Retail: 66
-33.61%
Retail: 99
-0.72%
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Mon, Aug 28, 2017
Vol 1, Issue No. 33
Monday, September 18, 2017
Volume 1, Issue No. 36

The Brits May Be Coming for The Finish Line

Photo © Betty Longbottom (cc-by-sa/2.0)

The publicly-traded, embattled mall sneaker specialty chain, slated to report its next quarterly results Friday, may be in the acquisition sights of U.K.-based Sports Direct after all. And, in some circles, that is seen as good news for all athletic footwear brands and mall rival and premium sneaker purveyor, Foot Locker. If the British retailer Sports Direct were to acquire Finish Line, it would most certainly “shake up” the U.S. retail athletic space, provide new opportunity to athletic brands that have found it difficult to penetrate the mall segment, pave the way for Foot Locker to own high-end, marquee footwear business and lower Finish Line’s reliance on Nike (which accounted for 71 percent of its sales last FY).  
Others, however, suggest a repositioning of Finish Line as a seller of more “middle of the road” athletic styles would be completely unnecessary given DSW and Famous Footwear’s rising positions in the segment. With a strategy to become more aggressive in the athletic space, DSW last month hired Kirk Persson, formerly of Foot Locker, Dick’s and Academy Sports + Outdoors, as SVP/GMM for men’s and athletic.  

Susquehanna analyst Sam Poser upgraded his position on FINL shares to positive from neutral in a Sep. 13 report, pointing out his $12 target price on the stock that was trading at $10.45 late Friday afternoon. Poser’s current position on Finish Line is based on a 75 percent chance the retailer is acquired by U.K.’s Sports Direct and a 25 percent probability it remains a standalone business. He is confident the Finish Line board is willing to talk to suitors based on its shareholders’ rights plans (“poison pill” adopted August 28) and his conversations with FINL management. He sees the “takeout price” for Finish Line at $13.30 a share or $495 million, a 27 percent premium over Friday’s closing price.  

For sure, Sports Direct, which has more than 775 doors worldwide and annual revenues north of $4 billion, is already a global player in the athletic footwear space. CEO Mike Ashley, disdained by some for his management style, has been eying a path to enter the U.S. market for some time. In January, Sports Direct acquired Bob’s Stores and Eastern Mountain Sports out of bankruptcy for $101 million and has been implementing its merchandising strategy in both banners for several months.  

According to public filings, Sports Direct has been accumulating a stake in the Finish Line since late March. Poser estimates the retailer stands to lose somewhere between $72-88 million if it walks away. Simultaneously, the analyst predicts FINL stock would dip to $8-9 a share without Sports Direct’s interest. Yet despite its 21.7 percent indirect economic interest in the Finish Line, Sports Direct may not be the only British entity with a say in the Finish Line’s future. U.K.-based Monecor Ltd., trading as ETX Capital, has a 21.9 percent stake in the retailer. In his report, Poser says ETX would not have disclosed its FINL interest “unless the likelihood of a takeover was increasing.”

Roots Eyes U.S. Northeast, Midwest

Photo © daveynin (cc-by-sa/2.0)

The 44-year-old Canadian outdoor lifestyle company, which filed a preliminary, C$200 million IPO on September 13, intends to ramp up marketing, expand in the U.S. and elsewhere internationally, grow its leather and footwear offerings, and increase its ecommerce penetration to 22 percent of direct-to-consumer sales by the end of FY19. Roots Corp., which would be listed on the Toronto Exchange under the ‘ROOT’ ticker, would have a C$700 million market value after the offering that would include unspecified share sales by an entity controlled by co-founders Michael Budman and Don Green and Roots investor and New York private equity firm Searchlight Capital.  

Roots Corp. is headed by Jim Gabel, president and CEO, the former Wolverine Worldwide and adidas Canada executive and Priscilla Shum, chief merchandising officer. Growth objectives for the company, which generated C$281.9 million in revenues in FY16 include the opening of 10-14 stores in the U.S. by the end of FY19, at a total cost of C$15-17 million. Stores in Boston, Detroit, Philadelphia, Washington, D.C. and Chicago, in close to the company’s existing infrastructure, would be the immediate targets and average between 3,250 square feet and 3,750 square feet. Roots’ brand awareness has grown steadily in the U.S. over the last 15 years despite currently having only four physical stores south of the border, thanks in part to the company’s investments in the 2002 Winter Olympics in Salt Lake City.  

Overall, Roots wants to grow its topline to C$410-450 million by the end of FY19. Besides the U.S. expansion, it intends to reach the objective by increasing its marketing spend to 4 percent of revenues from historically less than 2 percent; expanding its international reach beyond Taiwan and China, where it currently has 136 nameplate stores through a regional retailer to Singapore and Malaysia; and growing its sales in leather goods (approximately C$36.6 mm or 13% of FY16 sales) and footwear (C$8.5 mm or 3% of FY16 revenues).

Retail Round-up:
Canadian Farm Co-Op Exiting Outdoor Specialty Retail

The 12-store Wholesale Sports Canada, owned and operated by the United Farmers of Alberta Co-operative since 2008, began liquidation sales Friday. The event, in conjunction with Gordon Brothers, will wind down by Dec. 28. UFA cited the increasingly competitive outdoor market, a continued shift to online purchases and “an overall slowdown in consumer discretionary spending” for its decision to shut Wholesale Sports, which operates five stores each in the provinces of Alberta and British Columbia. The chain, in business for 30 years, suffered an 8.8 percent decline in 2016 total revenues to C$103 million. UFA said the retail exit will enable it to focus on its core agricultural and fuel services businesses.  

August retail sales dipped 0.2 percent from July, according to the National Retail Federation, as sales in clothing and accessories stores dipped 1 percent seasonally adjusted from the prior month. Nonetheless, many retailers are gearing up for a seasonal-help hiring surge. Target intends to hire 100,000 additional staffers nationwide, up from 70,000 in 2016, including 4,500 to assist in packing and shipping online orders at its warehouses. Macy’s, meanwhile, will hire 80,000 holiday staffers, down from 83,000 in 2016, but increase the number of workers dedicated to online order fulfillment by 20 percent to approximately 18,000.  

The U.S. Supreme Court may soon be asked to rule on whether states can collect sales tax on remote sales, according to OIA’s Rich Harper. South Dakota’s Supreme Court ruled on Sep. 14 that a 2016 law passed by the state’s legislature to require out-of-state Internet retailers to collect sales tax violates the 1992 U.S. Supreme Court decision that said retailers are not required to collect local sales taxes where they do not have a physical presence. The State of South Dakota is expected to appeal its Supreme Court’s decision to the U.S. Supreme Court. The OIA has strongly supported e-fairness legislation, including the Marketplace Fairness Act and the Remote Transaction Parity Act, to level the playing field for all retailers.  

Nordstrom, which is reportedly working on securing $8 billion in a deal to take the company private— with private-equity firm Leonard Green & Partners helping with about $1 billion of the requirement—last week unveiled a new concept called Nordstrom Local, which is 3,000-square-feet versus 140,000 for a typical Nordstrom location. Local will have no dedicated inventory, but customers will access to a suite of services—personal stylists, alterations/styling and a beverage bar. Customers will be able to shop at Nordstrom.com and pick-up at the Local location same day, if ordered before 2 p.m. The 356-door retailer opens a Local location in West Hollywood, CA on Oct. 3. It should be noted LG&P’s historical investments since 1989 have included Big 5 Sporting Goods (1992), Sports Authority (2003), Varsity Brands (2003) and BJ Wholesale (2011).

• ASICS America has opened an 1,850-square-foot retail store in Honolulu, a five-minute walk from Waikiki Beach, that utilizes the brand’s Motion ID shoe-selection service to capture a consumer’s natural posture and style of movement when running.

Nike Raises Bar on Connection to NBA Fans

The Swoosh, which takes over the NBA’s on-court apparel deal this season, is using technology to marry its new NBA Connected Jersey to fans’ mobile devices. An embedded chip in the jersey, which will be available exclusively online on September 29, will launch real-time team and player content such as pre-game arrival footage, highlight packages and top players’ favorite music playlists on the garment owner’s mobile device. It happens via a download of the NikeConnect app and a tap of the mobile device to the jersey.

Johnson Health Tech Creating National Fitness Banner

All specialty fitness chains owned by Johnson Health Tech Retail, a subsidiary of publicly traded Johnson Health Tech of Taiwan, are being re-branded Johnson Fitness and Wellness over the next two months. The action will create a national chain with 100 locations under the same nameplate. Current stores being rebranded include: 2nd Wind Exercise Equipment, Leisure Fitness, Busy Body Home Fitness, and Fitness Resource. Matrix, Vision and Horizon are Johnson’s fitness equipment brands.  

“Customers today want a store that offers both a wide range of affordable and quality home fitness equipment options, as well as an experienced staff of fitness consultants who can help identify and understand their unique, individual fitness needs and goals,” said Mike Olson, EVP of Johnson Health Tech Retail, Inc. “Unifying our retail stores under one brand allows us to reach more people in a new way—as a wellness partner, rather than just an equipment supplier.”

Responsible Technology Takes Shape

New sustainable textile tech is also emerging on the university front. Pratt Institute’s Brooklyn Fashion + Design Accelerator (BF+DA) recently launched TEK-TILES, a two-year project to investigate and create a library of 100 activated swatches that are a “how to” for the design and manufacture of “smart garments.” In so doing, a new term has been coined: Responsible Technology. The BF+DA has always embraced technology, with 3D printing and software, yet sustainability is the pulse of the organization.  

The new program encourages designers to think about sustainability from the very beginning of the creative process and bring the ethos of environmental-responsibility to smart garment development.   For more on Responsibility Technology and the TEK-TILES project, see the September/October issue of Textile Insight at textileinsight.com.

Outpost Trade Event Hosts Industry Leaders and Creators

More than 70 outdoor and lifestyle brands participated in Outpost Trade’s flagship event at Camp Navarro in California earlier this month. Attendees included marketing executive and social media influencers in a networking event described as “living somewhere between Burning Man and SXSW.” The event culminated with a mini outdoor film festival presented by Eagle Creek.

The Buzz

ASSOS of Switzerland, the heritage cycling brand is expanding its North American sales force and consolidating its owned distribution. The company has named Suncoast Sports (FL), The Gold Agency (MI, OH, IN, KY), Mark Hartney (ND, SD, MN, Western WI, Northern IA), Peak Sales LLC (New England) and Terry O’Brien (Eastern WI, IL, MO) along with Sylvain Galarneau to cover the Canadian provinces of Quebec and the Maritimes. Meanwhile, the company is taking back control of all North American product distribution from Quality Bicycle Products, which sold the ASSOS’ Sportsmedics line. Stores interested in continuing to offer these products are advised to contact ASSOS USA or ASSOS Canada.

Implus is partnering with Academy Sports + Outdoors to donate 60,000 pairs of socks to aid the victims of Hurricane Harvey. The organizations are working with nonprofit charity Delivering Goods to distribute the socks over the coming weeks after they are shipped from the Implus distribution center in Durham, NC.

Tubes of the Week

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Numbers In Play
Week of 9/07-9/14
The Sports Insight Index is our opinion of what we think are the 30 most important public companies in the industry, 15 vendors and 15 retailers. Space considerations prevent us from tracking more, but we will make changes over time.
Index base of 100 is key to the closing prices of 12/31/14
Retail
As the Dow closed at another record high on the final day of the period, 13 of 15 retail stocks rose for the week. The only downers were Big 5 and Walmart. The discount behemoth Walmart is reportedly streamlining its U.S. operations by cutting the number of division to 4 from 6 and regions to 36 from 44. Meanwhile, Kohl’s new partnership with Amazon with special 1,000-square-foot departments in 10 stores located in Los Angeles and Chicago may be a factor in its stock price hike. Dick’s and its foundation have pledged more than $5.5 million in hurricane relief effort, including $3.5 million in footwear and apparel and $2 million to rebuild and refurbish youth sports programs in affected regions. Texas and Florida where Hurricanes Harvey and Irma hit over the last month are big youth sports markets. Zumiez’s addition of 100 new brands includes Nitro Circus/’47 headwear and apparel at select locations and online.
Brands
Segment held steady at 99, on the cusp of its Dec. 31, 2014 Index score of 100, as 11 stocks rose for the week against four decliners. Deckers’ shares fell more than 3.5 percent as activist shareholder Marcato Capital nominated a full 10-person slate of candidates to the company’s board as no sale of the UGG parent has yet to materialize. Wolverine is donating $2.6 million for Hurricane Harvey relief, including 35,000 pieces of footwear and apparel. Under Armour opens its 70,000-square-foot innovation center in Portland, OR, about 12 miles from the Nike campus. Callaway introduces its $700 retail GBB Epic Star driver along with woods, hybrids and iron with lighter specifications. Acushnet’s Titleist 818 Hybrids, at $315 retail, will be available at golf shops worldwide on September 29.

RETAIL: 66

33.61

BRANDS: 99

0.72%

Retail Name (Ticker Symbol)
Close on 09/07/17
Close on 09/14/17
% change over time
Big 5 Sporting Goods (BGFV)
BGFV
$7.95
$7.75
-2.52%
Cabela's (CAB)
CAB
$61.06
$61.35
+0.47%
Camping World (CWH)
CWH
$37.97
$39.24
+3.34%
Dick's Sporting Goods (DKS)
DKA
$26.91
$27.32
+1.52%
Finish Line (FINL)
FINL
$9.46
$10.20
+7.82%
Foot Locker (FL)
FL
$36.16
$36.62
+1.27%
Genesco (GCO)
GCO
$23.85
$25.10
+5.24%
Hibbett Sports (HIBB)
HIBB
$12.63
$13.25
+4.91%
Kohl’s (KSS)
KSS
$42.40
$44.41
+4.74%
Macy’s (M)
M
$21.72
$22.00
+1.29%
Sportsman’s Warehouse (SPWH)
SPWH
$4.35
$4.41
+1.38%
Shoe Carnival (SCVL)
SCVL
$18.63
$19.01
+2.04%
Tilly’s (TLYS)
TLYS
$11.06
$11.54
+4.34%
Walmart (WMT)
WMT
$80.12
$79.72
-0.50%
Zumiez (ZUMZ)
ZUMZ
$13.20
$16.35
+23.86%
Brand Name (Ticker Symbol)
Close on 09/07/17
Close on 09/14/17
% change over time
Acushnet Holdings (GOLF)
GOLF
$16.65
$17.03
+2.28%
adidas (ADDYY)
ADDYY
$117.20
$117.50
+0.26%
Amer Sports (AGPDY)
AGPDY
$26.63
$27.01
+1.43%
Callaway (ELY)
ELY
$13.73
$14.03
+2.18%
Columbia Sportwear (COLM)
COLM
$58.34
$58.62
+0.48%
Deckers Brands (DECK)
DECK
$64.75
$62.47
-3.52%
Fitbit (FIT)
FIT
$6.49
$6.88
+6.01%
GoPro (GPRO)
GPRO
$10.00
$11.23
+12.30%
lululemon (LULU)
LULU
$61.30
$61.12
-0.29%
Nautilus (NLS)
NLS
$16.40
$17.13
+4.45%
Nike (NKE)
NKE
$52.39
$53.73
+2.56%
Skechers (SKX)
SKX
$25.68
$26.05
+1.44%
Under Armour (UA)
UA
$15.98
$16.52
+3.38%
VF Corp. (VFC)
VFC
$62.89
$62.35
-0.86%
Wolverine Worldwide (WWW)
WWW
$26.98
$26.50
-1.78%

Sports Insight Extra Podcast Series

Bryan Smeltzer

The general manager of Zamst Americas talks sports protectives, dispelling some of the consumer and athlete misconceptions about the category.

Emily Walzer

Formula4Media colleagues Emily Walzer, Textile Insight editor, Jennifer Beaudry-Ernst, footwear specialist, and contributor Kurt Gray, owner of SimplyGrayDesign, dish on key trends from the final Outdoor Retailer trade show in Salt Lake City.

Judith A. Russell

Shifting consumer purchasing patterns are vital to understanding today’s marketplace. Russell, a marketing and strategic planning professional, offered up her thoughts at TexWorld in New York on a panel with Sports Insight Extra’s Bob McGee.

Will Decker

Family-owned Silicon Valley firm Plug and Play, which dubs itself the “Ultimate Startup Ecosystem,” has raised over $6 billion in venture funding during its 11 years while bringing corporations, venture capitalists and start-ups together.

Matthew Lyon

In the fragmented hydration market, where price points for performance products are on the rise, HydraPak is an OE supplier to numerous brands and has its own lightweight, flexible products.

Eric Hayes

Superfeet Celebrates 40th Anniversary. The employee-owned company introduces footwear and rolls out a 3D printed insole program.

Shawn Neville

BOA introduces New Tech and Names New CEO. Nothing will constrict Boa Technology CEO Shawn Neville from helping the Denver company improve its customized fit solution.

Waingarten and Frydlewski

No strings attached. The married Argentinean couple has raised nearly $20 million for Hickies, a Brooklyn company addressing how athletic shoes are closed around the foot two eyelets at a time.

Michelle Carmichael

The Co-founder and Managing Partner of Partners Growth, which brings premium brands into the U.S. market, talks Finnish children’s wear brand Reima. 

Brian Beckstead

Six-year old Altra is teaming with Utah State University to develop outdoor design talent.

Declan Condron

Let's Go Hyperwear: Former Equinox personal trainer merges the innovative, functional fitness gear from Austin, TX company with programming for schools, camps and institutions.

Hugues Gontier

Sly and Simple. BlueFox.io and its technology enable a retailer to interact with customers in store and track traffic. No beacon required. The CMO explains the benefits of the platform.

Reza Raji

The CEO of Xenio Systems talks about the company’s new platform that tracks where shoppers spend time in physical stores and its patented hyper-positioning technology.

Jacob Torres Espino

The director of export promotion for Mexico’s Guanajuato State government agency addresses the proposed impact of the Border Adjustment Tax by the U.S. and the possibility of a renegotiated NAFTA free trade agreement.

Isabelle Ohnemus

The founder and CEO of EyeFitU, a former investment banker, talks ‘glocal’ assortments, shoppers’ personal sizing and global web payment options.

Tom Cove #2

The president and CEO of the SFIA addresses the most serious threat the industry has faced in the past half-century and the expected re-introduction of the PHIT Act by Congress.

Matteo Scarparo

The Italian global trade expert in footwear talks about the present and future of TheMicam trade show and the potential impact of a Border Adjustment Tax in the U.S. on imported shoes.

Dr. James Eakin

Dr. James Eakin, chief marketing officer and director of U.S. operations for Xenoma, discusses the Japan company’s e-skin shirt and entire wearable category.

Rusty Saunders

Industry senior statesman Rusty Saunders dishes on industry leadership, pressing issues and the inactivity pandemic.

Barbara Barclay

Expert Barbara Barclay, president of RightEye, talks eye-tracking technology and her company’s recent alliance with Major League Baseball and USA Baseball.

Julie Sylvester

Julie Sylvester, Executive Producer at Living in Digital Times, talks trends likely to emerge at Sports and FitnessTech Summit at CES in Las Vegas.

Chris Palmer

Chris Palmer, Founder and CEO of BoxFox, talks excess inventory and solutions for vendors, retailers and distributors.

Susie McCabe

Susie McCabe, SVP of global retail for Under Armour who previously spent 16 years at The Ralph Lauren Corp., dishes on UA’s retail strategy and new Brand House in Boston.

Tom Cove

On the eve of Election Day, we talk to three leading industry lobbyists on how the results may impact trade in the sporting goods, outdoor and apparel and footwear industries.

Rich Harper

On the eve of Election Day, we talk to three leading industry lobbyists on how the results may impact trade in the sporting goods, outdoor and apparel and footwear industries.

Stephen Lamar

On the eve of Election Day, we talk to three leading industry lobbyists on how the results may impact trade in the sporting goods, outdoor and apparel and footwear industries.

Bill McInnis

The president of Reebok Future discusses the intent of the unit and the brand’s plans to develop footwear in a new way.

Tom Fowler

Polar USA CEO Tom Fowler talks technology and the future of smart wearables.

Paul Schille

TREW CEO Paul Schille dishes on the eight-year old company in the process of completing its Series A round of funding and his dual career.

Jason Kaplan

Milestone Sports CEO Jason Kaplan dishes on the company’s low-cost, wearable pod and how it will help specialty retailers connect.

Duncan Finigan

OOFOS marketing executive talks about the recovery footwear brand and candidly about her courageous personal health journey.

Matt Priest

Footwear Distributors and Retailers of America President Matt Priest the likelihood of the Trans-Pacific Partnership being passed soon.

David and Josh Higgins

ING Source executives dish about compression technology and the Hickory, NC company’s breakthrough OS1st Brace Layer System.

Charles Liberge

Jones & Vining’s Charles Liberge addresses strategies and directions for the iconic brand.

Jim Baugh

PHIT America’s Jim Baugh dishes on the inactivity pandemic.

Sue Dooley and John Daher

Rockport Group senior executives talk about the brand’s fresh start under new ownership that has a major emphasis on versatility.

Josh Shaw

Mission Athletecare CEO Josh Shaw says thermoregulation is the New York company’s singular focus.

Tim Porth

Tim Porth of Octane Fitness talks trends, Zero Runner and the company’s January acquisition by Nautilus Inc.

David Costello

The principal and founder of Rising Tide Associates talks about industry advocate lobbying for the domestic textile and footwear industries.

Steven D’Angelo

The ‘47 brand executive dishes on the Boston company and long-time MLB licensee founded by his father Arthur and his late Uncle Henry.

Pam Gelsomini and CB Tuite

Pam Gelsomini, president, and CB Tuite, VP–sales, discuss the company’s products, partnerships and what’s new for the season ahead.

Kenneth G. Andres

The tradeshowdirector for the American Sportfishing Association casts comments on the activity’s popularity, and trends in fishing.

Dick Sullivan

The principal and founder of Rising Tide Associates talks about industry advocate lobbying for the domestic textile.

Dave Coradini

The VP of sales and sponsorships for Spalding, Dave Coradini talks Shot Tracker and basketball.

Scott McGuire

The executive brand and product innovation leader dishes to F4M’s Emily Walzer on an array of topics.

Kelly Davis

Snow Sports Industries of America’s Kelly Davis talks weather, participation trends and how to handle the psyche.

Kevin Davis

The CEO of Performance Sports Group dishes on new bat standards and Own the Moment.

Gene McCarthy, Pt 2

Gene McCarthy, president of Asics America, speaks to Jen Ernst Beaudry on specialty run and more in the second part of the podcast.

Gene McCarthy, Pt 1

Gene McCarthy, new president of Asics Americas, dishes to F4M’s Jen Ernst Beaudry in the first of a two-part podcast.

Richie Woodworth

Saucony’s Richie Woodworth offers his views on brand’s running business and what it takes to manage through change.

Bruce Cazenave

Bruce Cazenave, CEO of Nautilus Inc., recently ranked 23rd on Fortune’s “Fastest Growing Companies” list.

Tony Armand

Armand is leading USB, created after the April merger of Shock Doctor and McDavid.

Gary Smith

Gary Smith has been at the helm of the Lawrence, MA firm for three years, and his 2016 strategies will broaden Polartec’s scope.

Marty Hanaka

City Sports CEO Marty Hanaka has 42 years in retail, starting at Sears in 1973.

Mike Dowse

Wilson Sporting Goods, one year removed from its 100th anniversary and a major restructuring, has a renewed focus and strategy.