December 2005 - SportsOneSource.com

A SportsOneSource Trade Publication
Vital Apparel Acquires InSport
International
Vital Apparel, a New Yorkbased marketer of women’s
fitness and lifestyle apparel,
has acquired InSport International Inc. Terms of the transaction were
not disclosed. Vital Apparel is estimated
to have annual sales north of $30 million,
while InSport International 2005 sales are
estimated in the $10 million to $12 million
range.
Kerry Kligerman, president and CEO of
Vital Apparel, will remain in that post under the new structure that will see InSport
International function as a subsidiary of
Vital. Eric Merk, InSport’s president, will
continue to lead the company his family
acquired in 1996. The corporate headquarters for the combined company will
be in New York.
“The acquisition brings together two complementary brands and businesses,” said
Kerry Kligerman, president of Vital. “The
Vital brand is a strong player in full line
sports stores and InSport is a cutting edge
technical brand with an established specialty business.”
“With its purchase of InSport, Vital has
given us the opportunity to take the brand
to the next level,” says Eric Merk, whose
family has owned InSport since 1995. “We
are very excited about the core competencies Vital brings to the table, especially in
customer service and sourcing.”
December 2005
Annual Elite Running Conference a
Hit with Retailers
Running Specialty Retailers now have a forum to interact with their
RSR peers, rub elbows with industry executives, and pick up new
ideas that might just make the difference in their business in the
coming year. Retailers contacted by Performance Sports RETAILER
were unanimous in their praise for the invitation-only second annual
Elite Running Conference held in Austin, Texas in November. Renee Grant, owner of the Runner’s Depot in Davie,
Fla. said, “The conference was fantastic, better than I
expected. The wealth of information I received from
other owners was incredibly valuable.”
Hugh Gaither, president and CEO of three-yearold Feetures! Brand, called the conference a great
opportunity to meet face-to-face with owners of
well-known running specialty stores from across
the United States. “We all can benefit from situations where you hear people talk about best practices and trends,” Gaither said. Rod Foley from Mizuno, one of the conference’s Elite level sponsors
agreed, “It’s a tremendous opportunity to present
your vision and start a dialogue.”
Ashley Johnson, owner of The Running Company in
Indianapolis, found attendance by the top footwear
companies to be one of the conference’s best assets.
Sponsors and retailers offered positive feedback on the
discussion topics and presentations. Grant found Robert Spector’s
keynote presentation “Customer Service the Nordstrom Way,” to be
especially helpful. “I returned home with lists and lists of things to
do,” she said.
Johnson was pleased to see speakers from different business categories. “We can learn lessons from other companies’ successes.” Johnson plans to bring more members of the management team to next
year’s event.
INSIDE PSR: •
That’s Not My Competition, But They Serve
The Same Customer, Don’t They?
•
Running Footwear Sees More Brands for ‘06
•
PSR Retail Spotlight: Run On!
What’s This All About???
Performance Sports RETAILER
is published by SportsOneSource, the
From The PUBLISHER
leading provider of business informaI was coaxed into the specialty running market more than twenty years
ago (I was supposed to be a geologist,
mind you) by my brother who had
decided early on to turn his passion
for running into a career. As many of
you in California probably know, my
brother started out re-soling shoes for
TRED2 back in the early days when it
was easy to slap a new outsole on a
pair of shoes you spent miles breaking
in to meet your own specific requirements. After a few years selling the
Brooks Chariot during the advent of
motion control and a few more developing the ill-fated Sako line, he called
me up from the Pittsburgh farm team
to start a sales agency in California.
Life was a bit different back then as I
traveled the East Bay and Central
Valley selling Hind Performance Apparel to a broad range of specialty
shops. The shop owners were primarily runners that were fed up with the
rigors of the 9-to-5 job in the city, opting instead to give up another 8 hours
of the day (and their weekends) to
make a go of it. Those that failed to
understand that they had to run their
shops as businesses soon found themselves back in the grind. A lack of
marketing know-how or understanding of inventory turns and cash flows
doomed many. Those of you that focused on the business first and ran
your shops effectively have enjoyed a
long run and have built successful
businesses with multiple locations and
committed customers.
Today, we see more people entering
the market again as running grabs
more attention as a lifestyle, particularly with women. More potential shop
owners today are investors first, rather
than enthusiasts. The future for this
type of owner could also be at risk if
they do not understand the cyclical
nature of the business and the need to
over-invest in customers when times
are good so they remember you when
the consumer shifts focus.
The intent of this new publication is to
provide the Running Specialty Retailer
with an information source that will
help build a broader community of
2
business owners with similar experiences and needs, while delivering information that we hope will prove
beneficial to you and your stores.
Unlike any other trade publication,
this is a product developed exclusively
for the RSR. We are a small entrepreneurial operation that can service the
needs of 1,200 running specialty
doors. Others are either too large to
address the market or too consumerfocused to provide relevant information that will help you build your business.
We plan to go to market nine times a
year. Editorial will be based on a combination of pre-season product previews and analysis, and in-season
marketing, selling, and clinics.
We will address the business needs of
the RSR, including the impact of mergers & acquisitions, changing vendor
policies and strategies, and the need
to stay special to the consumer to
maintain your edge. We will also address issues like succession planning
as many of you look at your options
and the next generation takes the
reins of your business.
Our editorial team is a mix of talents
and backgrounds, from independent
reps, small shop employees and Fortune 500 company executives to roadrace organizers and running enthusiasts. We will continue to develop that
team to address the specific intent of
each issue.
This publication is what we call a hybrid. We print and mail each issue to
the RSR, but you can also get an email version if you want it quiker.
This month, we feature a quick peek
at running footwear in the pipeline
right now and take a look at potential
missed opportunities for the RSR.
Next month, we will focus on stability
product and technical apparel for fall.
Please feel free to drop us a note with
suggestions, including what you do
not like. It will help us serve the market better.
-- james
tion in the Sporting Goods industry.
Other SportsOneSource titles include:
The B.O.S.S. Report
Sports Executive Weekly
SnowSports Market Report
Specialty Market RETAILER
Specialty Market UPDATE
Sports Market UPDATE
*****
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dba SportsOneSource
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Group Publisher
James Hartford
james@SportsOneSource.com
Group Managing Editor Lou Dzierzak
lou@SportsOneSource.com
Specialty Editor
Kris Versteegen
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Associate Editor
Andy Kerrigan
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Performance Sports RETAILER
Feature
4
DECEMBER 2005 • Volume 1, Issue 1
But, That’s Not My Competition -- Performance Sports RETAILER
takes a look at the retail landscape and outlines potential missed
opportunities for the Running Specialty Retailer...
MarketWatch
8
PSR looks at the
broader offering
in footwear…
10 Asics sets new bar
for price-points …
14
Retailer Focus:
Run On! /Dallas...
Guest Editorial
15
Fleet Feet’s Tom
Raynor
NewsWire
6
Industry
14
Finance
Performance Sports RETAILER
3
That’s Not My Competition...
By Matt Powell
Specialty Feature
Too often we hear retailers describe another retailer as “not my
competition.” Just like academics
in their ivory towers, retailers often
shut themselves off from the rest
of the universe. Trust us: everyone is your competition, whether
they are selling double mocha lattes, iPods, or cheap sneakers.
Your job as a retailer is to part the
consumer from their cash, and
consequently you are competing
with every type of retailer.
In order to better understand the
world in which the performance
running shop exists, it is important to understand the larger universe that is made up of other running shoe retailers, most of which
are tracked each week by
SportScanINFO.
SportScanINFO captures point of
sale data from roughly 65% of the
athletic shoe market. SSI does not
capture sales from the performance running market, although the
plan is to add these retailers in the
near future. The conclusions of
this article are based on our analysis of the SSI POS data.
Athletic footwear in general and
running footwear specifically, is at
an interesting juncture. For the
last 10 years, the total athletic industry has seen zero sum growth.
If one vendor gained, another lost.
If one retailer thrived, another
died. If one category got hot, another cooled off. All that changed
in 2005.
We feel we are in a
“perfect storm” of conditions,
where units, dollars, and ASP’s are
all growing simultaneously.
According to SSI, unit sales for all
athletic footwear grew less than 2%
from 2002-2004.
Dollars sales
were essentially flat. But in 2005,
all that changed. Within total ath4
letic footwear:
•
YTD unit sales are up 11%.
•
YTD dollar sales are up 13%.
•
ASP’s are up 2%.
What’s driving this change in athletic footwear? Performance running, in particular women’s performance running over $75. According to SSI, running shoes represent about 30% of all athletic
shoes sold. Running shoes sales
have increased by more than 20%
year-to-date, the highest of any
athletic category. Running shoes
that retail over $75 increased by
more than 30%, with women’s running (over $75) up nearly 45%!
Many of these styles are likely not
on the walls of performance shops,
and yet they represent a major
portion of the overall running business in 2005 and are significant
contributors to the raging success
of the category. In order to be
competitive in this important category, performance running shops
should examine their assortments
to see if any of these styles have a
place on their walls. While many
of these styles are not appropriate
for running, a dedicated runner
would buy them to wear when they
aren’t running.
The other important question each
footwear retailer must ask themASP’s in women’s performance selves is whether they are giving
running is up nearly 3% YTD, enough shelf space to the women’s
while men’s is actually down category, in order to fully exploit
this important fashslightly.
At SportsOneSource, we
ion trend.
Running
has
believe the strong trend in
At
SportsOneshown the greatest
running will hold through
Source, we believe
strength in the
2006, as the narrow silthe strong trend in
Upper
Midwest
houette in denim jeans
running will hold
and in the Mouncontinues to be a driving
through 2006, as
tain States, while
force for footwear.
the narrow silhouthe sales trend has
ette in denim jeans
been the weakest
continues
to
be
a driving force for
in the Northeast and Mid-Atlantic
regions, due to a cold and rainy footwear. These expensive skinny
spring. But even the weak regions jeans just don’t look right with
showed growth in the better price heavy outsoled, cheap sneakers.
point performance styles.
Performance Sports RETAILER
But They Serve Your Customer, Don’t They?
We also believe there will be continued consolidation in both retail and
wholesale. There is plenty of money
in the investment banking community and they are looking to put that
money to work in this hot category.
Nike/Converse, Nike/Starter, Saucony/Stride Rite, Russell/Brooks,
ASG/And 1, Adidas/Reebok, TSA/
Gart, Dick’s/Galyan’s, and Footlocker/Footaction are only the beginning of what will be continued turmoil in the athletic footwear space.
There will also be more launches of
new footwear formats. We have already seen the announcement of Shi
by Journeys, Pac Sun’s 1000 Steps,
and the as-yet unnamed women’s
only chain by the Finish Line.
We bet there will be more.
In order for a performance running
store to compete in this ever changing market, there are a few key ideas
Performance Sports RETAILER
that must be considered.
Better Data improves performance.
Information like that provided by SSI
in this article will help all retailers
better understand the market and to
evaluate their vendor structure and
assortment plans.
Supply Chain Initiatives will start
to pay dividends, as vendors are able
to speed the time to market and to
react to changing consumer tastes.
We believe there will be greater vendor commitment to core styles and
quick response to top performers.
And finally, all retailers must constantly seek Points of Differentiation to help them stand out from the
ever challenging retail crowd. Think
of what makes you stand out and
reinforce it every time you come in
contact with a potential customer.
Matt Powell is Senior Retail Analyst
for SportsOneSource.
While the performance category in
running has been the strongest, the
more moderate styles dominate the
top seller list. Here are the top selling styles in total dollars sold, according to SportScanINFO:
•
New Balance 574 (retro fashion)
•
Nike Shox Turbo (better fashion)
•
Asics 2100 (better performance)
•
Nike Shox Cognoscenti (Better
fashion)
•
Nike Dual D (moderate performance)
•
Nike Shox Original (better fashion)
•
Nike Shox NZ (better fashion)
•
Asics 1100 (moderate performance)
•
New Balance 476 (moderate performance)
•
Nike Attest (opening price)
•
Asics Gel Kayano (better performance)
5
Business
Specialty NewsWire
lucy Sees Landmark Year In October, lucy observed Breast
Cancer Awareness Month with a
in 2005
It's been a landmark year for retailer lucy activewear, a growing women's activewear company, with the opening of 10 new stores, including its
first East Coast locations; more
than $20 million in series G financing; raising more than
$16,000 to benefit breast cancer
patients, and updating its online
shopping experience.
commemorative pink t-shirt.
Available on lucy.com and in all
retail locations, the shirt sold out
within weeks. Ten percent of all
sales were donated to Making
Memories Breast Cancer Foundation, a Portland, Ore.-based organization that works to fulfill the
dreams and wishes of metastatic
breast cancer patients nationwide.
In all, lucy donated more than
$16,000 to the foundation.
"This has been a busy and exciting year for lucy," said Michael J.
Edwards, president and CEO of
lucy activewear, inc. "We've had a
number of significant accomplishments and look forward to continuing to increase lucy's presence
nationwide in the coming year."
This holiday, lucy enhanced its
online shopping experience to better reflect the lucy brand and to
better engage with its customers.
With new navigation and shopping
features, and the introduction of
the lucy perfect fit guarantee, customers can expect an online experience that parallels the lucy
retail experience.
With a strong presence throughout the West Coast, 2005 was the
year that lucy extended its reach
to include locations in Denver,
Chicago, McLean, Va., and Washington, D.C. Opening 10 stores in
all, the other six locations
strengthened lucy's existing presence in California, with three additional stores; in Washington
state, with a new store in Redmond; in Oregon, with a new store
just south of Portland; and in Arizona, with a second store in
Scottsdale.
In July, lucy activewear closed a
$20.3 million round of financing.
Top-performing retailer Chico's
FAS, Inc. joined existing investors
Lone Pine Capital, Maveron LLC,
Oak Investment Partners, and
Sutter Hill Ventures in the series
G financing. Chico's purchased
$10 million of the series G convertible preferred stock financing
round and, in connection with
this investment, secured a seat on
the lucy board of directors.
6
The Finish Line Gets
Women Specific
The Finish Line announced that it
is in the developmental stages of a
new concept store. The company
did not reveal the name of the new
concept as it is currently in the
trademark process, but said that
the store will be a unique, multichannel, premium athletic specialty store geared toward active,
trend conscious women through
its products, brands, store environment, and elevated level of
customer service.
The new store will be primarily
mall-based and targeted to 25-40year-old active women who exercise at least one time per week
and have a household income of
$80,000+.
The product mix will be approximately 70% softgoods and 30%
footwear. The apparel offerings
will be multi-branded in addition
to housing a collection of private
label basics and athletic fashion
basics. Potential store locations
include high profile malls, lifestyle
centers, and street locations that
will average approximately 4,000
square feet.
Also, FINL has hired Jeff Pofsky as
its new VP and GMM of the concept along with a dedicated staff of
merchants. Jeff is a 20-year retail
veteran coming to the company
from Target where he was a senior
women’s apparel buyer.
The new concept will have separate and dedicated teams related
to product development, merchandising, marketing, and store operations and will utilize the company’s existing infrastructure
when it makes sense to assist in
development profitability.
The company believes that the
women’s concept will complement
its existing businesses. Additionally, there are still growth opportunities available for the Finish
Line chain, and the company has
set a goal to turn Man Alive into a
national player in the urban apparel market.
Chick’s Sporting Goods
to Open Three Stores
Chick’s Sporting Goods, the SoCal-based big-box retailer, has
inked leases for three new stores
in newly-planned power centers in
the Southern California market.
Chick’s received a $4 million cash
infusion in June 2005 from Nogales Investment Fund, which also
invested in Oregon-based GI Joe’s.
Company CEO Jim Chick said at
the time that the investment
would enable the retailer to accelerate growth plans, potentially
Performance Sports RETAILER
Business
adding four stores over the next two
years. He said three to four a year
would be the maximum number they
would attempt.
A 45,000 square foot store is planned
for Thousand Oaks, Calif. and another is slated for Manhattan Beach,
Calif. The third, a 60,000 square foot
store, has been confirmed for Temecula, Calif. Two of the stores are expected to open in late 2006, while the
third is scheduled for early 2007.
Chick’s Sporting Goods reported
sales of $92 million for the fiscal year
ended June 30, posting pre-tax earnings of $1.15 million for the year.
Chick’s currently operates eleven
stores from Los Angeles to San Diego.
Mizuno Opens New 'SOZO'
Design Center
Mizuno opened a Global Design Center for the company’s performance
running division that will be used by
Mizuno USA and the Mizuno Global
Product Design Team. The Mizuno
‘SOZO’ Design Center is located in
Portland, Oregon. The term “SOZO”
in Japanese means “imagination that
transcends into creation,” and the
philosophy behind the SOZO Design
and Development Studio in Japan is
to create cutting edge technologies
through imagination, computer animation, and the latest thinking in
bio-mechanics and design philosophies.
The SOZO Design Center in the U.S.
will be driven with the same philosophy towards design using U.S. tastes
and influences. The Center will be
utilized as a “design incubator” and
will be the epicenter of design innovation in performance running. The
opening of Mizuno’s SOZO Design
Center is yet another step in the strategic initiative by Mizuno Corporation
to enhance Mizuno USA’s role in running shoe design on a global scale.
Performance Sports RETAILER
Mizuno Corp., viewing the United
States as a strategic lever for global
growth, has made a long-term strategic commitment to the U.S. market.
The main goal of the global initiative
is to build global brand market share
in performance running, and because
both global consumer and product
performance trends in running are
often driven by the U.S. market, Mizuno Corporation has invested significantly in this Portland, Oregon
based Design Center. The new SOZO
Design Center is a pivotal step in the
heightened role for Mizuno USA in
the design of Mizuno’s global performance running line.
“Senior management in Japan has
made an impressive commitment to
Mizuno USA with the purpose of increasing the role that U.S. influences
play in the design of Mizuno’s performance running shoes and apparel,” said Bob Puccini, president
Mizuno USA, Inc., and chairman,
Mizuno Canada, Ltd. “The opening of
this U.S. design center is the next
logical step toward our continued
success and development as one of
the premier running brands in the
world.”
Stride Rite Shakes Up the
Saucony Team
Following its acquisition of Saucony,
Inc., The Stride Rite Corporation
made a number of expected changes
at both Saucony and Hind.
Stride Rite Chairman and CEO David
Chamberlain had initially indicated
that Saucony’s Peabody, Mass. operation will be moved to Stride Rite’s
HQ. But in a sharp departure from
Chamberlain’s initial vote of confidence for the management team two
weeks ago, PSR has learned that a
restructuring of the Saucony team
has now commenced in earnest.
Mike Umana, Saucony’s CFO who
was initially appointed as president
after the acquisition, is gone just a
month after the deal closed. Sam
Ward has also departed. Sources at
the company have indicated that a
large majority of the former senior
management team are now gone.
A new president for Saucony has not
been appointed, but Stride Rite president Rick Thornton is taking a more
direct role in the business. Product
chief Tom Carleo is now reporting
directly to Mr. Thornton. On the sales
side of the business, Mike Metcalfe,
who has been SVP of sales for Keds,
has now been appointed to the same
role at Saucony. Richie Woodworth,
the former president/CEO of the
Greg Norman Collection that has
been running the Tommy Hilfiger
Footwear business for SRR, is now
reportedly responsible for the Hind
business.
Under Armour Pulls Off
Strongest IPO in 5 Years
Under Armour hit the public markets
running last month, closing up
nearly 95% in its first day on the
Nasdaq exchange. UARM shares,
which were initially priced at $7.50 to
$9.50 per share and then raised to a
range of $10 to $12 early prior to the
IPO, opened at $31.00 a share on the
Nasdaq exchange its first day in public trading, more than double its final
$13 IPO price. Shares settled back to
close at $25.30 at the end of the day,
marking the best first-day performance of a U.S. company since November 2000.
Based on the IPO price, Under Armour raised about $123.5 million
before expenses on 9.5 million shares
of Class A common stock. Insiders
picked up another $33.8 million in
the IPO, selling another 2.5 million
shares. UARM had initially expected
to raise just $72 million, net of expenses, based on the early price estimates.
7
Running Footwear Sees a Broader Brand Base
for 2006
As Americans find themselves with less and less time,
running becomes a more popular activity, and the specialty running shop becomes a key influencer on trends
and technologies in footwear and apparel. At the same
time, customers begin to expect more from a specialty
retailer. Most performance running stores are owned and
staffed by passionate runners who live and breathe the
sport. Expertise is a given. Customers are looking for not
only advice on training, where to run, and when the next
big race will come to town, but also for gear that
they can’t find in any other store.
traditional running brands look to further establish their
brand positioning with the specialty retailer.
This year, Pearl iZUMi created a trainer/racer designed
for the lighter, neutral, efficient, runner, called the Shine.
Pearl used their Seamless Upper Technology, Endoskeletal support system (ES3) and Skydex heel crash pad
to create a shoe engineered to balance the performance of
a
racer with the day-in, day-out comfort of a
trainer. The Shine also offers 360 degree reflectivity for those after-dark winter training
runs.
With interest in running at an all-time
Two years ago, Keen Footwear exploded into the
high, the category (as well as many traOutdoor market and quickly developed into a preditional running brands) is starting to
mium
outdoor lifestyle brand. This year, the comsee broader distribution in the sporting
pany
is
entering
the running market for the first time
goods and family footwear channels.
and
has
designed
some
very unique styles that pop off
As the brands open product up to that
the shelf and offer a measure of performance at the same
wider audience, there are clear indications
time.
the RSR is getting more receptive to new
brands, new positioning, and more spe- Pearl iZUMi’s Shine Like many outdoor footwear companies, Keen’s first
cialized features.
foray into the world of running focuses on the trail. The
Ochoco Waterproof uses Keen’s proprietary Free Flex
There is a growing population of specialty vendors that
Asymmetric Lace Design, which uses asymmetrical eyeare producing niche running apparel and footwear with
stays that flex with the midsole, providing pinch-free forestrict specialty-only distribution strategies.
foot flex. The Ochoco also uses an eVENT Waterproof and
At the same time, larger footwear and apparel manufacBreathable Membrane. Underfoot, Keen engineers develturers are giving their specialty running base early reoped a new S3/Quindensity Midsole. S3 is an acronym
leases and exclusive merchandise in hopes of creating a
representing Shock, Stability, and Suspenbuzz around their product. By selling certain product
sion.
only to specialty stores, these manufacturers can creFila is offering three different
ate a buzz around the brand, which then trickles down
options for the biomeinto mall and big box retailers. By taking advantage of
chanically
correct
these exclusive deals and early releases, performance
runners
next
searetailers can take advantage of big brand marketing
son.
The
Flow
campaigns and name recognition, while maintaining a
Providence
is
Engiunique assortment.
neered for the runner
One only has to look a the patience exhibited by Mi- Keen’s New Ochoco Trail Runner with medium to high arches
zuno in building trust and credibility with the specialty
that are rigid who desires suretailer to understand what it takes to establish a presperior cushioning and a durable and protective ride, withence in this very tough market. This coming year will see
out sacrificing smooth transition or responsiveness.
more new brands than ever attemptThe Flow Temptation caters to the runner with medium
ing to penetrate the business
arches that are rigid who desires great cushioning and
in one form or fashsmooth transition. The Flow Testament is Fila’s top-end
ion. Expect to see
training and racing shoe for the season. It is engineered
traditional outdoor
for the runner with medium arches that are rigid to
brands spreading their
slightly flexible who is seeking an added advantage in adwings beyond trail running
dition to superior cushioning.
The Mizuno Wave Precision 6
and into the street, even as
8
Performance Sports RETAILER
All three models use Fila’s proprietary Dynamic Landing
System (DLS), which is a centrally positioned strikezone to ensure that the foot begins the gaitcycle from a neutral position. Fila has also
developed two new rubber compounds. Evergrip, which is found
in the forefoot, was created to
provide better traction on dry
surfaces, better grip on wet surfaces, and lighter weight. Fila’s
Fila’s latest neutral shoe, the Flow Testament
tests have shown that this
compound is 25% lighter and more responsive than solid rubber, 157%
stronger than blown rubber, and 50% more durable than blown rubber.
The second compound, Evergrind, is found in the heel and composed of
carbon rubber that is reinforced with metal flakes. Fila says that it is
77% more durable than traditional carbon rubber.
Brooks went back to the drawing board to develop a new cushioning
compound that could replace EVA. After forty formulations, the company’s engineers created MoGo, with a softer “first feel” and improved
durability and stability. Brooks engineers claim
that this new compound offers a 50%
savings in material waste, a 13%
weight reduction, a 38%
cushioning improvement,
and a 33% softer initial
ride. MoGo will be available
in Brooks new Trance 6
Brooks’ Trance 6 with MoGo Cushioning Technology for men and women.
Diadora’s new Mythos Ultimate is for the neutral or under-pronating
runner who needs maximum cushioning from heel strike to toe off. The
midsole provides cushioning with a single density, molded high-end EVA
foam mixed with Elastom for elasticity and durability. Double Action inserts in the forefoot and heel areaa provide additional shock absorption.
The Axeler CCB Power Flow shank ensures midfoot rigidity while enhancing breathability. The Outsole is made of
Diadora’s Axeler technology,
which
features a thread-like frame in
Tech Alloy that is inserted into
the outsole, ensuring a more
natural, graduated forefoot
flexion that propels the foot
forward while maintaining the necessary Diadora’s Mythos Ultimate
rigidity in the midfoot and heel. Diadora placed Duratech 5000 compound in the heel to resist abrasion.
New Balance has updated its 750 series with the new men’s or women’s
755. Designed for runners who need responsive neutral cushioning, the
755 uses New Balance’s proprietary Abzorb cushioning in the heel and
forefoot and a Stability Web system for lightweight midfoot support. A
full length Abzorb Strobel board provides additional shock absorption.
The 755 also features an Acteva midsole that resists compression, an Ndurance outsole for durability in high wear areas, and a blown rubber
Continued Page 10 >>>
outsole.
Performance Sports RETAILER
See Them at
Salt Lake City, Utah — January 28-31
Asics America:
Phone - 1-800-678-9435
www.asicsamerica.com
Brooks Sports: Booth 3335
Phone - 1-800-2-BROOKS
www.brooksrunning.com
Keen Footwear: Booth 5324
Phone - 1-510-337-3033
www.keenfootwear.com
Merrell: Booth 3921
Phone - 1-616-866-5500
www.merrell.com
Mizuno USA:
Phone - 1-800-925-4292
www.MizunoUSA.com
New Balance: Booth 3533
Phone - 1-617-783-4000
www.newbalance.com
Pearl iZUMi:
Phone - 1-800-328-8488
www.pearliZUMi.com
Timberland: Booth 1337
Phone - 603-772-9500
www.Timberland.com
9
Vendors Push New Highs with Price-Points
The New Balance N-Lock
technology provides slight
pronation control. The
seamless upper uses a
Lightning Dry lining
for moisture management with fewer overlays in the forefoot,
and a newly engineered tongue for a
more
comfortable
ride. Reflective details
proThe Latest 750 Series from New Balance, the 755
vide safety
for night running. The 755 will be available in July of
2006.
Products Evolve for Efficient Runners
The new adiStar Cushion with 3-D adiPrene
cushioning in the heel
is a trainer designed for
runners with a neutral
gait, but who still need
good support, cushioning, and a sock-like fit.
The upper is air mesh
An Early Look at the adiStar Cushion
for
ventilation
and
uses seam-free fit technology to prevent blisters on the
longest training runs. The three piece midsole is composed of adiPrene for protection from harmful impact
forces, adiPrene+, which maintains forefoot propulsion
and efficiency, and an extended Torsion for midfoot and
forefoot integrity.
Timberland has created a crossover street-to-trail running
shoe designed to balance lightweight performance,
weather protection, and breathability. The upper is constructed with Toray Soft
Shell
fabric
with a Durable Water
Repellent
(DWR) treatment. The
guts of
the shoe are built on
Timberland’s IQ platform with ¾ length
clefted plate and heel starburst for support
Timberland’s Cross-Over Endurion Drift
and motion control. A Vibram outsole provides traction from the street to
the trail and a posted midsole gives stability and control.
10
Mizuno will enter the 2006 model year with another innovation, SmoothRide Technology, which will be used in
their latest iteration of the Precision series, the Mizuno Precision 7. SmoothRide is a rubber parallel wave that is designed to provide better
cushioning and flexibility
for the high-arched, rigid
foot type. Mizuno’s engineers
designed this new technology
The Mizuno Precision 7
to minimize rapid acceleration
and deceleration of the foot. The Precision 7 will be available in both men’s and women’s models.
The ASICS GEL-Kinsei, which means “Golden Star,” was
designed to be the company’s new cutting edge, adaptable
“smart” shoe, positioned
in a brand new category, a notch above
the
GEL-Kayano.
This high pricepoint,
high-tech
shoe was designed
specifically
with
specialty running
retailers and their
customers in mind
and will be avail- Asics’ Latest Offering, the GEL-Kinsei
able on a limited distribution basis before being rolled out
to the mass market. The upper is made of a newly developed, Japanese mesh called Spacemaster-UV1. Conceived
by observing the unique properties of marine coral,
Spacemaster-UV is very breathable, remarkably strong,
and is about 30% lighter than regular polyester mesh.
The GEL-Kinsei’s Discrete Heel Unit takes the Asics’ Impact Guidance System one step further by creating Asics’
highest degree of shock attenuation and stability with
many different parts interrelating, but with the ability to
work independently. The midsole is a new, two-piece construction that wraps under the heel to form the support
system for the Discrete Heel Unit. The cradle extends all
the way to the forefoot, incorporating the Space Trusstic
System at the midfoot. Cushioning was achieved through
the use of the ASICS new Solyte midsole material and
ASICS Twist GEL Cushioning System.
This is a first blush of the product coming down the road
(or trail) and Performance Sports RETAILER will continue
to bring you an early read on success at retail this spring.
Performance Sports RETAILER
PSR Retail Spotlight: Run On!
By Lou Dzierzak
Bob Wallace is a Running Specialty Retailer with a long-term
view. While visibility and interest in running has waxed and waned in the public
eye, sales at Run On!, the store he founded ten years
ago in Dallas Texas, have increased every year.
Retailer PROFILE
“Our business is always increasing. We haven’t had a
year when sales have gone down or stayed flat,” Wallace reported. Sales for 2005 are up 17% over last
year.
According to Wallace, the business issues he faced a decade
ago remain the same today.
“Our biggest challenges will
always stay our biggest challenges. It revolves around
staffing and inventory control.
If you can manage those two
things well, you are on solid
ground,” Wallace said.
As the name suggests, Run
On! specializes in performance running footwear, apparel, and accessories. The store markets industryleading footwear brands like Adidas, Brooks, Asics,
New Balance, Nike, Saucony, and Mizuno. Clothing
and accessories brands that support the running lifestyle include Champion, Clif, Fila, Gu, Hind, InSport,
Moving Comfort, Nathan, Oakley, Powergel, Polar,
Smartwool, Spenco, Sorbothane, Thorlo, Timex, and
Ultimate Direction.
Monitoring sales keeps profitability high. “Our business is centered around turning inventory. Last year
our inventory turned 5.9 times, which is way above
the average in our chain of distribution,” Wallace explained.
Sales reports are continually analyzed to uncover slow
movers and areas of opportunity. “We spend a lot of
time analyzing what we’ve sold. We don’t reorder products that haven’t sold well. We move on to something
else,” he said.
Wallace believes other retail owners overlook that discipline. “There are a lot of people who keeping buying
and never go back to analyze what they sold and why
they sold it. I’ve seen a lot of people with inventory
that has birthdays and it costs them a lot of money,”
he said.
12
Run On! serves a niche market of committed runners.
Attention to customer service differentiates the stores
from the ever-present competition. “I don’t think that
we compete head to head with big boxes. Our reputation evolves around customer service and product
knowledge. We’ve created a niche and we will continue
to develop that market,” Wallace explained.
Run On!’s customers ask the staff to translate shoe
review technical reports into real world advice. Serving
runners with different cushioning, stability, and motion control needs overcomes discount-pricing pressures. Runners looking for
support in selecting footwear
will pay a higher price than
an online retailer may offer.
Wallace said, “People feel
more comfortable talking
with a knowledgeable person
before making a purchase.
It’s about buying something
that you can try on before
hand and experience the immediate gratification of being
able to run out the door with them.”
Repeat customers account for a large percentage of
sales, but new recreation enthusiasts are adding running to their workout mix. Women represent the largest growth market. Wallace finds women are motivated by health concerns and not the competitive atmosphere found at many 5k and 10k events.
Responding to the needs of women requires attention
to merchandising, product mix, and staff demeanor.
“Women don’t want to see a grubby running store
staffed by people walking around in shorts and talking
about their last half marathon times,” he said.
While footwear remains the core product, sales of
technical apparel have increased significantly, especially for female customers. “In the last 12 months,
women have accounted for 70% of apparel sales; for
footwear, it’s 54%,” Wallace reports.
Prohibitively high costs of media advertising in Dallas
mean the primary tool for brand building is word of
mouth recommendations from customer to customer.
Wallace sees growth potential in creating partnerships
with podiatrists and other health professionals. The
challenge is finding time and resources to present services and product knowledge to them.
Performance Sports RETAILER
Finance
ter ended October 29, but also saw
Specialty NewsWire
Marquee Footwear Boosts
a sharp jump in net income when
Foot Locker...
Foot Locker,
Inc. looked to
strong growth
in
the
Champs and Footaction businesses in the U.S. as positive longterm indicators for the company.
Comparable store sales for the U.S.
business were up in mid-singledigits for the quarter, with the U.S.
Foot Locker group, which includes
the Foot Locker, Lady Foot Locker,
and Kid’s Foot Locker nameplates,
comping up in low-singles. Footaction has entered the comp store
picture with a bang, posting a double-digit comp sales gain for the
quarter on stronger sales in both
footwear and apparel. The Champs
business was close behind, comping up “nearly double-digits” for
the third period, with apparel up in
double-digits. The DotCom business, including Eastbay, was up in
low- to mid-singles, with 60% of
the business coming from the Web
and the rest from catalogs.
From a merchandise perspective,
Foot Locker sees continued growth
in the marquee footwear business,
but “it’s not really performancebased,” according to a company
spokesman. He did acknowledge a
shift away from classics, but also
indicated that “not every classic
shoe is declining.” He said some of
the classics shift is from one brand
to another, with fashion driving the
move. He also indicated that some
of the shift in classics is moving to
the low-profile product as well.
TSA Posts Profit in Q3...
The
Sports
Authority,
Inc. swung to
a net profit in the fiscal third quar14
excluding integration costs of
merging the TSA and Gart businesses in the year-ago period.
Third quarter sales rose 2.8% to
$560.0 million, but comp store
sales inched up just 1.2%, still
within range of the company’s
guidance of a 1% to 2% gain for
the period. Excluding integration
costs in last year’s Q3, net income
jumped more than twenty-fold to
$3.5
million,
compared
to
$163,000. The gain came from a
combination of increased sales,
improving margins, and flat SG&A
expenses as a percent of sales.
An increase in store real estate
dedicated to apparel looks to be
paying off. Chairman and CEO
Doug Morton said the top-line got
a boost from strong sales of active
apparel, fitness, golf, ski apparel,
and team sports, and also surprised some with improvements in
licensed apparel. The performance
apparel category got its energy
from Nike, Under Armour, and adidas. Footwear suffered a bit from a
reduced reliance on promotional
events that drove sales last year,
but the elimination of “several
weeks of BOGO” helped boost margins in the period.
Dick’s Sporting Goods...
Dick's Sporting
Goods reported
its second full
quarter since it completed the conversion of the acquired Galyan’s
stores to the Dick’s Sporting Goods
format, and the first since it moved
to support those stores with the
marketing spend generally committed to the legacy Dick’s stores in
new markets. The shift has apparently helped to bring the former
Galyan’s stores more into line with
expectations. Total sales were up
7.7% to $582.7 million on a 2.9%
comp store sales increase. Increased ticket size was the big
driver for the gain. Net income increased 55.6% for the quarter. The
retailer saw “favorable results” in
golf, athletic footwear, and apparel,
partially offset by hockey and
paintball weakness.
Finish Line Turns Positive in Q3...
The
Finish
Line, Inc. reversed the negative comparablestore sales trend seen in fiscal Q2,
posting a solid 4% increase in
comps for the fiscal third quarter,
which ended November 26. Footwear posted a 5% comp sales gain
on top of an 8% increase in the
year-ago quarter. Total net sales
for the quarter, which includes the
49-store Man Alive chain acquired
in January 2005, increased 16.4%
to $274.0 million from net sales of
$235.3 million for last year's third
quarter. Internet sales jumped
35% for the quarter.
Sport Chalet Bottom Line
Takes Hit from Recap...
Sport
Chalet,
Inc. turned in
another
solid
quarterly performance for the fiscal
second. Five new stores opened
since fiscal Q2 last year added
about $6.9 million in revenues,
equaling a 10.7% sales increase.
Add this jump to a 2.7% comp
store sales gain, and revenues
climbed 12.7% for the quarter. Excluding costs associated with the
company’s recapitalization efforts,
net income would have increased
63.7% to $2.6 million, or 19 cents
per diluted share, in the fiscal second quarter.
Performance Sports RETAILER
The Future of the Running Business
Tom Raynor, Chairman &
CEO, Fleet Feet, Inc.
It goes without saying that running has been very good to both
Running Specialty Retailers (RSR)
and running manufacturers over
the past 10 years. The boom from
the rapidly growing consumer
base, the growth of cause-related events, a greater
awareness of the health benefits of running and walking, and the recognition by the consumer of the superior service and products delivered consistently by the
RSR, have all fueled our growth.
As you know, some of our traditional suppliers have
gone direct to consumers, first with the “factory outlet” concept, then with brand specific “marketing”
presentations, and more recently with completely unrestrained retail expansion competing directly with
the RSR. In addition, consumers are being driven to
vendor websites to purchase footwear, apparel, and
accessories. Value-oriented, family footwear retailers
are experiencing double-digit growth with running
shoes, and not just with their traditional $39.95 or
$49.95 offerings, but with running product north of
the $75 and even $90 price points. An even bigger
competitor is lurking in the wings (if you can lurk
when you’re doing $285 billion) as Wal-Mart expands
their running footwear product with the Starter
brand, which is marketed through Nike’s Exeter
Group subsidiary.
Now some people (retailers, industry pundits, and
manufacturers) might look at these competitors and
predict a bleak future for the independent RSR. And
in this group of independent RSR’s, I’m including
Fleet Feet franchisees (who are independent business
owners) as well as store owners and operators who
might have one or more store locations.
First, we’ve got to be truly Special; I mean that’s why
we can call ourselves Running Specialty Retailers.
And being Special means delivering consistently excellent customer service, being innovative in vendor partnerships, being involved in our communities, and
managing our businesses professionally, while retaining the unique personalities that make this such a
great business to be involved in.
Second, we have to be cohesive. Now I certainly don’t
mean to imply that we’ve got to become narrow in our
approach, but rather that we’ve got to put aside relatively small business disputes and focus on larger,
mutually beneficial goals.
The Elite Running Conference, originally a collaboration between Fleet Feet, Inc. and Sporting Goods
Business, is the only industry event attracting both a
wide variety of vendors as well as a broad crosssection of the RSR. As this event grows and evolves, I
believe it will be the platform for truly revolutionary
changes that are essential for the RSR channel to
thrive.
Third, we’ve got to attract new talent to our industry.
The reality is that the veterans of the running business have been doing this for 20 years and there is
going to be a demand for new store owners, with new
ideas, to take up the battle. We’ve got a lot of smart
people in the RSR group. And we’ve got to capitalize
on the willingness to contribute and the depth and
breadth of knowledge of Walt and Gwen Cleary, Bob
and Mary Ann Roncker, Garry Gribble, Gary and Jane
Muhrcke, Curt Munson, Laurel James, Jim and Claudette Braden, and other pioneers of RSR.
Guest Editorial
As both the sport of running and the activity of running have grown, so have the number of competitors
for the RSR from both traditional retail outlets and
new distribution sources. While we continue to deal
with the traditional “big box” retailers, online and
catalog retailers, and the traveling expo carnival barkers that market to, solicit from, and attempt to intercept the running consumer, we’re also dealing with an
entirely new set of dynamics in the retail market.
When I look at the future, I see both the capacity for
us to be wildly successful or to become insignificant to
the running business. We control our destiny and the
next five years will determine our collective future. So
what do we do?
And finally, we’ve got to be truly independent; independent not only from the traditional vendor/retailer
paradigm, but independent from the conventional wisdom and independent from the dire predictions and
expectations of a whole host of people sitting on the
sidelines. I won’t be around for another 30 years in
this business, but I wish I was, it’s going to be a great
ride.
Tom Raynor is chairman and CEO of Fleet Feet, Incorporated, a franchisor of 67 running specialty retailers around the
country. Before buying Fleet Feet in 1993, Tom worked at Nike and Brooks during his 30 year sporting goods career. Tom
can be reached at: tom.raynor@fleetfeet.com
Performance Sports RETAILER
15
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