Retail: 67
0.31%
Retail: 201
1.78%
Monday, January 7, 2019
Volume 3, Issue No. 1

Top Stories of the Year

As we head into 2019, we take a look back at our top 15 stories of the past year on Sports Insight Extra:

Callaway Acquires Jack Wolfskin for $476 Million (Dec. 3)

Macy’s Segmenting Store Fleet (Nov. 19)

Pure Fishing Sold for $1.3 Billion (Nov. 12)

DSW Wants Larger Role in Footwear Universe (Oct. 15)

Nike Makes Waves with Kaepernick Ad (Sep. 4)

VF Corp. to Split Into Two Companies (Aug. 13)

Nike Regains North American Momentum (July 9)

The Key to Puma’s Success in Basketball (June 25)

Higher Input Costs; More M&A’s on Horizon (April 9)

JD Sports Merging with The Finish Line (March 26)

Industry Braces for Possible U.S.-China Trade War (March 26)

Morphing Retail Not Without Growing Pains (March 19)

Ed Stack Takes a Stand on Guns (March 5)

Deckers Eyes Segmentation (Feb. 5)

Outdoor World of Marcus Lemonis Taking Shape (Jan. 8)

M&A
Let’s Make a Deal

Photo: amersports.com/brand/salomon

The climate is right for more mergers and acquisitions, but not necessarily megadeals valued at more than $10 billion. According to a recent Deloitte annual survey of 1,000 U.S. corporate dealmakers and private equity firms, 79 percent expect organizations to close more deals over the next 12 months, and 70 percent see those transactions as larger than ones made in 2018. Only 35 percent of survey respondents see global trade uncertainty reducing interest in deal-making, with 45 percent suggesting rising interest rates will accelerate M&A activity.

Within the sporting goods segment, the biggest pending deal is the more than $5.2 billion offer for Amer Sports, parent of Wilson, Precor, Arc’teryx, Salomon and other brands, that will see China’s Anta Sports take a significant stake in the Finnish company but operate it separately.

Before the holidays, Newell Brands completed its divestiture of Pure Fishing as part of its Accelerated Transformation Plan in a $2.6 billion sell-off that also included Jostens; specialized hunting/shooting products firm GSM Outdoors acquired CrossFire Elite, a maker of branded holsters; and Dutch bike giant Accell Group said it was exploring a sale of its U.S. business consisting of bike brands Raleigh, Diamondback and Redline.

Publicly-traded Accell, which owns 11 bike brands and a parts/accessories business, operates in 84 countries. Its North American operation, which suffered a nearly 23 percent drop in H1/18 revenues to the equivalent of $50.1 million, has been classified as a non-core segment as the company decides whether to sell or “rightsize” it to a standalone profitable organization. A 6- to 9-month review process is underway with a progress update expected March 8. Accell U.S., meanwhile, is forecast to generate FY18 EBIT of approximately $22.7 million.  

Forecast For 2019

OIA's Patricia Rojas-Ungar looks ahead to issues facing the industry in 2019.
SFIA's Tom Cove looks ahead to issues facing the industry in 2019.

Nike Embraces Tighter Bonds with Key Partners

Photo: nike.com

In the Swoosh’s whole new digitally-focused world, the company is moving swiftly to strengthen connections with key partners from its most important wholesale partners and distribution centers to its contract factories worldwide. As part of a connected inventory strategy, Nike will introduce RFID into all footwear and non-licensed apparel this year. President and CEO Mark Parker says the decision to add Radio-Frequency Identification tags or “smart labels” to Nike products will enable the company to “vastly improve product visibility and accuracy across the supply chain from product creation to point-of-sale.” While management didn’t elaborate, it’s clear RFID is vital if Nike wants to make products anywhere in its pipeline readily available to ship to demanding consumers.

Parker’s comments came as Nike reported higher-than-forecast revenues and profits last month for the period ended Nov. 30. The strong results included 9 percent growth in North America, nearly 20 percent, constant currency improvement internationally and digital growth of 41 percent (30+% in North America), bolstered by a double-digit gain in North American Jordan Brand sales. The company is forecasting stronger currency-neutral revenue growth in FY19 than previously planned.

During its quarterly call with analysts, Parker and CFO Andy Campion said Nike is committed to its digital approach, has a full “innovation pipeline” ready to roll out into FY20, and opined that the brand sees growth opportunity from a moderately-priced footwear collection with “core-only innovations” for the performance and lifestyle styles.

Among other Q2 key developments:
• Nike believes new innovation platforms will drive more than 50 percent of its incremental growth over the next five years. Already, platforms such as VaporMax, Air Max 270, React and ZoomX have bolstered incremental growth by more than 80 percent. Nike is focused on faster innovation cycles and platforms that have more potential to scale across geographies.

• Nike’s earlier estimate that “digital-owned and partnered” would comprise 30 percent of its business by 2023, versus approximately 15 percent currently, might be too low. Three-year “road map” will expand brand’s digital ecosystem in key cities and countries where most significant growth is possible.

• The company sees growth in women’s footwear, where segment revenues grew 20 percent in Q2, and says its strategy to offer more color and material choices but fewer styles is working.

• Nike says it is “making great strides” with strategic (wholesale) partners such as JD Sports, Foot Locker, Nordstrom and Dick’s Sporting Goods.

• Converse brand sales rose 6 percent on a constant currency basis, driven by Asia and digital.

• North American digital sales rose more than 30 percent during Thanksgiving Week.

• Nike is launching the $350 HyperAdapt basketball shoe in 2019.

INSIDE RETAIL:
Key Retail Trends on the Horizon

Don’t look now, but image recognition shopping may emerge as a key consumer-buying/retail trend this year as more retailers, social media platforms and technology companies focus further on the concept. Already, Google, Snapchat and Amazon have embraced the idea with photo features.

Other key retail trends, which are likely to come into more focus after next week’s National Retail Federation’s Big Show in New York, include: more retailers embracing checkout-less purchasing for the convenience of harried customers; more brands and once online-only companies embracing pop-up shops to grab additional business; a further acceleration and modifications to BOPIS (Buy Online, Pick Up In Store) to meet consumer needs and save on ecommerce fulfillment costs, and a rise in Instagram shopping.

Elsewhere,

• Foot Locker has made a $3-million, minority investment in lifestyle brand Super Heroic, paving the way for the Oakland company’s footwear, apparel and accessories for children to debut at brick-and-mortar with exclusive Kids Foot Locker distribution. Super Heroic, which has raised $10 million since its 2016 inception, has a mission to inspire children to be more active through play.

• REI is opening its first location in the Granite State, a 25,000-sq.-ft. store at Settlers Crossing in North Conway, NH.

• Dick’s Sporting Goods is opening new stores in Tennessee in parts of former Sears’ locations, a trend that may continue throughout 2019.

• Decathlon has partnered with a San Francisco Bay running organization, Represent Running, to become the official retail and apparel sponsor for five races. The France-based retailer, with more than 1,400 stores worldwide, re-entered the U.S. market on San Francisco’s Market Street last April. It plans to open a 47,000-sq.-ft. store in Emeryville, CA this spring.  

Quotable

“We have not seen any impact on our business from some of the U.S. - China dynamics that we’re all reading about. We’re mindful of those. But in the context of being mindful of those, we continue to see very strong signs of momentum in China.”
– Andrew Campion, Nike Chief Financial Officer

EXECS ON THE MOVE
SFIA Elects Four New Directors; Camping World Re-aligns Team

Clockwise from top left: Dan Sheridan, Eric O'Toole, Kim Davis and Michael Schroeder.

Chris Clawson, the former president of Life Fitness, has been elected to a fourth one-year term as Chairman of the Sports & Fitness Industry Association. Meanwhile, Dan Arment, president and CEO of Riddell & BRG Sports, will serve as the trade organization’s Vice-Chairman.

The SFIA also elected four new directors to join re-elected directors, Jennifer Bendall, VP of Govt. and Public Affairs at Nike, and Jonathan Ram, group president of Global Activewear for Hanesbrands. Elected to three-year terms, the four new directors are: Kim Davis, EVP at the NHL; Eric O’Toole, GM for Sports & Fitness at Walmart.Jet.com; Michael Schroeder, VP of Global Lifestyle Brands at Gildan; and Dan Sheridan, EVP/GM Global Sales at Brooks Running.

Elsewhere,

• Gander Outdoors’ parent Camping World Holdings has realigned its senior executive suite. In announcing the changes, CWH said it would not hesitate to close underperforming locations. Among the executive changes, Thomas Wolfe was named president of Good Sam and Melvin Flanigan as CFO.

• OrderMyGear, the Dallas group specializing in ecommerce software for apparel and gear, hires Dave Dutch as CEO. The 11-year-old company realized a $35 million investment from Susquehanna Growth Equity last year to fund expansion and product development.

• SRAM, the Chicago bicycle component maker, promotes COO Ken Lousberg to CEO as  Co-founder Stan Day transitions to Chairman.

• Sherpa Adventure Gear hires outdoor industry veteran Peter Novak, most recently VP of sales for 5.11 Tactical, as president of the 16-year-old Modesto, CA company.  

What's Hot, What's New?

HART Health, after 40 years of producing first aid kits for REI, is launching the product under a new brand—HART Outdoor. The kits are available in four sizes—Extended, Multiday, Weekend and Day Hike with more details available at www.hartoutdoor.com

PDG Summit Gear GmbH is launching advanced, electrically heated sleeping bags later this month made of ultra-light materials, a nanoengineered rechargeable lithium-ion battery pack and carbon fiber heating technology. Initially available direct on Amazon, Etsy, Jet, eBay, WISH and company website. MSRP: $185.

The Buzz

DonorsChoose.org and The Dick’s Sporting Goods Foundation launch the Teacher Champion Challenge for public school teachers seeking school supplies. DonorsChoose.org will track donations to classrooms in NFL playoff team markets through Feb. 3. At the end of the challenge, the foundation will award $100,000 to support team sports-related classroom project requests in the playoff city that raises the most in total donations per student.

Global Licensing Group will present during next week’s retail Big Show in New York City. Global retail sales of licensed goods and services rose 3.3 percent in 2017 to $271.6 billion. Meanwhile, the Licensing Expo is scheduled to take place from June 4-6 in Las Vegas.

PHIT ACT, The Personal Health Investment Today bill which currently has 150 co-sponsors in Congress, was not passed by U.S. Senate before the end of the last Congress. SFIA President & CEO Tom Cove says the bill, in the works for the past decade, simply “got caught in the shutdown politics.” But, the PHIT Act will be re-introduced to the new Congress early this year.

PHIT America and KIDS in the GAME launch a new school-based running program, AMPED, designed to amplify education by encouraging students to be active before school. The AMPED grant program is open through Jan. 31. The 25 winning U.S. schools will be notified by Feb. 7 with grants mailed by mid-February.

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
In our first issue of 2019, we look at the Index for all of 2018, comparing the stock’s opening price and closing price for the year, and for the final two weeks. The Dow clearly began its descent into bear territory in December, falling nearly 14 percent between Nov. 30 and Christmas Eve. There was some subsequent recovery, but by mid-afternoon on Jan. 3 with the Democrats taking control of the House, the Dow was off 10 percent from the Nov. 30 close of 25,307.14. Looking at the Retail segment for the year, six stocks rose and nine were down for the 12 months with six off double-digits as the segment Index fell more than 18 percent for the year. The decliners were led by Big 5 and Camping World, which saw its shares dip 42 percent over the last 90 days of 2018. CWH began 2019 by restructuring its executive suite following the Dec. 21 departure of its president. Despite holiday spending that grew 5.1 percent between Nov. 1 and Dec. 24, bolstered by rising wages and lower gas prices, retailers were facing many challenges as the year wound down. Monthly-measured consumer confidence declined 6.1 percent in December, according to the Conference Board, days before 19 states raised their minimum wage level on Jan. 1. Another three and the District of Columbia will raise their respective lowest allowed wage by the end of 2019. Dick’s has abandoned its formal sponsorship of the U.S. Olympic Committee. Shoe Carnival shares after getting an upgrade from Susquehanna. And there’s new state fallout from last June’s U.S. Supreme Court ruling allowing South Dakota to collect sales tax from online retailers. Six ecommerce firms have sued the Commonwealth of Massachusetts over the state’s decision to seek almost $3 million in retroactive sales taxes from six online retailers dating back to Oct. 2017 sales.
Brands
Segment fared better than Retail, rising nearly 15 percent in 2018. There were 5 decliners and 10 gainers, led by five double-digit improves paced by Decker’s, Amer Sports and Lululemon.There were also three double-decliners in 2018 – GoPro, Skechers and Nautilus. LULU is a top stock pick for 2019 by both MKM Partners and Cowen, citing the brand’s high level of customer loyalty and lack of in-store promotions. Amer Sports, before the holidays, sees Finnish government authorities approve the 40.00 euro per share offer for the company by Mascot Bidco Oy. Nike, which exceeded Q2 profit and sales expectations before Christmas, teased its futuristic Air Max 720 style right after the new year.The Swoosh is also launching a $350 retail adaptive basketball shoe. Some brands have to be concerned about the softening Chinese economy, given their bullish growth plans in the country, as the trade war with the country remains unresolved. In December, China’s factory activity shrank for the first time in two years. Adidas extended its sponsorship with soccer behemoth Juventus for another seven years at a reported 408 million euros, and Under Armour says it’s abandoning an athleisure approach in favor of performance. Puma inks a long-term sponsorship deal with Porsche Motorsport to become the company’s exclusive technical partner for fireproof racing apparel, footwear, caps and luggage. As part of the deal, the Cat will also market a range of replica and fan wear products for Porsche. Columbia Sportswear has closed on buying out the remaining 40 percent in its Chinese joint venture with Swire ResourceLtd. The buyout for the rest of the Chinese operation that was formed five years ago, was announced in April 2018.VF Corp. last week was trading near a 52-week low ahead of the spin-off of its jeans (Wrangler, Lee) business. Also,VFC-owned Vans has sued retailer Primark for allegedly knocking off and selling copies of its Old Skool and SK8-Hi sneakers. Lawsuit contends the Primarkstyles are being called “fake Vans” on social media.

RETAIL: 48

52.20%

BRANDS: 167

66.51%

Annual Review

Retail Name
(Ticker Symbol)

% Change Y-O-Y
Price 1/2/18 • 12/31/18

Big 5 Sporting Goods
(BGFV)

66.14%

$7.65 • $2.59

Sports Direct
LON: SPD

41.93%

$521.70 • $302.94

Camping World
CWH

74.61%

$45.18 • $11.47

Dick's Sporting Goods
DKS

7.11%

$29.13 • $31.20

JD Fashion
jD

4.03%

$463.02 • $444.34

Foot Locker
FL

12.12%

$47.45 • $53.20

Genesco
GCO

30.29%

$34.00 • $44.30

Hibbett Sports
HIBB

30.75%

$20.65 • $14.30

Kohl’s
KSS

21.08%

$54.79 • $66.34

Macy’s
M

15.3%

$25.81 • $29.78

Sportsman’s Warehouse
SPWH

34.43%

$6.68 • $4.38

Shoe Carnival
SCVL

25.18%

$26.77 • $33.51

Tilly’s
TLYS

26.47%

$14.77 • $10.86

Walmart
WMT

6.19%

$99.30 • $93.15

Zumiez
ZUMZ

10.63%

$21.45 • $19.17

TOTAL
WEEK OVER WEEK

18.11%

$1,418.35 - $1,161.53

Brand Name
(Ticker Symbol)

% Change Y-O-Y
Price 1/2/18 • 12/31/18

Acushnet Holdings
GOLF

0.61%

$21.20 • $21.07

adidas
addyy

4.71%

$99.65 • $104.34

Amer Sports
AGPDY

59.80%

$27.49 • $43.93

Callaway
ELY

9.29%

$14.00 • $15.30

Columbia Sportwear
COLM

16.15%

$72.40 • $84.09

Deckers Brands
DECK

61.70%

$79.13 • $127.95

GoPro
GPRO

44.43%

$7.63 • $4.24

lululemon
LULU

57.30%

$77.30 • $121.61

Nautilus
NLS

18.96%

$13.45 • $10.90

Nike
NKE

17.96%

$62.85 • $74.14

Puma
PUMA

9.76%

$436.30 • $478.90

Skechers
SKX

39.76%

$38.00 • $22.89

Under Armour
UA

10.83%

$14.59 • $16.17

VF Corp.
VFC

4.14%

$74.42 • $71.43

Wolverine Worldwide
WWW

0.99%

$32.21 • $31.89

TOTAL
WEEK OVER WEEK

14.77%

$1,070.76 - $1,070.63

RETAIL: 46

53.66%

BRANDS: 165

65.47%

Weekly Review

Retail Name
(Ticker Symbol)

% Change over week
Price 12/13/18 • 12/27/18

Big 5 Sporting Goods
(BGFV)

15.92%

$2.89 • $2.43

Sports Direct
LON: SPD

1.08%

$298.07 • $294.84

Camping World
CWH

20.40%

$15.15 • $12.06

Dick's Sporting Goods
DKS

9.54%

$34.16 • $30.90

JD Fashion
jD

7.08%

$453.68 • $421.58

Foot Locker
FL

3.92%

$49.94 • $51.90

Genesco
GCO

2.59%

$42.12 • $43.21

Hibbett Sports
HIBB

1.04%

$14.36 • $14.21

Kohl’s
KSS

5.88%

$61.18 • $64.78

Macy’s
M

2.47%

$30.80 • $30.04

Sportsman’s Warehouse
SPWH

6.21%

$4.51 • $4.23

Shoe Carnival
SCVL

4.55%

$33.16 • $34.67

Tilly’s
TLYS

1.13%

$10.60 • $10.72

Walmart
WMT

1.56%

$92.96 • $91.51

Zumiez
ZUMZ

3.88%

$18.31 • $19.02

TOTAL
WEEK OVER WEEK

3.08%

$1,161.89 - $1,226.10

Brand Name
(Ticker Symbol)

% Change over week
Price 12/13/18 • 12/27/18

Acushnet Holdings
GOLF

4.09%

$22.00 • $21.10

adidas
addyy

9.13%

$113.50 • $103.14

Amer Sports
AGPDY

0.60%

$43.63 • $43.89

Callaway
ELY

6.31%

$16.48 • $15.44

Columbia Sportwear
COLM

0.14%

$84.54 • $84.66

Deckers Brands
DECK

6.37%

$122.68 • $130.50

GoPro
GPRO

8.56%

$4.79 • $4.38

lululemon
LULU

2.61%

$120.20 • $123.34

Nautilus
NLS

7.97%

$11.55 • $11.55

Nike
NKE

1.07%

$72.93 • $73.71

Puma
PUMA

3.65%

$532.00 • $468.00

Skechers
SKX

1.70%

$23.51 • $23.11

Under Armour
UA

8.76%

$17.81 • $16.25

VF Corp.
VFC

7.60%

$76.22 • $70.43

Wolverine Worldwide
WWW

0.25%

$32.57 • $32.49

TOTAL
WEEK OVER WEEK

5.67%

$1,294.14 - $1,221.07

Sports Insight Extra Podcast Series