The Three Stripes, coming out of a Q3 where North American sales rose 16 percent and ecommerce revenues increased a whopping 76 percent, is preparing for the next iteration of the Ultraboost in 2019. The pinnacle product will be differentiated from its predecessor version but retain about the same retail launch price. Meanwhile, Adidas is promising high market scarcity for any future Yeezy rollouts. The recent launch of the Yeezy Boot 350v2 in triple white, which was a digital only global launch except for China, was described as above expectations in both sellthroughs and margin.
As for more specifics on Q3 results in North America, currency-neutral revenues came in at the equivalent of $1.46 billion with Adidas brand sales up 18 percent on growth in training, running, soccer and sport-inspired. Adidas CEO Kasper Rorsted described the brand’s U.S. growth as “balanced,” with Dick’s and ecommerce sales described as “exceptionally strong” and the Kohl’s business “still rolling out.”
Reebok brand sales were down slightly to approximately $119.4 million due to a decline in Canada that offset a “high single” increase in the U.S. Adidas senior executives told analysts the company is committed to getting Reebok to “breakeven no later than 2020.” Currently, Reebok sales are described as divided about evenly between Classics and running/performance. Rorsted told analysts “it would be a mistake to change the positioning (of Reebok at this point).” Reebok gross margins rose 440 basis points to 45.3 percent in the period.
Meanwhile, Adidas is exceptionally bullish about the progress it’s making in Direct-To-Consumer with the huge ecommerce quarterly growth bolstered by double-digit gains across all geographic regions. The company continues to target $4 billion in total ecommerce revenues by 2020 and Rorsted calls digital the company’s “most important vehicle” to drive consumer engagement. The Adidas app, now available in 17 countries, was downloaded five million times in Q3.
Pure Fishing is preparing to wade into a new ownership pond for the third time in the last dozen years. Newell Brands is selling the global business, which owns a vast portfolio of fishing equipment brands including Berkley, Shakespeare and Abu Garcia, to Sycamore Partners for $1.3 billion. The pending transaction is part of a broader transformation plan at Hobokon, NJ-based Newell, which is also divesting its Jostens yearbook and jewelry business for $1.3 billion.
Industry market speculation in October opined that American Outdoor Brands, the former Smith & Wesson, might be the Pure Fishing suitor given a September pronouncement by AOB that it intended to acquire ‘brands in the fishing realm.’
The former family-owned Pure Fishing was acquired by the former Jarden Corp. in April 2007 for $300 million and subsequently was folded into the company’s Coleman Company business. Months after Jarden and Newell merged in 2016, cost-cutting measures were implemented at Pure Fishing, which generated $556 million in FY17 revenues. They included elimination of the company’s 30-person marketing staff in Columbia, SC and cutting pro fishermen under contract.
• HydraPak is acquiring Boulder, CO-based Polar Bottle for undisclosed terms. Polar, which will hit its 25th anniversary in 2019, will remain a standalone business. The company, founded by two cyclists, had the first reusable water bottle to address heat loss during long rides.
• Maurice Sporting Goods, owned by private equity firm Middleton Partners, has purchased O2COOL, a Chicago-based maker of battery-powered cooling products, hydration systems and pet products. Founded in 1992, O2Cool’s annual revenues are north of $50 million with distribution stretching from Walmart and Bed, Bath & Beyond to Academy, Bass Pro, Campmor, Dick’s, Dunhams and Modell’s.
• Acushnet, parent of Titlelist and FootJoy, has acquired an 80-percent stake in PG Professional Golf, a Sugar Land, TX supplier of pre-owned golf balls. The business will remain a standalone operation and continue to be led by founders Greg Krueger and David Jones.
• Do Outdoors, doing business as Lew’s Fishing, a Springfield, MO supplier of fishing products to the mass market, sporting goods and specialty outdoor, is acquired by private equity firm Peak Rock Capital. Transaction terms were not disclosed.
• Escalade Sports is acquiring Victory Tailgate, a marketer of premium licensed and custom tailgating games, for an unspecified price. The acquisition should be accretive to the Evansville, IN company’s results in 2019.
Smaller and slower paced than typical Outdoor Retailer trade shows, the inaugural November Winter Market that wrapped up yesterday, left many attendees questioning the viability of the new three shows per year schedule and reflecting on whether or not to return to Denver this time next year. Last week’s show was the first of two Outdoor Retailer shows this season in Denver, with the OR Snow Show coming up in just over two months on January 30-February 1, 2019.
Exhibitors barely filled one floor of the Convention Center whereas Summer Market as well as the January Snow Show spread out over the entire three-floor capacity of the downtown venue. In addition, a handful of key outdoor brands did not attend – Patagonia, The North Face, Columbia, Yeti and Carhartt all opted out. Without these U.S. powerhouses on site, Euro brands such as Fjallraven, Kari Traa and Helly Hansen were strongly represented. Factoring in the Fall timing, an uncharacteristic low-energy vibe, and lack of industry leaders, the Show was a totally different OR experience.
For some, however, this quiet and calm Winter Market had a positive flip side: Conversations were both leisurely and productive. Some retailers wrote orders and others commented that the quality of discussions overall were more thoughtful and constructive than any other recent Outdoor Retailer show.
Primaloft was honored with ‘Product of the Year’ at the inaugural Outdoor Retail Innovation Awards for its Primaloft Bio. Other winners and their corresponding products were: Allbirds (SweetFoam), Black Diamond Equipment (JetForce Pro), Cake (Kalk Electric Motorbike), Costa Sunglasses (The Untangled Collection-Baffin), Crescent Moon Snowshoes (Eva Foam Snowshoes), GoLite (ReGreen Windshell), LynQ (LynQ), Tecnica (Plasma S), United By Blue (Bison Puffer Jacket), and Yale Cordage (Forj Thermoplastic Tape-Ribbon).
Below are a few scenes from the OR Winter Market trade show floor as seen by our editorial team. For more in-depth coverage of the outdoor retail marketplace, check out the November issue of Outdoor Insight magazine: outdoorinsightmag.com
Wolverine Worldwide is anticipating “low teens” growth for its Merrell business in the fourth quarter and a “high-single digit” topline increase in FY18. During Q3, WWW’s largest brand, plagued by sluggish retail conditions in international markets and lean inventories as a result of 19 percent sales expansion in Q2, produced a sales gain in the low-single digits.
CEO Blake Krueger says accelerated product introductions, increased marketing and Direct-To-Consumer will help Merrell reach its topline target in the final period of FY18.
Overall Q3 revenues in the U.S. rose mid-single digits in Q3 and were impacted by a number of factors, including lower closeout inventory, lean in-stock availability and late product deliveries for some brands.
The current FY18 revenue target for WWW is $2.24 billion and year-over-year EPS is forecast to increase 32 percent. Aggregate ecommerce sales for all brands is up 27 percent year-to-date after rising 33 percent in Q3. A similar increase is expected in Q4.
Elsewhere at Wolverine Worldwide in Q3,
• Keds sales rose mid-teens in Q3, helped by nearly 40 percent growth in ecommerce.; Chaco sales were down low-single digits, but the brand experienced a 35 percent increase in ecommerce sales.
• Saucony is projected to show improving year-over-year revenue trends in Q4 after a high-single digit drop in Q3 with particular challenges in the U.S. offsetting growth in the EMEA and a 25 percent uptick in ecommerce.
Waypoint Outdoor, a Seattle outdoor products sales and services company, has begun working with BioLite, an innovator in off-grid energy solutions, as the exclusive national sales representative group for the U.S. outdoor wholesale market.
Through a collaboration with BioLite’s in-house sales, marketing and dealer service teams, Waypoint intends to help the Brooklyn-based firm establish a clear brand position across the cooking, charging and lighting categories; strengthen relationships with existing retail partners and grow brand awareness and presence in specialty retail; develop comprehensive go-to-market plans for product launches; and build product knowledge and education programs for retail staff.
• W.L. Gore & Associates captures two Gear of the Year awards from Runner’s World for its Invisible Fit footwear technology in running shoes and Gore-Tex Shakedry fabric technology found in its Shakedry hooded jacket.
• Helly Hansen, acquired by Canadian Tire on July 3 for approximately $584 million, generated revenues of $138.4 million and a profit of $14.4 million for the quarter ended Sep. 29. Helly would have generated $320.7 million in revenues and approximately $12.5 million in net profit had it been acquired at the beginning of Canadian Tire’s FY18.
• Descente, which established a wholly-owned North American subsidiary, Descente Athletic Americas, in Atlanta in September, reported a six-month decline in net profit of nearly 7 percent to $20.2 million. H1 revenues at the Japanese premium athletic apparel brand rose less than a half-percent to $587.9 million.
• Patagonia is expanding its two-year old partnership with Swiss textile company HeiQ by using the brand’s Fresh Tech odor control in its Fall 2019 collection
• REI is investing $1 million in Thrive Outside, an effort designed to help young people’s social, emotional and academic development through the outdoors.
• BOGS/Rafters, owned by publicly traded Weyco, had a 5 percent decline in Q3 revenues to $16.7 million for the period ended Sept. 30, a factor attributed to lower sales to outdoor and online retailers.
Fila and Peloton team up for a new seven-style, capsule collection of athleisure wear for men and women that can be worn before and after class. The partnership marks Peloton’s first venture beyond performance wear into the athleisure segment. Items are available exclusively at Peloton’s online boutique: https://boutique.onepeloton.com
Crocs generated a 17.9 percent in DTC comps in Q3 as ecommerce sales rose 23 percent and retail comparable store sales increased 15 percent. Wholesale revenues increased 9.3 percent as the company reported total revenues of $261.1 million and a 250-basis point increase in gross margin to 53.3 percent. FY18 revenue outlook is calling for 4-5 percent topline improvement over $1,023.5 million.
Mizuno reported its first H1 profit in the Americas since FY14, but the six-month period represented the Japanese company’s third consecutive year of lower first half revenues in the region. Americas’ revenues fell 21 percent in Yen to the equivalent of $81.75 million. Footwear was off 23 percent to $29.9 million; apparel was down 6 percent to $14.1 million and equipment sales were down 23 percent year-over-year to the equivalent of $37.8 million. H1 profit at parent Mizuno Corp. was down 3.8 percent to $21.1 million on a 5 percent decline in total revenues to $763.9 million.
Retail container imports have slowed from a pre-holiday peak but remain at unusually high levels ahead of January tariff increases, according to the monthly Global Port Tracker. The Trump Administration’s trade war with China and threat of higher tariffs next year has created a ‘mini-boom in imports, commented Ben Hackett, founder of Hackett Associates, adding, “We are clearly in a politically motivated trade environment.”