With Black Diamond’s Fall 2013 apparel launch just hitting stores selling out, its Spring 2014 apparel line has followed suit by likewise selling out, Black Diamond Inc.’s CEO Peter Metcalf told attendees on Sept. 10 at the 2013 Gateway Conference.
Metcalf gave much of the credit for Black Diamond’s strong apparel push, started three years ago, to the creation of a “dream team of people” to run the category, led by Tim Bantle, formerly director of technical apparel at Patagonia, as director, apparel. Other team members include Cheryl Knopp (formerly of Arc'teryx), as designer lead, apparel; Martin Linden (previously Patagonia), design director, apparel; Brian Mecham (Patagonia), director of N.A. sales; Jeff Nash (The North Face), VP of engineering; Saskia Stock (Cannondale), marketing director, Europe; Walter Wilhelm (Arc'teryx), VP of business process; and Sven Mostogl (The North Face), director of merchandising, Europe.
Metcalf said the apparel talent joined BDE to “have the defining career opportunity of their lives” in establishing “a brand that is respected and earns prestige around the world” while being able to run it “as a start-up.”
He noted that all of the other major outdoor apparel brands got their start on the equipment side. Black Diamond’s history dates back to 1957.
Recruits were also attracted by BDE’s deep commitment to innovation. Metcalf cited Black Diamond’s break-throughs such as the Magnetron carabineer, the Cayenne Heated Glove, the Carbon Megawatt ski, and the ReVolt headlamp. Also attractive is BDE’s culture “defined by the sports themselves” with its employee base all active participants in sports and activities.
Metcalf described the culture as the “number one defining difference of our company,” and said BDE’s track record of innovation, leading to over 80 patents, comes from that culture. Said Metcalf, “The passion the people have creates an intimacy with the sports and the activities. Out of intimacy comes insight. And out of insight comes the ability to see where a sport and activity is going versus where it is.”
Company headquarters situated in Salt Lake City at the base of the Wasatch Mountains “creates a level of insight that you just can’t match in places like Ventura, San Leandro, Richmond, Santa Rosa, etc.,” he added.
The revenue goal for apparel is to reach $250 million by 2020.
Other strengths versus competitors across categories include having manufacturing operations in Zhuhai, China with plans to expand internal manufacturing.
With sales fairly split between fall/winter and spring/summer, Metcalf said BDE is also one of the “very few” outdoor companies with a healthy seasonal balance. This not only helps reduce weather-related seasonal risks but also supports efficiencies around warehouses and other areas, builds leverage with retailers around credit and other issues, and allows its sales team to be in “stores year-round talking to staff, getting them excited about product.”
Across its four brands Black Diamond, Gregory, POC and Pieps, BDE reaches across 33 product categories with about half in the mountain category, and the rest split between ski and climb. The company is also diversified geographically across over 50 countries, with more than 55 percent of sales coming outside the U.S.
Among its other recently-acquired brands, Metcalf noted that POC, a provider of protection gear such as helmets, body armor, goggles and gloves acquired in July 2012, will be entering cycling next year to represent the company’s fourth category. Fiscal 2012 sales of POC were up 35 percent for the brand to $22.5 million.
Pieps, an Australian brand known for its avalanche beacons and snow safety product acquired in October 2012, had sales of $8.2 million in fiscal year 2012. Pieps will particularly benefit from BDE’s global distribution capacities. Metcalf noted that Pieps has 75 percent market share with its products in Germany and Austria “but almost no market share anywhere else.”
BDE continues to look for tuck-in acquisitions to add onto its global operating platform. It’s particularly looking for suppliers of highly technical, quality product with an authentic and iconic brand heritage. Other investing parameters include sales of up to $50 million, being gross margin accretive, and having some protections over intellectual property.
Internally, Metcalf believes BDE has a “unique sets of skills in manufacturing, engineering and user intimacy that many other acquirers do not have. We understand what it takes to build a truly premium, IP-rich, passion-based brand at specialty.”
For 2013, Black Diamond Inc. expects revenues of $205 to $210 million, representing year-over-year growth of 17 to 19 percent and a gain of 11 to 14 percent on a pro-forma basis. Its long-term growth targets call for 15 to 20 percent CAGR growth in organic sales.
