Weekly News...7/8/05 JULY 08, 2005 -- Cannondale To Acquire Sugoi Cannondale Bicycle Corp has reached an agreement to acquire Sugoi Performance Apparel. Both companies are privately held and the terms of the agreement are undisclosed. Sugoi operations, management and staff will remain in its Vancouver headquarters and it will retain a separate sales team The acquisition significantly expands the apparel and accessories offerings under the Cannondale umbrella. Sugoi strengthens Cannondale's presence in the cycling and triathlon markets in addition to giving it a strong foothold in the running segment. Cannondale will continue to offer its own branded line of soft goods. “This is a natural extension for us to join forces with a company that has a similarly rich culture and a heritage of proven innovation and performance,” said Matt Mannelly, president of the Cannondale Brand. “It is consistent with our mission of offering innovative products for consumers who want to improve their performance and enhance their athletic experience.” Mannelly told SGB that the companies share similar brand equity and the company will capitalize on the significant heritage and strong consumer base of both brands in order to offer distribution of all products on a global basis. “We really are a premium brand focused on the specialty channel, specifically in the bike channel,” said Matt Mannelly, president of the Cannondale Brand. “We really want to have an even increased presence, but only if we have the opportunity to hook up and partner with another brand that was really kind of on the same ilk that we are. Sugui is a brand that has a very similar history and culture to ours in terms of being very performance oriented, very technical, and very authentic. So we feel like this really expands our presence and is consistent with our strategy.” Mannelly said Cannondale may benefit by moving into dealers that carry Sugoi but not Cannondale. He also expects to gain a benefit from Sugoi's management expertise. “Sugoi has been dedicated apparel experts for over ten years and I think they've done a tremendous job,” said Mannelly. “ I think we can learn from them.” For its part, Sugoi was not on the selling block and initially rebuffed Cannondale's advances. But David Hollands, co-founder of Sugoi, soon began to realize that Cannondale's additional resources will allow us to rapidly expand on a worldwide basis. “We saw them as an organizational complement to us, if not a big lever to help us grow,” said Hollands. He particularly pointed to the potential to tap into Cannondale's international distribution centers in Europe, Australia and Japan. Like Mannelly, Hollands also believes the merger makes sense because the brands share similar competencies. “We believe Cannondale is best of breed in bikes and Sugoi is best in breed in bike apparel,” said Hollands. Hollands said Cannondale is equally eager to tap into the growth opportunity in running. “This is a true brand in the marketplace,” said Holland. “It's going to be a global leader and bike's a piece or it and run's a piece of it . There's a lot of opportunity there.” Headquartered in Bethel, Connecticut, Cannondale Bicycle Corporation has operations in Europe, Japan and Australia, and distributes worldwide. Headquartered in Vancouver, British Columbia, Canada, Sugoi Performance Apparel has extensive distribution in North America, Europe and Asia. Adidas America Appoints New Head of Sales Adidas America announced today that Russ Hopcus has been named Senior V.P. of Sales. He replaces Joe Fields, who has chosen to leave his position for personal reasons to pursue an opportunity outside of the sporting goods industry. Hopcus came to adidas in 2002 with over 20 years of industry experience in various sales and marketing roles both in the U.S. and in Europe. Hopcus joined adidas as the Accessories Sales Director and has since gone on to be the Footwear Sales Director and served as the National Sales Director. Hopcus will lead a strong team of adidas veterans who together have contributed to the current upswing in sales and positive backlog development. Sales growth for the end of the year is projected to be in the high single digits. Fields joined adidas in April 2004. Mizuno Ranks High In Specialty Running Survey Mizuno said it posted an impressive 26% increase in running footwear and apparel sales through June of 2005 when compared with the same time period last year, and also continues to grow market share, climbing to 10.3 percent of the served market. Mizuno said this rapid growth has vaulted Mizuno into a leadership position as one of the top 4 running brands in the specialty running arena. Sports Marketing Surveys USA, in its Retail Sales Survey for Spring 2005, reported that the Mizuno brand, along with its patented Wave® Technology utilized in Mizuno running shoes, continues to receive high praise from specialty retailers in the areas of performance technology, customer service, and product delivery, to name a few. “It's great to hear this kind of positive feedback from our retailers regarding the increasing strength of the Mizuno brand and the continuous recognition of the performance benefits of our Wave® Technology.” said Bob Puccini, President Mizuno USA, Inc., and Chairman, Mizuno Canada, Ltd. “Our skyrocketing ratings in the customer service and delivery categories can be directly attributed to improved inventory planning, an extensive demand planning and supply chain initiative, system improvements, and significant investments in infrastructure. We are particularly excited by our brand momentum and will continue to drive business through maximum support of our retailers” Here are some of the results from the survey as they relate to the Mizuno brand: o Mizuno Wave Technology was ranked the #1 technology for the fifth consecutive season by specialty retailers in terms of benefit to the serious runner. o Mizuno's share in specialty running retailers, increased by 11.9% from Spring 2004 to Spring 2005. o Rated in Top 2 brands for Sales Rep Support, and Product Line. o Rated in Top 3 brands for Product Delivery, Cosmetics/Design, Profit to Dealer, In-House Customer Service, and Consumer Interest. These reports consistently combine qualitative and quantitative data gathering techniques in order to ensure an accurate overview of the running footwear marketplace. The Spring 2005 survey included in-depth phone interviews with a total of 75 specialty running retail store dealers across the United States. These results come on the heels of a blockbuster year for Mizuno, with a 25% growth in sales and 12% growth in market share from the end of year 2003 through end of year 2004. “We are extremely proud of what we've been able to accomplish as a brand and are very excited about the momentum we're building within the marketplace” said Tom Elwell, Vice President and General Manager of Athletic Footwear and Apparel, Mizuno USA, Inc. “We have been able to make significant gains this year, particularly in the Support category with the highly successful introductions of the Wave Nirvana and the Wave Inspire. We remain committed to creating the best performing products for runners of all abilities, and servicing our consumers and accounts at the highest level.” Mizuno USA, Inc. is a wholly owned subsidiary of Mizuno Corporation, one of the largest general sporting goods manufacturers in the world. Mizuno USA, Inc. manufactures and distributes baseball, golf, softball, running, track & field, and volleyball equipment, apparel, and footwear for North America. Mizuno USA, Inc. is based in Norcross, Georgia. PowerBar Hires Sales Manager For Sports Specialty Sales PowerBar hired Mike McQueeney as the new sales manager for the company’s sports specialty sales division. McQueeney joins PowerBar with more than 20 years of experience in the cycling and sporting goods industries. In his new position, McQueeney will manage PowerBar’s independent specialty sales force, comprised of more than 40 account managers, and the team’s 2005-2006 specialty sales initiatives including a newly-formed partnership with Quality Bike Products and nutrition education programs in the fPowerBar is pleased to announce the addition of Mike McQueeney as the new sales manager for the company’s sports specialty sales division. McQueeney joins PowerBar with more than 20 years of experience in the cycling and sporting goods industries. In his new position, McQueeney will manage PowerBar’s independent specialty sales force, comprised of more than 40 account managers and the team’s 2005-2006 specialty sales initiatives including a newly-formed partnership with Quality Bike Products and nutrition education programs in the field. McQueeney was the owner of two Golden Bear Bikes retail stores since 1997. New Balance Continues Sponsorship Of Girls On The Run New Balance announced that it will extend its sponsorship of Girls on the Run International (GOTRI) through 2007. New Balance has been the presenting sponsor of the organization since 1999. “New Balance is proud to continue our relationship as the presenting sponsor of Girls on the Run International,” says Kimberly Landry Wallengren, senior marketing promotions associate at New Balance. “This experiential learning program educates and prepares young girls for a lifetime of healthy living and self-respect, which fits in well with our corporate philosophies.” As the presenting sponsor of GOTRI, New Balance provides assistance on both the national and local level. At the National level, New Balance provides sponsorship funding, support of the annual Council Director Summit, and is the presenting sponsor of the Girls on the Run 5K Race Series. New Balance also provides running shoes for 500 needy GOTRI participants per year to be distributed by the national office. Locally, New Balance provides each council with their 5K race supplies, including race numbers and give-away items. “New Balance has worked closely with us from the very beginning, stepping forward at a time when only a handful of people had even heard of Girls on the Run,” says Molly Barker, Founder of Girls on the Run International. “In addition to offering product and financial support, New Balance offers the incalculable value of its fine reputation for quality and commitment to high ideals.” Shoe Carnival' s May Comps Jump 12% Shoe Carnival Inc. reported the sales for the five-week period ended July 2, 2005 increased 12.0 percent to $54.4 million from sales of $48.6 million for the five-week period ended July 3, 2004. Comparable store sales increased 6.7 percent in June 2005. Sales for the first five months of 2005 increased 11.0 percent to $263.1 million from sales of $237.1 million for the first five months of 2004. Comparable store sales increased 6.1 percent for the twenty-two week period. Based on the strength of June sales, the Company now expects diluted earnings per share to be $0.21 to $0.22 in the second quarter of 2005. The Company also announced the opening a store in Brownsville, TX and the closing of a store in Virginia Beach, VA. Shoe Pavilion Same-Store Sales Climb 8.2% Shoe Pavilion, Inc. announced comparable store net sales increased 8.2% for the second quarter ended July 2, 2005 from the same period last year. Net sales for the second quarter ended July 2, 2005 increased 20.2% to $24.9 million from $20.7 million for the same period last year. Comparable store net sales for the six months ended July 2, 2005 increased 9.5% from the same period last year. Net sales for the six months ended July 2, 2005 increased 19.6% to $48.2 million from $40.3 million for the same period last year.