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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) SPONSORED BY: AUGUST 17, 2015 INSIDEINSIGHT 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 [email protected] 2 ©2015 FORMULA4MEDIA, LLC www.insideinsight.com 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.