Bergans is preparing to close its Norwegian warehouse and centralize its entire European warehousing operations in Hamburg next year, as part of intensified efforts by the Norwegian outdoor brand to support its international business. This push is to come with more investment in the brand and extra resources to support retail partners.
As previously reported, the extra resources include management. After the formal arrival of Leif Holst-Liæker as chief executive in December, the company has hired two other senior executives who previously worked with the Nike and Berghaus brands. They should help to make the outdoor brand's international sales and marketing approach more consistent.
The German facility has already been covering deliveries in the European Union for several years and the closure of the Norwegian warehouse was decided three years ago. The move started to take more concrete shape with the opening of a much enlarged German warehouse of about 10,000 square meters in 2015, meaning that Bergans currently has two warehouses with over-capacity.
Adjacent to Bergans' head office, the facility in Hokksund is about 5,500 square meters and employs ten people along with four external workers. Exit packages have been agreed for the closure, which is scheduled to take place in the first quarter of 2017. The manager of the Hokksund warehouse will assist in implementing an auto-store system in Hamburg, which made Bergans' distribution much more efficient when it was adopted in Norway four years ago. He will also support the warehouse management in Hamburg to make sure the facility adequately covers the Norwegian market. That still makes up more than 65 percent of the group's turnover, despite investments in the U.S. and other markets.
Bergans raised its sales by 5.1 percent to 752 million Norwegian kroner (€81.0m-$90.6m) in 2015. But the group suffered a pre-tax loss of NOK 17.3 million (€1.86m-$2.08m) for the year, down from a profit of NOK 8.3 million (€0.89m-$1.00m) in 2014, due to rough pressure on margins in the first half. Holst-Liæker told Dagens Næringsliv that the swing in exchange rates between the Norwegian and U.S. currencies had pushed up purchasing costs by 40 percent in a short time.
The issue resulted in a loan of NOK 45 million (€4.85m-$5.42m) last year from the company's three shareholders: the former chief executive Ragnar Jensen, who remains board member and owns 38 percent of Bergans; the investor Torstein Søland, who has a stake of 58 percent; and Sølvi Nilsen, the owner of the remaining 4 percent.
As part of its efforts to add impetus to its international business, the company has been conducting consumer research about the brand's perception. Due to its huge market share in Norway, Bergans may have over-estimated its own reputation in other markets, and the focus groups in Sweden and Germany indicated that the brand recognition could be improved. On the other hand, the values attributed to the brand and its Norwegian origins were clearly positive. The group is working on ways to bring that across more distinctly and originally in international markets, focusing on the Norwegian outdoor culture and positive association with nature. The company's management is currently finalizing the strategic plan derived from these findings.