Retail: 55
8.67%
Retail: 181
-0.39%
PRESENTING SPONSORS
Monday, September 10, 2018
Volume 2, Issue No. 35

Trade Clouds May Linger Beyond Mid-Terms

Those eying a speedy resolution to U.S. trade disputes with Canada and China may be disappointed. Comments by Pres. Trump Friday threatened to escalate the U.S.-China trade dispute further with a threat to place tariffs on essentially all imported China-made merchandise without an agreement to more freely open China to more U.S. companies. Such action by the administration would undoubtedly impact the footwear, apparel and sporting goods industries, particularly smaller firms unable to pivot their supply chains with immediacy. Economists are already suggesting that the longer new tariffs stay in place, the potential bigger dragon U.S. economic growth.

“If the U.S. side obstinately clings to its course and takes any new tariff measures against China, then the Chinese side will inevitably take counter measures to resolutely protect our legitimate rights,” China Foreign Ministry spokesman Geng Shuang said in response to Trump’s new tariff warning.

Earlier this year, the U.S. tagged $50 billion worth of Chinese goods with additional tariffs. And within a matter of weeks, another $200 billion worth of tariffs of up to 25 percent will be slapped on certain China imports, most likely including sport coolers, gloves, chairs, helmet accessories and hats/caps.

Meanwhile, with China’s trade surplus with the U.S. widening more than 10.5 percent in August to more than $31 billion and the National RetailFederation warning that additional tariffs “are the wild card” that threaten the stronger retail sales gains that have been made this year, a lead investment house CEO said worries over a U.S.-China trade war are premature since the impact on the Asian country will not be as immediate and challenging as many investors expect.

From a purely political perspective, Pres. Trump and China Pres. Xi Jinping are unlikely to back off from the escalating trade tussle, opined the Financial Times. But it’s more likely the U.S. administration would settle with a symbolic victory.

“Further tariffs are likely to lead to a weaker Chinese yuan and stronger U.S. dollar, and I think emerging market currencies will fall in response,” MUFG Bank chief currency strategist Minori Uchida told Reuters. The yuan slid almost 9 percent against the U.S. dollar between April and July but was little changed last month. A weaker yuan makes China-manufactured products cheaper for U.S. consumers.

For his part, Pres. Trump says he’s being strong on China because “I have to be.”

Whether that hardline stance carries over to Canada is uncertain. The U.S. and Canada have until Sept. 30 to settle their trade differences before the text of the new U.S. trade treaty with Mexico is made public. The U.S.wants a new trade agreement in place with its neighbor to the south before Mexico’s new president takes office on Dec. 1.

Breaking Down Q2 Results

Each of the major U.S. footwear chains reported stronger results in their most recent quarters. A breakdown of the highlights:

• Famous Footwear, which welcomed new president Molly Adams at the end of May, delivered a 150-basis point improvement in operating margin to 7.7 percent. Same store sales were up 2.6 percent on improvements in traffic, conversion and pairs per transaction. Total sales rose 6.1 percent, driven by lifestyle athletic and sandals and benefitting from a quarterly sales shift of $20 million from Q3 last year. The Caleres-owned chain said it could not keep pace with consumer demand for retro styles but saw performance athletic sales fall mid-single digits and kids’ dip low-single digits despite growth in athletic. The 1,008-door chain shipped nearly 500,000 pairs from its stores in Q2. Ecommerce sales represented approximately 10percent of quarterly revenues, or approximately $43 million, up about 15 percent.

• DSW sales and comparable store sales each rose 10 percent in Q2 ended Aug. 4. All categories posted positive comps for the first time since Q1/15 with a stronger in-stock positions driving higher margins and more regular-priced sales. While sandals produced a double-digit comp increase, athletic lifestyle sales were said to remain healthy as demand for non-athletic dress, casual and seasonal offerings increased. Senior management says the chain will continue to invest in athleisure styles due to its under penetration in the segment. Given the rise in vendor DTC, retailer is eying more offering more styles from own brands.

• Journeys’ comps rose double-digits in Q2 for parent Genesco as demand exceeded internal expectations. This fall, the banner’s website is being re-launched with better search and navigation features, new payment options, new help availability and better local store integration. GCO has also completed the expansion and upgrade of the chain’s DC, including a customized module for ecommerce picking.

Inside Retail
Instagram Plots Shopping App; Bankrupt Bon-Ton Eyes Comeback

Facebook-owned Instagram, as first reported by The Verge, may be on the verge of launching a dedicated shopping app that would enable users to browse collections of merchandise from people and merchants they follow. Purchases would be made directly within the app, which has not yet been formally confirmed by Instagram.

Elsewhere:

• The new owner of bankrupt century-old Bon-TonStores, a subsidiary of tech firm CSC Generation Holdings, is reportedly eyeing a retail return for the retailer and six subsidiary banners (Carson’s and Elder Beerman among them) that would largely be focused online but also re-opened brick-and-mortar locations in five states (CO, IL, IN, PA and WI).

JackRabbit has completed its acquisition of Rhythm Running in Nashville to bring its door count to 62 across18 states. The CriticalPoint Capital-owned running retail chain also intends to open stores in Houston and Tampa, FL this month.

Retail jobs in sporting goods were up 9,200 in August, according to U.S. Labor Dept. data released Friday. Overall retail industry employment jumped by 89,100 jobs year-over-year, but the sector was down 9,700 positions from July.

Prime Time Sports, the Colorado Springs, CO-based retailer, will no longer sell Nike products due to the company’s decision to make Colin Kaepernick the face of its 30th anniversary “Just Do It” campaign. Meanwhile, reports late last week suggested Nike’s online sales jumped 31 percent after it revealed the ad effort.

NRF 2019: Retail’s Big Show will take place at the National Retail Federation’s 108th annual convention in New York City from Jan. 13-15, 2019. Dick’s Chairman and CEO Ed Stack and Allbirds Co-CEO and Co-founder Tim Brown are scheduled as keynote speakers. Emily Culp, chief marketing officer for Keds, will also speak at the event.

Allbirds is opening a new 4,800-sq. foot flagship store in New York City’s SoHo neighborhood this week. The company, which has raised $27.5 million to date, is said to be eying eight additional U.S. stores, including Los Angeles and Boston, over the next 12 months.

Amer Sports Considers Portfolio Changes

The public parent of Wilson and Salomon is weighing a number of changes to its portfolio of sports brands to generate faster growth, higher profitability and better asset efficiency.

On deck, besides the integration of the acquired Peak Performance apparel business, are: putting its Mavic/ENVE cycling group business, with approximately $109 million in annual revenues, up for strategic review and exploring long-term strategic options for its Precor fitness and Suunto sports instruments businesses that may include a spin-off of either or both of the units.

Amer, in maintaining its FY18 financial objectives, says it will continue to prioritize profitable, sustainable growth focused on apparel and footwear, DTC, China, U.S. and Connected Devices and Services.

Shadowman Sports CEO and industrial designer talks safety in rugby,football using company’s tackling system.

Michael Greenberg Honored for Humanitarian Achievement

The co-founder and president of Skechers, Michael Greenberg, is set to receive the T. Kenyon Holly Award, the Two Ten Foundation’s highest honor for outstanding humanitarian achievement during the foundation’s 79th annual gala on December 5 in New York City. Greenberg, who served as a mentor for a peer with special needs as an elementary school student, in 2005 co-founded The Friendship Circle of South Bay, which creates social and recreational opportunities for special needs children at risk of isolation. The Skechers Foundation hosts an annual walk every October to raise funds for children with special needs and public education. The event has raised $10 million over the last decade.

Zappos, meanwhile, will receive the Two Ten Social Impact Award, an honor for an individual or company who affects positive change through giving back to the community. The company has a Zappos for Good program with a mission to “spread happiness” through numerous initiatives.

Execs on the Move
Dick’s Hires Ecommerce Czar

Vidya Jwala, a former Walmart merchandising and operations executive who most recently has been SVP of merchandising, supply chain, technology and customer service for Overstock.com, is joining DKS as Chief eCommerce and Supply Chain Officer. DKS, which operates 729 full-line brick-and-mortar locations and recently reported a 12 percent increase in Q2 ecommerce sales, is currently building its first regional ecommerce fulfillment center in Binghamton, NY that is scheduled to open in Q3/2019.

Elsewhere:

• Mountain Khakis, the mountain town-inspired lifestyle apparel brand, has hired former Billabong executive Jeremy Hall as president. He is replacing Ross Saldarini, company founder and president who is leaving to pursue other opportunities.

• DSW taps company veteran Bill Jordan to head its Canadian operation.

• Vista Outdoor hires Kelly Reisdorf as VP of investor relations.

• Lew’s Holdings Corp. promotes Ken Eubanks to CEO as Gary Remensnyder moves to the board of the company, which supplies branded fishing and hunting gear.

Are You Ready For Safer Football?

Riddell, in honor of brand ambassador Peyton Manning’s iconic jersey number, increased the number of SmarterFootball equipment grants to 18 in 2018 from 10 last year. Winners, who applied via an online application, successfully demonstrated commitment to teach smarter tactics on and off the gridiron. There were 1,400 applicants for the grants that were given to one college program, 12 high schools, two middle school teams and three youth football organizations. (Photo courtesy of Riddell)

The Buzz

Golf Datatech has completed an exclusive study detailing the surge in the Ultra-Premium golf club market. The report provides details on who buys these clubs, why, price-point comparisons and best-selling brands. The200+ page offering is based on a survey with nearly 2,300 serious golfers.Parties interested in the report are advised to contact Tom Stine at info@golfdatatech.com.

Iconix Brand Group has launched a Direct-To-Consumer website for the Ocean Pacific brand, offering shoppers a vintage-inspired collection for men and women with pieces ranging from $32-$64 retail.

TheSecond World Cycling Forum has been scheduled by the World Federation of the Sporting Goods Industry (WFSGI) for June 4-5, 2019 in Rotterdam, theNetherlands. The main theme of the two-day event will be: “Putting the BicycleIndustry at the Core of Sustainable Development.” Discussion will focus on the consequences of climate change and the role that the bicycle industry can play in combatting those changes. For more information on the event and theme, interested parties are advised to contact Emma Mason, head of strategy and external affairs for the WFSGI, at: emason@wfsgi.org

Steelo Sports, aLos Angeles baseball start-up, is the first African-American owned baseball glove company to land its product in Major League Baseball. Jonathan Davis, aSeptember call-up by the Toronto Blue Jays, wore Steelo’s custom pro model during a Sept. 5 game.

Velocity Outdoor, a subsidiary of Compass Diversified Holdings, has acquired Ravin Crossbows for $94 million, excluding a potential earn out of up to $25 million based on future financial performance. Ravin, based in Superior, WI and focusing on the premium crossbow market, had net sales of $46 million for the 12 months ended June 30.

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
Segment gives back its 2.4 percent from last week and more as six stocks rise and nine fall for the period. Meanwhile, the Dow was up a meager 31.02, or 0.12 percent, for the week. Zumiez achieved eight consecutive quarters of comparable sales growth with a 6.3 percent increase in Q2. August sales for four weeks ended Sept. 1 were up 9.5 percent. Q3 comp forecast is for 4-6 percent comp expansion. Zumiez says its customers are coming back to Zumiez for footwear after abandoning the banner for kicks during basketball shoe craze. Tilly’s ecommerce sales rose 8.1 percent in Q1, the strongest since Q3/16. Tilly’s is adding a dozen stores in FY18, its highest annual increase since FY15. The retail chain will also introduce an augmented reality collaboration with SoCA pop band Echosmith in Q2 and a social media effort with Shonduras. Walmart’s fallout from the launch of its Premier Outdoor Store hit the pages of the Wall Street Journal late last week. (Click here for their response). LEKI and Deuter joined Black Diamond in withdrawing from the online store. The retailer tells the newspaper it has added replacement brands to the store. Genesco says it’s working “diligently” with its vendor partners to “investigate all opportunities to ignite a new headwear trend” for its Lids retail operation that had “challenged” traffic in Q3 and a -5 percent comparable sales against -7 percent in Q1. There should be some recovery from the “significant” fall off in NFL headwear last year, a trend that was partly blamed on the number of injured high-profile players.
Brands
Segment drops nearly 2 percent for the period as eight stocks rise and seven fall. Puma, the biggest percent decliner for the week, is partnering with fashion designer Karl Lagerfeld, 84, on a 13-piece basics capsule to honor the 50th anniversary of The Cat’s Original suede sneaker. The capsule, with pieces for men and women, hits Oct. 19. Adidas issues an equity-neutral, five-year bond of up to 500 million euros with proceeds pegged for general corporate purposes and to help finance its multi-year share buyback program. Lululemon Founder Chip Wilson, 62, is the 496th richest person in the world, according to Bloomberg’s Billionaires List with a fortune that recently hit $3.9 billion. He still owns 13 percent of LULU. While Skechers reported its BOBS for Dogs annual campaign raised more than $3 million to help more than 580,000 man’s best friends, at least two investor class-action lawsuits were filed against the company last week. Nike, according to the Apex Marketing Group, netted $163 million in media exposure from its choice of Colin Kaepernick in its 30th anniversary “Just Do It” campaign. Also, NKE was hit with its second class-action lawsuit by former employees.

RETAIL: 66

33.79%

BRANDS: 184

83.82%

Weekly Review

Retail Name (Ticker Symbol)
Close on 08/30/18
Close on 09/06/18
% change over week
Big 5 Sporting Goods (BGFV)
BGFV
$5.70
$5.35
-6.14%
Sports Direct (LON: SPD)
SPD
$496.71
$477.21
-3.93%
Camping World (CWH)
CWH
$19.76
$19.89
+0.66%
Dick's Sporting Goods (DKS)
DKS
$36.19
$38.34
+5.94%
JD Fashion (JD)
JD
$666.28
$643.71
-3.39%
Foot Locker (FL)
FL
$48.79
$48.12
-1.37%
Genesco (GCO)
GCO
$49.60
$47.00
-5.24%
Hibbett Sports (HIBB)
HIBB
$19.90
$20.55
+3.27%
Kohl’s (KSS)
KSS
$78.28
$81.06
+3.55%
Macy’s (M)
M
$35.97
$35.36
-1.70%
Sportsman’s Warehouse (SPWH)
SPWH
$5.55
$5.86
+5.59%
Shoe Carnival (SCVL)
SCVL
$43.02
$41.18
-4.28%
Tilly’s (TLYS)
TLYS
$20.63
$19.73
-4.36%
Walmart (WMT)
WMT
$96.10
$96.45
+0.36%
Zumiez (ZUMZ)
ZUMZ
$29.85
$29.15
-2.35%
TOTAL
TOTAL
$1,652.33
$1,608.96
-2.62%
Brand Name (Ticker Symbol)
Close on 08/30/18
Close on 09/06/18
% change over week
Acushnet Holdings (GOLF)
GOLF
$26.65
$26.95
+1.13%
adidas (ADDYY)
ADDYY
$124.99
$119.85
-4.11%
Amer Sports (AGPDY)
AGPDY
$34.01
$32.19
-5.35%
Callaway (ELY)
ELY
$22.44
$23.10
+2.94%
Columbia Sportwear (COLM)
COLM
$89.74
$90.99
+1.39%
Deckers Brands (DECK)
DECK
$119.00
$118.76
-0.20%
GoPro (GPRO)
GPRO
$6.2
$6.63
+5.74%
lululemon (LULU)
LULU
$137.00
$151.00
+10.22%
Nautilus (NLS)
NLS
$14.70
$14.20
-3.40%
Nike (NKE)
NKE
$81.40
$80.40
-1.23%
Puma (PUMA)
PUMA
$550.00
$515.00
-6.36%
Skechers (SKX)
SKX
$28.86
$28.40
-1.59%
Under Armour (UA)
UA
$19.04
$19.18
+0.74%
VF Corp. (VFC)
VFC
$91.22
$91.29
+0.08%
Wolverine Worldwide (WWW)
WWW
$38.36
$38.56
+0.52%
TOTAL
TOTAL
$1,383.68
$1,356.50
-1.96%

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.