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Mon, Aug 28, 2017
Vol 1, Issue No. 33
Monday, September 25, 2017
Volume 1, Issue No. 37

Academy Sports Must Weather Another Storm

Facing increased competition, a soft firearms business, a promotional apparel segment and the aftermath of Hurricane Harvey in its home market of Houston, Academy Sports + Outdoors was hit with a debt downgrade to B3 by Moody’s last week. The New York investors service, along with Standard & Poor’s, had each initiated negative outlooks on the KKR-controlled retailer in April. And in late August, forced to delay the release of its second quarter results due to Harvey, Academy found its $1.69 billion term loan B, due in 2022, in distressed territory.

Despite its high leverage and the current challenging conditions in brick-and-mortar sporting goods retail, the geographically-concentrated Academy does possess some positives that should help it endure through the remainder of FY17 and through FY18 when its borrowing availability should be north of $500 million at each quarter end. Moody’s is forecasting earnings to grow modestly in the second half of this year and through next year as merchandising issues dissipate and implemented cost savings emerge for the chain that has more than 40 percent of its doors in Texas.

Academy, whose value focus differentiates it from rivals Dick’s and Bass Pro/Cabela’s and whose “every day low price” position offers “relative stability through recessionary periods,” suffered an 8.3 percent comparable store sales decline in the second quarter but improved gross margins on less clearance and promotional activity. Hard goods (53 percent of FY16 or an estimated $2.49 billion) and apparel (27 percent of FY16 or an estimated $1.27 billion) sales each declined. The same store sales dip in footwear (20 percent of FY16 or an estimated $940 million) was less during the period, aided by better in-stocks and a more streamlined and easier-to-shop assortment, Moody’s said. The retailer’s apparel business has already shown some improvement from a decision to migrate to a deeper, narrower private label assortment.

But numerous headwinds remain for Academy, which counts approximately 15 percent of its doors in the Houston market and 98 total doors in the Lone Star State. Most notable are the retailer’s regional concentration in the U.S. southeast and underpenetrated ecommerce business (less than 5 percent of revenues versus 12 percent at Dick’s). One-third of Academy’s store base sits in oil and gas industry-reliant markets that were a boon to results in 2009-10 but more recently have been a significant drag on performance. Meanwhile, the retailer has made staff, systems and infrastructure investments to beef up its ecommerce business, including the addition of a third DC in Tennessee last year.

Although Academy has expanded its store base by 9 percent annually on average over the last decade, Moody’s said it would consider any aggressive store growth now for the chain as unfavorable due to the “difficult market conditions” and the retailer’s need “to preserve liquidity.” Academy intends to open 16 stores, most in core markets, this year and open fewer doors in 2018.

Since KKR’s LBO of Academy in 2011, the retailer has paid the private equity firm two debt-funded dividends totaling $686 million and a third $200 million dividend using cash on its balance sheet.

“…We would view any future dividends (to KKR) in the absence of a strong earnings recovery as highly credit negative,” Moody’s stated in its report.

Can “The Chuck” Buck Trend?

The basketball shoe category, still sagging at retail according to the latest NPD data and badly in need of a spark, may get just that next month. Dominant category leader Nike, which saw its basketball footwear business slip high-single digits in August and its Brand Jordan business lose about a third of its sales due to market oversupply, is turning to an updated Classic, the Chuck Taylor from its wholly-owned subsidiary Converse, to breathe new fashion life and pizzazz into the segment. This is believed to be the first time Nike has leaned heavily on the All-Star in basketball since it purchased the Boston company out of bankruptcy in July 2003 for $305 million. For the 12 months ended May 31, Converse revenues were up 4 percent to more than $2.04 billion.

Nike, whose eight-year, NBA contract kicks in Oct. 1, is rolling out three fashion-forward iterations of the Chuck Taylor All Star on Sept. 29 and utilizing longtime brand endorser and league Hall of Famer Julius “Dr. J” Erving to market the effort. Additionally, a collection of Converse NBA Apparel will be introduced, ranging from a winterwool bomber jack with Primaloft fill to hoodies, crewnecks and a long sleeve T-shirt under the Converse Essentials label.

The Converse Chuck ‘70 basketball shoe introductions include the limited-edition Gameday (250 pairs at $250 retail) made of authentic NBA jerseys and back with a leather lining; and the NBA Legend ($150 retail) luxe model built on the wining legacies of five franchises—Boston, Chicago, Golden State, Los Angeles and New York. A third Chuck, the SE NBA Franchise ($100), will cover all 30 NBA teams with representative logos and an outsole molded to display the given team’s city influence.

While Nike looks to Chuck to draw new street interest to its sagging basketball business, NPD reported last week that Adidas basketball sales, from a much smaller sales base, grew 40 percent in August. Adidas walked away as the official on-court apparel brand of the NBA after last season.

Elsewhere, the race appears to be on to snare Nigerian-born Giannis Antetokounmpo to a signature basketball shoe deal that would debut during the 2018-19 season. The 22-year old small forward with Milwaukee, who is entering his fifth NBA season, has an endorsement deal with Nike that expires September 30. If Adidas or the Chinese brand Li Ning sign him to an offer sheet, the Swoosh will have 20 days to match it, according to reports. Antetokounmpo would become only the 22nd league player with his own Nike signature basketball shoe if he decides to stick with the brand.

Meanwhile, Slam magazine was the first to report that the Big Baller brand has scrapped its $495 retail ZO2 Prime shoe in favor of a new redesigned model. And Adidas may be closer to launching the second iteration of its James Harden signature shoe, which was first introduced in October 2016.

Kicks Corner:
Adidas, Brooks Pace Running in August

The Three Stripes, while still trailing running shoe category leader Nike in dollar share by 40 percent, generated a 77 increase in dollar sales of its category shoes in August, according to NPD Group data. Overall, running shoe sales were down 4 percent last month, but Adidas models leaped 77 percent; Brooks running sales increased mid-single digits and Under Armour running grew double-digits, the research house reported. All other technical running brands experienced year-over-year sales drops in August.

For sure, Nike and Adidas appear locked in a battle to become the first brand to produce a racing shoe that can help a runner complete a marathon in under two hours. A documentary on Nike’s May attempt, which fell 26 seconds short, premiered on the National Geographic Channel before going online last week. Adidas, meanwhile, was preparing and hopeful that an update to its adizero Sub2 would carry one of three Kenyans—Wilson Kipsang, Patrick Makau or Felix Kandie—to a sub two-hour victory in the Berlin Marathon yesterday.

On September 30, Brooks’s new energy-return, performance shoe, the Levitate, will be available worldwide. It is the first Brooks’ shoe to feature the brand’s exclusive DNA AMP midsole, which was created in partnership with BASF. Wolverine Worldwide-owned Saucony, meanwhile, has created an elite running team consisting of athletes from around the U.S. Based in Boston and coached by 2004 Olympian Tim Broe, the team will be dedicated to helping talented runners progress to world-champion status and Olympian hopefuls. The Freedom Track Club will be an integral part of the Saucony brand, assisting with product development, offering biomechanical insight and sharing experiences and progress with the brand’s online running community. The Saucony FTC will conduct a fall training camp on Martha’s Vineyard. Initial members include: Molly Seidel (Notre Dame), Helen Schlachtenhaufen (Darmouth), Paige Kouba (Harvard), Tim Ritchie (Boston College), Brian Shrader (No. Arizona), Tommy Curtin (Virginia Tech), MJ Erb (Mississippi) and James Randon (Yale). 

Pictured from left: Helen Schlachtenhaufen, Saucony Freedom TC; James Randon, Saucony Freedom TC; Pat O’Malley, president of Saucony; Molly Seidel, Saucony Freedom TC

• Nathan tech reps will organize safety and visibility events and night-themed fun runs at local run specialty shops across the U.S. through the end of 2017.

Balega, the performance sock brand focused on the run specialty market, is continuing its support of Breast Cancer Prevention Partners with the release of its limited-edition Grit and Grace collection with $1 of every pair sold to benefit BCPP.

Finish Line Searches for Solutions, New Momentum

After an especially challenging, promotional second quarter where comparable store sales slipped 4.5 percent and sellthroughs of “more mature” footwear platforms slowed, Finish Line is forecasting difficult sales and margin trends to continue in the second half.

Nonetheless, without addressing the possibility of suitors, Finish Line senior executives did address a number of initiatives and products it hopes will spark positive business momentum in the months ahead. Among them: a new design format that commenced with 10 doors in the second quarter and will be expanded to 10-15 more locations in time for holiday and 90 total eventually; more allocations of key new products and a takedown of Nike’s VaporMax for kids in November; and more leverage of concepts from the banner’s new ambassador, Migos, for holiday and beyond.

Within its Macy’s business, Finish Line is forecasting to hit the high-end of its $350 million annual sales target in FY18 ahead of its initial forecast, and continuing to expand its offering of kids and women’s styles. In the second quarter, FINL’s Macy’s sales rose 17 percent to account for 24 percent of the segment’s turnover versus 22 percent in the year-ago period.

Acushnet’s Wally Uihlein Retiring

Wally Uihlein will be retiring January 1st.

Wally Uihlein, president and CEO of the Titleist and FootJoy parent, is retiring January 1 after nearly 42 years with the Fairhaven, MA golf company. He will remain an Acushnet director and advisor to the chairman. David Maher, 49, Acushnet’s current COO, has been promoted to president and CEO following Uihlein’s retirement.   In separate golf news, Etonic Holdings has tapped Ray Cook Brands, which owns Ray Cook, Hot-Z, Solus and Bullet, to make and market Etonic branded golf shoes, gloves and accessories under global license.

Kardashian, Jenners on the Move; Selena Aligns with Puma

Actress Selena Gomez

With social media abuzz in recent days over the apparent pregnancy of Kylie Jenner, who endorses Puma, Kim Kardashian is apparently working on a new endorsement deal with a new activewear brand, BILLY, which becomes available for purchase next month at Meanwhile, Puma, last week, strengthened its women’s business via a new long-term partnership with singer and actress Selena Gomez. Elsewhere, Pro-Tec signs X-Games gold medalist Brighton Zeuner, who is defending her women’s world championship title in Shanghai, China, to its skate team.

The Buzz

AGVSPORT America, based in Dallas, has purchased the rights for the AGVSPORT brand in the U.S. from AGV Sports Group and will introduce a product line-up in early 2018. AGV Sports Group maintains control of marketing the brand’s products outside the U.S. AGVSPORT has already re-entered the race and track-day world with custom suits. Meanwhile, Motonation, the brand’s previous U.S. distributor, will continue through existing channels into 2018.

Evo, a Seattle action sports, lifestyle, and outdoor retailer, strikes a strategic partnership with Loge Co., a brand offering unique camping and lodging destinations for surfers, hikers and outdoor enthusiasts. In exchange for its equity stake in Loge, evo will provide business mentorship, administrative assistance, financial flexibility, and real estate development support.

Fabletics is introducing its first footwear collection exclusively for its VIP members, promising the 11 styles will complement the brand’s existing assortment of workout clothes. Starting at $40 retail, the shoes range from training shoes and slip-ons to booties and lifestyle sneakers. They are available at eight countries, including the U.S. and Canada.

New Balance, which currently operates 10 stores in the Middle East, intends to add 40 more across the region by 2020 through its franchise partner.

Teamwork Athletic secured the rights to make apparel for each active roster player in the Major League Baseball Players Association and MLB Hall of Fame. The products will soon be available on Amazon. The San Marcos, CA company’s Prosphere sportswear brand currently has more than 10 million unique products. Rossignol is partnering with Italia Independent to produce and distribute a co-branded eyewear collection that will debut at the MIDO 2108 Show.

Tubes of the Week


Numbers In Play
Week of 9/14-9/21
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
Segment unable to keep momentum from last week going as nine of 15 stocks fall, led by the big retailers in Finish Line, Foot Locker, Big 5 and Dick’s who face a big threat to their respective athletic shoe businesses from the direct-to-consumer arms of large brands. Piper Jaffray disclosed that 11 percent of all athletic footwear dollar growth in the first half was generated by brands’ DTC. Foot Locker, meanwhile, has teamed up with VFC-owned Timberland and hip-hop artist Nas on a limited-edition series of boots called the “Legends Collection.” Hibbett Sports received some good news in the aftermath of Hurricanes Harvey and Irma as Susquehanna upgraded the stock to positive on the likelihood that in the aftermath of the storms, HIBB’s digital platform will benefit. Camping World has reached a multi-year agreement to become the presenting sponsor of Major League Baseball’s League Championship Series starting next month. Deal will also promote public company’s family of brands, including Gander Outdoors and Overton’s, at 2017 spring training camps in Arizona and Florida.
On the cusp of reaching an Index score of 100 (equal to Dec. 31, 2014), the segment fell back a single point as 12 of 15 stocks fell for the week, led by Fitbit. Poor reviews of FIT’s new Ionic smartwatch sent shares down 7.7 percent over five days with Mashable calling the product, “No Apple Watch killer.” In a related development, NPD predicted Apple will sell 3.25 million of its watches over the holiday season. Elsewhere, Acushnet’s Titleist brand introduced its DT TruSoft golf balls, which feature a larger, low core and proprietary soft cover technology. Adidas gets lauded for its invitation-only Glitch app launched last year with Newstore that offers same-day delivery and a one-touch payment option. Under Armour’s new relationship with ASAP Rocky was unable to squash a new report that says brand is not as cool with men (27%) as Nike (81%) or Adidas (70%). Only 17 percent of respondents to a survey said they were likely to purchase Under Armour branded footwear this year. Wolverine’s Saucony brand sees its new KOA Trail Shoe cited as “Best Debut” by Runner’s World in October issue buying guide.





Retail Name (Ticker Symbol)
Close on 09/14/17
Close on 09/21/17
% 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 09/14/17
Close on 09/21/17
% 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.