French sporting goods retailer Decathlon has started looking for a buyer for its assets in Russia. RBC was told about this by two sources in large retail chains and two sources in consulting companies. Decathlon expects to sell the entire business, three people said. According to another source, the retailer is ready to separately sell the property it owns.
In the spring of 2022, there were 57 Decathlon stores in Russia, now, according to information on the company’s website, there are 28 of them left. After the start of the Russian military special operation in Ukraine and the imposition of Western sanctions, the company announced the suspension of the supply of goods to the Russian market. All stores, including the Decathlon online store, were closed in Russia on June 27. The company's Russian website states that the outlets are temporarily closed, "sales are suspended indefinitely." The press service of Decathlon declined to comment on information about the sale of business in the country.
How much can a Decathlon business cost?
According to the consulting company CORE.XP, Decathlon owns at least 135,000 sq. m. m of commercial real estate. The bulk of real estate is freestanding hypermarkets (the so-called boxes): a total of 20 buildings with a total area of 91 thousand square meters. m, the area of each - from 3 thousand to 10 thousand square meters. m. In addition, the company owns office and warehouse space. Near some hypermarkets there are undeveloped land plots, which also belong to the chain.
In Russia, Decathlon has two main legal entities - Oktoblu and Blue House. The retailer conducts sales through Oktoblu, the same legal entity has signed lease agreements for shops in shopping centers that do not belong to the company. Oktoblu's revenue for 2021 amounted to 28.6 billion rubles, net profit - 1.5 billion rubles. (no results for 2022 yet). The property owned by the company is registered at the Blue House, and the retailer leases part of the space to third-party companies. The revenue of Blue House for 2021 amounted to 948.6 million rubles, profit - 123.5 million rubles.
The CEO of the analytical company INFOLine, Ivan Fedyakov, estimates Decathlon's business in Russia at 13-15 billion rubles. Now all transactions for the sale of companies from unfriendly countries must be approved by a special subcommittee of the Ministry of Finance in order to prevent the withdrawal of capital from the country against the backdrop of Western sanctions pressure. One of the criteria that the subcommittee uses in making a positive decision is the sale of an asset at a discount of at least 50% of the value determined during an independent valuation.
Decathlon is one of the largest sporting goods retailers in the world. In 2021, the company's sales grew by 21% and amounted to almost €14 billion excluding taxes, net profit of €913 million. The company was founded in 1976 by Michel Leclerc. The network came to Russia in 2006. According to the 2021 financial statements, the company is owned by the Leclerc family (42.39%), the Mullier family (44.13%) and company employees (13.48%). The Mullier family also owns Auchan, Leroy Merlin, Kiabi, Pimkie and others. Michel Leclerc and Auchan founder Gerard Mulier are cousins.
Who might be interested in the Decathlon business
The attractiveness of Decathlon's assets for investors will depend on the structure of the deal and whether the retailer's supplies to Russia will resume, said Marina Malakhatko, Senior Director, Head of the CORE.XP Retail Department. According to her, the assets may be of interest primarily to industry retail players, as well as developers and professional retail funds.
Decathlon's Russian business may be of interest to both private local investors who are aimed at expanding the current portfolio, and large institutional players, says Mikael Kazaryan, Head of Capital Markets and Investments at IBC Real Estate. Institutional players may consider purchasing assets as a whole or in parts for subsequent resale to core business participants, he adds. RBC sent inquiries to the sports networks Sportmaster and Kant.
Fedyakov believes that it will not be possible to sell the entire Russian business to Decathlon. “The situation is similar to that of the retailer IKEA – too large-format facilities, in addition, Decathlon specialized in selling a huge volume of products under its own brands, and it would take years for other retailers to create such a production,” he says. IKEA permanently closed its stores in Russia in August 2022 and is looking for a buyer for its production assets in the country. The company still owns the Mega shopping centers in Russia (the shopping centers themselves continue to operate) and the blue IKEA boxes, which may be leased out.
Since Decathlon entered the market quite late, the French chain occupied not always successful and specific areas, in which consumers came largely due to the strength of the brand, explains Fedyakov. In the retail market, assets can only be suitable for the DIY segment (from the English do it yourself, that is, “do it yourself”), since they are located in areas suitable for such stores, and it is good to store building materials in large areas, the expert adds. However, he is convinced that in the current realities of the consumer market, retail players will not buy Decathlon objects - in most cases in the retail sector, they will only bring losses. But these areas may be of interest to logistics operators and manufacturers, the expert suggests: it is not difficult to open both a dark store (a special warehouse with products in which online orders are collected for food delivery) and a small production on these areas.
Which Western chains left Russia
Over the past year, hundreds of international companies have announced the suspension of work in Russia or the closure of business in the country. Among retailers, the Swedish H&M group (H&M, COS, & Other Stories and others), the Swedish IKEA chain, and the Danish Jysk have completely curtailed their business. The Spanish Inditex (Zara, Massimo Dutti, Oysho and others) closed stores and sold the business. It is planned that its stores will reopen, but under different brands, as has already happened with the stores of the Swedish LPP (Reserved, Cropp, Sinsay, etc.), which changed names after the resale. Some foreign retailers have not yet made a decision about the future of business in Russia, their stores remain closed - for example, the Japanese chain Uniqlo.
Store closures have a negative impact on shopping mall traffic and revenue. In general, against the backdrop of Western sanctions in January-November 2022, the turnover of non-food retail trade in Russia decreased by 10.5%, to 19.4 trillion rubles.
In the spring of 2022, there were 57 Decathlon stores in Russia, now, according to information on the company’s website, there are 28 of them left. After the start of the Russian military special operation in Ukraine and the imposition of Western sanctions, the company announced the suspension of the supply of goods to the Russian market. All stores, including the Decathlon online store, were closed in Russia on June 27. The company's Russian website states that the outlets are temporarily closed, "sales are suspended indefinitely." The press service of Decathlon declined to comment on information about the sale of business in the country.
How much can a Decathlon business cost?
According to the consulting company CORE.XP, Decathlon owns at least 135,000 sq. m. m of commercial real estate. The bulk of real estate is freestanding hypermarkets (the so-called boxes): a total of 20 buildings with a total area of 91 thousand square meters. m, the area of each - from 3 thousand to 10 thousand square meters. m. In addition, the company owns office and warehouse space. Near some hypermarkets there are undeveloped land plots, which also belong to the chain.
In Russia, Decathlon has two main legal entities - Oktoblu and Blue House. The retailer conducts sales through Oktoblu, the same legal entity has signed lease agreements for shops in shopping centers that do not belong to the company. Oktoblu's revenue for 2021 amounted to 28.6 billion rubles, net profit - 1.5 billion rubles. (no results for 2022 yet). The property owned by the company is registered at the Blue House, and the retailer leases part of the space to third-party companies. The revenue of Blue House for 2021 amounted to 948.6 million rubles, profit - 123.5 million rubles.
The CEO of the analytical company INFOLine, Ivan Fedyakov, estimates Decathlon's business in Russia at 13-15 billion rubles. Now all transactions for the sale of companies from unfriendly countries must be approved by a special subcommittee of the Ministry of Finance in order to prevent the withdrawal of capital from the country against the backdrop of Western sanctions pressure. One of the criteria that the subcommittee uses in making a positive decision is the sale of an asset at a discount of at least 50% of the value determined during an independent valuation.
Decathlon is one of the largest sporting goods retailers in the world. In 2021, the company's sales grew by 21% and amounted to almost €14 billion excluding taxes, net profit of €913 million. The company was founded in 1976 by Michel Leclerc. The network came to Russia in 2006. According to the 2021 financial statements, the company is owned by the Leclerc family (42.39%), the Mullier family (44.13%) and company employees (13.48%). The Mullier family also owns Auchan, Leroy Merlin, Kiabi, Pimkie and others. Michel Leclerc and Auchan founder Gerard Mulier are cousins.
Who might be interested in the Decathlon business
The attractiveness of Decathlon's assets for investors will depend on the structure of the deal and whether the retailer's supplies to Russia will resume, said Marina Malakhatko, Senior Director, Head of the CORE.XP Retail Department. According to her, the assets may be of interest primarily to industry retail players, as well as developers and professional retail funds.
Decathlon's Russian business may be of interest to both private local investors who are aimed at expanding the current portfolio, and large institutional players, says Mikael Kazaryan, Head of Capital Markets and Investments at IBC Real Estate. Institutional players may consider purchasing assets as a whole or in parts for subsequent resale to core business participants, he adds. RBC sent inquiries to the sports networks Sportmaster and Kant.
Fedyakov believes that it will not be possible to sell the entire Russian business to Decathlon. “The situation is similar to that of the retailer IKEA – too large-format facilities, in addition, Decathlon specialized in selling a huge volume of products under its own brands, and it would take years for other retailers to create such a production,” he says. IKEA permanently closed its stores in Russia in August 2022 and is looking for a buyer for its production assets in the country. The company still owns the Mega shopping centers in Russia (the shopping centers themselves continue to operate) and the blue IKEA boxes, which may be leased out.
Since Decathlon entered the market quite late, the French chain occupied not always successful and specific areas, in which consumers came largely due to the strength of the brand, explains Fedyakov. In the retail market, assets can only be suitable for the DIY segment (from the English do it yourself, that is, “do it yourself”), since they are located in areas suitable for such stores, and it is good to store building materials in large areas, the expert adds. However, he is convinced that in the current realities of the consumer market, retail players will not buy Decathlon objects - in most cases in the retail sector, they will only bring losses. But these areas may be of interest to logistics operators and manufacturers, the expert suggests: it is not difficult to open both a dark store (a special warehouse with products in which online orders are collected for food delivery) and a small production on these areas.
Which Western chains left Russia
Over the past year, hundreds of international companies have announced the suspension of work in Russia or the closure of business in the country. Among retailers, the Swedish H&M group (H&M, COS, & Other Stories and others), the Swedish IKEA chain, and the Danish Jysk have completely curtailed their business. The Spanish Inditex (Zara, Massimo Dutti, Oysho and others) closed stores and sold the business. It is planned that its stores will reopen, but under different brands, as has already happened with the stores of the Swedish LPP (Reserved, Cropp, Sinsay, etc.), which changed names after the resale. Some foreign retailers have not yet made a decision about the future of business in Russia, their stores remain closed - for example, the Japanese chain Uniqlo.
Store closures have a negative impact on shopping mall traffic and revenue. In general, against the backdrop of Western sanctions in January-November 2022, the turnover of non-food retail trade in Russia decreased by 10.5%, to 19.4 trillion rubles.
