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Mon, Aug 28, 2017
Vol 1, Issue No. 33
Tuesday, September 5, 2017
Volume 1, Issue No. 34
The general manager of Zamst Americas talks sports protectives, dispelling some of the consumer and athlete misconceptions about the category.

Premium Sneaker Market in Crisis

The already battered premium-priced, performance athletic shoe market took two more direct hits last week that left some speculating that it might not recover until next year’s Back-to-School period. Nike and The Finish Line were at the center of the storm. In Beaverton, the second round of a previously announced 1,400 layoffs (an estimated 1.9 percent of the Swoosh’s global workforce of 74,000) commenced. One of the casualties, Tiffany Beers, a 13-year Nike veteran and special projects engineer who was the creative force behind the Hyper Adapt 1.0 and self-lacing MAG shoe, is moving on to Tesla, which former Nike executive Willem Haitink joined in April. Meanwhile, at Nike advertising agency Weiden & Kennedy, managing director Tom Blessington is off to Youtube as VP of brand, media and experiences.

The latest Nike exodus came days after Morgan Stanley proclaimed, “Nike has lost its core sneaker enthusiast customer to Adidas” and The Finish Line, citing sales and gross margin pressures from the highly promotional athletic shoe market before and during the Back-to-School season, pre-announced weak second quarter results and simultaneously lowered guidance for the remainder of the fiscal year. FINL shares fell 28 percent after the revised outlook was released.

Cannacord Genuity was quick to cite the persistent promotional environment for athletic shoes and Nike’s “innovation lull” as the key contributors that are “crippling the retailers.” In its August 29 report, the investment house suggested sales of Nike’s previously top-performing platforms in Roshe, Hurache and Jordan Retro were slowing at a faster rate than anticipated and the Adidas BOOST platform is still facing manufacturing constraints.

One bright spot for all marketers and retailers of premium athletic shoes, including Nike, is word that consumers’ appetite for new and innovative products remains strong. Build and market it and they will come and buy. That forecast bodes well for the athletic shoe brands that can speed up their supply chains and release the proper quantities of product to whet consumer appetites without oversaturating the market. Sneaker historians might remember that Nike has been in this market position before in the late 1980s when it lost its dominant U.S. market share lead to Reebok only to come storming back before decade end in the then $4.5 billion U.S. athletic shoe market.

Finish Line, which expects to report a 7 to 8 percent decline in inventory level, expressed confidence that it will be able to enhance its merchandise assortments to improve its topline in early 2018. But some circles, given the current traditional retail and athletic shoe climate, wondered if there is a real need for two mall-based purveyors of premium-athletic shoes.

Caleres-owned Famous Footwear, like rival DSW, realized an uptick in its sneaker business in the second quarter, bolstered by a 20 percent increase in lifestyle athletic with men’s and women’s athletic comps rising mid-single digits and kids’ gaining high-single digits. The retailer said the addition of Under Armour in its merchandise assortment was a key contributor to its 2.8-percent increase in second quarter comparable store sales. Shoe Carnival reported a slight decline in its second quarter adult athletic comparable sales, which it attributed to a decline in men’s basketball and continued strength in men’s and women’s running. SCVL said it believed the positive athletic and athleisure trends will continue in the family footwear retail segment and re-allocated buy dollars to both segment for fall.

Lululemon’s ‘Best Kept Secret’ Could Equal 25% of Biz by 2020

The men’s segment holds huge upside potential for lululemon, which would like to grow its men’s business to $1 billion by 2020, equal to 25 percent of its overall revenue objective of $4 billion by the end of the same year. The brand’s first focused men’s marketing effort, an extension of “This is Yoga,” will debut this month and extend through the holiday season.

“Men’s is still one of our best kept secrets and we will focus on guest acquisition and talking to men in unexpected ways through curated and targeted experiences, community activation and co-located stores,” CEO Laurent Potdevin told analysts last week. Sales of men’s pants and shorts increased 23 percent in the second quarter.

Elsewhere, lululemon is preparing to debut its newest fabric for high intensity workouts such as spinning, Everlux, in the third quarter, re-opening its Fashion Island ivivva location in the coming months to join seven remaining ivivva doors in key markets, and exploring supply chain production in Haiti with a sourcing partner. Meanwhile, the company’s footwear pilot in 23 select stores with Athletic Propulsion, which is not calculated into 2020 topline goals, has helped lululemon learn how to add the category to all of its stores. The chain will add footwear online for the holiday season. The company also sees upside topline potential from both high-margin accessories and outerwear, both of which are receiving a greater focus.

On the personnel front, Duke Stump, EVO of Brand and Community, and Gina Warren, EVP of People, are both departing by month’s end along with Director Steve Collins. Tricia Patrick from Advent Intl. has joined the lululemon board.

Overall, lululemon generated a 13 percent improvement in second quarter revenues to $581 million as comparable store sales jumped 2 percent and total square footage increased 11 percent on 42 new company stores. Two dozen of them were in the U.S. The company is currently forecasting a low-single digit in comp sales in FY17 as total revenues hit the $2.545-$2.595 billion range.

Genesco Banners Going in Different Directions

Mario Gallione
Journeys showed positive momentum in the second quarter, helped by an adjusted assortment that outperformed expectations and helped contribute to stronger results as the third quarter began. August was the fifth consecutive month of positive same store sales for the banner that realized improved year-over-year traffic during the month. Genesco senior management says it’s “enthusiastic” about Journeys’ in-store and online results and the overall trajectory of the business. Second half sales for Journeys are projected to be flat to up slightly more than 1 percent. 

The number of email campaigns is being increased 20 percent with the number of catalogue mailings forecast to increase 40 percent in the second half. The company has promoted the banner’s chief merchandising officer, Mario Gallione, to president. He will report to James C. Estepa, CEO of The Journeys Group.

The storyline for GCO’s Lids segment was contrary in the second quarter as comps fell in each month of the period on a sustained decline in store traffic. The poor trends have continued into the third quarter and Bob Dennis, Genesco CEO and president, said the banner’s difficult comparisons against last year’s historic Cubs’ World Series victory will impact the fall headwear business no matter who faces off in the Fall Classic. However, there would be a “meaningful difference” between a Yankees-Dodgers’ World Series and a championship run by the Cleveland Indians. Lids’ inventory rose 1 percent in the second quarter as total sales dipped 5 percent. Margin pressure in the banner will continue throughout the third quarter as Lids clears NBA and NHL product ahead of vendor transitions, including Nike for the NBA. By holiday, more than 1,000 Lids locations will offer customized embroidery on items as the banner increases its digital ad spend by 60 percent, largely in the area of page search.

While lowering Genesco's FY outlook, Dennis did emphasize the Nashville company’s objective to future enhance its omni-channel strategy. The plan will focus on lowering real estate risk and rents; enhancing the in-store experience to drive traffic; tightening the rein on capital spending; further building out omni-channel and digital capabilities and strengthening the equity of the company’s retail brands. Genesco is seeing rent reduction all tiers of malls, the largest in the least productive ones. The company thinks it will have the ability to favorably adjust the rent structure for nearly 50 percent of its doors over the next three years.

Report: Amazon is Far from Ruling Retail

Unlike some small retailers, Moody’s isn’t afraid to take on Amazon. In a seven-page report issued last week, the New York investors service separated fact from fiction about Amazon.  

Among key report findings: 
• Amazon is still a long way from dominating retail. It has a miniscule share of brick-and-mortar and only 10 percent of total U.S. sales are currently generated online.  

• Apart from sales growth, Amazon has weaker performance than the large retailers. The company’s stock has been outperforming retailers, largely on the growth on its web services business and the potential for future expense cuts that would enhance profitability.   

• Amazon Prime membership estimates are “seriously overstated” and likely closer to 50 million versus Costco’s 86.7 million memberships.

• Amazon is not outperforming the retail universe in operating margin or any profitability measure, only sales growth. “Amazon is actually the weakest of the large retailers, excluding sales growth,” Moody’s writes, later suggesting, “…the equity markets’ infatuation with Amazon’s stock is forcing retailers to manage more irrationally for short-term performance, which could have bad repercussions for those concerned…”

Billabong’s Americas Biz Has Turned Corner

Senior management of the publicly traded Australian company is optimistic about the Americas, a top priority for the Group’s turnaround, following a strong second half that included 25 percent growth in ecommerce and market share growth for its Billabong and RVCA brands in the core specialty channel.

Billabong, which realized a 380-basis point improvement in Americas’ gross margins in the second half, posted a 7.5 percent decline in annual constant currency revenues to the equivalent of $344.2 million for the 12 months ended June 30. Brick-and-mortar comps were 2.3 percent higher for the year while ecommerce as a percentage of sales was 7.4% (approximately $25.4 million) and highest among all geographic regions.

The company’s intense focus on the region during the second half, in the face of challenging market conditions, centered on planning the top line conservatively, controlling inventories (they fell 14 percent for the FY), streamlining the organization, cutting costs, improving owned retail through simplified assortments and improved merchandising and growing ecommerce. The latter was paced by a 32 percent increase for the Billabong brand in North America.

In & Out

Mizuno USA has parted ways with Mark O’Brien. He took over as president in January after joining the Norcross, GA company in 2015 as VP of brand management and marketing.

Deckers Outdoor appointed John M. Gibbons as Chairman on September 1 to replace Angel Martinez, who will remain a company director.

Amer Sports has appointed Bernard Millaud as a special advisor to Heikki Takala, president and CEO, following his resignation as president of the company’s Cycling Group.

Caleres hires Malcolm Robinson to oversee strategic growth initiatives, including Allen Edmonds and international expansion.

The Buzz

Adidas completes divestiture of Montreal-based CCM Hockey for $110 million to an affiliate of Birch Hill Equity Partners.

Big Rock Sports acquires Redl Sports Distributors, the Canadian wholesale distributor of fishing, hunting, shooting sports and camping products, from Maurice Sporting Goods. Big Rock acquired KTL Canada in 2015.

Bridgestone Sports says its first half unit shipments set a new record, which it attributed to an aggressive marketing campaign and a new, proprietary golf ball fitting launch monitor app.

Peak Sports, the Chinese brand, has introduced the first 3-D printed basketball shoes endorsed by basketball player Dwight Howard, three months after debuting “FUTURE I” 3-D printed running shoes.

Timberland has begun working with the nonprofit Smallholder Farmers Alliance to re-introduce cotton as an agricultural export crop in Haiti. The alliance builds on Timberland’s 2010 self-sustaining agroforestry model where the VFC-owned company planted five million trees on the island country.

Tubes of the Week


Numbers In Play
Week of 8/24-8/31
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
Nine up, six down but two double-digit decliners in The Finish Line and Genesco give the segment a flat Index for the week. Finish Line adopted a ‘poison pill’ while simultaneously pre-announcing a dreadful second quarter and lowered its annual guidance. Shoe Carnival reported better-than-forecasts second quarter results, including a 1.4 percent increase in comparable store sales, and investors see the chain’s business improving. SCVL has doubled the size of its loyalty program to more than 12 million members over the last several years. Genesco, which saw its Lids’ comps dip 2 percent in the second quarter, will be hard pressed to match comps from last year’s Cubs’ historic World Series win. Despite improving trends at Journeys, Nashville company lowers its full-year outlook.
Split week with seven up and eight down, but segment Index falls nearly 3.5 percent. Lululemon, which sees men’s as $1 billion business by 2020, launches first dedicated men’s marketing effort this month. The category of men’s apparel, up 23 percent in the second quarter, is reportedly 30 percent of UA’s men’s business and less than 10 percent of Nike’s currently. Dark week for Nike, which commences its second round of layoffs in three months and sees Morgan Stanley decree the brand has “lost” its core customer to rival Adidas. Columbia Sportswear’s 93-year-old Chairwoman Gert Boyle is teaming up with “High School Musical” star Zac Efron and his brother in a new online commercial for the brand. Under Armour debuted #WeWill marketing campaign that focuses on how sports can unite, inspire and change the world. Deckers Outdoors named John M. Gibbon as Chairman on September 1 to replace Angel Martinez who remains a company director.





Retail Name (Ticker Symbol)
Close on 08/24/17
Close on 08/31/17
% 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 08/24/17
Close on 08/31/17
% 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

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. 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

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.

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

Mission Athletecare CEO Josh Shaw says thermoregulation is the New York company’s singular focus.

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

Saucony’s Richie Woodworth offers his views on brand’s running business and what it takes to manage through change.

Bruce Cazenave

Bruce Cazenave, CEO of Nautilus Inc., recently ranked 23rd on Fortune’s “Fastest Growing Companies” list.

Tony Armand

Armand is leading USB, created after the April merger of Shock Doctor and McDavid.

Gary Smith

Gary Smith has been at the helm of the Lawrence, MA firm for three years, and his 2016 strategies will broaden Polartec’s scope.

Marty Hanaka

City Sports CEO Marty Hanaka has 42 years in retail, starting at Sears in 1973.

Mike Dowse

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