OutdOOr retailer Summer market 2015 Delivers AgAin
AUGUST 10, 2015
WEEK 1532 The Bicycle, Outdoor, and Snow Sports Trade Newsletter
HOka One One
Outdoor Retailer Summer Market 2015 Delivers Again While many of the mysteries around the event weren’t resolved - including whether the show would continue in Salt Lake City and what time of year the show should take place - Outdoor Retailer Summer Market 2015 was full of positivity and vibrancy once again. While no official figures were available at press time, attendance at the show appeared to be flat to slightly up versus last year but the energy in the aisles was clearly upbeat. Many attributed the exuberant crowd to a healthier industry overall, aided by the slow and steady improvement in the economy since the recession led to some quieter shows in the earlier part of this decade. Many attendees at the show appeared emboldened by the resiliency the industry showed during those challenging times. But the bigger payoff has been the way the outdoor industry is evolving to reach the emerging active lifestyle consumer. While the socially connected Millennial has disrupted an industry used to backcountry enthusiasts spending many days in the woods, it has also created a larger opportunity for many outdoor brands and the show. And the expansion of exhibitors, including running, surf and even lifestyle brands such as Levi Strauss -- making its first appearance at this year’s summer show -- has led to the many challenges already facing show management to keep the show in Salt Lake City past its current contract ending in 2016. Show owner Emerald Expositions recently announced the move of the upcoming Outdoor Retailer Winter Market earlier by two weeks in part to help improve order taking for apparel and footwear exhibitors to fit factory turnaround cycles, as well as to address other conflicts later in the month of January, such as SHOT Show and the SIA Snow Show. But Emerald also said the move was designed to free up hotel rooms competing against the Sundance Film Festival. While the Outdoor Retailer show, which has been in Salt Lake City since 1996, is contracted to stay in Salt Lake through August 2016, organizers would only say they are close to making a decision. Said Outdoor Retailer Show spokeswoman Kate Lowery, “We are dotting the i’s and crossing the t’s and finalizing contracts, unfortunately it is premature to comment at this time.” But the overall evolving active lifestyle consumer promises to continue to increase the appeal of the outdoor segment and boost the overall industry, including bringing a much greater fashion component to the outdoors. The active lifestyle trend is influencing apparel innovation with a focus on multi-functionality and design. Todd Spaletto, The North Face’s president of the Americas, marveled at how many bright colors are now widely accepted by today’s outdoor consumer whereas only athletic brands were using them ten years ago.
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Fjallraven Booth
Black Diamond booth
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“We just think that today’s outdoor consumer is more active, they’re more social, they’re more connected to their community, and there’s a really cool vibe that outdoor retail represents,” said Spaletto. “I think the industry needs to catch up a little bit to where the consumer is. The outdoor consumer is pointing us in a really positive direction and we have an opportunity to bring our product offering to where they are.” Nate Pund, managing director at D.A. Davidson & Co., who has long followed the space, said the size of the Outdoor Retailer show reflects how the outdoor industry has become “more sophisticated” but also how the industry is broadening its reach and the experiences it delivers. “The industry has grown both in size and focus, from a recreational and enthusiast perspective to a larger, more sophisticated brand perspective that strives to be part of your life activities and enhance your experiences,” said Pund. “At the end of the day the industry has grown from simply camping to incorporating a vast array of activities including action sports, sporting goods, core outdoor, hunting/fishing, and even tactical.” He added that the industry still faces challenges - namely the transformative and disruptive shifts taking place across retail, be it brick and mortar, online or catalog as well as a dramatic shift in the “outdoor consumer.” “Millennials, the new generation of outdoor consumer, define the outdoors very differently than we have traditionally done in the past,” said Pund. “The outdoor consumer used to define themselves by a single activity, whether it be a rock climber, a paddler or backpacker. But now Millennials will do five different activities in a day. They want to try all these different things. Also, going outdoors traditionally was about escapism, retreat, serenity and things like that. But Millennials are all about connectivity and want to share all those activities and experiences with their friends and broader network.” The European Invasion Continues In terms of expansion, this year’s Outdoor Retailer Summer Market saw a handful of European-based brands entering the U.S. with fully comprehensive apparel collections. U.K. born Craghoppers, for instance, premiered its Spring 2016 adventure travel range, while Adidas Outdoor, based out of Germany, finally found its footing in specialty retail and big box stores as its neighbor Ortovox introduced its full line of highly technical mountain wear to North America. “A lot of companies come to the U.S. and are gone next season,” said Craghoppers Managing Director Jim McNamara. “And American buyers want to know you’re here long term.” Craghopper’s adventure travel and performance lifestyle direction has taken more than ten years to transition to U.S. markets, as McNamara waited to refine brand storytelling before bringing the line to retailers. “If you get the product
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Icebreaker’s new fabric blend in men’s and women’s underwear
right, you can find the market,” McNamara said. “We’ll double the business this year, and we’ll double the business next.” His confidence is a reflection of the trend toward a blending of performance and lifestyle usability. Two Summer Markets ago, National Geographic sought out the U.K. brand and today Craghoppers is the official apparel sponsor for Nat Geo, in a five-year, renewable contract. “We’re in it for the long haul,” McNamara said. As for the future, McNamara sees the response from retailers and consumers moving toward a desire for more style-driven pieces. Take for instance Craghopper’s Spring 2016 line that includes roughly seven Women’s dresses. Mountain Hardwear also showcased a new maxi-dress and urban-wear, in a presentation they had to preface with a… “I know this may look
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different than what we’ve shown before.” And even more U.K. brands such as Montane continue to grab marketshare from traditional U.S. favorites. On the Show Floor David Kahan, CEO of Birkenstock USA, said “the energy is great,” at the show. “It seems like the outdoor industry is doing well and the footwear category has really established itself over the last few shows where it’s become more of a destination at the show. But this is a good market for us - no doubt. We have a substantial presence with the outdoor lifestyle retailers.” “The interesting thing always about this show is how friendly and engaging it is,” said Saucony President Richie Woodworth. “It certainly brings the industry together and, if nothing else, celebrates some of the stuff that we do.” Woodworth admitted that it’s “become more challenging to write business here,” and most of the brands’ accounts aren’t coming to see something new. Saucony will show some buyers future season ideas “with people that we trust a lot” but also discuss day-to-day operational issues. “We’ll talk about sales and inventory, how can we be better partners, etc.,” said Woodworth. “It’s a lot of conversations you really don’t get a chance to have when you’re trying to tell someone about a new technology or an innovation story that’s bigger and better than anyone else’s.” The show also enables Saucony to reach a slightly different customer than at a running-centric trade show. Said Woodworth, “We believe that running is the ultimate outdoor sport. My favorite place to run is not on cement and asphalt; it’s a pine forest somewhere in Austria, and I think in some ways that’s the spirit and essence of outdoors.” “The thing Outdoor Retailer is, is that it’s us,” said Golden Harper, founder of Altra, which literally made a lot of noise with its booth featuring runners dancing on treadmills. “It’s our vibe if you will. So it’s a chance for us to connect with a lot of like-minded individuals. But the show is huge! It’s literally our biggest show of the year, so it gives us a chance to connect with a ton of different people.” Simon Bonham, CEO at Hi-Tec, said the outdoor shoe industry has been flat for the last two years. But he felt “really buoyant about 2016 and 2017,” due partly to favorable trends. This includes the fastpacking trend, alternatively described as ultra light backpacking or extreme trail running, as well as the overall desire for more lightweight and athletic outdoor styles from the Millennials. But he also believes a few years out of the recession, consumers are ready to invest in better shoes. “They’re hiking and camping and they want better products,” said Bonham. “They’re fed up with buying $50 product since 2010, and I believe they’re moving forward. The top outdoor brands have a responsibility to continue to push the boundaries to bring good product out to show the consumer and show that outdoor is not just about a brown or black hiker. Millennials are all about selfies and posting stuff on Facebook and Instagram so they want to stand out.” Ryan Riggs, global senior product manager for outdoor at Keen, said that although some European markets are looking for a “little more performance technology,” “fast and light” is still a dominant theme in Europe and U.S. “Athletic’s influence is definitely taking the outdoor industry in a new direction, affecting categories that we didn’t think it would affect down to sandals and down to some of the more casual looks and that crossover-bridge category that any brand that has lifestyle category and performance can reach,” said Riggs. “There’s always that bridge area where people are looking for casual comfort and that athletic influence in casual comfort is really top of mind right now.”
Mammut Booth
Brian Moore, VP of global footwear, The North Face, said many brands are learning that the “fast and light” push is more about becoming “younger more progressive outdoor” rather than converging athletic and outdoor. He said many outdoor enthusiasts are looking for less bulkier shoes to do less-intensive, done-in-a-day activities and not necessarily seeking out athletic styling. Said Moore, “To make our shoes like Nike Free doesn’t attract a younger consumer; all it does is muddy the water between athletic and outdoor. What we’re learning now is we have to be uber-credible to outdoor but do it in a more progressive way.” Moore also believes that while some more fashionable brands are coming into the space, authenticity is crucial for the outdoor consumer. “We can make very fashionable shoes. But they should be waterproof, they should be insulated, they should have good traction. If you don’t include those three things, there’s really no need for the outdoor consumer to buy it from us,” he said. One of the newcomers was Oxx Products, the maker of coffee machines for construction sites as well as the outdoor enthusiast. Said founder Jim Doan, “For us, Outdoor Retailer is a great way to reach to outdoorsman across all types of categories.” Oxx’s product, described as ‘“The World’s Toughest Coffee Maker,” is designed to bring the comforts of home to campsites. Said Doan, “I think there’s a really romantic view of camping and people going out and roughing it. But not many people really want to build a fire to make instant coffee. They want something quick that they can do at home.” Tracy Thomas, marketing manager at Incase, attending its second OR show, said the brand is looking to reach the many outdoor enthusiasts looking to photograph their experiences outdoors.
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But she said the brand’s more urban-influence bags have already seen a strong response at the last Summer Market. Said Thomas, ”The same people that go hiking and go outdoors also have lives in the city.” Snow Peak, the Japanese maker of camping and backpacking gear, brought out its apparel product to OR for the first time. The company has been only showing its titanium utensil items and backpacks but has had some success in its lifestyle apparel at Bloomingdale’s as well as smaller accounts with as Pilgrim’s Surf in Williamsburg, Brooklyn. “We hear people are looking more for style than for function or at least a bigger balance,” said Nate Borne, Snow Peak’s general manager of the U.S. region. “It may be a few years before it begins to be more widely adopted so it’s good to be one of the first.” Richard Talbot, product manager of Mountain Equipment, the U.K.-based maker of backpacks, sleeping bags, trekking poles and apparel, said the firm agonizes every year about the investments in Outdoor Retailer as well as the two shows it attends in Europe. “It’s very, very expensive to put on and most of our business has been written before the show, so it becomes less of a sales-oriented show to one about marketing our brand,” said Talbot. “But we’re seeking the core specialist retailer and that’s what this show’s about.”W Steve Rosenberg, founder and CEO of Kaenon Sunglasses, likes that surf community from the defunct Action Sports Retailer (ASR) trade show is now attending OR but he also said the overall OR show fits his brand. “It’s who we are,” said Rosenberg. “We’re an outdoors company and we’re an active lifestyle company. And this show caters to that community of people.” He also believes the industry has shown some recovery over the last couple of years although he sees the high end and premium segment where Kaenon sells definitely doing better. Added Rosenberg, “It seems healthier, but I think we’ve got a ways to go though.” According to Daniel Roso, TravelChair’s VP of sales and marketing, “OR is very important. It allows us to engage with our core outdoor buyers that we otherwise don’t get to see in person.” Amy Roberts, the new executive director of Outdoor Industry Association (OIA), has already collaborated with Grassroots Outdoor Alliance, Outdoor Retailer and Emerald Expositions to devise an initiative focused on strengthening specialty retailers, via “advocacy, education and events.” The rough plan is to harness the members and resources of OIA, Grassroots and OR to service the unique position specialty retail holds in the industry as a whole. “Tactics are still to come,” said Roberts. TravelChair’s Roso added, “These “core outdoor” accounts are the backbone of our retail network - shops that really drive our direction and help brand us.” Roso added a second reason making OR is still a very important show for the industry: “OR allows us to view the current trends.” So where is the growth for the active lifestyle market? Continued TravelChair’s Roso, “In one word: Millennials. The Millennial generation is making our industry become more fashion-forward and bringing an urban, everyday user segment to it. Everyday outdoor gear is more approachable and more about style; everyone expects good performance from products, but performance isn’t the only selling point anymore.” ■
Gordon Seabury’s Top Ten List
Gordon Seabury, CEO, Toad & Co.
On August 4, Gordon Seabury, CEO, Toad & Co., became the next OIA board chairman, replacing Jennifer Mull, Backwoods CEO. On August 5, he delivered his first speech in his new role at the Industry Breakfast at Outdoor Retailer Summer Market 2015 detailing why the industry rocks. If you missed it, here’s the full speech: Fifteen years ago, OIA’s early leaders asked me to join the board to bring a next generation perspective and to be the voice of “youth.” Time does fly when you are having fun, and now as I bookend my board tenure as the chair, I look forward to helping guide the important work of the association for continued success in the 21st Century. Given my personal history and the vision of the earlier leadership, I am also looking forward to engaging the next generation of leaders in this powerful $646 billion dollar industry that brings so much joy, inspiration and health benefits to the communities and consumers around the world. I was just recently on my annual fly fishing sabbatical to the Dean River, BC - fortunate enough to be completely off the grid for a week. The trip allowed my mind and soul to be being fully present and connected with that beautiful place without interruption (other than the occasional adrenalin rush from a world class steelhead ripping line from the reel). I was reminded why I have spent the last two decades in this industry. I thought while it was fresh, I would use this morning’s opening to remind us all why we are here. Here is my top Gordon Seabury reasons to love and support the industry we are fortunate to call our own. Hopefully some of these resonate with each of you. #10. We work with inspiring people living their fullest lives. We are passionate professionals who genuinely love what we do and are building organizations and an industry we are proud of. Not everyone gets to work with their closest friends. #9. We create and sell high-quality, innovative products and services we believe in. And those products enrich the outdoor experiences we promote.
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#8. We are making the world and our consumers healthier. Outdoor activities can prevent a wide range of health problems. Doctors are now handing out “park prescriptions” for heart disease, obesity & attention deficit disorder. #7. We are passionate about protecting outdoor places. We want to ensure our consumers today and our grandchildren’s generation to come can enjoy the same beautiful spaces. Earlier this year OIA, Conservation Alliance & Outdoor Alliance created a coalition: The purpose: Strengthen our advocacy work at the local level; The plan: Provide resources to help our members advocate for important recreation places close to home.
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#6. We are committed to reducing the footprint of our products. Personally inspired by the industry’s leadership in triple bottom business practices 20 years ago, OIA continues that tradition with a commitment to helping our industry with best practices in environmental and social responsibility. The OIA Sustainability Working Group in collaboration with more than 300 outdoor organizations are developing solutions to reduce the environmental and social impacts of our products. #5. The outdoors bring families together. My best memories growing up and as an adult with my wife and two daughters are in the outdoors. Just last week, I was hiking with my oldest daughter on her 18th birthday through 15 miles of some of the most beautiful terrain in the Eastern Sierras. These moments bring us closer and also share our appreciation of the outdoors with our children. #4. The outdoors provide a much needed counter balance to our fast paced connected lives. For me, it is a haven from the demands of a 24/7 connected life…relaxation of mind and body. For my kids, it is a playground for their blended lives mixing social engagement, experience and digital storytelling. While a different outdoor lifestyle, the good news is the outdoors remains as relevant as ever. #3. Specialty outdoor retailers remain the foundation of the industry and hub of their communities. They support innovation (Toad & Co. would not be here without their early & continued support). They provide local intelligence on the best places to recreate in the outdoors and afterwards. They give back to their community with education and training, while supporting local not-for-profits. In recognition of their importance, OIA recently announced a formal relationship with Grassroots Outdoor Alliance and Outdoor Retailer. Purpose: To collaborate to develop programs that support specialty retail; Plan: To build relevant content and work to enhance the show experience. I am personally very excited about the important work that will come from this relationship. #2. The Outdoor industry represents aspiration AND accessibility. While our top athletes continue to achieve and enthusiasts are well respected for talents. The industry has evolved over 20 years and inclusion, education and diversity are equally recognized and important. This next generation of outdoorists honor both the achievement and the joy of the experience. #1. We are much bigger than the sum of our individual parts as a collaborative community. It comes back to the great people in this building, passionate advocates for outside recreation, sustainable business practices and doing the right thing. Together we are stronger and can continue to grow our influence. Look at that list of industry characteristics…relevant for this new generation? You tell me. And so, I believe we are a growing community that can be THE example of success if we continue to work towards a common vision together. ■ 5 THE B.O.S.S. REPORT | AUGUST 10, 2015 © SportsOneSource, LLC
Trek Bicycle Corporation Click-and-Collect Could Tip U.S. Independent Bike Dealer Market Trek Bicycle Corporation sent shockwaves through the Independent Bicycle Dealer (IBD) market in the U.S. last week by announcing it would launch a “click-and-collect” program next month that would enable consumers to order bikes at its site online and collect them from a local dealer. The Madison, WI, company said its new “Trek Connect E-commerce” program, which will enable Trek retailers to launch a web store at no cost, would go live next month. Dealers who opt into the program would be eligible to earn a commission on every sale at Trekbikes.com, where consumers will be required to select from a list of local dealers to service their order before checking out. Those commissions are expected to approach 80 percent of what a dealer would earn had they sold the products from their own inventory, even though Trek will be fulfilling the orders from its own inventory. Dealers would earn a commission regardless of where the order is delivered. For a nominal monthly fee, Trek is also offering its “committed retailers” access to a suite of marketing tools and assets that can be used to coordinate and automate search engine, email, social media, direct mail and in-store merchandising campaigns. Those retailers will also have exclusive access to Trek’s design team for assistance with the creation of visual marketing assets. “This is a massive investment in the long-term success of our brand and our retailers,” Trek President John Burke told more than 200 dealers during his keynote address at the Trek World retailer show August 3. “We believe the most successful companies in the future will all be omni-channel enabled, and we are doing everything we can to make sure the future for our retailers is bright.” While it is not clear what criteria Trek will use to designate committed retailers, the term is widely used in the industry to refer to dealers who agree not to sell competing bike brands. All but two Trek concept stores are indepenJohn Burke, President, Trek Bicycle Corp. dently owned and operated. A Paradigm Shift Industry observers said the move puts Trek’s two global rivals - Specialized Bicycle Components of Morgan Hill, CA, and Giant Manufacturing Co. of Taiwan – on the defensive. While so-called “clickand-carry” models have been widely adopted in France and other bike crazy European countries, none of America’s major IBD bicycle companies sell bikes direct-to-consumer online. “Trek has announced an order of magnitude paradigm shift in U.S. bike shop retailing,” said Jay Townley with the Gluskin Townley Group, which provides market search and consulting services. “Why?
Photo courtesy Trek
Trek is the number one brand group (with Electra and Bontrager) in the high end of the market and specifically the bike shop specialty channel of trade. Trek going consumer direct in the forms announced will most certainly disrupt the U.S. bike shop channel and probably the whole bike market as well.” The announcement triggered a flood of dealer calls to Giant USA, which has partnered with Shopatron to funnel all online sales inquires to local dealers. While Giant does use the “Click and Collect” model in several countries, its senior U.S. executives assured dealers Thursday that they would not bring the concept to the U.S. unless it reinforces their brick & mortar dealers. “If we embrace this opportunity, it will be done at a super high level, supporting our investment in your brick & mortar,” Giant USA General Manager Elysa Walk and Executive Director John T. Thompson explained in an email the company shared with The B.O.S.S. Report. “The way consumers buy bikes and gear is rapidly advancing, and we want our retailers to win as the environment changes here in the U.S. Our decision will be based on whether this model can enhance the strength of our retailer’s business in an evolving marketplace as well as better serve consumers with access to world-leading products.’ Specialized has been selling parts and accessories direct to U.S. consumers online for five years but does not sell bikes online. Consumers browsing Cannondale.com also uses a dealer locator to refer online
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visitors to its local dealers. Neither Specialized nor Cannondale could be reached for comment. Disruption Ripples Through Industry Trek Connect consummates a two-year pilot program with selected dealers and builds on lessons Trek learned through its Project One customization program. That program allows consumers to customize and build a Trek bike online but still requires they order it from their local bike dealer. Trek’s announcement comes amid broadening disruption in the North American IBD channel where Shimano, Selle Royale, Graber, Kirt Kinetics and other parts and accessories brands have begun selling direct. On July 24 Access North America, a subsidiary of Europe’s largest bicycle company, announced it was responding to the trend by refocusing its U.S. distributor on in-house brands. It also said it was retooling its Raleigh brand to address disappointing IBD sales and dealer complaints about its B2B website. Some researchers project the number of U.S. bike shops would decline from their current level of about 3,950 to 2,500 by 2025 as more efficient omnichannel models squeeze dealers out of the market. Canyon Bicycles GMBH, which sells direct exclusively, now ships to
55 countries in Europe and Asia and is rumored to be eyeing the U.S. market. Reports emerged Wednesday that Giant USA this week told dealers attending an annual meeting in Canada that it was working on an e-commerce initiative similar to Trek Connect, but a spokesman for Giant USA declined to comment on the reports. Spokesmen for Specialized and Cannondale did not respond to an inquiry in time for this article. Retailer reaction to the news was as lively and mixed as one might have expected. Critics predicted the emerging omnichannel model would ultimately replace dealers with contractors. Others welcomed the opportunity to reduce their own inventory risk and focus more on relationship building, fulfillment, service and other aspects of their retail business which the Bicycle Product Suppliers Associations view as critical to IBD sustainability. “I’ve been thinking a lot about what Trek Connect means to our customers and David’s World Cycle, and it’s really pretty simple. Customers not only have more choices than ever but also have less time. Trek Connect addresses both,” said David Sanborn, owner of David’s World Cycle, in a statement released by Trek. “We ask three questions at David’s World Cycle whenever we ask ourselves what to
do. Is it good for our customers, is it good for our partners and is it good for David’s World Cycle? Trek Connect is a yes on all three.” Trek Connect will launch in the U.S. in September and, depending on how it fares, Trek may expand the service globally. Eventually, Trek anticipates enabling consumers to search local availability at Trek dealers. “We are working toward that,” Trek spokesman Eric Bjorling told The B.O.S.S. Report. “There are a huge number of consumers that would buy today if they knew a dealer had the product they were looking for in their market.” Trek E-Bikes On The Way Bjorling confirmed Trek has also launched another pilot program inspired by developments in Europe. Eight weeks ago, the company launched a pilot program with a group of select dealers interested in helping the company introduce its e-bikes to the U.S. The company tentatively plans to offer three pavement e-bikes to the U.S. market in model year 2016 for the commuter and recreational use. “We think e-bikes in the U.S. is a $320 million-a-year business,” Bjorling said. “We estimated we are two percent of that and see it as a massive opportunity for a brand like us.” ■
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Fox Factory Holding’s Bike Sales Climb 24 Percent Fox Factory Holding Corp., maker of bicycles and power vehicles, reported second-quarter sales increased 12.5 percent to $97.2 million. Fox Factory also makes side-by-side vehicles, on-road and off-road vehicles and trucks, all-terrain vehicles, snowmobiles, specialty vehicles and applications, and motorcycles. The sales gain reflected a 23.9 percent increase in sales of bike products. “The increase in bikeS was due to our acquisitions and an increase in mountain bike suspension sales, which is an indication of an early positive industry response to our model year 2016 products,” said Larry Enterline, CEO, on a conference call with analysts. The quarter included Race Face/Easton Cycling. In the second quarter, growth also returned for its legacy Fox mountain bike business. Added Enterline, “While we are pleased with our bike business growth in the second quarter, we remain concerned that macro-economic factors in China and Western Europe could negatively impact consumer sellthrough of our bike products in the second half of 2015.” The gains in bicycles were partially offset by a 3.0 percent Larry Enterline, CEO, Fox Factory Holding Corp decline in sales of powered vehicle products. The decrease in powered vehicles was largely due to the temporary production hiatus of the Ford Raptor program, partially offset by higher sales to other OEMs. Non-GAAP adjusted net income was $9.8 million, or 26 cents a share, which is in line with the same period last fiscal year. Adjusted EBITDA improved 4.2 percent to $17.3 million. On a reported basis, net income was $6.8 million, or 18 cents per share, compared to $11.6 million, or 31 cents, last year. Gross margins decreased 50 basis points to 30.7 percent. The decrease was primarily attributable to changes in product and customer mix as well as supply chain and production inefficiencies associated with the logistics of accelerating the ramp up of bike rear shock production in Taiwan, and the subsequent reconfiguration of the company’s Watsonville, CA facility. Margins were also impacted by infrastructure investments in its El Cajon, CA facility. Gross margins are still expected to improve slightly in the back half of the year as compared to the last six months of 2014. As a percentage of sales, operating expenses increased to 19.9 percent from 17.5 percent a year ago, primarily due to acquisition-related compensation expense associated with Race Face/Easton Cycling. For the third quarter, Fox expects sales in the range of $103 million to $108 million and nonGAAP adjusted EPS in the range of 33 to 37 cents a share. For the fiscal year, the company raised its outlook. It now expects sales in the range of $347 million to $363 million and non-GAAP adjusted EPS in the range of 91 cents to $1.00. This compares to the company’s previous outlook of sales in the range of $333 million to $357 million and EPS in the range of 88 cents to $1.00. ■
Photo courtesy Fox Factory
Fox Factory Second Quarter Results
(in $ millions)
2015
2014
Total Sales
$97.2
$86.4
12.5%
Gross Margin
30.7%
31.2%
-50 bps
SG&A %
11.3%
11.4%
-10 bps
Operating Income
$10.5
$11.7
-10.2%
Net Income
$6.8
$11.6
-41.6%
Diluted EPS
18¢
31¢
-41.9%
$78.8
$63.1
24.9%
Inventory @ Quarter-end
Change
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Liberty Interactive Corp. To Earn $105 Million Profit on Backcountry.com
Liberty Interactive Corp. sold Backcountry.com for $350 million or 11 times what the online retailer is expected to earn in operating income before depreciation and amortization. The CEO for its former parent company disclosed the sale Wednesday. “We completed an attractive sale of Backcountry.com at the end of the second quarter on June 30,” said Greg Maffei, president and CEO, Liberty Interactive Corp. “This resulted in a book gain of $105 million. Our total consideration in that transaction was approximately $350 million, which is an implied multiple of over 11 times the enterprise value versus the forecasted 2015 adjusted OIBDA. So we consider that a pretty attractive sale.” Greg Maffei, President and CEO, Liberty Interactive announced July 1 that it had sold LIiberty Interactive Corp. Backcountry.com to the private equity firm TSG Consumer Partners LLC but had not disclosed terms of the deal. In its second quarter filing with the Securities & Exchange Commission, Liberty Interactive goes on to disclose that Backcountry.com lost $4 million on sales of $105 million in the second quarter ended June 30, 2015, compared with a loss of $3 million on sales of $99 million in the second quarter of 2014. Losses reached $3 million on sales of $227 million in the six months ended June 30, 2015, compared with a loss of $4 million on sales of $211 million in the first half of 2014, according to the filing. The 11 times OIBDA figure quoted by Maffei implies Backcountry will earn OIBDA of nearly $35 million in the back half of the year. Backcountry.com makes most its profits in the fourth
quarter, when outdoor enthusiasts flock to its online site to purchase winter gear. Liberty Interactive had never before disclosed Backcountry.com’s quarterly financial results, but broke out the numbers in a regulatory filing Wednesday to show investors how the remaining businesses at its Digital Commerce companies faired in the quarter. Those businesses generated sales of $149 million in the second quarter, up seven percent from a year earlier. Liberty Interactive reported Bodybuilding.com, where sales grew $5 million, and CommerceHub, where sales grew $6 million, accounted for most of the growth. Its Digital Commerce segment also includes Evite and Right Start. The increase in Bodybuilding.com revenue was attributed primarily to increased order volume on slightly lower average ticket. Average order values declined in part due to the impact of the strong dollar on sales to overseas customers. Growth at CommerceHub, which manages drop ship programs for many consumer products manufacturers, was attributed primarily to an acquisition during the first quarter of 2015 and growth in active customers (vendors and suppliers); which increased the number of aggregate transactions processed through the CommerceHub platform. Adjusted OIBDA for the continuing Digital Commerce companies increased $2 million yearover-year in the second quarter. Adjusted OIBDA as a percentage of revenue was relatively flat, representing 12.1 percent of revenue in the second quarter of 2015, as compared to 11.5 percent of revenue in the second quarter of 2014. Operating loss for the continuing Digital Commerce companies was $3 million in the second quarter as compared to a loss of $9 million in the same period in 2014. ■
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A i s l e Ta l k
Accell North America established a standalone business unit to handle sales and marketing for its Haibike ePerformance bicycles in the U.S. Blue Ridge Mountain Sports Ltd. secured financing for inventory to stock its seven stores in Charlottesville, Virginia Beach and Blacksburg, Va; Knoxville, TN, Madison, WI and Princeton, NJ. Descente Ltd of Japan acquired control of leading Japanese sportswear maker Inov-8 from the private equity firm Livingbridge. Financial terms were not disclosed. ElliptiGO Inc., creator of the world’s first elliptical bicycle, hired Raphael Weishaupt as VP of Global Marketing. Gregory appointed Jim Boisd’Enghien as its Sales Director and opened a dedicated design center in Salt Lake City where all product development for North America will take place.
Photo courtesy Bogs
Ibex Outdoor Clothing LLC has secured a multi-million dollar credit package from First Niagara Commercial Finance Inc., which provides asset-based loans and working capital to help its customers expand and grow.
Bogs Footwear Brand
L.L.Bean Inc. plans to open its first Kansas City store in November at Town Center Crossing.
Q2 Sales Jump 18 Percent
Oru Kayak partnered with the outdoor gear rental firm GetOutfitted to launch the first national kayak rental program that delivers foldable kayaks to consumers’ doorsteps for a convenient, affordable experience outdoors.
Weyco Group Inc. reported sales of its Bogs footwear brand increased 18 percent in the second quarter ended June 30 to $5.2 million. The gains reflected a broadening of the brand’s product line beyond boots, including expansion into women and kids’ offerings. Bogs sales are reported under Weyco Group’s North American Wholesale segment, where sales and licensing revenues reached $48.1 million for the quarter, up 7.4 percent. The segment also includes the Stacy Adams and Nunn Bush brands where sales grew 12 percent and 9 percent, respectively, for the quarter. Florsheim’s wholesale sales declined 3 percent. Wholesale gross margins increased to 31.0 percent from 30.5 percent in last year’s second quarter mainly due to an increase in U.S. gross margins. Earnings from operations for the wholesale segment increased 26 percent to $2.2 million, primarily due to higher sales and gross margins. Wecyo’s net earnings, which also included retail and international operations, declined 7.6 percent to $2.04 million, or 19 cents a share. Sales grew 1.7 percent to $63.9 million. The overall profit decline reflected lower sales in the company’s U.S. stores, which are largely Florsheim, as well as lower operating earnings in Australia, resulting from its sluggish retail environment and lower earnings of recently opened retail stores. ■
Pelican International Inc., the Canadian manufacturer of kayaks and other recreational boats, appointed Marie-Christine Piedboeuf as President, effective September 1, 2015. Shimano Corp. beat internal revenue forecasts in the first half ended June 30 as the weak yen fueled better than expected sales at its Bicycle Components segment. Smith, the maker of eyewear, goggles and helmets, appointed Ben “Benny” Cruickshank as Sport Channel Communications Manager and Tim Weisser as West Coast Sales Manager for its Sports/Outdoor Lifestyle channel. The American Mountain Guides Association, which has seen enrollment in its training courses grow 43 percent from 2013 through 2015, named Alex Kosseff as its Executive Director. Utah State University will become the home of the nation’s first undergraduate degree in designing and constructing outdoor apparel and products. Vista Outdoor Inc. completed its $412.5 million acquisition of CamelBak Products Inc. August 3 and announced plans to sell unsecured notes with a face value of $350 million in a private placement to help pay for the transaction and for other general corporate purposes. Whistler Blackcomb Holdings Inc. reported visitation to North America’s largest mountain resort grew 24.2 percent in the fiscal third quarter ended June 30, helping offset the decline in skier traffic it saw in the prior two quarters.
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NSSRA Data Partnership with SportsOneSource Signals Shift in Snow Sports Industry Data Ahead Leadership at the National Ski and Snowboard Retailers Association’s (NSSRA) said an exclusive partnership announced August 4 with SportsOneSource, LLC to produce weekly snow sports sales data trend reporting is a game changer for the entire industry. Under the deal, NSSRA will work with SportsOneSource, LLC to urge its members to begin reporting their sales data using SportsOneSource’s proprietary and confidential SSI Data platform, which already generates weekly reports based on POS data from more than 15,000 retail doors that sell active lifestyle products. “We believe that SportsOneSource is well qualified to provide this service to our members,” said Wilbur Rice, Chairman of NSSRA Board of Directors and owner of Equipe Sport, which operates from four retail locations in Vermont. “SportScanInfo has provided timely sales data reporting on a weekly basis in many sports and outdoor-related product categories since 1998.” NSSRA members who participate in the program will provide weekly POS data to SOS, which will aggregate the data and report its findings on a weekly basis. The research will cover sales of equipment, clothing and essentials for alpine and crosscountry skiing and snowboarding as well as footwear and apparel for the broader outdoors market. Participating members will receive free access to the data via SSI’s secure website. Aggregating the data at the channel and region level protects the anonymity and confidentiality of each member’s data. A Win-Win For The Entire Industry “This is really the best thing to happen to our industry in a really long time,” said Teddy Schiavoni, NSSRA Board member and owner of Summit Ski & Snowboard, Framingham, MA. “To have this kind of data available so readily will help retailers make better, wiser decisions, but it will also really help
manufacturers when it comes to streamlining production and having the right products available in the marketplace. It’s a win-win for the ski industry as a whole.” At a meeting in January, NSSRA’s board of directors appointed Rice, Schiavoni and Sports Specialists Ltd. President Steve Rogers to a committee to develop a POS data research program, identify the best potential partner
and negotiate an agreement that would benefit all its members. NSSRA is encouraging its approximately 270 retailers, who operate 900 retail locations, to sign up for the program. Rice said Sports Specialists Ltd and Snowsports Merchandising Group - the industry’s two largest buying groups - are supporting the effort.
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“The more storefronts contributing their anonymous data, the stronger the data, which is a benefit to all members and for companies purchasing the research,” said Rice. “Retailers can often make the mistake of thinking that certain products are successfully selling while the reality may be different.” Rice said he’d like to see a strong majority of NSSRA’s members participating in the program heading into its annual meeting at the SIA Snow Show in January. SSISnowSports.com To Launch In The Fall The partnership between SportsOneSource and NSSRA is the first retailer-based partnership for SportsOneSource and its SSI Data platforms. SportsOneSource is launching its new SSI SnowSports data platform this fall to provide weekly sales trend reporting based on data feeds from a broad range of retailers, including specialty shops, chain specialty retailers, big box sporting goods stores and the biggest names in Internet sales. The new platform will initially provide access to online weekly trend reporting across categories, brands and products, and features the ability to track sales trends by color and technology. Weekly data is available within five days of each weekly close to enable retailers to access actionable data in season as it progresses. “The entire SportsOneSource team is excited about this partnership with NSSRA as we launch the new SSI SnowSports platform in September,” said James Hartford, CEO of The SportsOneSource Group. “The new platform is built on our new Hybrid
Tabbed Platform (HTP) technology that enables specialty retailers and vendors to move quickly across the data from footwear to apparel to essentials and hardgoods.” This is the second new research offering for NSSRA members this year. The Association launched its Compensation and Benefits Report in May. The Snow Sports Participation Report and Cost of Doing Business Survey have been exclusive to NSSRA member benefits for many years. For more information how to enroll in this program, please contact NSSRA President Larry Weindruch at [email protected], or phone 847.391.9825. Companies wishing information on purchasing this data or retailers looking to develop a reporting relationship should contact Stacy Gerths, Outdoor Client Solutions Specialist at The SportsOneSource Group, at [email protected] or call 303. 997.7302. The National Ski and Snowboard Retailers Association is a volunteer-led organization dedicated to growing snowsports participation and to support and educate specialty snow sports retailers. Since its founding in 1989, NSSRA has served as the voice of specialty retailers, representing their interests in issues that concern the specialty snowsports retail channel. NSSRA publishes a number of research reports for specialty snow sports retailers, including the biennial NSSRA Cost of Doing Business Survey, a business-performance benchmarking tool; the annual Sports Participation in Snow Sports report; and the annual Combined Indemnified Bindings List. ■
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Safilo Group's NYC Showroom
Safilo Group S.p.A. North American Sales Slow Significantly Safilo Group S.p.A. reported its sales growth in North America, where it is building a Global Sports and Outdoor Lifestyle segment around its Smith brand, slowed significantly in currency-neutral terms in the second quarter. The Italian company reported North American revenues grew 23.5 percent to €137.6 million ($152 mm) in the second quarter ended June 30, an increase of just 0.8 percent in currency-neutral (c-n) terms. That compares with growth of 25.1 percent (2.9 percent c-n) in the first quarter. Sales at the 143-store Solstice retail chain grew 17.1 percent (-5.3 percent c-n) to €27.2 million ($30 mm), despite a net increase of 13 stores from a year earlier. Wholesale revenues grew 25.2 percent (2.4 percent c-n) on top of strong but undisclosed growth a year earlier. Safilo Wholesale revenues include sales of more sunglass, prescription frames and sports goggles under more than two dozen owned and licensed brands, made to departments stores, fashion boutiques, sporting goods and other retailers. Globally, Safilo earned 66 percent of its revenue in the quarter, or about $266 million, from sunglasses, up from nearly 61 percent from the second quarter of 2014. The company did not break out figures for Sports products sales, which accounted for 4.1 percent, or €12.7 million in revenue in the year ago quarter. Safilo has been shifting key Smith design and marketing managers to Portland, OR, to staff a new global design studio for sports and outdoor eyewear since last fall when it began folding Smith into its North American subsidiary. Safilo said the consolidation would enable it to redirect millions of dollars annually toward growing the Smith brand on a global scale and building a Global Sports and Outdoor lifestyle segment. Safilo has since consolidated its distribution center in Parsippany, NJ into its Denver, CO, distribution hub. The company is also scouting locations for a new U.S. headquarters closer to its showroom in New York City. In addition to Smith, Safilo owns the Carrera, Polaroid, Safilo and Oxydo brands. It earns the bulk of its sales providing sunglasses, eyewear and frames under licensed fashion brands such as Dior, Fendi and Gucci, primarily to department stores and fashion boutiques. ■
Dorel Sports Organic Sales Fell From Cannondale Delays Dorel Industries Inc. said the European bike dealers’ decision to stock up on Cannondale bikes in the first quarter, ahead of an April price increase, cut into second quarter sales at its Dorel Sports segment. Sales at Dorel Sport decreased by $35.2 million, or 12.3 percent, to $251.1 million in the second quarter and are off 8.8 percent for the first half of the year. Organic sales at the segment, declined by approximately 5 percent in the quarter and 2 percent year-todate in currency-neutral terms compared to the year earlier periods. The segment’s Cycling Sports Group sells Cannondale and other premium bikes to independent bicycle dealers worldwide, while its Pacific Cycle division sells low-end and private label bikes and wheeled toys to mass retailers such as Walmart and Costco. In Brazil, the bike manufacturer and distributor Caloi generated double-digit organic revenue growth in currency-neutral terms as sales rebounded from last year’s soft second quarter when the 2014 FIFA World Cup disrupted operations for many Brazilian retailers. Sales also increased organically in Japan and the U.K. That growth was offset by a decline in organic sales in Europe, where Cannondale bicycle dealers had loaded up on model 2015 bikes in the first quarter ahead of price increases implemented in April and in anticipation of the launch of new model-year 2016 products in the third quarter. This summer marked the first opportunity for many bike companies to adjust their Euro prices to reflect the currency’s decline against the U.S. dollar, which they use to pay Asian suppliers. Sales also declined in North America due to wet weather in May and mass retailers drawing down sporting goods inventory, according to Dorel Industries. DII said adjusted operating profit at Dorel Sports, excluding restructuring and other costs, decreased by $7.7 million, or 42.1 percent to $10.7 million, compared to $18.4 million in the year earlier quarter. For the six months, adjusted operating profit was down $13.3 million, or 37.6 percent to $22.0 million, compared to $35.3 million in 2014. Dorel said the appreciation of the U.S. dollar cost Dorel Sports $7 million in operating profit during the second quarter and $14 million during the first six months. Dorel Sports new product launches are expected to deliver better results in the second half versus last year, driven by the Cycling Sports Group, which focuses on the IBD channel, and Pacific Cycle, which serve the mass channel. The company forecasted, “Most of the benefit will be in the fourth quarter due to the seasonality of our business and the positive impact of the Christmas shopping season.” ■
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WEEK 1532 The Bicycle, Outdoor, and Snow Sports Trade Newsletter
HOka One One
Outdoor Retailer Summer Market 2015 Delivers Again While many of the mysteries around the event weren’t resolved - including whether the show would continue in Salt Lake City and what time of year the show should take place - Outdoor Retailer Summer Market 2015 was full of positivity and vibrancy once again. While no official figures were available at press time, attendance at the show appeared to be flat to slightly up versus last year but the energy in the aisles was clearly upbeat. Many attributed the exuberant crowd to a healthier industry overall, aided by the slow and steady improvement in the economy since the recession led to some quieter shows in the earlier part of this decade. Many attendees at the show appeared emboldened by the resiliency the industry showed during those challenging times. But the bigger payoff has been the way the outdoor industry is evolving to reach the emerging active lifestyle consumer. While the socially connected Millennial has disrupted an industry used to backcountry enthusiasts spending many days in the woods, it has also created a larger opportunity for many outdoor brands and the show. And the expansion of exhibitors, including running, surf and even lifestyle brands such as Levi Strauss -- making its first appearance at this year’s summer show -- has led to the many challenges already facing show management to keep the show in Salt Lake City past its current contract ending in 2016. Show owner Emerald Expositions recently announced the move of the upcoming Outdoor Retailer Winter Market earlier by two weeks in part to help improve order taking for apparel and footwear exhibitors to fit factory turnaround cycles, as well as to address other conflicts later in the month of January, such as SHOT Show and the SIA Snow Show. But Emerald also said the move was designed to free up hotel rooms competing against the Sundance Film Festival. While the Outdoor Retailer show, which has been in Salt Lake City since 1996, is contracted to stay in Salt Lake through August 2016, organizers would only say they are close to making a decision. Said Outdoor Retailer Show spokeswoman Kate Lowery, “We are dotting the i’s and crossing the t’s and finalizing contracts, unfortunately it is premature to comment at this time.” But the overall evolving active lifestyle consumer promises to continue to increase the appeal of the outdoor segment and boost the overall industry, including bringing a much greater fashion component to the outdoors. The active lifestyle trend is influencing apparel innovation with a focus on multi-functionality and design. Todd Spaletto, The North Face’s president of the Americas, marveled at how many bright colors are now widely accepted by today’s outdoor consumer whereas only athletic brands were using them ten years ago.
Columbia
La Sportiva
Fjallraven Booth
Black Diamond booth
Sierra Designs goes Queen-sized © SportsOneSource, LLC
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“We just think that today’s outdoor consumer is more active, they’re more social, they’re more connected to their community, and there’s a really cool vibe that outdoor retail represents,” said Spaletto. “I think the industry needs to catch up a little bit to where the consumer is. The outdoor consumer is pointing us in a really positive direction and we have an opportunity to bring our product offering to where they are.” Nate Pund, managing director at D.A. Davidson & Co., who has long followed the space, said the size of the Outdoor Retailer show reflects how the outdoor industry has become “more sophisticated” but also how the industry is broadening its reach and the experiences it delivers. “The industry has grown both in size and focus, from a recreational and enthusiast perspective to a larger, more sophisticated brand perspective that strives to be part of your life activities and enhance your experiences,” said Pund. “At the end of the day the industry has grown from simply camping to incorporating a vast array of activities including action sports, sporting goods, core outdoor, hunting/fishing, and even tactical.” He added that the industry still faces challenges - namely the transformative and disruptive shifts taking place across retail, be it brick and mortar, online or catalog as well as a dramatic shift in the “outdoor consumer.” “Millennials, the new generation of outdoor consumer, define the outdoors very differently than we have traditionally done in the past,” said Pund. “The outdoor consumer used to define themselves by a single activity, whether it be a rock climber, a paddler or backpacker. But now Millennials will do five different activities in a day. They want to try all these different things. Also, going outdoors traditionally was about escapism, retreat, serenity and things like that. But Millennials are all about connectivity and want to share all those activities and experiences with their friends and broader network.” The European Invasion Continues In terms of expansion, this year’s Outdoor Retailer Summer Market saw a handful of European-based brands entering the U.S. with fully comprehensive apparel collections. U.K. born Craghoppers, for instance, premiered its Spring 2016 adventure travel range, while Adidas Outdoor, based out of Germany, finally found its footing in specialty retail and big box stores as its neighbor Ortovox introduced its full line of highly technical mountain wear to North America. “A lot of companies come to the U.S. and are gone next season,” said Craghoppers Managing Director Jim McNamara. “And American buyers want to know you’re here long term.” Craghopper’s adventure travel and performance lifestyle direction has taken more than ten years to transition to U.S. markets, as McNamara waited to refine brand storytelling before bringing the line to retailers. “If you get the product
Proof Eyewear
Icebreaker’s new fabric blend in men’s and women’s underwear
right, you can find the market,” McNamara said. “We’ll double the business this year, and we’ll double the business next.” His confidence is a reflection of the trend toward a blending of performance and lifestyle usability. Two Summer Markets ago, National Geographic sought out the U.K. brand and today Craghoppers is the official apparel sponsor for Nat Geo, in a five-year, renewable contract. “We’re in it for the long haul,” McNamara said. As for the future, McNamara sees the response from retailers and consumers moving toward a desire for more style-driven pieces. Take for instance Craghopper’s Spring 2016 line that includes roughly seven Women’s dresses. Mountain Hardwear also showcased a new maxi-dress and urban-wear, in a presentation they had to preface with a… “I know this may look
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different than what we’ve shown before.” And even more U.K. brands such as Montane continue to grab marketshare from traditional U.S. favorites. On the Show Floor David Kahan, CEO of Birkenstock USA, said “the energy is great,” at the show. “It seems like the outdoor industry is doing well and the footwear category has really established itself over the last few shows where it’s become more of a destination at the show. But this is a good market for us - no doubt. We have a substantial presence with the outdoor lifestyle retailers.” “The interesting thing always about this show is how friendly and engaging it is,” said Saucony President Richie Woodworth. “It certainly brings the industry together and, if nothing else, celebrates some of the stuff that we do.” Woodworth admitted that it’s “become more challenging to write business here,” and most of the brands’ accounts aren’t coming to see something new. Saucony will show some buyers future season ideas “with people that we trust a lot” but also discuss day-to-day operational issues. “We’ll talk about sales and inventory, how can we be better partners, etc.,” said Woodworth. “It’s a lot of conversations you really don’t get a chance to have when you’re trying to tell someone about a new technology or an innovation story that’s bigger and better than anyone else’s.” The show also enables Saucony to reach a slightly different customer than at a running-centric trade show. Said Woodworth, “We believe that running is the ultimate outdoor sport. My favorite place to run is not on cement and asphalt; it’s a pine forest somewhere in Austria, and I think in some ways that’s the spirit and essence of outdoors.” “The thing Outdoor Retailer is, is that it’s us,” said Golden Harper, founder of Altra, which literally made a lot of noise with its booth featuring runners dancing on treadmills. “It’s our vibe if you will. So it’s a chance for us to connect with a lot of like-minded individuals. But the show is huge! It’s literally our biggest show of the year, so it gives us a chance to connect with a ton of different people.” Simon Bonham, CEO at Hi-Tec, said the outdoor shoe industry has been flat for the last two years. But he felt “really buoyant about 2016 and 2017,” due partly to favorable trends. This includes the fastpacking trend, alternatively described as ultra light backpacking or extreme trail running, as well as the overall desire for more lightweight and athletic outdoor styles from the Millennials. But he also believes a few years out of the recession, consumers are ready to invest in better shoes. “They’re hiking and camping and they want better products,” said Bonham. “They’re fed up with buying $50 product since 2010, and I believe they’re moving forward. The top outdoor brands have a responsibility to continue to push the boundaries to bring good product out to show the consumer and show that outdoor is not just about a brown or black hiker. Millennials are all about selfies and posting stuff on Facebook and Instagram so they want to stand out.” Ryan Riggs, global senior product manager for outdoor at Keen, said that although some European markets are looking for a “little more performance technology,” “fast and light” is still a dominant theme in Europe and U.S. “Athletic’s influence is definitely taking the outdoor industry in a new direction, affecting categories that we didn’t think it would affect down to sandals and down to some of the more casual looks and that crossover-bridge category that any brand that has lifestyle category and performance can reach,” said Riggs. “There’s always that bridge area where people are looking for casual comfort and that athletic influence in casual comfort is really top of mind right now.”
Mammut Booth
Brian Moore, VP of global footwear, The North Face, said many brands are learning that the “fast and light” push is more about becoming “younger more progressive outdoor” rather than converging athletic and outdoor. He said many outdoor enthusiasts are looking for less bulkier shoes to do less-intensive, done-in-a-day activities and not necessarily seeking out athletic styling. Said Moore, “To make our shoes like Nike Free doesn’t attract a younger consumer; all it does is muddy the water between athletic and outdoor. What we’re learning now is we have to be uber-credible to outdoor but do it in a more progressive way.” Moore also believes that while some more fashionable brands are coming into the space, authenticity is crucial for the outdoor consumer. “We can make very fashionable shoes. But they should be waterproof, they should be insulated, they should have good traction. If you don’t include those three things, there’s really no need for the outdoor consumer to buy it from us,” he said. One of the newcomers was Oxx Products, the maker of coffee machines for construction sites as well as the outdoor enthusiast. Said founder Jim Doan, “For us, Outdoor Retailer is a great way to reach to outdoorsman across all types of categories.” Oxx’s product, described as ‘“The World’s Toughest Coffee Maker,” is designed to bring the comforts of home to campsites. Said Doan, “I think there’s a really romantic view of camping and people going out and roughing it. But not many people really want to build a fire to make instant coffee. They want something quick that they can do at home.” Tracy Thomas, marketing manager at Incase, attending its second OR show, said the brand is looking to reach the many outdoor enthusiasts looking to photograph their experiences outdoors.
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But she said the brand’s more urban-influence bags have already seen a strong response at the last Summer Market. Said Thomas, ”The same people that go hiking and go outdoors also have lives in the city.” Snow Peak, the Japanese maker of camping and backpacking gear, brought out its apparel product to OR for the first time. The company has been only showing its titanium utensil items and backpacks but has had some success in its lifestyle apparel at Bloomingdale’s as well as smaller accounts with as Pilgrim’s Surf in Williamsburg, Brooklyn. “We hear people are looking more for style than for function or at least a bigger balance,” said Nate Borne, Snow Peak’s general manager of the U.S. region. “It may be a few years before it begins to be more widely adopted so it’s good to be one of the first.” Richard Talbot, product manager of Mountain Equipment, the U.K.-based maker of backpacks, sleeping bags, trekking poles and apparel, said the firm agonizes every year about the investments in Outdoor Retailer as well as the two shows it attends in Europe. “It’s very, very expensive to put on and most of our business has been written before the show, so it becomes less of a sales-oriented show to one about marketing our brand,” said Talbot. “But we’re seeking the core specialist retailer and that’s what this show’s about.”W Steve Rosenberg, founder and CEO of Kaenon Sunglasses, likes that surf community from the defunct Action Sports Retailer (ASR) trade show is now attending OR but he also said the overall OR show fits his brand. “It’s who we are,” said Rosenberg. “We’re an outdoors company and we’re an active lifestyle company. And this show caters to that community of people.” He also believes the industry has shown some recovery over the last couple of years although he sees the high end and premium segment where Kaenon sells definitely doing better. Added Rosenberg, “It seems healthier, but I think we’ve got a ways to go though.” According to Daniel Roso, TravelChair’s VP of sales and marketing, “OR is very important. It allows us to engage with our core outdoor buyers that we otherwise don’t get to see in person.” Amy Roberts, the new executive director of Outdoor Industry Association (OIA), has already collaborated with Grassroots Outdoor Alliance, Outdoor Retailer and Emerald Expositions to devise an initiative focused on strengthening specialty retailers, via “advocacy, education and events.” The rough plan is to harness the members and resources of OIA, Grassroots and OR to service the unique position specialty retail holds in the industry as a whole. “Tactics are still to come,” said Roberts. TravelChair’s Roso added, “These “core outdoor” accounts are the backbone of our retail network - shops that really drive our direction and help brand us.” Roso added a second reason making OR is still a very important show for the industry: “OR allows us to view the current trends.” So where is the growth for the active lifestyle market? Continued TravelChair’s Roso, “In one word: Millennials. The Millennial generation is making our industry become more fashion-forward and bringing an urban, everyday user segment to it. Everyday outdoor gear is more approachable and more about style; everyone expects good performance from products, but performance isn’t the only selling point anymore.” ■
Gordon Seabury’s Top Ten List
Gordon Seabury, CEO, Toad & Co.
On August 4, Gordon Seabury, CEO, Toad & Co., became the next OIA board chairman, replacing Jennifer Mull, Backwoods CEO. On August 5, he delivered his first speech in his new role at the Industry Breakfast at Outdoor Retailer Summer Market 2015 detailing why the industry rocks. If you missed it, here’s the full speech: Fifteen years ago, OIA’s early leaders asked me to join the board to bring a next generation perspective and to be the voice of “youth.” Time does fly when you are having fun, and now as I bookend my board tenure as the chair, I look forward to helping guide the important work of the association for continued success in the 21st Century. Given my personal history and the vision of the earlier leadership, I am also looking forward to engaging the next generation of leaders in this powerful $646 billion dollar industry that brings so much joy, inspiration and health benefits to the communities and consumers around the world. I was just recently on my annual fly fishing sabbatical to the Dean River, BC - fortunate enough to be completely off the grid for a week. The trip allowed my mind and soul to be being fully present and connected with that beautiful place without interruption (other than the occasional adrenalin rush from a world class steelhead ripping line from the reel). I was reminded why I have spent the last two decades in this industry. I thought while it was fresh, I would use this morning’s opening to remind us all why we are here. Here is my top Gordon Seabury reasons to love and support the industry we are fortunate to call our own. Hopefully some of these resonate with each of you. #10. We work with inspiring people living their fullest lives. We are passionate professionals who genuinely love what we do and are building organizations and an industry we are proud of. Not everyone gets to work with their closest friends. #9. We create and sell high-quality, innovative products and services we believe in. And those products enrich the outdoor experiences we promote.
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#8. We are making the world and our consumers healthier. Outdoor activities can prevent a wide range of health problems. Doctors are now handing out “park prescriptions” for heart disease, obesity & attention deficit disorder. #7. We are passionate about protecting outdoor places. We want to ensure our consumers today and our grandchildren’s generation to come can enjoy the same beautiful spaces. Earlier this year OIA, Conservation Alliance & Outdoor Alliance created a coalition: The purpose: Strengthen our advocacy work at the local level; The plan: Provide resources to help our members advocate for important recreation places close to home.
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#6. We are committed to reducing the footprint of our products. Personally inspired by the industry’s leadership in triple bottom business practices 20 years ago, OIA continues that tradition with a commitment to helping our industry with best practices in environmental and social responsibility. The OIA Sustainability Working Group in collaboration with more than 300 outdoor organizations are developing solutions to reduce the environmental and social impacts of our products. #5. The outdoors bring families together. My best memories growing up and as an adult with my wife and two daughters are in the outdoors. Just last week, I was hiking with my oldest daughter on her 18th birthday through 15 miles of some of the most beautiful terrain in the Eastern Sierras. These moments bring us closer and also share our appreciation of the outdoors with our children. #4. The outdoors provide a much needed counter balance to our fast paced connected lives. For me, it is a haven from the demands of a 24/7 connected life…relaxation of mind and body. For my kids, it is a playground for their blended lives mixing social engagement, experience and digital storytelling. While a different outdoor lifestyle, the good news is the outdoors remains as relevant as ever. #3. Specialty outdoor retailers remain the foundation of the industry and hub of their communities. They support innovation (Toad & Co. would not be here without their early & continued support). They provide local intelligence on the best places to recreate in the outdoors and afterwards. They give back to their community with education and training, while supporting local not-for-profits. In recognition of their importance, OIA recently announced a formal relationship with Grassroots Outdoor Alliance and Outdoor Retailer. Purpose: To collaborate to develop programs that support specialty retail; Plan: To build relevant content and work to enhance the show experience. I am personally very excited about the important work that will come from this relationship. #2. The Outdoor industry represents aspiration AND accessibility. While our top athletes continue to achieve and enthusiasts are well respected for talents. The industry has evolved over 20 years and inclusion, education and diversity are equally recognized and important. This next generation of outdoorists honor both the achievement and the joy of the experience. #1. We are much bigger than the sum of our individual parts as a collaborative community. It comes back to the great people in this building, passionate advocates for outside recreation, sustainable business practices and doing the right thing. Together we are stronger and can continue to grow our influence. Look at that list of industry characteristics…relevant for this new generation? You tell me. And so, I believe we are a growing community that can be THE example of success if we continue to work towards a common vision together. ■ 5 THE B.O.S.S. REPORT | AUGUST 10, 2015 © SportsOneSource, LLC
Trek Bicycle Corporation Click-and-Collect Could Tip U.S. Independent Bike Dealer Market Trek Bicycle Corporation sent shockwaves through the Independent Bicycle Dealer (IBD) market in the U.S. last week by announcing it would launch a “click-and-collect” program next month that would enable consumers to order bikes at its site online and collect them from a local dealer. The Madison, WI, company said its new “Trek Connect E-commerce” program, which will enable Trek retailers to launch a web store at no cost, would go live next month. Dealers who opt into the program would be eligible to earn a commission on every sale at Trekbikes.com, where consumers will be required to select from a list of local dealers to service their order before checking out. Those commissions are expected to approach 80 percent of what a dealer would earn had they sold the products from their own inventory, even though Trek will be fulfilling the orders from its own inventory. Dealers would earn a commission regardless of where the order is delivered. For a nominal monthly fee, Trek is also offering its “committed retailers” access to a suite of marketing tools and assets that can be used to coordinate and automate search engine, email, social media, direct mail and in-store merchandising campaigns. Those retailers will also have exclusive access to Trek’s design team for assistance with the creation of visual marketing assets. “This is a massive investment in the long-term success of our brand and our retailers,” Trek President John Burke told more than 200 dealers during his keynote address at the Trek World retailer show August 3. “We believe the most successful companies in the future will all be omni-channel enabled, and we are doing everything we can to make sure the future for our retailers is bright.” While it is not clear what criteria Trek will use to designate committed retailers, the term is widely used in the industry to refer to dealers who agree not to sell competing bike brands. All but two Trek concept stores are indepenJohn Burke, President, Trek Bicycle Corp. dently owned and operated. A Paradigm Shift Industry observers said the move puts Trek’s two global rivals - Specialized Bicycle Components of Morgan Hill, CA, and Giant Manufacturing Co. of Taiwan – on the defensive. While so-called “clickand-carry” models have been widely adopted in France and other bike crazy European countries, none of America’s major IBD bicycle companies sell bikes direct-to-consumer online. “Trek has announced an order of magnitude paradigm shift in U.S. bike shop retailing,” said Jay Townley with the Gluskin Townley Group, which provides market search and consulting services. “Why?
Photo courtesy Trek
Trek is the number one brand group (with Electra and Bontrager) in the high end of the market and specifically the bike shop specialty channel of trade. Trek going consumer direct in the forms announced will most certainly disrupt the U.S. bike shop channel and probably the whole bike market as well.” The announcement triggered a flood of dealer calls to Giant USA, which has partnered with Shopatron to funnel all online sales inquires to local dealers. While Giant does use the “Click and Collect” model in several countries, its senior U.S. executives assured dealers Thursday that they would not bring the concept to the U.S. unless it reinforces their brick & mortar dealers. “If we embrace this opportunity, it will be done at a super high level, supporting our investment in your brick & mortar,” Giant USA General Manager Elysa Walk and Executive Director John T. Thompson explained in an email the company shared with The B.O.S.S. Report. “The way consumers buy bikes and gear is rapidly advancing, and we want our retailers to win as the environment changes here in the U.S. Our decision will be based on whether this model can enhance the strength of our retailer’s business in an evolving marketplace as well as better serve consumers with access to world-leading products.’ Specialized has been selling parts and accessories direct to U.S. consumers online for five years but does not sell bikes online. Consumers browsing Cannondale.com also uses a dealer locator to refer online
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visitors to its local dealers. Neither Specialized nor Cannondale could be reached for comment. Disruption Ripples Through Industry Trek Connect consummates a two-year pilot program with selected dealers and builds on lessons Trek learned through its Project One customization program. That program allows consumers to customize and build a Trek bike online but still requires they order it from their local bike dealer. Trek’s announcement comes amid broadening disruption in the North American IBD channel where Shimano, Selle Royale, Graber, Kirt Kinetics and other parts and accessories brands have begun selling direct. On July 24 Access North America, a subsidiary of Europe’s largest bicycle company, announced it was responding to the trend by refocusing its U.S. distributor on in-house brands. It also said it was retooling its Raleigh brand to address disappointing IBD sales and dealer complaints about its B2B website. Some researchers project the number of U.S. bike shops would decline from their current level of about 3,950 to 2,500 by 2025 as more efficient omnichannel models squeeze dealers out of the market. Canyon Bicycles GMBH, which sells direct exclusively, now ships to
55 countries in Europe and Asia and is rumored to be eyeing the U.S. market. Reports emerged Wednesday that Giant USA this week told dealers attending an annual meeting in Canada that it was working on an e-commerce initiative similar to Trek Connect, but a spokesman for Giant USA declined to comment on the reports. Spokesmen for Specialized and Cannondale did not respond to an inquiry in time for this article. Retailer reaction to the news was as lively and mixed as one might have expected. Critics predicted the emerging omnichannel model would ultimately replace dealers with contractors. Others welcomed the opportunity to reduce their own inventory risk and focus more on relationship building, fulfillment, service and other aspects of their retail business which the Bicycle Product Suppliers Associations view as critical to IBD sustainability. “I’ve been thinking a lot about what Trek Connect means to our customers and David’s World Cycle, and it’s really pretty simple. Customers not only have more choices than ever but also have less time. Trek Connect addresses both,” said David Sanborn, owner of David’s World Cycle, in a statement released by Trek. “We ask three questions at David’s World Cycle whenever we ask ourselves what to
do. Is it good for our customers, is it good for our partners and is it good for David’s World Cycle? Trek Connect is a yes on all three.” Trek Connect will launch in the U.S. in September and, depending on how it fares, Trek may expand the service globally. Eventually, Trek anticipates enabling consumers to search local availability at Trek dealers. “We are working toward that,” Trek spokesman Eric Bjorling told The B.O.S.S. Report. “There are a huge number of consumers that would buy today if they knew a dealer had the product they were looking for in their market.” Trek E-Bikes On The Way Bjorling confirmed Trek has also launched another pilot program inspired by developments in Europe. Eight weeks ago, the company launched a pilot program with a group of select dealers interested in helping the company introduce its e-bikes to the U.S. The company tentatively plans to offer three pavement e-bikes to the U.S. market in model year 2016 for the commuter and recreational use. “We think e-bikes in the U.S. is a $320 million-a-year business,” Bjorling said. “We estimated we are two percent of that and see it as a massive opportunity for a brand like us.” ■
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Fox Factory Holding’s Bike Sales Climb 24 Percent Fox Factory Holding Corp., maker of bicycles and power vehicles, reported second-quarter sales increased 12.5 percent to $97.2 million. Fox Factory also makes side-by-side vehicles, on-road and off-road vehicles and trucks, all-terrain vehicles, snowmobiles, specialty vehicles and applications, and motorcycles. The sales gain reflected a 23.9 percent increase in sales of bike products. “The increase in bikeS was due to our acquisitions and an increase in mountain bike suspension sales, which is an indication of an early positive industry response to our model year 2016 products,” said Larry Enterline, CEO, on a conference call with analysts. The quarter included Race Face/Easton Cycling. In the second quarter, growth also returned for its legacy Fox mountain bike business. Added Enterline, “While we are pleased with our bike business growth in the second quarter, we remain concerned that macro-economic factors in China and Western Europe could negatively impact consumer sellthrough of our bike products in the second half of 2015.” The gains in bicycles were partially offset by a 3.0 percent Larry Enterline, CEO, Fox Factory Holding Corp decline in sales of powered vehicle products. The decrease in powered vehicles was largely due to the temporary production hiatus of the Ford Raptor program, partially offset by higher sales to other OEMs. Non-GAAP adjusted net income was $9.8 million, or 26 cents a share, which is in line with the same period last fiscal year. Adjusted EBITDA improved 4.2 percent to $17.3 million. On a reported basis, net income was $6.8 million, or 18 cents per share, compared to $11.6 million, or 31 cents, last year. Gross margins decreased 50 basis points to 30.7 percent. The decrease was primarily attributable to changes in product and customer mix as well as supply chain and production inefficiencies associated with the logistics of accelerating the ramp up of bike rear shock production in Taiwan, and the subsequent reconfiguration of the company’s Watsonville, CA facility. Margins were also impacted by infrastructure investments in its El Cajon, CA facility. Gross margins are still expected to improve slightly in the back half of the year as compared to the last six months of 2014. As a percentage of sales, operating expenses increased to 19.9 percent from 17.5 percent a year ago, primarily due to acquisition-related compensation expense associated with Race Face/Easton Cycling. For the third quarter, Fox expects sales in the range of $103 million to $108 million and nonGAAP adjusted EPS in the range of 33 to 37 cents a share. For the fiscal year, the company raised its outlook. It now expects sales in the range of $347 million to $363 million and non-GAAP adjusted EPS in the range of 91 cents to $1.00. This compares to the company’s previous outlook of sales in the range of $333 million to $357 million and EPS in the range of 88 cents to $1.00. ■
Photo courtesy Fox Factory
Fox Factory Second Quarter Results
(in $ millions)
2015
2014
Total Sales
$97.2
$86.4
12.5%
Gross Margin
30.7%
31.2%
-50 bps
SG&A %
11.3%
11.4%
-10 bps
Operating Income
$10.5
$11.7
-10.2%
Net Income
$6.8
$11.6
-41.6%
Diluted EPS
18¢
31¢
-41.9%
$78.8
$63.1
24.9%
Inventory @ Quarter-end
Change
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Liberty Interactive Corp. To Earn $105 Million Profit on Backcountry.com
Liberty Interactive Corp. sold Backcountry.com for $350 million or 11 times what the online retailer is expected to earn in operating income before depreciation and amortization. The CEO for its former parent company disclosed the sale Wednesday. “We completed an attractive sale of Backcountry.com at the end of the second quarter on June 30,” said Greg Maffei, president and CEO, Liberty Interactive Corp. “This resulted in a book gain of $105 million. Our total consideration in that transaction was approximately $350 million, which is an implied multiple of over 11 times the enterprise value versus the forecasted 2015 adjusted OIBDA. So we consider that a pretty attractive sale.” Greg Maffei, President and CEO, Liberty Interactive announced July 1 that it had sold LIiberty Interactive Corp. Backcountry.com to the private equity firm TSG Consumer Partners LLC but had not disclosed terms of the deal. In its second quarter filing with the Securities & Exchange Commission, Liberty Interactive goes on to disclose that Backcountry.com lost $4 million on sales of $105 million in the second quarter ended June 30, 2015, compared with a loss of $3 million on sales of $99 million in the second quarter of 2014. Losses reached $3 million on sales of $227 million in the six months ended June 30, 2015, compared with a loss of $4 million on sales of $211 million in the first half of 2014, according to the filing. The 11 times OIBDA figure quoted by Maffei implies Backcountry will earn OIBDA of nearly $35 million in the back half of the year. Backcountry.com makes most its profits in the fourth
quarter, when outdoor enthusiasts flock to its online site to purchase winter gear. Liberty Interactive had never before disclosed Backcountry.com’s quarterly financial results, but broke out the numbers in a regulatory filing Wednesday to show investors how the remaining businesses at its Digital Commerce companies faired in the quarter. Those businesses generated sales of $149 million in the second quarter, up seven percent from a year earlier. Liberty Interactive reported Bodybuilding.com, where sales grew $5 million, and CommerceHub, where sales grew $6 million, accounted for most of the growth. Its Digital Commerce segment also includes Evite and Right Start. The increase in Bodybuilding.com revenue was attributed primarily to increased order volume on slightly lower average ticket. Average order values declined in part due to the impact of the strong dollar on sales to overseas customers. Growth at CommerceHub, which manages drop ship programs for many consumer products manufacturers, was attributed primarily to an acquisition during the first quarter of 2015 and growth in active customers (vendors and suppliers); which increased the number of aggregate transactions processed through the CommerceHub platform. Adjusted OIBDA for the continuing Digital Commerce companies increased $2 million yearover-year in the second quarter. Adjusted OIBDA as a percentage of revenue was relatively flat, representing 12.1 percent of revenue in the second quarter of 2015, as compared to 11.5 percent of revenue in the second quarter of 2014. Operating loss for the continuing Digital Commerce companies was $3 million in the second quarter as compared to a loss of $9 million in the same period in 2014. ■
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A i s l e Ta l k
Accell North America established a standalone business unit to handle sales and marketing for its Haibike ePerformance bicycles in the U.S. Blue Ridge Mountain Sports Ltd. secured financing for inventory to stock its seven stores in Charlottesville, Virginia Beach and Blacksburg, Va; Knoxville, TN, Madison, WI and Princeton, NJ. Descente Ltd of Japan acquired control of leading Japanese sportswear maker Inov-8 from the private equity firm Livingbridge. Financial terms were not disclosed. ElliptiGO Inc., creator of the world’s first elliptical bicycle, hired Raphael Weishaupt as VP of Global Marketing. Gregory appointed Jim Boisd’Enghien as its Sales Director and opened a dedicated design center in Salt Lake City where all product development for North America will take place.
Photo courtesy Bogs
Ibex Outdoor Clothing LLC has secured a multi-million dollar credit package from First Niagara Commercial Finance Inc., which provides asset-based loans and working capital to help its customers expand and grow.
Bogs Footwear Brand
L.L.Bean Inc. plans to open its first Kansas City store in November at Town Center Crossing.
Q2 Sales Jump 18 Percent
Oru Kayak partnered with the outdoor gear rental firm GetOutfitted to launch the first national kayak rental program that delivers foldable kayaks to consumers’ doorsteps for a convenient, affordable experience outdoors.
Weyco Group Inc. reported sales of its Bogs footwear brand increased 18 percent in the second quarter ended June 30 to $5.2 million. The gains reflected a broadening of the brand’s product line beyond boots, including expansion into women and kids’ offerings. Bogs sales are reported under Weyco Group’s North American Wholesale segment, where sales and licensing revenues reached $48.1 million for the quarter, up 7.4 percent. The segment also includes the Stacy Adams and Nunn Bush brands where sales grew 12 percent and 9 percent, respectively, for the quarter. Florsheim’s wholesale sales declined 3 percent. Wholesale gross margins increased to 31.0 percent from 30.5 percent in last year’s second quarter mainly due to an increase in U.S. gross margins. Earnings from operations for the wholesale segment increased 26 percent to $2.2 million, primarily due to higher sales and gross margins. Wecyo’s net earnings, which also included retail and international operations, declined 7.6 percent to $2.04 million, or 19 cents a share. Sales grew 1.7 percent to $63.9 million. The overall profit decline reflected lower sales in the company’s U.S. stores, which are largely Florsheim, as well as lower operating earnings in Australia, resulting from its sluggish retail environment and lower earnings of recently opened retail stores. ■
Pelican International Inc., the Canadian manufacturer of kayaks and other recreational boats, appointed Marie-Christine Piedboeuf as President, effective September 1, 2015. Shimano Corp. beat internal revenue forecasts in the first half ended June 30 as the weak yen fueled better than expected sales at its Bicycle Components segment. Smith, the maker of eyewear, goggles and helmets, appointed Ben “Benny” Cruickshank as Sport Channel Communications Manager and Tim Weisser as West Coast Sales Manager for its Sports/Outdoor Lifestyle channel. The American Mountain Guides Association, which has seen enrollment in its training courses grow 43 percent from 2013 through 2015, named Alex Kosseff as its Executive Director. Utah State University will become the home of the nation’s first undergraduate degree in designing and constructing outdoor apparel and products. Vista Outdoor Inc. completed its $412.5 million acquisition of CamelBak Products Inc. August 3 and announced plans to sell unsecured notes with a face value of $350 million in a private placement to help pay for the transaction and for other general corporate purposes. Whistler Blackcomb Holdings Inc. reported visitation to North America’s largest mountain resort grew 24.2 percent in the fiscal third quarter ended June 30, helping offset the decline in skier traffic it saw in the prior two quarters.
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NSSRA Data Partnership with SportsOneSource Signals Shift in Snow Sports Industry Data Ahead Leadership at the National Ski and Snowboard Retailers Association’s (NSSRA) said an exclusive partnership announced August 4 with SportsOneSource, LLC to produce weekly snow sports sales data trend reporting is a game changer for the entire industry. Under the deal, NSSRA will work with SportsOneSource, LLC to urge its members to begin reporting their sales data using SportsOneSource’s proprietary and confidential SSI Data platform, which already generates weekly reports based on POS data from more than 15,000 retail doors that sell active lifestyle products. “We believe that SportsOneSource is well qualified to provide this service to our members,” said Wilbur Rice, Chairman of NSSRA Board of Directors and owner of Equipe Sport, which operates from four retail locations in Vermont. “SportScanInfo has provided timely sales data reporting on a weekly basis in many sports and outdoor-related product categories since 1998.” NSSRA members who participate in the program will provide weekly POS data to SOS, which will aggregate the data and report its findings on a weekly basis. The research will cover sales of equipment, clothing and essentials for alpine and crosscountry skiing and snowboarding as well as footwear and apparel for the broader outdoors market. Participating members will receive free access to the data via SSI’s secure website. Aggregating the data at the channel and region level protects the anonymity and confidentiality of each member’s data. A Win-Win For The Entire Industry “This is really the best thing to happen to our industry in a really long time,” said Teddy Schiavoni, NSSRA Board member and owner of Summit Ski & Snowboard, Framingham, MA. “To have this kind of data available so readily will help retailers make better, wiser decisions, but it will also really help
manufacturers when it comes to streamlining production and having the right products available in the marketplace. It’s a win-win for the ski industry as a whole.” At a meeting in January, NSSRA’s board of directors appointed Rice, Schiavoni and Sports Specialists Ltd. President Steve Rogers to a committee to develop a POS data research program, identify the best potential partner
and negotiate an agreement that would benefit all its members. NSSRA is encouraging its approximately 270 retailers, who operate 900 retail locations, to sign up for the program. Rice said Sports Specialists Ltd and Snowsports Merchandising Group - the industry’s two largest buying groups - are supporting the effort.
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“The more storefronts contributing their anonymous data, the stronger the data, which is a benefit to all members and for companies purchasing the research,” said Rice. “Retailers can often make the mistake of thinking that certain products are successfully selling while the reality may be different.” Rice said he’d like to see a strong majority of NSSRA’s members participating in the program heading into its annual meeting at the SIA Snow Show in January. SSISnowSports.com To Launch In The Fall The partnership between SportsOneSource and NSSRA is the first retailer-based partnership for SportsOneSource and its SSI Data platforms. SportsOneSource is launching its new SSI SnowSports data platform this fall to provide weekly sales trend reporting based on data feeds from a broad range of retailers, including specialty shops, chain specialty retailers, big box sporting goods stores and the biggest names in Internet sales. The new platform will initially provide access to online weekly trend reporting across categories, brands and products, and features the ability to track sales trends by color and technology. Weekly data is available within five days of each weekly close to enable retailers to access actionable data in season as it progresses. “The entire SportsOneSource team is excited about this partnership with NSSRA as we launch the new SSI SnowSports platform in September,” said James Hartford, CEO of The SportsOneSource Group. “The new platform is built on our new Hybrid
Tabbed Platform (HTP) technology that enables specialty retailers and vendors to move quickly across the data from footwear to apparel to essentials and hardgoods.” This is the second new research offering for NSSRA members this year. The Association launched its Compensation and Benefits Report in May. The Snow Sports Participation Report and Cost of Doing Business Survey have been exclusive to NSSRA member benefits for many years. For more information how to enroll in this program, please contact NSSRA President Larry Weindruch at [email protected], or phone 847.391.9825. Companies wishing information on purchasing this data or retailers looking to develop a reporting relationship should contact Stacy Gerths, Outdoor Client Solutions Specialist at The SportsOneSource Group, at [email protected] or call 303. 997.7302. The National Ski and Snowboard Retailers Association is a volunteer-led organization dedicated to growing snowsports participation and to support and educate specialty snow sports retailers. Since its founding in 1989, NSSRA has served as the voice of specialty retailers, representing their interests in issues that concern the specialty snowsports retail channel. NSSRA publishes a number of research reports for specialty snow sports retailers, including the biennial NSSRA Cost of Doing Business Survey, a business-performance benchmarking tool; the annual Sports Participation in Snow Sports report; and the annual Combined Indemnified Bindings List. ■
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Safilo Group's NYC Showroom
Safilo Group S.p.A. North American Sales Slow Significantly Safilo Group S.p.A. reported its sales growth in North America, where it is building a Global Sports and Outdoor Lifestyle segment around its Smith brand, slowed significantly in currency-neutral terms in the second quarter. The Italian company reported North American revenues grew 23.5 percent to €137.6 million ($152 mm) in the second quarter ended June 30, an increase of just 0.8 percent in currency-neutral (c-n) terms. That compares with growth of 25.1 percent (2.9 percent c-n) in the first quarter. Sales at the 143-store Solstice retail chain grew 17.1 percent (-5.3 percent c-n) to €27.2 million ($30 mm), despite a net increase of 13 stores from a year earlier. Wholesale revenues grew 25.2 percent (2.4 percent c-n) on top of strong but undisclosed growth a year earlier. Safilo Wholesale revenues include sales of more sunglass, prescription frames and sports goggles under more than two dozen owned and licensed brands, made to departments stores, fashion boutiques, sporting goods and other retailers. Globally, Safilo earned 66 percent of its revenue in the quarter, or about $266 million, from sunglasses, up from nearly 61 percent from the second quarter of 2014. The company did not break out figures for Sports products sales, which accounted for 4.1 percent, or €12.7 million in revenue in the year ago quarter. Safilo has been shifting key Smith design and marketing managers to Portland, OR, to staff a new global design studio for sports and outdoor eyewear since last fall when it began folding Smith into its North American subsidiary. Safilo said the consolidation would enable it to redirect millions of dollars annually toward growing the Smith brand on a global scale and building a Global Sports and Outdoor lifestyle segment. Safilo has since consolidated its distribution center in Parsippany, NJ into its Denver, CO, distribution hub. The company is also scouting locations for a new U.S. headquarters closer to its showroom in New York City. In addition to Smith, Safilo owns the Carrera, Polaroid, Safilo and Oxydo brands. It earns the bulk of its sales providing sunglasses, eyewear and frames under licensed fashion brands such as Dior, Fendi and Gucci, primarily to department stores and fashion boutiques. ■
Dorel Sports Organic Sales Fell From Cannondale Delays Dorel Industries Inc. said the European bike dealers’ decision to stock up on Cannondale bikes in the first quarter, ahead of an April price increase, cut into second quarter sales at its Dorel Sports segment. Sales at Dorel Sport decreased by $35.2 million, or 12.3 percent, to $251.1 million in the second quarter and are off 8.8 percent for the first half of the year. Organic sales at the segment, declined by approximately 5 percent in the quarter and 2 percent year-todate in currency-neutral terms compared to the year earlier periods. The segment’s Cycling Sports Group sells Cannondale and other premium bikes to independent bicycle dealers worldwide, while its Pacific Cycle division sells low-end and private label bikes and wheeled toys to mass retailers such as Walmart and Costco. In Brazil, the bike manufacturer and distributor Caloi generated double-digit organic revenue growth in currency-neutral terms as sales rebounded from last year’s soft second quarter when the 2014 FIFA World Cup disrupted operations for many Brazilian retailers. Sales also increased organically in Japan and the U.K. That growth was offset by a decline in organic sales in Europe, where Cannondale bicycle dealers had loaded up on model 2015 bikes in the first quarter ahead of price increases implemented in April and in anticipation of the launch of new model-year 2016 products in the third quarter. This summer marked the first opportunity for many bike companies to adjust their Euro prices to reflect the currency’s decline against the U.S. dollar, which they use to pay Asian suppliers. Sales also declined in North America due to wet weather in May and mass retailers drawing down sporting goods inventory, according to Dorel Industries. DII said adjusted operating profit at Dorel Sports, excluding restructuring and other costs, decreased by $7.7 million, or 42.1 percent to $10.7 million, compared to $18.4 million in the year earlier quarter. For the six months, adjusted operating profit was down $13.3 million, or 37.6 percent to $22.0 million, compared to $35.3 million in 2014. Dorel said the appreciation of the U.S. dollar cost Dorel Sports $7 million in operating profit during the second quarter and $14 million during the first six months. Dorel Sports new product launches are expected to deliver better results in the second half versus last year, driven by the Cycling Sports Group, which focuses on the IBD channel, and Pacific Cycle, which serve the mass channel. The company forecasted, “Most of the benefit will be in the fourth quarter due to the seasonality of our business and the positive impact of the Christmas shopping season.” ■
13 THE B.O.S.S. REPORT | AUGUST 10, 2015 © SportsOneSource, LLC
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