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Today's news...7/20/05

JULY 20, 2005 -- June Was Hot Month For Sporting Goods E-Commerce

According to comScore Media Metrix's monthly analysis of consumer activity at the top online properties and categories, summer leisure and sports interest helped make Retail -- Sports/Outdoors the second-highest gaining category in June, rising 9% to 20.2 million visitors (In June, General Motors' new financing option and other highly publicized promotions helped automotive manufacturers drive significant traffic increases compared to last year). Retailers who sell gear associated with water sports saw major gains. Swimming wear and equipment seller SwimOutlet.com was a standout, growing by 53% in June. GSI Network was among the Internet's top-gaining properties in terms of traffic, climbing 18% to 5.3 million visitors. A number of GSI's sporting goods sites drew significant increases, including MC Sports (up 65%), Modell's (up 53%) and Dick's Sporting Goods (up 25%). Hunting and fishing sites such as Cabela's Inc. (up 17%) and Bass Pro Shops (8%) also saw traffic gains.

SI.Com, Finish Line Team Up For Online Store

SI.Com, Sports Illustrated's web site, has teamed up with The Finish Line to launch a new online retail store, SI Shop. The announcement was made today by Gordon McLeod, president of SI.com and Alan Cohen, CEO of Finish Line.

SI Shop, which will be powered and produced by Finish Line, will offer one-stop shopping nationwide. Beginning this month, visitors to SI.com will have the ability to purchase their favorite team and fan-based sports apparel, including hats and jerseys, as well as additional footwear, apparel and accessories sold by Finish Line. Following the launch, SI products such as classic covers, calendars, books and Sports Illustrated subscriptions, will also be available directly from the site.

"SI Shop gives SI.com users another great reason to visit our site," said McLeod. "It's a state of the art online store that's very easy to use, and it carries all their favorite sports brands."

"Our partnership with SI.com will allow us to expand our presence on the web, a channel which continues to grow in importance for Finish Line and its consumers," said Cohen. "Additionally, SI Shop provides us with an excellent opportunity to increase Finish Line's brand awareness to a larger, more diversified audience."

Mitchell & Ness Obtains Licensing Agreement To Produce Nostalgic Collegiate Apparel

Mitchell & Ness Nostalgia Co. has signed a licensing agreement with The Collegiate Licensing Co. to design, manufacture and market nostalgic collegiate sportswear. Currently the agreement includes the University of Colorado, University of Miami, University of Notre Dame, Penn State University, Syracuse University, and the University of Wisconsin. Additional schools such as the University of Michigan, University of Oklahoma and Duke University are expected to join the agreement as well.

Mitchell & Ness will produce high quality, historically inspired outerwear, to include wool varsity jackets and track style warm-ups featuring vintage collegiate logos. "These schools have rich histories and proud alumni, and we are excited to tell the stories of their school spirit and sports traditions in the same way that we keep the history of the professional sports leagues alive through nostalgic uniforms," stated Peter Capolino, president of Mitchell & Ness.

The apparel will be sold at official Mitchell & Ness retailers throughout the country, through university bookstores and online at www.mitchellandness.com, beginning in Holiday '05.

Huffy Takes Reorganization Plan To Bankruptcy Court

Huffy Corp. filed its proposed Plan of Reorganization and related Disclosure Statement with the US Bankruptcy Court for the Southern District of Ohio, Western Division. The plan would give control of the bike maker to a Chinese company. Current equity holders will not receive any distributions and their equity interests will be cancelled.

The proposed Plan of Reorganization, which has been the subject of negotiations with the China Export & Credit Insurance Corp. and Huffy's primary bicycle suppliers (collectively referred to as the "Sinosure Group"), and the Official Unsecured Creditors Committee (the "Committee") is consistent with the agreement in principle between these parties that was announced on June 27, '05.

The Plan of Reorganization provides that substantially all of Huffy's pre-petition unsecured liabilities will be discharged in exchange for notes and new voting common equity of the reorganized company. Initial distributions to the Sinosure Group will be 30% of the new voting common equity of the company (in the form of new Class A shares) and a $3 million note to the Sinosure Group. Initial distributions to most of the other general unsecured creditors will be 70% of the new common equity (in the form of new Class B shares) (subject to later dilution by the performance shares) and a $9 million note.

The Sinosure Group as holders of Class A shares will elect a majority of Huffy's Board of Directors and, through the provision of trade credit to Huffy on favorable terms, have the ability to earn over 5 years up to 51% of the aggregate new common voting stock of the reorganized entity (the "performance shares"). The notes and post-confirmation trade credit will be secured by a lien on Huffy's intangible assets and on Huffy's other assets. The reorganized entity will emerge as a private company. Current equity holders will not receive any distributions and their equity interests will be cancelled.

Huffy is seeking approval of the Disclosure Statement and related voting solicitation procedures at a Bankruptcy Court hearing in mid-August '05, which would permit Huffy to solicit acceptances for the proposed Plan of Reorganization commencing as early as late August and to seek confirmation of the proposed Plan of Reorganization by the Bankruptcy Court in late September.

Firearms Makers Seek Supreme Court Review

Firearms manufacturers filed papers asking the Supreme Court to review a District of Columbia Court of Appeals ruling permitting lawsuits against firearms manufacturers under the District of Columbia's "Assault Weapon Manufacturing Strict Liability Act."

The manufacturers maintain the District's act is unconstitutional because it is intended to and does regulate out-of-state commerce. The statute imposes liability, for example, when an out-of-state manufacturer (it has long been unlawful to manufacture and sell firearms in the District) sells a gun to a federally licensed retailer who then sells the firearm to the local police chief where - maybe years later - it is stolen during a burglary and illegally smuggled into the District where it is misused by a criminal to shoot someone. Liability against the law-abiding manufacturer in this example is automatic and absolute because the act imposes liability "without regard to fault or proof of defect."

"There is simply no way to avoid liability, except to go out of business, precisely the law's intent and practical effect," said Lawrence Keane, SVP/general counsel to the National Shooting Sports Foundation, the trade association for the firearms industry.

The manufacturers are represented by former Solicitor General Theodore Olson. In the manufacturers' petition for a writ of certiorari, Olson argues the District is directly regulating interstate commerce in firearms in violation of the Commerce and Due Process clauses of the Constitution and improperly projecting its public policy choices on firearms nationwide, in violation of bedrock principles of federalism enshrined in the Constitution.
"The case presents significant questions of constitutional law and federalism that are important not just to the firearms industry but to product manufacturers in general," said Olson.

The case was originally dismissed by District of Columbia Superior Court judge Cheryl Long in May '02, who ruled the Act violated the Commerce Clause and the Due Process clause of the Constitution. On April 21, '05, the District of Columbia Court of Appeals held, in the case of District of Columbia, et al v. Beretta USA Corp., et al, that the District's "Assault Weapon Manufacturing Strict Liability Act" did not violate the Constitution. The court ruled victims of criminal shootings in the District could sue out-of-state manufacturers and sellers under the District's Act.

Keane said, "The District of Columbia decision and the lawsuits it will spawn will impose crushing liability upon blameless manufacturers. No industry in America should have to bear the burden of such unwarranted lawsuits."

Sales Agent News

Skip Nipper, Sporting Goods Agents Association president, announced the opening of the trade association's new website. www.sgaaonline.org. It will inform visitors of all the services SGAA offers to both independent agents and manufacturers…Tim Maloney, Tim Maloney Sales, Lake Forest, CA. will be recipient of the SGAA's highest honor, induction into the SGAA Hall of Fame. This will take place during SGAA's annual meeting on the opening day of the Super Show in Orlando, January 23. Jim Terry, James Terry Sales, Golden, CO, will be also receive the group's Lifetime Sales Achievement presentation, while the Manufacturers Appreciation Award will be given to Tom Rogge, president of Cramer Products. If you are interested in attending this SGAA meeting, contact COO Lois Halinton at [email protected] or call her at 847-296-3670 to reserve your seat.

Cathy Reed, Keane, Saunders & Associates, won the Brooks Sports '05 Rep of the Year honor, while Ken Sitko was named the '05 Specialty Rep of the Year. Reed reps Brooks in MI, OH and WV, while Sitko travels the territories of Northern Illinois and Northwest Indiana…Winning Edge Sales Group, Carrollton, TX, hired Michael Ryba for Northern New Jersey, Southern Connecticut and the Greater New York City area. Ryba is a 21-year veteran in the team industry.

Three-time Grammy Award winner Nelly and Reebok formed a long-term partnership that includes a signature collection of athletic footwear, apparel and accessories. The initial launch of the collection will be in holiday '05 in select boutiques and athletic specialty retailers with an expanded distribution in '06. The collection will feature clean, aggressive, sport-inspired designs with unique colors and materials.


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Quick links: One-click access to topics in this article.

Sporting goods industry
Specialty retailers

The Finish Line Inc.
Mitchell & Ness Nostalgia Co.
Sports Illustrated
comScore Media Metrix's
General Motors

online store
equity interests
performance shares
Initial distributions
firearms manufacturers

Gordon McLeod
Alan Cohen
Lawrence Keane
General Theodore Olson

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