RETAIL ROUND-UP:
Payless Emerges with Less Debt, Lower Rents, Better Terms

CEO, W. Paul Jones has resigned.Less than four months after filing for Chapter 11 bankruptcy protection, the shoe retailer’s restructuring translates into about $435 million less in debt, 700 fewer locations, a reported 30- to 50-percent in negotiated rent reductions on remaining stores and a 25 percent extension in payment terms from key vendors. Payless will go forward with about 3,500 locations but without CEO W. Paul Jones, a former Sears and Kohl’s senior executive, who has resigned months shy of his fifth anniversary with the company, which intends to accelerate its store openings across Latin America in 2018. Read More...

Foot Locker Should Benefit from Premium Status

Amazon’s rising influence in apparel and footwear should not impact FL significantly since the brick-and-mortar giant remains the top destination for the premium-priced athletic shoes, according to a research report issued by Morgan Stanley last week. In the shorter-term, however, FL is forecast to report results that look “weak” when it releases second quarter earnings on August 18.  

The investment house, while predicting Amazon’s athletic shoe market share could double to 18 percent over the next five years, thinks Foot Locker’s will only decline two percent to 29 percent during the same period due to the retailer’s allocations of higher-priced, best-in-class assortments versus Amazon’s focus on the larger, lower-priced sneaker market.   

Morgan Stanley’s Foot Locker outlook includes predictions that the retailer will return to 3-5 percent comparable store sales growth in coming quarters, bolstered by sell-throughs of top Nike and Adidas styles; Foot Locker landing a designation as a “Nike strategic partner” in late October; and FL buying back $450-500 million worth of shares annually this year and in 2018.   

Looking at the broader U.S. athletic footwear market through 2022, Morgan Stanley is forecasting share declines for the sporting goods, department store and All Other segments and gains for sneaker brands’ DTC channel and Amazon.

Asics America Goes Bi-Coastal; Strengthens Digital

AAG, which oversees the U.S., Canadian, Mexican and Brazilian markets for the Japanese brand, launched the GEL-Kayano 24 as it saw a 29 percent increase in online order values during the second quarter. Meanwhile, optimized mobile banners for site and emails, enhanced search capabilities and an update checkout process, has helped the company increase in mobile revenues 53 percent over the last year.

Overall, Asics America Group, which has opened a product creation studio in Boston to work on footwear merchandising, apparel design, sales and performance footwear, experienced a 5.9 percent revenue decline in the period ended June 30. The company retains its Irvine, California headquarters.

“We have an unwavering focus on being strategically geographically aligned to deliver innovative products to our fans, responding to their needs both on the field, on the court, and of course, online and on their phone,” said Gene McCarthy, ASICS America President and CEO.

Canada Goose Preps More Retail, Ecommerce

GOOS, which completed a secondary offering in early July, intends to open additional flagship stores in London, Chicago, Boston and Calgary, Alberta before the holiday shopping season. Additionally, there are plans in the works to open a Tokyo store operated by the company’s Japanese distribution partner. Long-term, there are plans to have 15-20 retail stores and 15-20 ecommerce sites worldwide.

Direct-To-Consumer revenues, which include own stores and ecommerce revenues, increased 560 percent to $8.3 million in the quarter ended June 30. Subsequently, Canada Goose opened ecommerce in Belgium, Luxembourg and the Netherlands and set plans to further expand ecommerce into Germany, Sweden and Austria this fall.

Overall second quarter revenues grew 80 percent to $28.2 million as the net loss was reduced 14 percent to $12.1 million. Wholesale revenues, helped by $5.1 million in accelerated shipments, increased 38 percent to $19.9 million. U.S. sales were up 93 percent to $5.98 million.

Wolverine Continues “Re-Wiring”

Senior management is hopeful a multitude of changes in recent months—including a drastic reduction in company-owned retail stores to approximately 80, the sell-off of Sebago and the licensing of its Stride Rite business—will enable Wolverine to become more consumer-focused and help escalate its adjusted operating margin to 12 percent by the end of 2018.

The store closures and brand changes are forecast to have a $175 million negative impact on WWW’s FY17 revenues, including $120 million from door closures, $40 million from the Stride Rite license model and $15 million in currency effect. But the actions are also forecast to lift Wolverine’s FY adjusted operating margin range to 10.4-10.9 percent. Wolverine has raised FY revenue guidance to $2.32-2.37 billion, down 5-7 percent on a reported basis but flat to up 2 percent from continuing operations.

Reported revenues rose 2.6 percent to $598.8 million in the second quarter ended July 1. Merrell sales were up mid-single digits, bolstered by a 30+ percent increase in ecommerce and strong results from its Nature’s Gym collection. Saucony, whose sales rose slightly in the period, were up high teens in both ecommerce and international on product innovations such as the Freedom ISO and new Ride 10. The brand is slated to introduce new Triumph and Hurricane models, both with full-length EVERUN cushioning, and the Liberty ISO and Liteform Feel, over the next several months.

Crocs Tightens Focus, Strengthens Ties to Actress Barrymore

Crocs, which wants to end up with about 400 company-owned stores by the end of 2018, closed or transferred 39 during the second quarter as total revenues of $313.2 million slightly exceeded Street expectations despite being down 3.3 percent year-over-year. The company did see a 180-basis-point improvement in gross margin to 54.2 percent and a nearly 8.4 percent decline in y-o-y inventory level as it increased its focus on styles that most represent the brand’s DNA—clogs, sandals, flips and slides.

Meanwhile, the company accelerated its “Come As You Are” marketing effort during the period and expanded its relationship with brand ambassador Drew Barrymore. The 42-year old star of countless movies, including “E.T.” and “Fever Pitch,” is now offering input on Spring/Summer 2018 products beginning in February.

Second quarter Americas’ revenues rose 0.8 percent to $136.2 million with growth in every channel and positive retail and ecommerce comparable store sales. Ecommerce revenues accelerated by double-digits in June, bolstered by pricing and promotions, to end up 2.6 percent during the period.

The Buzz

Tommy Bahama has introduced a collegiate series of custom-designed fan apparel for 40 top U.S. universities with more to come. The line features logoed polo shirts, camp shirts and half-zip pullovers in both standard and trim fit. Retail prices range from $110-165.

Escape Fitness announces a trio of promotions, who also become members of its board, to support the company’s global growth strategy. Jonathan Fekete moves to sales director for Asia-Pacific; Matt Morton to director of global strategic solutions and partnerships and Raimo Treffers to sales director for EMEA and the U.K.

prAna, owned by Columbia Sportswear, is looking for a new CEO. Scott Kerslake, who joined the company in 2009 as CEO and help grow brand sales to $100 million in 2014 when COLM acquired the firm, is resigning August 18. Kerslake’s next move is to take over as CEO at Nixon, the CA-based watch brand, beginning on August 21.

Salamander, the mid-priced German footwear brand owned by ara Holding that operates more than 300 branded retail stores in Europe, is returning to the North American market for Spring/Summer 2018

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