delisting and suspension of US reporting obligations, is in the overall best interests of the company and its stockholders.”
Outlook & Guidance
Since announcing FY23 guidance, operating performance, particularly in the Bike segment, has lagged behind management expectations. As a result of weaker consumer demand and elevated promotional activity to rightsize inventory levels, Signa Sports’ management anticipates FY23 net revenue will fall below FY23 guidance of a decline in the range of 9 percent to 11 percent, and FY23 free cash flow may miss the low end of the previously provided range.
As the company enters FY24, market disruptions associated with market overstock will likely persist into late FY24, adversely impacting its ability to achieve near-term growth and profitability targets. As a result, and in light of the upcoming accelerated realignment and restructuring program, Signa Sports said it is withdrawing its previously stated mid/long-term guidance provided in H1 FY23.
For more SGB Media coverage of Signa Sports, go here.
Photos courtesy Internetstores, Torsten Waack van Wasen/LinkedIn
