SGB WEEKLY 1150

DECEMBER 12, 2011

The Weekly Digital Magazine for the Sporting Goods Industry

REI SOHO

OPENS ITS DOORS IN THE PUCK BUILDING FOR A VIRTUAL TOUR SEE PAGE 10

ISSUE 1150 DECEMBER 12, 2011

Bill Garrels

Group Publisher bgarrels@sportsonesource.com 303.997.7302

Editor In Chief James Hartford (704.987.3450 x104) james@sportsonesource.com

The Weekly Digital Magazine for the Sporting Goods Industry

Senior Business Editor Thomas J. Ryan (917.375.4699) tryan@sportsonesource.com

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Contributing Editor Fernando J. Delgado Creative Director Teresa Hartford Graphic Designer Camila Amortegui Advertising Sales Account Manager Casey Vandenover (303-997-7302) caseyv@sportsonesource.com 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

Ryan Lochte wearing Speedo FASTSKIN3 racing cap and googles.

Photo courtesy of Getty Images

FINANCIALS

4 SIA: Pre-Season Snow Sports Sales Up 14 Percent Johnson Outdoors

Refocused on Specialty Dealers, 2012 Outlook “Uncertain”

5 LULULEMON Struggles to Meet Q3 Demand, but Q4 Inventories Look On Track Plus…Gildan Activewear, Zumiez, Vail Resorts, and Buckle

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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PACIFIC SUNWEAR to Close Upward of 200 Stores DOJ Seizure of Rogue Websites Encouraging SPORTING GOODS INDUSTRY Assesses Impact of the End of the NBA Lockout MOVERS & SHAKERS NIKE Introduces SPARQ Sensory Performance System

GIVING BACK

9 PATAGONIA “Don’t Buy This Jacket” Ad Campaign

FEATURES SportsOneSource Research SportScanInfo OIA VantagePoint SOS Research

2151 Hawkins Street • Suite 200 • Charlotte • NC • 28203 t. 704-987-3450 • f. 704-987-3455 www.SportsOneSource.com

10 REI Lands in Manhattan – Opens Its Doors in the Puck Building 14 SPEEDO Debuts Swimsuits with 3D Mapping

DEPARTMENTS

18 CALENDAR

ON THE COVER Street level (main) of REI’s new SoHo store, including customer service, central staircase to cellar level. Photo courtesy Matt Peyton / AP Images for REI 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 1150 | SGBweekly.com

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FINANCIALS

SIA: PRE-SEASON SNOW SPORTS SALES UP 14 PERCENT

Snow sports retail sales are off to a strong start this season and equipment is leading the charge, according to retail sales data released by SnowSports Industries America.

Overall, snow sports retail receipts are up 14 percent in dollars sold and 7 percent in units sold August - October (pre-season) 2011. Total snow sports pre-season sales increased from $565 million through October 2010 to $644 million through October 2011.

"We entered this season with inventories full of 2011/2012 gear after last season's epic conditions that kept participants on the slopes and in the shops well into spring. Consumers began this season with uninterrupted enthusiasm for the coming La Nina repeat and it is definitely showing up in equipment sales," commented Kelly Davis, SIA's Director of Research.

Pre-season sales in the snow sports market traditionally serve as opportunities for consumers to get discounts on items left in inventories over the summer, but this year consumers were buying snow sports gear at full price at the Labor Day and Columbus Day sales. This phenomenon is most apparent in alpine equipment where buxom sales led the pre-season market. Apparel and accessories sales also gained over last season and strong prices seen at the end of the 2010/2011 season continued into the early 2011/2012 season.

JOHNSON OUTDOORS REFOCUSED ON SPECIALTY DEALERS, BUT 2012 OUTLOOK IS “UNCERTAIN" Johnson Outdoors, Inc. is re-emphasizing specialty distribution at its Outdoor Gear and Watercraft businesses, which continue to lag in sales at its Marine Electronics and Diving businesses, the company’s CEO told analysts last week.

Johnson Outdoors will develop a paddlesports line specifically for the specialty channel for a Spring 2013 launch under the direction of Bill Kelly, the VP of Outdoor Gear who was put in charge of the Watercraft business in mid-October.

The strategy should improve margins compared to what it earns from sales to Academy Sports, Dick’s Sporting Goods, Cabela’s, Gander Mountain and other big-box retailers that carry Johnson Outdoors’ Old Town and Ocean Kayak boats, according to statements made by company Chairman and CEO Helen Johnson-Leipold during a conference call with analysts.

“With the specialty group, we do have more pricing flexibility,” said Johnson-Leipold. “They put value on the customer service that we provide, and the innovation that we bring. That's a channel that is more conducive to taking our higher-margin product.”

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SGB WEEKLY DECEMBER 12, 2011

Photo courtesy of Johnson Outdoors

Overall company revenues were up 3.0 percent to $77.4 million in the fiscal fourth quarter, or flat to the prior-year quarter on a constant-currency basis. Marine Electronics sales rose 27.6 percent to $36.1 million in the fiscal fourth quarter, enough to offset declines in the other divisions. Outdoor Gear division sales fell 35.7 percent to $6.8 million in fiscal Q4, Watercraft division sales declined 10.1 percent to $11.6 million and Diving division sales were off 1.5 percent to $23.0 million.

Johnson-Leipold said that while its Marine Electronics (Minn Kota, Cannon, Humminbird, Geonav) and Diving (ScubaPro and Seeman) businesses continue to grow thanks to product innovation and a recovery in those markets, sales stalled at its Outdoor Gear (Eureka, Silva, TECH40) and Watercraft (Necky, Old Town, Carlisle, Ocean Kayak, Extrasport) in the back half of the fiscal year-ended September 30.

Johnson Outdoors reported fiscal Q4 net income equaling $17.4 million, or $1.78 per diluted share, versus a net loss of $5.8 million, or 62 cents per share, in fiscal Q4 2010, due primarily to the reversal of the company's tax valuation allowance. The adjusted net loss for Q4 2011 was $4.5 million, or 47 cents per share, on an adjusted loss per diluted share basis.

Photo courtesy of Lululemon

LULULEMON STRUGGLES TO MEET Q3 DEMAND, BUT Q4 INVENTORIES LOOK TO BE ON TRACK

Lululemon Athletica, Inc. delivered another blowout quarter, with third quarter earnings jumping 50.9 percent, revenues advancing 31.0 percent, comparable store sales up 16.0 percent and sales-per-square foot reaching a quarterly record of $1,880 per square feet.

Management said the quarter yet again reflected ongoing problems refilling inventories to catch up with robust consumer demand. On a conference call with analysts, Lululemon management stated that they have finally solved the inventory issues.

"Our goal for Q4 was to break the inventory cycle we were in all year, and we have achieved it," said Lululemon CEO Christine Day. She recalled that strong inventories drove a 28 percent comp in Q4 2010, but left the company under-inventoried for much of the current year.

To catch up, Lululemon brought forward a portion of spring deliveries, built around a back-to-studio marathon training, cycling, commuter theme, along with its blackand-white capsule. Day said this will create inventory flexibility since the merchandise is appropriate for either quarter. Inventory turns and markdowns are also expected to appropriately normalize due to its in-stock position. Given its inventory reworking, the company increased revenue guidance for Q4.

Inventory at the end of the third quarter was $129.2 million, or up 77 percent. The increase included a significant increase in in-transit inventory, at $33 million versus $11 million last year, reflecting Spring season product pulled forward. Excluding the intransit inventory, inventory was up approximately 45 percent.

Revenues in the third quarter reached $230.2 million, slightly exceeding the range of $225 million to $230 million provided by the company when it released second quarter results but short of the $235.3 million forecasted on average seen by analysts.

The 16 percent comp gain also just topped the guidance calling for an increase in the low- to mid-teens. EPS of 27 cents exceeded guidance of 22 cents to 24 cents.

The total sales increase was aided by the addition of 28 net new corporate-owned stores in North America, and three net new corporate-owned stores in Australia. Since Q3 2010, Direct-to-consumer sales grew 71 percent to $23.9 million. A stronger Canadian dollar had the effect of increasing reported revenues by $3.7 million, or 1.6 percent.

Looking ahead, revenues for Q4 are projected in the range of $327 million to $332 million with comparable store growth in the low- to mid-teens.

G ​ ildan Activewear said its fourth quarter earnings met expectations but were down due to the significant increase in the cost of cotton and other factors. The Montreal-based maker of activewear and blanks for the screen printing industry reported net earnings for the fourth fiscal quarter ended October 2 were $48.5 million, or 40 cents per diluted share, down from $56.8 million, or 47 cents per share, in the yearago period.

Zumiez, Inc.

management said that fiscal third quarter top-line results were “better than initial projections” provided by the retailer at the end of August. The company’s e-commerce strategy reportedly “continues to yield positive results,” as sales conducted through Zumiez.com increased 70 percent in the third quarter and 100 percent in the first nine months of 2011. Fiscal third quarter sales increased 13.3 percent to $154.0 million for the fiscal third quarter ended October 29. Comparable store sales increased 6.0 percent.

Vail Resorts, Inc.

reported that its retail/rental revenue increased $4.9 million, or 22.3 percent, for the three months ended October 31 compared to the same period in the prior year, when abundant snow set the stage for what would become a record sales year for the U.S. snowsports industry.

Buckle reported that November comparable store sales increased 6.9 percent in comparison to the prior-year, four-week period. Total net sales for the fiscal month increased 9.2 percent to $94.9 million compared to net sales of $86.9 million in the prior-year fiscal November.

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NEWS

PACIFIC SUNWEAR TO CLOSE UPWARD OF 200 STORES Pacific Sunwear of California, Inc. said it plans to close up to 200 underperforming stores in the coming 14 months amid slumping sales. The teen-focused chain hopes to right itself with the help of a private-equity firm experienced in ailing retailer businesses.

In a deal announced with Pacific Sun's earnings, Golden Gate Capital will receive the option to buy up to 19.9 percent of PacSun's shares at a price of $1.75 in exchange for a five-year, $60 million loan. Two Golden Gate executives will join Pacific Sun’s board of directors. Golden Gate has worked a number of deals with distressed retailers in recent years, including the jewelry chain Zales and the clothing company Eddie Bauer.

Pacific Sun, which has 894 stores, also announced the completion of a five-year, $100 million revolving credit facility with Wells Fargo Capital Finance.

"The combination of these transactions greatly enhances our financial and operating position, and is another critical step forward as we work to re-establish PacSun as a leading specialty retailer across the U.S.," said Gary Schoenfeld, president and chief executive officer.

"With the support from all of our major landlords, we can now

DOJ SEIZURE OF ROGUE WEBSITES ENCOURAGES SPORTING GOODS INDUSTRY The sporting goods industry has been bolstered by the November 28 announcement from the U.S. Department of Justice of their seizure of 150 rogue domain names responsible for the illegal sale and distribution of counterfeit goods.

The seizure – part of the operation called “Operation In Our Sites” - was undertaken by the

focus on our targeted base of 550-600 better performing stores and our enhanced merchandising and marketing strategies for becoming the preferred destination among teens and young adults for great style and great brands," added Schoenfeld.

Pacific Sun reported a loss in the third quarter of $17.6 million, or 26 cents per- share, after including real estate buyout costs of $1.9 million and non-cash asset impairment charges of $4.4 million related to store closures. Revenues declined 6.2 percent to $242 million with comparable-stores sales down decreased 3 percent during the period.

"After a soft start to the back-to-school season in early August, our business improved in both men's and women's resulting in samestore sales and non-GAAP loss-per-share for Q3 better than we had expected," said Schoenfeld. "Looking now to the fourth quarter, we were encouraged by double-digit positive comps on Black Friday and a particularly strong response to our new strategies for women's holiday merchandising. Yet seasonal categories in both genders have started off slower than we would have expected resulting in quarter-to-date comp trends similar to the -3 percent we achieved in Q3."

Department of Justice Task Force on Intellectual Property (IP Task Force) in conjunction with the FBI’s Washington field office and other groups.

Federal law enforcement agents conducted undercover purchases of products during the operation. Products included professional sports jerseys, golf equipment, footwear, and sunglasses, among other items. Seizure orders for the domain names of the websites selling illegal goods were obtained from federal magistrate judges after trademark holders confirmed that the purchased products were counterfeit.

Bill Sells, VP of Government Relations for the Sporting Goods Manufacturers Association, detailed to SGB Weekly how changes in the marketplace have made counterfeiting a more pervasive threat for both consumers and manufacturers. “The real issue here is that, 10 years ago, what you would see sold on the street corner was how you came across counterfeit

products,” explained Sells. “It was limited to whoever walked by that street corner. Now you have the online retail networks, and these people make fake products and represent them as legitimate. Even at the point when you look at the websites – and you look at the branding of the products on the websites – it looks like it’s real. They’re misrepresenting the products to be legitimate when they’re not.”

Oftentimes rogue sites are run on foreignbased servers which are not subject to U.S. laws, making it difficult to shut such websites down. According to Sells, 127 of the 150 website domains that were seized sold sporting goods products. “Our industry is the most counterfeited industry of the sites that were seized,” said Sells. “Because of the growth of the internet and the fact online sales have really taken off as the primary way people purchase products, it’s important that we’re able to do something to limit the online sale of counterfeit products.”

MOVERS & SHAKERS

SPORTING GOODS INDUSTRY ASSESSES IMPACT OF THE END OF NBA LOCKOUT Thanks to a pending agreement between owners and player representatives which ended the 149-day NBA lockout and paves the way for a new 66-game season starting December 25, retailers are looking forward to a more promising holiday season for sales of basketball shoes and other NBA licensed merchandise.

“The tentative agreement from the NBA owners and NBA players is good news for all basketball fans worldwide. As the official outfitter of the NBA we at adidas are very much looking forward to the new NBA season,” said Adidas CEO Herbert Hainer in a statement provided to Reuters. “Without any doubt, the start of the season in December will help us to continue our growth momentum and finish the year strong in the largest basketball markets, North America and Greater China."

Many of the largest suppliers and retailers in the industry rely heavily on NBAlicensed footwear and apparel. According to retail point-of-sale data compiled

by SportsScanInfo, Nike brand did about 10 percent of sales in basketball shoes 2010, while Jordan brand - a subsidiary of Nike - saw about 95 percent of its 2010 sales in basketball shoes. Adidas brand also did approximately 10 percent of its sales in basketball footwear. Foot Locker, Inc. does not release sales percentage numbers by category, but stands to feel any potential effects from the lockout as the world’s largest retailer of basketball shoes.

Matt Powell, senior retail analyst at SportsOneSource, believes that the effect of the lockout - as well as the impending return of the NBA - will be negligible with regards to shoe sales industry-wide.

“Statistically, basketball shoe sales declined in the mid- to high-single digits for Q3 - since then sales are down in the mid-singles - so the lockout had no material negative impact on sales,” said Powell . “Conversely, I do not expect the commencement of the season will have a material impact on sales of basketball shoes.”

Powell also told SGB Weekly that the late start to the season could potentially have an adverse effect in retail, as unhappy fans express their displeasure with the delay in games.

Sales of NBA products grew 7 percent in the third quarter, but since then NBA sales have been down about a third.

Asics America promoted Tracy Paoletti to VP of sales with three regional managers reporting directly to her. Her team will consist of Mike Mitchell, senior regional director, West, Patty Kelly, regional manager, East and Mike Jensen, regional manager, Central.

The Finish Line, Inc. announced that its Chief Administrative Officer and Corporate Secretary, Gary D. Cohen, will retire from the company effective March 29, 2012.

Shaquille O’Neal, who retired from the NBA last year, has hired Mary Gleason, who ran the Starter collection for Nike, to help revamp his Shaq-branded footwear and apparel.

Performance Bicycle has hired Carol Wentworth as SVP of marketing.

City Sports appointed Debi Binder to VP of marketing and Dana Klein to director of e-commerce.

Nau has hired Caroline Nguyen as its new sales manager, effective immediately. ​ Injinji hired Russell Nadel as senior vice president of operations and general manager, and George Schott as vice president of sales and marketing. ​ Buff hired Peri Puckett as the company’s new director of sales. ​ Salomon has appointed Jake Fuller to the position of Salomon USA Apine product category manager.

Honey Stinger promoted Amy Satkiewicz to the position of national sales manager.

Keeper Sports Products, LLC, based in Oceanside, CA, has appointed Patrick Dugan as account executive and the new head of its surf line, California Board Company (CBC).

Waboba, the maker of beach gear such as balls and Frisbees, appointed Dale Marx as the new president of its USA division.

Interbike announced that show director Andy Tompkins will be leaving the company at the end of the month "to pursue other professional opportunities." ​ S ​ py Optic appointed Devon Howard as its marketing director.

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NEWS

CLICK TO PLAY

NIKE INTRODUCES SPARQ SENSORY PERFORMANCE SYSTEM Nike has introduced a new innovative product called SPARQ Sensory Performance (SSP), a system of technologies, products and programs designed to assess, analyze and improve an athlete’s visual and sensory performance.

The SSP uses the Nike SPARQ Sensory Station, an interactive touch screen device that helps evaluate athletes on 10 sportrelevant visual and sensory performance skills. Athletes can receive all the data they need to build a personalized training program. The personal data-based profile compares their results to others in their sport, position and skill level to better guide them to their best result.

SSP includes these ‘improving tools’: The Nike SPARQ Sensory Training Station and Nike SPARQ Vapor Strobe Eyewear. The Training Station helps improve multiple sensory performance skills using software-based training modules. The Eyewear uses a strobe, or flicker effect, that can be varied in speed to help athletes develop

quicker reaction time and motor skills. Athletes can switch the Eyewear between clear and blocked vision, which trains the brain to anticipate what‘s coming when the eyes are blocked. ​The system has proven its effectiveness. Due to several university studies, the Nike SPARQ Vapor Strobe improved the ability to pick up subtle motion cues, visual information processing, and timing of motion.

“Sensory training is at the cornerstone of how we can build better athletes,” said Paul Winsper, SPARQ Performance Director. “With SSP we’re able to integrate both sensory and physical training together.

This performance philosophy has resonated with some of the top athletes, teams and clubs throughout the world.”

The Nike SPARQ Vapor Strobes are available globally at NikeStore. com while the Nike SPARQ Sensory Station and Nike SPARQ Sensory Training Station are available through the Nike SPARQ Sensory Training Help Desk.

PATAGONIA COMMON THREADS INITIATIVE Patagonia made a splash on Black Friday and Cyber Monday with a full-page ad in the New York Times urging readers not to shop. The ad featured a picture of a Patagonia fleece jacket and carried the headline "Don't Buy This Jacket" in bold letters.

"Because Patagonia wants to be in business for a long time – and leave a world inhabitable for our kids – we want to do the opposite of every other business today. We ask you to buy less and to reflect before you spend a dime on this jacket or anything else."

Patagonia sent out the same message on its website and to the hundreds of thousands of customers on its email list as part of its Common Threads Initiative, which urges customers to Reduce, Repair, Reuse and Recycle products to minimize the impact of their consumption on the planet.

"Don’t buy what you don’t need. Think twice before you buy anything. Go to patagonia.com/CommonThreads, take the Common Threads Initiative pledge and join us in the fifth “R,” to reimagine a world where we take only what nature can replace." Photo and caption courtesy of Patagonia

▲ CLICK TO PLAY WEEK 1150 | SGBweekly.com

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Two 14-foot flywheels from the building’s original steam engine are showcased as part of the store design on the cellar level.

REI LANDS IN MANHATTAN

By Thomas J. Ryan

With great fanfare, REI finally made it to Broadway last week – or at least a block away - with its new store in lower Manhattan located in the Puck Building at Houston and Lafayette Streets.

The 35,000 square-foot store ranks as REI's fifth largest and is seen as the lynchpin for its expansion into the Tri-State NYC area as well as a way to reach international tourists. REI sees this as a huge opportunity to serve millions of local outdoor enthusiasts looking to play in New York City.

With a heavy dose of ads trumpeting its entry into the market via subway, sides of buses and other outdoor media including radio and its new Iphone App "Find Out", the store's grand opening arrived last week.

"We consider this a very important statement for us that is going to reach beyond the bounds of New York City," REI’s chief executive, Sally Jewell, told SGB Weekly at the opening night gala on December 1. ​"It's going to reach internationally because this is such an international city. Getting on the global radar for the co-op is really helpful. Even if there weren't visitors to the city who found us, there are so many people here who have really been underserved because between the retailers here - Paragon and EMS have been here for a long time and there's a number of smaller shops – it's tiny in terms of capacity relative to 10

SGB WEEKLY DECEMBER 12, 2011

the people in New York who do this stuff. If we did nothing more than serve this community, I think we could be very successful here."

The event drew a number of lawyers, builders and architects who guided the reconstruction of the historic Puck building, which features brick walls, ceilings and steel columns drawing reference to the design of the original late 1890's structure. A large number in the crowd also included local conservation and outdoor advocacy groups that have formed relationships with the mega-outdoor chain.

In the past 12 months REI has donated more than $300,000 to organizations restoring or maintaining outdoor areas in the Tri-State area including the Bronx River Alliance, Central Park Conservancy, Friends of the High Line, Prospect Park Alliance and New York Restoration Project. Last month REI SoHo employees also volunteered in each of New York City's five boroughs.

In a friendly gesture, guests also included a number of local competitors: Eastern Mountain Sports, Bicycle Habitat, Brooklyn Boulders, Gear To Go Outfitters and Outdoor Bound Adventures. Paragon Sports and Tent

& Trails were also invited to the opening festivities. Jewell said REI always invited potential competitors to opening events because the groups all share the same goal of raising outdoor awareness.

"We're all in the business of connecting people to the outdoors and nature," said Jewell. "And if we do our jobs right as we market, we get people into REI and they will find all the outdoor stores around us. It's not actually uncommon for people in the outdoor community to locate near an REI because it can help drive traffic. Will Manzer at EMS and I are regular participants on lobby days on Capitol ​Hill. He's on the Outdoor Industry Association's board along with my colleague, ​Brian Unmacht. We recognize that the potential is to make the market bigger, not to duke it out with each other over a small pie."

Speaking to SGB Weekly at the event, Manzer appeared to agree. He said, "Congrats to Sally! She's one of my favorite people and I’m glad she's here with me helping get people outdoors in New York."

The store features camping, climbing, cycling, snow sports and travel products on the

main floor, while men’s, women’s and kid’s clothing and footwear are housed on the cellar level. The design reflects a painstaking process to incorporate elements of the natural world and historical items that were reclaimed from the Puck Building into the retail space.

Design elements include: • The building’s brick walls and ceilings, and steel columns were exposed to honor the original structure as it appeared in the late 1890’s; • A central stairwell connects the main floor with two sub-grade shopping levels, open to the public for the first time; • Wood from the original construction was repurposed into the store’s cashier counters and canopies, display tables, chair railings, mirrors, wall coverings, signage and more; • Two focal chandeliers were refurbished by partnering with local artist Robert Odgen; • Two 14-foot flywheels from the building’s original steam power plant are showcased on the cellar level near the historical walls featuring REI’s foundWEEK 1150 | SGBweekly.com

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Wall featuring stone tablets recovered during construction process and displayed adjacent to the store’s cashier area on the cellar floor

ers, Lloyd and Mary Anderson, and the Puck Building heritage; • Approximately 30 original stone printing tablets discovered during construction and dating back to the early 1900’s are displayed near the cellar-level cashier area; • Display tables throughout the store incorporate additional historic items found in the Puck Building, including stairs, fans and steel from the original steam power plant.

The Puck Building is the original home of the Puck Magazine and J. Ottman Lithographic Company and represents one of the great surviving buildings of New York’s old printing and publishing district dating back to the 19th century. The building was added to the National Registry of Historic Places in 1983.

"We worked really hard to make sure as we restored the Puck Building that we did it in a way that is consistent with its history and respectful of that iconic building," said Tim Spangler, REI’s senior vice president of retail.

We tried to build a store that didn't take over the building but sticks in the building and 12

SGB WEEKLY DECEMBER 12, 2011

An example of the stone printing tablets found during construction. Approximately 30 are displayed on the store’s cellar floor

blends in nicely. We think the store will be particularly unique just from the historical perspective." ​But he said the store will also stand out for services, including a dedicated ​community space in the sub-cellar to enable local nonprofits to host outdoor classes, presentations and events. A rental department will offer seasonal gear for New Yorkers to try outdoor activities and an active REI Outdoor School program will also be rolled out.

"The outdoor school is really where we help take folks from the classroom into the outdoors and teach them about new activities," said Spangler. "We already started some of that in the market, even before the store kicked in. For example, this summer we've been running paddling and stand-up paddling courses in the Tri-State area. We've been running hiking and backpacking trips and navigation classes. This winter we expect to offer snowshoeing and Nordic skiing.

And I expect to see us expand on that. But that kind of functionality out of one of our stores is fairly unique and something we're really excited about bringing to New York City."

Spangler said that REI was exploring opening the store in the city for a number of years with figures showing 62,000 of its active members residing in the greater New York City area. With three stores opened in 2011, it now has six stores in the Tri-State area, including Manhattan. But besides reaching existing members, Spangler said market research and surveying both in the Manhattan market and the Tri-State area confirmed an abundance of outdoor enthusiasts in the city and region.

CLICK IMAGES BELOW TO PLAY VIDEOS "There are a lot of people who are running and biking obviously," said Spangler. "But we also have folks who are standup paddle boarding in the Hudson River; they're paddling all over the city. There's also folks who are hiking and climbing indoors in the gyms, then heading out to the Gunks every weekend to get out on the rocks. So there is a breadth of opportunity. And when it snows in the city, you see the cross country skis and snowshoes come out.

There's actually ample opportunity to find folks who are engaged in just about anything we touch."

Jewell also feels the city has mellowed over the years.

"New York City has evolved in such a positive way from when I first started coming here in the late 70s and it continues to evolve," said Jewell. "People are nicer, friendlier and more helpful. I think that REI's level of service and what we provide would have been more unique 20 years ago than what we have today. I've had such incredible service in a lot of places I've been to in New York. The city has evolved and there's just tons of people who enjoy playing outside and I think we'll fit right into that."

New York City over the years has also become more accommodating to outdoor play, including installing bike lanes across the metropolis in a broad program over the last few years. And with the burgeoning SoHo shopping district expanding east of Broadway and the Puck Building space becoming available, much of REI's entry came down to timing.

Said Spangler, "Generally, we like SoHo. It's highend retail. It's quality retail. It's the type of folks that we like to ​associates ourselves with in terms of adjacencies and partners."

Ake Skeppner, who founded Thule, Inc. and was in attendance, believes the city ​will warmly welcome REI. "It's a beautiful old building and it's really in a very authentic part of New York City. We see a lot of our outdoor racks on cars here. New Yorkers are big outdoors people."

As with any move into New York City, REI's wasn't without hurdles. Beside honoring the historical building in construction, tasks included fighting through bureaucratic issues and other costs that come with working with a major city. The rent is also high although REI fully expects to make money at the location while capitalizing on the side benefits.

"New York is pricey and the rents are commensurate with the quality of retail that people expect to get," said Spangler. "We certainly had to look at that and part of the timing was finding a rent structure

that would work for our business. At the same time, we recognize that moving into an iconic building in Manhattan isn't going to be cheap either. But a lot of the benefits that are going to come from that in terms of brand awareness, getting in front of an international population, and really getting the word out about REI is going to offset that in ways that we can't measure right now. We feel that this makes a lot of sense from a business standpoint. We think the business is there. We think the opportunity is there. And despite the fact it's a big pill to swallow when you look at rents in Manhattan in general, it's the best city in the country to be doing retail in and we have to figure out a way to make it work. We think we can." ■

DEBUTS SWIMSUITS WITH 3D MAPPING SPEEDO DEBUTS FASTSKIN3 SWIMSUIT TECHNOLOGY AT IT'S GLOBAL LAUNCH THAT PROMISES TO BREAK RECORDS AT THE 2012 OLYMPIC GAMES IN LONDON.

By Thomas J. Ryan

Team Speedo USA debuts the Speedo FASTSKIN3 Racing system Photos courtesy of Getty Images for Speedo

Speedo brought out Team U.S.A. Olympic Gold Medalist Michael Phelps and eight other Olympic swimming hopefuls to launch their latest skin-tight suits that the U.S. team hopes will help them win another round of medals at next year's Olympics in London.

Unveiled on November 30th during a global launch event held at Skylight Studios in New York City, the Speedo FASTSKIN3 Racing System features a technical suit, cap and goggles all engineered to work together to maximize a swimmers efficiency in the water.

Critically, Speedo has secured full FINA (FĂŠdĂŠration Internationale de Natation) approval.

Speedo's controversial high-tech LZR Racer released in 2008, helped swimmers break dozens of records, including 23 at the 2008 Beijing Olympics. FINA initially approved the suit and all other Speedo FASTSKIN competition suits but following a stream of toppled records, the FINA Congress voted almost unanimously in 2009 to 14

SGB WEEKLY DECEMBER 12, 2011

reverse its stand and banned all body-length swimsuits, including the LZR Racer. The new policy stated that men's swimsuits could maximally cover the area from the waist to the knee, and the women's counterparts from the shoulder to the knee. The new rules also stated that the fabric used must be a "textile" or a woven material and that a swimsuit may not have any fastening devices such as a zipper (drawstrings on male jammers are allowed). The new regulations took effect January 2010.

The FASTSKIN3 gear is what members of Team U.S.A. will wear to compete in the 2012 London Olympic Games.

"Were all FINA approved," Jim Gerson, president of Speedo, told SGB Weekly at the New York City launch event. "We worked very closely with FINA to make sure they're okay with what we're working on. So we're all good to go."

The launch also stirred up more speculation that many records

would be broken again with the marked advances in the FASTSKIN3 Racing System.

Asked whether he saw records being broken, Gerson said, "It's up to the guys in the back, "referring to the Olympians, also including stars Ryan Lochte and Natalie Coughlin, at the event. "We're going to give them the best opportunity."

The FASTSKIN3 Racing System promises to create "the world’s fastest cap, goggle and suit ever."

In development for four years, FASTSKIN3 Racing System tapped into extensive research and development by Speedo’s inhouse Aqualab facility while working with elite athletes and coaches, sports scientists, global hydrodynamics experts and optical engineers around the world. Speedo also worked with noted sports psychologists from Loughborough University (UK) in the development of the confidence-inspiring design of the Speedo FASTSKIN3 Racing System, with practical elements including a blue/grey tint on the lens of the goggle to evoke feelings of calm and focus.

One major difference is that while suits, caps and goggles are conventionally designed separately, Speedo designed and engineered all three elements together to generate a unified system that works in synergy.

The system also features innovative design techniques including the use of the same 3D scanning technology used to generate realistic CGI in Hollywood films.

"These are the fastest suits ever made," Speedo scientist and doctor Tom Waller said at the event. "We hope that means records will be broken but that still comes down to the swimmers. What we created is a system where all the technologies work in harmony with the swimmers' natural talent to give them a chance to maximize their potential."

Among the benefits include a passive drag reduction of 16.6 percent, an 11 percent improvement in the swimmer’s oxygen economy enabling them to swim stronger for longer, and a 5.2 percent reduction in fullbody active drag.

"In a sport where gold medals are decided by hundredths of a second, that's a huge advantage," said Phelps's coach Bob BowWEEK 1150 | SGBweekly.com Michael Phelps

15

"TO STEP IN THERE BEHIND THE BLOCK AND HAVE THAT LITTLE EXTRA BOOST OF CONFIDENCE IS SOMETHING THAT'S REALLY HELPED ME AND WHEN YOU'RE WEARING SPEEDO, YOU JUST NEVER THINK ABOUT IT. " - MICHAEL PHELPS

Michael Phelps

man, who helped develop the suits and also attended the event.

Bowman and Phelps were outspoken critics of the full-body polyurethane suits that reduced the 2009 world championships in Rome to farce and were later banned because they aided artificial buoyancy. Both said they were comfortable with the new suits.

"I think the difference between this and what happened before is that we're giving them an edge but we're doing it in three ways: cap, suit and goggles," said Bowman. "It's also done in a way that each swimmer can benefit the same from the suit. I don't think one swimmer will have a decided advantage over the competition because of the way the suit is put together and it's clearly within the FINA guidelines."

The Speedo FASTSKIN3 Racing System utilizes a new anatomical marking system, ‘Fit Point Markers’, at strategic points across the cap, suit, and googles which indicate how to align the Racing System accurately on the body to achieve optimum fit for the best performance. Intuitive IQ FIT technology maximizes swimming comfort while minimizing resistance and drag.

The FASTSKIN3 Cap is the first to feature the IQ Fit Cap Profile, designed using accurate 3D head mapping data. Made to fit head and face contours exactly, it delivers optimum comfort and hydrodynamic performance and ease of use. When combined with the Speedo FASTSKIN3 Super Elite Goggles, full-body drag force is reduced by 5.7 percent. A new Speedo Hair Management System also enhances swimming form and improves hydrodynamics for swimmers with long hair.

FASTSKIN3 Super Elite Goggles were designed with 3D global head scanning data to improve fit, leak resistance and provide comfort. With the unique IQ FIT seal and strap and Dive Stream outer profile that improves the contour of the swimmer’s head, localized force is reduced by up to 63.4 percent, minimizing the risk of goggle movement during a swim. The goggles also feature a

Ryan Lochte

Hydroscopic Lens that offers 180 degree peripheral vision.

The FASTSKIN3 Super Elite Swimsuit incorporates a 3D Zoned Compression fabric system throughout, sculpting the swimmer’s body to create the most efficient and hydrodynamic swimming shape in the water and reducing skin friction drag by up to 2.7 percent.

The system incorporates revolutionary Hydro K-Zone 3D fabric which provides high power, graduated compression throughout, helping to achieve the optimum hydrodynamic profile. A Pulse-Flex Fabric used on the shoulders and panels offers high stretch in one direction for freedom of movement with powerful compression.

A ‘Body Stability Web’ constant seam framework gives greater stability, improving stroke and enhancing the effectiveness of starts and turns by up to 3 percent, while an IQ FIT ‘snap back’ waistband on the male jammer eliminates the need for drawstrings for a flatter, more efficient profile.

For female suits, an Armhole Entry system makes it easier to put on while maintaining the best possible fit and maximum fabric coverage, optimizing the suit’s hydrodynamic properties.

"We're in our performance zone, bringing together technology that's never existed before," said Gerson.

The athletes at the event, who also participated as part of a fashion show, not surprisingly echoed those sentiments.

Natalie Coughlin

Coach Bob Bowman at the launch of the Speedo FASTSKIN3 Racing system

Lochte said, "When I put it on, I feel superhuman. I feel like I can beat anyone. When I get on the blocks, I'm like an action figure."

He added, "It's out there for everyone.

It's not like it's only available for Speedo athletes. It's out there for any swimmer who wants to wear it so it's to their disadvantage if they don't want to wear it."

For Coughlin, the biggest benefit were the new goggles that are fitted with a hydroscopic lens and 180 degree peripheral vision, making them look like spider's eyes.

She said, "I'm a backstroker so I can't afford to take a look around and see where my competitors are but with these, I can see everything without moving my head."

Said Phelps, "I think the sport's changed so much with the technology. Being able to feel comfortable, confident, knowing I'm in the best suit, has always been something that I felt was a cool feeling. To step in there behind the block and have that little extra boost of confidence is something that's re-

ally helped me and when you're wearing Speedo, you just never think about it. It's something that comes natural. Through this whole thing it's cool having the three parts all together in one big package."

The FASTSKIN3 Collection features two levels of technology, each tailored to the needs of swimmers of differing abilities: SUPER ELITE for professional athletes and ELITE for advanced competitors. The Men’s FASTSKIN3 Super Elite suit is available in a high-waisted jammer silhouette and the Men’s Elite suit is available in a traditional jammer silhouette. The Women’s FASTSKIN3 Super Elite suit is available in both a closedback kneeskin and recordbreaker kneeskin silhouette; the Women’s FASTSKIN3 Elite suit is available in the recordbreaker kneeskin silhouette.

The FASTSKIN3 Racing System is available for pre-order this month shipping in January 2012, at www.speedousa.com and via Speedo-authorized team dealers. ■ WEEK 1150 | SGBweekly.com

Michael Phelps

17

CALENDAR

JANUARY

MAY

10-12 ATA Show (Archery Trade

Association) Columbus, OH

6-9

NSGA Management Conference San Antonio, TX

12-14 Surf Expo Orlando, FL

JUNE

13-16

21-22

NBS Summer Market Austin, TX

28-30

Sports, Inc. Athletic Show Indianapolis, IN

NBS Winter Market Denver, CO

17-20 SHOT Show Las Vegas, NV 18

Outdoor Retailer All Mtn 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 30-31

SIA On-Snow Demo/Free Ride Fest Winter Park Resort, CO

JULY 19-21

ADA Spring Show Orlando, FL

AUGUST 9-11

Sports, Inc. Outdoor Show Indianapolis, IN

NOVEMBER

7-9

FEBRUARY 12-14 3-7 NBS Spring Market

Fort Worth, Texas 18-20 15-18 Sports Inc. Outdoor Show

Phoenix, AZ

TAG Fall/Winter Show N. Charleston, SC ADA Fall Show Las Vegas, NV Sports, Inc. Athletic Show Las Vegaas, NV

TRADE ASSOCIATIONS | BUYING GROUPS

For full year calendar go to sportsonesource.com/events

Athletic Dealers of America 1395 Highland Avenue Melbourne, FL 32935 t 321.254.0091 f 321.242.7419 athleticdealersofamerica.com National Shooting Sports Foundation Flintlock Ridge Office Center 11 Mile Hill Road Newtown, CT 06470 t 203.426.1320 f. 203.426.1087 nxsf.org 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 nbs.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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