Retail: 55
8.67%
Retail: 181
-0.39%
PRESENTING SPONSORS
Monday, September 17, 2018
Volume 2, Issue No. 36

Sports & Fitness Market Grows 2.4 Percent, But Industry Optimism Dips

The top five fastest-growing sports/activities over the past three years were: BMX Bicycling, Cardio Tennis, non-traditional/off-road triathlons, Cross-country skiing and Pickleball, according to the newly released 2018 SFIA State of the Industry Report.

Additionally, total participation in the three major running categories (Running/jogging, treadmill and trail running) rose for the first time since 2013. Winter sports, followed by fitness and team, have seen the largest, three-year average annual growth rates. Meanwhile, the U.S. inactivity rate for those ages 6+ has remained steady at 28 percent over the last three years.

Elsewhere in the 45-page SFIA report, available for sale to non-members, the trade group notes that annual industry growth jumped 2.4 percent in 2017 with most companies said to be: ‘Successful and thriving’, ‘Grinding it Out’ or ‘Challenged.’ The five most important concerns in the industry in 2017 were: Increasing Market Share, Retail Failures, Slower Consumer Spending, Consolidation of Retailers and Material Cost/Availability.

Optimism within the sporting goods industry declined for a second consecutive year in 2017 as 76.4 percent predicted sales growth, according to the report. As a point of reference, 95 percent of survey respondents forecasted industry sales growth in 2015. Of course, much has occurred over the last three years, most notably retail consolidation and the Direct-To-Consumer movement. The Sports & Fitness Industry Association, meanwhile, says brand DTC selling has stabilized at 76 percent.

Key Week Ahead for Future Tariffs, Talks

With Washington and Beijing locked in a standoff on trade, Outdoor Industry Association representatives last week urged members to reach out to their suppliers “to encourage the Chinese government to go to the (negotiating) table with the U.S.”

In a Sept. 13 member webinar, the trade group affirmed pricing and sourcing challenges for its members heading into the Fall19/Winter20 seasons and confirmed some vendors have already decided to raise prices ahead of expected increased tariffs while others have decided to absorb any new duty increases.

“These additional tariffs will hamper the (outdoor) industry and put some products out of reach to some customers,” said Rich Harper, OIA’s Manager of International Trade, pointing to higher tariffs on backpacks and sports bags. On the trade side, the OIA said additional tariffs will make it significantly more difficult for small and mid-size outdoor companies to compete.

Meanwhile, following a tweet last week by President Trump that said the U.S. was “under no pressure” to make a deal with China, the Chinese government was reportedly finalizing plans over the weekend to schedule a Washington visit by Vice Premier Liu He next week The caveat for those high-level talks—The U.S. not establishing a firm date for new tariffs on $200 billion worth of Chinese imports. A final list of those products is expected this week, and it may include some outdoor products. OIA representatives told webinar participants that it encouraged Congressional Republicans to work with the Trump Administration to remove those outdoor products from the list. With $50 billion in Chinese goods already facing additional 25 percent duties, new tariffs on the $200 billion worth of targeted products may be lowered to 10 percent.

Additionally, the U.S. now has less than two weeks to bring Canada into a new North American Free Trade agreement, according to a Sept. 30 deadline established by the administration. The U.S. wants its new trade pact with Mexico finalized before President-Elect André Obrador takes office on Dec. 1. There are no established trade negotiations between the U.S. and Canada this week.

Anta Makes Bid For Amer

Salomon is among the brands owned by Amer Sports. Anta Sports-FountainVest has made a bid for Amer.

The Anta Sports-FountainVest unsolicited $5.3 billion bid for Finnish-owned Amer Sports, if finalized by year-end, would create a $5.3 billion, publicly traded company and provide greater retail access for Amer Sports-owned brands such as Wilson Sports, Arc’teryx and Salomon, particularly in Asia. Additionally, it would provide the new parent with a sizeable footprint in the outdoor segment for growth across the region given 62 percent of Amer’s annual revenues, or $1.94 billion, were generated in the category last year. Ball Sports represented 24 percent ($759.6 mil.) of Amer’s FY17 revenues with Fitness accounted for 13 percent ($419.9 mil.).

Anta, an official partner of the Beijing 2022 Winter Games, celebrates its 25th anniversary and 12th year as a public company in 2019. While it markets a namesake shoe brand and owns daily shoe manufacturing capacity of 3,000 pairs using only 30 workers, the company’s aspiration is as a global company with a portfolio brands. An Amer Sports acquisition would take Anta a step closer to its objective.

The company licenses the Fila and Descente brands for distribution in China and owns a number of additional sport labels besides Anta in Kingkow, Sprandi and Kolon Sport. Between its licensed and owned brands, the company operated 11,253 single-brand stores across China and elsewhere in Asia in Fila’s case. An acquisition of Amer’s brand portfolio would accelerate Anta’s brand retail presence across Asia. That effort would spark Amer’s sales in region, which accounted for only 14.5 percent of its FY17 revenues, or $452.8 million, compared to 41.8 percent ($1.3 billion) in the Americas and 43.7 percent ($1.36 billion) in the EMEA. Conversely, with Amer in the fold, Anta would find stronger global distribution channels for its existing stable of brands outside of Asia.

For the six months ended June 30, Anta generated 44 percent topline growth to an estimated $1.54 billion and 34 percent improvement in profit to about $282.6 billion.

Inside Retail
Amazon’s Rising Influence

With the longest possible holiday season fast approaching at 33 days between Thanksgiving and Christmas, traditional and specialty retailers received a dose of bad news last week—Amazon’s online dominance is showing no signs of abating. With research firm NetElixir forecasting Amazon’s share of all U.S. online sales in 2018 to rise to 40 percent, up from 35 percent in 2017 and 22 percent in 2014, Wells Fargo research disclosed Amazon is the dominate online apparel and footwear player with a 35 percent share (or 4x the second-largest player), and still pushing with new fashion styles and service efforts (try-on before paying). Both may create greater brand allegiance among the 18- to 34-year old set that made 17 percent of its 2017 online purchases at Amazon. NetElixir research shows that Amazon’s apparel/shoe revenues are up 19 percent in 2018 over 2017, although the Average Order Value is down 3 percent.

Nike, despite its June 29 announced alliance with Amazon, is clearly keeping its online options open and wide. Next month, the Swoosh will begin selling a collection of footwear and apparel products on Walmart-owned Jet.com as the brand moves to widen its ecommerce net for affluent, urban millennials. No specifics have been disclosed on products that will be available on Jet, but it’s a sure bet the assortment will differ from the Nike offerings available on Amazon or FootLocker.com as the company firmly sets a segmented strategy.

Elsewhere,

• Year-over-year retail sales rose 6.6 percent in August, according to monthly data from the U.S. Census Bureau. Adjusted sales in the sporting goods/hobby/musical instrument/book store segment were down 3.9 percent last month and are off 2.2 percent on an unadjusted basis for the first eight months of 2018.

• NetElixir is forecasting 15 percent ecommerce sales growth during Holiday 2018 (vs. +13% in 2017, +10% in 2016) with 42 percent of all online purchases made through mobile phones. Product listing ads are forecast to drive more than 65 percent of total paid search sales during the season. Additional trends forecast by the Princeton, NJ company include: more voice searches and heavy discounting by larger online retailers that could negatively impact margins for smaller merchants that aim to remain price competitive.

• REI is opening its first store in Alabama, a 20,000-sq. ft. store in Huntsville in Fall 2019.

XOnano co-founder and lead engineer discusses the Orem, UT company’s advanced sensing materials and how they are being utilized in the sporting goods industry and beyond.

What’s Hot? What’s New?

New Balance unveils its TCS New York City Marathon products at select retailers and newbalance.com. The collection ranges from $30 retail for graphic T-shirts to$450 for a limited-edition, Expo-exclusive Gore-Tex shell jacket. There are also four performance running shoes in the range, including the new FuelCell Impulse for $135. The NYC Marathon takes place Nov. 4.

Feetures is releasing The Merino 10 collection, an update to its merino sock, consisting of a blend of merino wool and TENCEL fibers that is said to be warmer, drier, softer and more durable. Available in eight different colorways.

Pro-Tec is introducing new helmets, including a collaboration with Volcom and new Classic Lite at $100 retail that has polycarbonate shell with 11 open vents and is said to be 30-percent lighter than the Classic.

The Buzz

False ‘Made in USA’ claims were at the heart of recent Federal Trade Commission actions. Patriot Puck in Farmingdale, NY, which also does business as Underground Sports Inc., Hockey Underground and Ipuck Hockey, has agreed to stop making false ‘Made in USA’ claims for its products since virtually all of them are sourced in China. Also, the FTC has charged Sandpiper of California and PiperGear USA of falsely claiming in ads, promotional materials, product labels and on social media that their backpacks travel bags, wallets and other products are made in the U.S. In fact, 95 percent of Sandpiper’s products are imported as finished goods and 80 percent of PiperGear’s products are imported as finished goods or contain significant imported components.

Rossignol names Scott Rittschof, a bike industry veteran with prior experience at Cycling Sports Group and Pon Bicycle Group, as SVP of its global bike division. He will manage the Rossignol Group bike business that includes the Felt, Rossignol and Time brand. Following his appointment, the company announced the departure of Bill Duerhing,Co-founder and president of Felt.

United States Soccer League is initiating aleague-wide licensing program in the coming season headed by former MLS and Starter licensing veteran Stu Crystal. The effort will include all USL Division III clubs and will aim to streamline licenses for independent clubs. The initial efforts will focus on fan-facing categories such as apparel, accessories and novelties with opportunities to partner with industry-leading licensees in each category.

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 falls for second consecutive period, although less than last week as only three rise and 12 decline. The more than 1 percent drop was worse than the Dow’s flat performance for the period. JD Fashion, preparing a “differentiated multichannel” test in the U.S. ahead of the peak holiday season, is forecasting a $440-$451 million revenue contribution from Finish Line for the partial year. In its first seven weeks of JD ownership ended July 29, Finish Line contributed an operating profit of about $6.26 million on revenues of $234.6 million. Dick’s brings its door count to 733, ahead of Q4, with openings in FL (2), AZ and IN. Macy’s will hire 80,000 temporary workers for the holiday season, including 23,500 at its online order fulfillment centers and 1,500 for its customer service call centers in three cities. Like Macy’s, Kohl’s intends to offer discounts and gift cards to seasonal staff. Target (not in Index) is increasing its seasonal hire total 20 percent year-over-year to 120,000. Sports Direct Intl., the parent of Bob’s Stores and EMS, lost its Chairman Keith Hellawell last week. He resigned after the retailer’s board was accused of poor governance. More troubles for the U.K.-based retailer emerged as reports suggested three of the ‘Big Four’ accounting firms, including KPMG and PricewaterhouseCoopers, removed themselves for SPD audit consideration, citing concerns over reputational risk and potential conflicts of interest. A U.K. agency is currently investigating Sports Direct’s FY16 audit by Grant Thornton.
Brands
Segment rebounds with a flat week, with seven up and eight down for the period, after declining nearly 2 percent in the previous period. Amer Sports was the biggest gainer as publicly-traded Anta Sports is working with an Asian private equity firm on a potential $5.3 billion bid for the parent of Salomon, Wilson Sports and Arc’teryx among others (See story elsewhere in SIX.) Nike, six days after its annual shareholders’ meeting and weeks after unleashing its controversial Colin Kaepernick “Just Do It” campaign nets six consecutive days of all-time high stock prices. Also, the Swoosh announces plans to partner with Walmart’s Jet.com, starting in NYC next month, as both the brand and retailer aim to court more urban millennials. In a separate development, Brand Jordan strikes a partnership with France’s Paris Saint-German soccer club for expansion onto the professional soccer pitch. VF Corp. intends to grow its Vans business to $5 billion by FY23, representing 10-12 percent growth over the next five years and including about $3 billion Americas’ revenues. Under Armour releases its signature Misty Copeland apparel line and first sneakers in its collaboration with A$AP Rocky. Puma parties with Big Sean in its new Miami Select Shop where it debuted his new capsule collection. Adidas will reportedly re-up its endorsement deal with U.S. Open winner Naomi Osaka. The 20-year old also endorses Yonex racquets. Deckers sees an Illinois federal judge rule that “ugg” is not a generic term for type of sheepskin boot, paving the way for the company to sue rivals who try to piggyback on the brand’s success.

RETAIL: 66

34.45%

BRANDS: 184

84.42%

Weekly Review

Retail Name (Ticker Symbol)
Close on 09/13/18
Close on 09/13/18
% change over week
Big 5 Sporting Goods (BGFV)
BGFV
$5.35
$5.20
-2.80%
Sports Direct (LON: SPD)
SPD
$477.21
$458.33
-3.96%
Camping World (CWH)
CWH
$19.89
$19.03
-4.32%
Dick's Sporting Goods (DKS)
DKS
$38.43
$37.18
-3.03%
JD Fashion (JD)
JD
$643.71
$656.26
+1.95%
Foot Locker (FL)
FL
$48.12
$47.04
-2.24%
Genesco (GCO)
GCO
$47.00
$45.65
-2.87%
Hibbett Sports (HIBB)
HIBB
$20.55
$19.75
-3.89%
Kohl’s (KSS)
KSS
$81.06
$80.03
-1.27%
Macy’s (M)
M
$35.36
$35.74
+1.07%
Sportsman’s Warehouse (SPWH)
SPWH
$5.86
$5.94
+1.37%
Shoe Carnival (SCVL)
SCVL
$41.18
$40.69
-1.19%
Tilly’s (TLYS)
TLYS
$19.73
$18.78
-4.82%
Walmart (WMT)
WMT
$96.45
$95.12
-1.38%
Zumiez (ZUMZ)
ZUMZ
$29.15
$28.60
-4.12%
TOTAL
TOTAL
$1,608.96
$1,592.69
-1.01%
Brand Name (Ticker Symbol)
Close on 09/06/18
Close on 09/13/18
% change over week
Acushnet Holdings (GOLF)
GOLF
$26.95
$26.57
-1.41%
adidas (ADDYY)
ADDYY
$119.85
$122.86
+2.51%
Amer Sports (AGPDY)
AGPDY
$32.19
$40.09
+24.54%
Callaway (ELY)
ELY
$23.10
$23.21
+0.48%
Columbia Sportwear (COLM)
COLM
$90.99
$92.07
+1.19%
Deckers Brands (DECK)
DECK
$118.76
$117.16
-1.35%
GoPro (GPRO)
GPRO
$6.63
$6.40
-3.47%
lululemon (LULU)
LULU
$151.00
$154.60
+2.38%
Nautilus (NLS)
NLS
$14.20
$14.10
-0.70%
Nike (NKE)
NKE
$80.40
$83.47
+3.82%
Puma (PUMA)
PUMA
$515.00
$505.07
-1.93%
Skechers (SKX)
SKX
$28.40
$26.65
-6.16%
Under Armour (UA)
UA
$19.18
$18.35
-4.33%
VF Corp. (VFC)
VFC
$91.29
$91.21
-0.09%
Wolverine Worldwide (WWW)
WWW
$38.56
$39.11
+1.43%
TOTAL
TOTAL
$1,356.50
$1,360.92
+0.33%

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.