As reported in the previous issue of Shoe Intelligence, the big and acquisitive Groupe Royer of France has signed a deal to take over the distribution of New Balance in France, Germany and the Benelux countries, where the American athletic footwear brand has been running its own subsidiaries. Most of the 50-odd employees of New Balance in the three markets are expected to work with Royer, while the American company will continue to supervise brand development and marketing out of its European office in the U.K.
The deal, which became effective on Sept. 1 for the spring/summer 2011 season, is expected to boost Royer's annual revenues by between €30 million and €35 million in the first year and by €50 million within three years. It should help raise the group's total turnover to €340 million in 2011 from €290 million this year. It will also compensate for a recent decline in Royer's sales of Converse shoes to about €80 million a year from more than €100 million a couple of years ago.
Royer plans to develop specific styles of New Balance shoes for the three markets, expanding the non-athletic, lifestyle portion of the range. It also plans to offer a range of New Balance clothing from the fall/winter 2011 season, in line with a general diversification of the group into the apparel segment. It is in fact launching a collection of denim-based clothes for children, called Kickers Original Jeans Clothes, to accompany the shoes of its own Kickers brand, in tune with the policy already followed by Kickers' British licensee, Pentland Group.
While bringing New Balance into its brand portfolio, Royer is shedding the distribution in France of a more technical American brand of running shoes, Saucony. It will keep the French distribution of Sperry Top-Sider, Keds and Pro-Keds, which are also owned by Collective Brands, as well the European license for Airwalk, which is owned by the same group.
Collective, which recently expanded its European distribution center near Amsterdam, is setting up an office and showroom near Paris that will handle sales in France of Saucony as well as two of its children's brands, Stride Rite and Robeez.
Royer has been involved in the sports sector for many years. A former distributor of Hi-Tec Sports in France, it has made a fortune with its Converse license for the French market, which came to represent half of its turnover a few years ago. Recently, it negotiated a deal to distribute Fila in France, but it was quickly rescinded.
The New Balance contract has led to a reorganization of Royer's management. Stéphane Grimault, a former Reebok executive who has been with the group since 2004, is going to run a new sports business unit concentrating on Converse and New Balance. Jean-Baptiste Mayer, who has been Royer's financial director, will run the fashion and luxury business unit, comprising Charles Jourdan and Stéphane Kélian as well as Sperry, Keds and Pro-Keds. Another group veteran, Fidel Fernandes, will take charge of the children's segment, grouping Kickers, Mod'8 and other brands. Eric Lechat, a recent recruit from the eyewear sector, will take care of the mass market, adding Airwalk to a variety of other brands. Another BU will manage the development of Royer's growing network of single-brand stores.