Retail: 57
2.22%
Retail: 187
+0.32%

Trade Talk: Tic Toc,Tic Toc

U.S.-China trade talks could take a crucial turn this week, fewer than three weeks before a March 1 deadline hits forcing an escalation of U.S. tariffs (Section 301 duties) on $200 billion worth of Chinese imports to 25 percent from 10 percent. Or, both sides, seeing some progress in their negotiations, could seek to extend their trade war truce until Pres. Trump and China President Xi Jinping meet again face-to-face. Economists, according to reports, believe both countries will eventually reach a resolution given the trade war is hurting both nations.

Late last week, there was no trending viewpoint ahead of mid-level talks that commenced in China today. The U.S. stock market reacted negatively on Feb. 7 after White House economic advisor Larry Kudlow called the trade differences between the U.S. and China “pretty sizable,” and Pres. Trump tweeted that no deal would be struck until he and Pres. XI meet “to discuss and agree on some of the long-standing and more difficult points.”

Higher-level trade negotiations are set for Thursday and Friday between U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steve Mnuchin and Chinese government officials.

The SFIA recently conducted a webinar on how the “First Sale Valuation” rule can lower a vendor’s import duties with David Cohen, operating committee member for the law firm of Sandler, Travis & Rosenberg in Washington, D.C. Cohen outlined how a company can create a First Sale program with minimal impact to its current transaction structure; how to work with brokers and suppliers to ensure documentation meets U.S. Customs’ rigid standards; and how to certify all future qualifying transactions are constructed to meet First Sale program requirements.

Three additional methods to mitigate additional tariff impact, according to Cohen, include: ABC (Anywhere But China), obtaining government approval for a product-specific inclusion, or working with the seller/manufacturer to negotiate a reduced price on a product order. The benefits of utilizing the First Sale rule are many, including reduced cost for landed goods, higher profits and no cuts in FOB pricing from vendors, Cohen said.

INSIDE RETAIL
Trade Group Forecasts 3.8-4.4 Percent Growth in 2019

The National Retail Federation is predicting 2019 retail sales will grow to $3.82-$3.84 trillion, representing 3.8-4.4 percent growth. This predicted growth will be paced by 10-12 percent annual expansion of online sales to a range of $751.1-764.4 billion. The positive outlook comes despite threats from the ongoing trade war with China, the volatile stock market and any lingering impact from the U.S. government shutdown.

In a statement, NRF President and CEO Matthew Shay called for the end to “artificial problems” like trade wars and U.S. government shutdowns and more focus “on prosperity, not politics.” His comments were made on the eve of Pres. Trump’s State of the Union address.

Estimated 2018 retail sales increased 4.6 percent to more than $3.68 trillion, exceeding the trade group forecast of at least 4.5 percent, and including 10.4 percent growth in online and other non-store sales to $682.8 billion. The NRF was forced to estimate December retail sales due to the government shutdown and no release of final month data from the U.S. Commerce Dept.

Elsewhere, the trade group expects the U.S. economy to gain an average of 170,000 jobs monthly, down from 220,000 monthly in 2018, as overall unemployment drops to 3.5 percent from 4 percent by year-end and GDP expands 2.5 percent in 2019.

VP of Sales for 2UNDR goes beneath the surface to detail the men’s performance underwear market.

Inside Retail
Foot Locker Enters Re-Sell Market

Foot Locker is entering the sneaker re-sale market with $100M investment in GOAT Group.
Image by GOAT Group.

Foot Locker’s future in sneakers is broadening to include the online buying and selling of high-end and rare sneakers worldwide. Last week, FL announced it will be making a $100 million strategic minority investment in GOAT Group, a mobile-only marketplace for used and collectible sneakers. The four-year-old company, whose initial investors include Matrix Partners, Upfront Ventures, Webb Investment Network and Y Combinator, was co-founded by former UC-Berkeley students Daishin Sugano and Eddy Lu. Michigan-based StockX, founded by NBA owner Dan Gilbert, John Luber and Greg Schwartz is its primary competitor.

In a statement, FL said its relationship with GOAT will enable it “to provide an unmatched experience and elevate customer engagement across the entire sneaker industry.” For GOAT and its Fight Club subsidiary, the new investment will enable the Culver City, CA-based company to accelerate its global operations with additional focus on the omnichannel experience and new technologies.

“With over 3,000 retail locations, Foot Locker will support our primarily digital presence with physical access points worldwide, bringing more value to our community of buyers and sellers,” said Lu. Scott Martin, SVP of strategy and store development for Foot Locker, is joining GOAT Group’s board.

In a separate development, Foot Locker has condensed its geographical reporting segments to three from five, but the change does not impact Stephen Jacobs. He remains CEO of FL’s North American operations. Meanwhile, Lew Kimble, CEO of FL International, moves to CEO of the Asia-Pacific region, and Vijay Talwar is promoted to CEO of EMEA from president of FL’s digital business.

Elsewhere,

• Johnny Mac’s Sporting Goods, the eight-door, team-focused chain that was founded in 1967, is being acquired by BSN Sports. There has yet to be a formal announcement about the deal for the family-operated business founded by umpire John A McArthur. Johnny Mac’s has five doors in Missouri, two in Michigan and 1 in Illinois.

• Zumiez reported stronger Q4 comps, 3.9 percent, than expected and raised its FY EPS guidance slightly. The 707-door specialty chain generated a 3.5 percent comp gain for the four weeks ended Feb. 2 with hard goods and footwear as its largest gainers. FY18 comps rose 5.6 percent.  

Quotable

“…Although we’re projecting this year (’19) as flat, we clearly believe we’re going to be able to grow the Jack Wolfskin business over time and that the long-term growth rates of that business will be superior to the golf industry and our core business in general.”
– Chip Brewer, president and CEO of Callaway Golf Company

Execs on the Move
Academy Hires CMO; Outdoor Voices Taps COO

Steven P. Lawrence and Phyllis Dannin.

Retail veteran Steven P. Lawrence starts his new job as EVP and Chief Merchandising Officer for Academy Sports + Outdoors today, replacing Michelle Gloeckler who joined the Katy, TX-based chain in Aug. 2016. Lawrence resigned as president and CEO of Francesca’s Holding Corp. on Jan. 31 after two-and-a-half years. He had previous merchandising roles at Stage Stores and JC Penney.

At Academy, Lawrence may turn to his Francesca’s playbook to bolster the fortunes of the KKR-controlled retailer that was recently hit with a credit downgrade by Moody’s. Under Lawrence’s leadership, Francesca’s introduced a loyalty rewards program, invested in social media influencers, hired new merchants and began a store remodel program. In his Academy role, he will oversee buying, planning, allocation, pricing and sourcing.

“I am humbled and thrilled to join the company in its mission to provide fun for all through strong assortments, value and experience,” Lawrence said in a statement.

Elsewhere,

• Former Under Armour and Nike senior executive Pamela Catlett has been appointed president and Chief Operating Officer of Austin, TX-based Outdoor Voices.

• Johnston & Murphy Group and Licensed Brands CEO Jonathan D. Caplan resigned from Genesco on Feb. 2. He will continue consulting to the Nashville company through June.

• Matrix Fitness hires Phyllis Dannin as VP of strategic business development. She will work closely with the company’s U.S. commercial sales team on growth initiatives.

Champion Celebrates its Centennial with a New Global Campaign

100-year old Champion aims for $2 billion in global sales by 2022.

Hanesbrands-owned Champion, whose top line grew 30 percent in 2018 to $1.36 billion, is projected to maintain that sales momentum this year and remain ahead of schedule to reach its topline goal of $2 billion worldwide by 2022. Beyond the U.S. where Champion activewear sales hit $650 million last year, the brand is benefitting from distribution expansion, more shelf space with existing customers and price increases.

“We are carefully segmenting the business by channel, and even with customers within channels, to keep that strong presence for the brand and keep the differentiation for our core customers,” Gerald W. Evans, CEO of Hanesbrands told analysts last week.

Overall, HBI, which generated $1.79 billion in 2018 activewear sales, is projecting segment revenues to increase more than 10 percent in Q1 and H1 in the U.S. Champion is forecast to increase in the “high 20s” or about $180 million in the market this year. C9, the Champion sub-brand sold in Target stores that hit $382 million in 2018 revenues, is expected to experience a sales drop of about $50 million this year with most of the decline occurring in H2. The balance of HBI’s U.S. activewear business, approximately $760 million in 2018, is generated by its American Casualwear business, college bookstore, sport apparel and alternative apparel segments.  

Callaway Golf Tees Off on Acquisitions

Jack Wolfskin generally earns all of its profits in the second half of year.
Image by Jack Wolfskin.

Forecasting “flat to slightly up” overall market conditions in 2019, Callaway Golf expects double-digit growth rates for its Ogio and TravisMathew segments to outpace low- to mid-single digit sales expansion for its flagship golf equipment business.

As for Jack Wolfskin apparel, a largely European business it recently acquired for $476 million, ELY is forecasting flat annual sales of approximately $382 million as it works to integrate JW’s operations and develop a cohesive growth strategy for the brand in the U.S. and Japan where its market presence is negligible. TravisMathew and Jack Wolfskin have higher gross margins than golf equipment with JW generally earning all of its profits in second half of the calendar year with Q2 and Q3 typically the brand’s biggest sales periods. TM, which posted an estimated 30 percent increase in FY18 revenues, is only in the beginning stages of its international expansion.

Overall, Callaway is forecasting 4-6 percent revenue growth in FY19, including the $382 million sales contribution from Jack Wolfskin. In FY18, ELY’S sales rose 25 percent to $706.3 million. From a category perspective, golf ball sales grew 20 percent to $195.7 million last year with clubs (+11.5% to $717.3 mm) and Gear/Accessories/Other (+35.7% to $329.9 mm) also gaining.

Are We Ready For More Football?

The Alliance of American Football season will end April 27, 2019.

Six days after the final snap in Super Bowl III in Atlanta, another pro football season began Saturday night in Orlando, San Antonio, Birmingham and Arizona. Welcome to the inaugural, 10-week season of the Alliance of American Football. Besides bridging the gap between the Super Bowl and the annual NFL Draft on April 27, the AAF brings new sports apparel licensing opportunities and a tech-edge via in-game tracking devices and wearable technology.

Canadian athletic apparel brand Levelwear is an AAF partner and will provide and market an array of sportswear, T’s, polo shirts, pullovers and outerwear for men, women and children who follow the fortunes of teams such as the San Diego Fleet and Birmingham Iron. The Toronto company, which is also an apparel partner of the Canadian Football League, is one of the The Alliance’s two apparel licensees. The other is Starter, which once marketed sideline apparel and game-day jerseys for the NFL and select NBA teams in the 1980s and 1990s. Starter will supply on-field wearables for the league’s players and coaches. Through a partnership with a unit of G-III Apparel, the brand will supply on-field jerseys for all eight AAF teams. Amer-owned Wilson is the official game ball.

Yahoo Global Sports Tech Awards Set for May 2

LID foldable helmets, The Occlusion Cuff Elite and Solos Smart Wearable Technology are all category finalists.
Images via Occlusion Cuff, Lid Helmet,and Solos Wearables.

Winners will be announced in 14 categories in the sixth year of the event in London, including Best Digital Technology, Best App and Best Technology for Elite Performance. The 3D evaluations and biofeedback training technology for coaches and athletes by Scottsdale, AZ-based K-Motion is among the finalists in the elite performance category.

The six finalists in the Best Sports Equipment, Apparel or Wearable Technology category are: Guided Knowledge Wearables, LID Helmets, Solos Smart Wearable Technology, Sports Performance Tracking for SPT2, STATSports Apex Pro and The Occlusion Cuff Elite.

The Buzz

Crocs is relocating its corporate home to Broomfield, CO from Niwot, CO in 2020. The company says its new 88,000-sq.-ft. location will support talent recruitment and retention after more than a decade in Niwot. State and city incentives influenced Crocs’ decision to re-locate, according to the Daily Camera.

Quick Hits: Gladiator Lacrosse, the Boca Raton, FL company founded in 2013 by a 13-year old Rachel Zeitz, now a student at Princeton, has acquired St. Louis-based All Ball Pro, a lacrosse equipment company with a U.S. manufacturing facility.

FILA extends its sponsorship agreement with the BNP Paribas Open as the official apparel and footwear supplier to the two-week tennis event (March 4-17) at the Indian Wells (CA) Tennis Garden. During next month’s tournament, all ball kids will wear Fila’s new Axilus 2 Energized performance tennis shoe.

Yonex net income rose 9 percent to the equivalent of more than $10.1 million for the nine months ended Dec. 31. Operating income was essentially flat at $12.79 million on a 1 percent dip in revenues to $403.2 million for the Japanese sporting goods company.

Tubes of the Week

Mon, Aug 28, 2017
Vol 1, Issue No. 33
Numbers In Play
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
The 2019 winning streak for the segment is over with a more than 2.2 percent decline for the week with seven stocks down and eight up. Dow was up 0.85 percent for the period, after it shed more than 220 point on the final days on fears about more tariffs on China-made products. Presently, Pres. Trump isn’t slated to meet with China’s Pres. Xi before a March 1 deadline. Genesco completes its sale of The Lids Sports Group. Walmart, slated to report year-end results on Feb. 19, gets a boost when Cleveland Research raises WMT estimates on checks that showed the discounter’s sales are running ahead of expectations. Two retailers not listed in the segment made news last week. JC Penney is exiting the home appliance business after three years at month’s end to focus on higher-margin merchandise, including apparel. And Sears rallies 32 percent to $.076 Feb. 7 as a bankruptcy judge approves Edward Lampert’s $5.2 billion bid for the bankrupt retailer that will enable it keep 425 locations open for business.  
Brands
Segment is essentially flat for the period with eight stocks up and seven down. Callaway has its target stock price  lowered to $22 at outperform by Imperial Capital after reporting a 19 percent increase in FY18 revenues and 62 percent year-over-year improvement in operating income. Columbia Sportswear’s FY18 U.S. sales grew 14 percent, led by a high-teens increase in DTC and a high-single digit wholesale gain. International growth of 19.2 percent fueled record annual revenues of $4.64 billion at Skechers in FY18 with domestic sales up 3.5 percent for the 12 months. Nike is utilizing NFL player Khalil Mack, the Chicago Bears’ 247-pound linebacker, to introduce its first men’s yoga collection. Adidas withdraws an all-white shoe from its collection of footwear and apparel inspired by the Harlem Renaissance movement from stores after online backlash. Company states, “Toward the latter stages of the design process, we added a running shoe to the collection that we later felt did not reflect the spirit or philosophy of how Adidas believes we should recognize and honor Black History Month. After careful consideration, we have decided to withdraw the product from the collection.” VFC needs to fill approximately 400 positions at its new Denver HQ, according to the Denver Post. Also, the company’s spin-off of Kontoor Brands, its jeanswear segment, could be delayed by another government shutdown. It’s currently slated to occur on April 30. Under Armour reports year-end results tomorrow.  

RETAIL: 58

43.17%

BRANDS: 188

87.28%

Weekly Review

Retail Name
(Ticker Symbol)

% Change over week
Price  1/31/19 • 2/7/19

Big 5 Sporting Goods
(BGFV)

8.72%

$3.44 • $3.74

Sports Direct
LON: SPD

2.92%

$364.75 • $354.11

Camping World
CWH

3.46%

$14.18 • $12.69

Dick's Sporting Goods
DKS

1.44%

$35.31 • $35.82

JD Fashion
jD

2.69%

$606.78 • $590.45

Foot Locker
FL

1.22%

$55.89 • $56.57

Genesco
GCO

2.30%

$45.18 • $44.18

Hibbett Sports
HIBB

1.84%

$16.34 • $16.634

Kohl’s
KSS

3.13%

$68.694 • $66.54

Macy’s
M

2.43%

$26.30 • $25.66

Sportsman’s Warehouse
SPWH

3.11%

$5.14 • $5.30

Shoe Carnival
SCVL

4.09%

$36.88• $35.37

Tilly’s
TLYS

3.55%

$12.11 • $12.54

Walmart
WMT

0.93%

$95.83  • $96.72

Zumiez
ZUMZ

7.36%

$25.41 • $23.54

TOTAL
WEEK OVER WEEK

2.22%

$1,412.23 - $1,380.83

Brand Name
(Ticker Symbol)

% Change over week
Price  1/31/19 • 2/7/19

Acushnet Holdings
GOLF

0.96%

$22.99 • $23.21

adidas
addyy

4.63%

$119.01 • $113.50

Amer Sports
AGPDY

1.06%

$44.33 • $44.80

Callaway
ELY

4.54%

$16.29 • $15.55

Columbia Sportwear
COLM

3.66%

$89.18 • $92.45

Deckers Brands
DECK

9.52%

$128.45 • $140.68

GoPro
GPRO

4.26%

$4.93 • $5.14

lululemon
LULU

0.13%

$147.81 • $147.62

Nautilus
NLS

2.51%

$7.57 • $7.38

Nike
NKE

0.64%

$81.88 • $82.40

Puma
PUMA

3.13%

$559.50 • $542.00

Skechers
SKX

1.91%

$27.17 • $27.69

Under Armour
UA

1.53%

$18.94 • $18.65

VF Corp.
VFC

2.22%

$84.17 • $86.04

Wolverine Worldwide
WWW

1.81%

$34.31 • $34.93

TOTAL
WEEK OVER WEEK

0.32%

$1,386.54 - $1,382.04

Sports Insight Extra Podcast Series