Despite the stormy landscape of the sport retail industry in 2023, Decathlon UK maintains its commitment to the UK market, investing strategically to weather the storm and emerge stronger.
In 2023, Decathlon UK experienced a 5% decrease in turnover (with a 2.5% decrease for comparable stores), following two consecutive years of robust growth in 2021 (+25%) and 2022 (+6%). This decline in turnover can be attributed to three key elements:
Elevated Cost of Living: The elevated cost of living constrained consumer spending, leading to cautious purchasing behaviour across the retail sector. A challenging economic environment that saw major retailers grappling with closures, job losses and bankruptcy.
Market Dynamics: Structural changes in the sports market, coupled with unpredictable weather patterns, adversely impacted seasonal sports such as camping and skiing, and contributed to a 7% decline in the overall UK cycle market. Despite this complex period, Decathlon succeeded to gain market share in all these strategic markets.
Strategic Store Closures: Decathlon UK made the strategic decision to close six underperforming stores over the past two years, aligning with the evolving business model and resulting in a 2.5% negative impact on turnover.
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Amidst these challenges, Decathlon UK undertook significant transformations to bolster its resilience and drive growth:
Operational Efficiency: Decathlon UK voluntarily reduced operational costs by closing non-profitable stores and enhanced stock efficiency by 16%, resulting in a £16 million reduction in inventory. These measures were aimed at preserving low prices, despite the enduring impacts of Brexit, and supporting accessibility for customers while safeguarding employment.
Strategic Investments: With an investment of over £10 million in 2023, Decathlon UK accelerated its transformation initiatives. These included the launch of a new online website, enhancing the global product offer through partnerships, modernising top strategic stores, automating warehouses, and advancing circular business models such as the “buy back” program and rental propositions. Additionally, Decathlon deepened its wholesale business through collaborations with major partners that include Next, Argos, Ebay, Asda, Debenhams and Tesco.
Decathlon UK’s subsidiary, Sportstock, continued its real estate operations, demonstrating robust performance consistent with previous years. Despite this, the consolidated operating result for Decathlon’s activities, encompassing both retail and real estate, incurred a loss of £2 million, aligning with expectations for the year.
Throughout the challenges of 2023, Decathlon remained steadfast in its dedication to human and environmental values, exemplifying its mission to “Move People through the wonders of sports.” The company’s initiatives inspired and encouraged movement across the UK, contributing over 67,000 hours of sports activities through impactful partnerships and campaigns such as ParkPlay, RedJanuary, Bikeability Trust, and the One Decathlon Foundation Project with Bloomsbury Football.
Further enhancing its societal impact, Decathlon developed the Decathlon Activities Platform and established the Canada Water Health and Well-being Community Fund, committing £200,000 over the next five years to support local community charities in Southwark, London. Additionally, the company’s commitment to generosity was reflected in its customers’ contributions of £59,000 via store tills, supporting solidarity and environmental projects in collaboration with organisations such as the UN Refugee Agency, WWF, Sport in Mind, and Make a Wish. Detailed insights into these efforts can be found in the Social Impacts Report 2023.
Franck LADEN, the recently appointed Chief Financial Officer of Decathlon UK, shared his insights on the results:
“Looking back at 2023, a year marked by significant challenges for the UK’s retail sector, particularly within key segments of the sports equipment industry, it’s evident that a combination of factors influenced our revenue growth negatively. These include declining purchasing power, seasonal hurdles like adverse weather conditions during peak summer and winter seasons, and our strategic decision to close certain stores.
In response, our focus has remained squarely on our customers. We’ve implemented price adjustments, enhanced our market positioning, and introduced innovative alternatives through our circular economy models, both in-store and online.
Our commitment to enhancing customer experience remains steadfast. Substantial investments have been directed towards improving every touchpoint, whether online or offline, while simultaneously modernising our operational processes and structure for increased efficiency.
Decathlon UK is now more ready than ever to engage with our customers and fulfil our mission of ‘Moving People Through the Wonders of Sport’.”
Despite encountering financial headwinds in 2023, including a decline in turnover and increased net liabilities, Decathlon remains fiercely optimistic about its future prospects. Strategic investments, operational optimizations, and a commitment to exploring new sales channels position the company for sustainable growth in the long term.
