Signa Sports United NV, the sports-focused e-commerce company, announced plans to delist its shares from the New York Stock Exchange (NYSE) on Monday, following a 97% price slump. The decision comes as the company grapples with severe liquidity and profitability challenges, including a slowdown in demand for its products that has fallen significantly below pre-pandemic levels.
The Germany-based company, backed by Austrian real estate tycoon Rene Benko, stated that the costs of meeting U.S. regulatory requirements outweighed the benefits of being listed on the NYSE. The delisting is expected to become effective around October 22.
According to InvestingPro data, Signa Sports has a market cap of 3270M USD and a P/E ratio of 7.26, which is low compared to its near-term earnings growth, as highlighted in one of the InvestingPro Tips. This indicates that the company is trading at a low earnings multiple. The company's revenue for the last twelve months (LTM) ending Q2 2024 stood at 7530.5M USD, with a decline of 5.18% in the same period. The quarterly revenue growth for FY2024.Q2 was -8.05%.
In addition to delisting, Signa Sports is considering shrinking operations and selling non-core assets to improve its "distressed liquidity position." The company also plans to wind down underperforming parts of its business, particularly its bike business which has lagged expectations this year.
Signa Sports withdrew its mid-term profit targets and warned that revenue will decline by more than the previously anticipated 11% worst-case scenario for this year. The company cited an oversupply of sports products and mounting inventory at retailers as factors squeezing profitability.
Shares of Signa Sports have lost almost all of their value since a SPAC listing in December 2021 through a deal with billionaire Ron Burkle’s Yucaipa Acquisition Corp., which valued the company at about $3.2 billion. Since then, the company has not recorded a profitable quarter and struggled with a cash squeeze, weak consumer demand, and excessive inventory.
To shore up the ailing firm, Benko's Signa Holding made multiple liquidity pledges. Most recently in June, it offered to buy up to €150 million ($158 million) of convertible bonds to keep the company afloat into 2025. Yet, as per InvestingPro Tips, there is "substantial doubt" over its ability to continue as a going concern if it fails to extend or refinance a €100 million credit line due in May. This is despite the company's high earnings quality, with free cash flow exceeding net income, and its ability to maintain dividend payments for 13 consecutive years.
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