Mammut Sports Group AG eliminated 25 sales jobs at its corporate headquarters in Switzerland and will outsourcing rope manufacturing in a bid to cut costs amid declining sales and margin pressures created by adverse currency effects.
Due to the increasingly important role of direct-to-consumer sales, Mammut will consolidate sales for its Wholesale and Retail/E-commerce areas into a single sales organization under Stefan Merkt, who is already managing Retail/E-commerce. Merkt will take over management of all sale operations as chief sales officer beginning Oct. 1, when Wholesale Manager Andreas Kessler will leave the company.
The reorganization will eliminate 25 jobs, mostly at Mammut's headquarters in Seon, Switzerland.
Mammut also announced Teufelberger Holding AG of Austria will take over its labor-intensive rope production facility in Seon by Sept. 1, 2016. Teufelberger is a major manufacturer of ropes for arborists, utilities and other commercial customers and has experience producing mountaineering ropes. The family-owned company plans to invest in resources that will enable Mammut to continue to develop new ropes.
Mammut will still design, develop and market ropes from Seon, where it will continue to operate its rope test laboratory.
Mammut's parent company Conzetta AG announced Mammut would move to cut costs in early August after reporting Mammut's earnings before income taxes reached -CHF 5.9 million in the first half of the year, compared with a gain of CHF 1.5 million in the year earlier period. Conzetta attributed the sharp decline primarily to a unfavorable exchange rates but noted “a general weakening of growth in the outdoor activities market worldwide.”
“These were difficult decisions for us, however we have studied our options carefully and are convinced that these measures will improve Mammut Sports Group's long-term competitiveness,” said Mammut CEO Rolf Schmid.
Sporting goods retailers hit hardest by franc's appreciation
Mammut's currency issues were greatly aggravated in January when Switzerland's central bank abandoned efforts to keep the franc from appreciating against the euro. That shaved 5.5 percent off Mammut's revenues in the first half. Recent research from the University of St. Gallen Institute of Retail Management shows Switzerland's sporting goods retailers have been hit the hardest of five retail sectors since the euro's 18 percent decline against the euro on Jan. 17. The euro has since recovered about half of that ground, but remains nearly 11 percent cheaper than a year ago.
In its third biennial study of Swiss consumers' shopping habits, the Institute found 34.2 percent of 2,300 Swiss consumers surveyed this year reported buying more sporting goods, 43 percent had bought sporting goods on foreign online shops and 40 percent wanted to buy more sporting goods across the border. Those response rates indicate sporting goods retailers, particularly along Switzerland's border, are more vulnerable to losing customers to lower prices in Germany and elsewhere than food, apparel, electronics or furniture retailers.