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Mon, Aug 28, 2017
Vol 1, Issue No. 33
Monday, October 16, 2017
Volume 1, Issue No. 40
The managing director for Baird in Charlotte, NC discusses the M&A climate, consumer loyalty to brands today and the impact of private label.

New Threats to Brick-and-Mortar, Activewear Emerge

Traditional sporting goods retailers of new merchandise, already burdened with the Amazon effect and two years of excess merchandise in the market due to bankruptcies, store closures and slower traffic, face a new threat—online sites selling used gear from team to outdoor equipment.

Five years after being founded by a group of Division I college athletes frustrated by the cost of new sports merchandise, SidelineSwap last week completed its third round of funding with a $2 million seed extension. Besides Global Founders Capital, Haystack Partners, Riverpark Ventures, Fullstack Sports Ventures and former Etsy CEO Maria Thomas, round investors included a group of former Olympians and pro athletes from the NHL, NBA, MLB and NFL. The Boston company has raised $4 million to date and counts more than 150,000 athletes in its re-sell community that has achieved 10 percent month-over-month growth over the last year. SidelineSwap, which claims to have a larger selection of used sports equipment than eBay, has had the most success with hockey, skiing, golf and baseball gear.

Across the U.S. near Seattle, co-operative REI has tapped Yerdle Recommerce to help it launch a Used Gear Beta test program in all 50 states that consists of customer-returned outdoor gear and apparel. While it solicits feedback at [email protected], REI says Used Gear Beta is “one way we are experimenting expanding opportunities to enjoy life outdoors and bringing value to our (16 million) members.” It is a separate effort from the in-store “Garage Sales” at REI locations a couple times a year.

All merchandise sold through the program is “As-Is” and without a warranty, although the co-op provides a 30-day satisfaction guarantee for purchasers who don’t have to be members. Items are discounted according to their condition level with most “like new” or “lightly worn.” REI stores and the co-op’s online returns department cannot process product returns from the Co-op Used Gear Beta program and the retailer’s free ship to store for pick-up option isn’t available.

“Used Gear has the potential to help us understand if, with our scale, we can find new homes for pre-loved gear and apparel that might otherwise go to waste,” proclaims Vik Sahney, REI’s head of sustainability.

Of course, SidelineSwap and REI weren’t the first operations to address the consumer market for used sporting goods. That honor belongs to Winmark’s franchised Play It Again Sports brick-and-mortar operation. The retailer, which counted 283 U.S. and Canada locations on July 1, generated $228 million in revenues in 2016 for its publicly-traded parent and collected a 13.9 percent royalty on all purchases, up from 13.6 percent in 2015 but down from 15.4 percent in 2014.

Meanwhile, in the same week that Piper Jaffray released its semi-annual research on teen purchasing behavior that showed an apparel trend toward streetwear brands and away from traditional athletic brands, Bloomberg reported Friday that two Taiwanese contract manufacturers are working with Amazon on private-label sportswear for the online behemoth. Eclat Textile Co., one of the two, already makes apparel for Under Armour, Nike and lululemon. The head of Amazon active apparel is Kirsten K. Harris, a former Nordstrom, Nike and Eddie Bauer executive.

Piper Jaffray Research
The Shifting Tastes of Teens

U.S. teens spend on average 20 percent of their budget on apparel where their tastes appear to be shifting, according to Piper Jaffray’s latest “Taking Stock With Teens” survey of 6,100 teens. The detailed report, which also tracks spending on footwear, video games and food, focuses on 1,500 upper income teens and 4,600 of average income.

With overall teen spending dipping 4.4 percent year-over-year, there were noticeable shifts in fashion trends, up-trending brands and down-trending brands. Among upper-income males, the survey details the top fashion trends as: Nike/Jordans, Supreme, jogger pants/ ripped jeans, Khakis/Chinos and Adidas. Among upper-income females, top fashion trends were: ripped jeans, off the shoulder tops, Birkenstock, jeans, and leggings/lululemon.

The Piper Jaffray report also details the brands starting to be worn by teens today. Among upper-income male teens, the list was led by Adidas (12%), Nike (9%), Ralph Lauren (5%), American Eagle (5%) and Under Armour (5%). Among upper-income females, the top four up-trending brands were: American Eagle (9%), Forever 21 (6%), Adidas (5%) and Pacific Sunwear (5%). Meanwhile, top “down-trending” brands among the upper-income set were: Under Armour (10%) Gap (9%) for males and Justice (27%) and Aeropostale (20%) for females.

Notably, the survey found that athletic apparel is moderating somewhat led by Nike with apparel brand preference showing a shift toward streetwear brands such as Vans and Supreme. While Supreme cracked the Top 10 Preferred Brands among the upper-income group for the first time, category leader Nike fell 600 basis points to 23 percent. American Eagle, Adidas and Pacific Sunwear each gained preference from Fall 2016. Among upper-income males specifically, Nike fell 800 basis points year-over-year to 36% as a preferred brand while Adidas gained 300 basis points to 6 percent; Supreme captured 4 percent versus none in Fall 2016; and Vans lifted 200 basis points to 4 percent.

Meanwhile, the top footwear brands among the average-income teen group was still led by Nike. But the Swoosh showed year-over-year erosion to 48 percent from 53 percent in Fall 2016, including 57 percent for males (vs. 65% in Fall 2016) and 38% for females (holding steady from Fall 2016). Among average-income males, Adidas rose year-over-year to 13 percent from 6 percent and Vans held steady at 9 percent. Among females in the group, Vans rose to 12 percent from 9 percent and Adidas lifted to 7 percent from 4 percent. Birkenstock grew to 4 percent from 3 percent in Fall 2016 as Puma broke into the Top 10 Footwear Brands of average-income females with 1 percent. Among all upper-income teens, Nike continued to lead preferred footwear brands despite losing 500 basis points year-over-year to 46 percent. Adidas gained 500 basis points to an 11 percent favorability rating; Vans was up 300 basis points to 12 percent and second only to Nike. But among upper-income females, Vans’ popularity as a preferred brand soared to 14 percent versus 7 percent in Fall 2016 while Converse was flat at 15 percent. Among upper-income males, Adidas status lifted to 14 percent versus just 6 percent in Fall 2016, according to the Piper Jaffray research.

NAFTA's Future Could Go Either Way

The Trump Administration is pushing for a number of significant changes to the North American Free Trade Agreement (NAFTA) among the U.S., Canada and Mexico that could substantially re-shape the 23-year-old trade deal, or collapse it with a U.S. withdrawal. Hundreds of state and local chambers of commerce dispatched letters to Washington October 16 that urged the U.S. to remain part of the trade pact.

Meanwhile, people across the political spectrum have urged a NAFTA update but also preservation of the open trading system that has linked the North American economy. Neither Mexican nor Canadian trade officials have been pleased by a number of NAFTA change proposals from the U.S. Among them: A “sunset” clause that would compel a NAFTA expiration in five years if all three countries fail to renew it, and a clause that would weaken or cut procedures designed to settle disputes between the three nations. The administration’s primary objective is to dissolve core NAFTA concepts, including the objective of treating the three countries as a regional economy.

NAFTA has long been a target of labor unions, many Democrats and a few industries.

U.S. Trade Representative Robert Lighthizer’s office last week said, “The president has been clear that NAFTA has been a disaster for many Americans, and achieving his objectives requires substantial change.”

Most notably, according to published reports, the Trump Administration wants to change the NAFTA conversation around outsourcing and the offshoring of investments.

Still, Canadian Prime Minister Justin Trudeau expressed optimism last week that Washington will work “in good faith” on a trade agreement overhaul that benefits all three nations.

BREAKING NEWS - Textile Insight
Primaloft Undergoes Management-Led Buyout

The Latham, NY materials science company, which specializes in insulation, fabric and yarn for outdoor, fashion and other industries, has completed a management-led recapitalization with New York private equity firm Victor Capital Partners and a private equity group at Allstate. Victor was founded in 2015 by private equity veteran Douglas R. Korn. Financial terms of the transaction were not disclosed.

Primaloft, founded in 1988, was previously owned by Prudential Capital Group. Under new ownership, the company intends to continue making significant investments for the development of high-performance insulations and fabrics. Recognized as a leading consumer ingredient brand, Primaloft was originally developed in the 1980s for the U.S. Army as a water-resistant, synthetic alternative to down insulation. Today, its materials are used in work wear, hunting, home furnishing and military applications.

“Our new partnership with Victor Capital will provide the capital commitment and operating support to drive our technological innovation and market development to new levels,” said Primaloft’s President and CEO Mike Joyce said in a prepared statement.

Textile Insight
The Museum at FIT: Into the Wild

How designers turned safari wear into fashion chic. Photo by Emily Walzer.

Two exhibits currently on display at the Museum at FIT (Fashion Institute of Technology) cover a lot of ground—from ocean depths to Arctic regions, and from mountain tops to outer space—examining the relationship between fashion and the natural world. Materials play a key role in the evolution of apparel, and there are great examples on display of how wool, goose down, neoprene and other synthetics have shaped wardrobes over the centuries. However, the fun is in seeing how designers interpret the natural world. Hats inspired by hummingbirds; wolf-fur pants; feathered footwear; and an Eddie Bauer original Skyliner jacket morphed into a hip-hop influenced puffy by Tommy Hilfiger are among the many standout styles on exhibit.

Together, “Exhibition: Fashion from the Extreme” and “Force of Nature,” showcase how designers look to nature for fresh ideas. Not just in terms of color, shape, and silhouette, but also by use of dc.

Swiss Smart-Wear Brand Signs German NHL Star

Vexatec, founded by Salvatore Gandolfo, has seeded its new AGILITY smart-wear shirt in the National Hockey League by signing Edmonton center Leon Draisaitl to an endorsement contract. The German native and former European hockey star will wear the breathable AGILITY, which combines conductive tissue, high-tech sensors and a built-in central computing unit, during his NHL game play.

The garment, being positioned as ‘Performance Wear of Tomorrow,’ remains in development. Men’s and women’s versions, which will collect, save, calculate and transmit a range of precise live data (heart rate variability, G-force, breathing rate and calorie consumption among them) are due on the market in the coming months.

The Buzz

Easton Sports recently signed on as a sponsor of Phit America’s movement “To Get America Moving” and will assist the group with advocacy efforts on Capitol Hill.

National Retail Federation forms a global partnership with Ascential PLC, parent of World Retail Congress. Between NRF’s Big Show and and Ascential’s annual World Retail Congress, the two group host retail forums annually.

NSGA announces the 2018 inductees into the Sporting Goods Industry Hall of Fame: Arthur Gochman, the former CEO of Academy Sports + Outdoors; Stan Jurga, president & CEO of All-Star Sporting Goods; and Barbara Longstreth, founder & CEO of Longstreth Sporting Goods.

Rust-Oleum inks a multi-year agreement with Genesco and the Nashville company’s Dockers brand of footwear. Company’s NeverWet application will be applied to Dockers footwear, becoming the second brand after BearPaw to utilize the clear formula to its products.

Sporting Goods, hobby, book & music retail sales were flat in September at $6.94 billion on an adjusted basis, according to monthly data released by the U.S. Census Dept. Segment sales for the nine months were down 4.9 percent to $59.58 billion. Overall, September retail sales were up 3.2 percent year-over-year on an unadjusted basis.

Tubes of the Week


Numbers In Play
Week of 10/05-10/12
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
Another poor week for the segment as 13 stocks decline and only two, Camping World and Walmart, gain. It was a good week for WMT, which is forecasting a 40 percent increase in online sales in the coming year and may be getting more favorable opinions from Millenials. The Marcus Lemonis-led Camping World empire, meanwhile, intends to purchase Chicago-based Uncle Dan’s Outfitters as it moves to expand and strengthen its position in the outdoor lifestyle market. The first of the new Gander Outdoors stores are slated to open next month. Dick’s Sporting Goods, which currently counts 45 institutional shareholders, is hiring more than 200 for its new, fifth distribution center in Conklin, NY. Foot Locker shares have fallen for five consecutive months, but some circles are predicting a rebound for the retailer in Q1/2018.
The segment maintains an Index score of 100 despite only three gainers out of 15 stocks. For Adidas, there was both good news and bad news this week. Three Stripes scores favorably and gains favor with U.S. teens in the latest Piper Jaffray survey, but hears word that the ongoing investigation in college basketball may be expanded to the University of Kansas and other Three Stripe-sponsored programs. Nike, criticized for failing to engage its large base of Instagram followers, has a 40-percent off sale at website. Nearly 2,700 products are offered at discount, including more than 1,100 men’s items. Wolverine Worldwide will reportedly spend $1.69 million to install water infiltration systems in 338 homes near a former company tannery in Rockford, MI where contaminated waste was dumped. Fitbit may have a winner on its hands with reports its new Ionic smartwatch may end up as its best-selling product ever on strong early demand. Deckers gets some bad news as Piper Jaffray survey suggests UGGs popularity with teens has waned.





Retail Name (Ticker Symbol)
Close on 10/05/17
Close on 10/12/17
% change over time
Big 5 Sporting Goods (BGFV)
Sports Direct (LON: SPD)
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 10/05/17
Close on 10/12/17
% 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.