SGB WEEKLY 1319

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MAY 13, 2013 ISSUE 1319 The Weekly Digital Magazine for the Sporting Goods Industry

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SGB WEEKLY 1319

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Page 1: SGB WEEKLY 1319

MAY 13, 2013ISSUE 1319

The Weekly Digital Magazine for the Sporting Goods Industry

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Copyright 2013 SportsOneSource, LLC. All rights reserved. The opinions expressed by writers and contributors to SGB WEEKLY are not necessarily those of the editors or publishers. SGB WEEKLY is not responsible for unsolicited manuscripts, photographs or artwork. Articles appearing in SGB WEEKLY may not be reproduced in whole or in part without the express permission of the publisher. SGB WEEKLY is published weekly by SportsOneSource, LLC, 2151 Hawkins Street, Suite 200, Charlotte, NC 28203; 704.987.3450. Send address changes to SGB WEEKLY , 2151 Hawkins Street, Suite 200, Charlotte, NC 28203; 704.987.3450

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May 13, 2013ISSUE 1319

The Weekly Digital Magazine for the Sporting Goods Industry

MAKING NEWS 4 By The Numbers Foot Locker Agrees to Acquire German Run Specialty Chain 6 Movers & Shakers Altra Breaks Into Kids 8 Asics America Delivers Double- Digit Growth For the First Year 9 Bergan's Of Norway Base Layer Packaging Wins European Design Award Ecco Launches 'The Better Running Initiative' Co-Creation Platform20 I Am…SGB Brett Rivers, Owner, San Francisco Running Co.

ON THE COVER: Photo courtesy Saucony

RETAILER FOCUS10 2XU Opens First U.S. Store

SGB PROFILE12 Richie Woodworth, President, Saucony

FEATURES16 NEXT Asics Ramps Up Training Push18 Adidas Running Gets A Boost

20Photo courtesy San Francisco

Running Company

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NEWS

BY THE NUMBERS

6% Adidas reported net profit increased 6 percent during the first quarter of 2013 as a more favorable pricing, product and regional sales mix as well as a larger share of higher-margin retail sales boosted the margin. Revenue decreased 2 percent to EUR3.75 billion due to negative currency effects. In Q1, group revenues were stable on a currency-neutral basis as a result of sales increases in Retail and Other Businesses. Net income attributable to shareholders was up 6 percent to €308 million ($400.4 million).

$59.2 million Nautilus, Inc. reported net sales for the first quarter of 2013 totaled $59.2 million, a 15.5 percent increase compared to $51.3 million in the same quarter of 2012. Gross margin for the first quarter of 2013 improved 520 basis points to 51.8 percent, compared to 46.6 percent for the same quarter in 2012. The increase in gross margin was primarily due to higher gross margins in both the Retail and Direct businesses, as well as the continuing shift of sales to higher margin cardio products in the Direct channel. Operating margin for Q1 of 2013 improved 460 basis points to 10.1 percent compared to 5.5 percent in the same period last year.

19.6% Gaiam Inc.’s net revenue rose 19.6 percent to $56.6 million in the first quarter ended March 31, compared to net revenue of $47.3 million in the prior-year period. The Boulder, CO-based company is a leading producer and marketer of lifestyle media and fitness accessories. Net revenue for the company’s business segment increased $11.5 million, or 44.7 percent, to $37.3 million, while revenue for the direct-to-consumer segment was $19.4 million, down 11.3 percent from $21.6 million in the prior-year quarter.

NEWS

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FOOT LOCKER AGREES TO ACQUIRE GERMAN RUN SPECIALTY CHAIN

Foot Locker, Inc. signed a definitive agreement to acquire Runners Point Warenhandelsges. mbH (RPG), the owner of the Runners Point and Sidestep chains in Germany, for total cash consideration of €72 million (approximately $94 million).

RPG is currently majority owned by the private equity firm Hannover Finanz. The com-pany's CEO, Otto Hurler, and CFO, Harald Wittig, own the balance of the company. Both Hurler and Wittig, along with other members of senior management, will remain with the company post-acquisition. The transaction is subject to review by merger control authorities in Germany.

RPG, based in Recklinghausen, has a leading position in the German athletic retail market, operating more than 200 stores - with its most prominent banners being Runners Point and Sidestep - as well as an online subsidiary, Tredex. RPG previously announced sales of €197 million ($254 million) for calendar year 2012. Most of the stores are in Germany, although there are also Runners Point and Sidestep stores in The Netherlands, Austria and Switzerland. While most of the stores are owned and operated by RPG, 28 of the stores are operated by franchisees.

"We are excited to be adding Runners Point, a fast-growing, multi-format and multi-channel business, to our already-strong European operations," said Ken Hicks, chairman and chief executive officer of Foot Locker, Inc. "This acquisition will enhance our position in Germany, the strongest economy in Europe, and also provide us with additional banners to further diversify and expand our European business. We also intend to leverage Tredex's strong digital capabilities to accelerate growth in our own developing European e-commerce business."

"Our association with Foot Locker will significantly enhance the Runners Point team's ability to capitalize on the growth strategies we have been actively pursuing in recent years," said Hurler. "We look forward to working closely together to maximize the performance of our business as part of one of the world's leading specialty athletic retailers."

Foot Locker, Inc. operates 3,335 stores in 23 countries. Its banners include Foot Locker, Footaction, Lady Foot Locker, Kids Foot Locker and Champs. It has three Run By Foot Locker locations in New York City; Edison, NJ; and Dallas, TX.

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Penguin Brands, Inc., appointed Bridgit Lombard as CEO, a position she assumes from Penguin Brands founder and current chairman Jon Reichlin.

Amer Sports promoted Nora Stowell to a newly established role as vice president of sales for Amer Sports in the U.S. in all categories of Salomon, Suunto and Atomic. The company also promoted Jordan Judd as the new vice president and regional commercial director for Salomon apparel and gear in North America, and Erik Anderson to the newly created position of winter sports equipment national sales director for Amer Sports in the U. S.

Quiksilver appointed Michael A. Clarke to its board of directors, expanding its board from eight to nine members.

Dick's Sporting Goods, Inc. announced that Andre J. Hawaux will join the company in June, 2013 as EVP, finance, administration and chief financial officer.

Fanatics, Inc. named Ryan Donovan as vice president, marketing.

Columbia Sportswear Company appointed Shawn Cox as senior vice president of retail, a newly created position that will report directly to president and CEO Tim Boyle.

Raleigh Bicycles hired Alan Rowland as their new director of sales for the West territory.

Team Express, the online seller of team products, has bolstered its management team with the appointments of Greg Barbour as chief operations officer, Ben Marney as vice president of merchandising and Dan Shepler as product manager.

Sanuk, a division of Deckers Outdoor, said that Jeff Fitzhugh has joined Sanuk as vice president of sales for North America.

Native Eyewear hired Kate Heckman as their new consumer marketing manager.

Steiner, the maker of sporting optics, appointed Tom Frane as VP of sales, marketing and business development for North America.

Chums and suncare products maker Beyond Coastal named Matt Patterson as national sales manager.

MOVERS & SHAKERS

NEWS

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Altra Zero Drop Footwear, which has carved a niche with its zero drop yet fully cushioned running shoes, is introducing kids shoes. The Instinct Junior collection comes in youth sizes one through six and is set to debut in July.

Golden Harper, Altra’s founder and brand manager, said the shoes aren’t necessarily designed to get kids running, but will certainly help them run later in life. He said that most adult foot issues can be traced back to their youth when they were wearing shoes that deform and weaken the feet by pushing up the arch, raising the heels, and squeez-ing the toes out of their natural position. For Altra, the aim in bringing out kids shoes is to allow for healthy foot development.

Said Harper, “The big goal here is to get a child’s foot to be in its natural foot position so that it can develop properly without being bound, crowded or deformed.”

Like its adult models, the Altra kids’ collection features a zero-drop heel-to-toe dif-ferential to encourage a more natural midfoot or forefoot strike yet still provide enough cushioning “for kids to run miles in them,” said Harper.

The shoes have no extra arch support that can also impact development. Harper noted that the only reason a young foot would need arch support is if they had some initial structural deformity or if their feet had been weakened already by excessive arch supports.

Finally, the kids’ shoes feature Altra’s distinctive larger-than-average toe box that fol-lows the natural shape of the foot, providing enhanced comfort, increased balance and stride efficiency. The youth-specific toe box came after Altra designers scanned and traced the shoes of kids with healthy feet. Altra believes running shoes with narrower toe-boxes compress toes together, causing forefoot pain, bunions, shin splints and over-pronation.

Recognizing that parent’s are reluctant to spend too much on a shoe that will wear out quickly or be outgrown, Altra’s kid’s line is coming out at a budget-friendly $49 MSRP (initial color range covers blue, pink and red).

With the brand being founded by ultra-runners, Altra’s kid’s line provides enough sup-port for running long distances and beyond. “Obviously it’s an Altra product so it's built to be able to run,” said Harper. “But if they want to wear it to school or around town, it’s the most healthy thing they could be wearing to help their feet develop properly.”

Founded in 2009, the Logan, UT-based company was acquired in March 2011 by Icon Health & Fitness.

ALTRA BREAKS INTO KIDS

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Asics America Group, which includes the U.S., Brazil and Canada, reported net income increased 16.1 percent in its fiscal year ended December 31. Net sales for the year were up 13.2 percent and op-erating income rose 41.4 percent.

In a statement, Asics America said the fiscal year increase was largely driven by strong sales in the footwear category, including the newest addition, Asics Natural 33 collection. Additional growth in emerging categories such as tennis, and penetration in apparel and accessories, also played a role in Asics America's financial progress for 2012. Its volleyball and wrestling categories in the region also found success.

Asics America said it's on pace to show continued growth in 2013 and on track to reach its billion dollars sales goal by 2015.

“As Asics continuously pushes the limits and expands its product offering beyond running, we see the growth and potential to further penetrate new categories,” said Asics America's president and CEO Kevin Wulff in a statement. “We are thrilled to see the early traction we are already receiving in rising markets and it is a testament to the award winning, athletic performance products we offer.”

Overall, Asics Corp reported revenues rose 5 percent to ¥260.2 billion ($2.6 billion). Domestic net sales increased 1.7 percent to ¥94.1 billion ($951.8 million), mainly due to strong sales of running shoes in spite of weak sales of baseball wear and equipment affected by the unity of the Asics brand. (As an organizational restructuring of the domestic group, Asics Group at the start of this calendar year split its businesses in Japan from the global headquarters function and transferred them

to Asics Japan Corporation and Asics Sales Corporation.)Overseas sales increased 7 percent to ¥166.1 billion ($1.68 billion)

due to strong sales of running shoes in the Americas, Europe and the other regions.

Companywide operating income fell 4.9 percent to ¥18.7 billion ($188.8 million) because of the recording of commission paid to dis-tributors as commission fee in line with the recording of net sales at the sales price-to- end consumers at the Korean subsidiary, in addi-tion to an increase in personnel expenses.

In its major regions, sales in the America region reached ¥67.1 billion ($678.8 million), up 13.7 percent in Yen and 13.2 percent on a currency-neutral (c-n) basis. Operating income reached ¥4.8 billion ($48 million) against ¥3.7 billion on a recorded basis.

In its home market of Japan, revenues rose 4.8 percent to ¥114.4 billion ($1.16 billion). Operating profits were down 23.9 percent to ¥4.3 billion ($43.5 million).

In Europe, sales inched up 1.3 percent to ¥61.8 billion ($625.7 million) but advanced 8.9 percent on a c-n basis, thanks to strong sales of running shoes. Operating profits were down 5.7 percent to ¥6.6 billion ($67.1 million) mainly due to a rise in purchasing costs, in spite of a decrease in advertising expenses.

For the current fiscal year ending March 31, 2014, Asics Corp. forecasts consolidated net sales of ¥305 billion, operating in-come of ¥22 billion, and net income of ¥13.5 billion, representing gains of 17.2 percent in sales, 18.3 percent in operating income and 2 percent in net income.

ASICS AMERICA DELIVERS DOUBLE-DIGIT GROWTH FOR THE FISCAL YEAR

NEWS

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ECCO LAUNCHES ‘THE BETTER RUNNING INITIATIVE’ CO-CREATION PLATFORM

Danish brand Ecco has launched “The Better Running Initiative,” a global online program through which runners participate in experiments, provide feedback and share ideas that will lead to the brand’s first user-generated shoe. Hosted in the virtual “Better Running Lab,” the online community currently boasts more than 100 active members including journalists, professional athletes, industry insiders, brand ambassadors and others who share a passion for running. Each has received a complimentary pair of the Biom Evo Racer and is participating in experiments suggested by Ecco. Their observations will be incorporated into upcoming collections, with the goal of developing a user-generated model for Spring/Summer 2015.

“We’re getting valuable information from athletes with different running styles and performance levels,” said Alexander Nicolai, head of the Sports Business unit at Ecco. “Because we own the entire shoemaking process, we have the flexibility to respond to their comments in the Lab on everything from the material choices to the design, structure and assembly process.”

Initially invitation-only, the Better Running Lab will be expanded in coming months with applications accepted via the “Sign Up” button at betterrunning.ecco.com. Testing covers a wide range of key areas such as how comfort, fit and flexibility impact performance.

Launched Spring/Summer 2013, the Biom Evo Racer weighs 240 grams/8.5 ounces (men’s size 41). Crafted to encourage a smoother stride and powerful push off, fea-tures include a naturally-shaped last, low-to-the-ground platform, glove-like second skin fit and bio-mimicking anatomical support.

Bergans of Norway's new packaging for its wool base layer program was awarded the Norwegian "Award for Design Excellence” (Merket for God Design) by the Norwegian Design Council in Oslo last month.

"This Award goes to the most innovative and courageous companies and designers we have in Norway right now," said Thea Mehl, project leader at the Norwegian Design Council.

Packaging for the Bergans wool base layer collection consists of an inner box made of recycled card stock, covered by a bag made of Tyvek - a synthet-ic fabric of flashspun high-density polyethylene fibers made by DuPont. The bags are extremely strong, tear resistant, lightweight and can be re-purposed as a stuff sack. The texture of Tyvek makes it easy to find in a backpack and is also recyclable.

The jury of the Norwegian Design Council emphasized the possibility to re-use the packaging after buying the product, its special feel and its use of color codes to help consumers identify the different base-layer weights offered.

Bergans’ wool base layer collection was launched in Fall 2012 and is made of 100 percent Merino wool. In North America, the line is available in several styles for men and women in 150- and 210-gram weights.

Bergans was established in 1908 when Ole Ferdinand Bergan invented the first anatomical backpack. Today backpacks, outdoor clothing and tents are part of its portfolio, as well as the Ally brand of packable canoes. Adventur-ers such as South Pole explorer Roald Amundsen, Mount Everest pioneer Sir Edmund Hillary, and Polar explorers Rune Gjeldnes and Cecilie Skog use Bergans equipment on their expeditions. The company is based in Hokksund, Norway, where 90-plus employees work in development, research, design and sales.

BERGANS OF NORWAY BASE LAYER PACKAGING WINS EUROPEAN DESIGN AWARD

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2XU, the maker of performance athletic apparel based in Australia, opened its first-ever retail Performance Center in North America.

Located at 1512 Montana Avenue in Santa Monica, CA, 2XU Mon-tana represents the brand's first retail store in North America, and the beginning of numerous brand-building initiatives to support sales growth through all retail channels including wholesale and online.

"Since our North American debut in 2006, athletes from San Diego to New York have responded to our brand with exceptional enthusiasm," said 2XU co-founder and director of sales and marketing Aidan Clarke.

"We're thrilled to be extending our brand experience to the retail level in this critical market," said Clarke. "This is a milestone in the life of 2XU, and the start of bigger things ahead." Following an initial focus on the Southern California region, 2XU will set its eyes on additional retail locations across the nation.

Located in the heart of Montana Avenue, one of Los Angeles' pre-mier shopping destinations, 2XU Montana is minutes from the ocean amid 150 premium boutiques and restaurants. The 1,400 square foot store echoes 2XU's sleek, innovative and technical brand aesthetic with a modern, intelligent design, layout and furnishing to enhance the consumer shopping experience.

2XU OPENS FIRST U.S. STORE 2XU Montana will carry 2XU's full range of Run and Fitness ap-

parel as well as the brand's Compression, Triathlon, Cycle and Swim collections. The store will also play home to 2XU run groups and educational performance sessions encompassing health, nutrition and wellness.

"The 2XU brand is at a tipping point in North America,” said Doug Vargo, 2XU North America Chief Operating Officer. “In elite sporting circles, we currently boast enviable acclaim for unparalleled quality and technical excellence, and 2XU Montana will enable us to extend our reach to the broader fitness consumer."

With a relentless commitment to engineering world-class garments from fabrics delivering tangible benefits to the wearer, 2XU sets the benchmark in high performance sports apparel. Ongoing testing, re-search and consultation with professional sporting bodies, is integral to the brand's winning formula.

Founded and based in Melbourne, Australia, with North American Headquarters in Carlsbad, CA, 2XU is also the exclusive Official Com-pression Supplier to the Australian Institute of Sport, Ironman, the U.S. Ski and Snowboard Association (USSA), US Ski Team, US Snowboard-ing, US Freeskiing, and the USSA Center of Excellence. ■

By Thomas J. Ryan

RETAILER FOCUS

Photos courtesy 2xU

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with its deep footwear roots. But he wanted to talk about Saucony’s bright prospects that have resulted from a relentless commitment to innovation since he took over the brand in 2006.

“Saucony has never been better positioned to achieve our goals, including becoming the leading brand at the all-important run spe-cialty channel,” said Woodworth.

Prior to Saucony, Woodworth held posts as president of Tommy Hilfiger Footwear, CEO of Greg Norman golf collection, and president of National Hockey League Enterprises. He was a member of the U.S. Ski Team from 1973 to 1976 and a top ranked American on the World Pro Ski Tour for several years. Here, Woodworth discusses the merger with Wolverine and Saucony’s ongoing momentum.

How does the merger impact Saucony? Where we would gain the most in terms of the synergies that everybody likes to talk about are probably three things:

• First is with 16 brands within the context of Wolverine’s com-bined portfolio, we’ll be doing a significant number of pairs in the sourcing world. It creates a different leverage for us in Asia. It doesn’t necessarily mean we’re going to be able to walk in and say, “We want a dollar off all of our shoes!” That doesn’t happen. But there are ways that we, as a group, can work to potentially level load a factory or create other efficiencies where we couldn’t before. That takes pressure off the factories and we become a more efficient and better partner for them.

• Second, we have an ability to share best practices where it makes sense. We’ll certainly share how we look at the world and how we view certain things together.

• And then, addressing our pool of talent. When you have a brand

Richie WoodworthPresident, Saucony

Saucony has been growing revenues at a healthy double-digit clip for the last few years but in 2012 found itself for sale as part of a financial review by its former parent Collective Brands.

Saucony, along with Sperry Top-Sider, Stride Rite and Keds, found a home at Wolverine Worldwide, whose lineup already included Merrell, Hush Puppies, Sebago, Wolverine, Cushe and Chaco. Two private-equity firms acquired the Payless ShoeSource and Collective Licensing International side of Collective Brands.

Richie Woodworth, president of Saucony, certainly recognizes that the running brand will benefit from an even larger parent

SGB PROFILE

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like ours that’s grown quickly and you’ve got a young team with aspirations, in some cases, they’ll have more opportunities to develop without having to pick up and move to a different com-pany.

No sharing technologies, reps or marketing pushes with a brand like Merrell that’s also in the run space? Not really. One of the great things that Blake (Blake Krueger, CEO of Wolver-ine Worldwide) does is celebrate the independence and independent culture of each brand. Anytime you put 16 brands under one roof there’s risk and reward in it. I think the independence allows him to manage the risks better by spreading that risk across 16 brands.

However, there are also certain lines that we wouldn’t cross with regards to sharing and implementing the individual brand playbooks across other brands. We’ll share our experiences and help each other stay out of trouble, but there will be firewalls keeping every-one honest. With regard to Merrill, there’s the obvious crossover with Saucony in the outdoor trail running space, but they certainly don’t need our help. They have carved out their own positioning and prod-uct, which is very different than ours. We’re just starting to become good friends and neighbors and, in some ways, we will certainly be friendly rivals, which is always fun.

How is Saucony performing? The team at Saucony can be in-credibly proud of what they’ve accomplished over the last six years since the initial sale to Stride Rite Corp. The evolution and progres-sion in the brand has been phenomenal. I believe we’ve become an innovation driven company that’s helping lead the marketplace in a number of different areas − not only with product, but also in the digital marketing reach that we’ve gained. In the last six years we’ve never had a negative year, and we’ve achieved 16 straight quarters of double-digit growth.

How was 2012? In the first half of last year, we had a little bit of a pause. We still saw growth, but it represented a slowdown from the accelerated growth we’d been experiencing as well as being below our plan. We were going through a transition in our product. We were moving from a long held industry belief that 12mm heel-to-forefoot variance was perfect for every runner, to a different philosophy − which was to reduce that offset, allowing for varying offsets for dif-ferent runners and creating a better experience across the spectrum of all runners. We were applying the learnings from the Kinvara and our other natural motion running models to our franchise models. And I’m not sure everyone loved our change at first.

I call it a pause because once consumers started coming and go-ing, ‘Hey, I want to try that 8mm thing,’ and started talking about that, we were off and running and the second half of last year was phenomenal for us. This third quarter saw high teens growth and the fourth quarter was better than that. And we carried that into 2013

with first-quarter sales up in the high-teens again. The acceptance of our running-centric product innovation has been terrific and con-tinues to show positive results.

Are the franchise models or natural running side driving the growth? It’s the two together. Both of our Natural Motion Series − the Kinvara, Mirage and Virrata − and our franchise models are driv-ing growth. On a percentage basis, our product as a whole is seeing the fastest growth in sell-through at retail in run-specialty at nearly twice the rate of the next leading brand over the trailing three months and our sporting goods business is also very healthy.Much has been made of Five Fingers slowdown. How has your natural running side been performing? It’s still growing but it’s slowed down. The velocity that was there in the last couple of years is certainly not there now. I think that the extreme always gets weeded out over time. That happens with any trend, though I hate to call it a trend because I think there’s a real basis of support for what the category represents.

For example, we believe we have addressed the category in a runner-centric way with the Virrata by offering an option for zero drop shoes while also providing 18mm of cushioning, which is the same as our Triumph or our other franchise models. We’re offering tremendous flexibility in an extremely lightweight package, while not getting in the way of how the foot naturally moves or the biomechanical gait cycle. Yet we’re still providing what running shoes should provide. We’ve covered that with a series of products that includes the

Mirage, which offers a little bit of guidance; the Viratta, with great flexibility in a zero drop; and the industry leader with the Kinvara, a 4mm natural motion shoe that let’s your foot move naturally while still providing a little bit more support. The Kinvara’s inspired enduring popularity with a cult-like following. We have a real obsessive consumer base that follows that shoe.

What launches are you excited about for the current year? We believe we have a huge opportunity in the neutral category. Our Triumph was one of the first shoes that changed to 8mm and it’s coming up for its first remake set for November. We recently updated the Ride, also in the neutral category. It has more toe spring and a little faster design. That is a significant launch for us.

Triumph

Kinvara

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Also for November, we’re excited about the Guide 7. Since the Guide launched in 2008, it’s been twice award-ed ‘Shoe of the Year’ by the Independent Running Re-tailer’s Association, named

Runner’s World ‘Editor’s Choice’ and Runner’s World ‘International Shoe of the Year.’ For the seventh iteration, we’re incorporating many of the things that we’ve done around our 8mm platform, including reducing weight and adding our PowerGrid cushioning technology to the full length of the midsole. We believe there’s been some stag-nation in the light stability silo that’s been dominated by two shoes with not much newness to them. We think we’re poised to attack the status quo in that silo.

How is Saucony doing in apparel? After five years in the apparel business, we’re now the fourth brand in the category. Although it’s been difficult industry-wide, we’re committed to it. As an industry, we haven’t proven that we can keep, attract, and retain a consumer looking for running apparel or active apparel. At Saucony, we recog-nize that we need to be able to cross the bridge at being both func-tional and fashionable. We do great providing wicking and climate-controlled features, but do they hold a print well? Do they color well? How is the hand on the fabric? The versatility of apparel is something that’s going to become more important. From a vendor perspective, we have to make sure we’re supporting our retail partners in provid-ing the right kind of tools and opportunities from a merchandising standpoint to help them be successful. Stores need to be freshened up on a quicker basis. If a woman runner is coming in every 300 or 400 miles, and she sees the same apparel on the rack as when she came in the last time, that’s not interesting for her. We also can’t just hang things on rounders and expect that to be appealing. Fleet Feet Savannah, GA and Fleet Feet Chicago are among those doing a great job separating the apparel buying experience from the foot-wear wall. And when a store does well in apparel, it helps footwear sales. A brand engages the consumer at a different level when it can go across categories.

What else is working for Saucony? Everything starts with prod-uct. That’s one of the great things about our growth. It’s just the world we live in. Our voice in the marketplace is much different than it was ten or even six years ago. We’ve found a voice around ‘Find Your Strong’ and the idea of empowering the human spirit through running.

Marrying that with the ‘Find Your Strong’ project lines up naturally through our use of digital. How we create that dialogue and engagement model for our consumers is an important and dynamic piece in how we’re growing. We have 500,000 Facebook fans,

including 300,000 plus in the U.S., and that’s bigger than most of our competitors with the exception of the big athletic brands. And that’s not a one-way dialogue. We’re not talking at them; they’re talking to us and we’re talking back. It’s not only supporting them physically through great product but also emotionally by enriching their running experience. We’re continually establishing relationships with our brand.

Who is the Saucony customer? Historically Saucony has been a strong women’s brand. The gender split has changed over the last few years, and I think we needed to. It wasn’t that we marketed to women, but we were known for a fit that was narrower in the heel and wider in the forefoot - fitting women well. That model has been shattered as we opened different lasts and created different fits.

We look at the running consumer in three buckets: The first is the dedicated runner that we’re especially focused on. These are the runners that will be out there in the marathon − more towards the front than the middle or back. Then there is the ‘new school runner,’ for lack of a better term. That’s a runner who’s engaged; it’s part of their life and lifestyle, but they’re not going to win a race. This runner fits nicely into the rising popularity of all of the fun runs and charity runs, and that’s the biggest piece of the market now. Finally, we look at the scholastic athlete. We believe the cross-country and track and field kid today is tomorrow’s future for us and also im-portant to the fabric and future of the running community. We want them in our brand and that’s why we have the number one share in cross-country.

Some are heralding Saucony as Wolverine’s first true athlet-ic brand. Will Saucony be exploring other categories? We’re a progressive company. We’ve learned from studying running and the biomechanics of human motion and movement that could also be applied to other categories. Just think of a soccer player running seven miles during a game or a tennis player moving back and forth.

Yet how and when we decide to extend our offering is just as important as what we would do. One of the great sections in Steve Jobs’ book is where he talks about how clarity and focus can come from the things you say ‘no’ to rather than all of the things you say ‘yes’ to. He said, ‘I'm as proud of what we don't do as I am of what we do.’

For us, we know we have an incredible opportunity with great room for expansion in the running category. If we can stay laser focused on that and grow and nurture that, then we’ll blow away where we are at today. There’s certainly a long road ahead of us until we’re ready to break into new categories. We’re not just a team of incremental thinkers; our capacity to think innovatively allows us to see the huge opportunity in running. But it’s our clarity and fo-cus that will drive the new products, new markets and continued growth for us. ■

Guide 7

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Contact Jeremy Freed at 303.997.7302 or email [email protected].

REACHING THE MOST CONNECTED, BEST INFORMED, AND HIGHEST

CALIBER PROFESSIONALS IN THE ACTIVE LIFESTYLE MARKET

THE INTERSECTION OF CAREER AND LIFESTYLE

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16 SGBWeekly.com | MAY 13, 2013

Asics America is introducing a new line of footwear, apparel and accessories created specifically for the athletic training market.

The effort is backed by a national adver-tising and integrated marketing campaign built around the concept of "Next" - the mo-ment when an athlete pushes their limits to achieve their goal and immediately focuses on the next challenge.

"The extensive Asics training collection demonstrates our commitment to a rapidly growing category, offering a full range of ev-erything from the studio to hard core train-ing. Furthermore, it reinforces our dedication to providing athletes with the best tools they need to advance in their sporting goals," said Asics America director of marketing, Shannon Scott. "The accompanying market-ing campaign, titled 'Next,' points to the con-tinuing evolution of Asics as a brand while reinforcing its core message of continuous improvement."

Asics said products in the new collection are designed to withstand the strenuous and repetitive nature of training routines. All items in the collection offer the "perfect mix of high design, technology and perfor-mance" to help athletes move ahead to their next training challenge.

In footwear, the training collection to launch Fall 2013 includes:

• The GEL-Fortius TR for variable cross training. The shoe includes a super sticky outsole and reinforced toe bum-per to prevent wear and tear during in-tense, short interval workouts.

• The GEL-Synthesis with an innovative inner slipper that can be worn alone for a more barefoot training experience.

• The GEL-Craze TR for running-based training. The new shoe uses a rearfoot feature with positioned flex grooves for optimized flexibility.

• The GEL-Rhythmic 2 for the dance en-thusiast.

• GEL-Sustain TR is one of the lightest training shoes on the market today. A lightweight supportive upper combined with an ultra-flexible midsole and rear-foot GEL(R) Cushioning System.

• GEL-Blur33 TR designed for flexibility in a lightweight and supportive pack-age, featuring lateral support and cushioning.

On the apparel/accessory side, the train-ing initiative includes the Abby Collection

NEXTASICS RAMPS UP TRAINING PUSH

for women and the All Sport Collection for men.

A new high-energy TV spot will run during national broadcast sports pro-gramming, including the NBA playoffs on ESPN and Turner networks. In the "Next" commercial, a variety of Asics Elite Athletes advance through their training moves while wearing the new collection. Olympian Lolo Jones flies across asphalt tethered to a parachute, while Olympic decathlon medalist Bryan Clay wields a ham-mer for strength training. Shot put competitor Russ Winger conquers the free weights and new Asics ath-lete, performance-training aficionado, Rosario Rios-Aguilar, commands the rings. All athletes push their training efforts to the next level, accompanied by the folk tune "What's Next," writ-ten by advertising creative director, KT Thayer.

Complementing the national televi-sion spot will be a full digital and print campaign. The mobile, experiential program will launch this summer. More details on the Asics training initiative are available at asicstraining.com. ■

To view the What's Next? TV spot, click play

By Thomas J. Ryan

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18 SGBWeekly.com | MAY 13, 2013

By Thomas J. Ryan

Adidas’ running category is off and running at the start of 2013, thanks to a strong response to its Energy Boost cushioning technol-ogy. The collection helped drive Adidas’ global revenues in running ahead in the first quarter by 12 percent.

On a conference call with analysts, Herbert Hainer, Adidas Group CEO, heralded Boost as the “most successful running launch ever, with many markets almost completely sold through in the first four weeks.”

Hainer added, “There is absolutely no reason to doubt that Boost is the most significant innovation the market has seen in many years.”

Record-breaking pre-sales were also seen around Boost’s launch on its e-commerce platform, three times more than any footwear model before. The cushioning technology, currently incorporated in three running models, also won Runner's World's Best Debut; Run-ning Network's Best New Shoe; Shape magazine's Best Cushion-ing awards; and “MJ Approved” designation from Men’s Journal. On the road, Adidas’ elite athletes are racking up medals wearing Boost products, including Dennis Kimetto winning the Tokyo Marathon in a course record in the Adizero Boost.

“With more volume coming in the second half of the year, we are only getting started with our running revolution,” said Hainer. “Through further launches of Boost and several other new technolo-gies we have in the pipeline, we are creating new territory and mar-ket share potential for the Adidas brand, which I am convinced will lead to several years of double-digit growth in the footwear industry's most important category.”

In the U.S., the launch on February 27 has solidified Adidas’ posi-tion in the run specialty channel, according to Chris Brewer, running manager, Adidas America. Of the roughly 225 doors involved in the tight U.S. launch, 165 were run specialty stores. By Boston Marathon

ADIDAS RUNNING GETS A BOOST

Adizero Boost

Adizero Boost

Adstar Boost

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MAY 13, 2013 | SGBWeekly.com 19

weekend less than three weeks later, the line was 75 percent sold out across the majority of run specialty stores, he said.

“Frankly, it’s been a break through,” said Brewer in Boston on the Saturday before the Boston Marathon.

Boost’s success comes after the mega-brand spent much of 2010 and 2011 focusing on improving service levels, both in backend processes such as shipping accuracy and increasing investment in tech reps in the field. It now has 25 running tech reps, nicknamed ‘Adidas Gazelles,’ in the marketplace, double the levels it had previously served in the run specialty channel. Additional hires are planned.

With the service issues fixed, Adidas recognized in 2012 that it still needed game changing technology to break through the positioning of the more entrenched brands in the channel as well as the excite-ment around newer brands in the crowded category. With Boost, it feels it has one.

“The sell through has far exceeded everyone’s expectations, in-cluding retailers,” said Brewer. “We’ve got retailers who have never come close to sniffing that type of sell through from us. The worm has turned as far as what they expect from us.”

The foundation of the Boost innovation is centered on its cush-ioning material. Based on a development process first created in 2009 by BASF, solid granular material (TPU) is literally blown up and turned into thousands of small energy capsules which make up the footwear’s distinctive midsole. With their unique cell structure, the capsules store and unleash energy more efficiently in every stride. At its launch event in New York City, Adidas officials boasted that the technology might one day replace the EVA midsole.

Indeed, particularly helping the launch was Adidas’ requirement that stores participating in the launch feature point-of-purchase materials demonstrating the energy returning properties of Boost. A steel ball dropped on Adidas’ new cushioning versus traditional EVA illustrated the responsiveness of Boost foam.

Mikal Peveto, director of running, Adidas America, said that more so than consumers, Boost’s success in run specialty occurred initially because the stores’ staff began believing in the merits of Boost’s cushioning benefit as well as the Adidas brand again.

“It flipped the mindset,” said Peveto. “If you have a neutral foot, associates will always bring out ‘Brand X’ and ‘Brand Y’ that are the best sellers, and then they’ll bring out a third as well. And now we’re that third shoe. And on a fit test, we stand our ground and have a real good chance of winning. Once you take a couple steps or jump on a treadmill, you can feel the difference in responsiveness. But for me, the biggest thing was getting on the radar screen at run specialty as a viable option.”

Now, with praises from running magazines and more runners en-joying the experience of Boost, word-of-mouth at the consumer level is taking demand a step further. Said Brewer, “We’ve heard anec-dotal comments like, ‘I can’t wear anything else’ or ‘I’ve tried my old shoe after running in these and I can’t go backwards any more.' It sets a new expectation for what runners will look for in shoes.”

Due to the response, Adidas has had to accelerate some color

launches, including a fifth color launch just shipping into the market around the time of the Boston Marathon. Management admits that overall growth is somewhat constricted with BASF ramping up supply to help restock doors that participated in the launch.

A fairly conservative rollout of Boost is now being planned to support demand. In July, Boost will be expanded from the 55 Dick’s Sporting Goods’ doors that participated in the launch to 100. It will also reach 100 Foot Locker and Finish Line locations each and a few doors at The Sports Authority. Another hundred run spe-cialty doors will also receive their first shipments. Brewer said Adidas would keep the collection’s reach limited “to make sure we maximize the opportunity without overselling the market.”

On August 1, the Adistar Boost, a stability model, will be launched at 170 run specialty stores. On October 1, adizero Adios Boost, a lower-profile racing model, launches, also solely in run specialty.

For August, Adidas will deliver what it hopes will be another head-line - grabbing run technology with Springblade. But Adidas is also just starting to extend Boost across its running platform with plans also calling to expand it to basketball, training and even its Originals casual collections over the next few years.

Peveto said that in the run channel, the continued success of Boost on the footwear side would increasingly support Adidas in the apparel category, where Adidas has a much richer history as an innovator than most of the other running brands in the space. He also believes that with prices heading north, technology is becoming more important as part of the purchasing decision around running shoes, an advantage for a visceral innovation such as Boost. Said Peveto, “Prices are going up so runners are going to say, ‘Give me something unique and different if you expect me to pay more.’ It’s not just going to be color.”

Peveto admits that Adidas now faces the chore again of explain-ing the technology to the next group of stores, even ones with less knowledgeable and dedicated sales associates, as well as to that next level of consumer; but he feels fortunate Boost has already resonated with the first level of core run specialty accounts.

“My biggest fear was being the nice guys that can’t deliver,” said Peveto, “Now they see that, ‘Wow, all the stuff is now working on the backend. And they have Boost.’ So their confidence level is high. They’re saying, ‘I’m going to look at these guys differently.’” ■

Mikal Peveto, director of running, Adidas America

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20 SGBWeekly.com | MAY 13, 2013

San Francisco Running Company opened its doors on January 30, 2013, and from its first group run that Saturday February 2, with more than 50 hard-core enthusiasts on hand for the event, the shop immediately became a hub for Bay Area runners.

Owner Brett Rivers jumped at the chance to open the shop after four tough years in the Bay Area tech world. When his company went public, he jumped. “Ultimately the timing was right for me to move on and start a new business, and run with the entrepreneurial skills that I gained from my time in the San Francisco tech scene,” Rivers said.

What first drove you to get active in the outdoors? I was fortunate to have parents that headed outdoors just about every weekend. I loved to camp, hike, bicycle and fish throughout the foothills and Sierras in Northern California.

What sport was your favorite as a kid? I was probably best at soc-cer and was captain of our high school team. At UC Davis I played club lacrosse and that was a perfect balance of competitiveness and com-munity while still balancing work and school.

What were you like as a young person that set the stage for your career? I loved to explore the trails at the places where we would camp growing up. I would love to find each and every one of them now to go back and experience them through running.

How did you get started in the sports business? I opened a run-ning store that combined my strong passion for running with my strong work ethic and desire to build a true home for the San Francisco Bay Area runner.

What’s the best job you ever had? I spent two years in the North Pole, Alaska, working for my uncle’s lumberyard, Rivers Wood Products. I had a blast there and learned a lot about running a small business. I look back on those experiences, how he was able to grow his business over 25-plus years, and how he is able to strongly compete with the big box stores by focusing on quality products and customer service.

What do you love about working in the sporting goods industry? Entrepreneurship is a rush and I am incredibly passionate about running so it’s really rewarding to be able to work in an industry that I care so much about. We have a great team at San Francisco Running Company. Our GM Jorge Maravilla and head tech rep Victor Ballesteros are huge assets and we have a shared vision for what we are trying to build.

Who is the business person you most admire? The earlier genera-tions of my family are pretty much all small business owners and I am made up of the same blood; I admire them all. There is also my close friend Thomas Reiss who started and owns Kraftwerk Design, a fantastic graphic design firm down in San Luis Obispo. Thomas has a great story of how he came to the U.S. and built his business over time. We share a lot of the same passion for quality as well as frustrations with stagnant design and uninspiring product offerings.

If money was no concern, what would you be doing? You are looking at it. Money is a concern, but it is not my reason for starting a business. If you build a unique, customer-service focused business that is different from everything else then the money will come, but money should not be the driving factor. Money is one metric of success but it is far from being the goal.

What is your advice to someone looking to work in the sporting goods industry? Be active and be different. If you are out running, camping, cycling, whatever it may be, and you have a moment where you have a killer idea for a product or service then start getting ideas down on paper, work on a small business plan to see what the numbers would be to make it work, and run with it. However if you just copy what already exists then you will be reduced to only compete on price, which can be a downward spiral. There is a lot of junk out there. Build some-thing unique and of high quality that has an engaging story behind it and you will succeed.

BRETT RIVERSOwner, San Francisco Running Company

I AM... SGB

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MAY 13, 2013 | SGBWeekly.com 21

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