NOVEMBER 7, 2011
The Weekly Digital Magazine for the Sporting Goods Industry
Pictured: The Siesta New for spring. Featuring dynamic support in a stylish casual shoe. Available in 3 colors in both men and women’s styles.
Relevance www.spenco.com
A collection of casual footwear, insoles and accessories that are easy to merchandise and sell. A 45 year track record of products that keep people healthy and active. Great pricing. Terrific customer service. Sound relevant to your business? Then it's time to take a second look at Spenco.
Call 1-800-877-3626 to book your orders for 2012 now!
ISSUE 1145 NOVEMBER 7, 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 Senior Business Editor Thomas J. Ryan (917.375.4699) tryan@sportsonesource.com
Page
12
Contributing Editor Charlie Lunan Creative Director Teresa Hartford Graphic Designer Camila Amortegui 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 Jon Cardwell getting ready to climb in his Five Ten Blackwing's Photo courtesy of Five Ten 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 4 ADIDAS GROUP Ups Forecast as Q3 Beats Estimates 5 6 7 8 9
RUGER Q3 Profits Jump As Firearm Sales Surge ASICS CORP. Swings to Net Loss in Fiscal Second Quarter DOREL Bike Sales Fueled by Cannondale and Wal-Mart Lay-away Promotion BIG 5 Sees Third Quarter Earnings Fall on Weaker Comp Store Sales K-SWISS Falls Short of Earnings Growth Expectations SHIMANO, INC. Third Quarter Revenue Growth Accelerates But Profits Dip MOVERS AND SHAKERS GUARDS BEAT INMATES in 5th Annual Longest Yard Classic PUMA Unveils African Football Uniforms SPEEDO Revenues Inch Up Slightly in Third Quarter
FEATURE SportsOneSource Research SportScanInfo OIA VantagePoint SOS Research
SportsOneSource, LLC 2151 Hawkins Street • Suite 200 • Charlotte • NC • 28203 t. 704-987-3450 • f. 704-987-3455 www.SportsOneSource.com
10 BRAND OF THE BRAVE Adidas Group Acquires Five Ten 14 IMPLUS Sale to Trilantic Capital Partners Should Boost European Growth
24 JOB CLASSIFIEDS
DEPARTMENTS
ON THE COVER Gabriele Moroni Climbing the Route Coup d'Bamboo (a 9A Climb) in his Five Ten Dragons I Photo courtesy of Five Ten Copyright 2011 SportsOneSource, LLC. All rights reserved. The opinions expressed by writers and 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 1145 | SGBweekly.com
3
NEWS
ADIDAS GROUP UPS FORECAST AS Q3 BEATS ESTIMATES With heady growth in China, Russia and North America, Adidas Group reported better-than-expected third quarter results and raised their outlook for the fourth time this year. Management also said it expected earnings-per-share to increase 10 percent to 15 percent in 2012. "The traction we have as we turn our Route 2015 strategic vision into reality, increasing our speed, consistency and consumer focus, has enabled us to achieve record financial results," said Herbert Hainer, Adidas CEO, on a conference call with analysts. Net earnings in the third quarter rose 14.1 percent to €303 million ($429 mm), or €3.12 per diluted share. Overall revenues grew 8.0 percent to €3.74 billion ($5.30 bn). Currency movements again had a notable impact on sales in reported terms. Third quarter revenues grew 13 percent on a currency-neutral basis. Adidas brand overall revenues (wholesale and retail) jumped 14.9 percent currency-neutral to €2.79 billion ($3.96 bn) while Reebok brand revenues grew 2.2 percent currency-neutral to €564 million ($799 mm). In North America, currency-neutral sales jumped 12.7 percent to €855 million ($1.21 bn), driven by increases at all brands, with particular strength at Adidas as well as TaylorMade-Adidas Golf. Momentum at Adidas continued with sales rising 17 percent in the North America region, led by Adidas Sport Style business which jumped 58 percent. Reebok returned to growth in the quarter with sales increasing 4 percent following a 15 percent decline in the second quarter. TaylorMade Adidas Golf's revenues in the region expanded 24 percent. For the Adidas and Reebok Wholesale business combined on a global basis, currency-neutral sales increased 6.0 percent to €2.58 billion ($3.65 bn) with growth in all geographical areas.
RUGER Q3 PROFITS JUMP AS FIREARM SALES SURGE 4
SGB WEEKLY NOVEMBER 7, 2011
Currency-neutral Retail sales jumped 20.6 percent in the quarter to €757 million ($1.07 bn), driven by a 14 percent comparable store sales increase. In particular, Russia CIS drove the gains, with comps advancing 26 percent in the third quarter. From a brand and store concept perspective, growth was broad-based. Adidas and Reebok comps increased 14 percent each in the quarter. Similarly, comp store sales increased at double-digit rates in all store formats, with a 20 percent growth rate in the concept stores year-to-date. Revenues in its Other Businesses segment – TaylorMade-Adidas Golf, Rockport and Reebok-CCM Hockey – advanced 12.5 percent currency-neutral (C-N) in the quarter to €411 million. TaylorMadeAdidas Golf's revenues jumped 16.2 percent (C-N) to €244 million ($345 mm), Rockport's sales advanced 5.9 percent (C-N) to €72 million ($102 mm), and Reebok-CCM Hockey, saw a gain of 10.3 percent (C-N) to €70 million ($99 mm). With the stronger-than-expected performance in the quarter, Adidas Group now expects sales to increase at a rate approaching 12 percent on a currency-neutral basis in 2011, up from 10 percent previously. EPS is now projected to increase at a rate approaching 16 percent to a level around €3.15, up from a rate approaching 15 percent to between €3.10 and €3.12 previously. Looking to 2012, management indicated that sales are projected to increase at a mid- to high-single digit rate on a currency-neutral basis, based on the strong momentum of the Group’s brands well as the opportunities provided by the UEFA EURO 2012 and the London 2012 Olympic Games. Increases in input and labor costs as well as currency volatility are still expected to be headwinds for the development of Group profitability as in 2011. Nevertheless, due to operating leverage, EPS are forecasted to increase faster than sales, at a rate between 10 percent and 15 percent.
Sturm, Ruger, Inc. reported third quarter net sales increased 37.9 percent to $80.5 million, compared to $58.4 million in the prior year quarter. Company management indicated that 33 percent of sales were from new products compared to 21 percent of sales for the third quarter of 2010. Firearm sales grew 37.8 percent to $79.2 million, compared to $57.5 million. The balance of revenue was generated by the Castings business, which grew 44.9 percent for the period. Gross margins improved 440 basis points to 36.2 percent of sales from 31.8 percent of sales in the year-ago quarter. SG&A was 15.2 percent of sales, a 70 basis point improvement from the 15.9 percent of sales in Q3 last year. Net income jumped 77.7 percent to $10.7 million, or 56 cents per diluted share, from $6.0 million, or 31 cents per diluted share, in the prior-year period.
ASICS CORP. SWINGS TO NET LOSS IN FISCAL SECOND QUARTER Asics Corp. swung to a net loss in the fiscal second quarter ended September 30 due in part to sales declines in the Americas region and weaker earnings across regions outside Asia. The Japanese footwear giant posted a net loss of ¥68.0 million ($0.9 mm), or ¥0.35 yen per share, versus a net profit of ¥2.07 billion ($24 mm), or ¥10.9 yen per share, in Q2 last year. Operating income was down 40.6 percent to ¥2.61 billion ($34 mm) from ¥4.39 billion ($51 mm) in the year-ago period. Overall global revenues rose 2.8 percent to ¥58.57 billion ($753 million) in fiscal Q2 from ¥56.99 billion ($664 million) a year ago. Revenues in the domestic Japan business were up 3.3 percent to ¥23.06 billion ($297 mm) versus ¥22.31 billion ($260 mm) in the year-ago quarter. Operating income in the region jumped 131 percent to ¥1.26 billion ($16 mm) in the period. The Americas posted a 12.1 percent sales decrease in yen terms to ¥14.86 billion ($191 mm) in fiscal Q2 from ¥16.90 billion ($197 mm) in the year-ago period. In U.S. dollar terms, revenues were down 3.0 percent for the period. Operating profits in the region fell 80.7 percent to ¥238 million ($3.1 mm) versus ¥1.23 billion ($14 mm) in fiscal Q2 last year. In U.S. dollar terms, operating income fell 78.7 percent for the quarter and was down 9.9 percent for the first half. In Europe, fiscal second quarter revenues increased 9.4 percent to ¥13.34 billion ($172 mm) but operating income fell 66.2 percent to ¥510 million ($6.6 mm). Oceania revenues increased 5.8 percent to ¥2.41 billion ($31 mm) in Q2 and regional operating income declined 8.0 percent to ¥577 million ($7.4 mm). East Asia revenues increased 10.9 percent to ¥3.65 billion ($47 mm) for the period and operating profit grew 22.8 percent to ¥426 million ($5.5 mm). Looking ahead, Asics sees revenues reaching ¥250 billion in the year-ended March 31, 2012, representing a gain of 6.2 percent versus the prior fiscal year. Operating earnings are expected to decline 5.0 percent to ¥20.5 billion while net income is forecast to dip 0.4 percent to ¥11.0 billion.
DOREL BIKE SALES FUELED BY CANNONDALE AND WAL-MART LAYAWAY PROMOTION Dorel Industries, Inc. reported revenues increased 21.6 percent at its Recreational/Leisure segment in the third quarter ended September 30 as Cannondale sales to the independent bicycle dealer (IBD) channel continued to drive growth and Wal-Mart Stores, Inc. stocked up on bikes for its new lay-away promotion. Segment sales reached $209.8 million, up from $172.5 million in the third quarter ended September 30. Organic revenues increased 18 percent for the quarter and are up 13 percent year-to-date. The segment consists of the Cycling Sports group, which sells Cannondale and other premium bikes to the IBD channel; Pacific Cycle, which sell bikes to the mass merchandise and warehouse club channels; and the Apparel and Footwear Division (AFD), which provides cycling apparel and footwear under the Sugoi and Cannondale labels. Gross margin in the segment reached 22.4 percent, down 40 basis points from a year earlier, while operating profits slipped 50 basis points to 4.8 percent of revenue. The stronger U.S. dollar at the end of September shaved 100 basis points from the gross margin. Segment operating profits improved by $900,000, or 9.8 percent to $10 million, but would have improved 35 percent if not for a $2.5 million decline in revenues at the AFD division. The division took a write-down during the quarter on excess inventory as well as a one-time charge of $800,000 related to its decision to outsource the manufacture of custom club and team kits. "Our Recreational/Leisure segment continues to perform well and we see no change in this positive trend through year-end,” said Dorel President and CEO Martin Schwartz. “Cannondale has had an excellent year and we see this growth continuing.” WEEK 1145 | SGBweekly.com
5
NEWS
BIG 5 SEES THIRD QUARTER EARNINGS FALL ON WEAKER COMP STORE SALES Big 5 Sporting Goods, which serves 12 Western states that have been among the hardest hit by the housing bust and unemployment, said sales and margins improved with each month of the third quarter. The El Segundo, CA - based retailer said sales rose 1.3 percent
to $234.7 million in the third quarter ended October 2. Samestore sales decreased 0.1 percent for the third quarter of 2011 versus the comparable period last year when same store sales were up 2 percent. Big 5 ended the quarter with 398 stores and expects to close the year with a net increase of 11 percent. After a rainy, cool July, comp sales rose in the low-single digits in the back half of the quarter. Apparel sales rose in the mid-single digits thanks to better assortments of higher-priced branded product and clearance sales. Footwear sales were up in lowsingle digits, while sales of hardgoods fell in low-single digits due in part to a softness in golf, tennis and fitness products. Net income slipped 14.7 percent to $5.8 million, or 27 cents per diluted share. Big 5 said traffic and average ticket prices climbed in October and it expected fourth-quarter, same-store sales in the positive low- to low-mid-single digit range. Rising product costs and clearance activity will likely continue shaving margins, particularly as the company’s new merchandizing team clears out more SKUs to make room for higher priced branded goods aimed at attracting a more affluent customer. “We are trying to make some slight tweaks and adjustments to our model to just try to broaden our appeal to those that might be somewhat less price sensitive in this environment,” said President and CEO Steve Miller.
K-SWISS FALLS SHORT OF EARNINGS GROWTH EXPECTATIONS K-Swiss, Inc. reported higher sales and earnings in the third quarter but fell short of Wall Street's expectations. More discouragingly, worldwide futures orders were down 4.2 percent at the end of the period. The net loss in the quarter amounted to $15.4 million, or 43 cents a share, compared with a loss of $28.3 million, or 80 cents, a year earlier. Revenues in the quarter jumped 30.8 percent to $80.5 million. Analysts on average had expected a loss of 27 cents on revenue of $88 million. On a conference call with analysts, company President and CEO Steven Nichols said signs of the company's turnaround would have been evident if backlogs started improving in the second half. "We still see some positive trends with the performance category and international backlog up, but we didn't pass the test with flying colors," said Nichols. "Our grades, if you will, are a bit mixed and it appears we have more work to do." The company also said it decided to shut down the operations of FORM Athletics, the mixed martial arts apparel brand it acquired in July 2010 for $1.6 million. Said Nichols, "This performance was not meeting our expectations. We didn't see its future laying with the rest of our business." 6
SGB WEEKLY NOVEMBER 7, 2011
Performance product revenues, which represented 39 percent of revenues in Q3, were up 73 percent. Lifestyle product sales, accounting for 32 percent of revenues, were up 3 percent for the quarter. Other revenues, contributing 29 percent of sales and representing its Palladium and Apparel lines, climbed 35 percent. Domestic sales were up 21 percent in the quarter but domestic future orders were down 24 percent at September 30. Its international business rose 39 percent in the quarter and international futures improved 11 percent. K-Swiss estimated full-year revenue at $260 million, which was below Wall Street's average estimate of $278 million. Gross margin is expected to reach 36.5 percent of sales compared to 39 percent a year ago. SG&A expenses are expected to be $153 million to $155 million. Said George Powlick, the company's CFO, "Although Q1 2012 backlog was up very significantly when we reported in July, we experienced a reversal in that trend as the quarter progressed. We are budgeting our 2012 operating expenses so that they are appropriate for our expected revenue and have begun implementing a major cost reduction program."
MOVERS & SHAKERS SHIMANO, INC. THIRD QUARTER REVENUE GROWTH ACCELERATES BUT PROFITS DIP
Shimano, Inc. reported net sales for the third quarter rose 5.8 percent to ¥54.5 billion ($700 mm) from ¥51.5 billion ($600 mm) in the year-ago period. The gain in the quarter is an acceleration from the trend for the first half of the year when revenues rose just 2.6 percent. Total revenue growth for the nine month year-to-date period was up 3.7 percent to ¥162 billion ($2.02 bn). Gross margins slipped 280 basis points to 34.1 percent of sales in the third quarter and down 240 basis points for the YTD period, but SG&A improved 50 basis points to 20.3 percent of sales for the quarter and decreased by 10 basis points for the nine-month period. Resulting operating income for the third quarter declined 14.4 percent to ¥7.50 billion ($96 mm), and net income dipped 1.9 percent to ¥4.70 billion ($60 mm), or ¥48.16 (62 cents) per share. The company, which is one of the world’s two premier cycling component suppliers and parent of Pearl Izumi, said the economic malaise deepened in the U.S. and Europe in the year-to-date period, whereas high economic growth continued in China. Sales in the Bicycle Components business rose 7.0 percent to ¥44.45 billion ($572 mm) for the third quarter. Operating income for the segment declined 14.4 percent to ¥6.86 billion ($88 mm). Shimano said that while rain dampened sales in Europe and the U.S. in June and July, the market for sports bicycles in China continued to grow greatly over the prior year. Sales of DeoreXT mountain bike components and Tiagra road bike components remained brisk and order uptake for Ultegra road bike components and Di2 digital shifters were “upbeat.” In the Fishing Tackle segment, operating income jumped 128 percent to ¥716 million ($9.2 mm) on a 1.1 increase in sales to ¥9.88 billion ($127 mm). The company said fishing in markets affected by the Japanese Earthquake have yet to recover, although sales of the Scorpion DC series of double-axis bait-casting reels and the Poison Glorious rod series continued to sell strongly due to the continued popularity of bass fishing. Shimano indicated that despite the European debt crisis and rapid appreciation of the yen, overseas sales exceeded last year’s levels.
Quiksilver, Inc. has named Craig Stevenson, who has served as the company’s Americas region president, global brand president and chief operating officer of Quiksilver, Inc. Rob Colby, previously Quiksilver Americas chief operating officer, succeeds Stevenson as Americas region president. Mizuno USA CEO and President, Bob Puccini, has been elected as the vice chairman of the Sporting Goods Manufacturers Association (SGMA) for a one-year term. The announcement was made at the conclusion of SGMA's annual business meeting in Chicago, IL, held on October 18. James Van Doren, co-founder of Vans Shoes, passed away at the age of 72. Van Doren co-founded Vans, originally known as the Van Doren Rubber Co., with his older brother Paul in 1966 in Anaheim, CA. Rocket Dog Brands, LLC appointed Derek Bowen as managing director, Europe. He was most recently from Wolverine Worldwide where he acted as the Northern European sales director, Heritage Brands Group. Sturm, Ruger & Co. announced Randell Pence, former executive director of sales, will relocate to the greater Nashville, TN area as their newly appointed senior sales executive. Sport Obermeyer hired Linda Rodney, formerly of Burton Snowboards, as national sales director. Orange 21, the parent of Spy Optic, said that effective December 15, Carol Montgomery will join the company’s board of directors, making way for current President Michael Marckx to assume the additional role of CEO. LeMond Fitness appointed Raymond Calvert as senior vice president and chief financial officer. Superfeet Worldwide, Inc. lost of one of its longestemployed sales reps, Roger LaRoche (1949-2011). LaRoche was part of the Superfeet family for over 20 years, after joining the company as a Northern California rep in the mid-90s. WEEK 1145 | SGBweekly.com
7
NEWS
GUARDS BEAT INMATES IN 5TH ANNUAL LONGEST YARD CLASSIC WITH THE AID OF THE SGMA, NIKE, UNDER ARMOUR AND NEW BALANCE PROVIDED GEAR FOR THE GAME
On Wednesday, November 2, ‘political football’ again came to life in the nation’s capital with the 5th “Longest Yard” Football Classic. Played out at the Watkins Recreation Center (13th & ‘D’ Street, SE) in Washington, D.C. and supported by the SGMA (Sporting Goods Manufacturers Association), nearly 30 members of Congress (“The Inmates” aka “The Mean Machine”) competed in the flag football game against the Capitol Hill Police (“The Guards”). “The Guards” won, 28-14, and now lead the overall series 3-1-1. Along with bragging rights on Capital Hill, the game raises money for the U.S. Capitol Hill Police Scholarship Fund, established in 1998 to provide financial assistance to the widows and children of Capitol Hill police officers who have lost their lives in the line of duty. The event also raises money for Our Military Kids, which provides grants to children of deployed National Guard and Reserve personnel as well as to children of severely injured service members to cover the cost for enrichment activities and tutoring. While all the accounting has not been finalized, Mike May, SGMA's spokesman, said the game could potentially raise close to $40,000 through ticket sales, sponsorships and the eventual sale of the game jerseys and game shoes. To help maximize contributions to the Capitol Police Memorial Fund and Our Military Kids, three SGMA member companies supported the game with the following donations:
• Nike – footballs, shorts, and receiver gloves • Under Armour – game jerseys • New Balance – cleats
in the game was 1982 Heisman Trophy winner Herschel Walker, representing Franklin Sports, who played for the Congressional squad. Walker had a first-half leg injury and was limited for the balance of the game. One other notable player on the Congressional roster was Donna Wilkinson, a defensive lineman for the Washington Divas of the Professional Women’s Football League. Wilkinson is also a member of Team USA, this country’s national all-star team for women pro football players. In attendance at the game was NFL Hall of Fame wide receiver Art Monk, who watched but did not play. According to those in attendance, the top players in the game for the Congressional squad were U.S. Rep. Jack Kingston (D-GA) who played defensive back; U.S. Rep. Bob Dold (R-IL), and Congressional squad player-coach John Booty. "As an organization that supports exercise and athletic activity for all Americans, SGMA is delighted to support a fundraising cause, such as this game, which uses flag football as the vehicle to raise awareness and funds for a charitable cause," said SGMA President Tom Cove. “SGMA is proud to support the “Longest Yard” Football Classic to help those who have lost loved ones while serving our country,” said Bill Sells, SGMA’s vice president of government relations. “SGMA applauds the Members of Congress and the Capitol Hill Police for their participation in this game. It showcases their passion for football and their respect for those who protect all the people on Capitol Hill.”
OTHER INTERESTING ASPECTS OF THE GAME INCLUDED THE FOLLOWING: • The Congressional team was allowed to have two ex-NFL
players on the field at anytime. • The game was held in 2005, 2006, 2007, and 2009. In 2005, it was a 14-14 tie. In 2006 and 2007, the Capitol Hill Police won 35-7 and 28-0, respectively. In 2009, the Congressional team won 32-26 in overtime. • In 2005 and 2006, the head coach for the Congressional team was former University of Nebraska head football coach Tom Osborne who, at the time, was a congressman from the state of Nebraska.
“The Inmates” squad was a bi-partisan team of nearly 30 which featured Rep. Heath Shuler (R-NC), Rep. Jon Runyan (R-NJ), Rep. Bill Shuster (R-PA), Donna Edwards (D-MD), and U.S. Senator Marco Rubio (R-FL). Shuler is a former quarterback for the University of Tennessee Volunteers, Washington Redskins and New Orleans Saints. Runyan played 13 years in the NFL as an offensive lineman with the Oilers, Titans, Eagles and Chargers. This year, the Congressional team included a few former NFL players, including Ken Harvey and John Booty, who also coached the team. The most notable player 8
SGB WEEKLY NOVEMBER 7, 2011
Photo courtesy of Puma
PUMA UNVEILS AFRICAN FOOTBALL UNIFORMS For the first time, Puma has revealed the 2012 technical football kits for Puma's ten partnered African National football teams. The kits were designed by ten Creative African Network (CAN) artists from the corresponding nations, using inspiration from the visual and cultural motifs of their country to develop the jerseys. The kit unveiled at the Design Museum in London brought together high profile football players and CAN artists from each of the ten Puma partnered teams. This collaboration is accompanied by the month-long exhibition, ‘Interpretations of Africa: Football, Art and Design’ at the Design Museum in London, which is showcasing the artists’ design inspirations.
Through Puma, Creative’s CAN's program artists were commissioned to design a football jersey inspired from the country’s heritage, culture and traditions. Ten artists worked with their home nation to create unique and inspiring designs for the official football kits. Puma Creative’s central premise was a program that brings together the individual artists and organization, providing them with a platform for creative exchange and international exposure. Some of the notable football players attending included Samuel Eto’o of Cameroon, John Mensah of Ghana and Yaya Touré of the Ivory Coast.
SPEEDO REVENUES INCH UP SLIGHTLY IN THIRD QUARTER
Warnaco Swimwear Group, which includes Speedo and Calvin Klein swimwear, saw sales increase 7.2 percent to $39.3 million in the third quarter from $36.7 million in the year-ago period. The Group’s operating loss improved 11.5 percent to $3.4 million from $3.7 million in Q3 last year. Swimwear Group net revenues from international operations increased $2.1 million and from domestic operations increased $0.6 million. The increase in international net revenues includes a $0.8 million increase due to the favorable effect of fluctuations in foreign currency exchange rates. Net wholesale revenues from Speedo inched up 0.9 percent to $29.6 million in the third quarter from $29.3 million in the year-ago period, due primarily to gains in the U.S. related to increased sales to membership clubs and mass merchandisers, partially offset by a decrease in sales to team dealers and sporting goods stores. WEEK 1145 | SGBweekly.com
9
ADIDAS GROUP ACQUIRES FIVE TEN Five Ten Deal Gives Adidas Grip on Climbing Tech Market  By Thomas J. Ryan
10
SGB WEEKLY NOVEMBER 7, 2011
Ethan Pringle climbing Coup d'Bamboo Photo ccourtesy of Five Ten
In a move seen as a further example just how serious it is to sit among the leaders in the outdoor space, Adidas Group last week reached an agreement to acquire Five Ten, the outdoor/action footwear brand best known for its Stealth rubber outsole technology. The purchase price is $25 million in cash at closing and contingent payments, which are dependent on Five Ten achieving certain performance measures over the next three years. The deal is expected to close in the next couple of weeks. Best known for its climbing and mountain biking shoes, Five Ten will remain an independent brand with the existing set up in the U.S. remaining the same. Charles Cole, founder and president of Five Ten, is staying on to lead the brand. Annual sales in 2011 of Five Ten are expected to reach €16 million (approximately $23 million), excluding its distributor business in Japan and Korea. In an interview with SGB Weekly, Rolf Reinschmidt, senior vice president Adidas Outdoor, noted that as part of its Strategic Business Plan Route 2015, the Adidas Group expects sales in the outdoor segment to exceed €500 million by 2015 based on organic growth. Only three years after its relaunch overseas, the unit reached €200 million in sales in 2010 and has reached sales of €300 million already in the first nine months of 2011, which included its re-launch in the U.S. this fall. The acquisition of Five Ten is consistent with Adidas' long-term goal of establishing a leading position in the performance and technical outdoor sector, he said. "Five Ten will allow Adidas to expand into a market that is complementary to our current product offering, most notably the technical climbing segment. We also see significant growth opportunities for Five Ten across the globe." With the acquisition, Adidas also obtains the rights to Five Ten’s patented Stealth rubber technology and Reinschmidt expects this technology is transferable to many other applications with both Adidas Outdoor and Adidas' broader product offering. He further said the companies complement one another. “Five Ten has continuously been at the forefront of innovation and shares the same passion for athletes as we do at Adidas," noted Reinschmidt. "This acquisition underscores our clear commitment to the outdoors and our ambition to play a leading role in the outdoor industry going forward. I am looking forward to working on this journey together with Charles Cole.” On its third quarter conference call with analysts last week, Herbert Hainer, Adidas' CEO, likewise highlighted Adidas' success in reentering the outdoor space over the last three years. "Today we are among the top 10 brands in outdoor, worldwide, and as part of Route 2015, we have already announced our ambitious organic goals to reach €500 million in sales by 2015," said Hainer. "Momentum in the category is currently very strong, being our fastest growing category at Adidas in the first nine months, with sales increasing
Charles Cole, Founder and President of Five Ten and below in 1985, the same year he founded the company
40 percent, approaching €300 million. The continuing rise in popularity of our Terrex footwear and apparel offering, more than 50 percent growth in the emerging markets, as well as a good start into our outdoor relaunch in the US, is yielding just rewards for our investment and focus into the category." Hainer described Five Ten as "a perfect example of how we can help build out a more holistic and credible offering to service the outdoor market." He added, "It is the brand for outdoor athletes who like to live on the edge, which is reflected in its motto, 'The Brand of the Brave.' Five Ten has been at the forefront of innovation in the technical outdoor market since the day Stealth, a revolutionary, high-friction rubber compound, was created in 1985. Five Ten will, among other things, allow Adidas to expand into a market that is complementary to Adidas' current product offering, most notably the technical climbing segment. We will also keep Five Ten as an independent brand, integrated primarily on the back-office side, with a clear focus to create synergies wherever possible." In an interview with SGB Weekly, Cole said Five Ten's growth had become constrained by its current structure. "Basically, a few years ago, we really refined our strategy, the 'Brand of the Brave', which was a decision to act like who we really are. In our industry, WEEK 1145 | SGBweekly.com
11
there is so much pressure to walk the same “correct” line as everyone else. It just wasn’t/isn’t us. It was clear that we had potential to do amazing things in more extreme sports like mountain biking, which will be more than half of our business next year. We are a tiny company, we didn’t have the resources to grow as much as the market demanded. We had a choice. We could shrink and never give the public what they wanted or partner with someone who really got it, and Five Ten celebrates their acquisition by Adidas let 'Brand of the Brave' reach time to pursue the things that got me interested in the company in the first place - designing its full potential." "The demand is happening now, we need shoes, developing rubber. I love the marketing and creative stuff - for the first 15 years of help now," added Cole. "If people place business, I was the creative team. Now I will be able to work on ads, cool new designs, a lot of orders and we can’t deliver, they and new Stealth applications and formulas. The sale comes as Five Ten has witnessed significant growth this year, both in Europe, might as well not place orders. The biggest change people will see is in delivery. We were the U.S. and other emerging markets. Said Cole, "We have seen enormous growth in growing so fast and we needed more help. bike, climbing, wingsuiting, slack lining, free-running, military, and amphibious. What has But we needed to work with a company who happened is that people have realized the value of Stealth rubber. And I don’t forget bull not only knew what they were doing, but also running - the Atlas Pamplona sold out its first run in record time." The Five Ten Elite Team consists of some of the world’s top athletes - Dean Potter, National who understood all of what Five Ten stands Geographic’s 2011 athlete of the year; JT Holmes, champion bigmountain skier; and Suz for. The only company who got it was Adidas." Cole said Five Ten's philosophy is akin to Graham, the female action sports star. Other sponsored athletes include Dave Graham, Adidas’ founder Adi Dassler, with his focus Danny MacAskill, Ellen Brennan and Katie Lambert. Five Ten also sponsors a handful of athlete expeditions. It announced the CORE AWARDS on product quality and putting athletes and for 2012 designed to help young, competitive climbers with entry fees, travel and training performance first. Said Cole, "They bring in enormous resources. Every year we max out expenses – particularly needed with climbing recently landing on the docket as a potential what we can make dependent on cash flow. Olympic sport. The brand also has relationships with Hollywood. Transformer’s 3, Mission We have never been able to make enough Impossible 4, and The Twilight Saga: Eclipse are among the major releases in which product to satisfy the market and now we can." stunts/action sequences were made possible with Stealth and Five Ten. While early in its re-launch, Adidas Outdoor also teamed with a number of stars in the On a personal level, Cole recognized climbing space, including the Huber Brothers (climbing, Germany), Beat Kammerlander that Five Ten was ready to take its growth to (climbing, Austria), Barbara Zangerl (climbing, Austria) and Sasha DiGiulian (climbing, U.S.). the next level. "It is still my baby, and like all children, I It also partnered with prestigious mountain guide school organizations such as Zermatt Alpin want it to be successful," said Cole."Now it is Center (Swiss) and Ragni di Lecco (Italy), and renewed its partnership with Italian climbing time for it to go out and get married…I guess legend Reinhold Messner, who wore the Adidas Supertrekking lightweight trekking shoe when you could say we are kicking it out to grow he made the first Everest ascent without artificial oxygen in 1978. While the two brands both up, although I’ll still be around to guide - I’m share climbing roots, Cole said Five Ten will remain committed to its edgy positioning. "All of our categories will still be under the 'Brand of the Brave', around the World’s Most remaining as president. I suspect I’ll still be Exciting Sports," said Cole. "We are interested in sports that are dangerous and making the the black sheep in the industry and proud of it - meaning that Five Ten will continue to be best shoes for the world’s most dangerous sports. We have a lot to use with 'Brand of the independent thinkers. For me, now I will have Brave' - to take the risk out of scary." ■ 12
SGB WEEKLY NOVEMBER 7, 2011
RUN ONE LAP ON A BIGGER TRACK.
With Speed and Distance powered by GPS, Run Trainer™ system gives you the freedom to run anywhere. Just press start and enjoy your run.
NEW
GPS HOW FAR WILL YOU TAKE IT?™
Shannon Coates, Timex Multisport Team
©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.
Implus Sale to Trilantic Capital Partners Should Boost European Growth PE Firm Recently Sold Stake In SRAM, LLC for $575 Million By Charles Lunan
Rapidly growing Implus Corporation continues to outgrow investors like a teenager outgrows his shoes. The Durham, NC distributor of footwear, outdoor and fitness accessories announced November 1 that the private equity firm Trilantic Capital Partners acquired a majority stake in the company from AEA Investors, which had only acquired control of Implus in 2008. Financial terms of the transaction were not disclosed. Trilantic will partner with founding family member and CEO Seth Richards and President Todd Vore to help finance and guide Implus as it prepares to break the $200 million revenue mark in 2012. In an exclusive interview with SGB Weekly last week, Richards and Vore said the deal leaves their stake in the company largely intact and will enable Implus to take advantage of rapid growth in Europe and other overseas markets. Implus acquired its European distributor in France in 2010 and 14
SGB WEEKLY NOVEMBER 7, 2011
in May moved the operation to a new 50,000-square foot distribution center. Companywide, Implus sales are on track to reach $165 million this year, up nearly 20 percent from 2010 and nearly 50 percent from 2009. “We’ve had a lot of success internationally where we have worked Seth Richards, CEO of directly with retailers and replicated Implus Footcare our U.S. business model,” said Richards. “In October, we had more revenue in Europe than all of last year. The European business has exceeded all expectations.” Richards attributes the success to Implus’ business model, which has been to cut out distributors and offer retailers not only its ac-
cessory lines but merchandizing, logistics, category management and marketing services that help maximize turnover and profitability. Implus' categories and brands include insoles (Airplus, Apara, Sof Comfort and Sof Sole), shoe care products (Sneaker Balls and Sof Sole), socks (Apara, Sof Sole and Yaktrax) sports Todd Vore, President of monitors (Highgear and New BalImplus Footcare ance ), seasonal items (Little Hotties and Yaktrax) and fitness products (Perfect Fitness). "Trilantic is a partner who will help us expand across business lines and in new markets, both in the U.S. and overseas, where we see tremendous opportunity," said Richards. "Trilantic has proven to be a successful partner in helping the management teams of middle-market businesses grow organically and through acquisitions." Specifically, Implus was impressed with how Trilantic helped SRAM Holdings, LLC, the Chicago-based maker of premium bike components, grow internationally. Trilantic led a group that invested $234.8 million in SRAM in 2008 and sold that stake in June for $575 million. SRAM, which is the world’s second largest maker of bicycle components after Shimano Corp., is now pursuing a $300 million initial public offering of stock.
“Trilantic has a European office and will help us expand,” said Vore. “They have strategic relationships and 20 investment professionals there. They understand the culture and the nuances of importing country by country. They are also a set of eyes and ears to help us spot acquisition targets.” Trilantic focuses on taking controlling and significant minority stakes in consumer, energy, transport, financial services, business services and healthcare companies in North America and Europe. Formed in 2009 by the former principals of Lehman Brothers Merchant Banking ("LBMB"), the company works with management teams, entrepreneurs and families to take companies to the next level, including an IPO. "Implus has a strong competitive position with a proven track record of growth through innovation, customer expansion and strategic acquisition,” said Charlie Moore, partner at Trilantic and Chairman of the board of Implus, which manages two institutional private equity funds with an aggregate capital commitment of $3.8 billion. Trilantic acquired its stake from AEA Investors, a private equity firm that invested in Implus in May 2008 as it was digesting several acquisitions and laying plans for a new headquarters and distribution center just outside Research Triangle Park. A year later, just months before moving into the facility, Implus acquired Highgear, which designs, sources and sells instruments for outdoor enthusiasts. Implus has since expanded its headquarters facility by 20 percent to more than 300,000 square feet.
In September, Implus closed on its latest acquisition, Perfect Fitness.
month direct response campaigns. Implus can accelerate growth at the company by speeding up product development beyond two launches per year and by providing Perfect Fitness dealers – most of which Implus already serves through its other brands – best-of-breed category management and fulfillment services. That will involve crunching retail POS data and aligning production and fulfillment. “We will make sure the right products are in stock in the right stores at the right time, Richards said. WEEK 1145 | SGBweekly.com 15
Founded by a former Navy SEAL, the company is best known for using television commercials and other direct response channels to sell the Perfect Pushup, Perfect Pullup and Perfect Situp fitness accessories. Perfect Fitness is already sold in more than 24,000 doors by mass merchandisers and sporting goods retailers, but its sales have been relatively flat and tapered off after the company completed its six-
ball, football and other sports.
EVERY JOURNEY BEGINS WITH A GREAT JOB.
HAVE YOU LANDED YOURS?
FOR INFORMATION CONTACT 704.987.3450 OR SPORTSJOBS@SPORTSONESOURCE.COM
JOB
.COM
Job Classifieds TO READ THE FULL JOB DESCRIPTION, PLEASE CLICK ON JOB TITLE
Sales Representative Injinji, Inc.
Global Print Producer, adidas-Ashworth TaylorMade Golf Company
GEAR for Sports, a leading designer of quality custom active wear has an immediate opening for an Independent Sales Rep in our Resort Market in multiple territories across the country. The apparel brands under the GEAR for Sports umbrella include: GEAR for Sports, Champion and Under Armour. Responsible for presenting our seasonal product line to resort customers (hotel gift shops, tourist destinations, etc.) throughout the territory…
Injini, Inc. the Original Performace Toe Sock, is searching for manufacturer's independent commissioned reps in select territories. Identify, screen and open new business in all channels of trade in approved geographic territory; foster relationships with existing accounts to promote growth; professional and timely communication with the home office…
Coordinate the planning, design, production and rollout/ execution for adidas Golf and Ashworth 2D print production projects. Ensure all projects meet required levels of CI/ brand guidelines, budget and quality within departmental objectives and procedures. Provide project leadership throughout the lifecycle of 2D projects keeping jobs on time and within budget, maintaining professionalism, energy and focus in a variety of circumstances...
Senior Buyer 24 Seven
Business Systems Analyst III – Go To Market Columbia Sportswear
Director of Sourcing Life Is Good, Inc.
Our client is a destination specialty store with a reputation for outstanding customer service and the ability to understand their customer's needs and is currently seeking to add a dynamic Buyer to their non-apparel division-Golf, Gift & Tennis. Primary responsibilities include managing open-to-buy process, develop and direct subordinates to improve performance and achieve professional/business goals…
In this position you will act as the primary IS/IT department contact as you partner with a variety of departments throughout the organization. Although your primary focus will be aimed at the Sales, Marketing, and/or Product Development business areas, your flexibility will allow you to work in other areas. This is an opportunity to use your Project Management and Business Systems Analysis experience in the field of IS systems implementations…
Reporting to the VP of Product and Design, the sourcing manager will be responsible for the development, management, and communication of the company’s global sourcing strategy for all apparel and accessories. The primary focus of this role will be to work collaboratively with product development, design and quality assurance to ensure that all products achieve cost, technical, quality and aesthetic targets…
Senior Product Manager Primos Hunting
Apparel Technical Designer New Balance
Independent Sales Representative Wingflyer
Provides leadership throughout the design, development and commercialization of new products, including both new innovation and evolution of existing products, to ensure the delivery of the company-wide business goals and objectives. Responsibilities include, but are not limited to; conceptualization, translating market research and needs, project management, directing design teams and providing product content expertise. This position is responsible for all phases of product development, product design…
As an Apparel Technical Designer, you will be responsible for making accurate interpretations and translations of a design’s intent through product specifications. You will complete specification packages, including illustration, flat sketch with measurements, fabric, construction details, sewing instructions, trim sheet, and special applications. In this role, you will analyze the fit, quality, and pattern of garments ensuring that products are developed in a manner consistent with established standards. You will make appropriate adjustments to patterns as necessary…
WingFlyer, a division of Catalfumo Global Distributors, LLC is seeking independent sales representatives to expand distribution in the bike, outdoor and specialty retail channels. WingFlyer is paving a path for the new sport of step cycling by introducing innovative and high quality products for consumers to enjoy, and by launching an incredibly aggressive marketing campaign to help stimulate sales at the dealer level. We are seeking reps in multiple U.S.territories...
Independent Sales Rep – Resort Market GEAR for Sports
EVERY JOURNEY BEGINS WITH A GREAT JOB HAVE YOU LANDED YOURS? FOR INFORMATION CONTACT 704.987.3450 OR SPORTSJOBS@SPORTSONESOURCE.COM
18
SGB WEEKLY AUGUST 29, 2011
JOB
.COM
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.
© 2011 INVISTA. CORDURA® is a registered trademark of INVISTA for durable fabrics. Property of INVISTA.