Sports apparel e-retailer Fanatics Inc. is making a big bet on international expansion.
Fanatics, No. 45 in the Internet Retailer 2015 Top 500 Guide, acquired Kitbag, an online U.K. soccer gear retailer, from retail group Findel plc today. According to its half year report, Findel, No. 65 in the Internet Retailer 2015 Europe 500, announced on Sept. 29 that they had been approached by an unspecified potential buyer for Kitbag and had actually agreed to the terms of a deal.
Sources say Fanatics paid $17 million for Kitbag and assumed unspecified debt of about $12 million. All 500 of Kitbag’s Europe-based employees will join Fanatics, which prior to the acquisition had employees only in North America.
Fanatics CEO Doug Mack tells Internet Retailer the acquisition helps his company accomplish two major goals: expand Fanatics into the global soccer market and provide a platform for Fanatics’ U.S. major sports league clients to expand internationally.
“Soccer is not one of our bigger businesses, and soccer is the world’s No. 1 sport,” he says. “With Kitbag, we now have one of the largest soccer businesses. The combination of being able to immediately globalize and add significant scale, and to become quite large in the world of soccer was really attractive to us.”
Fanatics had considered expanding internationally for some time, but Mack says he wanted the retailer to do it right. Kitbag’s e-commerce platform will help Fanatics do just that.
“European e-commerce consumers expect a truly localized experience,” he says. “Bringing a hacky U.S. experience of your site to Europe is not a formula for growth. Kitbag has focused on having a platform that can localize in all countries across Europe,—language, currency, etc. As Kitbag helps us grow the Fanatics brand across Europe, they’ve got a foundation for us to grow upon.”
Kitbag’s platform is “fairly compatible” with Fanatics’ platform, Mack says
While Kitbag has a sizable foothold in the soccer market abroad, Mack hopes to leverage the brand to tap into a burgeoning soccer market in the U.S.
Soccer wasn’t the only reason for the deal, however.
Fanatics operates the e-commerce business of all four major North American sports leagues: the National Football League, the National Hockey League, the National Basketball Association and Major League Baseball. Those leagues have taken initiatives to grow their brands and fan bases globally. Mack sees the Kitbag acquisition as the natural next step in that progression.
“To the degree that Fanatics and Kitbag can really grow the U.S. sports leagues’ fan demand in Europe, that’s a huge strategic opportunity for us to support the leagues’ growth,” he says. “This isn’t only about growing soccer in the U.S. and Europe, it’s also about growing North American sports abroad and that’s something we’re definitely going to invest behind.”
Top500Guide.com shows that Fanatics’ online sales have soared since 2010, growing to an Internet Retailer-estimated $1.1 billion in 2014 from $186.3 million. That’s an annual growth rate of 55.88%.
Through the first six months of 2015, Findel reported sales of 33.3 million pounds ($48.0 million), down 2.1% from 34.0 million pounds ($49.0 million) during the same time last year.
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