Retail: 55
8.67%
Retail: 181
-0.39%
PRESENTING SPONSORS
Monday, August 27, 2018
Volume 2, Issue No. 33

Inside Trade
U.S., Mexico Draw Closer on NAFTA; U.S., China Talks Yield Little

U.S. and Mexican trade officials continued trade talks over the weekend as the two sides reportedly made “significant progress” toward a new North American Free Trade Agreement (NAFTA). An agreement in principle between the two nations may be reached by Aug. 31, paving the way to bring Canada back into the talks.

One possible deal breaker amidst all the optimism is both Canada and Mexico’s insistence that the U.S. relinquish its requirement for a “sunset clause” in NAFTA that would require renegotiation of the pact every five years. Both Canada and Mexico officials contend longer periods between NAFTA reviews would give more certainty to all business investments. Officially, the U.S. has yet to say it’s softening its stance on the sunset clause.

Meanwhile, as hearings concluded last week on another round of proposed tariffs on $200 billion worth of Chinese imports, including sport gloves, bags, coolers and sport chairs, the U.S. and China reportedly made little progress in mid-level talks that ended without a joint statement from the parties or an announcement of further negotiations. Reports suggest the new round of tariffs will take effect at the end of September or in early October.

An editorial in a Chinese national newspaper late last week cited the upcoming mid-term elections for the lack of a softened U.S. stance on trade with the country. “An escalation in the U.S.-China trade war is becoming obvious,” wrote the People’s Daily on Aug. 24.

Kohl’s Doubles Down on Active, Other Initiatives to Drive Traffic

The chain is testing a 40-percent larger activewear department in 30 doors with nearly 50 percent more SKUs than found in a typical Kohl’s, including exclusive items, via localized assortments. The success of the test launch will determine whether Active is expanded in Q4 and in 2019. In Q2, Kohl’s experienced a 4 percent increase in national brand sales, driven by strength in apparel and footwear that was largely tied to the banner’s continued Active growth, CEO Michelle Gass told analysts last week. Nike, the chain’s largest national brand, outperformed the chain’s increase through core and new offerings and the introduction of Nike Golf apparel. Under Armour, now in its second year selling the 1,158-door chain, accelerated sales from Q1, and Kohl’s customers were said to respond favorably to an expanded assortment from Adidas. And recently, the banner has worked to expand its selection of casual footwear offering from the likes of UGG, Steve Madden and Clarks. In mid-2019, the chain will launch the Nine West brand, working with Authentic Brands Group on an exclusive line of apparel under the label that will be complemented with footwear and handbags.

Overall, Kohl’s generated a 3.1 percent comparable store sales gain in Q2, its fourth consecutive quarterly increase, as digital sales jumped mid-teens and men’s, women’s and footwear were the strongest categories. Overall inventory per door dipped 8 percent.

On the traffic front, Kohl’s recently expanded its Smart Cart program, initiated in Q3/FY17, to mobile. Smart Cart, which incentivizes customers via Kohl’s Cash, to pick up orders in-store rather than having them shipped to their home, is helping the retailer lower shipping costs related to online orders. Meanwhile, after a late July launch for 20 stores, KSS is preparing to introduce its Buy-Online-Ship-to-Store (BOSS) to all locations ahead of the holiday shopping season. Gass says BOSS will significantly broaden the banner’s assortment available for free in-store pick-up and is another way for the chain to drive traffic into its stores.

Meanwhile, an initiative to have more smaller stores, now 500 total, continues as the retailer adds more in-store features and design changes for its customers. Among them: lockers for online order pick-ups and a new customer service center concept that will be tested in two doors later this year.  

The senior director of sales and marketing for Quality Corrections & Inspections, the largest rework operation in the U.S., discusses the nature of the business and details a new program created to help retailers deal with returns.

Foot Locker Launches Mini Hub DCs

Foot Locker intends to have a second mini-hub distribution center in test mode by week’s end, enabling it to better service its retail network and Direct-to-Consumer orders through quicker store inventory replenishment in key markets and the ability to offer next-day delivery to 6,000+ U.S. zip codes. Additionally, FL, which reported an 0.8 percent drop in comparable store sales but 9.3 percent DTC sales increase in Q2, is continuing work on strengthening its digital platforms across banners and repositioning its loyalty program away from a transactional coupon-based approach to an experiential one focused on “strategic brand moments” starting in 2019. FL loyalty program members will receive credit for purchases, regardless of which banner or channel they choose to shop at.

As for specifics on FL’s Q2 results, comparable sales rose 0.5 percent. Apparel was stronger than footwear with both average selling price (ASP) and units up, paced by Nike and Champion in Kids Foot Locker stores. Footwear comp sales slid slightly as ASPs rose and units fell. Men’s footwear sales increased low single-digit on a comp basis fueled by running (up mid-single digit) and a double-digit increase in casual bolstered by classic styles from Vans and Fila; women’s and kids were each down low-single digits. By banner, Eastbay posted a high single-digit comp increase followed by Champs Sports (up mid to high single-digits) and Kids Foot Locker (up low single digits). Foot Locker U.S. and Foot Locker Canada posted slight gains for the period ended Aug. 4.

Hibbett Embraces Apparel, E-com

At Hibbett, apparel sales were up on a comp store basis for a third consecutive quarter, rising low double-digits on double-digit gains for men’s and kid’s and a mid-single digit increase for women’s. HIBB’s licensed apparel segment, described as its “most challenged” area, fell high-single digits. Footwear sales rose mid-single digits, a fourth consecutive quarterly comp gain, with men’s up double-digits and women’s, low-single digits.

The small-town operator, which says 60 percent of its transactions are generated by its 860,000 loyalty program members, reported that 8 percent (approx. $16.9 million) of Q2 revenues came from ecommerce. Hibbett intends to expand its Buy Online, Pickup Instore (BOPIS) program, currently being tested in the Birmingham, AL market to most doors in Q3. The retailer is also unveiling a feature that will allow customers to reserve items online for instore pick-up (ROPIS).

Walmart Dips Big Toe into Online Outdoor Specialty

Moosejaw curated the products for the Premium Outdoor Store.

The retail behemoth’s mission to attract more Millennial shoppers and dent the online dominance of rival Amazon took another step forward today. Walmart opened its Premium Outdoor Store online, offering shoppers an outdoor specialty assortment in an online marketplace.  Thousands of items were curated for the format by Moosejaw, the outdoor specialty retailer acquired by WMT for $51 million 18 months ago.

In a statement, Eoin Comerford, GM of Outdoor, Walmart U.S. eCommerce and CEO of Moosejaw, outlined the improvements it has been able to make through Walmart’s scale and said the site was designed to complement the everyday camping assortment already available at Walmart.com. It should be noted that brands and products found on the Premium Outdoor Store will not be available in Walmart’s brick-and-mortar locations. With WMT’s backing and investments in technology improvements to its website, Moosejaw now offers free two-day shipping on orders over $49 and an enhanced rewards program that has pushed the redemption rate up 50 percent.

Besides Moosejaw branded products, which will be increased sitewide in the coming months, the Premium Outdoor Store’s women’s apparel section includes items from eight other brands—Black Diamond, Eider, Jack Wolfskin, ExOfficio, Zensah, Gramicci and Turtle Fur. In the men’s apparel area, there are also offerings from Native Eyewear, Terramar and CW-X.  Among the 17 pages of 663 footwear styles for sale, Danner and Bearpaw have the most products. Order fulfillment isn’t restricted to Moosejaw. Some footwear is sold and shipped by AreaTrend or Shoebuy.com. Team Spirit, CampMor and VM Innovations will fulfill purchases of some sleeping bag and pads from the likes of Klymit and Teton Sports.  

In addition to the other brands it is initially selling, including Deuter, First Ascent by Eddie Bauer and LEKI, new brands, products and technology features will be added to The Premium Outdoor Store over time, according to Comerford. Moosejaw is already working with Walmart’s technology incubator, Store N° 8, on virtual reality possibilities. If Walmart/Moosejaw is able to draw steady traffic to the site, some outdoor brands may face no choice but to consider a partnership with the retailer. However, it’s fairly certain the best-performing outdoor brands at the specialty store level won’t abandon those relationships, the distribution channel and margins to align with Walmart/Moosejaw. However, outdoor brands that already have proven success navigating and balancing their business between the outdoor specialty channel with online purveyors such as Amazon may be more inclined to give the Walmart/Moosejaw online marketplace a try. But perhaps with only certain products at the onset.

Inside Retail
REI Sticks with Used, Sustainably Produced Gear

REI Seattle

The national co-operative, with 17 million members and 152 stores nationwide, is moving forward with its used gear initiative. Launched in October 2017 as a beta test, REI’s used gear website (rei.com/used) is getting a refresh with additional brands, more product categories, a series of member-to-member gear swaps and an employee team focused on getting lightly used products in the hands of more customers.

“We launched Used Gear Beta online last year with the belief that we could help get more people outside by finding new homes for pre-loved gear and apparel,” said Peter Whitcomb, REI’s director of strategy and leader of the co-op’s used gear efforts.

In its first 10 months, REI has seen midweight down and synthetic jackets emerge as the most popular used gear item among customers. Women’s apparel is the site’s most popular category.

“If you’re an outdoor enthusiast looking to reduce your environmental footprint,” says Greg Gausewitz, REI’s manager of product sustainability, “you can approach this from both ends: by looking for more sustainability products at the outset, and by getting more life out of existing products by purchasing used gear.”

Elsewhere,

Sportsman’s Warehouse spend $3.5 million this year and another $3.5 million in 2019 to develop and get its ecommerce strategy operational sometime over the next 15-18 months. The first phase is set for an early 2019 debut. By mid-2019, SPWH will begin leveraging the inventory in its 92 doors online by making it available in real-time to customers who may pick-up orders at a nearby stores. The third phase of the ecommerce strategy, to launch in late 2019, will bring content, like local fishing or camping conditions, to customers via their Sportsman’s Warehouse mobile app. The more than 1.7 million consumers who are members of the retailer’s loyalty program account for 48 percent of its topline, which is projected to range from $841-$857 million in FY18 on comps of -1 to +2 percent.

Urban Outfitters, which generated a 15 percent comparable store sales increase at its namesake banner in Q2 with double-digit growth in men’s and women’s apparel, says its customers are voting for self-checkout. In doing so, the retailer is able to redeploy its labor force to service customers and drive conversion on the selling floor. On the web, UO launched a Shoppable Instagram sales effort. During the period, the retailer’s noteworthy campaigns included the exclusive UO x Adidas World Cup Collection and the UO x Fila collaboration inspired by Pierre Cardin. In H2, UO will ship its first-ever wholesale orders with a small, select group of best-in-class retail and digital partners.

The Buzz

Louisville Slugger made special bats for MLB Players Weekend.

Amazon has initiated a new payment policy called “Pay by Invoice” that has some sellers on its marketplace worried about the possibility of facing regular cash crunches as they will now have to wait 30 days for payment from business customers rather than receiving weekly or bi-weekly disbursements. The new policy allows qualified Amazon corporate buyers to purchase from the entire marketplace rather than be restricted to Amazon Business. Small business sellers, unsatisfied with the new payment terms are reportedly being advised to add a 1.5 percent surcharge to their invoices.

Louisville Slugger produced bats in team colors and with special team logos for the recently completed MLB Players Weekend (Aug. 24-26). Some players used the event to engrave something other than their name on the bat, including nicknames and their children’s names. Among them: ‘Boomer’ on the bat of Oriole Trey Mancini and ‘Pico De Gallo’ on the bat of the Rangers’ Joey Gallo. Fans and amateurs are encouraged to design, build and purchase their own colorful bat with Louisville Slugger’s  exclusive MLB team logos at sluggercustombats.com. The league’s official bat has been affiliated with the MLB for 134 seasons.

Matrix Fitness, a unit of Johnson Health Tech North America, was recently honored as the 2018 Gold’s Gym Equipment Vendor of the Year, the fifth time it has received the award since 2009.

Outdoor Industry Association reveals the winners of its first Together We Are a Force awards focused on the industry’s collaborative spirit. Northeastern Minnesotans for Wilderness captured the policy award for their Save the Boundary Waters campaign. The multiple winners of the Sustainability award are: The North Face, Allied Feather & Down, Textile Exchange, Control Union Certifications and Downline for their work on creating the Responsible Down Standard (RDS) to support supply chain transparency and prevent animal cruelty. Meanwhile, The Participation Award winners are The American Hiking Society and Teresa Baker of African American Nature & Parks Experience, with support from Vasque and Patagonia, for their creation of the Hike Like a Girl Weekend event.

Reebok has introduced the Guresu X Thread, a studio fitness shoe created from the brand’s partnership with Thread International, a company that takes waste from some of the globe’s poorest areas and transforms it into environmentally-friendly materials used in the creation of consumer products. Thread Intl. has removed more than 38.9 million plastic bottles from the waters off Haiti and Honduras.

Target, which generated a 6.5 percent comparable sales increase in Q2 with same store sales up 5 percent and digital growing more than 40 percent, attributed its traffic and sales growth to “the result of everything we’re doing for our guests.” The retailer, which intends to remodel 1,000 stores over the next three years, attributes outlook upgrades to current trends and “a very strong start to back-to-school and back-to-college.” Target is pleased with results from a delivery-from-store service launched in 58 stores across five markets. Customers pay a small fee at checkout and choose a time window later the same day for shopping basket delivery to their front door. Average basket size to date is more than $200. Also, Target expanded its drive-up service to 800 U.S. locations from 50 doors year start.

Reebok Guresu X Thread

Tubes of the Week

Back to School Vibes with #ReebokClassics @kidsfootlocker

A post shared by Foot Locker (@footlocker) on

Mon, Aug 28, 2017
Vol 1, Issue No. 33

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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
It was the best of times, it was the worst of times. Apt description of the Retail segment this week. Target (not on Index) and Urban Outfitters reported strong quarterly results with the former declaring the “end of the retail apocalypse.” But Sears (not on Index) and Hibbett Sports had a rough week. The former announced 46 more store closures, the latter saw its shares take more than a 30 percent hit on Friday after reporting Q2 results and lowering its FY guidance. Still, the segment, with 11 up and 4 down, outperformed the Dow, which rose 0.42 percent for the period. Dick’s, slated to report Q2 results on Aug. 29, had a solid gain for the week as did Sportsman’s Warehouse, which is expanding women’s tactical apparel to 13 stores in the coming months and has gained exclusive rights to sell Under Armour’s Ridge Reaper line. Foot Locker, which has opened its first two “Power” stores in London and Liverpool, will open its first U.S. power format in the Motor City. Walmart is adding ‘vending machines,’ or pick-up towers, to 500 stores to expediate online order pick-up. The devices were introduced in 200 doors last year.  
Brands
Segment pushes towards a record ‘190’ Index score with all but VF Corp. gaining for the period. Segment rises more than 4.2 percent, led by the percentage gains of GoPro, Puma and Lululemon. Meanwhile, Callaway sees its target price lifted to $25 by a couple of investment houses. Deckers lands an upgrade from Susquehanna’s Sam Poser, thanks to a new segmentation strategy by UGG that appears to be less harmful to the brand that initially thought. Susquehanna also weighs in on Nike. The Swoosh gains as its strategy to trim excess inventory and sell consumer-direct appears to be working. Nike is ‘balancing scale and scarcity well,’ wrote Poser. Foot Locker’s Dick Johnson, meanwhile, tells an analyst that basketball has to “be seen as cool by our consumer” to achieve stronger traction at the retailer. A couple of rappers are rolling out new footwear collections for Puma and Under Armour. The Cat’s first Big Sean collection was slated to hit stores on Aug. 25 with the next rendition slated for Oct. 20. Hotnewhiphop.com reported that A$AP Rocky’s first collaboration with Under Armour will debut next month. In a separate development, Atlanta wide receiver Julio Jones has apparently parted ways with the brand. Lululemon, whose shares are up more than 75 percent in this its 20th anniversary year, reports Q2 results on Aug. 30. Adidas’ first football uniforms incorporating repurposed and upcycled materials debut Sept. 2 on the Miami Hurricanes during their season opener against Louisiana State University. In another Adidas football matter, ‘Friday Night Stripes,’ an eight-game series of live streaming U.S. high school football games on Twitter commences Sept. 7. Teams from CA, NV, IN, GA, and FL will be featured in the series that concludes Nov. 9.  

RETAIL: 66

33.57%

BRANDS: 188

87.91%

Weekly Review

Retail Name (Ticker Symbol)
Close on 08/16/18
Close on 08/23/18
% change over week
Big 5 Sporting Goods (BGFV)
BGFV
$5.70
$5.90
+3.51%
Sports Direct (LON: SPD)
SPD
$493.70
$493.17
-0.11%
Camping World (CWH)
CWH
$21.85
$20.80
-4.81%
Dick's Sporting Goods (DKS)
DKS
$36.39
$38.56
+5.96%
JD Fashion (JD)
JD
$607.77
$624.11
+2.69%
Foot Locker (FL)
FL
$49.75
$53.20
+6.93%
Genesco (GCO)
GCO
$41.90
$46.50
+10.98%
Hibbett Sports (HIBB)
HIBB
$25.80
$29.40
+13.95%
Kohl’s (KSS)
KSS
$74.75
$80.70
+7.96%
Macy’s (M)
M
$35.81
$38.13
+6.48%
Sportsman’s Warehouse (SPWH)
SPWH
$5.21
$5.97
+14.59%
Shoe Carnival (SCVL)
SCVL
$32.78
$35.37
+7.90%
Tilly’s (TLYS)
TLYS
$17.35
$17.25
-0.58%
Walmart (WMT)
WMT
$98.64
$95.18
-3.51%
Zumiez (ZUMZ)
ZUMZ
$28.70
$30.00
+4.53%
TOTAL
TOTAL
$1576.10
$1614.324
+2.42%
Brand Name (Ticker Symbol)
Close on 08/016/18
Close on 08/23/18
% change over week
Acushnet Holdings (GOLF)
GOLF
$27.12
$27.51
+1.44%
adidas (ADDYY)
ADDYY
$118.90
$122.33
+2.88%
Amer Sports (AGPDY)
AGPDY
$31.98
$33.17
+3.72%
Callaway (ELY)
ELY
$22.52
$22.55
+0.13%
Columbia Sportwear (COLM)
COLM
$90.67
$90.59
+1.17%
Deckers Brands (DECK)
DECK
$89.54
$121.48
+2.43%
GoPro (GPRO)
GPRO
$5.46
$6.37
+16.67%
lululemon (LULU)
LULU
$129.47
$136.20
+5.20%
Nautilus (NLS)
NLS
$14.20
$14.20
+2.82%
Nike (NKE)
NKE
$80.05
$82.91
+3.57%
Puma (PUMA)
PUMA
$515.00
$549.74
+6.75%
Skechers (SKX)
SKX
$29.35
$29.60
+0.85%
Under Armour (UA)
UA
$19.22
$19.94
+3.75%
VF Corp. (VFC)
VFC
$91.13
$91.32
-0.01%
Wolverine Worldwide (WWW)
WWW
$37.76
$38.40
+2.78%
TOTAL
TOTAL
$1,330.30
$1,386.71
+4.26%

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.