Retail: 55
8.67%
Retail: 181
-0.39%
PRESENTING SPONSORS
Monday, November 19, 2018
Volume 2, Issue No. 44

Inside Fitness
U.S. Sets New Physical Fitness Guidelines

There are new U.S. guidelines on physical fitness.

Perhaps the timing was intentional. A week before America’s annual holiday to give thanks and eat, the U.S. government issued new guidelines on physical fitness for the first time in a decade. The new parameters claim that any amount of physical activity can have immediate health benefits—reduced anxiety and blood pressure, improved insulin activity and better quality of sleep among them. In laying out the activity needs of all age groups, including 150 minutes weekly of moderately intense aerobic activity and two days weekly dedicated to muscle strengthening activity for adults, the government offered a harsh assessment of the current physical fitness climate in America. Inadequate physical activity today is associated with approximately 10 percent of all premature mortality and an estimated $117 million annually in healthcare costs.

Meanwhile, two fitness companies, publicly traded Brunswick Corp. and Nautilus, Inc. detailed significant new strategies last week. NLS unveiled a new artificial intelligence platform, a cloud-based coaching technology called Max Intelligence and how it will be utilized in new fitness gear, starting this month with the Bowflex Max Trainer. The MI platform generates custom workout programs based on how an individual is feeling, how much time they have, their past performance and their feedback from prior workouts. Program times for workouts will range from 4, 7 or 14 minutes to 21 or 30 minutes for more physically fit users. Tom Holland, an author and consultant to Nautilus, says the customizable workouts complete with motivation for users, no matter the duration, are right for the times. “It all matters,” he added.

At Brunswick, the company is moving forward with plans to spin off its fitness segment into an independent, publicly traded company, named Life Fitness Holdings, sometime in 2019. During the transition period, BC directors David Everitt and David Singer are overseeing the fitness business, which also consists of the Cybex, Indoor Cycling, SciFit and Hammer Strength brands. BC’s fitness unit generated over $1 billion in FY17 revenues and had a CAGR of 9 percent between 2015 and 2017. In a public filing, Brunswick estimates the $3.4 billion global fitness equipment industry will grow low-single digits annually through 2020 as the $7.7 billion consumer side increases at a mid-single digit annual rate over the same two years.

Elsewhere, PLAE has developed premium fitness room surfaces for 10 NFL teams, including Chicago, Philadelphia, Minnesota and Baltimore.

Retail Round-Up
Macy’s Segmenting Store Fleet; Shoe Carnival’s Q3 Downright ‘Boot-I-ful’

A week before its 92nd annual Thanksgiving Day parade in New York City, Macy’s revealed preliminary details of strategy to segment its brick-and-mortar locations into one of three buckets—flagships, magnets and neighborhood stores. The Herald Square store in midtown Manhattan will be one of 11 flagships in the chain. Each regional flagship “will offer the best Macy’s has to offer” in fashion, service and experience. Magnet stores, part of the “Growth 50” launched this year, will likely be increased by an additional 100 locations in 2019 with all doors offering expanded assortments. The third segment will be smaller, but profitable neighborhood stores, visited customers today mostly for picking up online orders and purchasing casual wear. Senior management confirmed Macy’s is currently testing four different neighborhood store models focused on better shopping, more convenience and more self-service options before implementing a format next year. In Q3, a comp store sales increase of 3.3 percent was led by strong regional results in the Northeast and Midwest. Best merchandise category results included women’s shoes, activewear and women’s sportswear.

Elsewhere,

• Shoe Carnival realized a comp sales increase in “the 20s” in Q3 for boots as customers responded favorably to the chain’s assortment and marketing. “Weather does become a factor of both positivity as it creates need for weatherproof boots and negatively, if a winter storm occurs during a high-volume time period,” CEO Cliff Sifford told analysts. He declined to detail what specific types and brands of boots sold best during the period, only offering they were casual in nature and contributed to a merchandise margin gain as they were not markdown products. With the result, SCVL expects to have less seasonal inventory, including boots, on hand when January ends.

• Walmart boosted its outlook when reporting Q3 results that included a 3.4 percent comparable store sales gain and 1.2 percent traffic increase. In the U.S., total revenues surpassed $80.5 billion. FY19 comps are forecast to grow at least 3 percent.

• JC Penney is forecasting a low-single digit drop in FY comparable store sales after Q3 comps declined 5.4 percent for the period ended Nov. 3 on heavy discounting.

• Décathlon is opening a 38,000-sq.ft. store over two floors in Montreal’s Eaton Centre in Fall 2019. The French sporting goods retailer currently operates more than 1,430 stores in 42 countries with annual sales of approximately $12.9 billion.

• Sporting goods store sales, unadjusted, declined 7 percent, year-over, in October, according to monthly retail data from the U.S. Census Bureau. Overall U.S. retail sales were up 5.6 percent, y-o-y, with some of the increase attributed to spending associated with hurricanes in the early fall.

• At least 40 unprofitable Performance Bicycle specialty stores may shutter over the next 60-90 days following the Chap. 11 bankruptcy filing of Philadelphia parent Advanced Sport Enterprises last week. ASI, which employs more than 80 percent of more than 1,900 employees at Performance locations, owns and distributes the Breezer, Fuji, SE Racing, Phat, Kestrel, and Tuesday Cycles bike brands and component label Oval Concepts.  

President of OGIO Intl. discusses rebranding and strategic direction of company now owned by Callaway Golf.

INSIDE APPAREL
Champion Keeps Delivering; Delta Keen on DTG2Go

Photos: champion.com/fanreelgallery

Hanesbrands remains bullish on its Champion business, forecasted to surpass $2 billion in annual revenues by 2022 helped by double-digit expansion in H1/19. This FY, Champion’s annual revenues outside the mass channel should exceed $1.3 billion after the brand’s topline grew 40 percent in Q3, its fifth consecutive quarter of double-digit growth. Champion mass channel bookings for H1/19, meanwhile, are said to be flat.

“Our core Champion brand, it’s far exceeding our expectations at this point in time,” Hanesbrands CEO Gerald W. Evans Jr. told analysts recently. “So, we’re basically growing at twice the pace we expected and well ahead of the pace…to achieve our $2 billion goal and drive momentum in 2020 and beyond.”

With Champion’s U.S. sales growth exceeding 40 percent in Q3, the brand continues to see increases in all channels—online, wholesale and own stores. Hanesbrands has a distribution agreement for Champion’s subbrand, C9, with Target stores, until early 2020.

Elsewhere,

Delta Apparel, which recently completed its fiscal year, realized a 120 percent topline improvement its digital print business, DTG2Go, which it acquired in March. Recently acquired SSI digital print services has been folded into the business. DTG2Go is the only digital print supplier globally that offers customers a seamless fulfillment solution integrated with a vertical manufacturing platform for fashion and core basic items, says DLA CEO Bob Humphreys. It currently has a network of six digital print and fulfillment centers with the capacity to print over 70,000 unique prints daily and reach over 90 percent of the U.S. population with 1- to 2-day shipping. One DTG2Go facility and a DLC distribution center in Fayetteville, NC that services Salt Life and Soffe, had to be closed for eight days in September due to Hurricane Florence, resulting in $3 million in lost revenue. Gildan Activewear operations were also impacted by Hurricane Florence. Still the Montreal company delivered mid-single digit organic sales growth and 12.1 percent topline improvement in activewear in Q3 on higher volume and net selling prices. Activewear growth was broad based and included fleece, fashion basics and global lifestyle brands. Meanwhile, Gildan, citing higher cotton and polyester prices this year and ongoing pressures on labor and transportation costs among other factors, suggested there will likely be price increases on its garments in 2019.  

Footwear Insight
Holiday Season Footwear Buying Will Be Promotional, Online

Weeks before both Academy Sports & Outdoors and Dick’s Sporting Goods rolled out pre-Thanksgiving circulars with 25 percent off some Nike footwear and apparel, NPD analyst Matt Powell predicted the marketplace for footwear and apparel to be promotional this holiday season. Heading into 2018’s final two months, smaller footwear brands in Vans, Puma, Fila, Brooks and Reebok were outperforming in footwear, according to Powell, and activewear realized a small uptick Q3 sales that is forecast to continue at the same rate during the holiday period.

Meanwhile, a new Online Holiday Shoe Sales Survey, commissioned by the Footwear Distributors and Retailers of America and conducted by the research center at Emerson College, finds that 31 percent of the U.S. adult population intends to purchase footwear online this holiday season with another 22 percent likely to buy new kicks online. Some 49 percent of those online shoe purchases will be made between Thanksgiving and Nov. 30 with another 25 percent of respondents saying their online footwear purchase will occur during the first two weeks of December.

The most likely footwear purchasers this holiday will be 18- to 29-year old females with college degrees and living in the Western U.S., according to the study, which also suggests only 14 percent U.S. Northeast consumers are very likely to purchase new shoes during the holidays.

So where will survey respondents buy their new footwear, and how much will they spend? Some 57 percent they would turn to Amazon, 18 percent would make purchased at retail websites and 12 percent would rely on brand websites for their shoe purchases. Nearly 57 percent of respondents said they intended to spend between $250-500 on footwear during the season. Slightly more than 23 percent planned to spend more than $500. Sneakers (performance and casual/retro) will dominate all purchases at 58 percent followed by fashion/dress (15%), fashion boots (12%), winter/snow boots (8%) and work boots/shoes (5%).

NBA Court Side Style

Nipsey Hussle was spotted courtside last week at the Staples Center wearing the new Puma Clyde Court Glow ahead of others wearing the style on the NBA court. @PUMAHoops @puma

The Buzz

Pentland Brands, the British company that owns sports, outdoor and fashion footwear brands, forges new three-year partnerships with five U.K. and international charities that support women from disadvantaged backgrounds and inspire young people in the U.K. to be more active. The charities include Emerging Leaders, The British Council and SportInspired, which tackles childhood obesity in disadvantaged communities.

REI, which will keep the doors of its co-ops closed on Black Friday, paying all of its employees to spend the day outside, is investing $1 million at the University of Washington that will study the link between health and nature. REI also recently detailed the Top 50 U.S. cities to #OptOutside. Those interested in joining the #OptOutside movement can find local activities and other inspiration at rei.com/opt-outside.

Walmart is poised to surpass Apple as the third largest U.S. ecommerce retailer this year, according to an eMarketer forecast. WMT’s share of all retail commerce sales in 2018 is predicted to grow to 4.0 percent in 2018 from 3.3 percent in 2017. Amazon, meanwhile, figures to grow its share to 48.0 percent in 2018 from 43.1 percent last year, as eBay’s total share dips to 7.2 percent from 7.6 percent in 2017.

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 dips after two consecutive weekly gains as four stocks fall double-digits for the period. The nearly 8.3 percent aggregate decline exceeds the Dow’s drop of 3.29 percent for the week, or nearly 860 points. There has been recent market focus on Genesco, which still has no announced buyers for its Lids business despite being on the block for some nine months. Previous publish reports had pegged a potential Lids’ sale price at anywhere between $60-$250 million, but those estimates might prove too high now. Profit margin at the cap chain has dipped under 2 percent after being as high as 10.8 percent in 2012. Kohl’s CEO Michelle Gass is named one of the five top business people of 2018 by Fortune magazine. Foot Locker kicked off its 7th annual “Week of Greatness” (see video in Tubes of the Week) with social media hashtag #BecauseSneakers and special product drops and projects in markets around the world. Dick’s and Cabela’s will join Target and Walmart in opening on Thanksgiving afternoon. Shoe Carnival, based on early strong consumer response to its boot assortment, expects to have less seasonal inventory as it exits January and is fiscal year.  
Brands
Segment is essentially flat for second consecutive week with six stocks up and nine down. Acushnet had a 6.7 percent increase in Q3 consolidated sales, fueled in part by its new Titleist AVX golf balls. U.S. sales were up 11 percent in the quarter and 7 percent for the first nine months of FY18. Columbia is donating $20,000 to California’s Wildlife Relief Fund and will match any employee donation to support the effort. Separately, COLM’s former IR chief and former Nike senior executive Ron Parham has joined Cara Cannibas Solutions, an Oregon company reportedly considering a 2019 IPO. VF Corp.’s The North Face brand is introducing the latest version of its ThermoBall ECO jacket, first introduced in 2013, this month. The new jacket is made from recycled polyester fabric and recycled insulation. Nike grand opened the doors to its new 68,000-sq.-ft. House of Innovation on Fifth Avenue on the same day a late fall snowstorm dumped six inches on Central Park and snarled traffic to and from the city for hours. The multi-level store, sure to be a tourist attraction during the holiday season, is intent on integrating the brand’s digital and physical platforms, including the brand’s Scan to Try feature. Adidas, like rivals Under Armour and Nike, apparently isn’t immune to #MeToo scandals. A piece by Oregonian veteran Jeff Manning addresses an anonymous letter by Adidas employees to senior executives addressing race and diversity at the company and alleging Adidas fosters a culture “rooted in personal relationships, racial bias and not necessarily on experience or qualifications.”  

RETAIL: 55

44.90%

BRANDS: 181

80.83%

Weekly Review

Retail Name (Ticker Symbol)
Close on 11/08/18
Close on 11/15/18
% change over week
Big 5 Sporting Goods (BGFV)
BGFV
$3.76
$3.89
+3.46
Sports Direct (LON: SPD)
SPD
$420.35
$364.56
-13.27%
Camping World (CWH)
CWH
$18.23
$17.25
-5.38%
Dick's Sporting Goods (DKS)
DKS
$38.10
$38.2
+0.47%
JD Fashion (JD)
JD
$559.03
$518.01
-7.34%
Foot Locker (FL)
FL
$50.79
$51.40
+1.20%
Genesco (GCO)
GCO
$46.17
$42.79
-7.32%
Hibbett Sports (HIBB)
HIBB
$19.39
$18.73
-3.40%
Kohl’s (KSS)
KSS
$81.99
$73.22
-10.70%
Macy’s (M)
M
$37.79
$32.27
-14.61%
Sportsman’s Warehouse (SPWH)
SPWH
$5.10
$4.75
-6.86%
Shoe Carnival (SCVL)
SCVL
$40.74
$37.09
-8.96%
Tilly’s (TLYS)
TLYS
$18.05
$16.19
-10.30%
Walmart (WMT)
WMT
$104.89
$99.54
-5.10%
Zumiez (ZUMZ)
ZUMZ
$21.62
$20.92
-3.24%
TOTAL
TOTAL
$1,466.00
$1,338.89
-8.67%
Brand Name (Ticker Symbol)
Close on 11/0818
Close on 11/15/18
% change over week
Acushnet Holdings (GOLF)
GOLF
$26.26
$24.41
-7.04%
adidas (ADDYY)
ADDYY
$114.10
$117.14
+2.66%
Amer Sports (AGPDY)
AGPDY
$38.47
$39.48
+2.63%
Callaway (ELY)
ELY
$21.91
$21.27
-2.92%
Columbia Sportwear (COLM)
COLM
$93.69
$91.82
-2.00%
Deckers Brands (DECK)
DECK
$136.34
$127.66
-6.37%
GoPro (GPRO)
GPRO
$5.47
$5.43
-0.73%
lululemon (LULU)
LULU
$142.27
$139.83
-1.72%
Nautilus (NLS)
NLS
$12.78
$12.93
+1.17%
Nike (NKE)
NKE
$77.78
$74.33
-4.44%
Puma (PUMA)
PUMA
$499.69
$514.75
+3.01%
Skechers (SKX)
SKX
$29.66
$27.46
-7.42%
Under Armour (UA)
UA
$20.74
$20.90
+0.77%
VF Corp. (VFC)
VFC
$86.65
$84.07
-2.98%
Wolverine Worldwide (WWW)
WWW
$33.81
$32.97
-2.48%
TOTAL
TOTAL
$1,339.62
$1,334.45
-0.39%

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.