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Short news..5/6/04

MAY 06, 2004 -- During the adidas conference call, the company promised a revolutionary new footwear concept was about to be revealed. On the next day, it appeared on the front page of The New York Times. Called the 1, the running shoe houses a battery-powered sensor, microprocessor and electric motor. Retailing at $250, the shoe senses the environment, electronically calculates how best to perform in it and instantly makes changes in the sole to adapt. Each second, the paper said, a sensor in the heel can take up to 20,000 readings and the electronic brain can make 10,000 calculations. The electric motor makes the change to the shoe. The aim to is to make the shoe adjust to changing conditions and running style while in use. It will be in stores in December. A more critical article in The Wall Street Journal pointed out that adidas is asking runners to pay a super-premium for a shoe that wears out as fast as lower-priced and comfortable alternatives. This tech might have helped adidas in the early '70s when running took off. The German designers mandated hard soles on running shoes because Germans ran on bridle paths. In contrast, Nike had softer soles because Americans ran on concrete. The adidas US distributors begged Germany for softer soles. The designers gave in, but stopped the production run to make the soles harder again. That's why Nike is where it is today.

Foot Locker's Q1 sales were $1,186 million (+5.1%). Comp-store sales eked up 0.3%. Excluding the effect of foreign currency fluctuations, total sales for the period increased 2.0%. "Our first quarter comparable-store sales results reflected a low-single digit increase in our US business, with the most significant growth generated by our Foot Locker store division," stated CEO Matt Serra. "Sales in our international business declined low-single digits, partially as a result of weakening economic conditions and reduced tourism in certain European countries due to uncertain geo-political concerns. Our global expansion strategy, however, remains on track with 60 new stores planned in international markets during 2004. In line with our previously stated range, we currently expect our 2004 first quarter earnings per share to increase 10%-20%." The company's European performance has been stellar for some time. It carried the company when things were tough. Serra's caution bothered investors and the stock plunged on Thursday. In addition, Wall Street expected EPS of 33¢, not the 29¢-31 that Serra forecast. In his defense, he never promised 33¢. He always said 10%-20% ahead of Q103. At that time, EPS were 26¢.

Six New South Wales MPs called on the Australian government to "stick the boot" into attempts by Deckers Outdoor "to hijack the name ugg and ban Australian manufacturers from using the term." A small ugg boot manufacturer that employs intellectually disabled workers has been threatened by Deckers to surrender all brochures and advertising material using the word ugg, or face prosecution. Curiously, in company conference calls, no analysts have brought up the controversy, preferring to focus in on supply of the cult boots.

MJ Soffe's Dri-release T-shirt made America's 100 Best list from Reader's Digest as the best T-shirt. Published in the May 2004 issue, the list was compiled by polling experts and conducting research for ideas and nominations that were then investigated by the editorial staff. The goal was a snapshot of America "that celebrates our country and our lives," the article says. The Dri-release shirt was one of several other entries in the active sports genre including Clif Bar, Inc., makers of energy bars (Best Mom and Pop Biz), Speedo's Fastskin FSII that mimics the skin of a shark (Best Swimsuit) and the Napali Kayak (Best Kayak). A patented, intimate blend of synthetic and natural fibers, Dri-release is a moisture transport technology, marketed and invented by Optimer Performance Fibers. It accelerates the evaporation rate of wet fabric. It also includes FreshGuard, a unique odor neutralizer. Marketed to casual and active sports participants through suppliers like Soffe and popular apparel brands such as adidas, Columbia and Tommy Hilfiger, Dri-release has received considerable consumer success since its release in 2000.

Florian Weingärtner succeeded Martina Jahrbacher as director of marketing and communication for business division II, consumer goods fairs, at Messe München GmbH, effective May 10. Weingärtner studied marketing and economics in Munich and the US. He has been in the sports industry for over 10 years, most recently at Head Sport AG. Among Weingärtner's responsibilities as marketing director of Head Snowboards International, was the launch of Head snowboards, brand management and product design, as well as positioning within the HTM Group. His responsibilities at the MMG cover ispo summer and winter, ispovision, ispo china, Golf Europe, Fairway and inhorgenta Europe (watches, clocks and jewlery).

April sales at Famous Footwear were $91.9 million, even with the same period last year. Same-store sales decreased 1.2% for the month, partially due to the Easter calendar shift to earlier in April. Same-store sales for the combined March-April period were up 4.2%. For Q104, Famous Footwear sales were $272.1 million, a 4.2% increase compared to the same 13-week period last year. The chain experienced sales gains in athletic footwear, women's and men's dress shoes and sandals. Same-store sales for the quarter were up 2.6%. Same-store sales for the combined March-April period and for the full Q1, were ahead of plan. This along with continued improvement in gross margins, allowed parent Brown Shoe to increase both Q1 and FY EPS estimates.

The decision by MLB to sell their bases and on-deck circles to Columbia Pictures has aroused national ire. The NY Yankees, for example, are balking and will put ads on the bases only during batting practice, and then just for one game. The Yankees were said to reap as much as $100,000 from the sale. MLB will get $3.6 million that will be dispensed to the teams. The promotion is said to be part of baseball's pitch to appeal to younger fans and make money along the way. Unfortunately, with the price a tickets reaching new highs every year, it's questionable how many kids will see the ads in the stadiums. But it will be free advertising on the tube. Congressman George R. Nethercutt, Jr. (R-WA), for example, sent this missive to Bud Selig: "I am stunned by today's reports that Major League Baseball is injecting advertisements onto baseball diamonds in ballparks across the country. For decades, fans have tolerated advertisements that encroach closer and closer to the baseball diamond, but to put ads on the actual bases goes one step too far. Little leaguers deserve to see their heroes slide into bases – not ads. As a former minor-league baseball team owner myself, I believe such aggressive advertising undermines the character of America's pastime at every level. Major League Baseball has a duty to keep baseball pure for future generations of Americans. By intruding on the baseball diamond itself, baseball's profiteers are sacrificing too much. The US government recognizes the special contribution of baseball to our nation by granting MLB special anti-trust exemptions. This over-the-top commercialization of baseball undermines its value to our nation and potentially questions the need for MLB's special monopoly status. At a time when so many Americans are risking their lives to protect our values and traditions, I would hope Major League Baseball would do everything possible to protect our national pastime. Before haphazardly placing advertisements on the baseball diamond, I hope you engage in a dialogue with fans. Please let me know if I can do anything to help you facilitate such a discussion."

Shoe Carnival reported April sales increased 3.8% to $48.6. Comp-store sales decreased 4.6% in April 2004. Q1 sales increased 6.3% to $145.5 million. Comp-store sales decreased 2.2% in Q1. It expects to come in at the upper end of its EPS guidance of 31¢-35¢.

Pacific Sunwear of California reported that April sales were $73.7 million (+21.8%). Company same-store sales increased 11.4% with PacSun same-store sales up 12.4% and d.e.m.o. same-store sales up 2.9%. Total Q1 sales were $245.1 million (+23.6%). Company same-store sales increased 12.7% with PacSun same-store sales up 13.6% and d.e.m.o. same-store sales up 6.0%.

Schutt Sports will be the official supplier of all batting helmets, catcher's gear and bases for National Pro Fastpitch through the 2005 season. Schutt will also supply the league with training aids and umpire accessories. As an official licensee, Schutt will produce replica helmets, bases and home plates featuring the logos of NPF teams. Licensed product will be available at team stadiums and various retail locations.


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