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Mon, Aug 28, 2017
Vol 1, Issue No. 33
Monday, August 21, 2017
Volume 1, Issue No. 32

VF Will Chase B2B, B2C with Williamson-Dickie


The intent marks an entirely new distribution strategy for The North Face, Vans and Timberland parent, which will leverage its $820 million, all-cash price for the acquisition of the parent of the Dickies, Workrite, Kodiak, Terra and Walls brands with a head-to-toe approach in B2B and B2C channels. The growth emphasis will be on digital and international with the deal also allowing VFC to enter the services and healthcare segments.

“Workwear is very interesting to us,” Steve Rendle, VFC CEO told analysts early last week. “We are open to a broad view of where our consumer is shopping and acting…This is a very different model than we operate in today.”

The bolt-on acquisition for VF, its first since the 2011 purchase of Timberland, creates a $1.7 billion workwear business in the fragmented $30 billion segment. VFC also owns the Wrangler, RIGGS, Timberland PRO, Red Kap, Bulwark and Horace Small brands. It sees opportunity in the lifestyle aspect of workwear, citing a correlation between the core work consumer and its Vans’ consumer and Dickies’ 90%+ brand awareness in the U.S. Currently, Dickies accounts for 77 percent ($674 mm) of W-D’s overall revenues with all workwear equating to 90 percent. VF senior management sees the 10 percent of W-D’s business that is currently considered lifestyle as having potential to be the company’s “fastest growing segment.”

“We are open to a broad view of where our consumer is shopping and acting…This is a very different model than we operate in today.” – Steve Rendle, VFC CEO

Williamson-Dickie, family-owned since its inception 95 years ago with $875 million in trailing 12 months revenues, will continue to be led by CEO Bill Williamson after the transaction closes in the fourth quarter. The acquisition will immediately contribute to VFC’s top and bottom lines, but the longer-term plan is for W-D to grow its revenues to more than $1 billion and double its operating margin to 14 percent by 2021 when its VFC earnings contribution should be about 25 cents annually. VFC is especially interested in W-D’s D2C business, estimated at 14-15 percent of current revenues and growing (versus less than 10 percent for VFC workwear brands) and its international focus.

On the supply chain front, VFC senior management sees W-D factories in Mexico and Honduras as complimentary to its own supply chain in Asia and Panama. The possibility of creating a multi-brand retail workwear environment for brick-and-mortar and digital was called an “interesting opportunity that we will certainly look at.”

In the meantime, VFC management confirms the company remains on the acquisition prowl given it wants to “marry the knowledge” it has of its core consumers.

Foot Locker’s “Eyes Wide Open”


Faced with its first quarterly comparable sales decline (-6%) in nearly seven years, a difficult July and a general malaise and lack of innovation excitement in the premium athletic footwear space, Foot Locker senior executives tried to answer the question “Where do we go from here?” when reporting second quarter results Friday. Unfortunately, some of the trends that hampered the retailer are projected to persist through the remainder of FY17.   

Wall Street hammered FL’s stock after the retailer missed profit, revenue and margin estimates for the period ended July 29. Foot Locker shares fell nearly 28 percent, or $13.32, to close at $34.38 on Aug. 18.    

“The disruption taking place today in our industry, and in retail in general, is the most significant I’ve seen in my quarter-century in the athletic business,” Foot Locker Chairman, CEO and President Dick Johnson proclaimed. “The fact is that we’re seeing mobile technology drive shifts in consumer behavior spending patterns at a faster pace than our industry has been able to keep up with.”

For its part, Foot Locker will proceed with a number of initiatives as it waits for more premium-priced, innovative products to emerge from key vendors, particularly Nike, such as React and more iterations of the VaporMax. But with product lifecycles moving faster, the current void may open up opportunities for other brands.

Actions being set in motion at the retailer include a ramping up of technology to ensure consumer accessibility to all of Foot Locker’s inventory, shedding of unproductive real estate at a faster rate with FY door closures now set at 135 instead of 100, and a slashing of planned capital spending next year.

While Foot Locker posted a 5.4 percent increase in direct-to-consumer sales in the second quarter, growing that segment to 12.7 percent of overall revenues versus 11.5 percent a year earlier, the retailer was not immune to the sluggishness that plagued athletic shoe retail during the period. After a low-single digit slide in May comparable store sales, same store sales fell off in the high mid-single digits in both June and July. Double-digit dips in basketball and casual styles for men and a women’s shift away from Adidas Superstars and Stan Smiths more than offset strong demand for lifestyle running silhouettes.

Industrywide athletic footwear sales slipped 5 percent in July, even as the Back-to-School season commenced in some southern U.S. markets, making it the second worst-performing period of 2017 thus far, according to NPD. Unit sales were off 6 percent, but average selling prices (ASPs) were up 2 percent. Further, the research firm reported a “high teens” decline in performance basketball sales on dips by Nike, Brand Jordan and Under Armour, and an 8 percent falloff in sales of Classics.

Stack Weighs on Pricing Environment

The Chairman and CEO of Dick’s Sporting Goods, Ed Stack, is blunt when asked about the current state of pricing in sporting goods retail—it’s both irrational and unpredictable. But he vows the country’s largest full-line chain will address the likely persistent climate aggressively.

“I think it’s (promotional pricing) going to be, at least for the foreseeable future, the new normal until the industry consolidates further,” said Stack, adding that Dick’s previous 9 percent margin won’t likely be achieved again anytime soon. “…We don’t like where the whole industry is today, but it won’t stay here forever.”

In its second quarter where it produced essentially flat same store sales but 19 percent growth in ecommerce revenues, Dick’s reported four “under sales pressure” segments: hunting, licensed, athletic apparel and electronics. Hunting was the worst performer of the group with a gross margin decline and a double-digit drop in comp sales due to an irrational pricing environment fueled by significant excessive inventory throughout the industry. Meanwhile, Stack blamed a softer, more promotional athletic apparel segment on increased distribution and more promotions by both brands and Dick’s retail competitors.

As the retailer lowered its full-year sales, profit, gross margin and consolidated same-store sales (flat to negative low single digits from +1 to +3%), Stack was adamant about the retailer’s go-forward strategy on pricing.

“…We don’t like where the whole industry is today, but it won’t stay here forever.”

“...To protect and grow our market share, we will aggressively price offerings to improve our price perception with customers and drive traffic to our stores and online,” he told analysts. Stack believes the chain’s recently adopted “right price guarantee” will convince more consumers that the chain’s merchandise is competitively-priced. Dick’s current inventory situation is described as “in pretty good shape” despite the industry’s backed up supply chain.

Further efforts will include aggressive marketing and promotion of apparel to protect market share and further development of the retailer’s private brands. Private label comped up nearly 7 percent in the second quarter, is projected to top $1 billion in sales this fiscal year, and doesn’t face the promotional pricing pressures. The segment, which includes the Top-Flite and Field & Stream labels, has the potential to double eventually as Dick’s broadens assortments and distribution.

Also last week, The Dick’s Sporting Goods Foundations Sports Matter program unveiled a five-year, $500,000 commitment to Little League Baseball and Softball.

Top Urban Lifestyle Chains Merge

The marriage between DTLR and Sneaker Villa creates a regional chain of nearly 240 doors across 19 states and may eventually set the stage for a new national player in lifestyle footwear, apparel and accessories retail. The transaction was orchestrated by New York private equity firm Bruckmann, Rosser, Sherrill & Co., which bought DTLR in October 2005 in a management-led buyout and recapitalized the business a decade later. Besides DTLR, BRS’ current portfolio of a dozen firms includes Royal Robbins. Previously, it included Anvil, Remington and Totes Isotoner.

DTLR and VILLA currently have close to the same number of doors with no geographic overlap. In addition to its website, DTLR has 110 locations across a dozen states and the District of Columbia with penetration in the metro markets of Atlanta, Baltimore and Chicago among others. Philadelphia-based VILLA, which operates on the web at, currently has 120 doors across 10 states including key markets in Pennsylvania and Ohio.

DTLR CEO Glenn Gaynor says the combination will enable the emerging retailer to leverage the best practices of both VILLA and DTLR to better serve customers, employees and vendors. BRS has not disclosed what, if any, operations will be merged and whether both nameplates will go forward.

Patagonia Founder Stands Up for Public Lands

Yvon Chouinard is taking his company’s longstanding message about preserving shared U.S. public lands to U.S. consumers and Secretary of the Interior Ryan Zinke in Patagonia’s first television ad in its almost 45-year history. Zinke is scheduled to announce his decision on the fate of 21 remaining national monuments on Thursday, August 24.

In the spot, to air in Montana, Utah and Nevada where national monuments such as Bear Ears and Gold Butte and Basin could be recommended to be rescinded, 78-year old outdoorsman Chouinard tells the viewing audience that he has been a successful businessman because of lessons he has learned in the outdoors. He also suggests public lands are under greater threat today due to “a few self-serving politicians who want to sell them off and make money.”

The commercial ends by asking viewers to text “DEFEND” to 52886 by August 24.

“This is not about politics or partisanship,” Patagonia President and CEO Rose Marcario said in a prepared statement. “It’s about standing up for places that belong to future generations. We want to raise awareness of history’s lesson that when public lands are turned over to states that can’t afford to maintain them, the result is the land is often auctioned off to private companies who irrevocably damage them and deny access to them for all of us.”

Retail Round-Up
Hibbett Sports Sees More Speed But Fewer Footwear Launches

The small-town operator, which had a disastrous second quarter, sees a number of changes on the horizon from footwear vendors that it believes can turnaround the category’s fortunes. Most notably, Hibbett senior executives see speed accelerating in footwear product development cycles and a pullback on the number of marquee style debuts toward a focus on “more quality launches.”

The 1,080-door retailer, which reported an 11.7 percent drop in second quarter comparable store sales with double-digit declines in both June and July, is most excited about running and lifestyle offerings in the pipeline.

“We’re very focused on price value versus necessarily price, and we feel there are opportunities to provide value to the customer without necessarily going downstream from a price perspective,” HIBB’s chief merchant Jared Briskin told analysts.


Camping World CEO Marcus Lemonis says the new Gander Outdoors “will not carry the level of apparel and footwear that we historically have because we believe that is not as experiential. It’s more of a commodity-based business and we want to carry the types of products and services that require human interaction with an expert and or some level of installation…that is our defense mechanism against margin compression competing with Amazon-type retailers.”

Sportsman’s Warehouse, which saw a second quarter comparable store sales decline of 9 percent driven by the hunting and shooting categories, realized 5.9 percent and 2 percent comp gains, respectively in apparel and footwear. Transactions from the banner’s 1.4 million loyalty members accounted for 43 percent of the period’s $191.5 million in revenues. The chain has moderated FY18 door expansion to 5 to 9 so that it can allocate more free cash for debt reduction.

Sierra Trading Post has opened a store in Framingham, MA, the hometown of parent TJX Cos.

U.S. e-commerce sales rose 16.3 percent in the second quarter with Amazon accounting for nearly half of the growth. Walmart reported a 67 percent increase in second quarter sales from all of its websites, including Moosejaw and

The Buzz

ING Source has promoted Josh Higgins to president of OS1st Base Layer Bracing where he will run day-to-day global operations. He will work closely with outgoing president Dave Higgins, who will continue as CEO and handle international business development and strategy for the Hickory, NC company.

Tubes of the Week


Numbers In Play
Week of 8/10-8/17
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
The “Dog Days” of August were not kind to retail in the midst of a promotional, unexciting Back-to-School season. With the exception of Shoe Carnival, which landed an “outperform” rating from Wedbush,14 out of 15 stocks posted declines for the week. The result pushed the Index to its lowest number ever. Of course, a portion of the declines, including double-digit drops by five stocks, could be attributed to the atrocious geopolitical climate domestically and abroad with acts of violence in Virginia and Spain and another senior staffer exodus from the White House. The Dow and S&P suffered their worst percentage declines in more than two months on Aug. 17. Camping World, preparing for an eventual 40-57 Gander Outdoors openings, has seen its shares rise more than 21 percent over the last three months. Sportsman’s Warehouse reported eight of its nine percent comparable store sales drop in the second quarter was due to hunting and shooting department. Dick’s, despite a tough second quarter that resulted in a single-day share decline of 23 percent and three downgrades by investment houses, showed its continued commitment to the industry by donating $500,000 to Little League Baseball. Hibbett Sports is vowing to be “more selective” with expansion in 2018 after ending the second quarter with 1,080 locations.
Segment fell less than 1 percent as a whole, but there were only four gainers for the week. They were led by VF Corp., which announced its $820 million acquisition of Williamson-Dickie (See story above). Callaway, which has reportedly increased its green grass market share in balls to 14 percent from 7.9 percent in 2013 on the strength of its Chrome Soft line, is expanding its golf ball manufacturing facility in Chicopee, MA. The 32,000-square-foot expansion will cost an estimated $9 million. Rival Acushnet Holdings, meanwhile, files a countersuit against Costco and its March lawsuit, citing 10 patent infringements and false advertising by the warehouse club giant with its Kirkland golf ball. Time is ticking for Fitbit. Future of wearables company may hinge on the success of its upcoming, full-featured smartwatch given the brand’s legacy product sales will drop approximately 20 percent in 2018, according to Raymond James. Under Armour CEO Kevin Plank resigns from a President Trump manufacturing council days before other senior executives resign and the board is disbanded along with two others. But UA continues to take heat over its decision to sell Kohl’s, yet another issue Frisk will have to figure out in his attempt to turn around the brand’s fortunes with product, Wall Street and retailers.





Retail Name (Ticker Symbol)
Close on 08/10/17
Close on 08/17/17
% change over time
Big 5 Sporting Goods (BGFV)
Cabela's (CAB)
Camping World (CWH)
Dick's Sporting Goods (DKS)
Finish Line (FINL)
Foot Locker (FL)
Genesco (GCO)
Hibbett Sports (HIBB)
Kohl’s (KSS)
Macy’s (M)
Sportsman’s Warehouse (SPWH)
Shoe Carnival (SCVL)
Tilly’s (TLYS)
Walmart (WMT)
Zumiez (ZUMZ)
Brand Name (Ticker Symbol)
Close on 08/10/17
Close on 08/17/17
% change over time
Acushnet Holdings (GOLF)
adidas (ADDYY)
Amer Sports (AGPDY)
Callaway (ELY)
Columbia Sportwear (COLM)
Deckers Brands (DECK)
Fitbit (FIT)
GoPro (GPRO)
lululemon (LULU)
Nautilus (NLS)
Nike (NKE)
Skechers (SKX)
Under Armour (UA)
VF Corp. (VFC)
Wolverine Worldwide (WWW)

Sports Insight Extra Podcast Series

Bob Smith

The design consultant who began his 20-year career as a graphic artist for Nike dishes on the blur between lifestyle and performance and the importance of Struktur, the creative conference for active, outdoor and urban design.

Rob & Mike Barnes

The co-founders of Selkirk Sports, a Hayden, ID maker of Pickleball paddles and accessories, dish on the rise of the sport that counted 2.5 million participants in 2015.

Brendan Candon

CEO of SidelineSwap, an online marketplace for used sports gear and equipment, dishes on the market and whether it steps on the toes of traditional, full-line retailers.

Dave McGillivray

The long-time race director and long-distance runner weighs in on marathon participation, the future of event marketing and his latest venture that may bring a marathon to a MLB ballpark near you.

Paul Froio

Reebok’s VP of U.S. Retail and Direct-to-Consumer channels talks about the company’s new South Boston headquarters and adjacent global flagship store.

Aquiles M. Bermùdez P.

The former president of the Dominican Association of Free Zone Companies and current member of the National Commission of Footwear addresses the industry, Dominican Republic’s infrastructure and Footwear Technology Institute.

W. Andrew Martin

The managing director for Baird in Charlotte, NC discusses the M&A climate, consumer loyalty to brands today and the impact of private label.

Mark Sullivan

The president of Formula4Media, LLC previews The Running Event conference and trade show set for November 28-December 1 in Austin, Texas.

Bryan Smeltzer

The general manager of Zamst Americas talks sports protectives, dispelling some of the consumer and athlete misconceptions about the category.

Emily Walzer

Formula4Media colleagues Emily Walzer, Textile Insight editor, Jennifer Beaudry-Ernst, footwear specialist, and contributor Kurt Gray, owner of SimplyGrayDesign, dish on key trends from the final Outdoor Retailer trade show in Salt Lake City.

Judith A. Russell

Shifting consumer purchasing patterns are vital to understanding today’s marketplace. Russell, a marketing and strategic planning professional, offered up her thoughts at TexWorld in New York on a panel with Sports Insight Extra’s Bob McGee.

Will Decker

Family-owned Silicon Valley firm Plug and Play, which dubs itself the “Ultimate Startup Ecosystem,” has raised over $6 billion in venture funding during its 11 years while bringing corporations, venture capitalists and start-ups together.

Matthew Lyon

In the fragmented hydration market, where price points for performance products are on the rise, HydraPak is an OE supplier to numerous brands and has its own lightweight, flexible products.

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

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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

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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. 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.

Rusty Saunders

Industry senior statesman Rusty Saunders dishes on industry leadership, pressing issues and the inactivity pandemic.

Barbara Barclay

Expert Barbara Barclay, president of RightEye, talks eye-tracking technology and her company’s recent alliance with Major League Baseball and USA Baseball.

Julie Sylvester

Julie Sylvester, Executive Producer at Living in Digital Times, talks trends likely to emerge at Sports and FitnessTech Summit at CES in Las Vegas.

Chris Palmer

Chris Palmer, Founder and CEO of BoxFox, talks excess inventory and solutions for vendors, retailers and distributors.

Susie McCabe

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.

Tom Cove

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.

Rich Harper

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.

Stephen Lamar

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Bill McInnis

The president of Reebok Future discusses the intent of the unit and the brand’s plans to develop footwear in a new way.

Tom Fowler

Polar USA CEO Tom Fowler talks technology and the future of smart wearables.

Paul Schille

TREW CEO Paul Schille dishes on the eight-year old company in the process of completing its Series A round of funding and his dual career.

Jason Kaplan

Milestone Sports CEO Jason Kaplan dishes on the company’s low-cost, wearable pod and how it will help specialty retailers connect.

Duncan Finigan

OOFOS marketing executive talks about the recovery footwear brand and candidly about her courageous personal health journey.

Matt Priest

Footwear Distributors and Retailers of America President Matt Priest the likelihood of the Trans-Pacific Partnership being passed soon.

David and Josh Higgins

ING Source executives dish about compression technology and the Hickory, NC company’s breakthrough OS1st Brace Layer System.

Charles Liberge

Jones & Vining’s Charles Liberge addresses strategies and directions for the iconic brand.

Jim Baugh

PHIT America’s Jim Baugh dishes on the inactivity pandemic.

Sue Dooley and John Daher

Rockport Group senior executives talk about the brand’s fresh start under new ownership that has a major emphasis on versatility.

Josh Shaw

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Tim Porth

Tim Porth of Octane Fitness talks trends, Zero Runner and the company’s January acquisition by Nautilus Inc.

David Costello

The principal and founder of Rising Tide Associates talks about industry advocate lobbying for the domestic textile and footwear industries.

Steven D’Angelo

The ‘47 brand executive dishes on the Boston company and long-time MLB licensee founded by his father Arthur and his late Uncle Henry.

Pam Gelsomini and CB Tuite

Pam Gelsomini, president, and CB Tuite, VP–sales, discuss the company’s products, partnerships and what’s new for the season ahead.

Kenneth G. Andres

The tradeshowdirector for the American Sportfishing Association casts comments on the activity’s popularity, and trends in fishing.

Dick Sullivan

The principal and founder of Rising Tide Associates talks about industry advocate lobbying for the domestic textile.

Dave Coradini

The VP of sales and sponsorships for Spalding, Dave Coradini talks Shot Tracker and basketball.

Scott McGuire

The executive brand and product innovation leader dishes to F4M’s Emily Walzer on an array of topics.

Kelly Davis

Snow Sports Industries of America’s Kelly Davis talks weather, participation trends and how to handle the psyche.

Kevin Davis

The CEO of Performance Sports Group dishes on new bat standards and Own the Moment.

Gene McCarthy, Pt 2

Gene McCarthy, president of Asics America, speaks to Jen Ernst Beaudry on specialty run and more in the second part of the podcast.

Gene McCarthy, Pt 1

Gene McCarthy, new president of Asics Americas, dishes to F4M’s Jen Ernst Beaudry in the first of a two-part podcast.

Richie Woodworth

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Bruce Cazenave

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Tony Armand

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Gary Smith

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Marty Hanaka

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Mike Dowse

Wilson Sporting Goods, one year removed from its 100th anniversary and a major restructuring, has a renewed focus and strategy.