"SPORTMASTER": THE COMPLETE TERMINATION OF THE ACTIVITY OF THE STORES BECAME REAL

A few weeks ago, the editors of “Rusbankrot” have published a material about the scandal, related to the activities of the “Sportmaster” trading network. The company closed 314 of its outlets, transferring the remaining 120 to the remote work. The information about the possibility of mass layoffs of the employees without paying severance payments, spread around numerous media.

Now the company has responded to the situation - the business manager Sergei Agibalov said that no layoffs are being planned, and it is only about the efficient use of the workforce of the employees for a period of the forced downtime.

Despite the fact that the press service of “Sportmaster” posted information, refuting the rumors, on the official website and on the social networks, the information about dismissals is continued to be received.

The management still insists that there were no plans to close the company, and that the closure of the stores was temporary and related to the subordination of the company to an administrative order of the government.

Two weeks later, Sergei Agibalov gave us new details about the situation in the trading network. As the business manager notes, “unfortunately, the scenario of a complete shutdown of the “Sportmaster” stores in the Russian Federation, which in mid-March we considered as extraordinary and unlikely, became a reality.” The report emphasizes that the sale of goods through the online shops, which became the only way to monetize the work of the company, despite their quantitative growth, could not reach the "standard level" of the sales that was before the beginning of the forced downtime of the stores.

In fact, the head of “Sportmaster” confirmed the information on the employment of many employees in other companies (Russian Post, Wildberries, Pyaterochka, Magnit, etc.) for the period of the introduced trade restrictions.

“About 1,400 of our employees have already found jobs in these trading networks,” notes Sergey Agibalov. “At the same time, “Sportmaster” takes care of them and pays an additional amount of money to all the employees.”

The difficult situation in which “Sportmaster” found itself is currently common for many enterprises in Russia. The companies, operating in the continuous production cycle system and selling a significant amount of seasonal goods, cease to generate funds for the purchase of new goods by means of the sales of the previous collections. Sergey Agibalov notes that seasonal goods, as a rule, have a short sales period at a full price and often cannot be sold at an acceptable price in other periods.

It is clear that in such a situation, the trading network cannot go on a “vacation”, as it might lead to the freezing of the financial resources for a year, overfilling of the storage facilities and additional expenses.

Despite the difficulties, says Agibalov, “Sportmaster” will be able to overcome them.  He cites the fact that the company managed to pay the seasonal bonuses to the employees for the autumn-winter period in full and in standard terms as a positive example. The main priorities of the anti-crisis program, which the company is actively trying to implement, involve several areas of work:

•  activation of the online sales;

•  minimization of the cash gaps (with the aim of negotiating with lessors);

•  rationalization of the procurement budgets for the potential sales, expected after the lifting of restrictive measures.

Such areas of work could serve as the reference points not only for the “Sportmaster” network, but also for a number of other Russian companies in a similar situation.  But what to do with a reduction in sales and the inability to return funds for the goods, previously purchased for a particular season?

Here the management of “Sportmaster”, according to the information, provided by the company, admits a negative scenario.  As it is noted by Sergey Agibalov, against the background of mandatory rental and salary expenses, by September 2020 this could "lead to a significant gap in the liquidity and even to the inability to fulfill the contractual obligations to redeem the prepaid autumn-winter goods, shipped by the suppliers."