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Mon, Aug 28, 2017
Vol 1, Issue No. 33
Monday, March 19, 2018
Volume 2, Issue No. 11

Morphing Retail Not Without Growing Pains

Dick’s Sporting Goods and Tilly’s faced operational issues in their respective ecommerce segments in the fourth quarter in an overall retail environment where brick-and-mortar and online are increasingly becoming intertwined, according to the latest State of Retail by the National Retail Federation/Forrester.

Tilly’s, which generated 14 percent ($23.0 million) of its period revenues from ecommerce, saw online sales slide 12 percent due to technical issues with new order management and website platform systems that went live in November. During a December period of sustained high transaction volume, the retailer experienced problems that caused, among other things, incomplete orders and “issues supporting omnichannel execution.”

At Dick’s, customers had challenges either shopping or checking out on the retailer’s website during the holiday period, DKS President Lauren Hobart told analysts last week. She verified the impact of the problems was “meaningful,” but declined to provide further specifics including how much they negatively impacted results. Dick’s, which confirmed that 9 percent ecommerce growth in the fourth quarter was “below expectations,” said the sector’s growth rate has accelerated in the first quarter. On the delivery side of the business, the retailer is focusing on speed-to-customer and new shipping and fulfillment methods. One possibility may be same-day delivery in key markets.

The NRF/Forrester research found that new physical store locations are important since 42 percent of surveyed retailers are making faster delivery of online orders a top customer priority. Omnichannel services such as Buy Online, Pick-up In-Store (BOPIS) are a priority for 21 percent with 15 percent citing ship-from-store as a fulfillment priority.

Meanwhile, a new Deloitte report, citing a year-long study, suggests the heralded “retail apocalypse” going on is really a “renaissance” driven by huge shifts in economics, competition, and consumer access to options, each fueled by advancements in technology. Deloitte found that “balanced” retailers who deliver value through a combination of price and promotion are typically doing worse than price-based retailers (value= lowest possible prices) or premier retailers (value=premium or highly differentiated products and/or experience offerings.) Unlike their balanced counterparts, price-based and premium retailers opened more stores between 2015 and 2017 than they closed.

Adidas Promises More Investment, Double-Digit Growth

The Three Stripes isn’t content with its strong sales, margin and market share gains in North America in FY17. Adidas wants, and is planning, for more.

“…We’re getting closer to the first target we’ve set for ourselves, which is the 15 percent (market share) but we’re also getting closer to the €5 billion (revenue) target we set for 2002,” CEO Kasper Rorsted told analysts last week. “And we’re starting to see the profitability improvements that we need, and we also expect.”

Adidas Group reported 27 percent growth in North American revenues in FY17 to €4,275 million ($5.25 billion), bolstered by a 35 percent increase for the Adidas brand to the equivalent of $4.72 billion. Regional gross margin rose 180 basis points to 39.5 percent and operating margin was 470 basis points higher at 10.9 percent. Still, the company continues to see “market share opportunity gains in the U.S.” where 15 percent is the first target.

Adidas, too, realized improvement at Reebok in the brand’s home market as net margin rose 400 basis points to 40.7 percent, its highest mark since being acquired. Reebok’s annual revenues were up 4 percent to the equivalent of $530.8 million despite being down 15 percent in North America on more outlet store closures and further clean-up of its lower-margin business.

Globally, adidas generated a 25 percent increase in FY17 profit to more than $1.6 billion on a 15 percent jump in revenues to more than $26.1 billion. Operating margin rose 120 basis points to 9.8 percent and ecommerce sales increased 57 percent.

Outlining an up to €3 billion share buyback program over the next three years that represents about 8 percent of the company’s current market capitalization, adidas also intends to increase its annual capital expenditures budget in FY18 by 20 percent to approximately $1.1 billion. The spend will primarily be focused on opening new stores in key international cities, remodels of existing retail space; IT and logistics to aid in the growth of digital; and expansion of its Herzogenaurach, Germany headquarters and corresponding HQs in the U.S. and China.

Rorsted says it remains important that Adidas achieve “the right balance between top and bottomline” and “focus on revenue when it delivers margin.”

VF to Buy Altra

VF Corporation, the parent of The North Face, Smartwool, Timberland and Vans, has reached an agreement to buy Altra, the upstart footwear brand that has cracked the competitive running business with its Zero Drop shoe designs. Altra has been owned by ICON Health & Fitness since 2011. Terms of the agreement were not disclosed.

VF has been said to be on the hunt for a running shoe brand for years. The publicly traded conglomerate was in the hunt for Saucony in 2012 before losing out to a bid by Wolverine Worldwide. And VF’s name is mentioned as a possible acquirer whenever a running brand is rumored to be for sale.

In Altra, VF has acquired a brand that has captured the imagination of the run market since it was launched in 2011 by Brian Beckstead, Jeremy Howlett and Golden Harper. Golden is the son of Hawk and Cheryl Harper, owners of Runner’s Corner, a run specialty store in Orem, UT. The concept behind the first Altra shoe was developed when the trio shaved down the heels of existing running shoes to create a “zero drop” from heel to toe. The Altra brand was picked up by early adapter stores such as Playmakers in Michigan and the brand’s founders eventually sold to ICON so they would have the resources of a big company to keep up with the growing demand. Today, Altra is sold in 55 countries through more than 1,600 specialty retail locations and generated $50 million in revenue for the trailing 12 months.

“The acquisition of the Altra brand is another example of our efforts to reshape and evolve our portfolio of powerful brands to align with our enterprise value creation model,” said Steve Rendle, Chairman, President and Chief Executive Officer of VF Corporation. ICON executives say the sale of Altra will allow them to focus on its core fitness brands of NordicTrack ProForm, its Freemotion commercial business, and iFit, its connected fitness subscription brand.

Retail round-up 
Dick’s Eyes Growth from Premium Brands, Private Label

The largest full-line sporting goods retailer is ramping up in-store space for its own portfolio of brands, including a soon-to-launch outdoor label for apparel and some hard goods, but will also rely heavily on a “stronger innovation pipeline” from the likes of Nike, Adidas, Callaway and TaylorMade this year as it focuses on differentiation and exclusivity within its merchandise assortment. On the flip side, DKS foresees continued headwinds for hunting, which may stiffen given its recent firearms policy changes, and a smaller merchandise presence for electronics (including Fitbit) that suffered a double-digit negative comp in the fourth quarter. Dick’s is currently forecasting a flat to up low-single digit comp for FY18.

Sporting goods store sales were down 3.4 percent year-over-year in January but up 2.2 percent from January seasonally adjusted, according to monthly data reported by the U.S. Census Bureau.

L.L. Bean, which last week announced it had cancelled a limited data collection and analytics project using sensors attached to coats and boots, reported nearly flat annual revenues of $1.6 million for the FY ended Feb. 25. With the result, the Freeport, ME company eliminated worker bonuses for first time in a decade. Another 100 positions will be eliminated in April after 500 workers took a voluntary early retirement earlier this year.

Hibbett Sports intends to place a “significant focus” on omnichannel in FY19, including the addition of “Buy Online, Pick Up in Store” (BOPIS) and the launch of a new mobile app next month. The 1,079-store chain, which is forecasting a -1 to +2 percent comparable store sales gain this FY, intends to close 55-60 underperforming doors and open 30-35 new locations.

Tilly’s doesn’t expect the 30 percent of its merchandise assortment that is private label to change materially in FY18 as it opens 15 new stores and makes lease decisions on 120 locations over the two years.

DSW, pleased with “phase 1” growth for DSW Kids will establish a national presence for the segment by Back-to-School. The company is exiting Ebuys, whose sales fell 2 percent in FY17 and 11 percent in Q4, by mid-year. The challenge of sourcing merchandise in a sustainable way and scaling the business in the near-term were determining factors.

Famous Footwear shipped more than 46 million pairs in FY17 as the Caleres-owned chain got 70 percent of shipments to customers within three days. Ecommerce sales rose 17 percent in FY17 to represent 10 percent of total revenues. FY end inventory was down 2.4 percent from 1,026 stores after 34 were opened and 63 closed last year.

Journeys, owned by Genesco, generated an 11 percent comparable sales gain in Q4, driven by year-over-year increases in traffic, conversion and average ticket that were driven by boots and higher-priced fashion athletic. Footwear units and ASPs were higher. The retailer is currently working on a single view of its customers from multiple internal and external data sources.

The Buzz

Columbia Sportswear is teaming with Major League Soccer on a co-branded outerwear and apparel line for men, women and children covering all 23 MLS teams. The MLS logoed products will be available through Outdoor Custom Sportswear (OCS).

Cutters introduces a new brand logo and tagline, “Grip The Greatness” with its transition to an all-football brand identity. The new logo is featured in a new line of glove this spring, including the Rev Pro 3.0.

Matrix Fitness is introducing a new series of training cycles, including the CXC and CXM, to help fitness facilities attract more riders to group cycling classes. Also, Life Fitness creates the Digital Ventures Group to accelerate technology adoption and innovation within the global fitness industry. Already, DVG has partnered with VirZOOM, a developer of VR content and VSports technology, and Studio, an audio-coaching running platform.

New Balance lands a $17.3 million U.S. government contract to provide athletic shoes for military personnel entering basic training. NB factories in Norway, Skowhegan and Norridgewock, Maine are expected to produce the footwear.

NSGA Management Conference & Team Dealer Summit will take place May 20-22 in Bonita Springs, FL with Michigan State basketball coach Tom Izzo as the keynote speaker.

Tubes of the Week


Numbers In Play
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 results for the week, essentially flat, exceed the Dow’s 0.5 percent decline for the period. There were six up and nine down stocks for the week. Dick’s, which is the Tommy Armour Golf brand, was the segment’s big winner with a more than 10 percent increase. The golf label should contribute to DKS’ goal of reaching $2 billion in private (own) label sales. Sportsman’s Warehouse CEO John Schaefer is retiring after nine years leading the Utah-based chain. Former Walmart senior execute Jon Barker, who joined SPWH as president and CEO last March, becomes CEO. Tilly’s, where 14 percent of fourth quarter sales were generated by ecommerce, said the period’s revenues were negatively impacted by technical issues with its new order management and website platform systems. Genesco offered no update on its planned divestiture of Lids during its fourth quarter conference call. Camping World acquires River City Recreation World in Arkansas. Foot Locker is hit with a class-action lawsuit for allegedly failing to disclose negative information about its business for a period ending in August 2017, including that its “vendors were transitioning to selling through various online retailers.” The official statement must be referring to Nike’s decision to sell Amazon.
Adidas, with a stock price less than 1 percent beneath its 52-week high following a 10 percent spike after reporting Q4 results, says entry-level “CORE” footwear category sold into family shoe channel (Kohl’s, DSW, Famous Footwear) is a top growth driver. The brand, eying a 15 percent share in North America versus current 10 percent, is still facing challenges in fulfilling online orders in North America. CFO tells CFO Journal that company will overhaul its supply chain if China-sourced merchandise becomes subject to new U.S. tariffs. Nike, in an abrupt March 15 announcement, says brand president Trevor Edwards is relinquishing his title and will retire in August after advising to CEO Mark Parker until then. Subsequently, it was reported that Jayme Martin, VP/GM of global categories, who had reported to Edwards had left the company. Deckers’ shares take a hit of more than 7 percent after activist shareholder Marcato Capital exits its 8.5-percent stake. Under Armour, facing new pressure in family channel from Adidas, unveils Curry 5 signature basketball shoe on namesake’s 30th birthday. Institutions, which own 64 percent of UA shares, are feeling bearish on the stock. VF Corp. continues reshaping its brand portfolio with acquisition of Altra. Fitbit introduces its first fitness band for kids called Ace, an adapted version of its Alta, for $99 retail.





Retail Name (Ticker Symbol)
Close on 03/08/17
Close on 03/15/18
% change over week
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 03/08/17
Close on 03/15/18
% change over week
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

Nikki Barua

The old way of retail is dead, and there is a massive opportunity to re-invent, proclaims the CEO of Beyond Curious in Los Angeles.

Matt O’Toole

President of Reebok dishes on the brand’s mission and objectives from its headquarters in Boston.

Gabriella Santaniello

Retail expert dishes on what’s going right and wrong in industry today and weighs in on the Walmart vs. Amazon tussle.

Guy Yehiav

The CEO of Profitect addresses the right medicine for changing the paradigm of accountability—prescriptive analytics.

Pat Ryan

Batter Up! The global product director for baseball/softball at Wilson Sports details the new USA Baseball standard that took effect January 1 and what it means when you hit the store this spring looking for a new stick for junior.

Patrick Clark

President of Nextwave, a Buford, GA system integrator, discusses benefits of an on-demand apparel microfactory, a bridge to Just In Time manufacturing, from Sourcing at MAGIC in Las Vegas.

Shawn McBride

Ketchum Sports & Entertainment EVP talks Olympics—impact of three consecutive Games in Asia, social media, corporate guerilla marketing and drawing in younger consumers.

Tyson McGuffin

Tennis pro Tyson McGuffin, 28, talks about the rising popularity of pickleball and how he became a champion in the sport.

Bob Mullaney

The 20-year shoe and retail industry veteran, recently named president and CEO of RG Brands, dishes on the comfort footwear business and Barry’s iconic Dearfoams brand.

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.