Retail: 59
1.45%
Retail: 182
-0.09%
PRESENTING SPONSORS
Monday, November 12, 2018
Volume 2, Issue No. 44

Adidas Readies New Pinnacle Products

adidas Ultraboost

The Three Stripes, coming out of a Q3 where North American sales rose 16 percent and ecommerce revenues increased a whopping 76 percent, is preparing for the next iteration of the Ultraboost in 2019. The pinnacle product will be differentiated from its predecessor version but retain about the same retail launch price. Meanwhile, Adidas is promising high market scarcity for any future Yeezy rollouts. The recent launch of the Yeezy Boot 350v2 in triple white, which was a digital only global launch except for China, was described as above expectations in both sellthroughs and margin.

As for more specifics on Q3 results in North America, currency-neutral revenues came in at the equivalent of $1.46 billion with Adidas brand sales up 18 percent on growth in training, running, soccer and sport-inspired. Adidas CEO Kasper Rorsted described the brand’s U.S. growth as “balanced,” with Dick’s and ecommerce sales described as “exceptionally strong” and the Kohl’s business “still rolling out.”

Reebok brand sales were down slightly to approximately $119.4 million due to a decline in Canada that offset a “high single” increase in the U.S. Adidas senior executives told analysts the company is committed to getting Reebok to “breakeven no later than 2020.” Currently, Reebok sales are described as divided about evenly between Classics and running/performance. Rorsted told analysts “it would be a mistake to change the positioning (of Reebok at this point).” Reebok gross margins rose 440 basis points to 45.3 percent in the period.

Meanwhile, Adidas is exceptionally bullish about the progress it’s making in Direct-To-Consumer with the huge ecommerce quarterly growth bolstered by double-digit gains across all geographic regions. The company continues to target $4 billion in total ecommerce revenues by 2020 and Rorsted calls digital the company’s “most important vehicle” to drive consumer engagement. The Adidas app, now available in 17 countries, was downloaded five million times in Q3.  

Outdoor Insight / M&A
Pure Fishing Sold for $1.3 Billion

Pure Fishing is preparing to wade into a new ownership pond for the third time in the last dozen years. Newell Brands is selling the global business, which owns a vast portfolio of fishing equipment brands including Berkley, Shakespeare and Abu Garcia, to Sycamore Partners for $1.3 billion. The pending transaction is part of a broader transformation plan at Hobokon, NJ-based Newell, which is also divesting its Jostens yearbook and jewelry business for $1.3 billion.

Industry market speculation in October opined that American Outdoor Brands, the former Smith & Wesson, might be the Pure Fishing suitor given a September pronouncement by AOB that it intended to acquire ‘brands in the fishing realm.’

The former family-owned Pure Fishing was acquired by the former Jarden Corp. in April 2007 for $300 million and subsequently was folded into the company’s Coleman Company business. Months after Jarden and Newell merged in 2016, cost-cutting measures were implemented at Pure Fishing, which generated $556 million in FY17 revenues. They included elimination of the company’s 30-person marketing staff in Columbia, SC and cutting pro fishermen under contract.

Elsewhere,

• HydraPak is acquiring Boulder, CO-based Polar Bottle for undisclosed terms. Polar, which will hit its 25th anniversary in 2019, will remain a standalone business. The company, founded by two cyclists, had the first reusable water bottle to address heat loss during long rides.

• Maurice Sporting Goods, owned by private equity firm Middleton Partners, has purchased O2COOL, a Chicago-based maker of battery-powered cooling products, hydration systems and pet products. Founded in 1992, O2Cool’s annual revenues are north of $50 million with distribution stretching from Walmart and Bed, Bath & Beyond to Academy, Bass Pro, Campmor, Dick’s, Dunhams and Modell’s.

• Acushnet, parent of Titlelist and FootJoy, has acquired an 80-percent stake in PG Professional Golf, a Sugar Land, TX supplier of pre-owned golf balls. The business will remain a standalone operation and continue to be led by founders Greg Krueger and David Jones.

• Do Outdoors, doing business as Lew’s Fishing, a Springfield, MO supplier of fishing products to the mass market, sporting goods and specialty outdoor, is acquired by private equity firm Peak Rock Capital. Transaction terms were not disclosed.

• Escalade Sports is acquiring Victory Tailgate, a marketer of premium licensed and custom tailgating games, for an unspecified price. The acquisition should be accretive to the Evansville, IN company’s results in 2019.

The AND1 GM dishes on the return of The Tai Chai, basketball and the draw of ComplexCon.

Outdoor Insight
A Quiet Outdoor Retailer

Smaller and slower paced than typical Outdoor Retailer trade shows, the inaugural November Winter Market that wrapped up yesterday, left many attendees questioning the viability of the new three shows per year schedule and reflecting on whether or not to return to Denver this time next year. Last week’s show was the first of two Outdoor Retailer shows this season in Denver, with the OR Snow Show coming up in just over two months on January 30-February 1, 2019.

Exhibitors barely filled one floor of the Convention Center whereas Summer Market as well as the January Snow Show spread out over the entire three-floor capacity of the downtown venue. In addition, a handful of key outdoor brands did not attend – Patagonia, The North Face, Columbia, Yeti and Carhartt all opted out.  Without these U.S. powerhouses on site, Euro brands such as Fjallraven, Kari Traa and Helly Hansen were strongly represented.  Factoring in the Fall timing, an uncharacteristic low-energy vibe, and lack of industry leaders, the Show was a totally different OR experience.

For some, however, this quiet and calm Winter Market had a positive flip side: Conversations were both leisurely and productive. Some retailers wrote orders and others commented that the quality of discussions overall were more thoughtful and constructive than any other recent Outdoor Retailer show.

Primaloft was honored with ‘Product of the Year’ at the inaugural Outdoor Retail Innovation Awards for its Primaloft Bio. Other winners and their corresponding products were: Allbirds (SweetFoam), Black Diamond Equipment (JetForce Pro), Cake (Kalk Electric Motorbike), Costa Sunglasses (The Untangled Collection-Baffin), Crescent Moon Snowshoes (Eva Foam Snowshoes), GoLite (ReGreen Windshell), LynQ (LynQ), Tecnica (Plasma S), United By Blue (Bison Puffer Jacket), and Yale Cordage (Forj Thermoplastic Tape-Ribbon).

Below are a few scenes from the OR Winter Market trade show floor as seen by our editorial team. For more in-depth coverage of the outdoor retail marketplace, check out the November issue of Outdoor Insight magazine: outdoorinsightmag.com

Footwear Insight
DTC, More Marketing and Intros Should Drive Merrell in Q4

Merrell Trail Glove 4 Knit

Wolverine Worldwide is anticipating “low teens” growth for its Merrell business in the fourth quarter and a “high-single digit” topline increase in FY18. During Q3, WWW’s largest brand, plagued by sluggish retail conditions in international markets and lean inventories as a result of 19 percent sales expansion in Q2, produced a sales gain in the low-single digits.

CEO Blake Krueger says accelerated product introductions, increased marketing and Direct-To-Consumer will help Merrell reach its topline target in the final period of FY18.

Overall Q3 revenues in the U.S. rose mid-single digits in Q3 and were impacted by a number of factors, including lower closeout inventory, lean in-stock availability and late product deliveries for some brands.

The current FY18 revenue target for WWW is $2.24 billion and year-over-year EPS is forecast to increase 32 percent. Aggregate ecommerce sales for all brands is up 27 percent year-to-date after rising 33 percent in Q3. A similar increase is expected in Q4.

Elsewhere at Wolverine Worldwide in Q3,

• Keds sales rose mid-teens in Q3, helped by nearly 40 percent growth in ecommerce.; Chaco sales were down low-single digits, but the brand experienced a 35 percent increase in ecommerce sales.

• Saucony is projected to show improving year-over-year revenue trends in Q4 after a high-single digit drop in Q3 with particular challenges in the U.S. offsetting growth in the EMEA and a 25 percent uptick in ecommerce.

Outdoor Insight
BioLite Forges Partnership; Gore Takes Awards; REI Invests in Thrive Outside

W.L. Gore's Shakedry hooded jacket

Waypoint Outdoor, a Seattle outdoor products sales and services company, has begun working with BioLite, an innovator in off-grid energy solutions, as the exclusive national sales representative group for the U.S. outdoor wholesale market.

Through a collaboration with BioLite’s in-house sales, marketing and dealer service teams, Waypoint intends to help the Brooklyn-based firm establish a clear brand position across the cooking, charging and lighting categories; strengthen relationships with existing retail partners and grow brand awareness and presence in specialty retail; develop comprehensive go-to-market plans for product launches; and build product knowledge and education programs for retail staff.

Elsewhere,

• W.L. Gore & Associates captures two Gear of the Year awards from Runner’s World for its Invisible Fit footwear technology in running shoes and Gore-Tex Shakedry fabric technology found in its Shakedry hooded jacket.

• Helly Hansen, acquired by Canadian Tire on July 3 for approximately $584 million, generated revenues of $138.4 million and a profit of $14.4 million for the quarter ended Sep. 29. Helly would have generated $320.7 million in revenues and approximately $12.5 million in net profit had it been acquired at the beginning of Canadian Tire’s FY18.

• Descente, which established a wholly-owned North American subsidiary, Descente Athletic Americas, in Atlanta in September, reported a six-month decline in net profit of nearly 7 percent to $20.2 million. H1 revenues at the Japanese premium athletic apparel brand rose less than a half-percent to $587.9 million.

• Patagonia is expanding its two-year old partnership with Swiss textile company HeiQ by using the brand’s Fresh Tech odor control in its Fall 2019 collection

• REI is investing $1 million in Thrive Outside, an effort designed to help young people’s social, emotional and academic development through the outdoors.

• BOGS/Rafters, owned by publicly traded Weyco, had a 5 percent decline in Q3 revenues to $16.7 million for the period ended Sept. 30, a factor attributed to lower sales to outdoor and online retailers.

Execs ON THE MOVE
Nike Shifts Senior Execs; Keen Hires Longtime Timberland Exec

Left to right: Ann Hebert, Chris Pawlus and Carl Grebert.
Carl Grebert is leaving Nike’s Global Jordan business, where he has been VP/GMM for the past 18 months, to become VP/GM of Nike’s Asia-Pacific and Latin America (APLA) geographic region. Previously during his 23-year Nike career, Grebert was VP/GM of Nike Japan. Meanwhile, current APLA VP/GM Ann Hebert is shifting to VP of global sales to replace the retiring Mike Best. Both Grebert and Hebert will report to Elliot Hill, Nike’s president of consumer and marketplace.

Elsewhere, Keen has hired Chris Pawlus, a 21-year veteran at VF Corp.-owned Timberland, as VP of product design and innovation where he will oversee innovation and design for outdoor, lifestyle and kids. Most recently, he was VP of global product design and creative director for Timberland.    

Fila Adds U.S. Tennis Player

Fila has signed a sponsorship agreement with Sofia Kenin,19, the 52nd-ranked WTA singles player and a former Junior U.S. Open finalist and winner of the USTA Girls’ 18’s national championships. Since turning pro in 2017, she has captured four ITF titles and reached an additional four finals.

Quotable

“…Steel tariffs have had a – will have a – minimal impact on us, at present. It’s the Section 301 tariffs that have had some impact on our gear business, namely golf – I mean, headwear, golf bags and travel gear. These are expected to increase by 25 percent at year-end and would have some impact on 2019, perhaps around $3 million before we consider any mitigating actions…”
David Maher, President & CEO, Acushnet Holdings

What’s Hot? What’s New?

Fila and Peloton team up for a new seven-style, capsule collection of athleisure wear for men and women that can be worn before and after class. The partnership marks Peloton’s first venture beyond performance wear into the athleisure segment. Items are available exclusively at Peloton’s online boutique: https://boutique.onepeloton.com

Peloton x FILA Men's Women's Collection

The Buzz

Crocs generated a 17.9 percent in DTC comps in Q3 as ecommerce sales rose 23 percent and retail comparable store sales increased 15 percent. Wholesale revenues increased 9.3 percent as the company reported total revenues of $261.1 million and a 250-basis point increase in gross margin to 53.3 percent. FY18 revenue outlook is calling for 4-5 percent topline improvement over $1,023.5 million.

Mizuno reported its first H1 profit in the Americas since FY14, but the six-month period represented the Japanese company’s third consecutive year of lower first half revenues in the region. Americas’ revenues fell 21 percent in Yen to the equivalent of $81.75 million. Footwear was off 23 percent to $29.9 million; apparel was down 6 percent to $14.1 million and equipment sales were down 23 percent year-over-year to the equivalent of $37.8 million. H1 profit at parent Mizuno Corp. was down 3.8 percent to $21.1 million on a 5 percent decline in total revenues to $763.9 million.

Retail container imports have slowed from a pre-holiday peak but remain at unusually high levels ahead of January tariff increases, according to the monthly Global Port Tracker. The Trump Administration’s trade war with China and threat of higher tariffs next year has created a ‘mini-boom in imports, commented Ben Hackett, founder of Hackett Associates, adding, “We are clearly in a politically motivated trade environment.”

Tubes of the Week

Mon, Aug 28, 2017
Vol 1, Issue No. 33
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
Retail
Segment gains for second consecutive week with 10 stocks up and 5 down. But the slightly more than 1.4 percent increase for the period trailed 2.9 percent gain for the Dow over the same timeframe. Camping World reported Q3 topline growth of 6 percent, less than half what the Street was projecting for the Gander parent. Walmart opens a joint engineering office in Austin,TX with Microsoft as part of a five-year strategic cloud partnership. Additionally, the discount behemoth says it will commence Black Friday deals on the night before Thanksgiving at Walmart.com and will host in-store parties on Thanksgiving night. Like Walmart, Dick’s will open its stores at 6pm on Thanksgiving night. Deals include $700 off a Gorilla in-ground basketball hoop and $19.98 for select NCAA fleece, polos and quarter zips. Foot Locker store associates have been outfitted with custom Air Max Plus uniforms by Nike to mark the 20th anniversary of the style, according to highsnobiety.com. Zumiez says Q3 comps were up 4.8 percent, trailing year-to-date, same store sales growth of 6.3 percent at the 703-door chain. ZUMZ comps rose 1.6 percent for the four weeks ended Nov. 3.  
Brands
Segment is essentially flat for the week, negatively impacted by a double-digit drop for GoPro, where Q3 sales slipped 13 percent year-over-year. Seven stocks rose during the period; eight declined. As Nike and Under Armour prepared for ‘Singles Day’ in China, both brands were continuing deal with the aftermath of #MeToo scandals at their respective companies. At Under Amour, senior executives, responding to a Wall Street Journal article about company allowing employees to expense trips to strip clubs until earlier this year, wrote, “This not the culture we envision for Under Armour.” Search for a new HR czar at the Baltimore company is underway by an outside firm. Nike joins LVMH in applauding China’s efforts to fight counterfeit products at the China International Imports Expo. Adidas says its app is now available in 17 countries and experienced five million downloads in Q3. VF Corp. is reportedly moving 125 employees, part of its jeanswear business (Newco) spin-off to a former textile factor, the 43,000 sq. ft. Revolution Mill, in Greensboro, NC. Headquarters for the spin-off, expected in March 2019, will be Wrangler’s current HQ. Wolverine sees its stock rating lowered by both Baird and Telsey Advisory Group after reporting Q3 results (See story above).  

RETAIL: 60

39.67%

BRANDS: 182

81.53%

Weekly Review

Retail Name (Ticker Symbol)
Close on 11/01/18
Close on 11/08/18
% change over week
Big 5 Sporting Goods (BGFV)
BGFV
$43.99
$3.76
-5.76%
Sports Direct (LON: SPD)
SPD
$433.58
$420.35
-3.05%
Camping World (CWH)
CWH
$18.75
$18.23
-2.77%
Dick's Sporting Goods (DKS)
DKS
$35.85
$38.10
+6.28%
JD Fashion (JD)
JD
$545.03
$559.03
+2.57%
Foot Locker (FL)
FL
$47.94
$50.79
+5.94%
Genesco (GCO)
GCO
$44.02
$46.17
+4.88%
Hibbett Sports (HIBB)
HIBB
$18.53
$19.39
+4.64%
Kohl’s (KSS)
KSS
$75.62
$81.99
+8.42%
Macy’s (M)
M
$34.59
$37.79
+9.25%
Sportsman’s Warehouse (SPWH)
SPWH
$5.21
$5.10
-2.11%
Shoe Carnival (SCVL)
SCVL
$40.56
$40.74
+0.44%
Tilly’s (TLYS)
TLYS
$17.48
$18.05
+3.26%
Walmart (WMT)
WMT
$100.58
$104.89
+4.29%
Zumiez (ZUMZ)
ZUMZ
$23.26
$21.62
-7.05%
TOTAL
TOTAL
$1,444.99
$1,466.00
+1.45%
Brand Name (Ticker Symbol)
Close on 11/01/18
Close on 11/0818
% change over week
Acushnet Holdings (GOLF)
GOLF
$25.26
$26.26
+3.96%
adidas (ADDYY)
ADDYY
$116.69
$114.10
-2.22%
Amer Sports (AGPDY)
AGPDY
$37.20
$38.47
+3.41%
Callaway (ELY)
ELY
$22.00
$21.91
-0.41%
Columbia Sportwear (COLM)
COLM
$91.27
$93.69
+2.65%
Deckers Brands (DECK)
DECK
$131.72
$136.34
+3.51%
GoPro (GPRO)
GPRO
$7.18
$5.47
-23.82%
lululemon (LULU)
LULU
$144.17
$142.27
-1.32%
Nautilus (NLS)
NLS
$12.48
$12.78
+2.40%
Nike (NKE)
NKE
$76.79
$77.78
+1.29%
Puma (PUMA)
PUMA
$505.00
$499.69
-1.05%
Skechers (SKX)
SKX
$28.87
$29.66
+2.74%
Under Armour (UA)
UA
$21.11
$20.74
-1.75%
VF Corp. (VFC)
VFC
$85.12
$86.65
+1.80%
Wolverine Worldwide (WWW)
WWW
$35.97
$33.81
-6.01%
TOTAL
TOTAL
$1,340.83
$1,339.62
-0.09%

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.