Polo Motorrad sale faces headwinds despite pandemic boost

Johannes Koch and Gustav Hoejmark-Jensen
10 June 2022

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Polo Motorrad's retail footprint and the seasonality associated with the motorbike accessory player's sales peaks may dampen enthusiasm among potential buyers, two sources familiar with the situation said.

This despite the Equistone-backed, German motorbike clothing, accessories, and parts specialist coming off a bumper year for earnings, benefiting from growth in its e-commerce division during the pandemic as motorbiking gained traction.

Polo Motorrad is being marketed off cEUR 20m EBITDA in the Baird-led sale, the sources said.

Equistone, which acquired the business in 2015, has done well to focus on online sales and boosted the channel in France and the UK, but it would be hard to inspire buyers for its brick-and-mortar retail stores in the German-speaking region, the first source noted.

Polo has more than 90 stores across Germany, Austria and Switzerland, with 65,000 products on offer for motorbike enthusiasts.

The retailer is still valued as a consumer goods company and at the whim of consumer discretionary spending, the second source noted.

It is a very seasonal business - weather-dependent, as bikers tend to hit the road in decent conditions - with inventories that require a fair amount of working capital, this source noted.

In FY20, which ended on 30 September 2021, the company generated EUR 128m of sales compared to FY19 sales of EUR 115m, according to publicly filed records. Polo had drawn down a EUR 21.5m working capital credit line, which was subsequently extended by a year, the records show.

Equistone acquired the business in 2015 from Paragon, which had pulled it out of insolvency, turned it around in three years and sold it on. Polo generated cEUR 12m of EBITDA at the time, as reported.

US-based Revzilla and fellow German player Louis Motorrad are key Polo Motorrad competitors, one of the sources noted, adding that the latter was acquired by Berkshire Hathaway [NYSE: BRK.A] in 2015 for around EUR 400m.

Equistone declined to comment. Baird did not respond to a request for comment.