Sporting goods megastore Decathlon says $20m in losses has not put it off Australia
Megastore Decathlon launched its first Australian outlet in 2017, with three stores now open in Melbourne. But are Aussies embracing the world’s biggest sporting retailer?
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French sporting goods heavyweight Decathlon is running up big losses as it muscles its way into the Australian market.
Latest accounts from the Rebel-challenger show it has racked up almost $20 million in losses since it opened its first Australian store late in 2017.
Decathlon is the biggest sporting goods retailer in the world with more than 1500 stores in 51 countries throwing off sales of €11 billion ($18.2 billion) a year.
The Australian arm of the retail giant – dubbed the Ikea of sporting goods – posted a net loss of $10.8 million for 2018, its most recent financial statements lodged with the corporate regulator show.
That builds on a net loss of $8.77 million in 2017.
The losses came as Decathlon, which sells own-brand sporting goods at warehouse sized stores, expanded its bricks-and-mortar network.
It opened its first Australian store at Sydney’s Tempe in December 2017.
Decathlon has since opened four more stores – including three in Melbourne – and has said it plans to have as many as 35 outlets across the nation.
Despite the losses, which are not unusual for a business in its start-up phase, the retail interloper is attracting customers amid a difficult trading environment, in which the body count is growing.
Sales surged from $3.62 million in 2017 to $17.3 million in 2018, the accounts lodged with the Australian Securities and Investments Commission show.
Decathlon Australia chief Olivier Robinet said the retailer was fully committed to its expansion down under.
“Australians love Decathlon,” Mr Robinet told Business Daily.
“We are delivering high-quality and smart products at extremely affordable prices. Our in-store sales as well as our online sales are performing well.”
Mr Robinet said the retail industry had been “moving fast” for a number of years but Decathlon was keeping its focus on what had made it a global giant – product range, price and service.
“We have already opened five stores across NSW and Victoria within two short years, with many more planned across other parts of the country,” he said.
Decathlon poses a direct challenge to Super Retail Group, whose brands include Rebel and boating, fishing and camping merchandise seller BCF.
Super Retail is moving to reaffirm its credentials as the nation’s premier destination for sporting goods and will launch a new flagship Rebel store in Melbourne this year.
Decathlon appears to be cutting a less explosive path through the nation’s retail landscape than other international fashion heavyweights that have touched down over the past decade.
Zara, Hennes & Maurtiz, which trades as H&M, and JD Sports turned a profit in their second year of operations. Japanese import Uniqlo took four years to post its maiden profit.
Any hope Super Retail may have that a lacklustre retail climate will encourage its new competitor to call time on its Australian experiment would appear to be in vain.
The Australian arm of the sporting goods challenger is sitting on a war chest of almost $50 million while its French parent has also extended it $19.2 million in inter-company loans, the accounts show.
Decathlon entered the market here at a time of acute pressure for retailers as house prices began to fall and consumers wound back their spending.
Growth in consumer spending fell to its lowest level since the global financial crisis in the three months to September.
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Turnover clocked in higher than expected during November but economists warned the uptick was likely due to the Black Friday online sales event bringing forward the annual Christmas spending rather than a fundamental shift in the economy.
A string of retailers have collapsed or been forced into restructures during the past three years, including department stores Harris Scarfe and Debenhams, discount retailer Dimmeys, and fashion chains Bardot, Marcs, Herringbone, Roger David, Ed Harris and Rhodes & Beckett.
Others include footwear groups Shoes of Prey and Payless Shoes and video games seller EB Games.