Signa Sports United N.V. (SSU) reported net revenue grew 11 percent in the first quarter despite supply constraints in the full-bike category. Excluding full-bike sales, net revenue grew 15 percent.

During this reporting period, the Berlin-based online sports platform completed its business combination with Yucaipa Acquisition Corporation on December 14, 2021 and began trading on the NYSE on December 15, 2021. The company also closed the acquisitions of WiggleCRC and Tennis Express on December 14 and December 31, 2021, respectively.

The company’s brands include Wiggle, Chain Reaction Cycles, Fahrrad.de, Bikester, Probikeshop, Campz, Addnature, Tennis-Point, TennisPro, and Outfitter.

Stephan Zoll, CEO of SSU, said, “This quarter we closed two strategically significant transactions, WiggleCRC and Tennis Express, that allow us to meaningfully enhance the strength of our platform. Despite the macro factors that continue to impact our results, we are focused on driving SSU to be in the strongest possible position to create value in the mid and long-term and we believe we are poised to do so upon the normalization of supply-chain disruptions.”

In Q1 FY22, SSU faced multiple headwinds that contributed to softer topline growth. Supply chain disruptions remain a constant theme and the company was unable to meet consumer demand, with the most severe supply chain impacts being felt in its full-bike category. The quarter also comped against a strong YoY period, fueled by a spike in consumer interest during COVID-19 restrictions and lockdowns. However, the company achieved 11 percent net revenue growth and net revenue growth of 15 percent when excluding full-bike sales.

On an LTM Q1 FY22 basis, net revenue increased 17 percent. When excluding full-bike sales, LTM Q1 FY22 net revenue growth was 24 percent. The Company also achieved stable gross margins through Q1 FY22, even when compared to the COVID-driven spike in Q1 FY21, with the expansion of 200+ bps on an LTM basis.

Alex Johnstone, CFO, said, “SSU’s results in the fiscal first quarter demonstrate the resiliency of the SSU platform. We drove consolidated topline growth by offsetting headwinds caused by supply constraints in the full-bike category with growth across all other categories. We leveraged promotional activity and targeted marketing investment to drive active customer growth and market share.”

Q1 FY22 Consolidated Financial Summary and Key Operating Metrics | Q1 FY22 Business Highlights and Commentary

  • Business Update
    • Recently closed acquisitions of WiggleCRC and Tennis Express resulted in continued top-line growth despite  supply chain disruptions;
    • Strong performance in its Tennis and Outdoor categories provided a flexible response to full-bike supply constraints;
    • Heightened customer acquisition investment to drive market share gains and customer growth while lapping strong lockdown-driven demand spike in Q1 FY21;
    • Expansion in core geographies (DACH/Southern Europe) with further geographic net revenue diversification in Q1 FY22, particularly in the U.S. with Midwest Sports and Tennis Express acquisitions; and
    • Flagship tennis retail stores opened in France, Italy and Spain.
  • Key Performance Indicators
    • Targeted marketing spend resulted in customer growth and conversion, leading to 5.3 million active customers (25 percent YoY growth), 7.4 million proforma for closed acquisitions;
    • Reported traffic growth despite decline in pro forma organic traffic due to supply constraints and COVID-19-driven lockdowns;
    • Customer acquisition resulted in increased net conversion leading to a net order growth of 62 percent to 2.4 million in Q1 FY22, proforma for closed acquisitions; and
    • Slightly lower Q1 FY22 AOV stemming from lower full-bike contribution offset by growth in conversion and net orders.
  • Financial Update
    • Net revenue growth of 11 percent in Q1 FY22 (15 percent growth when excluding full-bike sales)to €213 million, despite supply constraints in full-bike, LTM Q1 FY22 net revenues of €892 million, a 17 percent increase;
    • Strong performance in Tennis and Outdoor categories more than offset the decline in full-bike sales, resulting in 24 percent growth in LTM net revenues, excluding full-bike sales;
    • Stable gross margin in Q1, despite COVID-19-driven margin spike in Q1 FY21, and ~200bps expansion on LTM basis;
    • Adjusted EBITDA fell to (€12) million in Q1 FY22. Adjusted EBITDA margin declined in Q1 FY22 due to heightened customer acquisition investment to drive market share gains and strong customer growth while lapping strong lockdown driven demand spike in Q1 FY21.

Outlook And Guidance
Management reiterated its previously published financial guidance for FY22 that reflects the continued organic growth of the enlarged company despite full-bike supply chain disruption.

FY22 Guidance
Net revenue €1,400 million to €1,550 million

Management’s expectations are underpinned by the following assumptions:

  • Favorable structural megatrends remain, double-digit topline growth expected to return once supply chain pressures ease towards the end of CY22;
  • Uncertainty relating to consumer demand against the inflationary backdrop, COVID-19, and geopolitical developments; and
  • H1 FY22 anticipated seeing negative organic growth on a pro forma basis, comping against ock-down induced H1 FY2021 and full-bike supply constraints. Anticipated return to organic growth expected from Q3 FY22.

Photo courtesy Sigma Sports