Let's start with good news. The sports sector is certainly being hit by the corona crisis, but a lot less hard than, say, the fashion sector. For the time being, the number of bankruptcies is not so high, but a large number of retail chains are nevertheless under heavy pressure. A recent example of a chain succumbing to this pressure is the Belgian FNG Group, known for labels such as Miss Etam and Claudia Sträter.
Limited dip for the Netherlands
If we take a closer look at sales - see image below - we see a dip from April onwards. However, that dip recovered by June. This probably has to do with the fact that sports (in groups) were allowed again fairly soon by our government. In addition, the symptoms of COVID-19 showed that a healthy lifestyle increased resilience to the virus, making people eager to keep or get moving. Interestingly, the dip for the Netherlands (and also Germany) relatively limited was compared to the Eurozone average.
The above figures confirm the stories we hear from retail - and especially the sports sector. Entrepreneurs are moderately positive, although of course it is still uncertain what the winter season will bring. A lower turnover than in 2019 seems likely, but that certainly need not have a dramatic impact on operators in the sports industry. The chart below shows that the sports sector (in the chart falling as recreation & culture goods) limited sensitivity to the effects of COVID-19, but moves between cyclical and temporally cyclical.
More bankruptcies, so be alert!
Yet it is not purely a good-news show when it comes to the sports industry. We should certainly take into account an increasing number of bankruptcies among retailers. In this autumn, but especially early next year. Credit insurers are already seeing a increasing number of debt collection cases, which is certainly going to result in an increasing number of bankruptcies.
Reason to panic? No. But reason to be more alert with existing and especially new customers in the sports industry. The current situation has made it even more important to check and monitor the creditworthiness of buyers. Our advice: hedge risks and if that fails, try to get collateral on financially weak buyers. Should even that prove unfeasible, it may be wise to no business or at least keep outstanding receivables manageable.
Branch policy in partnership with FGHS
Would you like to protecting against bad debt? Xolv can help you, because in cooperation with FGHS we have developed an industry policy credit insurance. The FGHS is the umbrella trade association of and for manufacturers, wholesalers, importers and agents in sporting goods, sports shoes, sportswear, camping equipment and recreational products in the widest sense. The FGHS has around 150 members, which together account for the majority of annual turnover in the sports industry.
Together, we look for the most optimal coverage on your buyers. We can also help you understand the creditworthiness of your buyers. Anything but an unnecessary luxury at the moment. The increasing pressure in the supply chain may also make it necessary to attract additional financing, such as purchase, stock and/or debtor financing. Xolv, in cooperation with FGHS, also has suitable solutions for this. This will keep your defences in order, so you can then attack with confidence.
Want to know more about our industry policy credit insurance in partnership with FGHS? We would be happy to discuss the possibilities for your company.
