La Sportiva's North American distribution operations have become part of La Sportiva Italy’s unified global distribution consortium. La Sportiva S.p.A. – the Italian parent company and manufacturer of the LaSportiva brand – and La Sportiva N.A., Inc. – the North American distribution company founded by Collin Lantz – merged together into one unified company.

BOSS sat down with Mr. Lantz shortly after the deal was announced and he
explained that LaSportiva N.A. allowed a pair of investors to cash out the
majority of their shares and then sold those share to the Italian parent
company. LaSportiva S.p.A. now holds an equity position in the North
American distributor. Lantz said that they did this because they have been
seeing the Global distribution model changing and there is no longer
enough room in footwear margins for a distributor and a manufacturer to
take a cut of the profits.

LaSportiva Italy has been slowly converting many of its distributors to a
similar model in Europe. Since the establishment of the EU, the manufacturer
– distributor model became antiquated and LaSportiva began turning
its independent distributors into subsidiaries.

Lantz and his team saw this same pattern beginning in the U.S. as Chinese
manufactured footwear started driving ASP’s down and consumers expected
lower prices across the board. “This process really started five years
ago,” Lantz said. “We knew that eventually someone would start making
climbing shoes and mountain boots in China and we started trying to align
our North American company more closely with the Italian manufacturer so
we could prepare for this. When it actually happened a few years ago, we
ended up looking pretty good to the people in Montebelluna.”

LaSportiva N.A. has been acting as a licensee of the brand since 2000 and
producing their own line of “Mountain Running” footwear to compliment
Italy’s line of more traditional mountain boots. This running line is sourced
in the Far East and provides LaSportiva N.A. with one of their biggest profit
centers.

“When we first started with the Mountain Running line, the Italians were skeptical,”
said Lantz. “They basically said, “Go ahead, it’s not our money.” When
it finally started to take off here in the U.S., they decided to bring some of the
line over to Italy. Now it is in its sixth season and they are fully on-board.

They sell more over there than we do here.”

As part of this latest deal, The North American R&D team, based in Boulder,
Colo. will be more closely aligned with the global R&D team based in Montebelluna,
Italy. Now the Italian mountain boots sold in the U.S. will have input
from the N.A. designers and the mountain running shoes sold in Europe will
have input from the Italian designers.

The new LaSportiva N.A. will operate like a subsidiary on the back-end, but
will be independent in its R&D and marketing. In design, the biggest difference
from this deal will be a shift away from the current structure where the N.A.
team and Italian team create two separate product lines, to a structure where
the global company will build one product line with sub-categories to address
local markets.

This shift in design will be felt behind the scenes and come out in the end
product. However, from a retailer’s point of view, the biggest change will be
the new North American marketing budget.

“I envision our office turning into this gigantic marketing machine for the
LaSportiva brand,” said Lantz. “Our sales reps have told us that we have this
great technical product, and retailers are committed to LaSportiva as their
top-shelf technical brand, but they don’t have the tools to really push the sellthrough.

That is all going to change. Our marketing budget is four times bigger
this year.”

Also as part of the deal, LaSportiva Italy is making a considerable capital contribution
towards expansion in North America. Part of this will go to the increase
in marketing at retail, and part will go towards adding a several new
positions in the Boulder office to support the anticipated growth. Lantz said
that the company has been in an investment phase for the last four years,
with product selling-in to retailers, but he is ready to begin the growth phase.

In fact, the company reported a 30% growth in preseason sales from spring
‘05 to spring ‘06 with a considerable spike in the Mountain Running category.

The company claims a 35% overall market share in the climbing shoe market
and a 65% market share for price points over $100. LaSportiva is seeing success
in the mountaineering boot segment with a 65% market share for the
same period. Lantz is encouraged by these numbers but feels that with more
emphasis on marketing sell-through can improve considerably.

In spite of the structural changes in marketing and design, the overall mission
statement of the company has not changed. LaSportiva N.A. wants to be the
number one specialty mountain-footwear brand in its market. Lantz does not
foresee any acquisitions or major brand extensions, but the company is looking
at broadening distribution to new specialty accounts.

“The company is in a fun place right now,” Lantz said. “We know who we are
and have a strict focus on the mountain lifestyle. We’re all climbers and trailrunners.

We’re big enough now and have the marketing to fully support our
retailers, but we’re still small enough to design some really cool product. The
kind of product where we may only sell 3,000 pairs, but hey, that’s who we
are so we do it anyway. It’s kind of like being able to make a Ferrari.”