SGB WEEKLY 1231 by SportsOneSource

ISSUE 1231 JULY 30, 2012

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Group Publisher Editor In Chief James Hartford james@sportsonesource.com 704.987.3450

ISSUE 1231 JULY 30, 2012

Senior Business Editor Thomas J. Ryan tryan@sportsonesource.com 917.375.4699 Contributing Editors Aaron H. Bible, Eugene Buchanan, Fernando J. Delgado, Charlie Lunan, Matt Powell Creative Director Teresa Hartford teresa@sportsonesource.com 704.987.3450 (x105)

The Weekly Digital Magazine for the Sporting Goods Industry

Graphic Designer Camila Amortegui camila@sportsonesource.com 704.987.3450 (x103)

Sebastian Restrepo Special Projects Manager Dao Huynh dao@sportsonesource.com 704.987.3450 (x109) President, Sports & Outdoor Paul Gagner pgagner@sportsonesource.com 303.997.7302 VP Business Development / East Barry Gauthier barry@sportsonesource.com 774.553.5312 VP Business Development / West Barry Schrimsher bschrimsher@sportsonesource.com 503.784.6267 VP Marketing / Product Development Gregg Hartley ghartley@sportsonesource.com 561.543.7789 Chief Information Officer Mark Fine mark@sportsonesource.com 561.615.0240 (x224) Advertising Sales Account Manager / Northeast Buz Keenan buz@sportsonesource.com 201.887.5112

Advertising Sales Account Managers / Midwest Barry Kingwill & Jim Kingwill bkingwill@sportsonesource.com jkingwill@sportsonesource.com 847.537.9196 Advertising Sales Account Manager / Southeast Katie O'Donohue katieo@sportsonesource.com 828.244.3043 Circulation & Subscriptions Subs@sportsonesource.com SportsOneSource Publications Print Magazine: SGB Digital Magazines: SGB Weekly, SGB Performance TEAM Business Newsletters: The B.O.S.S. Report Sports Executive Weekly Weekly Updates: SGB, Footwear Business, Outdoor Business, Sportsman’s Business, TEAM Business SportsOneSource Research SportScanInfo, OIA VantagePoint, SOS Research

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10 The co-owners of Austin Canoe & Kayak from left to right: Chris Hackerd, VP, store operations, Peter Messana, CEO, and Steve Messana, president

NEWS

4 6 8

NEW BALANCE Lobbies Capital Hill Over Tariffs MOVERS & SHAKERS LEATHERMAN Snaps Up Multi-Tool Upstart BY THE NUMBERS SAMSONITE To Acquire High Sierra

RETAILER FOCUS 10

AUSTIN CANOE & KAYAK TURNING HEADS - Customer Focus, Low Costs and E-commerce Savvy Help Texas Trio Build Market Winner

FEATURES

12 16 18

PADDLESPORTS REBOUNDS IN 2012 THE SUP SIDE – The Standup Craze Is The Fastest Growing Section In Paddlesports BOAT DESIGN TRENDS FOR 2013 From The World's Best Boat Designers

DEPARTMENTS 22

I AM… SGB Kenji Haroutunian, VP, Nielsen Expositions and Group Show Director Outdoor Retailer

Copyright 2012 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

JULY 30, 2012 | SGBWeekly.com

NEWS

NEW BALANCE LOBBIES CAPITAL HILL OVER TARIFFS Officials and factory employees from New Balance on July 8 lobbied on Capitol Hill to keep tariffs in place on foreign-made shoes. The group received vows of help from members of the Massachusetts and Maine congressional delegations. New Balance co-hosted the news conference along with the RPFMA (Rubber and Plastic Footwear Manufacturers Association) last Wednesday to discuss the importance of supporting domestic footwear manufacturing, and keeping jobs in the U.S., in light of ongoing negotiations for the Trans Pacific Partnership and changes to U.S. trade policy. Lifting tariffs on athletic shoes made in China and Vietnam could endanger the jobs of 4,000 employees of Boston-based New Balance, according to company officials. "New Balance is proud to make shoes in the U.S. despite the inherent challenges that caused the rest of the athletic footwear industry to move all of their production offshore," said Rob DeMartini, New Balance President & CEO in a statement. "We recognize the great work that our manufacturing associates do every day and we hope that the Administration will take the appropriate steps to foster and protect domestic manufacturing. There is a national conversation on jobs and the economy and those in government having this dialogue need to recognize that thousands of jobs hang in the balance.” New Balance is currently the only athletic shoe company that manufactures footwear in the U.S. with 25 percent of its U.S. footwear shipments produced at five New England facilities in Boston, Lawrence, MA and Norway, Norridgewock and Skowhegan, ME. The company also operates a manufacturing facility in Flimby, U.K. Where the domestic value is at least 70 percent, New Balance labels the shoe “Made in USA.” Where it falls below 70 percent, the label is qualified referencing domestic and imported materials. Participating New Balance associates included Raye Wentworth, New Balance Plant Manager in Norridgewock, ME and Brendan Melly, New Balance Plant Manager in Lawrence, MA. Additional manufacturing associates who attended included Arelis Villa Roman (Lawrence factory), Elisangela Monteiro (Boston factory), George Martikke and Oscar Brann (Norridgewock factory), and Sherry Piirainen (Norway factory). New Balance store owners Tom Luck from Ohio, Wesley McCluney from Alabama/Georgia and John Strojny from Delaware/Virginia/ Washington, D.C. also attended. Representatives from Canada's Kamik were also in attendance. 4 SGBWeekly.com | JULY 30, 2012

U.S. Representative Niki Tsongas (D-MA) meeting with New Balance manufacturing associates and Rob DeMartini, President & CEO

From left to right: Senator Scot Brown (R-MA), Senator Susan Collins (R-ME), Rob DeMartini (NB President & CEO), U.S. Representative Michael Michaud (D-ME), U.S. Representative Richard Neal (D-MA).

Senator Susan Collins (R-ME) said the need to preserve American jobs becomes more critical in light of “persistently high” unemployment rates. She said, “Domestic footwear production accounts for more than 4,000 U.S. jobs, including nearly 900 in my home state of Maine. It is critical that the final Trans-Pacific Partnership agreement not harm the manufacturers who continue to produce products here in the U.S. thus forcing even more production overseas,” “Massachusetts has a lengthy and strong history of garment and textile manufacturing, and New Balance proudly carries on that tradition as a model American manufacturer that provides well-paying, skilled jobs,” added Congresswoman Niki Tsongas (D-MA). “We must work to strike a better balance between the need to open access to new markets for American goods while ensuring that American manufacturing jobs are not simply outsourced to the lowest bidder. The success of this impressive company demonstrates that manufacturing jobs can stay here, but we need to pursue policies at the federal level that support their efforts.”

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NEWS

MOVERS & SHAKERS Leader Bike announced the appointment of Keith Simmons, the founder and current co-owner of Xterra Wetsuits, as the company’s new president. Former President and Founder Salvador Lombroso has moved into the position of CEO and will focus his resources primarily on research, development and global positioning.

Brewzer Key Chain

Asics America announced the signing of two-time National Collegiate Athletic Association (NCAA) singles champion Steve Johnson. Gregory Mountain Products has hired Rebecca Larsen as product line manager, where she will collaborate with the product development, sales and marketing teams to support the brand’s continued market share growth. Talus Outdoor Technologies, LLC, announced that Bret Wydysh, BSRT, RRT has joined its health advisory board. Crazy Creek Products announced that Neil Totman of the Nor’easter Group has joined the Crazy Creek sales team. Totman will be working with dealers and other key channels in the Northeast and New England regions. Mountainsmith hired Jeremy Dodge as sales and marketing coordinator to maintain its website, expand direct marketing, manage sponsorships, assist new dealers and follow up on new distribution channels. Big Rock Sports announced that Mark Harrison has agreed to join Big Rock Sports as director of merchandising for Canada. Harrison has spent his career with Canadian Tire Corporation, with the last six years in the Outdoor Recreation category. Petzl America appointed Blair Williams to sales director. Prior to joining Petzl, Williams was the government program manager with Grainger, Inc.

6 SGBWeekly.com | JULY 30, 2012

Mako Bike Tool

Piranha Pocket Tool

LEATHERMAN SNAPS UP MULTI-TOOL UPSTART Leatherman Tool Group, Inc. (LTG) has signed a definitive agreement to acquire the PocketToolX Company (PTX), a Seattle start-up that outgrew its capital resources when sales of its single-piece multi-tools caught on faster than expected. The deal will give Leatherman a jumpstart in a small, but rapidly emerging market it had already planned to enter. Terms of the transaction were not disclosed. PTX was created in 2009 by MK7 Designs, a Seattle product development and design and consulting firm that also occasionally launches and develops consumer brands. In the case of PTX, success came faster than expected as cyclists, utility workers and outdoor enthusiasts embraced its minimalist designs. Last week, PTX’s website said its Brewzer Key-chain, Mako Bike and Piranha and Piranha Ti pocket tools were sold out and that back orders could not be placed. LTG was already planning on making a line of single-piece multi-tools when Sawtooth Capital called on the company to see if it might be interested in acquiring PTX, said Ben Rivera, the VP of business development and principal design engineer at LTG. “One of the reasons we see a good fit for Leatherman is that PTX was constrained from growing by their cash position,” said Rivera. “Leatherman does not have that constraint. We plan to resume shipping the PTX Product on September 3.”

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JULY 30, 2012 | SGBWeekly.com

NEWS

BY THE NUMBERS

27%

Under Armour, Inc. reported revenues increased 27 percent in the second quarter, to $369 million from $291 million in the prior year's period. Net income increased 7 percent in the second quarter of 2012 to $7 million compared with $6 million in the prior year's period. Net income growth trailed net revenue growth, mostly due to a planned shift of marketing expenses into the second quarter.

17.7%

Jarden Corp. reported that operating earnings for its Outdoor Solutions unit declined 17.7 percent to $85.3 million. Net sales reached $747.3 million in the second quarter ended June 30, down 3.2 percent from the same period in 2011. The segment, which owns the Coleman, Ex-Officio, K2, Market, Marmot, Penn, Rawlings, Volkl and several fishing brands, earned $95.7 million, down 19.5 percent from the year earlier quarter.

16%

VF Corp. reported revenues in the second quarter rose 16 percent to $2.1 billion from $1.8 billion in 2011, and included $239 million from its acquisition of Timberland Co. Organic revenue growth in the quarter grew 3 percent, or 6 percent currency-neutral, driven by strong growth in the Outdoor & Action Sports and International businesses.

15.1%

Rocky Brands, Inc. reported revenues were down 15.1 percent to $44.4 million from $52.3 million due in part to the effects of storm damage. Earnings in its second quarter slumped to $218,000, or 3 cents a share, from $2.3 million, or 30 cents, a year ago. The company said that severe storms on June 29 knocked out power to more than 660,000 homes and businesses in Ohio, temporarily suspending shipping which caused approximately $2.5 million of shipments to move from the second quarter into the third quarter.

$221 million

EBay, Inc. reported that its GSI business, which was acquired in the second quarter of 2011, contributed $221 million in revenue for the second quarter. GSI generated $674 million in global ecommerce (GeC) merchandise sales during the second quarter. Same store sales grew 21 percent year over year, reflecting strong e-commerce sales from retail clients. 8 SGBWeekly.com | JULY 30, 2012

SAMSONITE TO ACQUIRE HIGH SIERRA Samsonite International has entered into an agreement to acquire High Sierra Sport Company, the U.S.-based manufacturer and distributor of adventure travel luggage. The move strategically extends Samsonite’s brand portfolio into the casual outdoor and sport segments of the global luggage market. Samsonite agreed to purchase all High Sierra assets for $110 million in cash, funded from internal sources and Samsonite’s recently expanded Revolving Credit Facility of $300 million. High Sierra’s net sales grew by 31 percent to $64 million in 2011, according to a statement by the company. Approximately 90 percent of High Sierra’s 2011 sales came from within the U.S. Samsonite anticipates High Sierra will continue achieving double-digit growth with the acquisition. The transaction is expected to close in the current quarter and to be accretive to Samsonite’s earnings per share in 2013 (the first full earnings year following closing). High Sierra’s lines of backpacks, adventure luggage, casual and sports bags appeal to active-lifestyle consumers including outdoor enthusiasts, skiers and snowboarders, adventure travelers and students. The acquisition provides Samsonite with significant opportunities for brand extensions, direct and through licenses. Significantly, Samsonite also gains access to sporting goods retailers, an important distribution channel where it is currently limited. The company also plans to open a number of High Sierra retail stores in North America and around the world. “Today marks a thrilling moment in High Sierra’s history and opens the door to a whole new future for the brand,” said High Sierra CEO Hank Bernbaum. “In Samsonite, we have found a true partner that values our high quality, innovative products and the tremendous potential of our brand. It will be exciting to see how High Sierra develops in the hands of Samsonite given its global scale and expertise. There is an unprecedented opportunity to grow the High Sierra brand and reach millions of new customers in the U.S. and around the world.” The outdoor and active lifestyle investment banking group D.A. Davidson & Company, a group that focuses exclusively on advising companies and clients in the outdoor industry around the world, advised High Sierra on their sale to Samsonite.

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R E TA I L E R F O C U S

ACK tries to avoid keeping kayaks on racks and prefers to have them conveniently available on the showroom floor for customers to try out either by sitting in them or on them.

AUSTIN CANOE & KAYAK TURNING HEADS

CUSTOMER FOCUS, LOW COSTS, AND E-COMMERCE SAVVY HELP TEXAS TRIO BUILD MARKET WINNER By Charlie Lunan

iewing the employee profiles in the “About Us” section of Austin Canoe & Kayak’s online store at ACK.com, you are immediately struck by the portraits. The company’s three partners are not shown fishing from a kayak, floating down a river or dressed in a rash guard or PFD, but sitting at their desks beaming in front of their computer terminals. Instead of focusing on image, they are focused on business, and their approach and practices have people talking. Notably, the partners withhold cost information from store managers so trying to earn a certain margin on every sale won’t distract them. “We don’t want our managers to worry about losing margin,” said Peter Messana, CEO for MSP Holdings, LLC, which operates Austin Canoe & Kayak stores in Austin, San Marcos and Houston TX, ACK.com and RackBoys.com. “We tell 10 SGBWeekly.com | JULY 30, 2012

them, 'Guess what? Ten percent is better than zero.' You can't deposit a percentage in the bank so don't worry.” Hersy, you say? Perhaps. Yet with its three brick-and-mortar stores in Texas and its ACK.com and RackBoys.com online stores, Austin-based MSP Holdings, LLC is turning heads in the outdoor industry as one of a handful of independent paddlesports dealers to truly understand omnichannel retailing. Last year, Messana was named one of the SportsOneSource Group’s SGB 40 Under 40 honorees and the company has stacked up a host of other awards from both trade and consumer publications.

CUSTOMERS FIRST, MARGINS SECOND Messana, as well as his vendors, attribute the company’s success to a simple philosophy – build customer relationships first and profits will follow. This is particularly important online, where ACK has experienced tremendous growth thanks to its policy of matching price even on sub-$500 boats, to get a customer relationship started and a reputation for excellent customer service. Once trust is established, Messana figures MSP stores have plenty of time to earn back profit through add-on sales of paddles, PFDs, apparel, footwear and other higher-margin accessories. The practice has helped place it among the largest independent dealers for several paddlesports brands.

"ACK IS A PERFECT EXAMPLE OF A BALANCED BUSINESS THAT IS WORKING IN ALL THE CHANNELS." - Sue Rechner, CEO Confluence Watersports Hobie rep Steve Oxenford describes ACK as “family business meets corporate efficiency.” “Marketing and community outreach helped put ACK on the map, but customer loyalty has been the key to their ongoing success,” he said. Importantly for vendors, MSP has done that in large part by growing the market. “They have grown substantially with us over the last several years and I don't think its cannibalizing growth,” said Sue Rechner, CEO for Confluence Watersports, which owns the Wilderness Systems, Perception Kayak, and Mad River Canoe brands. “They opened up the business to more people.” Locating stores off the beaten track, meanwhile, enables ACK to keep brick-and-mortar costs down so it can match competitor’s boat prices, whether selling online or from its stores. “We locate our stores in less desirable parts of town, which allows us to not waste time with tire kickers,” noted Messana. “You don't just walk into our stores because you are passing by. This allows you to have more affordable real estate and service your customers better.”

COMFORTABLE CODING OR KAYAKING ACK’s founders are among a new breed of independent outdoor specialty retailer who are as comfortable diving deep into Google’s latest search algorithms and coding mobile apps as they are walking the floor of a retail showroom or the Outdoor Retailer show. Messana holds a degree in business administration from the University of Arizona at Tucson and earned a six Sigma Black Belt working as a project manager at Home Depot from 1998 to 2004 before taking a position at Dell Computer. Along the way, he became proficient in the software applications Microsoft Access, Microsoft Project, Minitab, JMP, Optika Acorde, Visio, SQL, VBA, Java, Informix SQL, and DB2. Once in Austin, he and his brother Steve, who had also worked at Home Depot, began looking for business opportunities when they came across Bill Gossett’s Austin Canoe & Kayak. “We were looking for something to do and we both love retail and the outdoors and saw it,” said Peter Messana. In 2005, the brothers brought on fellow Home Depot alum Christopher Hackerd as an investor and purchased the store. Peter took on marketing, IT, finance,

and operations; Steve became president and general merchandise manager; and Hackerd manages the brick-and-mortar stores. Within six months the trio opened a second location and eight months later they began selling online. The partners built their own inventory management and ordering system from the ground up and began amassing content, including how-to articles, product videos and customer product reviews to replicate the specialty store experience online. “While the cost of maintaining and adding on may be higher than upgrading a packaged product, we have the flexibility to make changes in seconds, and having it 100 percent in-house means we have experts that know the code inside and out,” said Peter Messana. “It does provide risks as we continue to grow but we accept those risks based on the return we feel we will get from being lightening fast.”

A TRUE OMNI-CHANNEL RETAILER Under Peter Messana’s leadership, ACK has developed a reputation for being a first mover in the outdoor specialty retail space. Thanks to Messana’s programming and retailing acumen, the company has fully integrated its brick-and-mortar and online channels. That means employees running the company’s three brick-and-mortar and two e-commerce stores are all looking at the same inventory in a central warehouse in real time. This enables the company to avoid dreaded out-of-stocks and provide a uniform customer experience across all its channels, including assortments, pricing and, to the extent the Internet enables it, product expertise. Channel integration also gives ACK the ability to analyze data at a transaction level, customer level or at a product level across all of its channels in real time. This greatly enhances the company’s ability to achieve what many gurus are now calling “demand-driven retailing.” Such companies excel at mining data to spot trends early, personalize marketing messages and project

future demand right down to the individual SKU level. "MARKETING AND COMMUNITY OUTREACH HELPED PUT ACK ON THE MAP, BUT CUSTOMER LOYALTY HAS BEEN THE KEY TO THEIR ONGOING SUCCESS." - Hobie rep, Steve Oxenford ACK buyers even monitor the company’s more than 13,000 customer product reviews as well as hits on its more than 2,000 how-to articles and 1,000 product videos to define changes in consumer attitudes, behavior and preferences. “We are often asked why we don't have 1- or 2-star-rated products. The assumption a lot of people make is that we alter or remove the reviews,” said Messana. “It is quite the opposite. If a product is routinely rated poorly we simply remove the product.“ Another competitive advantage for ACK has been its decision to develop programming expertise in-house. The company’s e-commerce software is written 100 percent in-house, which means it can move quickly when it sees the need to make changes or add features. In May for example, the company launched an app specifically for the Apple iPad after noticing a 2,000 percent jump in hits from such devices to its website. “They are very in tune with consumers,” said Confluence’s Rechner. “They know what's trending up and what's trending down. They move with the market rather than expect the market to stay the same. It hurts us when retailers don't respond to what consumers are looking for and where consumers are shopping. ACK is a perfect example of a balanced business that is working in all the channels.” All those things are important, but Messana said none of it would be possible if MSP’s stores had not earned the trust of customers. “In the end,” said Messana, “we do what we feel is best for the customer - sometimes without regard for what is most profitable short-term.” ■

PADDLESPORTS REBOUNDS S IN 2012 A LOW-FLOW WATER YEAR IS NO MATCH FOR THE OVERALL MOMENTUM OF THE SPORT By Eugene Buchanan

12 SGBWeekly.com | JULY 30, 2012

trong sales, new manufacturing facilities, acquisitions – all this and more is seeing the 2012 paddlesports season off to a strong start as rollicking as the medium many of its products are designed for. According to retail point-of-sale data compiled by SportScanInfo for OIA VantagePoint, year-to-date paddlesports sales for the fiscal yearto-date period through June totaled approximately $248.5 million. “We saw an early–and strong–start to the year due to warm spring conditions and lack of winter in many parts of the country in the first quarter that had consumers turning in their boots for boats,” observed James Hartford, CEO and chief market analyst at The SportsOneSource Group, which manages the OIA VantagePoint platform. “However, we have seen some of that early momentum give way to more recent

Ten Mile Creek Kayaks owner Matti Wade plays in his backyard during this year's early runoff.

declines as paddlers deal with lower water levels and limited snow pack in many parts of the country.” Overall sales for the five-month period were up in the mid-single-digit range after double-digit growth through April. The mid-single-digit trend into July as accessories sales fueled more gains during the summer months. Still, manufacturers, especially boat builders, are basking in the momentum and biggest gains the category has seen in years. While boat sales are leading the way, not all sub-categories are chipping in equally. The rec and sit-on-top categories are clearly fueling the trend, according to the OIA VantagePoint data, while whitewater turned in flattish sales and canoe sales moved lower as more sporting enthusiasts shift to kayak models. Driving the rec and sit-on-top sectors are both angling models and those designed for touring and moving current. “People are discovering the fun of paddling on rivers,” maintains Cheri McKenzie, marketing director for Confluence Watersports, whose brands include Perception, Wave Sport, Dagger, Wilderness Systems, Harmony and Bomber Gear. “They may not be ready for the rigors of whitewater, but they want to get on the water and explore. We’re also seeing couples and families wanting to enjoy the outdoors together more, so more designs are catering to that.” Ramping up for the increased demand, Confluence recently completed a $13 million move into a new 300,000-square-foot facility in Greenville, SC, where it has consolidated its operations for even more planned growth. “It was important for us to consolidate our teams while providing for expansion,” added Confluence CEO Sue Rechner. “It will help us gain efficiencies that will translate back into investments to strengthen our brands even more.”Rechner added that the move follows the growth it’s seeing in the industry as a whole. “Our retailers are having very strong sell-through and sales this year and have cleared-out inventory,” she said. “Clearly kayaking is starting to reach the mainstream. The further its image gets away from the extreme side, the more it becomes accepted by mainstream America.” Strong sales, new manufacturing facilities, acquisitions - all this and more is seeing the 2012 paddlesports season off to a strong start as rollicking as the medium many of its products are designed for. According to retail point-of-sale data compiled by SportScanInfo for OIA VantagePoint, year-to-date paddlesports sales for the fiscal yearto-date period through June totaled approximately $248.5 million. “We saw an early–and strong–start to the year due to warm spring conditions and lack of winter in many parts of the country in the first quarter that had consumers turning in their boots for boats,” observed James Hartford, CEO and chief market analyst at The SportsOneSource Group, which manages the OIA VantagePoint platform. “However, we have seen some of that early momentum give way to more recent declines as paddlers deal with lower water levels and limited snow pack in many parts of the country.” Overall sales for the five-month period

were up in the mid-single-digit range after double-digit growth through April. The mid-single-digit trend into July as accessories sales fueled more gains during the summer months. Still, manufacturers, especially boat builders, are basking in the momentum and biggest gains the category has seen in years. While boat sales are leading the way, not all sub-categories are chipping in equally. The rec and sit-on-top categories are clearly fueling the trend, according to the OIA VantagePoint data, while whitewater turned in flattish sales and canoe sales moved lower as more sporting enthusiasts shift to kayak models. Driving the rec and sit-on-top sectors are both angling models and those designed for touring and moving current. “People are discovering the fun of paddling on rivers,” maintains Cheri McKenzie, marketing director for Confluence Watersports, whose brands include Perception, Wave Sport, Dagger, Wilderness Systems, Harmony and Bomber Gear. “They may not be ready for the rigors of whitewater, but they want to get on the water and explore. We’re also seeing couples and families wanting to enjoy the outdoors together more, so more designs are catering to that.” Ramping up for the increased demand, Confluence recently completed a $13 million move into a new 300,000-square-foot facility JULY 30, 2012 | SGBWeekly.com

in Greenville, SC, where it has consolidated its operations for even more planned growth. “It was important for us to consolidate our teams while providing for expansion,” added Confluence CEO Sue Rechner. “It will help us gain efficiencies that will translate back into investments to strengthen our brands even more.”Rechner added that the move follows the growth it’s seeing in the industry as a whole. “Our retailers are having very strong sell-through and sales this year and have cleared-out inventory,” she said. “Clearly kayaking is starting to reach the mainstream. The further its image gets away from the extreme side, the more it becomes accepted by mainstream America.” Confluence isn’t the only paddlesports powerhouse on the move. Legacy Paddlesports, whose brands include Liquidlogic, Native, Heritage and Watertrail Gear, finished relocating from its 160,000-square-foot leased facility in Greensboro, NC to a its new headquarters in Fletcher, NC, this month. Its move and investment are also predicated by performance. “We had a very strong pre-season this year, which has carried over into in-season sales,” said company COO Bill Medlin. “Our pre-season sales were up incredibly over last year. We haven’t seen this type of growth since the second year of our launch. I think it’s due to a re-positioning of the brand, new models and new distribution decisions.” The company is hitting the ground running in its new facility with the unveiling of two new model series this year. Retailers echo manufacturer reports for the year. Madison, WI-based Rutabaga, the nations’ largest specialty paddlesports store, reported that sales were better than last year, whether due to the economy or better weather. “Sales are definitely up,” said owner Darren Bush. “Our first six months were very good.” As to what’s selling in particular, he added that angling models and rec offerings were topping the list. “Fishing kayaks and lighter kayaks seem to be doing well, and SUP is growing,” he said. The only sector that’s slightly off were canoes, which “tend to fluctuate year to year,” he said. While most companies with fishing kayak SKUs are reporting growth, perhaps none are enjoying a sales increase in the sector like Jackson Kayak. “We definitely came out of the gates swinging this year,” said marketing director James McBeath, listing its Coosa model as its top seller, followed by the recently released Cuda. “And it should pick up even more now that we have the Big Tuna model in the mix.” The company is also one of the only in the industry to enjoy continued whitewater success, thanks largely to the marketing prowess and design expertise of company president Eric Jackson, a four-time freestyle world champion. McBeath said whitewater sales were up 40 percent over 2011. Still, other companies aren’t ignoring the niche and for good reason. 14 SGBWeekly.com | JULY 30, 2012

According to the Outdoor Foundation’s 2011 Topline Report, participation in kayaking is booming, with rec kayaking growing 31.9 percent over the past three years, whitewater kayaking 24.5 percent, and sea kayaking 14 percent. Confluence said people “will see a huge investment in whitewater” over the next two years for its marquee whitewater brands Dagger, Wave Sport and newly acquired Bomber Gear. Meanwhile South Africa’s Fluid Kayaks recently completed a new manufacturing facility in New Jersey where it plans to fulfill all North American orders, including those for its new, ground breaking, Do It Now whitewater sit-on-top. “It’s been a great year for us,” said president Celliers Kruger. “This should better enable us to service the U.S. market.” The accessory side of the business is also swirling with sales and new SKUs. According to the OIA VantagePoint data, accessories and equipment sales were up 14.3 percent for the five-month year-to-date period through June. Growth was driven by dry bags, dry containers, helmets and accessories. Philip Curry, owner of PFD maker Astral Buoyancy, said that while things slowed down in 2011, this year they’re back and beyond. “2010 was strong but then things slowed down in 2011. So far, this year is looking good. Things have settled out and the general tone of the market is more positive.” He added that this year, sales were up “20 to 30 percent over 2011.” This also bodes well for the launch of Astral’s new paddlesports footwear line, designed in partnership with former Salomon footwear guru Reglan Brewer and Five Ten’s Stealth rubber. The new four-model line features Cordura uppers and a barefoot last keeping the heel even with the bottom of the foot. Bottom line - the industry is back on as solid a footing as Astral’s customers. “We’re excited,” said Confluence’s Rechner. “We needed a good season and we got it. I think everyone is going into OR with a positive mindset and is excited about where things are headed. ■

JULY 30, 2012 | SGBWeekly.com

THE SUP SIDE By Eugene Buchanan

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Suplove Adventurer 11'2

rom one lone SUP exhibitor at Outdoor Retailer’s summer market in 2005 to this year’s more than 70 in number, the stand-up craze is the fastest-growing section in paddlesports. According to retail point-of-sale data compiled by SportScanInfo for OIA VantagePoint, year-to-date SUP category sales were up in triple-digits for the fiscal year-to-date period through June. The growth comes against a small base of business, but is still fueling excitement in the overall paddlesports business. Participation numbers echo the sales growth figures. The Outdoor Foundation's 2011 Outdoor Participation Report shows SUP paddlers growing from 1 million in 2010 to 1.2 million last year. Driving the SUP growth is the rec category. “The recreational category is booming for us,” said Surftech marketing director Duke Brouwer, adding that racing is also fueling sales. “Rec paddlers are gravitating to the SUP craze, as are 10K runners, women practicing yoga, and people using it for fitness.” Fueling the growth even more are manufacturers penetrating inland markets, kayak and other manufacturers fine-tuning plastic offerings, and inflatable technology at an all-time high. This spring, Boardworks launched its 13-city, “Show Up and Blow Up” tour, the largest SUP demo tour of its kind piggybacking on river festivals throughout the country. "Whitewater SUP is also becoming a big player,” said Mike Harvey, whose Salida, CO-based Badfish SUPs hit shelves for the first time this summer. "It has tremendous appeal across a broad spectrum of users from all age groups - from longtime paddlers looking for new challenges to women, kids and families. It makes easier sections of river more fun for everyone.” Added C4 Waterman president Todd Bradley, “It's bringing river paddling out again.” One fear this naturally addresses is the cannibalization of other paddlesport sales. But most feel it’s a complementary addition to the line-up. “We continue to keep an eye on the category,” said Sara Kneis, marketing director for Johnson Watercraft, whose brands include

Old Town Canoe, Necky Kayaks and Ocean Kayak. “We have two rotomolded hybrid kayak/SUPs which we feel occupy a niche in the marketplace. I look at the rise of SUP as a positive, much the same way the snowboard industry injected positive energy into the snowsports market.” Legacy’s Medlin agreed. “We've seen some explosive growth in our one SUP offering,” he said, adding that the hybrid SUP/kayak Versa Board is one of the company’s top-selling models. “Among our customer base I think it’s a complementary form of engaging water.” Corran Addison, former co-owner of Riot Kayaks and Savage Designs who recently sold SUP company Imagine Surf to focus on his new Corran brand, said the typical SUP paddler is a costal flatwater recreational user over 40 and “soon the inland rec segment

will overtake the costal users in numbers.” Added Jackson, whose company is debuting three new SUPs at this year’s OR show, including an angling-specific model, “It’s simply another fun way to enjoy the water.” And for many, it’s been a leader in sales, especially in accessories. “It’s been a growth-driver for us,” said Werner marketing director Jim Miller, who continues to bring new SUP-specific product to the market. “SUP is an increasingly important part of our business - it also brings in new customers who are crossing over from fitness activities like running and yoga. From Boardworks and C4 to Advanced Elements and Hala Gear, more companies are investing in the inflatable side of the sport. Even inflatable mainstay NRS is continuing to invest in the category with the Earl, Big Baron and fishing-oriented Boss now in its stand-up arsenal. The bottom line, said Addison, is that it’s good for paddlesports as a whole. “Paddlers are getting into it because it’s fresh and has that whole ‘surfing’ image to it that kayaking lacks,” he said. “Something about it appeals to this demographic that kayaking doesn’t.” ■ JULY 30, 2012 | SGBWeekly.com

BOAT DESIGN

TRENDS FOR 2013 VERSATILITY, RECREATION, AND LIGHTER WEIGHTS LEAD THE LIST OF DESIGN TRENDS COMING FROM THE WORLD'S BEST BOAT DESIGNERS By Eugene Buchanan

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ith both participation and sales numbers up for most paddlesports categories this season, manufacturers are pulling out the design stops once again to bring new customers into the sport and give existing participants new reasons to buy. Trends can be seen in a new crop of all-around river runners in the whitewater sector, a growing number of fishing craft SKUs, sit-on-tops with an increased emphasis on stability, a resurgence in tandem craft, and stand-up paddleboards better addressing price point and weight. And consumers want customization. “A trend we’re seeing is an increased focus on comfort and customization,” said Confluence CEO Sue Rechner, whose brands include Perception, Wave Sport, Dagger, Wilderness Systems, Harmony and Bomber Gear. “Paddlers are like cyclists, who have a tremendous amount of access to customization and features, and a personal vision for their sport. Manufacturers are responding with more technical and feature-rich products.” Confluence is addressing this with its new Phase III AirPro outfitting system, all in the name of “providing a better experience for consumers on the water.” “It’s more of an automotive methodology, more streamlined and sleek,” said Rechner, who also gives a nod to smaller companies doing a great job with such innovation. The following are a few more trends for this year making headlines in boat design.

REC KAYAKING

In going where the numbers are, more companies are investing in the larger cockpit, stable rec kayak market. Seaward enters the category with its three-model Super Rec series, designed by Mark Hall and Steve Horvath, featuring the thermoformed Halo SR 130 as well as 12- and 14-foot versions. Current Designs does so for the first time with its new five-boat Solara series. “Our reps have been asking for it for a while,” said marketing director Jake Greseth, adding that the new line has large cockpits and stable hulls. “We don’t have anywhere to go farther up in performance.” Crossover boats, designed for touring and mild whitewater, are also selling well. An example is Wave Sport’s Ethos, whose rocker profile and a drop-down skeg make it versatile for multi-use. Wilderness Systems’ Aspire does the same, as does Perception’s price-point oriented Prodigy XS ($399) and Impulse ($375).

CANOEING

With an estimated 10.5 million participants, canoeing continues to lead the pack as the most popular paddling pastime. While manufacturers are largely resting on existing designs, the category is still benefiting from innovation. The OC-1 category gets a boost from an insurgence of new plastic designs on the whitewater front, including Esquif ’s popular 9’2” L’Edge and Jeremy Lauk’s BlackFly Ion and Option. High-performance tourers are also enjoying growth. “Our high-end composite models are doing especially well, but they’re tried and true designs,” said Wenonah marketing director Jake Greseth, touting increased outfitter business and international sales as fueling growth. Companies also continue to concentrate on building boats lighter and stronger, as evidenced by Nova Craft recently partnering with Georgia-based Twaron for its revamped Aramid-material offerings.

WHITEWATER

According to the Outdoor Foundation’s 2011 Participation Study, whitewater grew 35 percent last year to 1.8 million participants. Boat makers are hot to capitalize on this across several fronts. “Crossover and river-running kayaks are doing well,” saidConfluence’s Rechner, adding that Wave Sport is debuting several new whitewater boats and new outfitting this year (its new Recon fits the river-runner bill with full stern chines and enhanced secondary stability). Playboat designs continue to garner attention, as illustrated by Jackson Kayak’s revamped, more user-friendly Star series for 2013; Dagger’s new Jitsu, a three-size line with a double-step carving rail for grip and drive; and Fluid’s new Dope series. Creekers are also getting attention, via Jackson’s newly tweaked Villain series; Pyranha’s Shiva, with a rounded hull for soft landings and high-volume bow and stern for quick resurfacing; and the new Bazooka creekboat series from Fluid, which just started producing kayaks in the U.S. this year.

SUP

According to the Outdoor Foundation, last year more than one million people tried stand-up paddling. Taking advantage of sales figures estimated to double last year’s, manufacturers continue to focus on weight savings, price point and inflatable technology. For example, Bic Sport whose ACE-TEC thermoformed epoxy construction helps its new 12’6” Wing comes in at just 34 lbs., and its 9’6” model at 23 lbs. JULY 30, 2012 | SGBWeekly.com

Companies are also investing in a new genre built for anglers, giving users the ability to stand up to sight fish and cast, and also sit down and paddle to make miles and combat potential wind. The inflatable side of the SUP market also continues to grow as manufacturers continue to come up with new drop-stitch and other chamber technology making boards more rigid. This is seen in Boardworks new MCIT, the world’s first three-chamber inflatable SUP, complete with tapered, separate chamber rails for rigidity and stability; a new thicker (5.5-inch) line of boards from upstart Hala Gear; new inflatable offerings from NRS, including the 9-foot Tyrant ($995), made from PVC-coated drop-stitch and weighing just 19.2 lbs.; and Advanced Elements, whose 11-foot, 32-pounder comes with aluminum support shafts along its sides.

FISHING KAYAKS

Consumers are on a feeding frenzy in the fish kayak market. "The trends in the market are very encouraging,” said Hobie fishing product manager Morgan Promnitz, touting the company’s Pro Angler 12 as its most versatile, feature-filled kayak to date, complete with arm rest control and integrated Boa System for lumbar support. “And the industry is creating a lot of these trends." Confluence’s Rechner said anglers look for the most customization in their craft, which it addresses in its new offerings from Wilderness Systems. Jackson Kayaks is bullish on the category as well, unveiling the industry’s first self-bailing, sit-inside fish kayak in the Kilroy, with an optional/ interchangeable front deck system, as well as its best-selling Cuda. Legacy Paddlesports CEO Bill Medlin said its fish kayak category is the company’s “strongest gainer this year,” with its Propel, pedal-drive system outfitted boats in high demand.

SIT-ON-TOPS

Sit-on-tops continue to attract more people into kayaks than any other category. Manufacturers are responding with increased interest in the sector, especially with designs suitable for the whole family. This can be seen in Ocean Kayak’s new Banzai, with a lowprofile deck for kids and unique Tag-Along Tow System allowing parents to tow. Pelican International continues its stronghold with two new models, the Gulf 100XE and 100XE Angler, in its Elie brand. Other companies are also focused on performance. Eddyline’s Carribean offers a 30-inch beam for steadiness and a sleek, Gull Wing hull design for glide. Some companies are showing that sit-on-tops have crossover appeal into other categories. Fluid debuts its Do It Now, a cockpit-less kayak with a hull and thigh straps designed for whitewater. “It’s an extremely versatile category that gets a lot of people into the sport,” said president Celliers Kruger.

SEA KAYAKS

Consumers seem to be going high-end when it comes to sea kayaks. “People are willing to pay more for weight savings,” said Darren Bush of retailer Rutabaga. “Things are moving in the composite high-end category.” Confluence’s Rechner echoed this trend. “Pricepoint doesn’t seem to be an issue,” she said. “Many people are moving straight into the touring category and bypassing more recoriented product.” Companies are reacting with models focusing on performance. Necky’s 14’6” Manitou is an example, as is the Elias, based on its popular women’s-specific Eliza. ■ 20 SGBWeekly.com | JULY 30, 2012

JULY 30, 2012 | SGBWeekly.com

I AM... SGB

KENJI HAROUTUNIAN Vice President, Nielsen Expositions Group Show Director Outdoor Retailer Kenji Haroutunian produces world-class trade shows and other market-centric, business focused experiences. He has helped Nielson slough off the old trade show model by expanding its reach far beyond the walls of any convention center. Through multiple creative programs, consumer events and publication partnerships, he has created important value drivers for exhibiting and buying organizations that help to grow the active outdoor recreation industry.

WERE YOU AN ATHLETE OR OUTDOOR GEEK GROWING UP? Athletic pursuit and achievement was a way for me to fit in as a kid growing up in the urban core of South L.A. Once I joined a local scout troop, I discovered the great outdoors and have never looked back. HOW DID YOU GET STARTED IN THE INDUSTRY? In 1985, I took a 70 percent pay cut to work for Adventure 16. It was the smartest move I ever made. I helped A16’s program become AMGA (American Mountain Guides Association) accredited, and also taught climbing skills, also led outdoor adventure programs. In the retail stores, I loved helping customers and felt like a concierge to a whole new natural world for people living in LA. WHAT DID YOU LEARN WORKING IN RETAIL? Everything I know about managing people and serving customers. I had unbelievable opportunities that I never would have experienced otherwise. It was a great time of discovery, outward as well as inward. HOW DID YOU FIND YOUR WAY TO NIELSEN AND OUTDOOR RETAILER? Larry Harrison recommended me for an interview and the rest is history.

22 SGBWeekly.com | JULY 30, 2012

WHY DO YOU THINK OUTDOOR RETAILER IS A VIBRANT SHOW? Because it has so many touch points of value - from being an exposé of emerging trends to the many creative networking opportunities and powerful brand presentations. We’ve been able to stay fresh and give back to the industry. Keeping the future of business and retailing in mind is what has gotten results for OR attendees, and we want to continue to deliver that cutting edge experience into the future. IN TWO WORDS, HOW WOULD YOUR FRIENDS DESCRIBE YOU? Outdoor-vangelist NAME ONE THING THAT THE INDUSTRY MAY BE SURPRISED TO KNOW ABOUT YOU? I’ve never been to the Grand Canyon and this month was my first trip to Europe. WHAT ADVICE WOULD YOU GIVE TO SOMEONE LOOKING TO WORK IN THE OUTDOOR INDUSTRY? Start on the ground floor and learn the ropes of customer service.

JULY 30, 2012 | SGBWeekly.com

THE RISE OF OUTDOOR “The energy at this show was tremendous and it rebooted everything for me as I head back to my store. Talking with the manufacturers I work with, their business results are up. Our sales are up. People are excited.” – Shelley O’Neill, Tooth of Time Traders

SHOW • AUGUST 2-5, 2012

Salt Palace Convention Center, Salt Lake City, UT

DEMO • AUGUST 1, 2012 Jordanelle State Park, Heber City, UT

To exhibit or attend, go to outdoorretailer.com/SGB ––– SUMMER MARKET –––