Solis : and there was light

In a universe where versatility is omnipotent, to bring out a ski dedicated to steep slopes could be thought of as a conceited risk. Nevertheless, the elegance of its line and robust appearance awakens the curiosity and desire of numerous skiers who are not specialists in mid-air jump turns. An encounter with Julien Regnier*, the architect of this distinctive bird, the first ski shaped for verticality.

*Designer of black crow skis since 2009, Julien Regnier was formerly a bumps skiing champion and initiator of modern freestyle. Alternating between a designer of skis and freestyle events, film director, editor, cameraman, photographer, Julien is passionate about the engineering of a ski.

Black crows: Why make a ski specifically for steep slopes ?

Julien: The idea was to realise a robust and loyal product for mountain use with very few constraints on the weight. We wanted a ski destined for mountain skiers whose overriding objective is not the summit, but the descent.

Black crows: A mountain ski without the constraint of weight, that seems contradictory…

Julien: One knows that the weight will be too larger a constraint for creating a ski which works well. Having said that, all the same we had an acceptable objective because one knows that in the mountains, lightweight is an advantage. But we also wanted a ski whose edges hold well, which is robust and agreeable to ski. The concept began there, afterwards with Bruno (Compagnet, Editor’s Note) and Camille (Jaccoux, Editor’s Note), we chose the dimensions for a ski which would be versatile in the mountains, namely 100 underfoot.

Black crows: What is a ski which is specifically for steep slopes ?

Julien: One is often concerned on a steep slope, the ski tends to oversteer because of the incline in relation to the plane of glide. Yet, a modern ski with a quite pronounced side line is going to curve under the influence of the slope. So, inevitably, when you are in the mountains with slopes of 45-50 degrees, you already have a large incline in relation to your plane of glide, but you want to tend towards a side slip, in any case to have a very strong control over your side slip.

Unfortunately, a ski with a strong radius is going to curve a lot and to bend and so have a fast and persistent directional effect. To remedy this, we lengthened the side lines, tried to stiffen the flex and lengthen the lift of the rocker as much as possible so that it would be very soft and not embark the ski too much into the turn. Equally, we wanted a very stiff heel for those who carry rather heavy loads so that there is no loss of balance. It is the whole shape which is influenced by this objective of very stable turns when it is steep: flex, lift of the rocker and radius.

Black crows: How was such distinctive shape of ski born?

Julien: The team left me to be master of my own design and I would like to thank them because it is one of the aspects where one has good ideas but which modify everything. Personally I don’t like having somebody behind me when I am doing my designs because it is really frustrating, and I have been trying understand how it all works for 20 years. You have plenty of constraints when you make a ski so you have to understand and try and harmonise them. And, when somebody gives you their opinion, if only on a detail, it affects all the rest. As from the moment when we lay the basis of what we want, I make the designs and, later, all the process of testing takes place together. We have all a different feel for the snow and it is Bruno who, in the end, really has the use.

Black crows: And this square tip, for what use ?

Julien: The tip is the only area of liberty that you have. I think that the influence of the tip on the behaviour of the ski is marginal, so you can allow yourself a bit of freedom and add a personal touch. This allows for having an object which is unique and I am very proud because it really has rather a particular look to it. It is very elegant and a lot of people notice it. And, we don’t use any revolutionary procedures. As a whole, this matte yellow and black design form Yorgo (Tloupas, Black Crows’ art director, Editor’s Note) combined with the top logo placement, the angles, and the tails… I put a lot of work in. Let’s say that it is the design of tips and tails which make the object. But, they are also in relation to the lift of the rocker. I always design the tips in relation to the lift of the rocker. If they are rapid or slow, you don’t do the same thing.

Black crows: Have you had any criticisms of this shape ?

Julien: At the beginning, there were people who really didn’t like the tip but now I believe there is unanimity, except with some die-hards. I remember, however, that with the arrival of the first prototypes in wood, many people in the office were sceptical. Then, when you see the finished ski, it is really attractive. But it is necessary to stick your neck out when you make such a ski because it is easier to make a round tip which has consensus. When you take this type of risk, you really have to believe in your idea and be sure that it is going to work.

Black crows: What were the technical difficulties which you encountered with the solis ?

Julien: The main difficulty with this ski, is that the modern mountain skis are a lot shorter than before. Yet, as we favoured the rise of the rocker for versatility in varied snow, the points of contact are quite short with a long radius. This gives a ski which is quite confusing on ski runs because it needs a bit of speed in order to perform. As it is short underfoot and makes long turns, it could feel quite unstable. Nevertheless, with its construction, and notably the presence of titanal, the stability that you loose on the edge length, I won’t say that you gain, but it gives you confidence because you have something under your foot. It is not hyper light. It has therefore a certain versatility, but for sure it is not a playful short radius ski which can do everything. That said, it is very specialist and for sure leaves gaps in its versatility. But, all the same, it is interesting to ski and in the end you get used to it on ski runs.

Black crows: And talking of development, how did the fabrication process go?

Julien: The development was quite long with quite a few tests, but that is the classic procedure to get what you want. For the shape, we arrived at something good quite quickly; however for the flex, we had to have a lot of tries. The ski was too heavy, which wasn’t acceptable for its use. Notably, we replaced the initial edge, it was too heavy, with an edge from our freeride range. Like that we arrived at a good compromise between ski-ability and weight.

But yes, it took a certain amount of time because we really wanted to make a good ski. There were a lot of innovations in the association of small details and it was necessary to make tests, to understand what doesn’t work , then re-test. At the beginning we tested with touring bindings and, for me, they didn’t work. I have to be able to ski hard. So, we all moved to alpine bindings so that we could ski like troopers and really understand the ski.

There were also many discussions with Bruno about the tests. We understand one another. Each time we came to the same conclusions. He contributed his expertise and his feel for the snow. I, myself, don’t have the same feel for the snow. I don’t ski in the same way at all, not in the same areas… So it was really good to have Bruno associated with the conception so that we could collate our thoughts.

Black crows: What is the idea of having the chevron hollowed in to the tip ?

It is, at the same time, the logo, a fixing point for skins and it allows for making a sled if somebody should be injured. All it needs is to attach an ice-axe or ski pole and fix something at the back and one can easily create a sled. I think that it was Bruno who wanted the hole for the sled. Afterwards, it was me who placed the chevron and it really had to be exact. It is all about industrial design and if you have bad angles in the wrong place, all the aesthetics are modified. And now I think that the ski is truly elegant.

Black crows: What advice you would give to happy owners of the solis ?

Julien: It is really quite a powerful ski, so you should really put good kit on this ski so that it can express all its qualities. So, if you fix bindings which are too supple at the back, the boot will tend to want to release and finally, won’t ski well because the binding is always on the move. This ski transmits a lot of energy so it is useless to associate it with floating bindings. There is a force in this ski. It is a highly specialised ski but lots of friends want to try it. So, I tell them that it isn’t for them. But nothing to do, the guy answers me: “I don’t care, I want to ski it”.

 

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Black Crows

by Antoine Jag | 7 August 2018 | issue n°n°15 – summer

J. Crew launches third-party marketplace

Dive Brief:

  • J. Crew is selling some accessories, footwear and lingerie using a marketplace approach — having the brands drop-ship the items directly to customers. The debut of J. Crew Marketplace was first noted by Business Insider, which confirmed the company soft launched the platform this spring.
  • The retailer takes the orders and payment and provides tracking, but returns must be made directly to the sellers, according to a note on the company’s website.
  • The items “cannot be sold in or shipped to Washington, Rhode Island, Pennsylvania or Oklahoma,” according to the company’s website, presumably due to those states’ sales tax laws governing remote sellers. J. Crew didn’t immediately return Retail Dive’s request for more details.

Dive Insight:

J. Crew Marketplace is less a curated page of goods and more a notice to customers that certain items will be drop-shipped directly from brands. Drop-shipping is an age-old fulfillment tactic for catalog and online retailers that allows for higher wholesale margins as they bypass fulfillment headaches and inventory risk.

That can be lucrative. Amazon is selling at least half its assortment via third-party sellers, and Walmart has launched a series of pages dedicated to Lord & Taylor and Moosejaw in addition to its general third party sales there. But J. Crew Marketplace isn’t extensive. “For now J. Crew has covered the bases — making sure customers are getting the right merchandise and the right shopping experience at the right price,” Howard Schneider, VP of loyalty strategy at loyalty marketing firm Kobie, told Retail Dive in an email.

The brand has more room to “elevate the customer experience even further and create opportunities to engage customers to feel like ‘insiders’ with an ongoing relationship with the brand,” he said. Still, “it’s clear J. Crew has done its homework. … This gives more consumers more reasons to visit the J. Crew site. By creating more opportunities for engagement and opening up its brand and products to a broader customer base, the retailer is primed to compete with other online retail leaders.”

Like drop-shipping, marketplaces offer retailers a way to expand their merchandising with less risk, and the model has expanded globally in recent years. “In 2017, 40% of all digital commerce sales went through a marketplace model compared to 23% in 2013, according to Euromonitor, and Amazon Marketplace accounted for 87% of that growth,” Michelle Grant, head of retailing research at Euromonitor International, wrote in an opinion piece for Retail Dive earlier this year. “The marketplace model is only going to grow and retailers need to stay on top of these trends. The endless assortment and lower prices resonate with consumers and the largest retailers are responding by making their marketplaces even better.”

Not all retailers have been keen on the model — Best Buy shuttered its five-year-old marketplace a few years ago, citing shopper confusion and other priorities. Crate and Barrel in 2016 announced a marketplace with a “highly curated” assortment, but that’s nowhere to be found anymore.

And it can be risky for the sellers, who take on not just the expense and responsibility for fulfillment and returns but also the consequences of associating themselves with marketplace hosts. Premium outdoor brand Black Diamond, for example, sent Walmart a cease and desist letter asking to be removed from the retailer’s new Moosejaw page immediately upon its launch.

 

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The Path to $5 Billion: Vans Unveils Roadmap For Lofty Goal

The numbers that the Vans leadership presented at Wednesday morning’s investor meeting in Costa Mesa, CA, were staggering relative to the company’s current financial snapshot of $3 billion in annual revenue for fiscal 2018.

The footwear and apparel brand expects to generate compounded annual growth rate (CAGR) of 10 percent to 12 percent each year over the next five years to reach $5 billion in annual revenue by 2023.

“It’s not a number we take lightly,” Steve Rendle, president and CEO of Vans parent company VF Corp., said during the investor meeting. “A lot of work has gone into understanding how that will come by region, by product category and by channel.”

To reach the goal, Vans will need double-digit increases in footwear and apparel, at home and abroad, through direct-to-consumer and wholesale. And while the company has plenty of work to do in the next five years, especially in light of ever-shifting consumer demands and a constantly changing retail landscape, Vans and VF are confident they have forged the right strategy to get there.

History is on Vans’ side. Since being acquired by VF Corp. in 2004 for $396 million, Vans has grown at a 17 percent CAGR and expanded its reach across the globe. Vans is the corporation’s largest, fastest-growing and most profitable brand, a notable accomplishment alongside such VF brand stalwarts as The North Face, Dickies and Timberland.

Vans, which expects to notch $3.4 billion in fiscal 2019 on 20-plus percent CAGR, is already on target to surpass its 2021 strategic goals laid out for analysts and investors last year—$3.3 billion on 8 percent to 10 percent CAGR. So Vans decided to set the bar even higher, and at Wednesday’s investor meeting, executives outlined specific ways the company expects to clear it.

“It’s an opportunity for us to rethink the trajectory of this business,” Rendle said. What’s behind the brand’s success to date—and what will propel it toward $5 billion—is the management team, Rendle added, specifically “the quality of their knowledge, the connectivity they have as a team and how they are focused on a clear set of integrated strategies and capabilities that are driving this business.”

In Wednesday morning’s press release, Vans said it “expects diversified and balanced growth across all product categories, channels of distribution and geographies, driven by disciplined execution and investment to continue to fuel growth.” The company’s specific financial targets include:

  • Footwear revenue is expected to grow at a five-year CAGR between 10 percent and 12 percent. Heritage footwear is expected to grow at a CAGR between 8 percent and 10 percent and Progression footwear is expected to grow at a CAGR between 14 percent and 16 percent.
  • Apparel and accessories revenue is expected to grow to more than $1 billion which represents a five-year CAGR between 13 percent and 15 percent.
  • Direct-to-consumer (DTC) revenue is expected to grow to approximately $3 billion representing about 60 percent of global brand revenue and a five-year CAGR between 13 percent and 16 percent. DTC Digital revenue is expected to grow to more than $1 billion which represents a five-year CAGR between 30 percent and 35 percent.
  • Revenue in the Americas region is expected to reach approximately $3 billion which represents a five-year CAGR between 10 percent and 12 percent.

But understanding where Vans wants to go requires a quick look back at the brand’s origins. Brothers Paul Van Doren and Jim Van Doren, along with partners Gordon Lee and Serge Delia, founded the Van Doren Rubber Co. in 1966 in Anaheim, CA. They made shoes to order right in their small store and sold pairs to 12 customers on opening day.

The brand slowly grew, but soon became an icon in the Southern California skateboard scene and even made its way into popular culture when the Vans Classic Slip-On, with its famous checkerboard design, appeared in “Fast Times at Ridgemont High.”

Good times and bad ensued over the years, including a bankruptcy and, perhaps more importantly, falling out of favor with the company’s core audience—skateboarders—in the early 2000s. This led to the eventual purchase by VF in 2004.

That move helped Vans reignite brand loyalty and gave the company the scale needed to expand beyond its then-footprint into new markets. Vans truly began the company’s evolution from Southern California skate brand to a global action sports brand.

Over the decades, across the geographies and throughout ownership structures, Vans maintained seven foundational beliefs which Doug Palladini, Vans global brand president, outlined Wednesday for investors and analysts. He said these are key to understanding how the company plans to stay true to itself while also fostering rapid growth among both brand loyalists and newcomers.

According to Palladini, Vans’ core tenets are:

  1. Open to anyone, but not for everyone. Vans is inclusive by nature but understands that not everybody in the marketplace wants to wear the brand.
  2. Clear about who we are and who we are not. Vans is rooted in skateboarding and is focused on four pillars of arts, music, action sports and street culture.
  3. Imperfect = beloved. Vans shoes aren’t meant to be collected, kept in a box and never worn but are meant to be loved and even thrashed through experience.
  4. Checkerboard, not checkbook. Vans isn’t the world’s biggest lifestyle sports brand but is connected to youth culture and builds brand loyalty through meaningful connections with consumers.
  5. Global consistency with local relevancy. The brand has moved way past the company’s California skateboard roots and even beyond the Americas to about 85 countries, where Vans works to connect with each region where its products are sold.
  6. Hungry and humble. Vans is proud of being a culture-led brand that acts with humility.
  7. Off the wall. Vans’ longtime mantra is about not adhering to tradition.

After detailing the foundational elements, Vans then explained the growth drivers needed to reach $5 billion. They are:

  • Customer connectivity: “Over the last 50-plus years, Vans has grown by staying true to who we are, by listening to our consumers and by enabling creative expression,” the company said. “Our strategic choices and executional discipline will allow us to continue that legacy in an aligned and powerful way.”
  • Icons and innovation: Vans authenticity is based on the history and strength of our iconic franchises,” but the company is also squarely focused on a “test and learn” mindset to foster innovation.
  • Expanding next generation direct-to-consumer: “Direct-to-consumer business is a strategic enabler for Vans to drive awareness, affinity, aspiration and sales, productivity and profitability.”
  • Inspire Asian expressive creators: Asia is a key market for the brand to reach its growth potential.

Many levers will pull these growth drivers for Vans. One is global diversity. The company expects double-digit growth in all regions led by 17 percent to 19 percent CAGR in Asia.

Another is retail expansion. Vans is expecting the company’s store teams continuing to be a “key point of differentiation and competitive advantage,” as the company ramps up retail push with new concepts for storytelling via window, interior and footwear walls inside stores.

Another is apparel. The company expects to grow apparel and accessories significantly, with projections of double-digit growth and reaching $1 billion, or 21 percent of the company’s overall business, by 2023.

Yet another is e-commerce and omnichannel. The company views Vans.com as “more than a sales channel, it is an opportunity to create powerful brand experiences.”

And uniting all these drivers are marketing and digital storytelling, which Vans will ramp up as the company works to grow mind share and marketshare around the world.

The response to Vans’ growth goals and strategic plan to reach them has been positive, with Jim Duffy of Stifel writing in a note to investors (before the meeting), “We view Vans as a powerful youth lifestyle brand and see this as an ambitious but achievable objective, and we see this confident view as an endorsement of near-term trends.”

Aiming for $5 billion is lofty, ambitious and aggressive. But the tailwinds are in place, along with the power and scale of VF Corp. and a detailed roadmap to get there. All of which might be enough for this “off the wall” brand to meet a goal the founders likely wouldn’t—or couldn’t—have imagined in 1966.

“Vans is moving into its rightful place as the No. 3 global sport lifestyle brand by being clear about who we are and who we are not,” Palladini said. “By forsaking ubiquity and instead focusing on Vans’ brand pillars of art, music, action sports and street culture, we continue to generate deep and meaningful consumer connectivity that is growing the Vans family worldwide.”

 

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What Would Anta’s Merger Mean For Amer Sports?

“What’s Anta Sports?” was among the questions heard by more than a few market observers after news arrived Tuesday that the Chinese sports powerhouse had made an all-cash offer to acquire Amer Sports, the owner of Salomon, Arc’teryx, Suunto, Wilson, Louisville Slugger, Precor and a few other niche sports brands.

As reported, Anta partnered with FountainVest Partners, a Hong Kong private equity group, to offer €40 per share for Amer, representing a nearly 40 percent premium to Monday’s closing price before the approach was made public. The offer values Amer at more than €4.6 billion ($5.3 bn).

Amer said the non-binding and preliminary offer was dependent on a numerous conditions including financing, board approval as well as approval from at least 90 percent of shareholders.

“At this time, Amer Sports is not engaged in any negotiations with the Consortium and has made no decisions in respect of the Indication of Interest,” Amer said in a statement. “Amer Sports will release further information at an appropriate time if an agreement is reached with the Consortium in respect of a transaction or any negotiations are terminated or abandoned.”

Anta hasn’t publicly commented on the bid but over the last year has made the company’s ambitions to become a global superpower in sporting goods well known. Amer also held the company’s annual Capital Markets Day last week to give a solid view of what Anta would be getting.

What is Anta Sports?

Founded as a factory in 1991, Anta has grown to become China’s largest domestic sportswear brand and is believed to be the third-largest in the world by market capitalization after Nike and Adidas.

In the company’s year ended December 31, sales grew 25.1 to RMB16.69 billion (U.S. $2.43 bn). Profits expanded 29.4 percent to RMB3.09 billion ($450 mm). Sales grew 20 percent in 2016 and 25 percent in 2015. In the six months ended June 30, sales ran up 44.1 percent and profits grew 34.0 percent.

The reason observers aren’t too familiar with Anta is the company generates nearly all business in China.

The company’s primary brand is Anta, which focuses on functional footwear and apparel products for running, crossing-training, basketball and soccer. The brand caters specifically to lower- and middle-income groups, and part of the brand’s success has been traced to opening stores in second and third tier cities. As at June 30, the total number of Anta stores (including Anta Kids stand-alone stores) in China stood at 9,650.

The Anta brand in recent years is also said to be benefitting from efforts to upgrade quality and invest in innovation to rely less on price as a differentiator.

Anta’s biggest marketing deal is the company’s partnership with the Chinese Olympic Committee (COC) and the company’s positioning as the official sportswear for the Chinese Sports Delegation.

Anta surpassed Li Ning as China’s largest domestic sportswear supplier in 2012 and in 2015 set a goal to become the second-largest sports brand in China by 2020. At the time, Nike was seen leading the market with a share of 18 percent, followed by Adidas, at around 16 percent. Anta was at 13 percent and the company’s largest local competitor was Li Ning, 8 percent.

An apparent big step toward that goal was the signing in June 2017 of Klay Thompson of the Golden State Warriors to a 10-year shoe deal. Anta also has a deal the New Orleans Pelicans’ Rajon Rondo and had deals with Kevin Garnett and Luis Scola in the past, but major pushes have been put behind Thompson’s three signature shoes.

But the Anta brand remains largely a China-only brand. Anta’s American website, for instance, indicates Thompson’s signature shoes are only available at Shoe Palace, the sneaker chain with stores across California. Anta officials told Bloomberg that the Anta brand planned to enter the European market in 2019.

In recent years, however, Anta has benefited from a “Single-Focus, Multi-Brand and Omni-Channel” program to accelerate growth in its home market. The “Multi-Brand” approach focuses on broadening its customer base with different brands to meet different client demands and has led to a number of licensing deals and outright acquisitions.

Anta’s first success with a second brand was with Fila. In 2009, Anta acquired the rights to use Fila brand in China and has earned praise for successfully turning around the money-losing business. Helped by campaigns featuring famous Chinese celebrity Gao Yuanyuan, Fila in China focuses on high-end and stylish sportswear. As of June 30, the total number of Fila doors (including Fila Kids and Fila Fusion stand-alone stores) in Mainland China, Hong Kong, Macao and Singapore reached 1,248.

Partnerships and acquisitions have picked up in the last two years with the multi-brand push. In the first half of 2016, Anta formed a joint venture with Descente Japan and Itochu for the rights to distribute Descente, best known for the company’s ski wear, in China. At June 30, the total number of Descente stores in China reached 85.

Also in 2016, Anta acquired an English brand, Sprandi, which mainly offers leisure footwear products.

In early 2017, Anta formed a joint venture to expand Kolon Sport, a leading outdoor brand in Korea, in China. As of June 30, the total number of Kolon Sport stores in China reached 189. In September 2017, Anta acquired Kingkow, a children’s wear brand based in Hong Kong, As of June 30, Kingkow had 63 stores in Mainland China, Hong Kong, Macao and the U.S.

In releasing the company’s annual figures in February 2018, Ding Shizhong, Anta’s chairman and CEO, noted that the company was seeking to improve product differentiation and increase market share in running, boxing, basketball, female fitness, cross-training and skiing sports segments. He also said the company would seek to acquire “high-end international sportswear brands” with strong growth potential in part to “fill the gaps between different market segments” while heralding new globalization goals.

“Last year marked the 10th anniversary since we were listed in Hong Kong in 2007 and was a year of strategic transformation for Anta from a traditional private company into an internationally competitive listed corporation with modern governance standards,” said Shizhong. “Our ‘Single-Focus, Multi-Brand, and Omni-Channel’ strategy has laid a solid and sound foundation. However, we are not satisfied with only being a leading multi-brand company in China. Through our multi-brand strategy, we aspire to become a competitive, global, multi-brand company with newly added brands including Kingkow And Kolon Sports. To that end, we are launching our globalization strategy in 2018. Through product innovation and R&D investment, we hope athletes will fight for glory in our sportswear and that the public will break through their limits with our products. We will tap into the global market with our best brands.”

What Attracted Anta to Amer Sports 

Acquiring Amer, which had sales of €2.69 billion ($3.12 bn) in 2017, would quickly support those global ambitions. Last year, 43 percent of Amer’s sales were in the EMEA region, the same 43 percent in the Americas and 14 percent in Asia Pacific.

Softgoods, led by Salomon and Arc’Teryx, is Amer’s fastest-growing segment and complements Anta’s footwear and apparel expertise while adding two premier outdoor brands to Anta’s mix. Amer in June acquired Swedish sports fashion brand Peak Performance as well.

The merger would also enable Anta to diversify into a number of other categories, including Ball Sports (Wilson, DeMarini, Louisville Slugger), Winter Sports (Atomic, Armada Skis), Sports Instruments (Suunto) and Cycling (Mavic, ENVE Composites). Anta could also decide sell-off some categories that don’t fit with the company’s soft-goods focus, including a few Amer said have been underperforming, but also may want to enter equipment categories to tap the burgeoning sports opportunity in China.

Indeed, the biggest benefit for Amer’s brand may be Anta’s proximity to accelerate Amer’s recent success expanding in China.

At the company’s Capital Markets Day presentation last Thursday, Heikki Takala, Amer’s president and CEO, noted that three areas–softgoods, DTC and China–have contributed “disproportionately” to Amer’s growth in recent years as they had been prioritized as “”transformational drivers” of growth for Amer.

Sales in China for Amer across brands have grown from less than 1 percent of sales in 2010 to 6 percent in 2018 with a near-term goal to reach 10 percent of sales. Over the last five years, Amer’s sales in China have grown at a 29 percent CAGR.

Amer’s focus on China, as well as Anta’s global growth ambitions, comes as the nation has put a high priority behind expanding sports. In 2014, China’s President Xi Jinping set out a plan to create a sport industry worth $850 billion by 2025, in part to support the goal of eventually becoming a superpower in global football and landing a World Cup. A national fitness plan was also launched to combat rising rates of health problems such as obesity and diabetes. Beyond a booming middle class, China also has 415 million millennials who have embraced active lifestyles, gym workouts and the athleisure trend and have also shown an appetite for foreign brands.

Beijing will also play host to the Winter Olympics in 2022, providing a springboard for sales of skis and snowboards, while the 2020 Summer Games is being held in Tokyo.

Anta would also look to build on some of the successes at Amer since 2010 when Amer’s current management and strategy started.

At Amer’s investor meeting, Takala noted that shares of Amer have grown 311 percent since 2010 and 79 percent since 2015, outperforming the broader market. Amer didn’t change the company’s outlook for the year as part of the meeting, but provided an update on business and slight adjustments to growth strategies.

Addressing the company’s seven business units, Takala said Apparel’s role for Amer remains “full acceleration” with the category delivering consistent double-digit growth and “executing fully” on the company’s plans.

Footwear, the second category, is being positioned for “sustainable, profitable growth” and is performing in line with internal expectations. Some inventories that needed to be cleaned up in 2018 had an adverse impact on top-line growth in footwear but “was the right thing to do vis-a-vis a sustainable long-term business model,” said Takala.

Third, Winter Sports’ role for Amer is seen as “sustainable profitability in all weather conditions,” given volatile winter weather patterns. Takala said the Winter Sports category has been performing “fully in line” with plans and has seen significant gross margin improvement due to past investments in operating efficiencies. Gross margins overall in the Winter Sports’ segment have improved 800 basis points versus 10 years ago.

In the fourth category, Ball Sports is seen as having a “cash and profit first” positioning for Amer. Takala said Ball Sports is “not fast growing, if growing at all” and requires a focus on profits. Added Takala, “It doesn’t mean that we don’t want to grow. We do want to grow in areas where it’s available. But we go for cash and profit first.”

Gross margins for Ball Sports have improved by over 300 basis points to over 40 percent over the past five years due to complexity reductions and acquisitions that have furthered scale.

Takala said the Ball Sports segment has been “largely in line” with targets for cash and profits over the last ten years. Growth is slightly underperforming with Amer still looking to “get to at least inflation level growth in that business.”

Takala said Apparel, Footwear, Winter Sports and Ball Sports are the largest businesses for Amer and are all supported by segment-leading brands and offer synergies across the organization.

Fitness, Sports Instruments, Cycling Below Plan for Amer 

In the fifth category, Fitness is positioned for “sustainable, profitable growth.” Significant investments were made in the segment in 2015 and 2016 with a focus on “fast-growing” areas Fitness wasn’t participating in, and that’s helping revive growth. But Takala said the top-line acceleration “took a little more time than expected.” The focus in the near-term will be to continue to build on the momentum in top-line growth and “then attack the profitability.”

Similarly, in Sports Instruments, the sixth category, major investments were made in 2015 and 2016 to address opportunities in wearables with the digitization trend and Sports Instruments has recently become the “fastest growing part of the company today.” Takala added, “As that growth is coming, we’ll seek to improve the profitability back to the target following the significant upfront investment.”

Takala, nonetheless, said both Fitness and Sports Instruments segments will be reviewed after the current strategy cycle is completed. Although seeing positive top-line momentum, both are not performing in line with expectations. Fitness is also more digital-and-technology driven and a “bit less synergistic” than the rest of Amer’s portfolio. Amer will pursue current strategies for both businesses to see how they perform and “confirm that these businesses can contribute to the company at the target level and then based on that, we’ll make the next choices.”

The final category, Cycling, is underperforming expectations in both growth and profitability. Takala said Amer has decided that the company’s “capabilities and capacities” aren’t a good match for cycling.

Structurally, Takala said Amer hasn’t been able “give enough scale and synergy potential and benefits” to the cycling business. He also said the category offers “a bit too much factory footprint and things like that which are fixed assets while the market continues to move somewhere else.”

Takala added, “We’ve done good things, but it’s clearly taking a lot of time and effort, and it’s not responding in line with expectations.”

As a result, the Cycling segment is being put under strategic review “to make sure we understand are we the best owner for the business.” The investment bank Centerview has been hired to assist in the process.

The Cycling segment, which includes Mavic and Enve, currently represents approximately 3.5 percent of Amer’s sales.

Beyond China, Amer officials also expected strong continued growth from softgoods, which has expanded from 20 percent of sales in 2010 to 40 percent in 2018 with a near-term goal of reaching 50 percent.

Overall, sales in softgoods have grown 11 percent on a CAGR over the last five years through June 2018, ahead of targeted growth of 9 to 10 percent. Growth in the softgoods area is expected to accelerate with the addition of Peak Performance. Softgoods has also been able to expand its gross margin rate by over 300 basis points over the last five years to more than 50 percent.

D2C sales have grown from 2 percent of Amer’s sales in 2010 to 10 percent in 2018 with a near-term goal of reaching 20 percent. D2C growth has seen a 22 CAGR over the last five years, ahead of its target for 20 percent. Gross margins in DTC have likewise expanded over the last five years by 300 basis points to 60 percent due to channel mix changes.

Despite the 40 percent premium offered from Anta, Amer’s shareholders may still have some reluctance to accept the offer because Amer’s shares have performed below the market’s average due to two difficult years and may not be fully pricing the recent improving trend and bullish prospects.

Both  profitability and sales “slowed” in 2016 and 2017 as shares of Amer are up only 10 percent since 2016.

Takala said the reason for the shortfall over the last two years was because the U.S. missed its target growth rate. Amer lost more than 1,000 distribution doors given the bankruptcy of The Sports Authority and others in the marketplace. Sales have been flat in the U.S. market for the last two years, but Takala said the U.S. is returning to its target of mid-single digit growth.

Amer’s CEO also said investments into digital, fitness and sports instruments were made in those years to boost sales but the payback took longer than expected. Said Takala, “There was a delay, but today, I’m much more relaxed. I can say it’s starting to yield, but it took a toll on our top line and profitability versus the line we had been on.”

 

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Why brands quickly changed their minds about selling on Walmart.com

Outdoor industry leaders shine a light on the crux of the issue—that selling on the “cheapest retailer’s” website changes consumer’s perception of brands, putting specialty retailers at risk.

It’s safe to say American shoppers don’t go to Walmart looking for top-of-the line backpacks, winter expedition apparel, and mountaineering gear. But the big box discounter challenged that assumption with the launch of a premium outdoor store last week.

“When’s the last time you bought something nice from Walmart?” said Wes Allen, owner of Sunlight Sports in Cody, Wyoming.

As Walmart continues to build its online marketplace in an attempt to keep up with Amazon as the sell-everything search engine, outdoor industry leaders say that brands can no longer ignore Walmart as part of their omni-channel strategy. They now need to decide if they want to be a pawn in the game.

Sure, individuals at the company might have a genuine interest in the mountains—Greg Penner, Chairman of the Walmart Board of Directors, reached the summit of Mt. Everest this summer. But since 2016, Walmart in its race with Amazon has been adding  inventory and brands by the thousands through third-party sellers. You can browse $200 handbags and upscale beauty products on the site—something you can’t do in stores. In 2017, Walmart acquired a number of brands: the men’s line Bonobos, hipster women’s clothing site Modcloth, and Moosejaw, a reseller of some of the best brands in the outdoor industry. As expected, Walmart gained access to those and stocked it’s “curated by Moosejaw” store with nearly 50 different brands, from Black Diamond Equipment to Deuter.

For a store built on a foundation of bottom-of-the-barrel prices and quality, many people commented that it makes no sense for Walmart to sell the best of the best. Amazon has prioritized pricing and selection, but others made the argument that if brands sell on Amazon, why wouldn’t they sell on Walmart.com?

SNEWS polled readers on the topic: As of midday Friday, 45 percent of voters said that selling through Walmart abandons specialty retailers, 26 percent said that selling on Walmart was like selling on Amazon, and 23 percent said it introduces more people to brands.

Deuter products available on Walmart.com

Deuter backpacks were on sale through Walmart.com when the premium outdoor store launched on Aug. 27. But products were taken down by the next week, at the request of Deuter.

Walmart.com

Who withdrew?

What was appealing about the deal, according to insiders, was the chance to control third-party sellers and distribution, and list products online at full MSRP. No discounts. It’s important to note that Moosejaw is still a well-respected retailer in the industry, despite its new parent, and brands were willing to support them. But some brands quickly realized that selling on the Walmart-branded platform immediately shattered trust with specialty retailers, some of whom halted orders, and with consumers who define their image by where they shop.

“Many brands are not playing a particularly long game here,” said Mike Massey, founder of Locally and owner of Massey’s Outfitters. “It took them 30 years to build their goodwill and reputation with consumers and making the wrong decision here with their intellectual property is like flipping a coin with the future. There’s a lot of large companies who would be happy to cash that goodwill in for one great quarter.”

While $200 Deuter backpacks and $100 Black Diamond harnesses were on the microsite, some feared that, based on Walmart’s decades-old status, prices would eventually drop or products would be thrown into the mix on shelves in stores.

“For retailers, we’re ordering product a year ahead, based on product selection and brand positioning. We’re taking delivery of it now for fall and betting our livelihoods that we’re going to be able to sell it for enough money to pay rent, pay employees, maybe put our kids through college,” Allen said. “You build relationships with people you trust that sell you things. Then somebody opens in Walmart, with no explanation. Your order ships next week. Would you still take that order? A brand’s worth has to do with how people feel about it.”

A little more than 24 hours after the launch, the fallout began. Black Diamond was the first to respond. The company sent a cease and desist notice demanding Walmart stop using logos and product images on the website. In the days following, DeuterKatadynLEKI, Yakima, Native Eyewear, and Therm-a-rest changed their minds about being sold through Walmart.com.

Shawn Hostetter, president of Katadyn North America, said: “We made this decision after listening to the retailers we partner with — in doing so it became clear we needed to remove our brand and products from Walmart.com to best support their needs and to best caretake our premium brand position.”

At the time of publication, Craghoppers, Klymit, Grand Trunk, Orca Coolers, PacSafe, Tentsile, Teton Sports, ExOfficio, and 18 others were still listed on the site.

Moosejaw’s response

Eoin Comerford, CEO of Moosejaw and general manager of outdoor at Walmart e-commerce, in a LinkedIn post on Friday addressed concerns. He said that if the outdoor industry wants to advance beyond being exclusionary and dominated by a few large retailers, then they have to adapt to new ways and keep an open-mind. The retailer is known for not taking itself too seriously and because of that, according to Comerford, it has attracted beginner outdoor enthusiasts intimidated by the industry’s elitism.

Eoin Comerford, CEO of Moosejaw, was featured in SNEWS' Innovation Project.

Eoin Comerford, CEO of Moosejaw, was featured in SNEWS’ Innovation Project.

 

“I wasn’t naïve enough to think that all outdoor retailers would welcome the Premium Outdoor Store with open arms, but I am surprised by the vehemence of attacks by some of our industry’s leading retailers and the threats to drop brands that participated,” Comerford wrote.

Diversity, equity, and inclusivity have been leading topics in the outdoor industry. As a whole, the predominantly white and predominantly male industry is trying to figure out how to welcome and include more diverse populations.

Comerford said that in launching the store, he kept in mind how it would expose outdoor brands and activities to a massive audience, including underrepresented groups. In its response to Black Diamond, Walmart’s statement said: “At a time when the outdoor industry is working hard to expose more people to the amazing experiences they can have outside, we feel like [having a premium outdoor store is] a really positive development.”

However, others in the outdoor industry see it as a tactic. Rich Hill, president of Grassroots Outdoor Alliance, a consortium of more than 60 independent outdoor specialty retailers and more than 60 vendor partners, believes that the new site will not reach any new customers.

“Not a single new climber will discover their love of the sport through Walmart.com,” Hill wrote in an email. “It’s just expanding the number of locations customers can search for a lower price.”

Sunlight Sports

Sunlight Sports in Cody, Wyoming, is considered one of the top specialty outdoor retailers providing quality service and gear to shoppers. The store won Grassroots Outdoor Alliance’s 2018 Retailer of the Year Award. Courtesy

Walmart’s specialty veneer

In a continued effort to give consumers a special experience—walking through the front doors and feeling at home or stoked on adventure—retailers strive for quality customer service. Some, like Summit Hut in Tucson, Arizona, even rearrange their shops to guide shoppers through each brand’s stories. And with the rise of social media, brands are using storytelling to connect with fans. Think Patagonia’s Worn Wear and Merrell Magic.

Large corporate structures are trying to harness that magic and contribute by providing supplies needed for those premium experiences. Allen said that big box conglomerates—such as Camping World Holdings buying beloved retailers Erehwonand Rock/Creek Outfitters—are attempting to engage shoppers in their hearts and emotions like specialty does.

“I totally get it—it’s flattering,” Allen said. “The environment that created that desirability needs to be protected if it’s going to survive. You can’t just rip it up by the roots and throw it out on a Walmart shelf and hope it survives. We need to safeguard this thing and water it.”

Hill said that any brand that chooses to do business with Walmart has become irrelevant with specialty retail, REI, Backcountry.com, or even their own DTC strategies.

“I see it mainly as a desperate move by brands that cannot see a path forward other than to get in bed with the most dangerous retailer on the planet,” Hill said.

And Massey said the most important thing brands can do is apply some of the same lessons they’ve learned in brick and mortar to online, and make sophisticated decisions about how they want their products merchandized online.

“Most would never tolerate their merchandise shipping into Costco simply because lots of customers go there, but some might,” Massey said. “And, on the other hand, just because someone is a dealer for your products in Waco or Bend doesn’t mean they should automatically be allowed to sell them online. Having no channel strategy is the worst-case scenario. It’s like trying to open 15 dealers in the same mall and hoping for the best.”

If retailers and brands have learned anything about selling through Amazon and developing an omni-channel strategy, it’s that they have to consider it from all angles. And now Walmart is part of that sphere.