October 2007 - SportsOneSource.com
Transcription
October 2007 - SportsOneSource.com
Performance Sports RETAILER News and Information for the Running and Triathlon Market A SportsOneSource Trade Publication Merrell Sees Strong Growth in Third Quarter Wolverine World Wide, the parent company to Merrell and several other footwear brands reported that their Outdoor group was “the most significant contributor” to the third quarter revenue increases. Strong Merrell shipments coupled with another quarter of Patagonia footwear sales drove a strong double-digit increase. The Outdoor Group, which consists of Merrell footwear and apparel and the Sebago and Patagonia footwear brands, saw sales increase nearly 20%. The Merrell brand as a whole saw sales increase approximately 16% for the quarter. Backlog for Merrell footwear was up in the “strong double-digits” entering the fourth quarter with the enterprise described as “taking shelf space from the competition.” The Track ‘n Trail retail chain, which is also owned by Wolverine, now has 17 doors open with comp sales for the year-todate period up in the mid- to upper-singledigit range. Merrell footwear accounts for approximately 50% of all footwear sales in the store. Management said they’ll open a “handful” of Track ‘n Trail stores in 2008, shifting focus to the Merrell concept. Inside PSR n The Runner’s Depot How One Small Retailer Took Over the South Florida Running Market n Hydration It’s All About Getting the Timing Right n Money Matters How Outside Financing Can Help Your Business n The Executive Track Paul Heffernan, New Balance October 2007 Nike Pushes Ahead with IndustryLeading Sustainability Efforts While many in the industry are aware of Nike’s “Considered” line of environmentally friendly footwear, there is much more involved in Nike’s efforts than just one collection of products. The “Considered” team at Nike is actually a think tank dedicated to implementing new sustainable processes across all of Nike’s products. Unlike many companies and brands that are calling out their individual “greenness,” Nike’s design philosophy calls for sustainable efforts in products that look, feel and perform just like their counterparts in the market. The company feels that by making all of their products more sustainable, they are reducing their environmental footprint by a greater percentage than if they were to only make the most sustainable products possible. Every design to come out of Nike’s creative department is graded on a sustainability scale with four “grades.” The lowest is non-participant, meaning the designers did not take sustainability into account. “Considered Bronze” is given to any product that incorporates processes that reduce toxic materials and waste, the use of environmental materials, and/or the development of new “Change Agents” that solve existing sustainability problems. “Considered Silver” requires these same criteria, but to a greater extent, and “Considered Gold” is the most stringent standard. This score is taken into consideration when deciding whether or not the product will go into production. Because of this sustainability report card, Nike designers are learning to “consider” the environmental impact of every design choice throughout the creative process. In running, for example, the Air Zoom Feenix has achieved Nike’s “Considered Gold” standard of sustainability, because it uses water-based adhesives and a wide variety of environmentallypreferred materials like “green” rubber. The shoe’s designers solved several new environmental problems while going through their creative process, including generating minimal waste during production of the shoe. While the Zoom Feenix is one of Nike’s flagship models in sustainability, there is little or no difference in its performance or appearance on the shelf. Nike plans to have 100% of their footwear product rated “Considered Bronze” by fiscal year 2011. All apparel will follow in 2015 and equipment in 2020. However, the company is quick to point out that one of their key lessons in sustainability is to keep what consumers want in mind at all times. They are dedicated to achieving these goals, but they will do so without sacrificing performance of aesthetics, so in many cases, the customer won’t even know that they are buying a green product. EDITORIAL Group Editorial Director Judy Leand (646-654-5058) jleand@sportsonesource.com Art Director Sean Berthelot (646-654-5346) sberthelot@sportsonesource.com Performance Sports RETAILER News and Information for the Running and Triathlon Market CONTENTS October 2007 Managing Editor Kris Versteegen (704-987-3450) kris@sportsonesource.com Contributing Editors Andy Kerrigan, Cara Griffin, Lou Dzierzak Matt Powell, Richard Holcomb, Dr. Paul Langer ADVERTISING Account Managers Robert Z. Feiner (646-654-4991) rfeiner@sportsonesource.com Sam Selvaggio (646-654-7465) sselvaggio@sportsonesource.com 8 Susan Tauster (630-858-1558) stauster@sportsonesource.com News_________________________________________ President & CEO James Hartford Chief Information Officer Mark Fine VP Research & Development Gerry Axelrod Director Information Management Ruben Desangles Manager Database Operations Cathy Badalamenti VP Business Development Bill Bratton Eastern Business Manager Barry Gauthier Western Business Manager Cyrus Severance Controller, HR Manager Carol Wexler Other SportsOneSource Titles: Footwear Business Hunting Business Outdoor Business Sporting Goods Business Sporting Goods Dealer The B.O.S.S. Report Sports Executive Weekly Footwear Business Update Outdoor Business Update SGB Update Team Sports Update © SportsOneSource, LLC PO Box 480156 | Charlotte, NC 28269 704-987-3450 | fax: 704-987-3455 4 6 7 n Asics’ Onitsuka Passes Away n New Balance Increases Commitment to Komen n Brooks Appoints Team Sales Manager n Nike’s Bodecker Promoted to VP of Design n adidas Confirms London Olympics Sponsorship n Nike Apple, Sued Over Nike+iPod n TAF to Open 20 Franchises in Mississippi n Saucony Parent Company Lays Out Its New Model n Nike Inc. Growth Surges for Fiscal First Quarter Features_____________________________________ 8 Conquering the Southern Peninsula Renee Grant Gives PSR an Inside Look at How The Runner’s Depot Took Over the South Florida Running Market 10 Hydration Getting the Timing Right Departments_____________________ 14 Money Matters 15 The Executive Track How Outside Financing Can Help Take Your Business to the Next Level 10 Paul Heffernan, New Balance Executive Vice President of Global Marketing Asics’ Onitsuka Passes Away Asics Corporation chairman Kihachiro Onitsuka died on Saturday, September 29 of heart failure in a hospital in Kobe, Japan. He was 89. Mr. Onitsuka was born on May 29, 1918, in Tottori Prefecture in western Japan. Concerned at the sight of the nation’s youth after World War II, he made it his mission to inspire young people and chose the world of sports as a means to fulfill his goal. Today Asics is the fifth largest sports goods manufacturer, making products not only for Olympic Gold medalists, but also ordinary people who do sports to keep up a healthy lifestyle. Over the years, Mr. Onitsuka also held a number of public offices. He presided over the Japan Basketball Association as its president; and, he was the lifetime honorary president of the World Federation of the Sporting Goods Industry. Specialty NEWSwatch Key Events 4 1949: Onitsuka Co. Ltd. is founded, the first sports shoe company in Japan. 1977: Asics Corporation is formed through a merger of Onitsuka Co. Ltd, G.T.O. Co., an equipment manufacturer, and Jelenk Co., a sports apparel manufacturer. Mr. Onitsuka becomes the president and aims to diversify the business to be more competitive in the global sporting goods market. 1988: Mr. Onitsuka receives Order of the Sacred Treasure. 1992: Mr. Onitsuka becomes chairman of Asics Corporation, a position he will hold until his death. Publishes My Personal History. 2000: Publishes All You Need to do After Falling Down is to Stand up Again. Brooks Appoints Team Sales Manager Brooks Sports, Inc. has hired Charlie Wilson as team sales manager. His major responsibilities include driving the team sales efforts, developing successful sales programs with individual team dealers, and working with the external sales force to provide leadership on all team sales opportunities within the dealer channel. Charlie joins Brooks with more than 10 years experience in the athletic apparel industry. Most recently, he spent two years at InSport as national team sales manager. During this time, he helped InSport increase national team sales by 13% while overseeing sales operations and marketing logistics for Oregon, Washington, Idaho, Montana, Maryland, Virginia, Delaware and Alaska. Prior to Insport, Charlie spent eight years as account services manager at SportHill, where he was in charge of developing new accounts and servicing the client roster in the Southeast. New Balance Increases Commitment to Komen New Balance will increase their long-term commitment to Susan G. Komen for the Cure by donating an expected $1 million (with a guaranteed minimum donation of $500,000) from the New Balance Lace Up for the Cure Collection. The company will also debut a new advertising campaign to highlight that New Balance is the longest running sponsor of the Susan G. Komen Race for the Cure Series. The Lace Up for the Cure retail promotion has been extended for 2007 and will now run all year with a special focus during October, Breast Cancer Awareness Month. The company’s new advertising campaign supporting their efforts with Komen will be featured in special interest publications such as Beyond magazine beginning in April. The campaign will also be integrated into point of purchase materials at retail locations, as well as on the company’s corporate website. “We are extremely proud of our longstanding relationship with Susan G. Komen for the Cure and are committed to finding a cure for breast cancer,” says Christine Madigan, director, global marketing and brand management for New Balance. “We believe we can reach a larger number of consumers and make a significant contribution to breast cancer education and research.” Bodecker Promoted to VP of Design at Nike Sandy Bodecker was named to the newly created position of vice president of Nike global design. In his new role, Bodecker will oversee all aspects of design for the Nike brand, from concept creation to retail presentation. He will report to Nike brand president Charlie Denson. Nike is driving global growth through a sharper consumer focus across six core categories. “Sandy is uniquely qualified to lead the design of Nike products and the premium presentation of the Nike brand to consumers,” Denson said. “Sandy knows how to deliver an innovative, compelling Nike point of view that creates deep consumer connections and drives growth. In this new role, Sandy will help ensure we’re bringing a consistent and relevant Nike experience to the marketplace across our core consumer categories and retail executions.” Bodecker joined Nike in 1982 as a footwear wear-test coordinator. Over the next decade he held a variety of positions in footwear, including product development manager and director of product development. In 1993, he was named vice president of advanced research and development for footwear. Bodecker most recently was vice president of sport culture, one of Nike’s six core consumer categories. Dermott Cleary, who is vice president of brand marketing for sport culture, will now lead the category. Performance Sports RETAILER Specialty NEWSwatch adidas Confirms London Olympics Sponsorship adidas has become the official sportswear sponsor of the 2012 Olympics in London. adidas said the partnership with London 2012 will be the biggest single investment adidas has ever put into a UK sporting event. As part of the deal, adidas will be the exclusive supplier of branded and unbranded sports merchandise to all London 2012 venues and stores and they will also provide apparel for the approximately 70,000 volunteers needed to man the Games. The celebrations for the 2012 Games are beginning in 2008, as the London Olympic organizers will launch a four-year cultural celebration. The organizers also expect that the Olympic Park construction will be ready to begin by the time the Beijing Olympics begin, with all site preparations completed. Nike, Apple Sued Over Nike+iPod A Highland, Utah-based shoe company, Leaper Footwear, has filed suit against Apple and Nike over the Nike+iPod Sport Kit. Documents filed in Utah’s District Court show that Leaper’s founders, Greg and Kenny Anderson, claim the Sport Kit violates a 1998 patent, which involves the use of custom footwear to track performance, such as running/walking speed and distances traveled. According to the lawsuit, Leaper approached Nike in 2000, suggesting to the company that it could license Leaper’s concept. Though the offer was rejected, the Andersons charge that Apple and Nike exploited their idea anyway, announcing Nike+iPod in May 2006. Leaper seeks an injunction against the Sport Kit, plus legal fees and damages. TAF to Open 20 Franchises in Mississippi A “veteran apparel retailer” has entered into a definitive agreement with NexCen to open twenty of The Athlete’s Foot franchises throughout the state of Mississippi. These TAF stores will be the first in the state of Mississippi. Financial terms of the agreement were not disclosed, but the arrangement calls for a minimum of 12 new TAF stores to be opened within the next five years. Earlier this month, NexCen announced a 100store agreement with a master franchisee. Both major expansion plans resulted from the TAF re-branding effort announced by the parent company this past June at the TAF Global Franchise Convention in Las Vegas. 6 Jackson, MS The entrepreneur inking the deal is described as “an established apparel retailer” who is aiming to “broaden his current business through athletic and fashion footwear.” Under the deal, he is granted the exclusive rights to operate athletic footwear and apparel stores under the TAF brand, as well as the right to sub-franchise. He is expected to take advantage of this opportunity to expedite TAF store development. The first TAF in Mississippi is expected to open in December of 2007. Performance Sports RETAILER Saucony Parent Company Lays Out Its New Model Collective Brands, Inc., the new parent company behind Saucony and Hind, gave the market a peek inside its business model at its recent shareholder meeting, providing investors, analysts and the media with a pretty comprehensive look at a model that merges once divergent wholesale, retail and licensing businesses into a cohesive new structure that leverages the strengths of each area of business, maximizes revenues, and leverages infrastructure and economies of scale in the supply chain. “Collective Brands will be more than simply the sum strength of our business units’ individual core competencies, expertise and heritage; we intend to leverage this exceptional foundation to become the preeminent, consumer-centric, global footwear, accessories and lifestyle brand company,” said Matt Rubel, president and CEO of Collective Brands, Inc., at the meeting held in New York. CBI was formed last month after Payless Corporation completed its acquisition of The Stride Rite Corporation and its brands – Saucony, Hind, Stride Rite, Keds, Sperry Top-Sider and Tommy Hilfiger Footwear, and merged the company into the new entity that also includes Collective Licensing International, which Payless acquired earlier this year. During the investor’s conference, Richie Woodworth, president of Saucony, Inc., said the company has three very distinct and main areas of focus for the future. First, they will continue to focus on continued growth in the core running specialty channel. Woodworth said they now hold the #3 share spot at running specialty with 12.4% of the market, up from the #6 spot (9.3%) in 2005, and only 5.6 points behind the #2 spot currently being held by Brooks (18.0%). Second, they plan to continue to focus on growing share in the sporting goods and athletic specialty channels primarily by leveraging their technical heritage and the momentum they have in the marketplace in running, as well as by utilizing their heritage in women’s product. Lastly, Saucony sees the need to “re-energize and re-establish” the Originals business. Woodworth laid out Saucony’s key goals for market share growth across the three key areas in running footwear. The brand is focused on achieving a 17% share in the Stability category, up from 14.5% last year. They see doing this through continued improvements in the Hurricane, Omni and ProGrid Guide products. In the Cushioning category, Woodworth is working towards a market share goal of 14%, up from 11% last year, through growth in the Triumph and ProGrid Ride products. In Stability, the ProGrid Stabil is expected to help drive share to 12% from 9.1% last year. Saucony also plans to “elevate” the brand in running specialty by extending it into apparel for the first time, reiterating a decision made prior to the CBI acquisition when they announced that the Hind brand would be deemphasized and sold off in favor of Saucony product. “We need to capitalize, frankly, on the success and the momentum that we’ve been able to generate in this trade channel,” said Woodworth. “And we can do it and elevate and build our brand to a new level by taking our loyal Saucony consumer, a woman that’s just come in and purchased a Hurricane 9 for $130 off the wall, and not walk them by the apparel category or have them purchase a Mizuno or an ASICS piece of outerwear. We want them to hook up.” Woodworth sees a bigger challenge in sporting goods, describing it as a “big dog fight.” He said they need to “come off the wall in a really compelling way” in the channel where they compete with the “big boys.” While Woodworth feels they can have an impact in the top running doors at Dick’s and TSA by leveraging the “market momentum” they have in running specialty, he feels the bigger growth opportunity in the channel will come in the “volume price points” in the $50 to $85 range. He sees doing that by building a “visually compelling technology story” into these price point shoes where a younger, more maledominated consumer is going to be attracted to them. Woodworth also expects that the ability to leverage CBI’s sourcing base to produce better margins in the sporting goods and athletic specialty channels will be beneficial. Nike Inc. Growth Surges for Fiscal First Quarter Nike, Inc. saw contributions from across the globe in its fiscal first quarter, posting double-digit sales gains and operating profit growth in every region outside of the U.S. Nike management said that its renewed focus on the running specialty business is starting to pay off already, suggesting that the channel is one of the fastest growing areas of business in the U.S. Regarding the U.S., Nike said that they were up in “every major account across all channels with the exception of the mall guys” during the fiscal first quarter. The urban guys and the independent sporting goods business were also said to be performing well. Cancellation rates in the U.S. were said to have improved a little over the last few quarters, but inventories were up in the low-single-digits. U.S. footwear revenues were up 3.8% for the quarter, but unit sales increased at a high-single-digit rate, yielding a midsingle-digit decline in average selling prices that management attributed to a shift in product mix away from higher-priced basketball product. Unit sales growth was driven by sport culture (fashion athletic), Jordan and action sports product. Growth in performance apparel was offset by declines in Jordan apparel and core basics such as t-shirts and fleece. One area that may be helping boost the U.S. business is owned-retail, which grew 13% for the quarter on expansion of stores and a 4% comp stores sales gain at both the first quality Nike stores and the outlet stores. U.S pre-tax income declined 2.4% for the period, due primarily to increased discounts and lower margins on close-outs. 7 Conquering the Southern Peninsula Renee Grant gives PSR an inside look at how The Runner’s Depot took over the South Florida running market. By Kris Versteegen Specialty FEATURE I n January of 2000, Renee Grant became a runner. At the time she was operating a specialty dance and fitness retail shop in Davie, FL and doing well. By the end of the year she had converted all of her dance inventory to running product and she was the proud owner of The Runner’s Depot. Today her small chain of stores is the largest specialty running retail operation in South Florida. “I found that I didn’t have the same passion for dance footwear and apparel that I had for running. I didn’t become a runner until the beginning of 2000. I joined the local running club and realized that there wasn’t a running store in the area. So, some of the other members encouraged me to open a running store and get rid of this dance store,” she says. Grant has a long history of business experience. She has a degree in business administration and accounting which she first put to use running a printing business for 18 years. She built up her retail experience running the dance and fitness store that she owned for five years. The core principle behind her success has been attracting new participants to the sport. “We are a beginner friendly runner store. We get a lot of people coming through the doors that are new to the sport, because we really try to create an atmosphere where anyone can feel comfortable coming in and asking questions. Going back to before I opened, a lot of the running stores I went into were a little intimidating. A lot of the customers and people working the floor looked like elite runners and all of the shoes were overwhelming. So we really try to cater to our customers and make them feel comfortable. We make them a part of our family right away.” Part of this commitment to the beginner is education and building community around each of the company’s stores. The Runner’s Depot organizes in-store clinics and special events that address every demographic in Florida’s running community. “We have a running club that we operate out of the store, the Gold Coast Runners, and we have about 500 members now and most of them are new runners. We are in a rapidly developing area of Florida – there are a lot of families moving in. However, there wasn’t much of a running community, so we took it upon ourselves to develop that community,” Grant says. “We do a lot of clinics. We have triathlon clinics. We have swim clinics where we have a guy come into the store and run through the total immersion program – he’s had some great turn-out. A lot of the in-store promotional things we started have really taken off. We do a ladies night with free wine and chocolate where everything in the store is 15% off. The last one we held, there were over 100 women. They were waiting in line outside the store to get in. We also had free massage and it was just a great ladies night out.” The Runner’s Depot Expansion Timeline 2000 irst location F opened in Davie, FL 2004 Opened second Runner’s Depot in Miramar, FL 2007 Opened third Runner’s Depot in Ft. Lauderdale, FL 2000 2007 2003 Expanded first Runner’s Depot and entered triathlon market 8 2005 Inked business deal to open Vero Beach Runner’s Depot 2007 Will open fourth Runner’s Depot in Miami Beach, FL Performance Sports RETAILER “ “ We are growing pretty fast, but there is really a demand. We are trying to be more convenient for our customers. – Renee Grant co-owner and president of The Runner’s Depot At the same time, The Runner’s Depot focuses on the core runner and racer by organizing and supporting events throughout their market. “Through our club, we put on - right now it’s just two events per year. Of course, we also do in-store registration for all of the events held in our area. We also donate and give away shoes and raffle items to all of the race organizers and we try to have a presence at every race.” These different programs, combined with an intimate knowledge of the local market, allowed Grant to expand her single store operation into a chain that will soon be able to service the entire South Florida community. Runner’s Depot expanded its original Davie, FL location three years after Grant opened the business. At the same time, the company began to address the triathlon market, which “is growing by leaps and bounds in South Florida.” At the beginning of 2004, Runner’s Depot opened its second location in the southern part of Broward County and this year opened its third location in Fort Lauderdale. Grant is also opening a fourth location near Miami Beach, which is under construction and should open by the end of October. “We are growing pretty fast, but there is really a demand. We are trying to be more convenient for our customers. We are doing a lot of free shipping for people outside of our immediate area right now, and some of our customers are driving over two hours to get to our locations. We want to make our stores easily accessible for the entire South Florida market,” she says. “I took on a partner shortly before the Fort Lauderdale store. So Scott Kirsch came on as a percentage owner in the business. He had been working in the store for about a year and he has been a real asset to the business. He’s now my Vice President.” With a new partner on board to help with the demands of a rapidly growing retail operation, Grant is also looking ahead and formulating strategies for state-wide and regional expansion. “I also have an agreement with a store owner in Vero Beach, FL – it’s not a true franchise, but he came to me and wanted to open his own store in the area, but didn’t want to start from scratch. So, he paid for the rights to use the Runner’s Depot name and I helped him set everything up. He’s been operating under the same systems and procedures and his shop has the same look and feel. I am looking into possibly franchising at some point, maybe within the next five to ten years.” With two new stores opening in 2007 and some aggressive growth plans for the future, Grant’s schedule is packed, but like most specialty running store owners, she still maintains the same passion for the sport and the running community that prompted her to shift careers seven years ago. Performance Sports RETAILER 9 Specialty FEATURE Getting the Timing Right with Hydration 10 F or many retailers, hydration is a rapidly growing category. According to data collected by SportScanINFO, the overall hydration category is up in the 30% range for the year-to date this year with gains in nearly every sub-category. Backpack hydration systems, such as Camelbak, are showing double-digit growth, while more running-specific items, such as waist belt water bottle packs, are showing growth in the 40% range. Much of this increase is due to some of the innovative designs that hit the market this year and the recent proliferation of hydration and energy gel belts. This year the innovation is continuing with brands like GoLite completely redesigning their entire line of waist belt hydration packs and several other brands looking at new ways to integrate electronics. From a retail perspective, selling hydration packs and belts can be a seasonal endeavor. According to data collected by SportScanINFO, sales of waist belt hydration packs have two peaks throughout the year. Obviously, sales are stronger throughout the summer months. When looking at the data in the chart below, which is presented on a weekly basis, it becomes clear that sales of hydration waist packs and belts begin to accelerate in early May, with the trend peaking in mid-July. Most importantly, sales begin a series of sharp declines by the end of September. This trend presents itself year after year, amplifying itself as sales increase. The second sales spike comes during the Holiday season, with sales accelerating at the beginning of December, peaking mid-month, and then drying up again by the first week in January. Again, this sales spike presents itself during the same six week period each year. Armed with this type of weekly sales trend information, retailers can make sure product is on the shelf early enough to maximize sales. At the end of the summer season, The three lines represent sales volume for 2005 (green), 2006 retailers can mark down products and clear out inventory (orange) and 2007 (blue). The timeline runs along a standard in late September so they can re-stock and sell new, full retail calendar from February through January. margin product for the holiday season. Performance Sports RETAILER GoLite (opposite page) The Hydrospeed features two easy to access bottles and enough room to stuff a rain jacket for long runs in temperamental weather. The whole pack is supported by GoLite’s proprietary “No Bounce” suspension system that uses a wide waistbelt platform combined with a bomb-proof system of compression straps. SRP $50. Ultimate Direction The Thunderbolt is for runners that need enough liquid and fuel for “the long run” with enough capacity for 30 ounces of fluids and four ounces of energy gel. SRP: $30.00 Ultimate Direction The 20 oz. FastDraw Extreme uses a neoprene band that wraps around the bottle to protect the water from freezing and the users hands from getting ice cold. The FastDraw has a zippered stash compartment for keys, snack money or a gel pouch. An updated narrower tension-lock hand strap with reflective webbing makes it easier to use on the go. SRP $19. Ultimate Direction The Matrix HHS is a completely customizable plugand-play pack that lets athletes tailor it to specific races and training runs. The included accessory pouches can be moved or removed to mix and match the perfect amount of fuel and gear. SRP $50. Nathan The Booster Belt is described as “the evolution of the race number belt.” It incorporates a unique shock cord system that carries several energy gels securely. SRP $16. Performance Sports RETAILER 11 Camelbak Specialty FEATURE The 50 oz. Slip Stream offers external access to the reservoir for easy filling. A low profile sternum strap keeps the pack in place when you are on the move. Reflective material on the pack and harness aids visibility on autumn nights. Camelbak offers the Thermal Control Kit for cold weather use. The kit includes a mouthpiece cover, insulated tube cover and 42” delivery tube. SRP n/a Nathan The HPL #008 A.K.A. the Magda Lewy Vest was brought into existence, because Pittsburgh marathon winner Magda Lewy was tired of hiding bottles along her training route. The hydration “vest” carries 1.5 liters of water and minimizes any impact on speed. SRP $80. GoLite The Hydroclutch is the perfect add-on for the really long days on the road, or for runners who don’t like the feel of a pack. SRP $15. GoLite The new Hydrosprint uses the same “No Bounce Technology” as its big brother, the Hydrospeed, but caries one bottle for the light and fast morning run. SRP $40. 12 Performance Sports RETAILER A multi-channel round-up of the running business published monthly by: The Report and SEPTEMBER 2007 MARKET OVERVIEW x For the five-week fiscal September period, Running Footwear sales increased in the low-teens in dollars and mid-singles in units in the Sports Retailer trade channel. x Road running product sales increased slightly above the overall trends, while trail running was slightly below. x Women’s Running sales, which account for approximately one-third of the market, were up in the high-teens in dollars for the fiscal month, but men’s sales fell in the mid-singles in dollars and mid-teens in units. RUNNING FW MARKET SHARE ($)* -- Sporting Goods SEPTEMBER This Yr* Point Chg YTD NIKE 63.5% +14.53 NIKE ASICS 12.3% -1.97 AMERICAN S.G. 0.4% +0.22 x In the channel, the our trailrsFull Line Sporting Goods e o yMen’s l i ing four-week period sawosales ofhboth and a w t w e R kn well, with dollar in 62.7% +11.69 Women’sD product perform o you sellingand unit ecialty This Yr* n g Sp CHANNEL NOTES Point Chg is eet?increasing.oHowever, -1.42 the strsales u whatunits outpaced dollar y ll n e w t o sales for both genders, suggesting clearance sales o st lling d -3.06 se10.5% NEW BALANCE 10.0% -5.33 NEW BALANCE n rep o is or a consumer opting for less expensive styles. ly n e r io ning petit o you -8.13 untrxy?Road Running product soldofthrough D he ratuanlow-teens c om t ? r ADIDAS 6.3% -7.69 ADIDAS 6.3% ls u e o o h n y c n at ealt was white thot aystrong what e hRunning odwith of the+2.65 rate,o while Trail lty cha egion2.9% h w s t o ia O c n n F e k N p PUMA 2.3% +1.64 PUMA I s u s n nate calikely a result of more most Do yo other r portS is in no +0.34 Sgains, kly upd double-digit atGoods ee+0.40 w n Sporting stores addressing the category SAUCONYpetition 1.6% SAUCONY 1.6% o e t t e r a f r com eive t Bill B and adding that product to the shoe wall. can rec els1.1% BROOKS 1.1% -1.02 you MIZUNO contac+0.08 . , w n x Nike saw major share gains in the month, most ho an 450 etail ch tion on -0.04ajor rBROOKS MIZUNO .987.3 -1.35 a1.0% 41.0% likely a result . of the Nike+iPod product line that m 0 r 7 o f ow m in . N For s all-0.44 e s has caught many casual runners imaginations. The r o o r c REEBOK 0.5% REEBOK 0.5% -0.81 M a ss ow Bowerman line, focused on specialty shops was busine it? Kn nni RuASICS a Wh y W AMERICAN S.G. 11.8% 0.4% also called out as performing well. +0.20 TOP SELLERS -- RUNNING FOOTWEAR -- Sporting Goods Top Sellers for SEPTEMBER -- Units Rank Brand Style Top Sellers for SEPTEMBER -- Dollars ASP Rank Brand Style ASP 1 NIKE K ATTEST VIII WHT/RED/NVY (GS) $27.17 1 NIKE W SHOX CLASSIC WHT/GREY $107.26 2 ASICS M GT-2120 WHT/NVY/GLD $84.04 2 ASICS M GT-2120 WHT/NVY/GLD $84.04 3 NIKE W DART V EXTRA WHT/ROSE $42.79 3 ASICS W GEL-2120 WHT/PLAT/NVY $87.58 4 NIKE M AIR MAX TORCH BLK/BLK/SLV $74.12 4 NEW BALANCE M992GL D $125.02 5 ASICS W GEL-2120 WHT/PLAT/NVY $87.58 5 NIKE M AIR MAX 90 LEATHER BLK/BLK $87.82 6 ASICS W GEL-1120 WHT/BLU/BLK $70.31 6 NIKE M AIR MAX 90 LEATHER WHT/WHT $88.46 7 NIKE W AIR TRI-D BLK/PNK $56.66 7 NIKE M AIR MAX TORCH BLK/BLK/SLV $74.12 8 NIKE W SHOX CLASSIC WHT/GREY $107.26 8 NIKE M SHOX CLASSIC WHT/WHT $109.01 9 NIKE M AIR MAX 90 LEATHER BLK/BLK $87.82 9 ASICS W GEL KAYANO 13 WHT/BLK/SLV $120.59 10 NIKE M AIR MAX 90 LEATHER WHT/WHT $88.46 10 ASICS W GEL-1120 WHT/BLU/BLK $70.31 The Running Report is produced each month by analysts and editors at The SportsOneSource Group exclusively for SportScanINFO subscribers and retail reporting partners. All data is compiled utilizing SportScanINFO’s comprehensive platform that presents weekly retail POS data across the Footwear. Apparel, Licensed Products, Hardgoods, and Outdoor market segments. For more information regarding Custom Reports, contact your Regional Business Manager or contact us directly at SportScan@SportsOneSource.com. * Important Market Share Note: SportScanINFO has added a large number of reporting retail rooftops for 2007 which may make year-on-year comparisons of market share difficult without utilizing additional data. Please talk to your regional business manager with any questions on the new expanded system. Money Matters How Outside Financing Can Help Take Your Business to the Next Level By Richard J. Holcombe Specialty MARKETwatch Y 14 Five Key Sources for Outside Financing Once you have the business plan, it will prove invaluable in helping to raise our business is up and running. You the required financing. Here are some sources you can tap into when fundare at a point where you can see that ing the expansion of your business. your great idea is working. But you are suddenly faced with the realization that you Commercial Banks/Credit Unions typically offer a line of credit based upon the need to raise capital to grow your business. value of accounts receivable and inventory. Inventory and inventory turns are causing A U.S. Small Business Administration (SBA) loan may work for you if you need issues with your cash flow. You have hired help in securing bank financing. The SBA provides a guarantee to banks that more help and you have looked into finding a in turn lend to small businesses. Check it out at SBA.gov. third party to assist you in your operations, but now your infrastructure must be expanded to A Purchase Order or Contract Financing is available for projects in which one include a bigger and better operating system or two customers have placed large orders with you, and you need cash to procure the goods (if you are an importer/distributor), or procure the for your computer. It is obvious that to move components and assemble the product (if you are looking for a private label the business to the next level, outside financing line). The lender uses the purchase order or contract as security, which will will be required. be paid back when the product is delivered to your customer. The first step in this process is to prepare a business plan. This is the document that Commercial Finance companies typically will provide more funding that is will help you acquire the capital necessary to easier to attain than through a commercial bank or credit union, but at a grow the business. You can hire a professional higher cost. Some will lend against proven cash flows. service to produce a business plan. Or, you can Investment Banks will lend you money and/or take an equity position in your write it yourself by going to your local office company, or find someone or an institution that will do the same. Usually, equipment store and buying a software package investment banks charge an upfront fee for their services. that becomes the template to write your business plan. Or, you can Google “business plan” to access online resources. Putting your great idea Once the funding is in place, the hardest part of this whole into a formal and formatted plan is probably the most important process is execution. Since you will be operating your business activity you must undertake. using other people’s money, it is important to remember that The easiest and most successful way to raise capital to grow your the true way you ran your business before external funding, in business is to have a “friends and family night.” Open your place which every dollar counted, because it was your own, now must of business after-hours and invite your friends, associates and their carry over to using someone else’s money. You secured funding, friends that may have investment capital available. Present your because your business plan made sense and showed a profit. Now business plan and blueprint for success to them and let them know you must make it happen! Hiring a hands-on CFO or accountant is that you are seeking financing. an important step in controlling costs and maximizing profits. If the capital needed to expand your business is far above the net Note: There are various federal and state laws that regulate how worth of your existing business, then you may seek out venture capital equity can be secured. Please check with a professional advisor to investors to fund the business and to grow it substantially. However, be sure you are in compliance. understand the risk that you will give up a substantial portion of The Holcombe Group Inc. was recently formed to offer a broad range ownership in the business, and in some cases control, but this is an of third-party logistics services to businesses in the apparel, footwear option to quickly accelerate the growth of your business. and sporting goods industries and allied areas of gifts, novelties and When securing equity investments, make sure it is clear if the promotional items. The company specializes in advising entrepreneurs on the start-up and development of a business, assisting existing businesses investor is going to be active in the business or be a silent partner. to grow, and providing 3PL expertise that ranges from front-end If active, is it someone who you are comfortable working with? services of product design and development, brand creation, sourcing, So, the basic question is, do you want to take on partners or marketing, advertising and sales, to back-end services of call/service debt? That is a decision you will have to make and there are no center operations, warehousing and shipping. The concept and strategy canned answers. What is right for you may not be right for another was created by Richard J. Holcombe, a 30-year veteran of the apparel, footwear and sporting goods industries whose experience includes 18 entrepreneur. You should explore all of the options and choose the years with business start-ups or companies in need of a turnaround or one(s) that feel right for you. revitalization. He played a leading role in brand expansion and product In more sophisticated transactions, various combinations of debt acquisition for major apparel and gear companies including Blair, and equity are used. For example, a combination of a commercial Gear.com, Chipman-Union, The Rockport Company, and Woolrich. He loan and friends and family investment, along with some venture has extensive P&L and board-level experience. capital, could be a sound plan to fund the growth of your business. Performance Sports RETAILER The Executive Track Paul Heffernan, New Balance Executive Vice President of Global Marketing F Key Statistics Started Running: 1968 Weekly Mileage: “three to five hours” Distance of Choice: “one hour” Achievements: Three Boston Marathons Best time, “just over three hours” Shoe of Choice: NB 1061 with custom orthotics Performance Sports RETAILER market. “It was a great experience and we were making some good running product,” he says. “But Converse is not a running brand. So, one day I saw an ad that said New Balance was looking for a product manager. I knew that I needed that job. That was 24 years ago, and I’ve been here ever since.” Today, after nearly 40 years of running and tens of thousands of miles on the road, Heffernan still runs but now it’s primarily for fitness. “I need an hour,” he says. “A few years ago I had to do a lot of cross training and give up running for a while, which I hated. Before that I ran or I did nothing at all. Now, I run a few days a week; I go to the gym a couple days a week; I play a few rounds of golf and in the winter I ski.” With more miles in his legs than most people drive in a year, Heffernan plans to keep running as long as his body will allow. In spite of past injuries, he still stays competitive, even though he no longer competes. “It still frustrates me to see a guy that looks less athletic than I am flying down the road doing a sub six minute mile. I keep thinking, ‘I’m the athlete here,’ and I go faster.” Specialty MARKETwatch orty years ago, Paul Heffernan was a basketball player who ran when his coach told him to. This was usually a form of punishment to condition the team after a lost scrimmage or if he and his grade school teammates weren’t pushing themselves hard enough. One day in 1968 he and one of his friends missed their ride home after basketball practice and they decided to run home. “A friend of mine said, ‘do you want to run home?’ All I could think was that it’s a long way to run but he told me that he did it all the time, so we did it anyway,” Hefferrnan says. “I ran home and I was hooked. I loved how it made me feel.” In high school, Heffernan started competing. “I grew up with running as an integral part of sports, but I didn’t see it as an individual event. Then in 1970, I ran a cross country race and I was doing pretty well until the last half mile when I had to stop and get sick. Then I realized that running is not as easy as I thought.” After high school, Heffernan went to Villanova, which was one of the best running schools in the country at the time. While he never competed, he was able to train with several of the athletes that were on the Villanova track team in the 70’s. “I just liked the idea of long distance running. It kept my weight down; it made me feel sharp; I felt like I could problem-solve better; I was better to be with as a person.” In the 1980’s, while working as a merchandiser for Thom McAn, Heffernan began to take his training seriously. “I ran three Boston Marathons back in the 80’s. This was back in the days when mileage was king and I trained 70 to 80 miles a week. Everyone believed that if you weren’t doing a lot of miles, you couldn’t call yourself a runner. This was back when the American icons were driving the sport. We were all looking at Bill Rogers, Salazar, Jeff Smith, all of the American athletes who were dominating the international scene. I would say it was a combination of these people and several others that really inspired me to push myself in the sport.” Heffernan’s dedication to the sport had a major influence on his career. After working for Thom McAn, Heffernan moved over to Converse to help the brand make their initial foray into the running Editor’s note: If you would like to nominate an executive to be featured in this column, please email Specialty@SportsOneSource.com with your suggestion. 15