Deichmann has continued its expansion in the U.S. with the takeover of KicksUSA. Founded in 2002, the American retail chain, which specializes in sneakers, athletic shoes and clothing, operates 64 stores on the East Coast, primarily in Philadelphia, New York and New Jersey, as well as a web store.
The shops of KicksUSA will be renamed Snipes, the sneaker retailer chain that has belonged to the Deichmann group since 2011, operating more than 230 stores in nine European countries. Both chains address a similar type of customer.
Without revealing the price paid for Kicks, Deichmann said it was the biggest takeover in the company's history. The German-based shoe retailing group made its first acquisition in the U.S. in 1984 by acquiring Lerner Shoes, which resulted in the launch of the Rack Room Shoes chain. Deichmann replicated the shop fitting concept of Lerner Shoes, a mix of self-service and service to the customers, in Germany and later in other parts of Europe. At the end of 2018, Deichmann was operating more than 520 stores in the U.S., including also the Off Broadway chain acquired in 2001.
The group will continue to expand abroad in 2019. In Dubai, Deichmann will open its first store in the summer with a franchise partner, the Azadea Group, a lifestyle retailer that has been operating in the Middle East for 40 years. The Azadea Group operates over 50 international franchise concepts in the fashion & accessories, food & beverage, home textiles, sporting goods, multimedia and beauty industries. If the partnership with the Azadea Group in Dubai is successful, Deichmann will further expand in the Arabian Peninsula and North Africa.
Deichmann will also start operating in China during the first half of 2019 by selling a selection of its products online through the T-Mall Global platform. The group also plans to enter the markets of Estonia and Latvia under the Deichmann banner this year. The MyShoes banner, which is currently operating with stores in Germany, Austria and Switzerland, will also be further internationalized with the opening of the first shop in Poland.
Blaming excessively warm weather in Europe and strong competition from pure e-tailers and fashion retailers, Deichmann reported relatively stable figures on a comparable basis for the past year. Its gross sales, adjusted for currency exchange effects, rose by 2 percent in 2018. They reached €5.8 billion in 25 European countries and in the U.S under several banners. Net sales reached €5 billion. The growth on a same-store basis was limited to 0.1 percent.
Sales outside Germany represented 60 percent of the group's total sales. Deichmann sold 178 million pairs of shoes in its stores worldwide and through its web shops, an increase of 1 percent as compared to the previous year. In Germany, the group sold 73.4 million pairs of shoes, roughly the same as in the previous year, in 1,461 stores and online. Sales remained stable in Germany at €2.3 billion as compared to 2017.
The addition of new stores contributed to the sales increases in volume and value. At the end of 2018, Deichmann operated 4,053 physical stores and 40 web shops in 26 countries, employing a total of 40,698 people. This compares with 3,989 brick-and-mortar stores and 36 web shops at the end of 2017.
For 2019, Deichmann plans to invest a record of €285 million on various programs including the modernization of its store network, the opening of new shops, internationalization and digitalization. Deichmann plans to open 229 new stores worldwide and to renovate 256 existing stores in its 25 European markets and the U.S. in 2019.
For Germany alone, the group's investment budget amounts to €102 million. The group plans to open 30 new shops and renovate 110 existing stores in its domestic market. A new flagship store with screens and omni-channel elements will open in Munich in the summer. Changing its business model, Deichmann will further develop its omni-channel capabilities and introduce the Click & Collect option in Germany this year, allowing customers to buy items online and pick them up in a store.
Deichmann sells its products on 40 web shops in 26 countries, plus four online marketplaces. The e-commerce division is enjoying a double-digit growth rate. As part of the development of its activities in this area, the group will launch a new homepage, called Deichmann Digital.
About 1,134 new employees joined the group in 2018. In Germany, the group employed 16,271 (294 more than in 2017), including around 3,000 trainees, some of whom specialized in digital operations. In the course of 2019, Deichmann plans to hire another 400 people in Germany. In 2018, 1,253 people started a traineeship in Germany, and the group plans to recruit more than 1,000 trainees this year.
More than 900 people work at its headquarters in Essen, where the construction of a new office and administration building for around 120 workers was completed in the autumn of 2018. Deichmann invested more than €6 million in the project.
The management pointed out that the family-owned group's ongoing profitability allows it to continue to be self-financed.
The family-owned company continued to invest in humanitarian activities last year, particularly the fight against leprosy and aid to refugees.