The president and CEO of the Sports & Fitness Industry Association addresses the most serious threat the industry has faced in the past half-century and the expected re-introduction of the PHIT Act by Congress.
Foot Locker Plugged In
The athletic specialty behemoth, intent on intensifying its immersion in sneaker culture no matter where in the world, the style classification or the gender wearing it, is also defying the odds with U.S. traffic trends and average selling prices. Both were higher in the fourth quarter for Foot Locker as it reported a 20 percent increase in profitability on 5.3 percent top line growth and a 5 percent comparable store sales increase. Read more...
Footwear Trends Revealed
A robust crowd of designers, brand reps and manufacturers from all categories took to the Northwest Materials Show earlier this month in Portland, OR to move forward after a chaotic year that saw major upheaval in the footwear business, a troubled U.S. retail market and a new administration debating trade policies that could have a dramatic effect on the footwear and apparel business. Read More...
As the
Outdoor Specialty World Turns
With some circles suggesting the Bass Pro-Cabela’s deal will need to be revised to reach completion, ala Verizon-Yahoo, and others waiting to see if the Chap. 11 shoe does indeed fall on Gander Mountain, another potentially mighty player is emerging in outdoor specialty retail. A week after discount behemoth Walmart officially entered the space with its $51 million cash acquisition of Moosejaw Mountaineering, another off-price king in TJX Companies announced plans to accelerate its Sierra Trading Post business. Read More...
Merrell Aims to Climb Higher in 2017
Senior management at parent Wolverine Worldwide thinks Merrell is poised for a comeback in 2017 due to a robust product pipeline and today’s macro trends that focus on the outdoors, health, experiences and active lifestyles.
Merrell’s performance in the fourth quarter “improved significantly” from the prior period, bolstered by key product initiatives and the introduction of new collections. In outdoor specifically, the brand gained market share in the U.S. and grew globally.
“Looking ahead, we are confident in Merrell’s direction,” said Blake W. Krueger, Wolverine Worldwide Chairman, CEO and president told analysts last week. “Consumers love the brand, and the injection of updated product design and innovation to keep franchises was critical in 2016. This also provides a proven roadmap moving forward.”
WWW is hopeful that Merrell’s new Nature’s Gym athletic offerings will gain solid traction this year, helping the outdoor brand to eventually develop a revenue base split evenly between outdoor and active lifestyle products.
As for FY17 overall, Wolverine is forecasting overall revenues for its portfolio of brands, excluding currency fluctuations and the impact of store closures, to be in the range of down 2 percent to up 2 percent from the $2.49 billion generated in FY16.
“We anticipate global demand to remain tepid as evidenced by relatively low commodity prices; the U.S. dollar to remain strong, negatively impacting product costs in most international markets, and the retail environment to remain challenged, especially in the U.S…” said Krueger.
Vans’
Revenues Will Accelerate Further
The VF Corp.-owned brand, whose iconic black-and-white checkerboard slip-on became iconic 35 years ago when it was donned by Sean Penn in “Fast Times at Ridgemont High,” is forecast to increase its top line by “low double-digits” in 2017 fueled by high teens growth in Asia and high single-digit sales gains in both the Americas and Europe.
Vans became VF’s largest brand in 2016, its 50th anniversary year, with a 7 percent revenue increase to $2.3 billion that included a 20 percent increase in its direct-to-consumer business, 40 percent growth in e-commerce and 15 percent sales growth in the fourth quarter. The company’s annual gross margin, meanwhile, improved 120 basis points to 49.4 percent.
VF senior management, commenting on Vans’ success in 2016, said the brand’s All Weather MTE Collection that leverages the label as a four-season brand, doubled its revenues last year. Also, an upgraded custom footwear platform that allows customers to create their own Vans through their own patterns, colors and art, is said to be off to a strong start.
Nautilus Readies
Bowflex HVT Rollout
The fitness company, which generated a 20 percent increase in annual sales last year to $406 million, intends to introduce its Bowflex Hybrid Velocity Trainer into the direct channel before mid-year.
“Our research indicates that the more innovative nature of the HVT will require added initial support in the early stages,” Nautilus CEO Bruce Cazenave told analysts. “This support will include both television and expanded digital marketing efforts.”
Meanwhile, on the retail side of its business, whose organic sales dipped 7 percent in the fourth quarter, NLS senior management is hopeful its initial partnership with Dick’s Sporting Goods can be expanded. In the fourth quarter, the Max Trainer M3 was placed within stores for purchase and a smaller test of a Bowflex branded in-store shop was tested with the retailer. Results of the NLS-DKS partnership will be examined at the end of the fitness season. If it proves successful, Nautilus says it will be able to further optimize the reach of its direct media advertising to include those who prefer to fitness equipment in-store from a trusted, major retailer.
American
Apparel Moves Forward
Gildan Activewear, which bought the Los Angeles company (but not its 110 retail stores) out of bankruptcy for $88 million, thinks the acquisition will help it capture a more market share in fashion basics and grow its international business.
American Apparel will be completely integrated into Gildan’s operations in March, even though GIL senior management is still devising a strategy for marketing the brand directly to consumers but it will be positioned as premium brand within the company’s portfolio of fashion basics. Since AA customers purchased additional inventory ahead of the company’s bankruptcy filing, Gildan won’t begin shipping orders for the brand until the end of April or beginning of May.
“We’re definitely going to manufacture product in the U.S. to support ‘Made in the USA,’ Rhodri J. Harries, GIL’s EVP and Chief Administrative Officer told analysts last week. “But at the same time, we think that there’s an opportunity to offer product that’s more price-centric basically, allow us to drive the potential of the (American Apparel) brand.”
To that end, initially at least, Gildan is outsourcing core American Apparel styles to western U.S. contractors. Other items from the $100 million-brand will be made in Gildan factories outside the U.S.
Product of the Week
Adidas was slated to introducing the adizero Sub2 marathon shoe, designed to take athletes below the two-hour mark for the 26.2-mile course, on Kenyan Wilson Kipsang during the Tokyo Marathon on Feb. 26. He owns the only pair of Sub2 shoes currently in existence. Adidas Innovation Technologies explored a range of materials in different temperatures and environments and on different surface when building the shoe, which was co-developed by and tested on elite athletes. The Three Stripes says it began thinking about Sub2 as a concept around the 2012 London Marathon. The shoe will be available for all marathoners later this year. No word yet on retail cost.
Tubes of the Week
Little Bytes
• World
Federation of the Sporting Goods Industry (WFSGI) is opening its Responsible
Sport Initiative (RSI) platform that helps industry companies efficiently implement unified corporate and social responsibility standards. Participation does not require WFSGI membership. The RSI functions with a system of audit-sharing to make it more affordable for companies to check the compliance of suppliers.
• U.S.
ecommerce sales rose 15.1 percent in 2016, exceeding 2.9 percent growth in brick-and-mortar retail sales, reported the U.S. Dept. of Commerce
• Dick’s is set to open five stores in three states between March 10-12. The additions in Davenport, IA; Queens, NY; and Hinesville, GA will take chain’s door count to 680. The New York location, a former Sports Authority, marks the banner’s second in Manhattan.
• Adidas strikes a multi-year partnership with The Prep Baseball
Report to become the official athletic footwear, apparel and accessory brand of the report and events sponsored by the Portland, Oregon company.
• Puma and Adidas will apparently duke it out in federal court over The Cat’s use of four diagonal stripes on its NRGY soccer boots. The Three Stripes-brand charges its longtime German brand rival with trademark infringement in the recently filed case.
• Superfeet has a new CEO and president in John Rauvola. He led the insole company to be 100 percent employee-owned and has helped grow revenues by 27 percent since his arrival in 2013. More details on other executive changes at the Ferndale, WA firm in next Running Insight.
• Vail
Resorts, a publicly traded resort company, is acquiring Stowe Mountain Resort in Vermont for $50 million.
• Roc
Nation, founded by Jay Z in 2008, last week forged its first team venue partnership with Major League Soccer’s Houston Dynamo franchise. RN will help the soccer franchise secure new branding and sponsorship contracts and broker live entertainment for its home stadium.
• JC
Penny intends to close 13-14 percent of its store base, accounting for approximately 5 percent of its annual revenues, and two distribution centers to save approximately $200 million annually. Retailer will offer buyouts to 6,000 employees as part of the effort.
Quote of the Week “Athletic, athleisure, sport casual, however you want to define it, is clearly a continuing trend affecting the entire footwear industry. When you look at Merrell…at its push into the Nature’s Gym category with a number of new collections this year, which is more athletic-inspired outside training, outside running, just outside enjoyment, I think Merrell is going to be able to take some market share in participate in that segment of the market. And that trends very well.”
— Blake W. Krueger, Chairman, CEO and President of Wolverine Worldwide
-
Numbers In Play Week of 2/09-16
The Sports Insight Index is our opinion of what we think are the 28 most important public companies in the industry, 14 vendors and 14 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
Dow rose for 10 consecutive days ending Feb. 23—something it hasn’t done in four years—but it failed to help the retail stocks in the Index. Twelve of the 14 in the sector fell this week, led by Tilly’s. Biggest gainer was Walmart, which the former JC
Penney CEO said is the only retailer taking Amazon seriously right now. WMT’s online revenues rose 29 percent in the fourth quarter, partly on the acquisitions it has made over last six months. Elsewhere, Macy’s is expected to continue cost-cutting in 2017. The chain, whose fourth quarter comparable store sales were down 2.2 percent, is eying entertainment and technology options to bolster in-store experiences for its customers. Kohl’s will have Under Armour products, largely basic tank tops, leggings and shorts, in all 1,154 stores as early as week’s end. Chain has expanded its activewear space by 25-30 percent on average to accommodate the brand expected to do well in women’s, children’s and footwear. Kohl’s active and wellness apparel grew double-digits last year. Will continue spending on its fifth e-commerce fulfillment center slated to open in 2018.
Brands
Eight of 14 stocks were positive this week, led by Wolverine
Worldwide that is seeing international momentum for its Keds’ business as “very strong.” Intends to pullback on the label’s “value distribution” in the U.S. this year. Meanwhile, Saucony sales grew hi-teens internationally in 2016 with overseas markets now accounting for nearly half the brand’s revenues. Nautilus, the biggest decliner for the period, showed improved results but fell short of Street expectations. Fitness equipment maker is said to need turnaround in its higher-margin Direct business to spark stock price momentum again. Adidas sports a healthy weekly again, likely gaining from all the buzz around casual athletic product. Fitbit, whose shares were flat for the week, spent $23 million for Pebble and $15 million for Vector last year. Both companies were former rivals of FIT, which continues to move forward with plans to enter the smartwatch business.
RETAIL: 80
20.27%
BRANDS: 88
11.63%
Name
Close on 02/16/17
Close on 02/23/17
% change over time
Big 5 Sporting Goods (BGFV)
$13.65
$13.35
-2.20%
Cabela's (CAB)
$46.23
$45.46
-1.67%
Dick's Sporting Goods (DKS)
$48.50
$48.32
-0.37%
Finish Line (FINL)
$17.31
$16.65
-3.81%
Foot Locker (FL)
$70.50
$68.58
-2.72%
Genesco (GCO)
$59.90
$58.65
-2.09%
Hibbett Sports (HIBB)
$29.25
$29.15
-0.34%
Kohl’s (KSS)
$41.52
$40.91
-1.47%
Macy’s (M)
$31.82
$32.44
+1.95%
Sportsman’s Warehouse (SPWH)
$5.20
$5.11
-1.73%
Shoe Carnival (SCVL)
$25.64
$25.30
-1.33%
Tilly’s (TLYS)
$11.12
$10.55
-5.13%
Walmart (WMT)
$68.85
$71.31
+3.57%
Zumiez (ZUMZ)
$19.80
$18.85
-4.80%
Name
Close on 02/16/17
Close on 02/23/17
% change over time
adidas (ADDYY)
$78.89
$80.93
+2.59%
Amer Sports (AGPDY)
$24.87
$23.56
-5.27%
Callaway (ELY)
$10.31
$10.17
-1.36%
Columbia Sportwear (COLM)
$56.76
$55.55
-2.13%
Deckers Brands (DECK)
$52.71
$52.11
-1.14%
Fitbit (FIT)
$6.07
$6.07
0.00%
GoPro (GPRO)
$9.33
$9.57
+2.57%
lululemon (LULU)
$65.97
$64.84
-1.71%
Nautilus (NLS)
$16.90
$15.50
-8.28%
Nike (NKE)
$56.30
$57.39
+1.94%
Skechers (SKX)
$25.58
$26.22
+2.50%
Under Armour (UA)
$19.62
$19.64
+0.10%
VF Corp. (VFC)
$50.36
$52.45
+4.15%
Wolverine Worldwide (WWW)
$23.68
$24.98
+5.49%
Sports Insight Extra Podcast Series
Eric Hayes
Superfeet Celebrates 40th Anniversary. The employee-owned company introduces footwear and rolls out a 3D printed insole program.
Shawn Neville
BOA introduces New Tech and Names New CEO. Nothing will constrict Boa Technology CEO Shawn Neville from helping the Denver company improve its customized fit solution.
Waingarten and Frydlewski
No strings attached. The married Argentinean couple has raised nearly $20 million for Hickies, a Brooklyn company addressing how athletic shoes are closed around the foot two eyelets at a time.
Michelle Carmichael
The Co-founder and Managing Partner of Partners Growth, which brings premium brands into the U.S. market, talks Finnish children’s wear brand Reima.
Brian Beckstead
Six-year old Altra is teaming with Utah State University to develop outdoor design talent.
Declan Condron
Let's Go Hyperwear: Former Equinox personal trainer merges the innovative, functional fitness gear from Austin, TX company with programming for schools, camps and institutions.
Hugues Gontier
Sly and Simple. BlueFox.io and its technology enable a retailer to interact with customers in store and track traffic. No beacon required. The CMO explains the benefits of the platform.
Reza Raji
The CEO of Xenio Systems talks about the company’s new platform that tracks where shoppers spend time in physical stores and its patented hyper-positioning technology.
Jacob Torres Espino
The director of export promotion for Mexico’s Guanajuato State government agency addresses the proposed impact of the Border Adjustment Tax by the U.S. and the possibility of a renegotiated NAFTA free trade agreement.
Isabelle Ohnemus
The founder and CEO of EyeFitU, a former investment banker, talks ‘glocal’ assortments, shoppers’ personal sizing and global web payment options.
Tom Cove #2
The president and CEO of the SFIA addresses the most serious threat the industry has faced in the past half-century and the expected re-introduction of the PHIT Act by Congress.
Matteo Scarparo
The Italian global trade expert in footwear talks about the present and future of TheMicam trade show and the potential impact of a Border Adjustment Tax in the U.S. on imported shoes.
Dr. James Eakin
Dr. James Eakin, chief marketing officer and director of U.S. operations for Xenoma, discusses the Japan company’s e-skin shirt and entire wearable category.
Expert Barbara Barclay, president of RightEye, talks eye-tracking technology and her company’s recent alliance with Major League Baseball and USA Baseball.
Susie McCabe, SVP of global retail for Under Armour who previously spent 16 years at The Ralph Lauren Corp., dishes on UA’s retail strategy and new Brand House in Boston.
On the eve of Election Day, we talk to three leading industry lobbyists on how the results may impact trade in the sporting goods, outdoor and apparel and footwear industries.
On the eve of Election Day, we talk to three leading industry lobbyists on how the results may impact trade in the sporting goods, outdoor and apparel and footwear industries.
On the eve of Election Day, we talk to three leading industry lobbyists on how the results may impact trade in the sporting goods, outdoor and apparel and footwear industries.