2014 Outlook: Cautious Optimism Found for 2014

With the arrival
of a chilly temperatures for the first time in two years helping provide a lift
to winter categories in December and early January, the sporting goods industry
apparently closedthe year with more of a glass-half full outlook than the last
few years.

The hope
is the weather stays seasonally cold for a few more weeks to clear out winter
stocks to avoid the deep promotions required in past years, according to interviews
with several industry execs and insiders reached by SportsOneSource’s editors.
Clean winter stocks not only promise set the stage for strong early spring
sales but may provide some comfort to many a buyer looking at fall/winter
categories heading to January’s trade shows.

On the
macro-side, the roaring stock market as well as improvements in housing starts
and employment rates are also supporting the somewhat brighter view. Some are
encouraged by the resiliency seen in core activities such as running, yoga and
several outdoor categories, as well as an overall zest by many people to
workout and get fit. The excitement around wearable technologies and other
innovations promise to keep new and exciting merchandise coming to selling
floors. The World Cup and Winter Olympics will also provide an opportunity to
shine a light on key categories.

Not that
the industry doesn’t have concerns. For specialty stores, they include
distribution issues to help avoid price competition against the big boxes and
online shops. As always, the never-ending worries include whether the economy’s
recovery continues, the weather continues to arrive, and the innovation arrives
and dazzles.

Ken
Lombardi, CEO, Lombardi Sports: Holiday 2013 was full of surprises – good and bad. The bad
– worst winter in terms of water and snow since 1850 (the first year the California
Department Of Water Resources started tracking). The good – the Dow Jones is at
16,500. Social media is at the forefront of the charge. San Francisco/Bay Area
is in a bubble. So this all lead to sales being
flat. If we had any kind of weather, we would be up…Looking ahead to 2014, if
we get some rain/snow, sales should be good in the first quarter. Spring/summer
should be good as well, as long as the bubble doesn’t burst. Sorry I had to go there! I like to take the
optimistic view. The realistic view – the sporting goods retailer has some
tough challenges. All our equipment (bikes, skis, boards, racquets, gloves,
etc. ) are being showroomed (people try out and shop in/purchase online.) At
the very least this all leads to erosion of gross profit margin. Lombardi Sports  policy is to price match.

Matt Lucas, president, Luke’s
Locker: “I think
the industry outlook for 2014 is solid with new footwear and accessory styles
playing an important role in maintaining growth. I also think some new brands
will emerge as rising stars for the female consumer on the clothing side. My
concerns center around distribution. I don't see many of the brands having a
compelling plan to properly segment their products in the different markets of
big box and specialty retail. I also think brands are struggling with this same
issue online. I am optimistic about how we can infuse our personalized customer
service model with new technology.” 

Brian Curin, President of Flip
Flop Shops: “My
outlook for 2014 is a positive one. I see consumer wallets loosening up a bit
more than they did this past year, however I don't see consumers spending more
for the sake of spending more, but more on basics with a focus on quality over
quantity… Flip Flop Shops is forecasting significant growth in 2014 in both
same-shop-sales and as a system. Most of this will come from really getting
focused on the critical drivers that make a successful shop, including
location, product knowledge and customer service, inventory and merchandising,
and local shop marketing.  Our mantra
this year is “More In The Door!”  We are
also working closely with our core brands to make sure Flip Flop Shops is the
most knowledgeable and has best brand ambassadors in the industry.  We are also challenging our core brands on
working together to drive more customers and fans of their brands into our
doors…Global influence will be big in 2014 as well. We will see many new brands
emerging in North America from key markets that I consider to be hot beds for
undiscovered trends, brands and products like Latin America, United Kingdom,
Spain and the Middle East.  These
influences will become apparent in fashion, footwear, food and more.”

Dan Sheridan, VP, general manager
North America, Brooks Running Company: “I’m extremely excited about what Brooks and Moving
Comfort have accomplished in 2013 and where we’re going in 2014. All the trends
in our industry continue to point to more people living an active lifestyle.
More people are running, working out, practicing yoga, signing up for CrossFit,
etc. than ever before. All of these activities help drive both Brooks and
Moving Comfort’s business…Trends in housing and auto sales also indicate
consumers are gaining confidence and that the economy is rebounding…I don’t
have specific concerns as I see great opportunity for us in the year ahead. At
Brooks and Moving Comfort we are spending a lot of time focusing on the
changing shopping behavior of the consumer. As we manage specialty brands that
depend heavily on the interaction at specialty retail, we are paying great
attention to the ever changing dynamic of the web and the brick and mortar
store.”

Tom Cove, president and CEO, SFIA: “2013 proved a tougher year than
anticipated but we are cautiously optimistic about our industry’s growth
prospects in 2014.  Several important
macroeconomic indicators suggest positive movement including housing starts,
overall construction, stock market appreciation and lower unemployment
rates.  We don’t see supply chain
disruptions like raw material price volatility and energy spikes like we’ve
faced in not-so-distant past.  But the
most important macroeconomic indicator we track is consumer confidence, and
that continues to move back and forth much more than we’d like.  That’s where the cautious part really kicks
in. Sustained positive consumer confidence would make all the difference…More
specific to our industry, we see pent-up demand for new products, which is why
the macroeconomic situation is so critical. 
People want to buy sports and fitness. 
Technology around products making it easy for individuals to maintain an
active lifestyle is hot, and the market will definitely prosper.  From fitness monitoring devices to
safety-focused sensors to new wearable technology applications, consumers are
welcoming sports and fitness innovation. 
And we see huge and exciting progress in building these new technologies
into a wide variety of sports products. Clearly another positive in 2014 is the
confluence of Olympics and World Cup. 
Historically, this bumps sales in the right direction, especially when
US teams and individuals do well!…By far our biggest concern is the alarming
rate of inactivity in America. This is a crisis.  Declining participation in overall physical
activity, including traditional team sports and physical education, must be a
clarion call for action by our industry. 
This is SFIA’s top priority and we believe it is in every single
person’s interest to support efforts like National Health Through Fitness Day
and PHIT America to increase physical activity across the country.”

Mark Lardie, CEO, Rack Room Shoes: “We continued to see that
innovation is critical, whether it's on the product side or the customer
experience. Our brand must lead and bring a clearly differentiated story to
market, and our local stores must be devoted to continually improving customer
experiences… The macro-economic outlook looks very promising going into the new
year. Our brand partners are telling engaging stories, while largely focusing
on product innovation. This, paired with new retail real estate opportunities,
has us optimistic for a strong 2014.

Bob Puccini, president, Mizuno
USA; chairman, SFIA:
“In general, I believe 2014 will show a slightly accelerated GDP growth rate vs
2013. The wealth effect from both stock market and housing appreciation in 2013
will help to some extent. However, the wealth appreciation was not so evenly
distributed across the masses, which might mislead some to believe that
“everyone” is doing well, or at least, better. Many are still
suffering low wages and /or long term unemployment. This, added with pressure
on increased (minimum) wages, as well as uncertainty related to the Affordable
Care Act, will create a bit of hesitation or conservatism in some organizations
who might otherwise be more aggressive as the economy seems to be “turning
the corner” through its own natural cyclical adjustments. A generally
heavy regulatory administration as well as a less than business friendly
approach might  “mute,” to some
extent, the recovery.  So, in general,
I'm cautiously optimistic about 2014, from a macro sense, but expect less than
“robust” growth or less than what it could have been in a more pro
business environment…Around concerns, as chairman of the SFIA, I'm proud of the
work our Board and staff as well as many others in and associated with the industry
have done to directly effect, and amplify the call for, greater commitment
among all industry constituents to promote participation in sports and fitness.
It's on the decline and threatens our industry. Lower participation raises
health concerns and costs associated with dealing with obesity and other
“non activity” related diseases, Lower participation creates
unfavorable societal effects manifested in many social issues from drug abuse,
to increased crime rates, to incarceration costs to lower academic performance,
etc.  This lack of societal productivity,
and, in fact the costs associated with these, also affects our ability to
invest in our military and national security, which should be cause for
everyone's concern. Further, lack of participation means less impact and
benefit from the core (intrinsic) values of sport and fitness, which have
favorably helped shape and drive our country's culture and values for decades.
There are many reasons for the deterioration in participation. Our challenge,
now, is to rally together, and in an untied way, to address participation
decline and its impact. We ALL have “EVERYTHING” at stake…We will
do our best to rally a collection of well-intentioned constituents and to find
ways to “coalesce” around tangible and beneficial initiatives that
can build success and “traction,” toward driving a turnaround in
participation. As some have said, we may not need to reinvent the wheel, just
get it rolling – such as rallying behind PHIT America, PEP, participating in
National Heath Through Fitness Day and others…What’s supporting my overall optimism?
Our entrepreneurial and competitive spirit, which built America, is alive and
well. Our love for our industry and belief in the benefits derived
therefrom.” 

Phil Bowman, president, Omega Sports: “We
were very pleased with our holiday sales and look forward to the next year. I
think the economy will be better in 2014 but that doesn’t mean that everyone’s
business will be better. The consumer has changed since the economic crash and
has been reprogramed in their buying decisions. I believe that the sporting
goods industry will be solid but each segment will have its own set of
challenges. Some key elements will be the Internet tax. Will that pass this
year and level the playing field. I really don’t understand this issue and why
it hasn’t been resolved. Give anyone a 7-10 point edge and they really have an
advantage. The other issue to me is the direct competition of the manufacturer
with their customers.”

Adam
Blumenfeld, CEO, BSN Sports: Our 2014 outlook is
strong. We’re investing heavily in vendor relationships that further separate our
company and salesmen from the competition and provide specialized services in
marketplace. Advancing technology is also helping us further streamline the salesmen,
vendor and customer experience. Other internal initiatives include expanding
our footprint in multiple categories of business to better serve local markets
as well as bringing out a new “pledge” to local markets in need of
our assistance. In particular, we have exciting lacrosse, hockey and women's
sports plans set for 2014. Hopefully the end to the government sequester
loosens pocketbook in this segment of economy, and the industry sees a benefit
from enhanced focus on keeping Americas youth fit through physical education
programs with a purpose. Overall, we’re looking for a good year ahead for BSN
with the aim of getting even better at what we do on front line and behind the
scenes. It’s time for us to really 'Make Our Mark.'

Mike Wallenfels, CEO, Timbuk2: “In 2014, Internet retailers
eager to grab at every possible sale will ante up to compete by offering
something even better than free shipping and free returns on all merchandise.
The only logical next step is to offer free product!…Also in 2014 the
American consumer, tired of simple SUP (stand-up paddleboard) yoga, will add another popular
fitness craze to jazz up their SUP experience by creating SUP CrossFit! Look to
stock up and package together kettle balls and old tires with that new SUP
board. Of course the mixing together heavy lifting equipment with an unstable
water craft will have some unique challenges to excite any committed CrossFit
junkie.”

Nando Zucchi, VP of sales and
marketing, SOG Knives & Tools: “We're very optimistic about the coming year,
particularly with our knives.  We've
heard from all of our key retail partners that the category is growing, and
among consumers the awareness and acceptance of knives as an everyday carry
item continues to increase.  Essentially,
the market rationale for buying a new knife has shifted from extreme survival
to simply good common sense.”

Russ Pitman, VP sales, Terramar: “Our outlook for the industry is
a positive one. This year after a long drought both the weather and economy
have cooperated. Retailers are having a strong fourth quarter with sales at
healthy margins compared to recent past seasons. Inventories are down both at
retail and with the manufacturers. Attitude is positive at all ends.

New
technologies will continue to be a big driver in product innovations. The
consumer is very interested in product technology and readily accepts and
expects it as they gravitate toward products with technology.

Technology
is also playing a major role with retailers and manufactures as the web
business continues to grow and both are looking at improved technology to take
advantage of what the web has to offer.

Monetary
policy and patrician divide dictated by the beltway politician could put a
damper on the recovery as the negative Washington perception is perceived as
the reality leading to a consumer pull back. Labor costs are rising and the ‘weak’
US dollar is having its effect but not discouraging.”

Dan Abrams, president, Flylow: “In the ski industry, if it snows
in Colorado in the fall and sets their resorts for good groomer skiing we
should see good sell through at maximum margin. 
This is the difference from 2013 to the past two years.  We need to end the closeout cycle and retrain
the consumer to make purchases at MSRP.”

Tom Boyle, strategic marketing,
W.L. Gore & Associates: “Overall, we are cautiously optimistic for 2014, with the
successful launch of the new Gore-Tex Pro products and the weather contributing
to good holiday sell-out. Continued economic optimism should fuel modest growth
in the near term, driving retailer's inventory replenishment.”

Simon Bonham, CEO, Hi-Tec USA: “I believe the industry will bounce
back strongly and the current winter conditions will be a positive start to the
new year. The trend for versatile products which offer great value will
continue and it's important to understand the consumer expects excellent
quality at all times…Of course there will be challenges throughout the year. It's
important for us to focus in on what we can control (great products at a great
price which always delight and excite the end user) and try not to concern
ourselves with elements outside of our control.”

Brian Anderson, CEO, Madd Gear: “Our outlook for 2014 is very
positive.  The market for our core
product category (performance, freestyle scooters) is still growing very
strongly in the US and Canada.  And in
2014 we plan to introduce the sport of freestyle scooter riding into Latin
America in a meaningful way. I am also encouraged by current inventory
levels.  After Holiday 2012, retailers
and suppliers in our industry were heavy on inventory levels going into
2013.  This led to lots of aggressive
pricing and promotion in 2013.  This year
most retailers and suppliers are going into 2014 with very low inventory
levels.  As a result, we expect a very
strong Q1, bolstered by a February product launch of Madd Gear’s 2014 product
line, which will generate tremendous excitement at the consumer level…I have
very few concerns for 2014.  We are
projecting strong growth and managing expenses to drop most of the growth to
the bottom line 🙂  Glad to get 2013 in
the rear view mirror and excited to grow and have fun in 2014!”

Chase Heard, co-founder, Howler
Brothers: “We at
Howler Brothers are optimistic about what 2014 holds.  As a young company we are excited to see
specialty outdoor shops and consumers looking for an alternative to big box
offerings and established brands. We have seen exciting growth over our first
three years and with our expanded staff and increased PR efforts and we are
hoping to continue the trend into the new year.”

Ted Manning, CEO, Ibex Outdoor
Clothing: “Ibex
is cautiously optimistic about 2014. Our optimism comes from a having had a
solid 2013, continued participant growth in outdoor sports and continued demand
for sustainable apparel. Our caution comes from our concerns about the macroeconomics
of the United States and our industry's great need for spectacular winters
every year. What we are more sure about is that 2014 will be another year of
working on products we believe in, working with people whom inspire us and
working for customers that we love.”

Chris Goddard, president, CGPR: “I am most definitely upbeat
about the new year.  Fashion and outdoor
continue to be fairly resilient despite the ups and downs of the economy. In
the outdoor/sporting world, bold bright color is everywhere, which speaks to
optimism – from the color of zippers, to contrast stitching to shoe laces to
linings. And while there is a positive outlook, point of difference has never
been more important. The outdoor marketplace is cluttered with wannabes and
spectators looking on from the sidelines ready to pounce. Brands must
absolutely be very clear on their product or service offering and be able to
have a damn good elevator pitch. Finally, fashion is front and center – this
merger of fashion/outdoor has never been stronger. Fashion brands want to
appeal to our consumer while outdoor brands want consumers to think of their
brands as an option for a night on the town…My concerns are over saturation, more
vanilla brands and the ability to attract the next generation of consumers to
the outdoors. With technology taking over almost every aspect of our lives, it
is harder to appeal to a generation that lives on Snapchat, Instragram and
Twitter. Until we can figure out how to bring these consumers into our family, we
are in deep trouble…But I overall remain optimistic due to the collective
passion of the industry — company leaders, product designers, communicators,
sales reps — everyone involved that loves this industry to death. This is a
reason for optimism not found in many other industries. We are so lucky!”

Rich Packer,
sales manager, Easton Mountain Products:  “I think
2014 is looking to be a vibrant year for Easton; with recent acquisitions and
category expansions our retailers are finding success and helping more
customers than ever enjoy the outdoors.”

Rob
Morales, director of purchasing, Backwoods/Neptune Mountaineering, Austin,
TX/Boulder, CO: “As for 2014 and beyond, I am cautiously optimistic
that we will continue to see a slow economic reco