Decathlon SA is exploring selling a minority stake in its China business, people with knowledge of the matter said, as the French sporting goods retailer seeks a strategic partner to boost growth in the world’s second-largest economy.
The firm is working with an adviser on a potential stake sale that could give the China unit a valuation of at least US$1 billion ($1.37 billion), the people said, asking not to be identified discussing information that is private.
Deliberations are preliminary and Decathlon could decide against any deal, the people said. A representative for Decathlon declined to comment.
Decathlon’s plans for its China arm come as other foreign retail brands are reviewing their operations in the Asian country where economic growth has significantly slowed down in recent years. Although consumer spending has shown signs of recovery, the country’s property crisis continues to weigh on sentiment and cast doubt on whether Beijing can meet its full-year growth target of 5%.
Procter & Gamble Co. is weighing options for the Chinese operation of its hair-care brand VS Sassoon, Bloomberg News reported last week. Tyson Foods Inc., the biggest US meat company, is considering options including a potential sale of its China unit, people familiar with the matter have said. Japan’s convenience store chain Lawson Inc. is also among those exploring strategic options for the China business, Bloomberg News has reported.
Decathlon is part of a larger constellation of retail brands controlled by France’s billionaire Mulliez family whose founder is 92-year-old Gerard Mulliez. The clan’s Association Familiale Mulliez owns some of the nation’s biggest brands like supermarket chain Auchan and Leroy Merlin. The sporting goods retailer was started by Mulliez’s cousin, Michel Leclercq, in 1976 in a parking lot in northern France and reported worldwide sales of EUR15.4 billion ($22.32 billion) in 2022 with 1,751 stores.
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Decathlon opened an office in Guangzhou of Guangdong province in 1993, according to its website. A decade later, the company relocated its Asia headquarters from Hong Kong to Shanghai, where it opened its first retail store in China, its official LinkedIn profile shows. Since then, Decathlon has expanded rapidly in China and runs more than 300 outlets across 100 major cities, according to a 2022 interview with Marc Zielinski, who was Decathlon China Chief Executive Officer, on McKinsey & Co.
China is Decathlon’s second-largest market in terms of store number, Zielinski said in the interview. Zielinski, now Decathlon Greater China CEO, also said its domestic manufacturing base supplies 90% of the goods the company sells in China, where it has a customer base of 25 million with as many as 15 million of them being active members.
In India, Decathlon vowed to invest EUR100 million over the next five years into its retail, logistics and manufacturing operations, the Financial Times reported in March, citing Chief Executive Officer Barbara Martin Coppola. The firm was also considering selling and leasing back stores valued at about EUR700 million in a bid to raise capital as the cost of borrowing increases, Bloomberg News reported last year.
