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Finish Line making

TM changes to all aspects of its business. Page 4. INSIGHT Sullivan on Retail: Back- INSIDE to-School in 2015. SPORTS. SPECIALTY. RETAIL. BUSINESS. Page 17.

Headline Here Please Two Lines of Text PAGE 00 August 17 / 2015

Olly Olly Oxen Free Acquisition Adidas buys Runtastic. hurt the top and bottom lines, Soaring and Adidas must address Skechers leads Insight numerous issues within its Index Brand gainers again. flagging golf unit headed by one-time industry darling Maintained EWSRA keeps January TaylorMade. show dates. And while some investment circles recently urged Dick’s Safety Sporting Goods to shed its For college students and athletes who run, 76-door Golf Galaxy specialty bike and train. unit, there has been more recent speculation, due in part Sweet & Sour to the wilting Canadian dollar, Escalade takes bite at Pickleball. that investors in Golfsmith are getting an itchy trigger finger and may pull it if the right offer comes along. LISTEN TO Adidas senior executives THE PODCAST have admitted TaylorMade- hile the top pros in the world Adidas Golf has not lived up to company were battling it out at The projections in recent months, confirming the PGA Chapionship this past R15 and Aeroburner introductions have not W weekend, the golf business resonated well with golfers, and promising also became a battleground. Some suggest improvements in pricing, promotion and the sport has recovered from its nadir and trade patterns on the brand’s equipment. is leveling off, and that going forward the There was further admission that category will largely be a market share TaylorMade’s core portfolio of drivers has tournament among large vendors and historically been priced below competitors’ retailers. Others are sounding the alarm that product despite being the market leader in further consolidation is inevitable. metal woods. In July, TaylorMade reduced City Sports New CEO On the upside, U.S. rounds played were up its workforce by six percent. An overhaul Marty Hanaka has nearly one percent in the first half of 2015. will also “aggressively” address the brand’s spent 42 years in retail, And sport participants and observers remain supply chain and product expenses. Despite starting at Sears in 1973. mesmerized by the game’s young guns in it all, the Adidas Group, which has hired His latest challenge Rory, Jordan, Ricky and now Ollie, the top an investment bank to analyze possible is building the core amateur Schniederjans, a recently turned pro divestitures of Adams and Ashworth, says business of Boston- who signed on with Callaway. its golf unit will not hinder the corporation’s based City Sports as its On the downside, international markets FY15 top and bottom line guidance. new president and CEO. are tough, currency fluctuations continue to (Continued on Page 3)

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FROM THE EDITOR Let the Games Begin

orget about the impending football season for a

moment. The real action in these Dog Days of INSIDE VOL.1 NO.2 August is in basketball, the business of roundball. INSIGHT F In the days before and after the NBA released its SPORTS. SPECIALTY. RETAIL. BUSINESS. official 2015-16 schedule, Under Armour and Adidas made moves that they respectively hope can erode the dominance EDITORIAL Editor in Chief Nike has in the sport with its 90 percent market share in Bob McGee / [email protected] shoes, roster of marquee endorsers led by LeBron and its Contributing Editors forthcoming, long-term NBA apparel deal. Retail and Technology Some Swoosh diehards might contend any movements Mark Sullivan / [email protected] by Under Armour and Adidas in basketball smack of Sports Specialty Adidas, Cara Griffin / [email protected] desperation, a need to have a more formidable presence in the Outdoor meanwhile, most exportable U.S. sport. I say otherwise. Lou Dzierzak / [email protected] appears to Footwear Under Armour and Adidas may have a difficult time Jennifer Ernst Beaudry / [email protected] betting the chipping away many share points from Nike, but, if they Textiles and Sourcing house that a execute properly, the entire basketball category can reach Emily Walzer / [email protected] Team Sports former Nike a new stratosphere in terms of global sales volume and Michael Jacobsen / [email protected] basketball relevance for consumers from Shanghai to Rio. It should be Publisher Jeff Nott / [email protected] endorser who noted, however, that U.S. sales of basketball shoes fell below the $1-billion-mark last year, declining five percent to $979.8 never wore a million, according to SFIA research. DESIGN signature shoe Design Director Under Armour, already a proven, albeit small, entity in Francis Klaess can re-ignite basketball with its decision to bank its category brand presence Art Director its fortunes in on eventual NBA MVP Stephen Curry, has taken another Mary McGann Designer the segment. step forward with a new multi-year, global partnership as Brandon Christie the title partner of the NBA Draft Combine and presenting partner of the Jr. NBA, the league’s youth basketball program. ADVERTISING Additionally, UA, a NBA partner since 2011, is developing a Beth Gordon / [email protected] NBA FIT mobile app through its Connected Fitness platform. Jeff Gruenhut / [email protected] Troy Leonard / [email protected] Rather than taking its ball and going home after being Katie O’Donohue / [email protected] outmuscled by Nike for the NBA apparel deal, UA tweaked its Sam Selvaggio / [email protected] strategy to strengthen its alignment with the game. Adidas, meanwhile, appears to betting the house that a SUBSCRIBE: former Nike basketball endorser who never wore a signature store.formula4media.com shoe can re-ignite its fortunes in the segment. The Three INSIDE INSIGHTTM is a trademark of Formula4Media, LLC. Stripes has signed James Harden to a 13-year deal worth a © 2015 all rights reserved. Inside Insight is published on the first and third Mondays of every month, and is edited reported $200 million, instantly making the latest squeeze of for sports brands and retail management executives. The Khloe Kardashian one of the five highest paid endorsers in opinions by authors and contributors to Inside Insight are not necessarily those of the editors or publishers. Articles n the U.S. Let the games begin. appearing in Inside Insight may not be reproduced in whole or in part without the express permission of the publisher. Formula4Media, LLC, P.O. Box 23-1318, Great Neck, NY 11023. Tel: 516-305-4709. Annual subscription $249.00

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AUGUST 17, 2015 INSIDEINSIGHT

INSIDE RETAIL More May Be Less for Finish Line

Addressing Finish Line’s ongoing work with its Macy’s shops, whose year-over-year average size was down five percent May 31 despite 43 percent growth in total square footage to nearly 423,000 from 395 locations, the investment house says the retailer is transitioning approximately 100 of them to larger, higher traffic areas within the department stores and adding kids’ assortments. An omni-channel improvement will allow Macys.com customers to see the inventory of all 400 stores besides what is located in distribution centers. Cannacord Finish Line’s Q1 profits rose leading analyst says Finish Line may estimates Finish Line’s Macy’s business can 11 percent on 9 percent revenue growth. close more stores as leases come eventually approach $400-500 million in annual up for renewal, part of a focused revenues, above the chain’s long-term unit A strategy to boost profitability at revenue goal of $250-350 million. the Indianapolis-based retailer. Other changes After spending $8.9 million to purchase the ahead include 100 overhauls of shops inside four-door JackRabbit Sports chain in New York Macy’s before the holiday season and a halting in March, acquisitions under Finish Line’s RSG of additional acquisitions by its RSG running division are said to be “on hold.” As of May 31, specialty group headed by Bill Kirkendall. RSG’s total square footage was up 38 percent Research by Canaccord, citing a meeting with year-over-year to 275,842-square feet, but the Finish Line’s CFO Ed Wilheim and reiterating average door size had grown only five percent a “Buy” rating on the stock, said Finish Line over the 12 months to 3630-square feet from management is “intently focused on driving its 76 locations. Cannacord does not believe Finish Line will returns and profitable growth in all aspects of Finish Line will commit capital for future RSG spend $25 the business while deploying capital judiciously.” acquisitions “if progress has not been made and million on new In its first quarter ended May 31, Finish Line a path to profitability is not visible” by fiscal reported an 11 percent increase in profitability year 2016. Finish Line, which is repositioning stores, and the to $13.8 million on nine percent top line growth JackRabbit to pure run specialty from its prior remodeling of to $443.4 million. The retailer confirmed its multi-sport specialty focus, will reportedly re- 65-80 with plans to spend $60 million in the current fiscal open JackRabbit’s 14th Street location prior to in-store shops. year–$25 million for new brick-and-mortar the New York City Marathon after sinking up stores and the remodeling of 65-80 existing to $1 million in renovations into it. The store doors to add Nike Track Club, Brand Jordan is only a few blocks from the city’s legendary and other “store within a store” shops; $5-8 Paragon Sports. Meanwhile, Keith Johnson, million to reposition and expand 75-100 of RSG’s footwear buyer, has resigned to join The its Macy’s shops; and another $27-30 million Sports Authority in a similar capacity. RSG has on technology investments related to new hired Frank Pruitt, cross category sales director warehouse, order management and Macy’s for national strategic accounts at Nike to be the merchandise systems and an upgrade to digital chain’s general merchandise manager, evidence platforms. All of the capital expenditures will be of the retailer’s close ties to Beaverton. He will funded with cash-on-hand and cash flows. hire the banner’s new footwear buyer. n

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HOT TOPICS Global Efforts, Outdoor Trends China’s Action Adds New Dimension urrency fluctuations against the U.S. concerns about any huge decline in the Chinese dollar have long been a complex issue economy. Meanwhile, a U.S. sporting goods and Cfor U.S. manufacturers. The Chinese footwear sourcing expert confirms the currency government’s recent decision to tighten its grip devaluation will raise raw material import and on the yuan resulted in a two percent decline energy costs for Chinese manufacturers. And to its value Aug. 11, its lowest level against there will also be more pressure on labor rates the U.S. dollar in four years, and a 4.4 percent in the market, already up 11 percent this year. drop over three days. Some in China caution Nonetheless, when the yuan devaluation hits a The yuan’s recent U.S. businessmen about having a knee-jerk five percent, there will be a movement to reduce devaluation will raise raw reaction to these developments and downplay factory pricing for exporters, the expert said. n materials energy costs for Chinese manufacturers. Easier Access to Energy onsumers, outdoorsmen or not, now with new durability suited for construction sites, want access to the daily comforts of tailgating and camping. Another start-up is Clife in the outdoors. These luxuries working with a Chinese supplier on a series of include everything from a cup of joe to sufficient tote-able, lightweight solar panels. But perhaps lighting and mobile device chargeability on an no vendor is leading the easier-access-to-energy overnight hike. Two “energy” threads at the trend more than Goal Zero. Some 18 months recent Outdoor Retailer Summer Market were after being acquired by NRG and getting early- many new food items that rev up the soul with stage products distributed through REI and natural ingredients, and devices, many of them Amazon, this Utah company has teamed with solar (although I don’t have the space knowledge Big Agnes on a line of integrated, solar ready to explain their inner workings), with the ability tents and Gregory on a heavy-duty pack. And, to provide power on a moment’s notice. after doing a product collaboration earlier this Big Agnes has introduced A former Whirlpool designer in Michigan has year with Burton Snowboards, there are more a line of integrated solar n ready tents. combined the functionality of a Keurig machine to come.

Olly Olly Oxen Free (continued from cover) learly, the golf business has been with currency issues and weaker international going through a rough patch over the markets in Europe and Asia. Although ELY Clast 12-18 months. Dips in annual recently lowered its FY15 reported revenue revenues at Nike, down two percent to $771 guidance to $830-840 million, it raised its million for the period ended May 31, and full-year earnings guidance. In doing so, operating profit margin at Titleist parent the company reported a 500 basis point and golf ball market leader Acushnet, 7.1 improvement in second quarter gross margin percent in 2014 versus 8.1 percent the prior due to favorable product pricing and a year, prove that out. But Callaway Golf, under sales mix of more higher-margin products. former Adams czar and CEO Chip Brewer, Quarterly revenues were flat, but were up 6.5 Rory McIlroy is Nike’s appears to be making progress in the category percent on a currency neutral basis and eight marquee golfer. at the expense of rivals while also dealing percent in the U.S. n

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ADIDAS Q2 SALES Adidas Enters Fitness live. The business, however, Apparel generated operating Currency Neutral Tracking with Runtastic reported a $13.1 million profit that was slightly ahead Group Acquisition 15 segment operating loss in 2014. of plan. It has begun to in- Adidas Nearly five years after Meanwhile, Nike, which source some of DBA’s third- 8 rival Nike entered the fitness launched the Fuelband in 2012 party manufacturing. Knights Reebok tracking app business with the but subsequently opted to Apparel integration will 6 launch of the Nike+ running exit the hardware business for commence by year-end with Running app, initially called Nike+ tracking apps, counted more HBI planning to double the 2 GPS, rival Adidas has entered than 28 million Nike+ users in company’s operating profit to Originals 37 the segment via its recent April 2014. about $40 million within 2-3 $239 million acquisition of years. Sees Knights Apparel as Training 6 Runtastic. The Three Stripes Gildan, Hanesbrands a complement to its Gear For NEO says the Austrian company has Take Sales Hits In Sports business. 43 a range of 20 apps – everything Second Quarter • Champion sales grew from Leg Trainer and Six Both publicly traded 42 percent in the quarter, Pack to Sleep Better – that apparel companies missed helped by significant gains in cover endurance, health and their revenue targets in their sporting goods, mid-tier and TRACKING FITNESS fitness activities and count an most recent fiscal quarters. department store channels. May 2006: aggregate 70 million users, Gildan reported nearly three New distribution was in both Nike and apple’s IPod currently 10 million active percent revenue growth to men’s and women’s programs. announce a partnership. in the U.S. The company will $714.1 million, but saw the • It is beginning to expand Sep. 2010: Nike releases Nike+ operate as an independent bottom line and margins the X-Temp concept into Running app. business unit under Adi’s negatively impacted by lower outerwear categories. April 2013: ownership with all four selling prices. The Montreal • 9,000 factory workers in Nike says 18 million Runtastic co-founders expected company says its gross Vietnam are projected to grow people are using its apps. to remain through 2019. margins should improve as to 12,000-13,000 over time. Dec. 2013: Under Armour acquires Adidas, which launched lower manufacturing and MapMyFitness for $150 its miCoach fitness device in cotton costs contribute in the Gildan million. recent years, spent one-third second half. Hanesbrands, • Sales of Gildan branded April 2014: of what Under Armour did meanwhile, was negatively products to retailers rose Nike+ users up to 28 million. to build its footprint in the impacted by weak innerwear 70 percent year-over-year, Jan. 2015: data analytics business. UA sales and is now forecasting buoyed by new programs Under Armour acquires says it has more than 120 fiscal year revenues of $5.9 and conversion of its largest Endomondo and its 20 million users in Europe and million registered users total billion, slightly below a prior private label sock program to other regions outside U.S. for the three apps it acquired range of $5.90-5.95 billion. As Gildan brand. Feb. 2015: between December 2013 for Delta Apparel, it generated • Weak consumer demand in MyFitnessPal, a digital and February of this year. a 1.7 percent increase in U.S. department stores and nutrition and connected fitness company with 80+ Under Armour intends to third quarter revenues to national chains negatively million users, acquired by grow its Connect Fitness $120.5 million, excluding the impacted sales of Gold Toe. Under Armour for $475 million. business – MapMyFitness, divested The Game collegiate • Fourth quarter will likely be

Aug. 2015: Endomondo and MyFitnessPal business, as its activewear a record period due to timing Adidas pays 230 million – through the development of sales rose nearly four percent. of Printwear sales, the benefit euros for Runtastic, founded in Austria in 2009. applications, services and other Among the period highlights: of low-cost cotton and further digital solutions to impact how manufacturing savings. athletes and fitness-minded Hanesbrands • Expanding capacity in individuals train, perform and • DBApparel and Knights Bangladesh factory by 50

IN THE NEWS percent to support projected quarter ended June 30. Organic Onix Sports and three-time growth in Europe and Asia- revenue was down five percent. National Pickleball Champion, Pacific. Meanwhile, the period’s North will work with the Escalade • Rio Nance 6, coming on line American sales decline was management team to support at end of 2016, will produce blamed on a wet May and mass brand marketing initiatives. both performance and retailers lowering inventory Meanwhile, Escalade Sports fashion products. levels in the sporting goods has reported a profit on a 15 • Doubling of retail doors by segment. percent increase in sales to year-end to 18,000 includes Elsewhere, Brazilian-based $43.8 million for the second 4000 in food and drug, the Caloi produced double-digit quarter ended July 11. First mass channel and some sport organic revenue growth in local half revenues increased 18 specialty. currency with higher organic percent to $77.2 million sales in Japan and the United as profitability jumped 12 Delta Apparel Kingdom offset by a drop in percent to nearly $6.5 million. • Junkfood sales were up European sales that was partly slightly period on strong prompted by an April price Running Drives Mizuno margin improvement with hike and the anticipation of Sales in First Quarter Pickleball will be promoted brand website sales growing new 2016 model year products Mizuno generated strong by Escalade Sports. 22 percent. being introduced in the third sales of running shoes in all • Soffe sales were described quarter. geographic areas in its first as generally flat on fewer quarter ended June 30, but closeout sales. Escalade Sales Up 15%, the period’s net profit fell 25 • Salt Life sales rose 4.1 percent, Acquires Onix Sports percent to the equivalent of but lower than projected as The Evansville, IN, sporting $6.2 million due exchange shipping was hindered by a goods company, days before rates and higher costs. Total shift in distribution ops to announcing its second quarter revenues rose 4.3 percent in Fayetteville, NC. and first half results, acquired Japanese Yen to the equivalent Onix Sports. Peoria, AZ-based of $386.6 million. Quarterly Dorel Banking on Better Onix makes paddles, balls, footwear sales increased H2 for Sports Unit sportswear and accessories for 5.6 percent $127.0 million; New product launches from pickleball. The competitive apparel revenues increased 1.9 the Cycling Sports Group and sport is combination of percent to $114.7 million. Pacific Cycle are being forecast tennis, badminton and table In the Americas region, to bolster second half results, tennis. Financial terms of the which encompasses the U.S., particularly in the fourth transaction were not disclosed. Canada and South America, quarter, within Dorel Industries But Escalade Sports, first quarter revenues rose Sports Group. Nonetheless, through the Onix and 7.4 percent to $72.9 million due to the continued decline Pickleball Now brands, is but declined 6.5 percent on of most currencies against implementing an aggressive a currency neutral basis. MIZUNO Q2 SALES the U.S. dollar, the Montreal strategy to grow the sport Americas operating income Currency Neutral (% increase) company says it remains of pickleball that includes fell 50.7 percent to $2.4 cautious on the FY15 outlook event sponsorships and the million. Mizuno, which for its Sports segment. development of programs said its North American 5.6 Dorel Sports’ operating to encourage new players running shoe business was the 4.3 1.9 revenue declined 12 percent to to participate in the sport. principal cause of a sluggish $251.1 million in the second Steve Wong, the founder of performance in the year-ago Revenues Footwear Apparel

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period, said the unit was down products. In the first half of sparked a nearly 29 percent for the period despite strong 2015, Asics’ Americas unit increase in Direct segment sales of new models and a late generated $576.3 million in sales to $41.7 million. period recovery bolstered by consolidated revenues, up Divisional operating profit the brand’s partnership with six percent currency neutral was 31 percent higher at $5.1 the Atlanta Track Club. from adjusted FY2014 sales million. ASICS H1 SALES The Japanese company is for the same period. However, Nautilus, while confirming Currency Neutral (% increase) projecting worldwide sales of operating income in the its intention to “incrementally 64 200 billion Yen, or $1.6 billion, region declined 27 percent to ramp up” media spend for the 12 months ended $51.0 million. Running shoe to promote the Bowflex March 31, 2016 with annual sales in the Americas were up Max Trainer, said it is also net income of 3.7 billion Yen, 18 percent to $481.4 million preparing to launch new or an estimated $29.8 million. for the six months. innovation on the strength Meanwhile, sales of side of the unit with the Asics Creates ‘Centers of Onitsuka Tiger and Asics introduction of the Bowflex Excellence’ for Training, Tiger shoes increased 64 560 SelectTech dumbbell later Lifestyle Categories percent to $32.0 million for this year. Meanwhile, the next The Japanese company, the period ended June 30. generation of the Bowflex 18 which reported a 36 percent Elsewhere in the Americas, TreadClimber will launch in 6 increase in H1 sales to a U.S. running apparel sales the fourth quarter. Revenues Onitsuka Total dollar equivalent of $2.13 increased 54 percent to Nautilus will take all Tiger/ billion, is establishing Centers $25.1 million. of its new Direct fitness Asics Tiger of Excellence in the U.S. and Asics Corp. is forecasting products to a higher level Europe to develop and manage nine percent adjusted through a modernized its training and lifestyle revenue growth in FY15 to an platform that includes digital categories, respectively. Asics equivalent $3.4 billion, and a integration, enhanced console America will spearhead global 10 percent gain in operating technologies and the ability product planning for training, income to approximately to track and export data to a new category focus for the $265.0 million. Annual net a variety of smart devices, brand, which is also aiming income, however, is projected including wearables. to create additional value to slip two percent to about Retail segment sales rose for its products through the $168.7 million. nearly 16 percent in the introduction of a wearable second quarter to $17.4 device. The Smart B-Trainer Nautilus Q2 Pumped Up million, supported by from Sony will work in By Direct, Retail strong sales of select type conjunction with the brand’s Double-digit revenue dumbbells and a new line of My Asics online training increases in both its Direct cardio products that includes menu. and Retail segments bolstered Nautilus and Schwinn NAUTILUS Q2 SALES Asics, a gold partner for second quarter results at branded treadmills. Currency Neutral (% increase) the Tokyo 2020 Olympic fitness equipment maker Nautilus is forecasting and Paralympic Games, is Nautilus. Total sales rose 23 additional U.S. retail market restructuring its business in percent to $59.7 million for penetration during the 29 23 Japan with a focus on making the period ended June 30. upcoming fitness seasons 16 the brand more sophisticated Continued strong sales of the through additional SKUs and a provider of more Bowflex Max Trainer, which and doors across a variety of Retail Direct Total technologically innovative was launched in early 2014, accounts and the introduction

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of a new Schwinn AD Pro 10 percent higher on a a chance on impacting the COLUMBIA Q2 SALES bike that incorporates currency neutral basis, with show.” Currency Neutral (% increase) commercial quality Airdyne the U.S. accounting for half However, the EWSRA is Revenues components. of the revenues. Higher modifying its show policies to 17 sales and benefits from allow member representatives U.S. Sales Columbia Sportswear cost containment efforts to hire a sub-rep to cover 45 Sees Mid-Teens Revenue Columbia Brand contributed to a four percent their booth if they need to 12 Growth in FY15 increase in first half sales to attend OR in Salt Lake City. Sorel Brand Columbia generated a 17 $359.4 million for the period 43 percent revenue to $380.2 ended July 4. Fila USA Generates million in its second quarter, Life Fitness, which enjoyed Higher Q2 Sales, its smallest period of the a “really strong” H1 in Operating Margin year, ended June 30. The Europe, expects the growth Fila USA, as reported by company said it experienced rate there to slow a bit. But parent Fila Korea, generated strong sell-throughs in North conversely, the company sees an 11.5 percent increase in America and Europe in the its U.S. growth rate improving second quarter revenues to spring as its U.S. sales rose in H2. Despite ongoing $71.31 million from $63.9 45 percent to $212.1 million currency headwinds, Life million. Quarterly operating and Columbia brand sales Fitness is forecasting revenue margin ticked slightly higher increased 12 percent to growth in the mid-singe at 6.0 percent versus 5.9 $325.1 million. digits and a flat to slightly up percent. Among other brands: Sorel operating margin in FY15. In the first half of 2015, sales rose 43 percent to $4.3 the unit’s revenues grew 17 million; Mountain Hardwear Eastern Winter Sports percent to $166.2 million sales dipped three percent Reps Maintaining 2015-16 from $141.9 million, although to $21.2 million; and prAna Show Schedule the operating margin was off sales were $26.1 million. By The EWSRA Board of 80 basis points to 7.9 percent product category, second Directors has opted to from 8.7 percent. quarter apparel/accessory/ maintain the Mid-Atlantic Fila Korea, which holds a equipment revenues jumped trade group’s scheduled show stake in Acushnet Company, 18 percent to $310.2 million for Jan. 5-7, 2016 in Atlantic parent of Titleist and FootJoy, and footwear sales were 14 City, NJ’s Harrah’s Waterfront also reported its results. percent higher at $70 million. Conference Center despite Acushnet second quarter Columbia is currently the recent announcement by operating profits increased forecasting mid-teens Outdoor Retailer organizers 30 percent to more than constant currency revenue that its Winter Market $65.7 million despite a two growth and better-than- showcase will now take place percent drop in revenues to expected earnings. from Jan. 6-10, 2016. $446.5 million from $455.6 Kevin O’Flaherty, EWSRA million. Period operating Life Fitness Captures president, said, “Moving the margin was 170 b.p. higher at Commercial Cardio, show even one day earlier 14.7 percent. In the first half Strength places such a burden on of 2015, Acushnet revenues Second quarter revenues retailers as they come off were down 1 percent to at the Brunswick-owned one of their busiest selling $862.6 million but company company grew five percent periods, and financially on operating margin jumped 260 to $173.8 million and were reps, that we just couldn’t take b.p. to 13.5 percent. n

NUMBERS IN PLAY Week of 8/1-8/14 Retail: 92 Brands: 125 n Largest Gainers i7.6% h25.4% Retail Foot Locker: Using Nike change over period change over period endorser and Super Bowl champion Rob Gronkowski Big 5 Sporting Goods (BGFV) adidas (ADDYY) to promote back-to-school Price on 7/29/15...... $10.51 Price on 7/29/15...... $39.71 at Kids Foot Locker. Reports Price on 8/13/15...... $10.90 +3.7% Price on 8/13/15...... $38.71 -2.5% quarterly results Aug. 21. Brands Cabela’s (CAB) l Amer Sports (AGPDY) Skechers: Establishes a Price on 7/29/15...... $44.83 Price on 7/29/15...... $14.72 Latin America subsidiary Price on 8/13/15...... $43.65 -2.6% Price on 8/13/15...... $13.78 -6.4% for 30 countries in region, continued stock strength Dick’s Sporting Goods (DKS) Callaway (ELY) points to a strong back-to- Price on 7/29/15...... $27.45 Price on 7/29/15...... $8.47 school for brand. Price on 8/13/15...... $50.44 -1% Price on 8/13/15...... $9.01 +6.4% l Largest Decliners Finish Line (FINL) Columbia Sportwear (COLM) Price on 7/29/15...... $27.45 Price on 7/29/15...... $61.36 Retail Price on 8/13/15...... $27.63 +1% Price on 8/13/15...... $65.05 +6.0% Pacific Sunwear: Stock falls below a half-dollar, making n Foot Locker (FL) Deckers Brands (DECK) Sept. 3 earnings report Price on 7/29/15:...... $69.41 Price on 7/29/15...... $69.45 worth watching. Price on 8/13/15:...... $72.66 +4.7% Price on 8/13/15...... $69.64 0% Brands Amer Sports: Has sold Hibbett Sports (HIBB) Fitbit (FIT) Nikita and Bonfire apparel Price on 7/29/15...... $45.30 -8.5% Price on 7/29/15:...... $44.07 -4.1% and outerwear brands, which Price on 8/13/15...... $41.45 Price on 8/13/15...... $42.25 generated an aggregate $10.6 million in FY14 revenues, to a Genesco (GCO) GoPro (GPRO) Singapore investment house. Price on 7/29/15...... $63.68 Price on 7/29/15...... $61.88 Price on 8/13/15...... $62.99 -1.1% Price on 8/13/15...... $59.50 -3.9% u Other Notables u Kohl’s (KSS) lululemon (LULU) Kohl’s blames disappointing Price on 7/29/15...... $61.17 Price on 7/29/15...... $63.75 results on sales tax holiday Price on 8/13/15...... $56.11 -8.3% Price on 8/13/15...... $64.50 -1.2% shifts in some states. Guides to low-end of FY earnings u Macy’s (M) Nike (NKE) range. Macy’s reports Price on 7/29/15:...... $69.19 Price on 7/29/15:...... $114.92 downbeat earnings report Price on 8/13/15...... $62.98 -9.0% Price on 8/13/15...... $113.60 -1.1% on across-the-board weak numbers, including lower l Pacific Sunwear (PSUN) Performance Sports Group (PSG) same store sales and higher Price on 7/29/15...... $ 0.68 Price on 7/29/15...... $16.45 inventories. Studying real Price on 8/13/15...... $ 0.435 -36% Price on 8/13/15...... $15.45 -6.1% estate holdings. Shoe Carnival (SCVL) n Skechers (SKX) The Inside Insight Index is our Price on 7/29/15...... $28.45 Price on 7/29/15...... $128.44 +18.8% opinion of what we think are the 28 Price on 8/13/15...... $27.28 -4.1% Price on 8/13/15...... $152.57 most important public companies in the industry, 14 vendors and Tilly’s (TLYS) Under Armour (UA) 14 retailers. Space considerations prevent us from tracking more, but Price on 7/29/15...... $9.01 +1.6% Price on 7/29/15...... $98.82 +1% we will make changes over time. Price on 8/13/15...... $9.15 Price on 8/13/15...... $99.40

Walmart (WMT) VF Corp. (VFC) Price on 7/29/15...... $ 72.23 Price on 7/29/15...... $76.00 Price on 8/13/15...... $72.11 0% Price on 8/13/15...... $75.42 -1%

Index base of 100 Zumiez (ZUMZ) Wolverine Worldwide (WWW) is key to the closing Price on 7/29/15...... $26.30 -11% Price on 7/29/15...... $29.02 -1% prices of 12/31/14 Price on 8/13/15...... $23.40 Price on 8/13/15...... $28.82

September 9–10, 2015 | The Roosevelt Hotel New Orleans #SFIAleads

Don’t Wait. The 2015 SFIA Industry Leaders Summit, September 9-10 in New Orleans, is your chance to engage in thought-provoking dialogue on the future of the industry. Be Relentlessly Relevant. How can today’s sports, fitness, and active lifestyle executives maintain relevant products, processes, services, technology and innovations in a rapidly changing economic environment?

Join the conversation. Confirmed presenters and panelists include:

Roger Goodell Ronald J. Stoupa Sarah Robb O’Hagan Matt Laukaitis Commissioner Chief Marketing Officer & President Managing Director, Executive Vice President Retail U.S. North America

Randall Bergstedt Colleen Pritchett Steven Hill Nick Vyas Head of Fitness Global Business Director Vice Chairman, Program Director Wearables Dupont Microcircuit Strategic Investments Center for Global Supply Materials Chain Management

School of Business Global Supply Chain Management

Jeffrey Phillips Kevin Pollack Cooper Smith Jim Carroll Vice President of Marketing Vice President Senior Research Analyst Futurist, Trends and and Senior Consultant Innovation Expert

*As of July 31, 2015 Make your plans today. Visit www.sfia.org/2015ILS to learn more and register.

SFIA_ad_resize.indd 1 7/31/15 4:15 PM AUGUST 17, 2015 INSIDEINSIGHT

SPORTSTATS Paint By Numbers $3,213,000,000 Cost of Demand Creation (expenses related to advertising and promotions costs – endorsement contracts, television, digital and print advertising, brand events and retail brand presentations – in FY15. $30.6 408 146 Number of footwear factories Number of apparel factories in 14 countries that supply in 39 countries that supply Nike footwear, led by Vietnam Nike. Largest accounted for 11 BILLION (43 percent), China 32 percent) percent of all Nike Brand apparel Nike’s total revenues in FY15 ended May 31. and Indonesia (20 percent). production in FY15. 394 Size in acres of Nike 62,000 12% World Campus in Nike employees worldwide, including retail and Growth rate of Nike’s women’s training Beaverton, OR. It part-time staffers. business in FY15 to $1.28 billion. has 44 buildings and employs approximately 9200. 339/592 67vs.71 26% Three largest Nike Percentage of U.S. wholesale apparel Number of Nike U.S. retail stores at May 31, customers accounted shipments (excluding Nike Golf, Hurley, including 185 factory and 92 Converse stores. for this percentage of the Converse) made on futures program in Number of non-U.S. retail stores, dominated by company’s U.S. sales in FY15 compared to FY14. 512 Nike Brand stores. FY15 ended May 31.

BENCH STRENGTH Execs on the Move

Executive Shuffle Continues facilitated the development program. Separately, Mike at Iconix Brand Group of the industry’s Eco Index to Robbins, former SVP of Icon lost its third senior measure the environmental global supply chain, is taking executive in six months footprint of products. on the same role for J.C. recently with the abrupt In order to ensure a Penney. His prior experience resignation of Neil Cole, successful transition, includes AutoZone and president, chairman and Steve Barker, OIA interim Procter & Gamble. CEO, who founded the New executive director and York company a decade ago. founder of Eagle Creek, will Shoe Carnival’s Jackson He has been replaced on an stay on at the trade group for Adds Responsibilities interim basis by Iconix board several months. In a separate W. Kerry Jackson, who Amy Roberts member Peter Cuneo. development, the trade has worked for the retailer Mountain Equipment Co-Op (MEC) In late March, Iconix CFO group is moving toward since 1988, has added the Jeff Lupinacci resigned, adjusting its board structure responsibilities of chief followed by the resignation to 15-18 from a current 25 accounting officer. He is of COO Seth Horowith three directors. OIA intends to taking over the duties from weeks later. Subsequently, reach its new board size via Kathy Yearwood, who has Roth published a research a mixture of term limits, retired as Shoe Carnival’s note alleging accounting member resignations and SVP, controller and chief irregularities at the the new additions. accounting officer. In company. That in mind, addition to his new role, Iconix is currently facing Foot Locker Hires CIO Jackson will continue as the a class action lawsuit by Pawan Verma, the former company’s SEVP, COO, CFO shareholders of its stock VP of digital technology for and treasurer. between February 2013 and Target Corp., is the new CIO Wolverine Worldwide Michael Stornant April 2015. at Foot Locker where he will Wolverine Worldwide head the retailer’s technology Promotes Company Former Outdoor Industry and e-commerce initiatives. Veteran to CFO Lobbyist Takes Helm of OIA He succeeds Peter Brown, Michael D. Stornant, Amy Roberts, the director who retired from Foot 49, who has worked for of sustainability and an Locker in April after Wolverine for 19 years executive at Canadian 38 years. and most recently as VP outdoor retailer Mountain of corporate finance, has Equipment Co-Op (MEC), J.C. Penney Strengthens been named Chief Financial became the new executive Omnichannel Team Officer at the Rockford, director of the Outdoor Michael Amend, former MI company. He replaces Industry Association on VP of online, mobile and Donald Grimes, who the eve of Outdoor Retailer omnichannel for The resigned as CFO to become Summer Market in Salt Lake Home Depot, is the new COO and CFO for private City. Previously, she worked EVP of omnichannel. At luxury group retailer, The as VO of government affairs Home Depot, his initiatives Neiman Marcus Group, for the Outdoor Industry included the retailer’s “buy which recently filed for a Association, where she online, pick-up in store” public offering. n

ENDORSERS New Faces Push Training 2 1 Decades after ‘Bo Knows’ brought training to the mainstream, companies are using a diverse lot to market the physical activity of working out. 4

1, 2: Reebok is using UFC Bantamweight Champion Ronda Rousey, who raised 3 eyebrows far and wide when she defeated her most recent opponent in 34 seconds, and NFL defensive end JJ Watt, to promote its ZPump Fusion running shoes.

3. Puma has tapped Super Bowl champion wide receiver Julian Edelman as one face in its “Forever Faster” campaign that also includes Usain Bolt, 6 Rihanna and the Cuban 5 National Boxing Team.

4. STX recently signed a multi-year contract with Team USA field hockey midfielder Kelsey Kolojejchick.

5. Uggs apparently isn’t backing away from its support for Super Bowl MVP Tom Brady as evidenced by this new billboard over the Massachusetts Turnpike.

6. Brooks is applauding the leadership of endorser Nick Symmonds, who won’t represent the brand at the IAAF World Championships in Beijing, but recently started a dialogue around athletes’ rights.

POP CULTURE The Social Scene

o Outdoor Retailer trade show would be complete without N the Outdoor Foundation’s annual Outsiders Ball. Nearly 850 participated in the evening’s events that raised more than $265,000 to be used for needed gear and funding to non-profit projects and college campuses. More than 1000 products were donated to the cause and 55 brands participated. Platinum sponsors of the Ball were Levi’s, Backpacker, Gore- Tex, Keen, Outdoor Industry Association, Outdoor Retailer, Periscope, prAna, REI, Snews, SportsOneSource, SSI Data, The Conservation Fund, The North Face, Thule, Vasque, W.L. Gore Associates and Wolverine Worldwide. When not at the Outsider’s Ball, attendees were participating in the semi- annual trade show and using social media to reach potential customers and consumers. Here are some examples as curated by Breakaway. n

If you have a social media posting that you would like us to consider for a future Pop Culture page, please submit it to [email protected], letting us know where and when it was posted.

EMERGING Button Push Brings Help

said the decision to have the app connect to a chosen network of friends or family, instead of straight to a call center or even emergency services, was a key selling point. “One of the important feedback points we got early on was that people really trust their loved ones and family and friends who knew their schedules and who can make judgments about what the situation might be really quickly,” she said. Giancarlo said Wearsafe is initially aimed at college students and athletes who run, bike or train solo, as well as to corporate clients. But, he said, the company thinks there’s a vast audience to tap: “It’s for anyone who can press a button: young children, middle schoolers or high By Jennifer Ernst Beaudry schoolers, to the senior — it’s hard to say where it can’t be used.” artford, CT-based Wearsafe wants to The initial Wearsafe run of 10,000 tags is save 10 million lives in 10 years — scheduled to go to production this week, and the company is banking on its and deliver to Kickstarter backers, stores H new one-touch wearable to do it. and the Wearsafe e-commerce site by early Founded in 2011 by Phill Giancarlo and September. The Wearsafe team is finalizing David Benoit for use in distress situations, the corresponding app, and Giancarlo said Wearsafe marries two elements — a software they’re hoping to have it approved and available app on a smartphone that pairs with a small on Apple’s App Store by next month, with an tag that can be clipped, hung or strapped on. If Android version arriving by the end of the pressed by the wearer, the tag uses a low-energy year. The company is also looking to bring The goal is to Bluetooth link to open a live audio link, share more wearable devices — including the Pebble provide users the user’s GPS location and open a live chat with smartwatch, the Apple Watch, and Garmin — contacts selected by the wearer, who can assess into the subscription service for fall. with a way the situation, discuss with the other contacts The team is aiming to sell 200,000 units to summon and, if necessary, call 911 from within the app. over the next year, and grow its current five- help during The goal, Giancarlo said, is to provide users person team to 15. In addition to the Wearsafe an accident with a way to summon help during an accident e-commerce site, Giancarlo said targeting or attack — even if their smartphone has been active shops for runners and cyclists will be key, or attack — lost or taken from them. (The company said data especially as the brand grows. even if their shows that even when phones are taken away, One account already confirmed for the launch smartphone they are generally within 35 feet of the user.) So is Fleet Feet Sports in Hartford. “After two long as the Wearsafe tag is within 200 feet of the instances of women being raped near the store, has been lost working phone, he said, the alert will be sent and the most recent a few weeks ago at noon on a or taken from the tag will vibrate silently to reassure the wearer popular rail-trail, I’m excited to soon be able to them. that it’s been sent. The tag is set to retail for $40, offer the product in the store and help empower with a monthly subscription price of $4.99. women to get back out there,” owner Stephanie Wearsafe Chief Creative Officer Kim Glooch Blozy said. n

A new digital magazine in a lively format from the most experienced journalistic team in the business. Coverage of the sports specialty marketplace in a succinct insightful manner, delivered to your e-mail box on the first and third Monday of each month. insideinsight.com

INSIDEINSIGHTTM SPORTS. SPECIALTY. RETAIL. BUSINESS.

Charter subscriber trial offer: 5 months/10 issues: $79. 12 months/24 issues: $179. 24 months/48 issues: $249. store.formula4media.com AUGUST 17, 2015 INSIDEINSIGHT

TECHNOLOGY BTS Goes Mobile

Source information provided by Deloitte

Digital influence Shopping Behaviors Back-to-school shoppers Percentage point change vs. 2011 expect to rely heavily on digital this season. Among the 88% of -14 -8 smartphone owners 80% 80% +13 will use them to shop for back-to-school items an I’ll use more I’ll buy more Our household increase of 6 percentage store coupons back-to-school will reuse last points over 2014 items “on sale” year’s school items rather OWN A TABLET than buying new 73% (an increase of 7 percentage points over 2014) Parents intend to modify their back-to-school shopping behaviors because of their concerns about the U.S. OWN A WEARABLE DEVICE 20% economy or their household’s finances.

Top Shopping Destinations Social Media

“Online sites” increase from of shoppers say they rely on social media for back-to-school shopping assistance 86% 44% will shop discount/ in 2015 10% 17% down from 18% last year value department and 35% in 2011 stores — the #1 in 2010 destination as the #2 shopping destination Data Security

Shopping Plans of consumers are concerned about the average spend by parents this back-to-school shopping at retailers $375 season — relatively unchanged from a year ago that have experienced a data breach, yet only 52% 19%said that they will complete their shopping after the start of would not continue to 31% the school year— versus 26% in 2014 shop at a retailer that has suffered a breach will use their smartphones to engage with in- 16% store beacon technology More consumers are concerned about personal data security when shopping online (68%) compared with shopping in plan to use a mobile payment or digital wallet brick-and mortar stores (50%) 7% service

NUMBERS Annual Hot List

YoY Rank 2014 U.S. Retail Sales Growth he annual ranking G-III Apparel 4 $499,000,000 67.5% by Stores magazine consists of retail Boot Barn Holding 25 $403,000,000 16.4% T companies that reported the greatest Skechers USA 27 $535,000,000 16.2% increase in U.S. retail sales between 2013 and 2014. lululemon athetica 31 $1,250,000,000 15.4% All public and private companies with more than Gander Mountain 45 $1,320,000,000 10.7% $300 million in sales were eligible for the list that was Dick’s Sporting Goods 53 $6,811,000,000 9.7% compiled by Kantar Retail. Bolstered by its Genesco 64 $2,211,000,000 8.4% acquisition of Saks, Inc., Canada’s Hudson’s Bay tops Hibbett Sports 82 $913,000,000 7.2% the ‘Hot 100 List’ with 254 percent U.S. sales growth last Foot Locker 85 $5,239,000,000 7.0% year to nearly $5.2 billion. The remainder of the Top 5 Bass Pro Shops 89 $2,274,000,000 6.9% includes: Choxi.com, Zulily. com, G-III Apparel Group Shoe Carnival 99 $940,000,000 6.3% and Wayfair. n

$1B $2B $3B $4B $5B $6B $7B

OTHER NEWS & NOTES

Hibbett Sports suffered a store sales for the second quarter Leawood, KS, in November. hackers who stole earnings report 1.1 percent comp store sales was within its guidance. information ahead of its official decline for the 13 weeks ended Dick’s is filing documents to open release and made more than Aug.1, a result that was softer National Ski & Snowboard a 51,000-square-foot store in the $100 million shorting the stock than expected due to underlying Retailers Association (NSSRA) Capitol Mall in Olympia, WA. of the action sports retailer, business softness. Total chain sales struck an exclusive partnership Sportsman’s Warehouse opened a according to charges filed by the rose 2.8 percent to $199.3 million. with SportsOneSource to store in Albany, OR. U.S. Securities and Exchange produce weekly snow sports Commission. There are 32 Zumiez sales declined 2.3 percent sales data across categories, Bass Pro Shops saw one million defendants named in the case. to $61.4 million for the four weeks brands and products. customers pass through its ended Aug. 1 on a comparable Pyramid store in Memphis during REI has promoted Julie Averill to store sales drop of 7.6 percent. L.L. Bean will open its 26th the store’s first 70 days open. its first Chief Information Officer. Management at the 640-door store and first in Kansas with She joined the co-operative from chain said its -4.5 percent same a 15,000-square-foot unit in Zumiez was the target of Ukrainian Nordstrom in 2014. n

MARK IT UP: SULLIVAN ON RETAIL No More Pencils, Books or Sneakers

for sneakers. But let me add when I was a kid, gas was 29 cents a gallon, we used rotary phones and color TV was a big deal. Today, gas is expensive, kids have their own phones on which they shop and watch what we used to call TV. I share this charming reflection on my childhood to illustrate two points. First, shopping is no longer concentrated on two times of the year. It is a 12-month a year shopping season that has upward ticks when brands introduce new product and retailers generate excitement with sales and or in-store events. The trip to the mall is no longer a planned excursion. Mobile shopping has made the act of buying things spontaneous. And even when purchases are planned and calculated, they do not always involve trips to the store, where it’s more likely shoppers will buy socks, hats or Yoenis Céspedes T-shirts. Source: Illustration few years ago, I touched a nerve Equally as significant, technology is the new by Deloitte when I suggested that Christmas back-to-school status symbol for teenagers. would never be Christmas again Today, it’s about the iPhone 6 or the Galaxy S6 A when it came to retail sales. Forgive more than it is about the newest TNF jacket or me for being a Grinch in mid-August, but I am new Chuck Taylors. The Chucks and the jackets afraid the same is true when it comes to Back- are still cool, but technology carries the day for To-School business. That ship has sailed and status and functionality. Ask a teenager what successfully offloaded its containers. they could NOT do without-their phones or First of all, actual back-to-school timing their new sneaks- and they would all say the The real is spread out depending on what region of phone. In fact, most adults would likely answer issue is that the country you’re in. Children in the south the same way. teenagers (and are already back in class. Some kids in the Finally, as a walk through the aisles of the their parents) Northeast don’t head back until after Labor Day, recent Outdoor Retailer Summer Market so the limited BTS spending out there on shoes showed, we’re in a slow trend period. There are do not spend and apparel is spread out over a six week period, no “must have” items for kids heading back to money for spanning two months. Spending over that school. Kids have become as jaded and sated back-to-school diffused time period will not make an impact as their parents. We have all the stuff we need. on retailers’ monthly reports, but that’s not even We’re more willing to pay for experiences shoes and the real issue. than we are for the latest shoes and apparel. So apparel the The real issue is that teenagers (and their while the kids (and grown-ups) still want the way they parents) do not spend money for back to school stuff, they don’t want it at the same time in the same way they have in the past. The consumer once did. shoes and apparel the way they once did. When I was a kid, my parents took me shoe shopping buying cycle has changed for good and it’s best twice a year: Easter for dress shoes and August everyone realize that and plan accordingly. n