Retail: 52
-4.84%
Retail: 178
+0.22%
PRESENTING SPONSORS
Monday, December 10, 2018
Volume 2, Issue No. 47

DEALS
Investment Group Readies $5.25 Billion Cash Bid for Amer Sports

Peak Performance is one of several brands owned by Amer Sports. Photo credit: amersports.com/brand/peak-performance.

A group consisting of China’s publicly traded ANTA Sports Group, an affiliate of FountainVest Partners, Lululemon founder Chip Wilson and Tencent will commence a 4.6 billion euro ($5.25 billion) offer for the parent of the Salomon, Arc’teryx, Peak Performance, Atomic, Mavic, Suunto, Wilson and Precor brands on Dec. 20. The bid represents a 39 percent premium on Amer Sports’ closing stock price on Sept. 10, the last trading day before Amer received preliminary interest from ANTA and FountainVest and a 14 percent premium on Amer’s closing price on Dec. 5, the day before the tender offer was formally disclosed.

While retaining Amer Sports’ corporate headquarters in Helsinki, Finland, the acquiring group says it intends to “invest significant time, resources and effort” to help Amer Sports “accelerate several important ongoing and new strategic initiatives under private ownership,” including expansion into the Chinese market. That effort would likely be accelerated, particularly for the Salomon and Arc’teryx brands, given Beijing will host the Winter Games in February 2022 and become the third consecutive Asian market to host the Olympics after PyeongChang, South Korea and Tokyo, Japan.

Upon completion of the tender offer, Amer Sports would operate independently from ANTA with a separate board. The ANTA brand was founded in 1991 and its parent company, which today also distributes the Fila and Descente brands in China among others, became a publicly traded company on the Hong Kong Stock Exchange in 2007. The investment consortium, meanwhile, has asked Heikki Takala, president and CEO of Amer Sports, to continue leading the company along with existing senior management.

“Amer Sports’ brands have exceptional potential for growth in an environment that is increasingly valuing quality, technically oriented soft goods,” said Wilson, Chairman of Hold It All Inc. and owner of Anamered Investments.

Elsewhere:

In another transaction last week, Marquee Brands, a brand management company that currently consists of Bruno Magli, Ben Sherman, Body Glove and others, acquired the Dakine brand and all related intellectual property. Simultaneously, Marquee struck a long-term license agreement with JR286, the acquirer of Dakine’s operating assets, to become Marquee Brands’ long-term operating partner for the brand that was founded in Maui, Hawaii in 1979 and is currently based in Hood River, OR and France. Dakine specializes in snow, surf and biking gear, packs and accessories.

Trade SHOWS
Interbike Canceled; OR Show Shrinks

Following a difficult four-year stretch in the U.S. bicycle market, show organizer Emerald Expositions has opted to scrap its annual Interbike show scheduled for Sept. 2019 in Reno, NV and layoff four staffers who worked exclusively on the event, including Justin Gottlieb, show director, and Jack Morrissey, marketing manager. All four will leave the company at month’s end.

Emerald Expositions’ Sports Group intends to research alternatives for Interbike in 2020 and beyond, perhaps launching bike-related events within or alongside its other multi-sport trade shows.

In separate developments, Emerald’s Outdoor Retailer show is moving to a three-day event in 2019, starting with the Jan. 30-Feb. 1 Snow Show in Denver, and ComplexCon is adding a show in Chicago (July 20-21) before returning to Long Beach, CA next November. The OR Summer Market will take place June 18-20 with a June 17 Demo Experience Day and next OR Winter Market is slated for Nov. 5-7, 2019.

“…We know it’s crucial to continue to evolve and enhance the shows and to take action on the feedback we’ve received,” said Marisa Nicholson, OR VP and show director. “What we learned is that three full days is sufficient.”

Meanwhile, The Fashion Footwear Association of New York (FFANY) has named former H.H. Brown and Nike executive John Heron its new executive director, starting Jan. 1. He replaces Ron Fromm, who stepped down earlier this year but continues overseeing FFANY’s philanthropic arm, The Fashion Footwear Charitable Foundation.

ComplexCon is coming to Chicago in July 2019.
Formula4Media editors talk trends and FFANY, The Running Event and Nike’s new House of Innovation on Fifth Avenue in New York City.

RetaiL ROND-UP
Zumiez Likes Its Global Reach; Lids’ Sale Still Possible

Zumiez continues on its path of global growth in the lifestyle sector.

Senior management at Zumiez, coming out of a Q3 where total revenues inched 1.2 percent higher to $248.8 million and comparable store sales grew 4.8 percent, think the retailer is well positioned to be a dominant global player in the lifestyle segment given its strategic presence in seven countries on three continents and its digital savviness. To that end, ZUMZ continues to focus on localized fulfillment on its strategic roadmap. Meanwhile, while the retailer continues to search out and develop relationships with a host of up-and-coming brands, it confirms its Top 20 brands as a percentage of overall sales continue to grow with its Top Three brands representing slightly over 10 percent of Q3 revenues. North American product margins were described as “very strong” in Q3 where the region generated a 1.5 percent increase in overall revenues to $226.5 million. Footwear was the largest “comping category” in the period, followed by men’s, women’s and accessories.

Elsewhere, Genesco-owned Lids continued to struggle with store traffic in Q3 despite higher promotional activity. Headwear is currently “between trends,” noted GCO Chairman, president and CEO Bob Dennis, and was largely responsible for the lower traffic. NBA branded and NFL were up on a comp basis, but a shorter World Series, the Red Sox win and headwinds from the MLB playoffs were all drags to push the chain’s quarterly comp into negative territory at -2 percent. Dennis confirmed Genesco “has a reasonable prospect of accomplishing a sale of the Lids’ business,” but admitted the process is taking longer than initially thought.

At Dick’s, CEO Ed Stack reportedly told investors in attendance at the recent Goldman Sachs Retail Conference that DKS is considering exiting its Field & Stream chain of 35 stores across 18 states. The decision may come at the end of Q4, but rather than an outright shutdown could involve remerchandising and reconceptualizing the banner.

Lululemon Keeps Expanding Reach

Photo credit: lululemon.com/story/women

Bras, outerwear, digital and memberships will likely each play critical roles in Lululemon’s overall strategy to reach topline revenue of $4 billion by 2020.

“The opportunities are considerable, beginning with our digital and retail experiences, our brand and community expressions and, of course, our product,” CEO Calvin McDonald told investors last week as the company reported a 21 percent increase in Q3 revenues, 18 percent comparable sales growth, 35+ percent traffic growth to its ecommerce site and hiked its annual guidance. The brand’s Like Nothing bra, its first such garment designed to be worn all day, sold through strongly. On deck for 2019: More franchise product line extensions including a hydration vest, an offshoot from the Enlite high support bra that was introduced a few years ago.

While Lululemon generated double-digit comps in all major categories in Q3, growth was particularly strong in men’s and women’s outerwear that rose 150 percent and 40 percent, respectively, that was fueled by the Cloudscape jacket for women and Outpour Parka for men.

On the digital side of its business, Lululemon says it’s “ahead of schedule” in reaching 25 percent, full year penetration by 2020. In Q3, conversion rose high single digits as digital represented more than 25 percent of overall revenues. COO Stuart Haselden told analysts the Vancouver company has been able to automate most of its email marketing strategies while adding in personalization. Meanwhile, within its brick-and-mortar fleet, LULU has added BOPIS (Buy Online, Pick Up In Store) to 35 locations. It also projects that 40 percent of guests at 49 seasonal stores that will be operating in Q4 will be new to the brand.

Meanwhile, Lululemon has begun a pilot $128 membership loyalty program in the Edmonton, Canada market. Subscribers receive either a pant or pair of shorts designed exclusively for the program, access to classes and curated evens and free expedited shipping on ecommerce orders. During H1/19, LULU intends to “tinker” with the membership program, including possible adjustments to the annual fee and curation of services ahead of a likely wider launch.

Quotable

“…If we look at our overall sourcing out of China, it’s right around 60 percent. That is a combination of both what our vendors produce as well as our own private label. So, we do have a good portion of our product coming out of China and obviously that’s why we continue to watch it.” — Chris Work, Zumiez, CFO

Nearly $90 Million Worth of Fake Kicks Seized

In separate actions in New York and East China, more than 509,000 pairs of counterfeit Nike, Converse, and Vans footwear have been seized.

U.S. Customs and Border Protection at the Port of New York/New Jersey completed their seizure of 9,024 pairs of fake Nikes, valued at nearly $1.7 million, last week. The fakes, with a Chino, CA destination, were initially flagged by CBP officials in late September after arriving in the U.S. from Dongguan City, China. An investigation into the matter by Immigration and Customs Enforcement (ICE) continues.

Meanwhile, more than 500,000 pairs of counterfeit Converse and Vans shoes with a reported value of $87.5 million have been destroyed following a three-year investigation. Some of the shoes were destined for Middle Eastern countries. In Dec. 2016, a Chinese sting operation netted the fake products from five former factories in Guangdong, Fujian and Zhejiang and resulted in seven arrests.  

What's Hot, What's New?

Merrell Gridway Soldier.

Merrell’s new Gridway Collection, which debuts at retail for Spring/Summer ’19 and continues in Fall ’19, is made from recycled materials. Knit uppers, laces and EVA footbeds are made from 100-percent recycled materials. EVA midsoles are made with 40-percent recycled content from manufacturing scraps and the Vibram EcoDura outsole is manufactured with a minimum of 30-percent post-industrial scrap rubber.

Execs on the Move
Promotions at Nike, Lululemon, Mountain Khaki

Left to right: Victoria Payne and Heidi O'Neill.

Heidi O’Neill, a 20-year Nike veteran who oversaw the development and opening of the Nike Experience store on Fifth Avenue in New York City, now has an expanded role at the company. Besides spearheading the brand’s brick-and-mortar doors and Nike.com, she will also oversee all digital products and services while remaining president of Nike Direct.

Elsewhere, Lululemon recently promoted Sun Choe to Chief Product Officer. She has been heading the brand’s product organization since February. And Mountain Khaki has elevated 12-year company veteran Victoria Payne to CFO and VP. She has previously served as controller and direct of finance and administration for the Charlotte, NC company.

The Buzz

Bauerfeind, the 90-year-old maker of sports and medical knee supports, strikes a new multiyear partnership with the National Basketball Association that makes the brand’s GenuTrain NBA an officially-licensed knee support of the league. The product will be available Dec. 12 at sports retail locations nationwide and at bauerfeind.com. Additional global markets will launch in 2019. The NBA and Bauerfeind have had a relationship for more than a decade, starting when athletic trainers first introduced players to the original GenuTrain knee support. Dallas Mavericks’ power forward and 13-time All-Star Dirk Nowitzki is Bauerfeind’s official brand ambassador.

Global Golf Innovation Competition, a new “Shark Tank”-style competition for golf start-ups, will take place at the PGA Merchandise Show in Orlando next month. HYPE Sports Innovation will host the event in cooperation with PGA Worldwide Golf Exhibitions. Start-ups and innovators may apply at: Golf2019.HYPESportsInnovation.com/competition until Dec. 15. Ten finalists will present at the competition.

Kontoor Brands will be the name of the independent, publicly traded company that was formerly VF Corp.’s Jeanswear organization when the VFC spinoff is completed in H1/19. The company will consist of the Wrangler, Lee and Rock & Republic brands and be spearheaded by CEO Scott Baxter. Further details about Kontoor’s board, executive team, stock symbol and strategic direction will be revealed before the separation.

U.S. Imports hit two million containers in a month for the first time in October, according to Global Port Tracker, as retailers raced to bring merchandise into the U.S. ahead of the now-postponed increased tariffs on China imports. The October import total of 2.04 million Twenty-Foot Equivalent Units (TEU) was up 9 percent from Sept. and 13.6 percent year-over-year and topped the previous monthly import high of 1.9 million TEU in July 2018.

U.S. Soccer Foundation sued the U.S. Soccer Federation (USSF) in federal court in Washington, DC last week seeking a declaratory judgment of non-infringement of trademarks in an ongoing dispute over who controls the Foundation’s name and branding marks. The USSF recently demanded the Foundation, founded as a nonprofit in 1994 with surplus funds from the 1994 World Cup hosted by the U.S., cease using its name and logos.

U.S. Treasury task force is recommending the U.S. Postal service increase shipping prices on commercial packages, a move that could significantly impact the cost of deliveries from Walmart, Target and Amazon.

Patagonia is investing the $10 million in cash it received from last year’s federal tax cut into grassroot organizations focused on climate change and public lands.

SFIA, which saw bipartisan passage of the PHIT Act in the House in July, is hoping the Senate will include the bill in tax package that will be voted on this month. Last week, the trade group was urging members to Tweet or email their respective senators about the need to include PHIT in the tax package.

YETI, in its first reported quarter since filing an IPO, generated a 7 percent revenue jump to $196.1 million and 51 percent increase in profitability to $17.0 million for the period ended Sep. 29. Direct-to-Consumer sales rose 23 percent to $71.2 million. Wholesale revenues were flat at $125.0 million with lower cooler and equipment sales offsetting higher drinkware.

Tubes of the Week

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Keeping it warm and cozy all season long. 🍂

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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
Segment returns to downside for third time in four weeks with a more than 4.8 percent drop, exceeding the Dow’s 1.4 percent decline. With Friday’s more than 558-point drop, the Dow fell more than 918 points over six trading days ended Dec. 7. Three stocks rose and 12 fell as the calendar moved into the holiday homestretch. Genesco’s Q3 consolidated comparable store sales gain of 4 percent was its strongest in more than 30 months. Macy’s is closing its online store on Tmall, owned by Alibaba Group, and will now ship directly to Chinese customers from its U.S. website. Walmart, Target (not on Index) and the National Retail Federation are urging the federal government to develop a service, per the Wall Street Journal, to settle interbank transfers in real-time. This would eliminate the lag between when consumers use debit cards and stores receive the funds. Feedback on the matter is being solicited through Dec. 14. Investment group wants Big 5 Sporting Goods, whose shares hit a one-year low Dec. 6 at $3.18, to expand its board to seven by adding former Walmart senior executive Mel Redman and Jeff Moore, a former Vans senior executive. Zumiez experienced its ninth consecutive period of same store sales growth in Q3 and early in Q4, realized 4.1 percent comp improvement on Black Friday Weekend. Camping World is the title sponsor of the college football game in Orlando on Dec. 28 between Syracuse and West Virginia.  
Brands
Segment is essentially flat for the period despite nine stocks rising and six falling over the period. Callaway, which last week announced its $476 million acquisition of Jack Wolfskin, was the biggest decliner. Adidas is partnering with Foot Locker on its new global Asterisk Collective, a platform it says empowers creative partners to make a difference through their respective initiatives. Initial ambassadors for the collection, whose first shoe (TRESC Run) hits FL Dec. 20, are Patrick Mahomes, Kid Cudi, H.E.R., Candace Parker and Donovan Mitchell. Puma, meanwhile, has debuted its new Co.Creative platform that connects the company with up-and-coming brands around the world. The platform’s first collection, which hit over the weekend, is from Dubai-based contemporary ready-to-wear label Lama Jouni. Nike names Tamika Curry Smith, a former Mercedes-Benz USA and Target executive as VP of Diversity & Inclusion. Lululemon is testing a $128 annual fee loyalty program with customers in the Edmonton, Canada market. Fee gets members a free pair of pants or shorts, free expediated shipping and the ability to attend curated workout classes. Skechers President Michael Greenberg is honored with the T. Kenyon Holly Award at the Two Ten Gala for his work supporting children with special needs and donating to families impacted by natural disasters. Wolverine’s CAT brand is launching a collection of rubber boots inspired by rugged equipment, Stormers, for Fall 2019.  

RETAIL: 52

48.35%

BRANDS: 178

77.66%

Weekly Review

Retail Name (Ticker Symbol)
Close on 11/30/18
Close on 12/06/18
% change over week
Big 5 Sporting Goods (BGFV)
BGFV
$3.60
$3.39
-5.83
Sports Direct (LON: SPD)
SPD
$372.03
$354.19
-4.80%
Camping World (CWH)
CWH
$19.01
$16.84
-11.42%
Dick's Sporting Goods (DKS)
DKS
$35.52
$35.71
+0.53%
JD Fashion (JD)
JD
$504.98
$466.88
-7.54%
Foot Locker (FL)
FL
$55.37
$54.47
-1.63%
Genesco (GCO)
GCO
$41.79
$43.84
+4.91%
Hibbett Sports (HIBB)
HIBB
$15.51
$15.72
+1.35%
Kohl’s (KSS)
KSS
$67.10
$65.63
-2.19%
Macy’s (M)
M
$33.74
$32.37
-4.06%
Sportsman’s Warehouse (SPWH)
SPWH
$4.70
$4.54
-3.40%
Shoe Carnival (SCVL)
SCVL
$37.05
$36.27
-2.11%
Tilly’s (TLYS)
TLYS
$12.05
$11.23
-6.80%
Walmart (WMT)
WMT
$97.29
$94.82
-2.54%
Zumiez (ZUMZ)
ZUMZ
$19.21
$19.26
+0.26%
TOTAL
TOTAL
$1,318.95
$1,255.16
-4.84%
Brand Name (Ticker Symbol)
Close on 11/30/18
Close on 12/06/18
% change over week
Acushnet Holdings (GOLF)
GOLF
$23.20
$23.45
+1.08%
adidas (ADDYY)
ADDYY
$112.72
$110.54
-1.93%
Amer Sports (AGPDY)
AGPDY
$38.46
$39.92
+3.80%
Callaway (ELY)
ELY
$18.90
$16.87
-10.74%
Columbia Sportwear (COLM)
COLM
$90.11
$91.98
+2.08%
Deckers Brands (DECK)
DECK
$130.27
$128.07
-1.69%
GoPro (GPRO)
GPRO
$5.33
$5.18
-2.81%
lululemon (LULU)
LULU
$129.46
$131.44
+1.53%
Nautilus (NLS)
NLS
$13.29
$12.01
-9.63%
Nike (NKE)
NKE
$74.35
$75.51
+1.56%
Puma (PUMA)
PUMA
$509.85
$513.25
+0.67%
Skechers (SKX)
SKX
$26.56
$26.19
-1.39%
Under Armour (UA)
UA
$21.75
$22.57
+3.77%
VF Corp. (VFC)
VFC
$79.46
$79.92
+0.58%
Wolverine Worldwide (WWW)
WWW
$34.40
$34.14
-0.76%
TOTAL
TOTAL
$1,308.11
$1,311.04
+0.22%

Sports Insight Extra Podcast Series

Nikki Barua

The old way of retail is dead, and there is a massive opportunity to re-invent, proclaims the CEO of Beyond Curious in Los Angeles.

Matt O’Toole

President of Reebok dishes on the brand’s mission and objectives from its headquarters in Boston.

Gabriella Santaniello

Retail expert dishes on what’s going right and wrong in industry today and weighs in on the Walmart vs. Amazon tussle.

Guy Yehiav

The CEO of Profitect addresses the right medicine for changing the paradigm of accountability—prescriptive analytics.

Pat Ryan

Batter Up! The global product director for baseball/softball at Wilson Sports details the new USA Baseball standard that took effect January 1 and what it means when you hit the store this spring looking for a new stick for junior.

Patrick Clark

President of Nextwave, a Buford, GA system integrator, discusses benefits of an on-demand apparel microfactory, a bridge to Just In Time manufacturing, from Sourcing at MAGIC in Las Vegas.

Shawn McBride

Ketchum Sports & Entertainment EVP talks Olympics—impact of three consecutive Games in Asia, social media, corporate guerilla marketing and drawing in younger consumers.

Tyson McGuffin

Tennis pro Tyson McGuffin, 28, talks about the rising popularity of pickleball and how he became a champion in the sport.

Bob Mullaney

The 20-year shoe and retail industry veteran, recently named president and CEO of RG Brands, dishes on the comfort footwear business and Barry’s iconic Dearfoams brand.