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.
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.
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.
• 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.
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.
• 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.
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.
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.