Intersport PSC Holding AG, which owns the franchising rights to the Intersport brand in Switzerland, cut its way to higher profits in fiscal 2014, despite the lingering effects of difficult winter weather conditions and the loss of 10 percent of its dealer base.
“The poor 2013/14 winter season caused retailers to lower their orders for 2014/15 winter products and Intersport PSC Group expects sales to decline again in the current fiscal year,” the company reported. The forecast coincided with reports that many ski resorts in the Northern Aplps have yet to open due to unseasonably warm weather.
Intersport PSC (Intersport Switzerland) ended the year with 179 franchised dealers and 43 Shopping Partners, down 20 and 2 respectively from a year earlier. Shopping Partners are unaffiliated retailers who buy products at wholesale. Swiss Intersport dealers operated 313 outlets with annual retail sales of around CHF432 million, or about 23 percent of the country's retail sales of sporting goods, according to Intersport Switzerland.
The company reported group sales declined 0.9 percent to CHF199.2 million ($221 mm) in the fiscal year ended Sept. 30, 2014 compared with the same period in 2013. Centralized settlement sales reached CHF173.8 million ($193 mm), down CHF500,000, or 0.3 percent from a year earlier, due primarily to the loss of 20 Intersport franchisees. Retail sales came in essentially flat at CHF17.3 million ($19 mm), while sales of owned inventory declined nearly 15 percent to CHF8.1 million due primarily to the loss of one Shopping Partner. Sales of private label goods increased 7 percent to 71.4 percent of owned inventory sales, up from 66.7 percent in fiscal 2013.
Gross margins increased 3.0 percent to CHF12.6 million, or 6.3 percent of sales, up 200 basis points from fiscal 2013. Operating profit, or earnings before income taxes, increased 56.5 percent to CHF1.26 million, or 0.6 percent of consolidated net sales, compared with 0.4 percent in fiscal 2013. The 20 basis point improvement was attributed to cost cutting that reduced operating expenses by 7.5 percent to CHF17.3 million. Net income reached CHF1.46 million ($1.6 mm), up 63.8 percent from CHF892,000 in fiscal 2013.
Intersport Switzerland ended the period with inventory valued at CHF13.8 million, up 9.3 percent from a year earlier even after marking down values 22.5 percent to estimated market values. Accounts receivables were estimated at CHF15.8 million as of Sept. 30, up 12.0 percent from a year earlier. The company's equity ratio fell 70 basis points to 72.5 percent. Cash and cash equivalents declined 10.4 percent to CHF5.19 million.
On the positive side, Intersport Switzerland saw good results from intersportrent.com, a bike rental portal that allows consumers to rent bikes from Intersport retailers in about 30 countries. The venture is helping drive traffic to many Intersport Switzerland dealers, who are have a significant presence in or near tourism destinations, including mountain resorts. Globally, thousands of independent retailers operate more than 5,500 Intersport shops in 44 countries, making it the largest retail brand in the sporting goods industry.
