Retail: 58
+1.85%
Retail: 126
+5.07
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Mon, Aug 28, 2017
Vol 1, Issue No. 33
PRESENTING SPONSORS
Monday, February 26, 2018
Volume 2, Issue No. 08

Apparel’s Shifting Paradigm

The industry’s model for years is undergoing a revamp due to the buying habits of Millennials, the growing influence of online shopping, and the increasing consumer comfort with ordering a garment from a mobile device or laptop. Changes are far-reaching and wide, from traditional discounters Walmart and Target to basic apparel behemoth Gildan Activewear, which is altering its business model to become more of a retail private label supplier.

“It’s a lot easier to sell private label than it is to sell brands. I can tell you that,” Gildan CEO Glenn J. Chamandy told analysts last week. “…There’s been a convergence of historical printwear business with our retail business because of two things, one is that a lot of products today are actually ending up online.”

Gildan points to its Comfort Colors fashion basics business, acquired for $100 million in Feb. 2015, which is sold through Amazon and was recently named one of the six best T-shirts in the U.S. by the Wall Street Journal. The Montreal company’s newly adopted strategy will focus on aligning the apparel brands in its portfolio, including American Apparel, with particular retailers and developing a more cohesive ecommerce strategy.

“Now, we’re looking to put up a second facility on the East Coast to support all of our branded products. The Gold Toes and all the other Gildan items that we’ve been selling online that we really haven’t been able to service to be honest with you,” Chamandy admitted. “…So that’s really going to help us from a distribution strategy.”

Only months after Target revealed a number of new private label brands for its business, including JoyLab athletic apparel, Walmart is preparing to retire some of its tired clothing labels (White Stag and Faded Glory among them) with new brands this year.

U.S. apparel sales slipped 2 percent in 2017 to $215 billion, according to The NPD Group, which also reported a 2 percent gain in dollar sales of activewear last year to $48 billion that was driven by a 4 percent gain in women’s activewear to $21.9 billion. Overall online apparel sales, meanwhile, slowed to 4 percent growth in 2017 after recording double-digit increases in both 2015 and 2016.

Nonetheless, Cowen & Co. is forecasting Amazon’s apparel sales to hit $28 billion this year as other analysts have predicted the online giant’s clothing sales could reach $85 billion by 2020. That expansion could be fueled by Millennials and GenXers, the two generational demographics to purchase more apparel in 2017 and who are becoming increasingly comfortable with buying both in-store and online.

Amazon (37.4%) was slightly ahead of Target (37.3%) and behind only Walmart (41.8%) in a consumer survey by Coresight Research asking 1,564 Americans where they bought most of their footwear and apparel in 2017. Without the soft goods purchases of its Prime members, Amazon would be seventh in terms of retailers shopped for apparel. Kohl’s (32.9%), TJMaxx (25.3%) and Macy’s (24%) rounded out the Top Six followed by JC Penney, Old Navy and Costco.

A new cpcstrategy report based on a survey of 1,500 U.S. shoppers found that more than 52 percent of them purchased clothing items from Amazon over the prior six months versus nearly 47 percent that bought apparel items directly from a retailer’s website. While 56 percent of men said they were more likely to purchase clothing from Amazon; 53 percent of women favored a retailer’s website. And the three most important features valued by online apparel shoppers, no matter where they shopped, were: secure checkout (35%) followed by ability to filter items (20.6%) and customer reviews (18.6%).

Walmart Cools Its Jet, Ramps Up Apparel

The discount behemoth’s spend on marketing fuel for Jet.com, which it acquired for $3.3 billion in September 2016, is being throttled back. But Walmart is hardly abandoning the ecommerce business that is known to attract higher-income, urban millennials.

“Jet plays a great role reaching parts of the country and selling, in some cases, some brands that are not ready to sell on Walmart.com,” WMT CEO and President Doug McMillon told analysts last week. “So I think what you’ll see is Jet go through a period of adjustment. And then it’ll start to grow again but focused on specific markets and opportunities whereas Walmart will be the broad-based, big part of the business, and growing it will be a priority.”

Walmart’s ecommerce sales growth was 23 percent in the final quarter of 2017, down from a 50 percent increase in the third quarter. Most of the slowdown was attributed to Jet with a smaller percentage related to unspecified “operational challenges.” Still, the retailer, which ended the FY with approximately $11.5 billion total in U.S. ecommerce revenues, says it will evaluate additional ecommerce investments in FY18 on a month-to-month and quarter-to-quarter basis.

Despite the slower finish, Walmart finished FY17 with ecommerce revenue growth of approximately 40 percent, a figure the retailer expects to match in FY18 after a slower start to the year. McMillon readily admits lower national customer acquisition costs for the Walmart brand are prompting the marketing reduction at Jet.com, which will continue being promoted in certain urban markets.

With Jet President Liza Landsman slated to leave the company this spring for a position with venture capital firm New Enterprise Associates, a New York Post report suggested Jet founder and Walmart.com CEO Marc Lore may also be eying an exit from the company over the next two years with Landsman’s replacement likely being groomed to take over WMT’s ecommerce operations. Lore was not present on Walmart’s year-end conference call Feb. 20, but he denied last week that his exit was imminent.

Meanwhile, on the apparel front, Walmart, which owns the Digitally Native Vertical Brands in Bonobos and ModCloth and could acquire additional DNVBs in the future, is moving forward with a strategy to improve quality; manage good, better and best labels and lower SKU counts to improve in-store presentation. Acquisitions could help Walmart.com and Jet.com improve their respective apparel segments.

Wolverine Banking on Merrell in 2018

A cleaner inventory position and a renewed focus on a number of product segments should bring “high single” if not low double-digit growth for the Merrell brand in 2018 after a “flattish” first quarter. Merrell was the first Wolverine business to implement the company’s new business model that focuses on shorter market lead times for product collections and greater ability to backfill collections that sell through well at retail. The result was a high-single digit revenue growth in FY17, fueled by the new Chameleon 7 series in the fourth quarter and Work and Tactical product lines earlier in the year.

Merrell’s key product focuses in FY18 will be fast and light hiking and the expansion of its Nature’s Gym and Work segments. Additionally, the brand is expanding Arctic Grip to lifestyle offerings that are more fashion-forward with color to appeal to younger consumers. In the fourth quarter, the brand delivered “high teens” sales growth on the early introduction of the Chameleon 7 and a strong performance from Arctic Grip styles.

Billabong’s Future Hangs on Boardriders’ Deal

Despite delivering improved results in the Americas’ region, senior management at the Australian surfwear company Billabong insist the company’s $150 million, non-binding takeover by Boardriders, parent of the Quiksilver brand, must be completed to a avoid a massive capital structure, strategy and operations overhaul. Billabong is projecting a third consecutive year of “relatively flat” EBITDA due to difficult market conditions and despite an improving business in the Americas’ region.

Ecommerce sales in the Americas’ increased 19.5 percent to approximately $14.6 million, or 9.6% of overall regional revenues, for the six months ended Dec. 31. Overall, the region posted a 34 percent gain in EBITDA in H1 (prior to global allocations) on 3.9 percent constant currency revenue growth to $151.9 million. Americas’ revenue and EBITDA improvements are projected to level out in the second half of the FY and first half of 2018 as the segment “cycles tougher comparables and operational improvements.”

The Buzz

Outdoor Industry Association’s 2018 Agenda will focus on a number of key initiatives. Among them: building on the success of OIA’s Close to Home program; further lobbying of federal policymakers for funding and protection of U.S. public lands; promoting a “balanced trade agenda,” and expanding more than a decade of climate work through its Climate Change policy program. The trade group will release new Congressional District data in April during its Capitol Summit.

Hibbett Sports was bolstered by branded apparel and footwear and continued growth from its ecommerce business in the fourth quarter. Comparable store sales rose 1.6 percent for the period ended Feb. 3 as total revenues jumped 8.0 percent to $266.7 million. Ecommerce sales accounted for 7.6 percent of the total, or an implied $20.3 million. The quarterly same store sales gain was the retailer’s first in FY18, following declines of 4.9 percent, 11.7 percent and 1.3 percent during the first three quarters. Projected fourth quarter net income will benefit from the retailer’s sale of its team division. Hibbett is scheduled to formally report year-end results on March 16.

Nike has appointed Peter B. Henry, 48, Dean Emeritus of New York University’s Leonard N. Stern School of Business and a professor of economics and finance to its board. NKE Chairman and CEO said Henry’s expertise “will be invaluable…as we create new growth opportunities and accelerate our international momentum.”

Tubes of the Week

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.

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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
Dow was off nearly 238 points for the period and remained 6.2 percent below its Jan. 26 peak of 26,616.71. Only five of 15 stocks improved for the week, led by UK-based Sports Direct, whose increase benefited from currency. Walmart had the toughest week, hurt by a slowdown in fourth quarter ecommerce sales. Some suggest the discounter may be abandon its hard target in Amazon for Target with its decision to open a home goods website. Or, maybe TJX and Bed, Bath and Beyond? Macy’s, which reports year-end results on Feb. 27, is expected to benefit from cost controls and increases in its digital business. Nov.-Dec. comps rose 1.1 percent on fewer discounts and more turnover in key apparel, according to EDITED. Activewear sales rose 15 percent with Nike up nearly 45 percent for the period, the data-analytics firm reported. Foot Locker raised its dividend by 11 percent, but slashed its FY18 capital plan 15 percent to $230 million with a promised greater focus on supply chain and digital, including new enhancements to its mobile and web platforms. Dick’s strikes a multi-year, strategic partnership with Virginia Youth Soccer. Starting Sep. 1, DKS Team Sports HQ will be preferred online registration and club management provider of organization. Shoe Carnival is downgraded to hold by Zacks.
Brands
A week after realizing a weekly gain for 14 of 15 entrants, segment sees all stocks dip for the period. VF Corp., bullish again on The North Face, was the biggest decline. Company missed Street’s Q4 forecasts and its profits fell on U.S. tax changes. Adidas, which reportedly is trying to lure Drake over from Brand Jordan, is introducing new kids’ football kits tied to Marvel superheroes this summer. Nike rolls out the much anticipated React running style and becomes the first brand to sell a product on Snapchat. Callaway surpassed $1 billion in sales in FY17, the first time since FY08. Senior management calls 2018 “a competitive year for golf” but confirms U.S. channel inventories are in “a good position” currently. Under Armour is teaming with ESPN and local support groups to fund community revitalization projects in Baltimore, Philadelphia and Los Angeles.

RETAIL: 58

42.77%

BRANDS: 118

21.31%

Retail Name (Ticker Symbol)
Close on 02/15/17
Close on 02/22/18
% change over week
Big 5 Sporting Goods (BGFV)
BGFV
$5.95
$6.00
+0.84%
Sports Direct (LON: SPD)
SPD
$494.09
$525.88
+6.43%
Camping World (CWH)
CWH
$41.77
$40.80
-2.32%
Dick's Sporting Goods (DKS)
DKS
$33.58
$32.87
-2.11%
Finish Line (FINL)
FINL
$10.29
$10.35
+0.58%
Foot Locker (FL)
FL
$49.25
$48.26
-2.01%
Genesco (GCO)
GCO
$38.17
$38.55
+1.00%
Hibbett Sports (HIBB)
HIBB
$25.45
$25.00
-1.77%
Kohl’s (KSS)
KSS
$65.14
$64.75
-0.60%
Macy’s (M)
M
$26.48
$26.17
-1.17%
Sportsman’s Warehouse (SPWH)
SPWH
$5.01
$5.08
+1.40%
Shoe Carnival (SCVL)
SCVL
$24.11
$23.46
-2.70%
Tilly’s (TLYS)
TLYS
$13.81
$13.46
-2.53%
Walmart (WMT)
WMT
$103.26
$92.77
-10.16%
Zumiez (ZUMZ)
ZUMZ
$20.10
$19.80
-1.49%
TOTAL
ZUMZ
$956.46
$973.20
+1.75%
Brand Name (Ticker Symbol)
Close on 02/15/17
Close on 02/22/18
% change over week
Acushnet Holdings (GOLF)
GOLF
$21.54
$21.26
-1.30%
adidas (ADDYY)
ADDYY
$111.32
$110.95
-0.33%
Amer Sports (AGPDY)
AGPDY
$31.46
$31.24
-0.70%
Callaway (ELY)
ELY
$15.92
$15.47
-2.83%
Columbia Sportwear (COLM)
COLM
$76.19
$75.12
-1.40%
Deckers Brands (DECK)
DECK
$95.98
$95.56
-0.44%
Fitbit (FIT)
FIT
$5.40
$5.20
-3.70%
GoPro (GPRO)
GPRO
$5.62
$5.46
-2.85%
lululemon (LULU)
LULU
$80.92
$80.83
-0.11%
Nautilus (NLS)
NLS
$11.90
$11.85
-0.42%
Nike (NKE)
NKE
$68.30
$67.13
-1.71%
Skechers (SKX)
SKX
$39.47
$38.21
-3.19%
Under Armour (UA)
UA
$16.55
$14.97
-9.55%
VF Corp. (VFC)
VFC
$83.89
$75.21
-10.35%
Wolverine Worldwide (WWW)
WWW
$31.08
$30.68
-1.29%
TOTAL
ZUMZ
$695.54
$679.14
-2.36%

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.

Bob Smith

The design consultant who began his 20-year career as a graphic artist for Nike dishes on the blur between lifestyle and performance and the importance of Struktur, the creative conference for active, outdoor and urban design.

Rob & Mike Barnes

The co-founders of Selkirk Sports, a Hayden, ID maker of Pickleball paddles and accessories, dish on the rise of the sport that counted 2.5 million participants in 2015.

Brendan Candon

CEO of SidelineSwap, an online marketplace for used sports gear and equipment, dishes on the market and whether it steps on the toes of traditional, full-line retailers.

Dave McGillivray

The long-time race director and long-distance runner weighs in on marathon participation, the future of event marketing and his latest venture that may bring a marathon to a MLB ballpark near you.

Paul Froio

Reebok’s VP of U.S. Retail and Direct-to-Consumer channels talks about the company’s new South Boston headquarters and adjacent global flagship store.

Aquiles M. Bermùdez P.

The former president of the Dominican Association of Free Zone Companies and current member of the National Commission of Footwear addresses the industry, Dominican Republic’s infrastructure and Footwear Technology Institute.

W. Andrew Martin

The managing director for Baird in Charlotte, NC discusses the M&A climate, consumer loyalty to brands today and the impact of private label.

Mark Sullivan

The president of Formula4Media, LLC previews The Running Event conference and trade show set for November 28-December 1 in Austin, Texas.

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.