SGB WEEKLY 1210 by SportsOneSource

ISSUE 1210 MARCH 5, 2012

The Weekly Digital Magazine for the Sporting Goods Industry

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ISSUE 1210 MARCH 5, 2012

Bill Garrels

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Page 20 NEWS

4 6 8

ADIDAS Signs Long-Term Deal with Derrick Rose AFFLICTION Holdings Recapitalized, Acquires Throwdown MOVERS & SHAKERS MICHAEL JORDAN Sues Qiaodan Sports For Name Misuse BY THE NUMBERS KEEN Acquires Portland Building For New Home BSN SPORTS Becomes National Health Through Fitness Day Sponsor

GIVING BACK

10 PIER TO PIER FRIENDSHIP WALK Skechers Foundation Presents $480,000 In Donation Funds

FEATURES 14 20

GENE YOON & JON EPSTEIN’S MISSION TO BRING FILA BACK TO RELEVANCE KENNY POWERS RETURNS FOR K-SWISS’ BLADE-MAX

DEPARTMENTS

22 JOB CLASSIFIEDS

ADVERTISERS

2 5 7 9 19 23 24

SPENCO YAKTRAX GOALRILLA SKECHERS FLEXFIT CORDURA OR MARKET 2012/2013

SPOTLIGHT 12 13 13

NIKE Unveils Olympic Line YAKTRAX Unveils New Branding for 2012/13 Winter Season SIERRA DESIGNS Debuts DriDown Insulation SKULLCANDY Takes Over NBA All-Star Weekend

Cover Photo: WTA Tour star Vera Zvonareva courtesy of Fila 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

MARCH 5, 2012 | SGBWeekly.com

NEWS

ADIDAS SIGNS LONG-TERM DEAL WITH DERRICK ROSE Adidas during NBA's All-Star weekend extended its endorsement deal with the Chicago BullsÂ Derrick Rose in a deal that should keep the reigning NBA most valuable player with Adidas for the rest of his career. According to reports, Rose's new deal was for 14 years and $250 million. Rose has been with Adidas since he entered the league in the 2008/2009 season. Said Lawrence Norman, Adidas' VP of global basketball, "We're extremely excited to extend our partnership with Derrick Rose. Derrick is a tremendous partner whose humility, commitment to the community and exciting play on the court is a perfect match for the Adidas brand."

AFFLICTION HOLDINGS RECAPITALIZED, ACQUIRES THROWDOWN Affliction Holdings, the lifestyle apparel company defined by its Live Fast tagline, has been recapitalized by an investor group led by New Evolution Ventures, LLC (NeV) and Bob Meers, previously the CEO of Reebok and Lululemon Athletica. In a simultaneous closing, Affliction acquired a controlling interest in Throwdown Industries, an MMA-equipment and gear maker that has recently introduced apparel and accessories. Meers joined Affliction as CEO in August 2011 and will continue to lead the Seal Beach, CA-based company post-transaction. Meers stated, "I am excited to complete this transaction with NeV and see a very bright future for Affliction and Throwdown. The 4 SGBWeekly.com | MARCH 5, 2012

founders of Affliction have done a terrific job building a unique brand and I see tremendous opportunities, both domestic and international, through organic initiatives and acquisitions." Founded in 2005, Affliction has evolved into a diversified family of brands appealing to extreme sports enthusiasts, including skate boarding, snowboarding, MMA, surfing, NASCAR and motocross. It also operates nine flagship stores in the U.S. and 11 overseas. Founded in 2002, Throwdown's is best known for providing cages, racks, rings, ramps, equipment and gear across impact and action sports, including serving as the official provider to UFC Gyms.

WINTER TRACTION FOR ALL YOU DO

NEWS

MOVERS & SHAKERS Phil Knight, founder and chairman of Nike, was among five people elected to the basketball Hall of Fame in the "Contributor" category. Callaway Golf appointed Chip Brewer as president and CEO, effective March 5. Brewer had served as president and CEO of Adams Golf since 2002. Woolrich named Donna Fitch as director of men's merchandising. She had been men's general manager at Dickies. Following its decision to decline a revised offer from TPG Capital to purchase the company, Billabong hired former Target Australia managing director Launa Inman as a retail advisor. Asics named Alistair Cameron, CEO of its European operations, as chairman of Haglöfs, succeeding Lars Göthlin. The National Shooting Sports Foundation (NSSF) promoted Melissa Schilling to director of its recruitment and retention initiatives. Longstreth Sporting Goods, based in Parker Ford, PA, said Joni Garber, field hockey sales and service manager, is retiring after 13 years with the women's team retailer. Ultimate Direction hired Buzz Burrell to the newly created brand manager position. Summit Sports, the Bloomfield Hills, MI-based outdoor retailer, has promoted Trey Rouss to general manager for retail stores. Yakima hired Ashley Williams as marketing manager, and Jenna Fallon as digital & e-commerce manager. 6 SGBWeekly.com | MARCH 5, 2012

MICHAEL JORDAN SUES QIAODAN SPORTS FOR NAME MISUSE Michael Jordan sued a Chinese maker of sportswear and footwear for unauthorized use of his name. The lawsuit was filed with a Chinese court against Qiaodan Sports Co. The company’s name and trademark are the Chinese version of Jordan’s name. The Chinese company, which is preparing to raise 1.06 billion yuan ($168 million) in a listing in Shanghai, is accused of using Jordan’s Chinese name and jersey number 23 without permission. According to reports, Jordan is employing his own legal counsel and Nike is not involved in the lawsuit. “It is deeply disappointing to see a company build a business off my Chinese name without my permission, use the number 23 and even attempt to use the names of my children,” Jordan said in a statement. “I am taking this action to preserve ownership of my name and my brand.” He added, "This complaint is not about money. It's about principle and protecting my name. Any monetary awards I might receive will be invested in growing the sport of basketball in China." According to the prospectus posted on the website of the China Securities Regulatory Commission, Qiaodan Sports noted that Jordan hadn’t raised any complaints against Qiaodan regarding the trademark since the company was established in 2000. “‘Qiaodan’ is a brand we registered according to Chinese law, and its lawful use should be protected,” Qiaodan said in a statement posted on its website yesterday. “We will make further clarification through our website if there is any development.” Qiaodan has opened 5,715 retail outlets in all 31 of China’s provinces and municipalities, according to the prospectus. In 2011, it signed Chuck Hayes, currently a forward of the NBA’s Sacramento Kings, to a sponsorship contract.

BY THE NUMBERS 1.6%

Collective Brands, Inc. reported that its loss in the fourth quarter swelled to $41.6 million, or 69 cents a share from a loss of $10.1 million, or 16 cents a year ago. Net sales for the quarter were $815.9 million and adjusted net sales were $802.0 million, up 3.6 percent compared to fourth quarter 2010. The sales growth was driven principally by the strong performance of the Performance + Lifestyle Group (PLG), led by Saucony and Sperry Top-Sider. Management particularly highlighted Payless Domestic's 1.6 percent increase, the strongest same-store sales increase for the segment since the third quarter of 2009.

40.4% Deckers Outdoor Corp. reported fourth quarter profits jumped 39.8 percent on a 40.4 percent revenue gain but still disappointed investors by forecasting first quarter results would fall short of Wall Street estimates due to a significant hike in sheepskin prices. While first quarter revenue is projected to increase approximately 19 percent over the 2011 quarter, EPS is expected to decline approximately 50 percent compared to the 2011 period, when Deckers posted EPS of 49 cents a share. Wall Street's consensus estimate for the quarter had been 63 cents per share.

$1 Billion Crocs, Inc.'s revenue increased 13.7 percent in the fourth quarter, to $203.7 million. That helped push sales for the year up 26.6 percent to $1.00 billion, reaching a significant milestone for the company. On a conference call with analysts, company President and CEO John McCarvel noted that that the feat is impressive since Crocs is only a ten-year old company and has "only been selling shoes in a meaningful way for the past seven years." At the same time, he noted that just a few years ago, the growth had been "extremely concentrated" on its Classic and Core product, and also primarily focused in the U.S. and wholesale channels. Today, Crocs is selling more than 300 different styles, and only two styles represent more than 5 percent of sales.

32.1% JJB Sports, LLC., which operates more than 200 sporting goods stores in the United Kingdom and Ireland, reported comparable cash gross margins increased 32.1 percent for the five weeks ended January 29 amid a comp sales decrease of 5.7 percent. The company, which is about 18 months into what it estimates will be a three to five-year turnaround plan, said that cumulative comps store sales in the second half of the year ended January 29 were down 7.6 percent, compared to a decrease of 17.9 percent in the first half ended July 31, 2011. 8 SGBWeekly.com | MARCH 5, 2012

KEEN ACQUIRES PORTLAND BUILDING FOR NEW HOME

Keen purchased a building at the Corner of 13th & Glisan in Portland, OR that will serve as its new headquarters. This move expresses Keen’s commitment to the future of Portland and the city’s importance as a catalyst for hybrid innovation, a cornerstone of Keen’s philosophy. The five-story, 50,000-square-foot office building includes a ground floor retail space (approximately 6,000 square feet), a lower level recreation room (6,000 square feet), and four floors of office space (approximately 10,000 square feet each). A few blocks from the company’s existing operation, Keen will design its space to incorporate existing innovations, such as its Recess Hub and Keen retail store, while planning an environment that inspires and supports creativity in the future. Keen has completed the purchase of the building and plans to move into its headquarters by the end of 2012. The ability to own versus rent will enable the company to infuse the “Keen Factor” into its offices by customizing and creating new and culturally meaningful space for meeting rooms, showrooms, expanded retail and more. "At Keen we’re always trying to repurpose for a purpose and this is one example of how we are converting that vision into a reality,” said Keen CEO James Curleigh. “It represents a sizable investment for Keen; a long-term investment in our brand, our place and our people.”

BSN SPORTS BECOMES NATIONAL HEALTH THROUGH FITNESS DAY SPONSOR

BSN Sports/U.S. Games is the latest company in the sporting goods industry to support SGMA's 13th National Health Through Fitness Day (March 6-7 in Washington, D.C.) BSN Sports/U.S. Games will be the Transportation Sponsor of this year’s event which will attract more than 100 leaders from organizations in the sports and fitness industries. As the transportation sponsor, BSN Sports/U.S. Games is making sure everyone who arrives in Washington, D.C. for this day of advocacy receives complimentary transportation from the host hotel (The Madison) to the Capitol Hill reception on Tuesday, March 6 (and gets a ride back to the hotel afterwards). National Health Through Fitness Day is SGMA's signature event that promotes policies to increase participation in sports and fitness activities to improve health and active lifestyles. "This is an important cause that needs to be addressed on all fronts, in schools, in our home communities, and in Washington D.C.," said Adam Blumenfeld, CEO of BSN Sports.

SKECHERS president Michael Greenberg presents a $209,000 donation to the Friendship Circle, a non-profit organization dedicated to making a dramatic difference in the lives of children and young adults with special needs.

PIER TO PIER FRIENDSHIP WALK

SKECHERS FOUNDATION PRESENTS MORE THAN $480,000 IN DONATION FUNDS TO EDUCATION AND CHILDREN WITH SPECIAL NEEDS

10 SGBWeekly.com | MARCH 5, 2012

▲

The Skechers Foundation celebrated its most impactful Skechers Pier to Pier Friendship Walk by donating $209,000 to the Friendship Circle for children with special needs and more than $280,000 to six Southern California education foundations. The donations were the largest made by the Foundation and were the result of dozens of corporate sponsors, including presenting sponsor Kids Foot Locker, and thousands of walkers who united for the Skechers Friendship Walk in October 2011. Taking place on October 30, over 7,000 walkers participated in the Skechers Pier to Pier Friendship Walk. Traveling from the Manhattan Beach Pier to Hermosa Beach Pier and back, the 3.4-mile Pier to Pier Walk included performances from local schools and activities for the entire family. The walk was followed by the 21st annual World Famous Pumpkin Races at Manhattan Beach Pier. Among those making special appearances during the opening

TAKE A CLOSER LOOK Just click on the video icon to see more of the 2010 Pier To Pier Friendship Walk

ceremonies for the 2011 walk was Hall of Fame baseball manager Tommy Lasorda, Dancing with the Stars co-host Brooke Burke-Charvet and fitness expert Denise Austin. All of the celebrities share a long history with Skechers - Brooke Burke-Charvet and Denise Austin have

Overhead crowd shot at Skechers Pier to Pier Friendship Walk.

supported the company's fitness collections as celebrity endorsees in print and on television, and Tommy Lasorda has been a loyal friend of the brand, joining the Pier to Pier Walk's Board of Directors and attending the event in each of its three years. Skechers President Michael Greenberg expressed his gratitude during a formal presentation ceremony on February 16 at Skechers’ corporate headquarters in Manhattan Beach, CA. “Our sponsors have done something incredible – gathering our friends, families and neighbors so we can change the lives of our children. Because of them, our kids now have more opportunities than what would have been possible without this walk. And we’ve shown that we’re not dependent on our economy or our state’s budget to make a real impact. I’m extremely proud of what we’ve created here, and to be part of a community with such great love for our kids.” The Skechers Pier to Pier Friendship Walk is now the Southern California’s largest annual donor event for children with special needs and local schools. Over the past three years, the Skechers Pier to Pier Friendship Walk has raised more than $1 million to benefit education and children with special needs. Along with the Friendship Circle, the funds raised in the 2011 event will directly benefit Manhattan Beach, Hermosa Beach, Redondo Beach, El Segundo, Palos Verdes Peninsula and Torrance schools. Along with presenting sponsor Kids Foot Locker, other 2011 corporate sponsors of the Skechers Pier to Pier Friendship Walk included Wells Fargo, Ross, Premier Displays and Exhibits, Body Glove, Marshalls, Chevron, Waste Management and Equinox and countless others who provided funds and support to make a difference in children's lives. For more information about the Skechers Pier to Pier Friendship Walk and the Skechers Foundation, please visit skechersfriendshipwalk.com.

Skechers President Michael Greenberg, Denise Austin, Brooke Burke-Charvet and Tommy Lasorda.

MARCH 5, 2012 | SGBWeekly.com

SPOTLIGHT

Nike Flyknit Racer

Nike Lunar Innovation

Nike Hyperdunk

Nike Hyper Elite Basketball Uniforms

NIKE UNVEILS OLYMPIC LINE At an event emceed by Olympic track and field legend Carl Lewis, Nike unveiled its product lineup for this summer's Olympic Games in London. Multiple products were unveiled, ranging from Nike Flyknit footwear, to the Nike Hyper Elite basketball uniform to the next evolution of Nike Lunarlon footwear. Along with Nike CEO Mark Parker, athletes were on hand at the event held in New York City were Deron Williams of the New Jersey Nets, Tamika Catchings of Indiana Fever and 2008, and Carmelita Jeter, current 100m World Champion. The introductions included: Nike Flyknit: Weighing 5.6 ounces (size 9) and 19 percent lighter than the Nike Zoom Streak 3, Nike Flyknit Racer's yarns and fabric variations were engineered only where needed for a featherweight, formfitting and seamless upper. The Nike Flyknit Trainer+, at 7.7 ounces, brings the weight and fit benefits of Nike Flyknit to runners of all levels. Nike Hyperdunk: Part the Lunarlon Collection that includes running, men’s training and 12 SGBWeekly.com | MARCH 5, 2012

women’s training, the Hyperdunk is made with re-engineered Nike Lunarlon foam that is 30 percent lighter than Phylon and designed to vary in density - thicker where needed for stability and softer for absorbing impact in key areas. Features Nike Flywire - highstrength cables constructed from a thin core encased in a flexible woven sheath that remains loose at rest and dynamic in motion, tensing to help stabilize the foot where needed. Nike Pro TurboSpeed: Based on wind tunnel data and building on its AeroSwift technology, the Pro TurboSpeed is .023 seconds faster over 100m than Nike's previous track uniform. The Pro TurboSpeed is made of 82 percent recycled polyester, using an average of 13 recycled plastic bottles. The technology will be worn by the U.S.A, Russian, German, and Chinese teams. Nike Zoom Spikes: The ultra-light Nike Zoom Superfly R4 and Nike Zoom Victory Elite spikes uniting superior fit, protection and Nike's Flywire technology. Nike Hyper Elite Basketball Uniform: The shorts weigh 5 ounces while the basketball jersey features a breathable design with Nike Aerographics. The men’s jersey is made of 96 percent polyester from recycled plastic bottles while the short is 100 percent recycled polyester. The uniform will be worn by the U.S.A., China and Brazilian teams.

SIERRA DESIGNS DEBUTS DRIDOWN INSULATION

UNVEILS NEW BRANDING

FOR 2012/13 WINTER SEASON Yaktrax, the maker of winter footwear traction devices, revealed a new logo and packaging at the 2012 Outdoor Retailer Winter Market in January. Featuring an iconic Yak and a powerful new font, the logo will roll out on packaging, in-store displays, and marketing materials next fall. The new logo and tagline “Winter Traction For All You Do” is part of an overall brand-building move that comes as the company is ramping up its innovation engine. This fall/winter, Yaktrax will introduce the first removable winter traction device made for runners, called the Yaktrax Run, featuring a combination of interchangeable spike plates and the patented Yaktrax SkidLock coil design. Yaktrax also recently introduced Yaktraction, a blog featuring regular updates from the company and Yaktrax-sponsored athletes. "We are excited to get back to the roots of our brand with the new logo and packaging that was received positively by buyers at the OR Show,” said Steve Couder, VP of Yaktrax, a division of Implus Footcare. “The origins of the brand started in the Himalayas with an expedition to Everest and with our new logo we can proudly say the 'Yak' is back."

Sierra Designs recently debuted its DriDown insulation technology on a new line of sleeping bags and jackets. A vast improvement over regular down, DriDown features a molecular level polymer applied to individual down plumes during the down finishing process. A proprietary application method developed by Sierra Designs ensures a hydrophobic finish. As a result, DriDown stays dry seven times longer in rain, melting snow, or spills, maintains 98 percent loft after a night in a high humidity environment, and dries 33 percent faster when wet. “Our inspiration for DriDown came from the need for higher performance down insulation,” said Sue Timbo, Sierra Designs marketing director. “Due to its warmth to weight ratio, down is the best performing insulation available. Its only downside is a loss of thermal efficiency as it becomes wet. DriDown tolerates moisture far better than untreated down, improving the performance of down sleeping bags so everyone from pro athletes to family campers will sleep dryer, warmer, and more comfortably.” Sierra Designs’ DriDown sleeping bags include the Zissou 0 HI (3 lb, 1 oz; $299), Zissou 15 (2 lb, 11 oz; $259), Zissou 30 LITE (2 lb, 1 oz; $199), Eleanor 20 HI women’s (3 lb, 0 oz; $299) and Eleanor 30 LITE women’s (2 lb, 9 oz; $259). All five bags feature 600 fill DriDown, polyester ripstop shells, and polyester liners for performance, warmth, compressibility, and light weight. The technology is also being extended to Sierra Designs’ Tov ($259) and Gnar Lite ($229) jackets. DriDown’s hydrophobic finish helps prevent sweat, rain, or melting snow from soaking into the down while allowing internal moisture to escape, maintaining loft for optimum thermal efficiency. DriDown sleeping bag retail availability is scheduled for June 1 exclusively through REI and will reach other specialty outdoor retailers mid-July. DriDown apparel will debut August 2012.

Gnar Hoody Jacket for men

Eleanor - Women's DriDown Sleeping Bag

SKULLCANDY TAKES OVER NBA ALL-STAR WEEKEND

NBA Throwback Mix Master

In addition to outfitting all the NBA All-Stars with custom East/West All-Star headphones, Skullcandy showcased its new NBA Throwback Mix Master headphone collection at the NBA All-Star Jam Session throughout the weekend. Skullcandy's NBA Crew - Derrick Rose, Kevin Durant, Deron Williams, Andre Iguodala and James Harden – met fans, streaming footage and posting pictures. The Throwback Mix Master headphones, which hit stores this April, feature five NBA teams - Los Angeles Lakers, New York Knicks, Boston Celtics, Chicago Bulls and Miami Heat - and retail for $299. MARCH 5, 2012 | SGBWeekly.com

The Cage

GENE YOON & JON EPSTEIN'S MISSION TO BRING FILA BACK TO RELEVANCE By Thomas J. Ryan

14 SGBWeekly.com | MARCH 5, 2012

"Stay hungry. Stay foolish.” That’s a famous line the late Steve Jobs delivered to Stanford University graduates at commencement ceremonies in 2005. It’s also a favorite quote of Gene Yoon, the Korean businessman who parlayed his own admitted “high-risk, high-reward” tendencies to end up owning Fila, one of the industries most illustrious sports brands of the 20th century, as well as taking control last year of Acushnet Company which owned both the Titleist and FootJoy brands. Yoon-Soo (Gene) Yoon became involved with Fila in the early 1980s when he served as the company’s first footwear sourcing agent in Korea. His customers included Homer Altice, who brought Fila footwear to the U.S. In 1991, Yoon launched Fila Korea at a time when the country, largely barren of retail infrastructure, was seen as a meager revenue possibility for a sport lifestyle brand. Recognizing the necessity of franchising in such an environment, Yoon turned South Korea into one of the most prosperous countries for Fila. With its current franchise network of 870 stores, Fila currently ranks as the second largest sports brand in Korea only after Nike. In 2005, Yoon led a management buyout to purchase a longterm license for Fila in Korea from Sports Brand International, a holding company controlled by private-equity giant Cerberus Capital Management. Cerberus had acquired Fila from its Italian parent in 2003 at a time when the brand was hoping to recapture some of the magic that made it a cult urban icon in the 90s or at least tap into some of its tennis roots in the 70s when stars such as Bjorn Borg and Guillermo Vilas first introduced the Fila name to the American public. In 2007, with rumblings in the marketplace that Fila had been put up for sale, Yoon reached out to Jon Epstein, past president of Fila USA, with his dream of acquiring the Fila brand. Two decades earlier, Yoon first ran into Epstein, who was then sales manager at Adidas, and invited him to a Foot Locker event held in Korea. In March 2007, the two completed the acquisition of the worldwide rights and operations of the Fila brand. A long process began to unify the fragmented global operations and revive U.S. sales with the aid of a successful IPO and with a breakout hit with Skele-toes. But Yoon and Epstein had more immediate concerns following the acquisition. The first was figuring out how to meet the obligation to pay back within one year $230 million of the $400 million they borrowed to make the acquisition. Yoon came up with the idea of selling long-term licenses for the Fila brand to dedicated partners globally in return for an upfront payment and a lower annual royalty fee. As a former licensee, Yoon recognized the frustrations of the licensing arrangement. There was a time when Fila's Italian owners had forced Yoon to buy a caseload of product he had to liquidate at 50 percent off the original price he

Gene Yoon, Chairman and CEO, Fila Korea, Ltd.

Jon Epstein, President of Fila

had paid. Licensed arrangements in most cases become vexed by their limited-time nature and meddling by the licensor. “If they do good business, the licensor is always trying to take more from the licensee,” said Yoon. “And if the business is underperforming, the licensor is looking to terminate the license. That’s an awkward position to be in as a licensee. I knew that because I was a licensee.” After spending a year visiting with each licensee around the world, Yoon and Epstein raised enough money to meet the debt obligation. But the scheme also proved to be beneficial to the business because it empowered global licensees by providing them with product and marketing resources. The lower royalty rate - about half the previous rate in most cases - gave the licensee the chance to earn a better margin and the one-time fee in particular gave each licensee the commitment and security needed to motivate them to invest long-term in building the brand locally. One noted success has been the DASS Group, who produces footwear on a contract basis for many sporting goods companies, and after securing a long term license has led Fila to become the number two brand in Brazil. MARCH 5, 2012 | SGBWeekly.com

“It wasn't so difficult to sell the concept because there weren’t many global brands that you could effectively own in a marketplace,” said Epstein. “They knew Gene’s experience as a long term licensee and knew the arrangement would give them some control over their own destiny. It was very compelling and in the end we have very committed partners.” REVIVING THE U.S. MARKET At the same time, Yoon and Epstein recognized that in order to unify and drive the brand globally, the U.S. business had to be turned around to lead the way. Said Epstein, “The brand globally was fragmented with everyone doing their own thing. Gene said, ‘Let’s fix the U.S. business first, and then everyone else will follow.’” The biggest challenge Fila USA faced was competing at a time when labor costs were steadily rising. With the 2008 recession, consumers were looking for value. Epstein said Fila USA recognized that providing retailers with better margins had become more critical in footwear during the economic instability. “Today so much of our business is done in the middle market with Dick’s, Academy, Modell’s and Kohl’s selling a tremendous amount of athletic footwear,” said Epstein. “Frankly to compete in that area we needed to make sure we had good product and good value.” As such, Fila decided a value approach was the way to regain a foothold in the U.S. Epstein described the approach as similar to the way the Korean-based car brands, Hyundai Motor Co. and Kia Motors, entered the U.S. marketplace. Both first focused on value to gain traction and then “innovated upwards” with better features and materials that merited higher prices. To secure lower priced production for the value approach, Yoon decided Fila had to risk moving its China production further north to Fujian. Said Yoon, ”This area was very famous for manufacturing domestic brands and counterfeiting the major brands. Everyone was scared to go there and produce.” But the gamble paid off. Fila was able to source products at about a third of the price it had been getting from its factories in Southern China. Establishing a sizeable infrastructure in the region also gave controlling, unauthorized production of Fila product in the area. In the U.S., Yoon and Epstein went on a countrywide tour of retailers to not only explain the merits of the new product and marketing strategy but to restore faith in the Fila brand and convince retailers that the new team was dependable. “Together Gene and I took bags of product and traveled the country visiting retailers. Some of them were skeptical at the beginning because the brand had been through so much,” said Epstein. “But over the last couple of years they’ve realized we’re a reliable resource and consumers know the brand. Although we’re smaller, we’re definitely well known and given the opportunity, their consumers respond.” SKELE-TOES BECOMES A PHENOMENON It also helped to have a breakthrough product and Fila lucked onto one with its Skele-toes collection, its own take on the barefoot run 16 SGBWeekly.com | MARCH 5, 2012

Fila Men's Skele-Toes EZ Slide Cross-Trainer

craze. Skele-toes only features four spots for the five toes with one shared by the smaller ring and pinky toes. To develop the line, Fila had to create all new lasts and retrofit machinery with Korean design knowhow. Factories initially asked to have insurance to cover the costs in case the product failed. But the product took off, selling a million pairs in 2011, the first year of the shoe’s launch, and 2 million in 2012 with 1.5 million being shipping into the market just for Spring 2012. Said Epstein, “We had the best-selling product at Dick’s and Modell’s last year. We’re seeing incredible growth.” And Epstein said the opportunity was not limited to running with the company now making Skele-toes styles with drainage to handle water parks and coastal regions, as well as trail and beach. “We’re not just promoting it as barefoot running,” said Epstein. “We’re saying, ‘Your foot is natural and we’re mimicking the actual foot.’ We’re making a comfortable performance product to do a lot of things in.” The line, which will make up about 23 percent of Fila’s volume this year, is being extended and upgraded with the addition of injected EVA bottoms, memory foot beds and other technologies. Fila also partnered with RealTree and Mossy Oak to come out with camouflage Skele-toes terrain and water shoes. Said Epstein, “In southern markets and places like Academy and Bass Pro, customers are very excited about those lines.” Last year’s Skele-toes growth was supported by a massive buy of outdoor billboards and Fila has teamed up again this year with Clear Channel, CBS and Lamar to buy up to 1,000 billboards starting in March to represent one of the biggest outdoor buys ever. The line is also being supported with more informative packaging designed to communicate with consumers in the self-service channels where much of the footwear is increasingly sold. Similar to the way cereal boxes work, Skele-toes boxes will line up to reveal what’s inside each

In January, Fila extended its endorsement agreement with WTA Tour star Kim Clijsters. In tennis, Fila has 10 women in the top 25 under contract.

box instead all being just one color as in the past. Inside the box, the story behind the product and a detailed explanation of benefits will be included. The greater emphasis on spelling out its technologies, such as its partnerships with CoolMax, Cordura, and 3M, will now be found on hangtags and boxes across all its lines. Like Skele-toes, the other collections initially found placement with a bare-bones, low-price approach but are now fetching higher prices with the support of upgraded features. “When we first started coming back, the only thing we could do was compete on price but now we’re competing on innovative product, new materials and branding that people know,” said Epstein. Beyond Skele-toes, the focus in footwear in the U.S. will be on basketball, tennis, kids, running, women’s and its heritage business. Given the brand’s long heritage, basketball is seen as a particularly strong opportunity given that 2 million pairs of Fila basketball shoes sold in the U.S. last year. In 2013, Fila plans to resume sponsorship of NBA players to provide more athletic credibility outside of tennis. (In tennis, Fila has 10 women in the top 25 under contract.) Fila is already finding success reconnecting with sneaker heads with releases such as The Cage, a retro shoe with colorways harking back to the 90s. “The Cage is a bit on the urban side but sneaker heads really love it, especially in the northeast on the I-95 Corridor from Baltimore, Philly and NYC,” said Epstein. “They’re looking for Fila again, which is exciting for us because it used to be the whole business. In the mid-90s, this company sold $500 million worth of basketball shoes. The great thing about Fila in the U.S. is that people know the brand.” Another big opportunity is seen in running. Fila has “some brand

In January Fila signed an endorsement agreement with Vera Zvonareva. “The... brand aligns so well with my personal style...” Pictured on Vera is the Fila Winter Collezione Racer tank, MSRP $50, (MSRP $50 in a super tank), platinum color with black and white accents and coordinating Collezione Petal Skort, (MSRP $48). The built-in undershorts are platinum.

credibility” in running given its long-time support of distance running with its “Discovery Kenya" program that helped support success in racing flats. But Epstein admitted that Fila is extending into running since “that’s where the open-to-buy dollars are.” With its steady focus on the category over the last four years, Fila sold 4 million pairs of running shoes in the U.S. last year. “Running is where the consumer is on the suburban side,” explained Epstein. “Knowing that the urban consumer has faced more economic challenges, we had to address a category we weren’t necessarily known for. By being innovative and bringing added value through partnerships with Invista and 3M, creating lightweight technical products fits the bill for different retailers.” Apparel in the U.S. for Fila faces its own unique challenges. The biggest hurdle, according to Epstein, is that “you have Nike, Under Armour and Adidas and then everyone else.” That’s encouraged other major athletic brands to enter into exclusive licensing arrangements to become private labels for some chains, similar to Fila’s own partnership with Kohl’s for the Fila Sport brand. In the sporting goods channel, apparel has “become more itemdriven for us” with an overall focus on tennis, yoga, and women’s and men’s sports active. In all, Fila has over 1000 different customers MARCH 5, 2012 | SGBWeekly.com

In May 2011 Fila Korea announced that it had partnered with Mirae Asset Private Equity, the largest private equity firm in Korea, to acquire Acushnet, which owns the Titleist and FootJoy brands, from Fortune Brands.

in apparel - more than footwear - but it’s focused more on niche accounts such as tennis shops and upscale specialty shops like Paragon Sporting Goods and Sport Chalet. Fila will “try to become a little wider” in the sports channel by expanding to accounts such as Big 5, Modell’s and Academy. But with the reach of the Fila Sport line at Kohl’s, Fila will still be boasting about $150 million in apparel sales in the U.S. that Epstein feels offers a solid base to further grow the business. “What’s great about it now is our distribution is more focused on the suburban customer instead of the urban customer, which was the business in the 90s providing better balance to the business,” said Epstein. “And the categories that are doing the best are women’s Personal Performance, Men’s Lifestyle Heritage, and Tennis. Tthere is a real focus on the performance categories.” Yoon's and Epstein’s efforts have paid off handsomely. In the U.S., sales are currently running ahead about 40 percent of last year after growing 40 percent in 2011 and 55 percent in 2010. The U.S. business in total last year achieved $155 million at wholesale, rising to $210 million including Kohl’s Fila Sport sales. Many of its worldwide licensees have also tapping into the winners in Fila U.S.’s broader assortments to support growth in local markets. Worldwide, the Fila business has grown from approximately $800 million when Yoon took over in 2007 to $1.25 billion in 2011. Epstein also indicated that the company is “very profitable” and even with the reduced royalty rates, the royalty stream coming from its licensing partners is running higher than when Yoon acquired Fila. In September 2010, Fila Korea went public in a successful offering on South Korea's Kospi Index. GOING FOR THE GREEN WITH ACUSHNET Yoon’s latest surprise occurred in May 2011 when Fila Korea announced that it had partnered with Mirae Asset Private Equity, the largest private equity firm in Korea, to acquire Acushnet, which owns the Titleist and FootJoy brands, from Fortune Brands. The price paid was $1.25 billion. Just returning from busy booths for both Titleist and FootJoy at the PGA Show in Orlando, Yoon believes that Titleist along with FootJoy rank as two of the most powerful brands in the golf space, particularly in light of the recent struggles at Callaway. Titleist remains the number one ball maker in the world and leads in several accessory categories while recently grabbing share in wedges, putters and

18 SGBWeekly.com | MARCH 5, 2012

other irons. With the success of the 910 adjustable driver, Titleist club sales grew 35 percent in 2011. Yoon is enthused about the planned Fall 2013 launch of Titleist apparel in the Far East (Korea, Japan and China). Having apparel will help support the rollout of franchise locations in Korea and China that work better with full assortments – from equipment to accessories and apparel. With two golf channels underscoring the popularity of the sport of golf in the country, Korea is an attractive growth area. Yoon plans to utilize his own experience building the Fila brand to tap the opportunity in Korea. China stands out as a much bigger opportunity with a similar lack of a retail infrastructure likewise presenting a strong franchising opportunity as the emerging middle class embraces the sport of golf. In the U.S., the apparel opportunity for Acushnet will focus on building on the successful reception of FootJoy’s first full apparel collection in green grass accounts this spring. Titleist will look to build on its ball and club successes in recent years though Yoon acknowledged that one of the reasons the brand became available was that the golf market had saturated in the U.S. Said Yoon, “The only way to grow is to take someone else’s market share.” The goal is for Fila Korea to continue to build its ownership stake in Acushnet from its current 34 percent stake to majority ownership by 2015. Once achieved, the next step would be to take Acushnet public in 2016. While Fila’s expertise may be tapped to develop the Titleist apparel line, the Acushnet business will continue to operate separately from the Fila business until 2016. More synergies between the two businesses as well as efforts to further capitalize on its position as a “sporting goods house,” including other acquisitions, will more likely present itself toward the latter part of the decade, said Yoon. ■

e c n a m r rfo The One

riginal

& Only O

KENNY POWERS RETURNS FOR K-SWISS' BLADE-MAX By Thomas J. Ryan

20 SGBWeekly.com | MARCH 5, 2012

Following the 2011 campaign that won several “Best of” accolades, including Mashable. com's “Most Innovative Viral Video” and AthlonSports.com's “Best Sports Video of the Year,” a new campaign for K-Swiss starring HBO cult hero Kenny Powers is rolling out. The launch, which supports the introduction of K-Swiss Blade-Max Technology, included a special web film engineered in partnership with 72andSunny on February 23 on FunnyorDie.com and Break.com. Filled with the expletives, cockiness and scatological humor that the character is known for on the HBO hit series Eastbound & Down, the web film opens with Kenny Powers (played by Danny McBride) as the "MFCEO of K-Swiss making a keynote speech to formally unveil "his greatest creation ever," BladeMax technology. Appearing to resemble the late Steve Jobs with the jeans-and-blackturtleneck look – albeit a more profanity-laced version, Powers points to "the three things an athlete needs to succeed – talent, strippers and most importantly speed because speed is what takes an athlete to another level." He then takes the audience on a tour of K-Swiss' R&DD lab to show how the new

Blades make athletes run super fast, even out running cheetahs and ballistic missiles. The footage includes the return of K-Swiss athlete Patrick Willis of the San Francisco 49ers showcasing his speed in the K-Swiss BladeMax as he tackles a wildebeast. Powers next shows a black and white video of a conversation of himself with Bruce Lee to show how the martial arts legend inspired Powers to come up with the name. To reach kids, he shows an extremely-violent cartoon that demonstrates the benefits and ramifications of the Blade's speed. Exclaims Powers, "Let's get these kids hooked on speed!" Finally, the web film ends with Powers in an astronaut suit standing on the moon with two green females clad in bikinis in a lunar hot tub. Declares Powers, "Walking on the moon was the greatest thing that man has ever done until now. I've taken all the fastest things I've ever seen - bionic missiles, cheetahs and Bruce Lee - and I've combined them together to make the best shoe you've ever seen. You may applaud now." Through March 1, the film has been viewed more than 185,000 times on FunnyorDie. com. One week after the web film's launch, the national campaign expanded to TV built around ESPN programming, airing March 1 through March 19. The campaign will be supported with in-store displays at The Finish Line stores where Blades will be sold throughout the country. The new campaign will continue to target young, athletically-minded males, with the help of Powers’ "comic genius and unpredictable marketing strategies," K-Swiss said in a statement. "Kenny Powers has transformed the consumer view of our brand connecting the young, male audience with our product since our first iteration of the campaign in 2010," said David Nichols, executive vice president for K-Swiss. "We're pushing boundaries with both our product advancements, and the methods we are using to introduce them, and changing minds in the process." The focal point of the campaign is the introduction of K-Swiss Blade-Max Technology

Kenny Powers

Jillian Michaels for the "New Year, New You" campaign for K-Swiss

to a broader consumer base outside of specialty running. The Blade-Max features athlete engineered bladed Superfoam, space-aged energy-return foam that resists compression and lasts longer, providing cushioning and comfort. Both the Blade-Max Glide and BladeMax Stable received "glowing reviews" in Runners World's spring shoe review, Nichols said on K-Swiss' fourth-quarter conference call. The Kwicky Blade-Light has particularly done well at run specialty accounts. Also supporting the Blades roll out is a "New Year, New You" campaign starring Jillian Michaels from Biggest Loser that began on January 2. In the 30-second spot airing on select NBC-owned and affiliate stations, Bravo and E!, Michaels is shown wearing a 1950s-inspired cocktail dress and heels as

she says goodbye to her last party guest. Immediately after the door closes, Michaels transforms into a hard-core trainer and encourages consumers to get to work on their New Year's resolutions. Integrated with print, digital and social media, the campaign was designed to maximize awareness and send consumers to Lady Foot Locker, who carried the Blades line nationally. As part of the partnership, Michaels is offering her workout tips via exclusive web videos hosted on K-Swiss and Lady Foot Locker Facebook pages and Lady Foot Locker is providing a gift-with-purchase of Jillian Michaels’ workout DVD “Killer Buns & Thighs” while supplies last. Lady Foot Locker customers can also enter to win a trip for two to visit Michaels on set in Hollywood and a K-Swiss gear package. ■ MARCH 5, 2012 | SGBWeekly.com

TO READ THE FULL JOB DESCRIPTION, PLEASE CLICK ON JOB TITLE

ACCESSORY EXCHANGE Maurice Sporting Goods

Grip4orce, LLC

Account Executive – 3 Positions

Independent Rep – Nationwide Opportunities

Accessory Exchange Junior Graphic Designer

We are looking for independent sales reps to sell to various retailers throughout the U.S. and Canada. Must have a strong history in the sporting goods or fitness industry with sales relationships with the various buyers in your territory. We are offering 10 percent commission for all accounts…

Accessory Exchange is seeking a Junior Graphic Designer to fill a position at their Hickory, NC, location. Accessory Exchange is a 100-year-old company based in New York with a focus on selling accessories for licensed brands. This position will conceptualize and design product, packaging, and marketing materials for global brands. The design department at Accessory Exchange is looking for a designer who can forecast visual trends...

Smartwool

Easton-Bell Sports

Big Rock Sports

Director of Sourcing and Logistics

Associate Sports Marketing Manager – Giro Snow

Merchandise Manager-Camping

Our sales organization has three exciting career opportunities for sales/account management professionals who possess extensive knowledge of the outdoor sporting goods product categories - specifically fishing and hunting: National Account Executive - Walmart (based in Bentonville, AR);National Account Executive - The Sports Authority (based in Denver, CO); Regional Account Executive - Academy Sports (based in Northbrook, IL)...

The SmartWool Director of Sourcing and Logistics leads the functions of material and product sourcing, quality assurance, and logistics for SmartWool. Quality, Innovation, Service Delivery, and Cost will govern every process, initiative, and decision. The Director has a primary responsibility of driving for cost efficiencies, while driving innovation and maintaining superior quality. The Director and team are the owners of all supply chain relationships from material suppliers to…

Reporting directly to the Director Global Sports Marketing, this role manages Giro Snowboard/Ski relationships with the most important athlete assets in Action Sports, as well as activating and delivering against an effective product seeding program for non-contracted athletes and signing of the future talent. Essential Job Functions include building and strengthening relationships…

The Merchandise Manager will be responsible for developing and implementing merchandising strategies to maximize sales opportunities within assigned categories; - Develops category plans that incorporate strategies for pricing, placement, and vendor relations; Supports the product development process, budget management, and functional operating plans; Performs business and industry analysis and develops plans to include product improvements...

Inno Advanced Car Racks

EleVen by Venus Williams

Sales

Tennis Apparel Manufacturers National Territory Sales Manager Sales Reps

Wingflyer

This person will be responsible for managing the Sales Representative Groups in their assigned region(s) to develop profitable sales and promotional strategies for the territories working closely with existing customers, developing new customers, negotiating annual programs, and maintaining internal communications and follow-up. Plans, leads and manages all aspects of sales execution within their assigned area. Drives profitable growth opportunities…

EleVen by Venus Williams is the largest clothing line ever launched by a female athlete. The first line is ready to be introduced to coincide with the Sony Ericsson Tournament in March 2012. Job requires selling to tennis pro shops, country clubs, hotels, resorts, specialty boutiques and sporting goods stores; meet monthly, quarterly, and yearly sales goals; development of new accounts; orchestrating and managing a disciplined sales process that ensures efficiency and accountability…

Territories include: North Texas (Dallas, Ft. Worth; OK) and South Texas (Houston, Austin, San Antonio). One representative is needed for each territory to develop and maintain business in defined geographic territories by planning and conducting sales calls to qualified retailers; educate retailers on Wingflyer products and help them market the product regionally through local or in-store events; 1-2 years of successful outside sales experience in the bicycle or a related sporting good (outdoor/surf) business (preferred)…

FOR INFORMATION CONTACT 704.987.3450 OR SPORTSJOBS@SPORTSONESOURCE.COM

There are plenty of reasons top outdoor gear and apparel brands choose CORDURA® fabric. High tenacity fiber technology. Incredible tear and tensile strength. Exceptional abrasion resistance. Sure there are cheaper alternatives. But in a world this tough, cheap just doesn’t cut it. See what makes our fabrics so durable at CORDURA.com © 2012 INVISTA. CORDURA® is a registered trademark of INVISTA for durable fabrics. Property of INVISTA.

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