Retail: 55
8.67%
Retail: 181
-0.39%
PRESENTING SPONSORS
Monday, September 4, 2018
Volume 2, Issue No. 34

Breaking News
Nike Makes Waves with Kaepernick Ad

On the eve of mid-term election Primary Day, the opening of the NFL season and U.S. Supreme Court confirmation hearings in Washington, Nike set social media channels ablaze by revealing it has chosen former 49er quarterback Colin Kaepernick as the face of its 30th anniversary ‘Just Do It’ campaign. Also, reportedly in the works: a signature C.K. line of Nike athletic apparel.

Kaepernick revealed a Swoosh ad yesterday with the tagline: “Believe in something. Even if it means sacrificing everything.” Ahead of the decision to launch a campaign around the polarizing Kaepernick, Nike must have weighed the odds, taken the political temperature, and determined it could withstand any backlash it will face from conservatives, the White House and all those who do not favor Kaepernick’s position of kneeling during the national anthem to raise awareness about police brutality against African-Americans.

But did the Swoosh consult with its business partner in the NFL to gauge its temperature? Kaepernick, who hasn’t played in the NFL since 2016, is suing the league,alleging owners have conspired to keep him off the field.

Nearly an hour after the opening bell on Wall Street, NKE shares were down nearly 2.7 percent to $80.00. 

As of 9:00 a.m.today, 58 percent of respondents to a Twitter poll by the Daily Caller replied that Colin Kaepernick would “help” Nike with 42 percent saying his alliance would “hurt” the brand. Meanwhile, #NikeBoycott was trending with 35,500 tweets as country singer John Rich urged his Twitter followers to boycott the Swoosh. Others on social media, in light of the Nike-Kaepernick campaign, were threatening to destroy all of the Nike products and/or migrate to athletic brands such as New Balance and Reebok. Industry reporter Darren Rovell pointed out that in his nine-and-half years of tweeting, his Nike-Kaepernick ad post was the first to receive more than 10,000 comments. 

Meanwhile, financial commentator “Downtown” Josh Brown,CEO of Ritholtz Wealth Management, summed up the situation with: “Nike is marketing to their customer of the next 30 years, not the last 30 years. That new customer base will be highly educated and be able to draw a distinction between protesting the American flag vs. protesting institutionalized racial violence.”

Trade Update
Ohh, Canada!!

The U.S., already engaging in a trade war with China that could escalate with tariffs of 25 percent on an additional $200 billion worth of Chinese exports as early as this week, is also in the midst of an ongoing trade tiff with its neighbor to the north.

Trade representatives for Canada, the largest export market for U,S. goods, are scheduled to resume negotiations with the U.S. officials tomorrow, only days after Pres. Trump told Bloomberg that Canada will receive no concessions from the U.S. in any eventual trade deal. The two sides appeared close to an agreement late last week, but were unable to strike an accord over apparent differences on trade-dispute resolution, dairy policy and patent protection on drugs.

The U.S. appears ready to accelerate the formal approval process for a new trade deal with Mexico, its other partner in the current North American Free Trade Agreement (NAFTA), with or without Canada on board for a new trade pact. The Trump Administration needs to commence the 90-day approval process for the new deal with Mexico soon if it wants the treaty in place before the term of Mexican President Enrique Pena Nieto ends Dec. 1.

Meanwhile, across the world, worries about any further escalation of a U.S.-China trade war negatively impacted Asian stock markets in Japan, South Korea, China and Australia as September trading began. China, pledging to retaliate to any new U.S. tariffs with $60 billion on U.S. exports, is already experiencing downward pressure on its economy. The country’s manufacturing segment saw export orders decline for a fifth consecutive month in August as both infrastructure investments and credit growth dipped.

Both developments coupled with the persistent trade troubles with the U.S. led a senior China economist to write yesterday that, “(China’s) growth will probably remain on a downward trajectory well into next year.”

Dick’s Shifting Priorities Are Evident

The nation’s largest, full-line sporting goods retailer is intent on growing the profitable components of its business—largely premium athletic footwear and apparel, outdoor soft goods, golf, licensed, private label and fitness equipment—and is preparing for a larger, more efficient ecommerce operation for holiday and beyond. But DKS continues to show less confidence in the low-margin hunting business and electronics, a segment it is exiting.

The retailer’s operating margin in the hunt/electronics category, approximately 1,700 basis points lower than the company average, accounted for half of the retailer’s 4 percent consolidated same-store sales decline in Q2 where total revenues rose 1 percent to $2.18 billion and inventories dipped more than 6 percent. Merchandise margin improved 141 basis points on an improved product cycle, fewer promotions and a more favorable merchandise mix. But with more comp sales risk expected from hunting in H2, Dick’s is removing the category assortment from 10 doors this fall and repositioning the floor space in those locations. No word if the move will lead to a larger category pullback in FY19.

“We are delivering a much stronger, more curated assortment with a greater focus on key items,” Dick’s president Lauren Hobart told analysts last week. “We’ve narrowed and removed complexity from our assortment, which has allowed us to add more depth behind key items and significant business drivers.” 

With e-commerce accounting for 11 percent of quarterly revenues on 12 percent growth, DKS is taking steps to strengthen the segment’s infrastructure and efficiencies. A Buy Online Pick Up In Store locker test has already been expanded to 10 location from the three initially, and a Curbside pickup program for online is being tested at select stores. Robotics will be utilized in the retailer’s first regional ecommerce fulfillment center under construction inBinghamton, NY. Expected to open in Q3/19, the FC will have the ability to fulfill orders from customers in the densely-populated Northeast U.S. withinone business day. A smaller, regional ecommerce FC will open in the WesternU.S. in late 2019, Dick’s CFO Lee Belitsky told analysts.  

Catching up with the editorial director and editors at Formula4Media.

Lululemon Ahead of Schedule on $4 Billion Revenue Goal

Saying its men’s and ecommerce financial objectives are ahead of schedule, Lululemon reported strong quarterly results last week and predicted it’s tracking to meet or exceed its $4 billion annual top line objective.

LULU, which welcomed new CEO Calvin McDonald formerly with Sephora, generated25 percent revenue growth to $724 million for the period ended July 29. Brick-and-mortar produced a 10 percent comparable sales increase as digital comps soared 47percent to $167 million, equal to 23 percent of revenues. Excluding warehouse sale revenues from the prior year, digital comp dollar growth was 65 percent,the company reported. Men’s, women’s and accessories each generated double-digit sales increases with women’s pants, the brand’s highest-margin category, producing a comp increase above 30 percent.  

With plans to open 40 new store locations by year-end and increase its seasonal store count to more than 46 in Q4, Lululemon will introduce a BuyOnline, Pick Up In Store (BOPIS) program by year-end. This month, the brand continues its 20th anniversary celebration with a number of initiatives, including the introduction of a special capsule collection.

Footwear Insight
Sandals, Canvas Lift Shoe Carnival

The 402-door chain, which has scaled back its FY18 door closures to a range of 15-17, reported a 6.7 percent Q2 comparable store sales gain on a low-single digit traffic drop and flat average dollars per transaction. Revenues rose more than 14 percent to $268.2 million as inventory per store fell 2percent for the period ended Aug. 4.  

Sandals and canvas drove a “teens” comparable stores sales increase in women’s non-athletic with sandals up in the high-20s. The company attributed part of the gain to strategy to offer broad assortments in key categories.Meanwhile, a double-digit gain in men’s sandal sales paced men’s non-athletic,which rose mid-single digits on a comp basis. Both adult athletic and children’s shoes were each up mid-single digits.

Asked to offer his assessment of the chain’s current merchandise assortment, SCVL President and CEO Cliff Sifford said, “…I’m really happy with where our women’s business is performing. But, there is some concern, whether or not, the athletic trend will continue at the current rate through the rest of the fall season.”

Shoe Carnival has had seven consecutive years of strong athletic, athleisure footwear sales, he added.  

While August was off to a strong start for the chain with a 7.6 percent comparable store sales increase through Aug. 27, Shoe Carnival senior management admits Mother Nature will impact footwear sales from late September into October.

“Our customer shops at need and we’ve proven that time and time again when the weather turns cool, our boot sales will accelerate,” said Sifford.“We’re always somewhat cautious on this because we obviously don’t have any visibility to the weather. 

“…I hate to keep saying weather-driven,” added Sifford responding to another analyst question, “but the fact is, if we get decent fall and winter weather, we’ll sell the boots through at least the margin that we sold them through last year, if not better.”

Despite the strong Q3 sales start, bolstered by continued back-to-school buying, Shoe Carnival is cautious about its September-October business. A low single-digit comp decline is forecast for this month with Oct. expected to generate a small comp loss due a tough comparison against re-opened hurricane-impacted doors in Puerto Rico and Houston that produced strong sales numbers a year ago.

Walmart’s Outdoor Store Launch Hits Snag

Black Diamond, a Moosejaw partner for more than a decade and owned by publicly traded Clarus Corp. since May 2010, is currently evaluating its relationship with the 10-door outdoor specialty chain in the aftermath of last week’s launch of The Premium Outdoor Store online by Walmart.

Moosejaw, acquired by the discount behemoth in Feb. 2017, curated the brands and products for the online store that featured 20 outdoor brands two days after its Aug. 27 debut and no mention or presence of Black Diamond.

Earlier, Black Diamond, which has privately pledged ongoing commitment to outdoor specialty dealers and no plans to deviate from the strategy,dispatched a cease-and-desist letter to Walmart. The correspondence suggested WMT’s use of Black Diamond trademarked logo and product photos on The PremiumOutdoor Store site was likely to create consumer confusion and suggest the retailer is an authorized retailer for the brand.

Black Diamond is not the only vendor pushing back. Moosejaw partners Deuter and Katadyn announced that they will not participate in Walmart’s new premium outdoor store either.

TIA Focuses on State of Tennis Business

FILA endorsers stand out at the U.S. Open. From left to right: Marin Cilic, Karolina Pliskova and John Isner.

Held on the first Monday of the U.S. Open tennis tournament in New York City, the Tennis Industry Association Forum was an opportunity for those in the tennis industry to gather and to share insight on the health of the industry. The TIA Forum included research presentations on participation trends and tennis product sales from a variety of sources, including the Sports & Fitness Industry Association,Sports Marketing Surveys Inc. and Nielsen Sports.

A key research takeaway is that core tennis participation is slightly down, and casual participation is growing. Core is defined as playing 10 times or more per year. Core tennis players still account for 93 percent of “play occasions”and nearly 90 percent of tennis spending in the U.S.

At U.S.retail in 2017, core players spent $211.7 million on shoes, $163.9 million on apparel, $134.5 million on racquets, $80 million on balls and $37.8 million on strings. There were 17.68 million total tennis participants in the U.S. in2017, with 9.52 million being core participants. Youth tennis participation for2017 was 4.57 million, up one percent from 2016.

Growth is being seen in “cardio tennis,” which is a combination of group fitness and tennis drills on a tennis court. There are 2.2 million cardio tennis players in the U.S.

The not-for-profit Tennis Industry Association’s mission is to promote the growth and economic vitality of the business of tennis. The TIA State of the Industry report is available to TIA members at various levels. For more information, visit TennisIndustry.org.

Callaway Apparel a Key Driver for Perry Ellis

Growth across all channels helped Callaway Golf revenues swing 24 percent higher in Q2 for licensee Perry Ellis Intl. Additionally, Jack Nicklaus branded golf apparel sales increased more than 40 percent. During the period ended Aug. 4, PERY launched and delivered first shipments of its OriginalPenguin golf collection. Overall, the Miami company reported strong H1 golf apparel sales fueled by higher AURs and lower clearance inventory.

Elsewhere, the company said its strategy to expand its licensed NIKESwim business globally is “progressing well” with Q2 international revenues for the label nearly doubling year-over year, thanks largely to new wholesale partners in Europe.

Meanwhile, in October, PERY will relaunch the first of five limited-edition Perry Ellis America capsules with apparel pieces pulled from the 1990s that feature the bold logos and colors of the time. The marketing campaign to support the launch was developed in partnership with Hypebeast and some key retailers, including Bloomingdales and Selfridges in the U.K.

What’s Hot? What’s New?

Fila has released an updated version of its wildly popular Disruptor, the Disruptor 2 Premium Repeat ($65 retail), that offers a new twist on the popular silhouette. There is a repeating FILA logo around the eyelets and additional brand detailing throughout. Puma, meanwhile, has teamed with South Korean boy band BTS (also known as the Bangtan Boys) on a new iteration of its classic Basket, the Puma X BTS Basket ($90 retail). Modelre-interprets the iconic style in BTS style with black and gold colorization on the white patent upper and an engraving of the group’s debut date on the outsole and heel cup.

The Buzz

Merrell has named Adam Craig VP of Sales.Since 2013, Craig has served as director of U.S.sales for Columbia footwear. Craig spent 20 years at Columbia Sportswear in a variety of roles.

Adidas, two years after seeing 19-year Kylie Jenner front a Puma ad campaign, has inked her to an endorsement deal. She joins brother-in-law Kanye West and sister Kendall Jenner at The Three Stripes.

California becomes the 8th state to recognize the outdoor recreation economy, passing a bill last week to create the Office of Sustainable Outdoor Recreation. The outdoor industry provides over 690,000 jobs in the Golden State. The bill heads to Gov. Jerry Brown’s desk for his signature. 

NSGA names two Hall of Fame inductees for its May 21, 2019 ceremony during its annual management conference and team dealer summit. Bob Dickman, current SVP at BSN Sports, was chairman of the trade group in 2009 and 2010. He has spent the majority of his 42-year industry career working for Kesslers Sport Shop in Richmond, IN. Ronny Flowers, president of Athletic Supply Inc., Odessa, TX, is the second inductee.

Wolverine partnered with mikeroweWORKS to launch a limited-edition 1000 Mile boot with red, white and blue details as a salute to U.S. skilled workers. All boot sale proceeds between Aug. 28 andSept. 4 will be donated to the mikeroweWORKS Foundation, a non-profit with a mission to challenge the myths and misperceptions about the skilled trades. TheWolverine 1000 Mile boot was first introduced in 1914.

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
A couple of strong performances from the likes of Shoe Carnival and Tilly’s (see stories elsewhere in Sports Insight Extra) helped carry the segment to its second consecutive nearly 2.4 percent gain for the period, offsetting drags from a group led by Hibbett that received a downgrade to “Hold” to “Buy” by Canaccord Genuity on Aug. 27. Overall, the segment saw five stocks rise and 10fall for the period. Nonetheless, its aggregate increase beat the Dow, which rose 1.29 percent for the week. Dick’s decision to focus on profitable sales and de-emphasize the likes of hunt and electronics apparently did not please the Street, which appeared hyper-focused on the retailer’s current and future relationship with Under Armour. Tilly’s, as part of a legal settlement,will issue non-transferable discount coupons to 612,000 of its customers this month that will offer them a one-time 50-percent discount on a single purchase of up to $1,000. Sports Direct sees U.K. newspaper The Independent, citing a public survey, report that it’s ranked as the country’s least reputable retailer. Walmart, according to a WSJ report late last week, has alter edits ecommerce system to avoid orders deemed “too expensive to ship” in a test designed to make shipments more profitable.
Brands
Segment holds steady as six stocks rise and nine fall during the period. Under Armour, which has had a tough business in Dick’s this year since its expanding its distribution toKohl’s, may be on better footing with the nation’s largest full-line sporting goods retailer in 2019 as the two forge a new relationship focused on exclusive items  that will include signature products from brand endorser Dwayne “TheRock” Johnson. Lululemon COO Stuart Haselden tells analysts, as the company reports another strong quarter, that LULU is now “tracking to meet or even exceed our $4 billion revenue goal with men’s and ecommerce effectively ahead of schedule.” Lululemon men’s and women’s pants each comped over 30percent in the second quarter. Adidas consolidates its global media business this month, according to the MarketingReport, with Mediacom tapped to lead the Three Stripes and Reebok forward with London (adidas) and New York (Reebok) as the principal hubs for staff. Nike signs a multi-year, head-to-toe endorsement deal with NBA rookie andMemphis Grizzlie Jaren Jackson Jr. Also, the Swoosh sees former KenyanAthletics senior official David Okeyo banned from track and field for life for allegedly diverting Nike sponsorship dollars for personal use. Okeyo will appeal the ruling.  

RETAIL: 68

32.00%

BRANDS: 188

87.50%

Weekly Review

Retail Name (Ticker Symbol)
Close on 08/23/18
Close on 08/30/18
% change over week
Big 5 Sporting Goods (BGFV)
BGFV
$5.90
$5.70
-3.39%
Sports Direct (LON: SPD)
SPD
$493.17
$496.71
+0.72%
Camping World (CWH)
CWH
$20.80
$19.76
-5.00%
Dick's Sporting Goods (DKS)
DKS
$38.56
$36.19
-6.15%
JD Fashion (JD)
JD
$624.11
$666.28
+6.76%
Foot Locker (FL)
FL
$53.20
$48.79
-8.29%
Genesco (GCO)
GCO
$46.50
$49.60
+6.67%
Hibbett Sports (HIBB)
HIBB
$29.40
$19.90
-32.21%
Kohl’s (KSS)
KSS
$80.70
$78.28
-3.00%
Macy’s (M)
M
$38.13
$35.97
-5.66%
Sportsman’s Warehouse (SPWH)
SPWH
$5.97
$5.55
-7.04%
Shoe Carnival (SCVL)
SCVL
$35.37
$43.02
+21.63%
Tilly’s (TLYS)
TLYS
$17.25
$20.63
+19.59%
Walmart (WMT)
WMT
$95.18
$96.10
+0.97%
Zumiez (ZUMZ)
ZUMZ
$30.00
$29.85
-0.50%
TOTAL
TOTAL
$1,614.324
$1,652.33
+2.42%
Brand Name (Ticker Symbol)
Close on 08/23/18
Close on 08/30/18
% change over week
Acushnet Holdings (GOLF)
GOLF
$27.51
$26.65
-3.13%
adidas (ADDYY)
ADDYY
$122.33
$124.99
+2.17%
Amer Sports (AGPDY)
AGPDY
$33.17
$34.01
+2.53%
Callaway (ELY)
ELY
$22.55
$22.44
-0.49%
Columbia Sportwear (COLM)
COLM
$90.59
$89.74
-0.94%
Deckers Brands (DECK)
DECK
$121.48
$119.00
-2.04%
GoPro (GPRO)
GPRO
$6.37
$6.27
-1.57%
lululemon (LULU)
LULU
$136.20
$137.00
+0.59%
Nautilus (NLS)
NLS
$14.60
$14.70
+0.68%
Nike (NKE)
NKE
$82.91
$81.40
-1.82%
Puma (PUMA)
PUMA
$549.74
$550.00
+0.05%
Skechers (SKX)
SKX
$29.60
$28.86
-2.50%
Under Armour (UA)
UA
$19.94
$19.04
-4.51%
VF Corp. (VFC)
VFC
$91.32
$91.22
-0.11%
Wolverine Worldwide (WWW)
WWW
$38.40
$38.36
-0.10%
TOTAL
TOTAL
$1,386.71
$1,383.68
-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.