ISSUE 1442 OCTOBER 20, 2014
The Weekly Digital Magazine for the Sporting Goods Industry
K-SWISS Introduces a New Brand Identity
Group Publisher Editor In Chief James Hartford james@sportsonesource.com 303.997.7302
Senior Business Editor Thomas J. Ryan tryan@sportsonesource.com 917.375.4699
ISSUE 1442 OCTOBER 20, 2014
The Weekly Digital Magazine for the Sporting Goods Industry
Contributing Editors Scott Boulbol, Fernando J. Delgado, Bill Kendy, Charlie Lunan Editorial & Creative Director Teresa Hartford teresa@sportsonesource.com Senior Graphic Designer Camila Amortegui camila@sportsonesource.com
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8 MAKING NEWS
PRODUCT FOCUS
4 Movers & Shakers Wolverine Reduces 2014 Revenue Guidance on Q3 Shortfall 5 Converse Sues 31 Companies Over Chuck Taylor Knockoffs 6 Pensar Development Showcases 3D-Footwear Design
10 Rocky Game Changer Boot Receives National Acclaim Eros Sport Releases "Cool T" Shirts 11 Kronos America and Reebok Introduce New Watch Collection Teva Partners with Woolrich on Collection
OIA Forms Executive Director Search Committee 8 Gore-Tex Debuts Global, Multi-Channel Marketing Campaign 18 Industry Calendar
14 FGL Sports Set For Growth 16 K-Swiss Unveils New Brand Identity
FEATURES
Cover Photo Courtesy K-Swiss
OCTOBER 20, 2014 | SGBWeekly.com
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MOVERS & SHAKERS Hydro Flask announced that Dennis Conner joined the company as its new VP of operations effective October 13. Rocco Villano was promoted to director of sourcing and planning, and industry veteran Rob Mitchell joined the company’s advisory board. New World Consumer Products, LLC, the makers of the XRCEL carbohydrate supplement line, hired former professional soccer champion John Wilson as its institutional sales manager. Lands' End, Inc. announced the rotation of several board assignments including the election of Josephine Linden as chairman of the board of directors. Linden, founder, managing member, and principal of Linden Global Strategies LLC, has been a member of the board since March 2014. Elizabeth Darst Leykum, who had served as chairman since April, becomes chair of the nominating and corporate governance committee, and Robert Galvin becomes chair of the compensation committee. Quiksilver, Inc. announced its founder, Bob McKnight, would step down as executive chairman effective October 1 and that it had elected CEO Andy Mooney as its new chairman and promoted Pierre Agnes to the position of president effective November 1. McKnight will remain on the Quiksilver board. J.C. Penney Company, Inc. appointed Marvin Ellison, currently EVP of stores at Home Depot, as president and CEO-designee effective November 1, 2014. Ellison succeeds Myron E. (Mike) Ullman, III as CEO of J.C. Penney effective August 1, 2015. Brooks runner Amy Hastings dominated the U.S. field at the 2014 Bank of America Chicago Marathon finishing fifth in a stacked race, exactly matching her personal record of 2 hours, 27 minutes, and 3 seconds. Wolverine Worldwide appointed Roxane Divol to the company's Board of Directors. Divol, 42, is SVP of Alliances for Symantec Corporation - one of the world's largest software companies. EB Brands Holdings, Inc. hired a corporate CFO and a SVP of sales for its fitness division specializing in the making of accessories under the Bally, Everlast, Valeo and Sportline brands. Tom Osgood, who served on the senior membership team for Dorel Recreational/Leisure, joined K. Russo Consulting, Inc., a leading boutique executive search firm where he will launch a new HR advisory practice. Tecnica Blizzard announced that Charlie Hepburn would be its new sales associate for Tecnica and Blizzard alpine products in California and Nevada. 4 SGBWeekly.com | OCTOBER 20, 2014
WOLVERINE REDUCES 2014 REVENUE GUIDANCE ON Q3 SHORTFALL Wolverine Worldwide, Inc. last week lowered its guidance for a full-year revenue growth from three to two percent stating it expected the U.S. retail environment to be more promotional over the holidays than last year. However, the owner of Keds, Merrell, Saucony, Sperry Top-Sider and a dozen other footwear brands said they remained confident it could hit both its 2014 and its long-range earnings’ targets. "As we look toward to the fourth-quarter, we expect a soft and highlypromotional environment at retail, particularly in the U.S., to pressure fourth-quarter revenue performance," said Wolvervine Worldwide VP and CFO Don Grimes during the company's third-quarter earnings call. Wolverine Worldwide reported consolidated revenues declined 0.8 percent to $711.1 million in its third fiscal quarter ended September 6, compared with the year prior, as mid-single-digit growth from its Heritage Group Brands, (Wolverine, Cat, Bates, Sebago, Harley Davidson, and Hytest), and low-single-digit growth from its Performance Group Brands, (Merrell, Saucony, Chaco, Patagonia and Cushe), were offset by an 11 percent decline in sales by its Lifestyle Group Brands, (Hush Puppies, Keds, Sperry Top-Sider, Stride Rite, and Soft Style). Much of the growth came from overseas. Its Lifestyle Group Brands declined 11 percent due to a double-digit decline in sales of Sperry Top-Sider shoes and the closing of Stride-Rite stores. The decline at Sperry Top-Sider reflects Wolverine Worldwide’s decision to halt distribution of the brand to some family footwear retailers, a trend away from women's boat shoes and tough comps. In its Performance Group Brands, Saucony sales grew in the mid-singledigits on strong demand for the Guide 7, Ride 7, and Kinvara 5. Demand for its technical and retro styles were strong in EMEA. At Merrell, strong men's and international sales, especially in Latin America, offset flat sales in North America where women's sales were off due to misses in its core casual and sandal styles. In its Heritage Group Brands, Cat had exceptional results in all geographies and was boosted by new technical work footwear in North America. Wolverine sales grew across the outdoor, heritage, and work segments. Wolverine Worldwide lowered its full-year consolidated revenue forecast by $30 million to approximately $2.745 billion, which represents approximately two percent growth over the prior year’s revenue compared with the three percent it forecasted in July. Wolverine Worldwide reaffirmed its earnings forecast, which calls for diluted earnings-per-share to grow 10 to 14 percent or $1.57 to $1.63 on an adjusted basis and $1.32 to $1.38 on a GAAP basis. Wolverine Worldwide forecasted sales to grow seven percent in the fourth quarter as overseas expansion continues to offset flat or lower sales in the U.S. where executives expect a more promotional holiday environment than a year ago. The forecast anticipates the impact of a broader assortment of cold and wet weather boots, an additional 17th week of sales compared with fiscal 2014, healthy order backlogs, strong boot sales, and assumes stable foreign exchange rates.
CONVERSE SUES 31 COMPANIES OVER CHUCK TAYLOR KNOCKOFFS Converse filed lawsuits against 31 companies in New York Federal District Court accusing them of trademark infringement on its Chuck Taylor shoe. The brand, owned by Nike, Inc., is suing for monetary damages, but is also seeking to prevent the continued sale of the alleged infringing product. Skechers USA, Wal-Mart, Fila, Ed Hardy, K-Mart Corp., Tory Burch, Ralph Lauren Corp., Zulily, Aldo Group, H&M, Highline United, and Kitson are among those being sued. Of the 31 companies, four are based in China, two in Canada, one in Australia, one in Italy, and one in Japan. Converse claims the companies are infringing on trademarks that cover the look of the shoe including he distinctive toe cap, toe bumper, and side strip as well as the diamond pattern on the bottom of the sole. The Converse star is not in question. Converse claims look-alike Chuck Taylors have become more common in recent years with their popularity. It claims to have served about 180 cease and desist letters related to the issue since 2008. It also claims to have spent hundreds of millions of dollars on advertising the shoes, famous for their star, stripes, and rubber toe tip,
and acknowledges benefiting from extra publicity it gained from books, magazines, newspapers, movies, and TV. “For generations the Chuck Taylor, universally known as the ‘Chuck,’ has captured the hearts and minds of millions of consumers selling over a billion pairs globally during the past century,” said Converse Chief Executive Officer Jim Calhoun in a statement. “We welcome fair competition, but we do not believe companies have a right to copy the Chuck’s trademarked look.” The “All-Star” debuted in 1917 as a basketball shoe and was later renamed the Chuck Taylor.
OCTOBER 20, 2014 | SGBWeekly.com
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OIA FORMS EXECUTIVE DIRECTOR SEARCH COMMITTEE
PENSAR DEVELOPMENT SHOWCASES 3D-FOOTWEAR DESIGN Seattle-based product development firm Pensar Development, has created a shoe concept that demonstrates how 3D printing will impact the future of the retail experience, point-of-sale manufacturing, and the product design process. Pensar’s DNA shoe concept uses footwear to examine the opportunities surrounding point-of-sale manufacturing and ergonomic/biomechanical tailoring. Typically, the athletic footwear market relies on set sizing to accommodate most common foot shapes and movement styles. For many people, the average fit does not equal the best fit. To create a more user-centric design, footwear needs to be based on the feet of each customer. The first step is to acquire the data that an individual's shoes will be based on. Each foot is three dimensionally scanned. Then the customer puts on a pair of special sensor shoes and goes for a test run or walk. The sensors track movement (e.g., footfall, pronation, balance, etc.), and combined with the scan create a usable database to build the new shoes for the customer. Algorithms are used to translate the data into shape and the shoes start to come together. Next, the customer is able to customize the materials, colors and textures or they can save a shoe design in advance that can be combined with their foot data when they get to the store. The design then goes to print, and as they shop, the 3D printer creates their shoes. Costly tooling and expensive skilled labor has prevented the mass market from owning customtailored products. The goal of the DNA concept is to illustrate a path where 3D printing would enable customers to engage in the design process and create a personalized product. Automating the process through algorithm-driven design and 3D printing will make it economically viable to a much larger audience. While there are obvious benefits to consumers, there are positive impacts to retailers as well. First, by creating products-on-demand, retailers will be able to offer limitless design updates and customization. Second, the ability to have shoes custom fit will draw online customers back into stores. Third, while raw materials need to be stocked, inventory of pre-built products will be greatly reduced giving retailers more flexibility and less overstock of undesired product. Pensar’s DNA shoe explores how 3D printing will evolve the retail experience for customers and change the way products are designed and manufactured. Before this concept can become a reality, there are advancements that need to take place in 3D printing technology. For example, the materials currently available don't offer the durability or softness necessary for wearing every day or for athletic use. Further study is also required to ensure that the materials are biocompatible and safe for consumers. Today, the cost and time it takes to print a pair of shoes are both too high. However, the 3D printing industry is evolving quickly and while material challenges may prohibit immediate implementation, user-driven, rapid manufacturing will be realized in the near future. 6 SGBWeekly.com | OCTOBER 20, 2014
The Outdoor Industry Association's (OIA) board of directors has named five directors to serve on a search committee with a national search firm to find a new chief executive. Frank Hugelmeyer resigned as OIA President and CEO effective October 3. Members of the OIA executive director search committee include Jennifer Mull, CEO, Backwoods; Bob Holding, co-founder, Waypoint Outdoor; Nora Stowell, VP sales, AmeriSports; Mark Satkiewicz, president, Smartwool; and Jim Zwiers, SVP and president international, Wolverine World Wide. The hiring committee will focus on finding a leader who can build on Hugelmeyer's 15-year tenure and implement on its strategic plan with an emphasis on the top three challenges facing the outdoor industry today – the changing consumer base, the supply chain resiliency/transparency, and the access to recreation. “The board is very focused on helping members anticipate and prepare for the consumers of the future,” said Mull, also OIA board chair. “The outdoor industry has changed more in the last five years than in any other time in its history. Our association is well positioned to help guide our members so that we can adapt our supply chains, business models, and public policy initiatives to ensure the growth and long-term health of our industry and the lifestyles and livelihoods it supports.”
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GORE-TEX DEBUTS GLOBAL, MULTI-CHANNEL MARKETING CAMPAIGN Coming on the heels of the successful debut of its Gore-Tex Surround product technology at Outdoor Retailer Summer Market and the outdoor fair in Friedrichshafen, W. L. Gore & Associates (Gore) will debut a multi-year, multi-channel, international marketing campaign, “Experience the Difference” in support of the Gore-Tex brand this fall. Launching in four countries, the campaign, with a seven-figure budget, will generate more than one billion impressions over the next two years through video, online, and print. Developed by German-based Brand and Design Agency Zeichen & Wunder, the campaign strengthens the direct connection between brand and consumer with a distinctive visual approach that showcases the emotion of personal experience regardless of weather challenges.
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The campaign motifs feature close-up, emotive images of people exploring the outdoors in a split photo that illustrates comfort and weather protection in different end-uses. The creative thinking behind the campaign is to showcase the special properties of Gore-Tex product technology in all weather situations portrayed through the "Split" approach. The good weather on one side and the bad weather on the other illustrate the main functionalities "breathability" and "waterproofness" in an easy way. The split approach serves as a red thread across media through the campaign and is extensible for new designs in the future. Specific channels of distribution include print magazines, TV, online, and social media platforms, Out of Home, and cinema. “The spring/summer 2014 season was the start of a significant and compelling brand program for Gore-Tex footwear,” said Tom Bugg, global brand manager at Gore. “Over the next several years, the company will continue to increase its investments to further strengthen the brand. In 2013 more than 34 million Gore-Tex products were sold in more than 50 countries.”
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PRODUCT FOCUS
ROCKY GAME CHANGER BOOT RECEIVES NATIONAL ACCLAIM Rocky Boots, a division of Rocky Brands, Inc., said its Rocky Athletic Mobility Game Changer earned Editor's Choice among knee-high boots by Outdoor Life magazine. The Game Changer boots have a thinner upper than most rubber boots thanks to a liquefied polyether construction. They also weigh less than 1.5 pounds per boot and fit more like athletic footwear than rubber boots. Style RKYS072 also features the Retain heating system; which utilizes a reflective lining to maintain body heat eliminating the need for bulky insulation. "The Game Changer is a perfect example of what our product development process can accomplish," said Jordan Gottke, marketing director for Rocky. "Our goal is to remedy the problems outdoorsmen face in the field through the use of new materials and technology, and we are on the leading edge among footwear manufacturers in that area."
EROS SPORT RELEASES "COOL T" SHIRTS Made in the USA athletic apparel brand Eros Sport, based in Laguna Niguel, CA, is set to launch its "Cool T" Shirts made from cutting-edge microfiber breathable fabric that wicks moisture away for a cooling effect during exercise. Wear test subjects who wore the Cool T Shirt said that they felt more comfortable during their workouts and remarked that they also felt more energized. Eros Sport Cool T Shirts are best suited for Yoga, Pilates, Crossfit, strength training, cross training, mud runs, boxing, cycling, and running. The shirts come in black with blue contrast stitching and charcoal. The shirts also compliment Eros Sport Core Vibe shorts, Core Active shorts, and Core Energy shorts.
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KRONOS AMERICA AND REEBOK INTRODUCE NEW WATCH COLLECTION Kronos America, LLC, in partnership with Reebok, unveiled its newest watch collection for men and women. Inspired by Reebok’s focus on fitness lifestyle, the collection features classic, retro, vintage and iconic designs that capture the brand’s essence and history with styles such as Pump, Vintage Nerd, Warm Up, Icon, Block Party, and Workout Z1G. “We are thrilled to introduce the Reebok Watch Collection,” said Christian Jamin, CEO of Kronos America, LLC. “It’s an honor to work with such an iconic brand and bring a new, diverse line of both functional and fashionable pieces that capture the essence of Reebok to consumers and brand enthusiasts everywhere.” In keeping with the Reebok brand, the collection features vibrant colors for men and women and all of the watches include a rubber or silicone strap with certain styles featuring gold-plated or stainless steel bracelets with stone detailing. “It’s an exciting time for Reebok and partner Kronos America, LLC to launch our latest watch collection,” said Linne Kimball, head of licensing at Reebok. “We are always looking for ways to expand the depth of products for our consumer and the new range is both fashion-conscious and functional, inspired by some of Reebok’s most iconic styles.” The current Reebok watch collection includes 56 pieces with 15 different styles. The line will be sold at Reebok FitHubs and select Macy’s, JCPenney, Kohl’s, and Bon-Ton stores, as well as on Reebok.com, Macys.com, JCPenney.com and Kohls.com beginning this month 2014. Prices range from $50 to $150.
TEVA PARTNERS WITH WOOLRICH ON COLLECTION Teva, a division of Deckers Brands, announced its newest collaboration with Woolrich. Extending the time spent in the comfort of Teva sandals, Woolrich has paired wool-blended socks to complement the patterned webbing and colorways of Teva Original Universal. "We continue to celebrate the versatility of our iconic silhouette. Like our consumers, the Original Collection comes to life through personalization. Unique collaborations help to expand the freedom that our brand encourages while proving that 'fashion' is subjective and can certainly be polarizing," said Lorie Pointer, Teva’s director of product and design. For those who might need some inspiration to help pull off the #SocksandSandals look, Teva teamed with stylists Elizabeth Stewart and Kira Sheppard to offer some styling tips that can be found on Teva.com. The Teva x Woolrich collaboration includes two style options for men and women - a solid Teva sandal with a printed Woolrich sock and a patterned webbing sandal with a solid Woolrich sock. The sock and sandal combination are are being sold together for $65 at select Urban Outfitter retail locations as well as online at Teva.com and Woolrich.com.
OCTOBER 20, 2014 | SGBWeekly.com
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Photos courtesy Sport Chek
FGL SPORTS SET FOR GROWTH By Thomas J. Ryan
A
t its annual analyst meeting, Canadian Tire Corp, Ltd. outlined its three-year vision for annual growth of at least 9 percent at FGL Sports, which largely includes Sport Chek. Officials also announced annualized sales growth targets of at least 3 percent at its flagship Canadian Tire chain and five percent or more at Mark's, its work wear chain. In addition, the company announced targets for return on invested capital of nine percent by the end of 2017, return on receivables growth in the financial services business of at least six percent and average diluted EPS growth of 8 to 10 percent over the three-year period. At the meeting, Michael Medline, president and incoming CEO of Canadian Tire Corporation, said that since completing the acquisition in August 2011, FGL Sports has achieved 12 positive comp quarters in a row. Sport Chek, by far the biggest part of FGL, has put together three double-digit quarters in a row of comp “and there's more growth to be had.” Medline noted that since acquisition, FGL Sports has had a “simple twopart strategy” - expanding Sport Chek’s footprint and building “an unassailable Michael Medline, president and incoming CEO connection with our target of Canadian Tire Corporation customers.” 12 SGBWeekly.com | OCTOBER 20, 2014
Regarding expansion, Medline said Sport Check is on track to meet its 2 million-square-foot target set in 2012. At the time, the company said it would add more than 2 million square feet of retail space under the Sport Chek and Atmosphere banners between 2012 and 2017, representing more than 50 percent to the chains existing retail space. At the meeting, Medline noted that some of its existing Sport Chek stores are being converted to 12 to 14 Hero stores in addition to the flagship stores. Many incorporate some of the prime elements of its West Edmonton Mall location, an 80,000 square-foot retail store opened earlier this year that features 800 in-store screens showing 240 channels of digital content. A new Burnaby flagship will open this November, and Medline announced plans to open a 75,000-square-foot store at Square One in Mississauga and a 45,000-square-foot location at Yorkdale in 2015. At least two more flagships are expected to open in 2016 and Medline sees room for 10 to 12 flagships across Canada. In Spring 2015, a Sport Chek store is set to replace a Real Sports store in Maple Leaf Square, the home of the Maple Leafs hockey team. The store will bring “our brand and products even closer to our customers.” Noting that Sport Chek has historically found challenges finding prime real estate, Medline cited the Maple Leaf Square lease as a sign that Sport Chek has “the opportunity to put a store in any space. Our vital relationship with landlords has completely turned around.” In addition to securing better real estate, Sport Chek is accessing wellknown labels including Quiksilver, Roxy, Arc'teryx, and Ping Golf and
starting to sell to Sport Chek. Said Medline, “We are getting the best products in the world from the best brands in the world – the Nike’s, Adidas’, Under Armour’s, North Face’s, Columbia’s, Bauer’s.” He also Sports Chek intends to “become the world-class destination for sport technology,” while admitting he could offer few details on the plan. He added, “You will begin to see new vendors and partners, many of which are considered global icons, selling their products in our stores. We've already started down this journey with the addition of technology-infused basketballs, tennis rackets, and wearables.” Beyond expansion and brand upgrades, Sport Chek is also working to “deepen our emotional connection with our customers.” The brand reinivention started three years ago and focused on a group of active lifestyle “achievers” that represented just 27 percent of the country’s shoppers yet drove about 59 percent of all sporting goods sales in Canada. “We refined the Sport Chek brand to speak directly to those core customers,” Medline said. “And in just three years, we've moved every single retail metric we track by 10 to 20 points more favorable. And the trailer indicator of success is more than a higher likelihood to shop or increase brand affinity. We see a material strength in week-to-week comp store sales that simply did not exist three years ago.” He added about the target group, “By connecting on a highly emotional level, this target group started to see Sport Chek as the enabler, the catalyst to help them live more active and healthier lives to find their better.” Beyond ads, the group was reached through social media channels, strategic sponsorships, and digital marketing. Said Medline, “We created an extensive digital footprint that engages consumers through Google, through Facebook, Twitter, and YouTube. And our Blue Jay video celebrating players and their fathers achieved 9 million social impressions, 80 percent of which were organic, driven by one-to-one conversations with fans and influencers.”
The company’s overall Olympic partnership “is only getting started and one that Canadians care a lot about,” with the Sport Chek Olympic ad resulting in the strongest recall and brand link the company had ever seen. Its digital flyer enables Sport Chek to target the 18- to 34-year-old demographic with inspirational marketing content. “This year alone, we pulled the paper flyer completely and replaced it with a digital flyer four different times to test and learn,” said Medline. “In each case, we drove significantly more sales and provided our stores with the flexibility to adjust for weather, geography, and categories on the fly. This trend to digital flyers will continue as we aim to transition more than 20 percent of our print spend to digital in 2015.” He added that Sport Chek would “continue to be the banner where we test and learn” for the rest of Canadian Tire’s businesses. He added, “In the process, Sport Chek will lead the industry as one of the best retail experiences in the world. And our vision is that Sport Chek one day will become as iconic to sports enthusiasts as Canadian Tire is with Canadians.”
Beyond Sport Chek, Medline said the opportunity within the Canadian Tire chain is to “successfully move from a general merchant to a group of specialty retailers under one big roof.” While Canadian Tire has accomplished this in the automotive category, Medline sees the opportunity in the “Playing,” or sports category. “Canadian Tire and FGL Sports combined are the fifth largest sporting goods retailer on the planet,” asserted Medline. “Fifty-seven percent of Canadian sporting goods’ buyers have purchased from one of the CTC companies for sports in the past 12 months. Only 24 percent of those purchases are Canadian Tire, and we can do more. We brought over one of our top FGL merchants to run Playing at CTR. We created a halo around our sports brands with our Olympic sponsorships and partnerships with Canadian athletes and are putting in new hiring and recruiting strategies focused on ensuring that our in-store staff and category specialists in sports are sports enthusiasts. They’ve got to love sports.” That emphasis is also embraced by its 'We All Play for Canada' platform. The effort will include OCTOBER 20, 2014 | SGBWeekly.com
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getting kids active for an hour a day in schools through the 'Active at School' program, and helping families in need get their kids into organized sports’ programs through the company's charity, 'Jumpstart'. Medline said Canadian Tire’s focus around sport through such sponsorships “has not only enabled us to connect with our customers through our marketing but also in our communities. Since its inception, Jumpstart Charity has given back more than $70 million and helped more than 800,000 children live a healthier and more active life. It's a legacy that's important to us, but also one that matters to Canadians.” The three-year plan overall also includes a “generational shift” program to target a younger demographic and focus on digital investments including a vastly improved website. “Our current online presence is disappointing and not up to our standards yet. In fact, it reflects poorly on our brands,” said Medline. Canadian Tire has put into place 70 percent of the infrastructure it needs for an improved digital presence that offers customers more than just online shopping. The goal is to make the company’s site an online hub, keeping customers entertained, informed, and engaged. “The web sites today all look the same. Ours needs to be different. We will create a unique online destination that will inspire customers to keep coming back,” said Medline. Canadian Tire wants to better target 30- to 49-year-olds with a focus on young families. Canadian Tire will offer more items such as indoor sleepover tents, snow paint, and outdoor skating rink kits to target young families but the shift will also be noticeable in marketing. Medline elaborated, “Instead of ads featuring dad painting the deck, new ones will focus on a father and his young son building a tree house.” 14 SGBWeekly.com | OCTOBER 20, 2014
Medline will become CEO of Canadian Tire effective December 1 replacing Stephen Wetmore, who launched the company’s successful brand revival six years ago. Also at the meeting, the company expects to make an average annual capital investment of $575 million from 2015-2017 including significant new investments in digital technology and an expansion and upgrade of the company's store network. These investments do not include expenditures related to distribution center capacity and any properties acquired by CT REIT from vendors other than the company. The company announced that it intended to buy back an additional $400 million of its stock and also confirmed that it would maintain its dividend policy paying out 25 to 30 percent of the prior year's normalized earnings. As the company continues to evaluate possible acquisitions to grow core categories it will look for companies with a strong financial outlook, a brand with great potential, a profitable base, and runway for growth. Also, any acquisition must have a distinctive long-term value proposition that can be strengthened through existing CTC expertise. He also said Canadian Tire had no plans to expand Canadian Tire or Sports Chek to the U.S., noting that only Marks “could ever make sense to bring to the U.S.” But he also said the company continually gets asked whether it will expand outside Canada and he said the company would consider such an acquisition if it reached management’s criteria. “We are picky as hell and I would rather stay in Canada, I guess, because it's our home market,” added Medline. “Now importantly, I am not trying to signal you on anything here. We do not have an imminent transaction in the pipeline. The headline here is not ‘Canadian Tire is Moving South.’ That's not what I'm saying. But if we saw something great, we'd consider it.” ■
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K-SWISS UNVEILS NEW BRAND IDENTITY By Thomas J. Ryan
Photos courtesy K-Swiss
S
eeking to gain momentum around a successful reboot of the brand, K-Swiss introduced a new brand identity that celebrates its place as the only heritage American tennis brand. K-Swiss’ new look brings the brand back to its founding roots in 1966 and is characterized by a new visual language including a directional logo, classic 1966 typeface, and signature Brunner Blue colorway inspired by the blue courts of America’s championship stadiums. “The refresh of the brand ID is one piece of an overall plan to rebuild the K-Swiss brand,” said Barney Waters, chief marketing officer of K-Swiss, Inc., which was acquired by South Korea’s E.Land in April 2013. The first step was to reestablish K-Swiss’ original, authentic brand foundation as the heritage American tennis brand, said Waters. The second was working to reach the retailer community to sell the new strategy, vision, and product line. Having reconnected with retailers, the final step was enhancing the consumer facing elements of the brand. “Brand identity is a big piece of that,” said Waters. “The old logo and symbol felt like they were trapped in the past; they needed to be brought up to date. We’ve modernized and refreshed the logo while retaining the elements with equity like the shield shape, five stripes, and the red and blue color combination.” Among the changes with the update: Modernizing The Shield The new minimalist shield logo retains the classic K-Swiss five stripes trademark, although the orientation of the stripes has changed. The stripes now point upward to signify the brand’s momentum toward the future. The streamlined stripes are now positioned at a precise 58-degree angle. 16 SGBWeekly.com | OCTOBER 20, 2014
A Color For Tennis The red, white, and blue K-Swiss logo has long signified America as the place where the brand was introduced in 1966. The classic color trifecta is given a facelift with the introduction of an official brand color, Brunner Blue. Named for K-Swiss’ founders, brothers Art and Ernie Brunner,
the color matches the legendary shade of blue found on America’s most competitive tennis courts. The rich and sophisticated hue provides a premium feel and will be introduced into all branding elements including the K-Swiss logo, packaging, retail displays, and website. Legendary Letters The typeface used in the K-Swiss wordmark draws inspiration from the font used by the U.S. Federal Highway Administration on interstate road signs. Created the same year K-Swiss was founded in 1966, the font evokes the spirit of the open road and the innovative drive used to craft each K-Swiss product. The angles in the letters ‘K’ and ‘S’ are positioned at a 58-degree angle to complement the orientation of the stripes in the new Shield Logo trademark. A Sleeker Future The new logo, wordmark, Brunner Blue color, and updated brand imagery will be featured prominently across the K-Swiss digital presence, positioning K-Swiss as a brand that embraces and adapts to change while paying tribute to its past. Waters said in the year since being acquired by E.Land, one of the largest South Korean conglomerates with close to 200 brands and operating more than 10,000 stores worldwide, K-Swiss has managed to achieve a significant turnaround financially. “Our first goal was to return the brand to profitability and we are on track to do that,” said Waters. “At the same time, we’ve completely revamped the product and marketing teams, and have brought in fresh talent from some of the best brands in our industry. The atmosphere is now dynamic and creative, as it should be in a company like ours.” Most significantly, K-Swiss is back into almost all of the premium retailers it’s targeted including Foot Locker, Nordstrom, Bloomingdale’s, and Urban Outfitters. “We’ve been lucky to have the support of the industry,” said Waters. “They know the brand’s potential and they believe in what we’re doing. At the same time, the athletic industry is desperate for alternatives.” As part of its turnaround push, K-Swiss is moving away from its run and triathlon product while putting greater focus on tennis, its core competency. Waters said in recent years the company veered away from the authentic brand position. “Our strategy is to get the brand back to its authentic roots of heritage American tennis and build from there, so Court is the common denominator in what we do,” said Waters. “Court Performance for tennis players, Court Style for casual wear, and Court Fitness for training. Our approach to fitness training is centered on lateral movement, which is the primary movement in tennis, and also a huge part of modern workouts. Why wear a running shoe designed for repetitive forward motion if you’re doing multi-direction, multi-speed workouts which most people now are?” At the top tier of lifestyle, K-Swiss will relaunch the original Si18 International, a performance tennis shoe from 1990. “This will be a pinnacle shoe for us, packed with original technology, but with an authentic 90’s look and feel,” said Waters. “This will have very tight distribution in the best lifestyle stores. At the same time, white court shoes are coming back with a bang and that’s our expertise, so we have a
big program built around our heritage white court styles like the Classic and Lozan.” Another big area for K-Swiss is International distribution with new distributors in China, Australia, South America, the Nordics, and the Middle East. Said Waters, “2015 will be a big year for K-Swiss now that we’ve shored up the foundations.” E.Land’s acquisition of K-Swiss, Inc. also included Palladium, the canvas Pampa boot brand originally made for the French Foreign Legion in 1947. K-Swiss re-launched the brand in 2010 and it has grown rapidly ever since and is now distributed in over 80 countries. “Palladium has grown like wild fire and continues to do so,” said Waters. “It’s been a really fun ride as the brand is now five times the size it was when we launched in 2010.” Palladium now has over 50 Palladium stores around the world. Its newest market, China, is off to a “very strong start” with demand outpacing supply. Added Waters, “We’re also launching Palladium apparel in Asia this year with the design direction being a combination of our military heritage and our modern position as a city exploring brand, so we’re becoming a head-to-toe brand.” PLDM, a sister collection recreated by the original Palladium team in Lyon, France to complement the popular Pampa boot style, is also seeing greater investments under E.Land’s ownership. PDLM focuses more on leather with burnishing and vintage treatments inspired by biker, military, and workwear. Said Waters, “It is designed in France and much of the product is made in Portugal.” With the acquisition of K-Swiss, Inc., E.Land formed K-Swiss Global Brands based in Westlake Village, CA, with a goal of acquiring a portfolio of Western-based brands to help it better compete globally. A month after acquiring K-Swiss, E.Land acquired OTZ Shoes, the comfort footwear brand that features cork footbeds engineered to mold to the shape of the wearer's foot. Waters said OTZ is now fully integrated into K-Swiss Holdings’ shared services support and systems and is positioned for growth. The brand, according to Waters, has a strong back-story, being founded in Malibu and being based on the oldest shoe ever found, on Oetzi the Iceman, who died over 5000 years ago in the Austrian mountains. But OTZ is especially benefiting from resurgence of cork-based footwear marked by the fashion craze around Birkenstocks, and many consumers again are recognizing the health benefits inherent in cork footbeds. “OTZ’s focus on the Lohas movement (life of health and sustainability) sets them apart as a brand, amidst a sea of items,” said Waters. “A huge percentage of the population is making conscious decisions about what they buy, whether it’s eating organic, choosing farm-to-table restaurants, reading product labels, or preferring footwear with minimalist construction, natural materials, and comfort - like OTZ.” Waters also noted that while E.Land and K-Swiss Holdings haven’t made another acquisition since OTZ, E.Land’s strategy hasn’t changed. “We want to be a multi-brand company with shared back-end services,” said Waters. “This model creates efficiencies which positively affect the price/value equation for the customer. We are continually looking at M&A opportunities to complement the portfolio of brands, as the efficiencies increase as more brands share services.” ■ OCTOBER 20, 2014 | SGBWeekly.com
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