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Mon, Aug 28, 2017
Vol 1, Issue No. 33
Monday, December 18, 2017
Volume 1, Issue No. 49

’Tis the M&A Season

More than last-minute holiday shopping, this time of the year is regularly marked by noise over possible mergers, acquisitions and unfortunately, bankruptcies. Most of these transactions don’t actually occur until the first or second month of the following calendar year, but the behind-the-scenes work to make them happen generally takes place in the fourth quarter.

Key developments in early 2017 included Gildan Activewear acquiring American Apparel for $88 million; the former Performance Sports Group and Bauer parent going on the bankruptcy court auction block; Callaway Golf buying Ogio for $75.5 million; MC Sports filing for Chap. 11 on Valentine’s Day; Walmart acquiring Moosejaw Mountaineering for $51 million; Sports Direct acquiring Bob’s Stores/Eastern Mountaineering Sports; Lucy being folded into The North Face; and Finish Line selling JackRabbit to CriticalPoint Capital.

Late last month ahead of The Running Event in Austin, speculation arose about a few athletic brands being shopped, and in recent weeks there have been reports about two football helmet companies, Riddell and Schutt, and shoe firm The Rockport Co. that have ‘For Sale’ signs up.

The New York Post was the first to report that private equity firm Fenway Partners, which acquired Riddell in 2004, has been unable to find a buyer for the brand that is dealing with a class-action suit brought by 4,500 former NFL players over concussions that will enter the discovery phase next year. Platinum Equity, meanwhile, has reportedly asked $40 million for Schutt, which recently canceled an auction for the company.

Last week, Reuters reported that Crescent Capital Group, a major Rockport creditor, took ownership of the West Newton, MA footwear company from private equity firm Berkshire Partners LLC and injected new capital into the firm along with other investors. Berkshire acquired Rockport, which reportedly owes $60 million on its revolver, from the adidas Group in 2015. Strategic options for Rockport are said to include a possible sale of the company.

Adidas Alters Digital Strategy

Adidas has done an apparent about-face on its digital strategy. A month after it announced an expanded digital presence and launched a new adidas app for the U.S. and U.K. markets, the company last week confirmed to the Portland Business Journal that it was eliminating its stand-alone digital service unit and consolidating the number of mobile apps it operates to two—Runtastic and Adidas. The changes are expected to result in 74 layoffs worldwide if affected digital employees in the U.S., China and Germany can’t be re-assigned within the company.

Going forward, Adidas intends to integrate digital development into all aspects of its global operation rather than as a separate entity. Of course, the strategy shift casts a cloud of uncertainty over the future of some Adidas apps and products, including miCoach, the health and fitness-focused “All Day,” and a smart soccer soccer ball.

In early November, the Three Stripes unveiled its adidas app at the Dreamforce software conference in San Francisco by promising it would be tailored to consumer preferences and behaviors and offer one-tap, mobile device purchases in addition to personalized articles and videos. The app will be introduced in other global markets in H1/18, the company said. Meanwhile, earlier this month, rival Under Armour announced a restructuring of its digital business under Chief Technology Officer Paul Fipps. Michael La Guardia was named UA’s SVP of digital product commencing Jan. 8.

Elsewhere, Adidas is reportedly moving forward with a planned expansion of its Portland, OR campus that will include an office building, an amenity structure, underground parking garage and site work when completed by 2020, according to paperwork recently filed with local authorities. Adidas North America’s workforce in Portland has more than doubled since 2015 to approximately 1,700.

Retail Round-Up 
British, French Take on U.S. Sports Retail; Mall of America Keeps Up

The first financial look at U.K.’s Sports Direct’s foray into the U.S. with its May acquisition of Bob’s Stores and Eastern Mountain Sports came last week with the release of the retailer’s six-month results for the period ended Oct. 29. The two U.S. chains, heavily focused in the Northeast and New England, generated the equivalent of $85.3 million in revenues for a five-month period but also an operating loss of $31.78 million, excluding foreign exchange and exceptional items. Gross margin for Bob’s/EMS came at 38.5 percent, excluding approximately $23.4 million in losses due to acquisition accounting adjustments. When Sports Direct completed its acquisition of both chains out of bankruptcy on May 18, it acquired the equivalent of $99.9 million in inventories and $14.96 million in trade and other receivables.

France-based Decathlon, more than a decade after exiting the U.S. with an exit from Massachusetts, is trying it again but on the left coast this time with a store in a former Golfsmith on San Francisco’s Market Street. More stores for the banner are likely coming in the Golden State.

Elsewhere, with malls across the world in acquisition play (see last week’s $16 billion acquisition of U.S. and U.K. mall operator Westfield Corp. by French commercial giant Unibail-Rodamco), Mall of America is upping its game to retain shoppers. According to eMarketer Retail, the 5.6-million square feet Minnesota space that draws 40 million visitors annually has launched an artificial intelligence-fueled chatbot to answer customer questions in real time and its Amazon Alexa voice assistant will allow mall shoppers to ask questions without typing.

• November retail sales rose 6 percent year-over-year unadjusted, according to the National Retail Federation with online/non-store sales y-o-y sales up 10.5 percent. Sales at sporting goods stores were up 2.1 percent y-o-y. Meanwhile, NPD reported dollar sales during the first week of December were 1 percent higher y-o-y with fashion athletic footwear one of five top performing categories. But “leading segments are struggling to make up for aggressive promotions,” claims NPD’s Marshal Cohen. Meanwhile, unadjusted sporting goods/hobby/book/music store retail sales rose 2.1 percent in November, according to monthly U.S. Census Bureau data but the segment was off 3.6 percent through 11 months.

Footwear Insight
Promotional Environment Drives November Kicks

Athletic footwear sales rose 5 percent in dollars and 3 percent in units last month due to an “unprecedented” promotional environment, according to NPD. Some industry analysts have said the actions were necessary to secure a healthier retail environment for the category in 2018. Despite the discount landscape, year-over-year average selling price (ASP) was up 2 percent in November, the research house reported.

Dollar sales of women’s styles, driven by the sport leisure segment, rose 8 percent in November.  The sport leisure category in total, which represented 40 percent of all sneaker sales during the month, had a 20 percent increase in monthly dollar sales. Conversely, performance running sales slipped 9 percent and basketball shoe sales were off 3 percent despite some improvement. Cold/all-weather boot sales spiked 6 percent, but hiking/trekking footwear sales slipped 7 percent, NPD reported.

By brand, Nike sales fell low single-digits in November on declines in performance running that offset growth in sport leisure. Overall, helped by low teens growth for Brand Jordan, Nike sales were flat for the month. Adidas sales were up more than half and revenues at Brooks soared nearly 20 percent. Elsewhere, NPD said Skechers, Puma and Under Armour sales slipped as UGG boot sales jumped 17 percent in November. Timberland and Keen sales increased in the high single-digits, but Merrell and The North Face each posted declines.

Outdoor Insight
Maine Aims to Ignite State’s Outdoor Recreation Economy

The birthplace of L.L. Bean more than a century ago has created a coalition to attract a younger workforce and create a stronger future for the Pine Tree State’s $8.2 billion outdoor recreation economy. Maine Outdoor Brands (MOB), founded by local business leaders and entrepreneurs, was recently launched to promote sustainable economic development by strengthening Maine-based outdoor brands through knowledge sharing, collaborative marketing and access to professional resources. MOB also hopes its efforts can capitalize on the state’s iconic outdoor heritage to lure outdoor product brands and the younger workers they attract to Maine.

Patagonia in Bears Ears Battle
Patagonia leads a coalition in suing the Trump Administration for its decision centered on reducing the boundaries of the Bears Ears National Monument in Utah by 85 percent. The privately-held company, whose annual revenues are reportedly approaching $1 billion, donated more than $89 million to environmental groups. The company has recently come under attack by members of Congress with a story in a recent emailed newsletter headlined, “Patagonia: Don’t Buy It.”

Tubes of the Week

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.


Numbers In Play
Week of 12/07-12/14
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 Index lost 1.5 percent this week with seven stocks up and eight down. But there was positive news, led by upgraded stock ratings for Foot Locker, Dick’s, Hibbett and Big 5 by Deutsche Bank. The investment bank also upgraded Finish Line to “Hold” citing a modestly improved top line and lower promotional activity. Walmart’s latest holiday advertising emphasized its BOPIS program as a key lure for late holiday season male shoppers in a TV spot with an “It’s Raining Men” soundtrack. Sports Direct reported first half results and the first glimpse of results from its U.S. acquisition of Bob’s Stores and Eastern Mountain Sports (See story). Kohl’s, in a late holiday push, is keeping its doors open 83 consecutive hours from Dec. 21 through Dec. 24. Sportsman’s Warehouse may be benefitting from others’ decision to de-emphasize guns and ammo. At Macy’s, some investors appear to be betting against the stock despite a 47-percent rise since early November. Morgan Stanley says Dick’s investments in labor, technology, ecommerce and pricing “should better position” the business as an omni-channel retailer and also drive traffic and loyalty.
Segment Index remained steady for the period as nine stocks rose and six fell. Adidas sees a share sell-off during the first week of December, prompting a nearly 7 percent price decline. Piper Jaffray reports that brands’ holiday orders may be under pressure due to logistical issues. Others express concern about Three Stripes’ increased promotional activity, including a company email offering 50-percent off key styles. Under Armour gets a lift from Stifel, which upgrades the stock to “buy” from “hold” and suggests the North American athletic footwear and apparel market will be more stable in 2018 as UAA works to lower expenses and improve operations. Nike, which reports second quarter results on Dec. 21, sees its target price lifted to $76 by Deutsche Bank on anticipation that there will be sequential revenue gains and ongoing improvement in the fiscal years ahead. VF Corp. is ranked 85th on Forbes ranking of America’s most JUST companies for its high environmental, social, and ethical standards. Deckers Brands defeats activist shareholder Marcato Capital as all of its board nominees are re-elected.





Retail Name (Ticker Symbol)
Close on 12/07/17
Close on 12/14/17
% 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 12/07/17
Close on 12/14/17
% 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.