OCTOBER 3, 2011
The Weekly Digital Magazine for the Sporting Goods Industry
ce Releva n
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ISSUE 1140 OCTOBER 3, 2011
Group Publisher Bill Garrels bgarrels@sportsonesource.com 303.997.7302
The Weekly Digital Magazine for the Sporting Goods Industry Editor In Chief James Hartford (704.987.3450 x104) james@sportsonesource.com
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Senior Business Editor Thomas J. Ryan (917.375.4699) tryan@sportsonesource.com
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Creative Director Teresa Hartford Graphic Designer Camila Amortegui Advertising Sales Director Casey Vandenoever (303.997.7302) caseyv@sportsonesource.com Advertising Sales Account Manager Katie O’Donohue (704.987.3450 x110) katieo@sportsonesource.com Circulation & Subscriptions subs@sportsonesource.com Technology Chief Information Officer, Mark Fine VP Research & Development, Gerry Axelrod Manager Database Operations, Cathy Badalamenti
SportsOneSource Publications SGB TEAM Business Sportsman’s Business The B.O.S.S. Report Sports Executive Weekly SGB Update Footwear Business Update Outdoor Business Update Sportsman’s Business Update Team Business Update SGB Weekly
NEWS
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FEATURES
SportsOneSource Research SportScanInfo OIA VantagePoint
OLYMPIA SPORTS Plots Mid-Atlantic Expansion WOLVERINE WORLD WIDE Lifts FY Outlook on Solid Fiscal Third Quarter Results INTERBIKE Attendance Up NSSF STUDY: Hunting Support Not Flagging MOVERS AND SHAKERS
6 SPORT CHALET Fights Back In A Tough Economy 10 REEBOK Settles U.S. Charges Over Toning Shoe Claims
DEPARTMENTS
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ON THE COVER Hollywood actress Eva Mendes earlier this year became the new ambassador of Reebok EasyTone. Other endorsers have been supermodel Helena Christensen and British actress Kelly Brook. Copyright 2011 SportsOneSource, LLC. All rights reserved. The opinions expressed by writers & contributors to SGB WEEKLY are not necessarily those of the editors or publishers. SGB WEEKLY is not responsible for unsolicited manuscripts, photographs or artwork. Articles appearing in SGB WEEKLY may not be reproduced in whole or in part without the express permission of the publisher. SGB WEEKLY is published weekly by SportsOneSource, LLC, 2151 Hawkins Street, Suite 200, Charlotte, NC 28203; 704.987.3450. Send address changes to SGB WEEKLY, 2151 HAWKINS STREET, SUITE 200, CHARLOTTE, NC 28203; 704.987.3450.
WEEK 1140 | SGBweekly.com
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NEWS
PLOTS MID-ATLANTIC EXPANSION Olympia Sports, a regional sporting goods retailer with 193 stores throughout the Northeast, opened its first store south of the Mason Dixon line with more coming soon. The Grand Opening of its first store in Warrenton, VA was held Sept. 29 and Olympia indicated that it expects to open six or more stores in the mid-Atlantic region by the end of 2012. The retailer also said 11 new stores will open throughout the Northeast by Thanksgiving. “Olympia Sports has developed a very strong loyal customer base in the Northeast region since opening its first location in South Portland, ME, in 1975,” said Dick Coffey, president of Olympia Sports, headquartered in Westbrook, ME. “With our great selection of brandname athletic footwear, apparel and sporting goods equipment, we
deliver quality product at affordable prices.” Bob Boland, director of stores and head of Olympia's real estate department, added that the mid-Atlantic states of Virginia and Maryland are a natural progression from its base of strength in New England, New York, and Pennsylvania. Boland noted, "While we will continue to expand in our current footprint, our studies have shown a real opportunity for expansion throughout the mid-Atlantic, and we plan to aggressively pursue those opportunities." Boland said that the company targets 4,000 to 6,000 square foot strip center locations with strong anchor tenants in small to mid-sized markets.
WOLVERINE WORLD WIDE LIFTS FY OUTLOOK ON SOLID FISCAL THIRD QUARTER RESULTS The star for Wolverine World Wide continues to be its Merrell Barefoot collection, which only built momentum in the fiscal third quarter as the brand gears up for the introduction of a much wider selection of offerings in spring 2012. Strength across a number of brands in the company’s Outdoor and Lifestyle Groups also helped WWW deliver better-than-expected results in the period. Revenues in the fiscal third quarter rose 12.9 percent to $361.6 million. Foreign exchange rate fluctuations contributed $8.3 million to reported revenue in the quarter. Earnings jumped 18.4 percent to $40.4 million, or 82 cents a share, topping Wall Street's consensus estimate of 75 cents a share. With the quarter marking its fifth consecutive quarter of record revenue and seventh consecutive quarter of record EPS, WWW boosted its full-year earnings and revenue outlook. By segment, revenues in the Outdoor Group climbed 19.9 percent to $145.4 million in Q3. All brands in the company’s most profitable operating group scored double-digit increases during the quarter. Merrell led the Outdoor Group with an "outstanding global performance, particularly in the U.S. and Europe," and led by Merrell's new Barefoot collection, said Blake Krueger, Wolverine World Wide's chairman, CEO and president, on a conference call with analysts. Merrell Barefoot, launched in February, continues to be the most successful new product introduction in Wolverine's history. Said Krueger, "Year-to-date global shipments have exceeded our expectations and retailer and consumer interest continues to build." Krueger also noted that Merrell had success in the quarter with the new Origins collection, which features heritage-inspired product harking back to the brand's start 30 years ago. Chaco turned in "exceptional" results as it continues to expand distribution in the U.S., especially in key specialty footwear retailers. The early response to Chaco's closed toe program "has also been very strong," said Krueger. 4
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Patagonia footwear also performed "very well" in Q3, led by tripledigit growth in hiking and continued momentum in casual boots and shoes. The Heritage Group's revenues grew 6.8 percent to $128.0 million, led by strong growth in Caterpillar footwear and the Wolverine brand. Those gains offset lower sales in the niche Bates and HyTest work shoe businesses. Harley-Davidson footwear also declined. The Lifestyle Group's sales jumped 21.6 percent to $55.5 million with all its brands - Hush Puppies, Sebago, Soft Style and Cushe – seeing strong double-digit gains. Sebago's strong momentum was also driven by the Artisan collection and other collaborations that are gaining shelf space at upscale retailers around the world. Cushe, the action sports inspired brand acquired last year, continued its tripledigit pace growth in Q3. In its Other Business Units segment, revenues slid 5.2 percent to $28.9 million as the lower-margin Wolverine leathers business experienced a revenue decline in the quarter due to reduced customer demand for pigskin leather. Wolverine Retail saw midsingle-digit comp store gains and continued strong double-digit organic growth from its e-commerce business. Sales-per-square-foot in its brick and mortar fleet were up almost 12 percent in the quarter "and we believe that our entire consumer direct business is poised for an outstanding holiday shopping season," said Krueger. Based on the strength in Q3 and a solid Q4 outlook, Wolverine World Wide raised its full-year revenue estimate to a range of $1.40 billion to $1.43 billion, representing growth of 12.1 percent to 14.5 percent, and lifted its estimate for EPS to a range of $2.46 to $2.52, representing growth of 13.4 percent to 16.1 percent. Gross margins are now expected to be flat to up slightly. Wolverine World Wide expects to spend about 6 cents a share in Q4 for marketing investments, particularly to support the expanded spring 2012 Merrell Barefoot collection.
MOVERS & SHAKERS Mike Egeck, the former president of The North Face and VF's
INTERBIKE ATTENDANCE UP
Retailers sent fewer buyers and employees to Interbike this year, according to preliminary figures released by the trade show last week. Interbike, which is owned by Nielsen Expositions, reported the show drew more than 23,000 total attendees to see 1,200 exhibiting cyclingrelated brands at the Sands Expo and Convention Center the week of September 12. Nearly 4,000 stores sent more than 11,000 buyers, including 1,300 from overseas, Interbike said. Interbike 2010, by contrast, drew 24,000, including 11,300 buyers from 4,000 stores, according to a press release issued by Interbike last year. The dip contrasted with attendance at Nielsen’s Outdoor Retailer Summer Market, which set attendance records this August in Salt Lake City, UT. Leased booth space, the number of brands exhibiting, and the number of retail employees attending all grew at the show. Interbike 2012 returns to Las Vegas September 19-21, 2012 at the at the Sands Expo and Convention Center.
NSSF STUDY: HUNTING SUPPORT NOT FLAGGING
A new study commissioned by the National Shooting Sports Foundation (NSSF) shows that a strong majority of Americans continue to support hunting. According to a news release from the NSSF, 74 percent of respondents to a recent survey said they approved of hunting, a level of support that has not varied by more than a few percentage points since 1995. The telephone survey of American adults 18 and older was conducted in early September. According to the NSSF press release, the new study went a step further than previous research, revealing strong support for the "right to hunt." The release stated that no matter what their opinion about hunting, Americans stand firmly behind a person's right to hunt, with 94 percent agreeing it is "o.k. for other people to hunt if they do so legally and in accordance with hunting laws and regulations." Only 4 percent of respondents wanted to strip citizens of their right to hunt. "It's gratifying to see that strong public support for our great tradition of hunting is unwavering," said NSSF President and CEO Steve Sanetti in the release.
Outdoor Coalition, has been named CEO of Hurley International, LLC. His most recent assignment prior to coming to Hurley was as President of True Religion Brand Jeans. Easton Technical Products hired Shane Michelli as president effective mid-October. Kynetic, the parent of Fanatics and Rue La La, has tapped Michael Conn as its CFO, reuniting Conn with former GSI Commerce CEO Michael Rubin. Puma has signed a long term endorsement agreement with Spanish international midfielder Cesc Fabregas. He had been with Nike. Smith & Wesson Holding Corp. has appointed James Debney as president and CEO and a member of the board of directors, effective immediately. Debney previously served as VP of Smith & Wesson Holding Corporation and president of the company's firearm division. Teva, a division of Deckers Outdoor Corp., appointed Ryan Erickson as their domestic sales vice president. Erickson has 19 years of footwear industry experience, primarily in sales management, having held director of sales positions at Rockport and Canadian sales manager positions at Timberland. Stuart Redsun, SVP for Sony Electronics, Inc., is set to join Under Armour in one of two lead marketing roles effective October 10. Cabela's, Inc. has hired Scott K. Williams, formerly president of Fanatics, Inc., as EVP and chief marketing and e-commerce officer. Cherokee, Inc. appointed Sally Mueller as the company's chief brand officer and Jamie Curtis as its VP of marketing. Mueller was formerly at Target Corp. while Curtis had worked for Coach. Michael McBreen, previously president of the global operations group at Wolverine World Wide, Inc., has joined Collective Brands, Inc. as its new divisional SVP of Payless product development. BH North America has added Jim McGeehan as national sales manager for the Bladez Fitness brand. Sport Obermeyer has added the Southeast territory under veteran sales representative Greg Morrison, who has worked as a sales rep for the Mid-Atlantic region.
SPORT CHALET
FIGHTS BACK IN A TOUGH ECONOMY By Thomas J. Ryan
Having weathered a firestorm in its core Southwest markets, Sport Chalet has stabilized its business, is preparing for growth mode and steering its way back to profitability. But it hasn’t been easy. In a recent interview with Sports Executive Weekly, Sport Chalet Chairman and CEO Craig Levra said the company’s stores are located in states that were clearly among those hit earliest and hardest by the economic downturn. The housing crisis in particular continues to weigh on those states. As of May 31, according to an article in the Los Angeles Times, Arizona’s homes had a 50.9 percent negative equity share; California, a 31.8 percent negative equity share; and Nevada, a 65.4 percent negative equity share. “Looking at the economic indicators, we began to experience pressure back in 2007,” said Levra. “We took aggressive action by examining our practices, assumptions, models and costs and modifying our business model to make our company more efficient. Because we have been in this economic climate for quite some time, we understand how to adjust to these challenging conditions and our customers have resolved to adapt as well.” As a result of those efforts, Sport Chalet has now marked nine straight quarters of positive EBITDA improvement, each quarter sequentially better than the comparable quarter in the prior year despite ongoing economic challenges. The specialty chain retailer’s working capital position has improved by $20.2 million over the past nine quarters. Sport Chalet also negotiated last October a new four-year agreement with Bank of America to provide more breathing room under its covenants. The loan balance at July 3 was $44.5 million, 11.7 percent less than the same time last year. “We are focused on implementing our strategy to return to consistent profitability,” explained Levra. “We also have to work on 6
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leveraging our balance sheet correctly and that means continuing to pay down our bank debt, which we are doing, and then use that availability for new store growth.” While cutting costs and improving its liquidity remain key drivers to progress, sales are also on the mend. Comps slid 0.4 percent in its latest fiscal year ended April 3, following declines of 8.3 percent in fiscal 2010, 12.4 percent in fiscal 2009 and 4.5 percent in fiscal 2008. In the company’s first quarter ended July 3, comps were up 2.3 percent. Gross margins have also been steadily improving on reduced inventory counts. Levra asserts that part of the top-line progress reflects the fruits of investments in technology and marketing to understand customer and merchandise behavior. “We are using more data and more science about customer behavior, as well as article behavior, than anybody in retail today,” said Levra. “For a company our size, nobody is putting the effort into really understanding that behavior and across multiple channels as we are, and taking action on it.” Part of it also reflects efforts over the last year to reinforce its commitment to be first-to-market with performance, technology and lifestyle merchandise by expanding its base of specialty brands. “As many retailers have rushed to offer more opening pricepoint products or lower perceived value products, we have gone exactly in the opposite direction and it is paying off,” explained Levra. Some of the newer, successful introductions in their respective categories have included: Santa Cruz bikes, True Fitness equipment, Vibram FiveFingers footwear, Grivel climbing gear, Nemo tents, Zoot triathlon gear, Matrix Fitness equipment, Robert August stand-up paddleboards, Kuhl mountain apparel, Apex ski boots, and GoPro video cameras.
Levra said Sport Chalet often obtains exclusive product launches or new product Beta tests to cement its reputation among serious sports enthusiasts as the place to find the “very best” product. He also believes they are much less price-driven versus competitors – including carrying no private label product – and this positioning remains a critical differentiator in the market. “We really consider ourselves, and our customers perceive us, as a true high-end specialty retailer,” said Levra. “We support specialty brands that design and manufacture innovative products. As a result, we do not sell private label, special make-up, or close-out merchandise. Some national chains tout their merchandise mix to consist of 20 percent private label or higher. There is a lot of sameness in the world today, and you continually read about companies wanting to innovate and the innovators are considered leaders.” Another key differentiator continues to be Sport Chalet’s staff of “Experts” providing technical expertise compared to the comparatively sparse staffs of competitors. Investments around service training were increased in the last year to further that advantage. The chain also stands out by providing over 50 services for the sports enthusiast. “We teach what we sell because we want our customers to enjoy and excel in their chosen sports,” said Levra. “We are the
number one Scuba retailer in the United States with PADI 5 Star IDC certified Scuba shops and 33 on-site training pools. We offer ski and snowboard training, mountaineering and climbing instruction and rental gear in every sport so our customers can try new sports before they buy. Additionally, we provide racquet stringing and Barnett Bicycle certified mechanics in every bike shop. We are continuing to create a real point of differentiation between ourselves and many of our competitors.” Sport Chalet is also ramping up their in-store experience with concept shops. One success has been a test of running concept shops in two stores. Said Levra, “In these shops we use sophisticated technology to monitor, measure, and recommend the correct footwear for every type of runner. It has been so successful that we are adding fifteen additional shops this year.” It has also had early success with creating two triathlon-focused shops in its La Canada, CA, and Mission Valley, CA locations that the company has found particularly cater to triathletes. Sport Chalet is also aggressively seeking out ways to capitalize on new sports. For instance, while there are fewer than 300,000 stand-up paddle boarders in the U.S., the sport is growing and the chain is adding two new brands and a much broader assortment in its key water sports stores. WEEK 1140 | SGBweekly.com
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Tapping a wealth of customer and merchandise data has helped in bringing the right mix and message to each individual store. One path to uncovering customer insights is through its customer relationship management program, Action Pass. The company ended its year with over 1.46 million Action Pass members, representing a 30 percent increase over last year. Forty-nine percent of all sales in dollars came from Action Pass members. At the same time, the Sport Chalet credit card, launched in December 2008, now has over 23,400 cardholders. Levra said one notable side-benefit from its Action Pass program has been more pointed marketing efforts. “Thanks to an ongoing commitment to extract every last bit of data on how our customers behave, how our merchandise and services are sold by store, and what factors determine each store’s ability to achieve success, we are able to set assortments that are spot-on by store, talk to customers in ways that others cannot, and present the latest in technical product the day it arrives” explained Levra. “We are not beholden to any outside agency, media company, or printing schedule. We advertise the right way and spend one third the amount per store that others do.” At the same time, as a result of earlier aggressive IT investments, Sport Chalet is also able to understand how each item performs in every store, by size and by color and can study their customer’s online behavior and how they use the Sport Chalet website to learn more about the products and services offered in stores as well as their online purchasing behavior. All of the data collection points drive decisions related to marketing, employee staffing and training, and store location planning. It’s particularly beneficial in its Craig Levra, Sport Chalet Chairman and CEO ongoing effort to micromerchandise each store based on the local customer base. In many cases, a radically different mix may appear in one store versus another based on which categories are trending up or down at each location. “As we continue to micro-merchandise each store to best reflect the local consumers’ needs and preferences with our expanding assortment of specialty brands, our goal is to leverage each store’s strengths by expanding and clarifying the presentation of merchandise categories in which each particular store excels by adjusting assortment plans, inventory levels and space allocation,” said Levra. “We don’t have every category and every brand in every store; instead we have the right categories and the right brands in each store.” Online has particularly picked up momentum in recent years, with online sales last year running ahead 110 percent and were up 66 percent in the first quarter. “While other, much larger chains continue to rely on third-party suppliers to run their online business, we took a different approach 8
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during the worst of the downturn and created our own website in order to make sure we capitalized on our brand strength,” said Levra. Using a shared inventory platform, all 55 stores, plus its distribution center, fulfill orders and ship merchandise to customers. Online customers also have the ability to check inventory online before driving to a store to buy. They can also reach in-store “experts” with questions. “Well over 50 percent of our online business comes from outside the four states in which our stores are located, and we feel we have not even begun to scratch the surface of this business,” said Levra. Another successful area has been its Team Sales Division, which grew revenues by 15 percent in the last fiscal year at a time of dramatic school budget cutbacks. The business continues to be helped by the integration of team sales and retail. The company has recognized that $1 spent on the team side translates to $2 spent at retail. Levra believes the team business benefits from the infrastructure the chain has built to work with schools. Said Levra, “No other large specialty retailer enjoys what we have – twenty road salespeople calling on schools, teams and leagues throughout our four states; in-house embellishment and production capabilities and a customer list that includes the nation’s top universities and high schools such as San Diego State University, Bishop Gorman H.S., and Harvard-Westlake.” In the near term, Levra said the company’s focus will remain on improving existing operations, further deleveraging its balance sheet, being first-to-market with performance, technology and lifestyle merchandise and improving bottom-line financial performance. Sport Chalet is not planning any stores in the current fiscal year but is laying the groundwork to expand again. Said Levra, “We have multiple five-year scenarios that have been mapped out. In all cases, we are able to reduce our dependence on our bank line, while investing capital for infrastructure improvements as well as growth. As we continue to improve, we believe we have enough capital to begin to grow our store base again when we determine the time is right.” ■
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WEEK 1140 | SGBweekly.com ©2011 Timex Group USA, Inc. TIMEX, TRIATHLON, INDIGLO, RUN TRAINER and HOW FAR WILL YOU TAKE IT? are trademarks of Timex Group B.V. and its subsidiaries. IRONMAN and M-DOT are registered trademarks of World Triathlon Corporation. Used here by permission.
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REEBOK SETTLES U.S. CHARGES OVER TONING SHOE CLAIMS By Thomas J. Ryan
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hile defending its popular EasyTone and RunTone shoes, Reebok International, Ltd. agreed last week to refund $25 million to consumers who bought its toning shoes as part of a settlement with the Federal Trade Commission (FTC) over deceptive advertising. The FTC found that the advertising claims that the toning shoes toned and strengthened muscles in the legs and buttocks were unsubstantiated. Reebok said that it chose to settle only to avoid a drawn-out legal battle. A short statement from the company read, "The (FTC) allegations suggested that the testing we conducted did not substantiate certain claims used in the advertising of our EasyTone line of products. In order to avoid a protracted legal battle, Reebok has chosen to settle with the FTC. Settling does not mean we agree with the FTC's allegations; we do not." Reebok added, "We stand behind our EasyTone technology - the first shoe in the toning category that was inspired by balance-ball training. We have received overwhelmingly enthusiastic feedback from thousands of EasyTone customers, and we remain committed to the further development of our EasyTone line of products. Our customers are our number one priority, and we will continue to deliver products that they trust and love." But the settlement - believed to have been the largest in recent memory for a false advertising case - was seen as a crackdown against all advertisers making dubious claims across categories. Normally advertisers agree to stop making the claims in such cases, but forcing a company to make restitutions to consumers is rare. “The FTC wants national advertisers to understand that they must exercise some responsibility and ensure that their claims for fitness gear are supported by sound science,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection, in a statement. In addition to the $25 million payment, Reebok under the settlement is barred from: • making claims that toning shoes and other toning apparel are effective in strengthening muscles, or that using the footwear will result in a specific percentage or amount of muscle toning or strengthening, unless the claims are true and backed by scientific evidence; • making any health or fitness-related efficacy claims for toning shoes and other toning apparel unless the claims are true and backed by scientific evidence; and • misrepresenting any tests, studies, or research results regarding toning shoes and other toning apparel. The Commission vote was 5-0. The proposed consent decree is subject to court approval. A consolidated class-action lawsuit filed against Reebok in U.S. District Court in Boston is being settled alongside the FTC complaint. Three other proposed class-action cases in California and Arkansas are on hold pending a judge’s approval of the Massachusetts settlement. At a news conference, Vladeck said, "We want to get cash back in the hands of consumers as quickly as we can, but this process will take some time."
Vladeck praised Reebok for its cooperation in the matter. He noted that Reebok pulled the advertising detailed in the complaint "sometime in the middle of our investigation." The shoes became available in early 2009, and the ads ran during 2009 into 2010, according to the FTC. Reebok also stopped manufacturing boxes and promotional materials with the “deceptive” claims, he added. Toning became a fast growing footwear category when Skechers launched its Shape-Ups line in 2008 after languishing as a small category offered by MBT. Reebok and New Balance created their versions of toning, all claiming that specially shaped soles create mild instability to force muscles to work harder. Reebok advertisements said the shoes strengthened hamstrings and calves by up to 11 percent more than regular sneakers, and toned buttocks up to 28 percent more, the FTC said. One ad tagline read, “Nice booty. Great sole.” Mr. Vladeck said the evidence supporting Reebok's marketing claims was "wholly insufficient," though he declined to describe the nature of the evidence. The refunds also will apply to Reebok’s toning apparel, which the company claimed would tone body parts by creating muscle resistance in certain movements. Reebok apparently based its claims on a 2008 study at the University of Delaware it commissioned in which five women wore EasyTone shoes, regular shoes or no shoes. Electrodes recorded their muscle activity as they walked on a treadmill for five minutes. It is not known if Reebok provided additional research to the FTC. Last year, The American Council on Exercise recruited a dozen young women, monitored their muscle and exercise response to WEEK 1140 | SGBweekly.com
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toning shoes and concluded that they did nothing more for strength or tone than regular running shoes. Reebok as well as Skechers and New Balance all soon faced lawsuits claiming false advertising or injuries caused by the shoes. But industry sources don't expect much of an impact from the FTC settlement on the toning category in part because the category has already been facing widespread markdown pressures caused by over-production issues for the past year. Matt Powell, senior retail analyst for The SportsOneSource Group, estimates that toning shoes growth peaked in 2010 at $1.1 billion sales, up from only $50 million in 2008. But revenues are down 40 percent this year, according to retail pointof-sale data compiled by SportsScanInfo, in large part because Skechers vastly overproduced its toning shoes. That forced down overall prices and the dollar volume of sales but Powell said the number of pairs of shoes sold slipped only 7 percent. Powell said this shows that consumers are still buying the product, albeit at a lower price. The EasyTone and RunTone shoes were selling for $80 to $100 at their peak. Powell also explored customer comments on popular online shoe store e-commerce sites and found that while shoppers did not particularly support the musclestrengthening claims, there was still support for toning product. "Consumers still love toning shoes," said Powell. "Most of the comments on e-commerce sites are positive. Comfort and pain relief are the most common reasons cited. Few mention weight loss and muscle tone. The larger issue for toning is the glut of inventory which we still have not worked through." Powell also said Reebok's sales of toning products covered the settlement costs. On its first-quarter 2010 conference call at the height of the trend in May 2010, Herbert Hainer, CEO of Adidas Group, which owns the Reebok brand, said Reebok was on track to sell at least 5 million pairs of toning footwear in the U.S. alone and forecasted as many as 10 million pairs worldwide. SportScanInfo data indicates that at least 4 million pair were eventually sold at U.S. retail. Finally, Powell does not think that Reebok would incur serious damage to the brand. 12
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"They have established themselves as a legitimate performance brand", said Powell. Nonetheless, Powell feels the one repercussion from the FTC's ruling is that touted health claims going forward will likely be facing more scrutiny, whether from makers of footwear, fitness equipment or other categories. "I think it says that if you are going to make claims about your product, you better be able to back them up. While Reebok had studies that showed results, they must not have been able to convince the FTC", said Powell. The FTC's Vladeck declined to indicate whether they are investigating other footwear makers that have made similar claims and are also facing class-action lawsuits. Skechers declined comment but indicated in its second quarter 10-Q regulatory filing with the SEC in August that they had been responding to requests for information regarding its Shape-ups claims and advertising from regulatory and quasiregulatory agencies in several countries throughout the world and are cooperating with such requests. Skechers added, "While we believe that our claims and advertising are supported by tests, medical opinions and other relevant data and we have been successful in defending our claims and advertising in several different countries, in light of these regulatory requests, we frequently review and update our claims and advertising. It is too early to predict the outcome of the ongoing inquiries and whether such an outcome will have a material effect on our advertising, promotional claims, business, results of operations or financial position." Regarding restitution for Reebok toning shoe buyers, it is unclear whether consumers will be reimbursed for all or a portion of the purchase price. The FTC must first determine how many customers want their money back. At that point, the agency will be in a better position to divide the money among consumers. The agency also has yet to determine what limits to place on the purchase dates. A microsite - www.ftc.gov/reebok - was set up to provide consumers with the basic facts about the Reebok settlement and directs them to apply for a refund if they are eligible. ■
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CALENDAR
For full year calendar go to sportsonesource.com/events
JANUARY
4-6
OIA Rendezvous Portland, OR
10-12 ATA Show Columbus, OH
The Retail Summit Dallas, TX
12-14 Surf Expo Orlando, FL
6-7
NOVEMBER 1-4
NASGW Annual Meeting & Expo Reno, NV
2-4
TAG Fall/Winter Show Kansas City, MO
3-4
NBS Fall Market Mobile, AL
12-14
ADA Fall Buying Show Kansas City, MO
20-22
Sports, Inc. Athletic Show Las Vegas, NV
17-20 SHOT Show Las Vegas, NV 18
Outdoor Retailer Demo Solitude, UT
19-22 25-28
Outdoor Retailer Winter Market Salt Lake City, UT
26-29
SIA Snow Show Denver, CO
PGA Merchandise Show Orlando, FL
29-2/1 ISPO Munich 2012 Munich, Germany
DECEMBER 5-7
MRA December Market Lansing, MI
30-31 SIA On-Snow Demo/Free Ride Fest Winter Park Resort, CO FEBRUARY 1-2
NBS Spring Semi-Annual Market Fort Worth, Texas
TRADE ASSOCIATIONS | BUYING GROUPS
OCTOBER
Athletic Dealers of America 1395 Highland Avenue Melbourne, FL 32935 t 321.254.0091 f 321.242.7419 athleticdealersofamerica.com National Sporting Goods Association 1601 Feehanville Dr. / Suite 300 Mount Prospect, IL 60056 t 847.296.6742 f 847.391.9827 nsga.org Nation’s Best Sports 4216 Hahn Blvd. Ft. Worth, TX 76117 t 817.788.0034 f 817.788.8542 nationsbestsports.com Outdoor Industry Association 4909 Pearl East Circle / Suite 200 Boulder, CO 80301 t 303.444.3353 f 303.444.3284 outdoorindustry.org SGMA 8505 Fenton Street Silver Spring, MD 20910 t 301.495.6321 f 301.495.6322 sgma.com SnowSports Industries America 8377-B Greensboro Drive McLean, VA 22102 t 703.556.9020 f 703.821.8276 snowsports.org Sports, Inc. 333 2nd Avenue North Lewistown, MT 59457 t 406.538.3496 f 406.538.2801 sportsinc.com Sports Specialists Ltd. 590 Fishers Station Dr. / Suite 110 Victor, NY 14564 t 585.742.1010 f 585.742.2645 sportsspecialistsltd.com Team Athletic Goods 629 Cepi Drive Chesterfield, MO 63005 t 636.530.3710 f 636.530.3711 tag1.com World Wide Distributors 8211 South 194th Kent, WA 98032 t 253.872.8746 f 253.872.7603 wdi-wdi.com
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SGB WEEKLY AUGUST 29, 2011
Durability you can wear.
The Apparel Collection. Including new CORDURA® Naturalle™ fabrics. Styles, colors and textures designed from the skin, out. Get comfortable at cordura.com/apparel.
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