City Sports appointed veteran retail executive Marty Hanaka as its CEO. Hanaka replaces Eddie Albertian, who left the company in June.
In an interview with Sports Executive Weekly, Hanaka said Albertian, who had been leading the chain since September 2012, retired and was planning his exit for “a little bit of time.”
The board decided that Hanaka became “a natural” to replace Albertian since he has served on the board of directors for City Sports since 2008, joined Highland Consumer Fund, City Sports’ parent, as an operating partner in August 2014, and given his vast experience in sporting goods retailing, including leading Sports Authority and Golfsmith.
Hanaka also said he has held a minority stake in City Sports since Highland acquired the Boston-based chain in 2008. Said Hanaka, “I have a vested interest in seeing this thing be successful. I have some skin in the game.”
Prior to joining Highland last year, Hanaka’s last active retail role was as interim CEO of Guitar Center Inc., from January 2013 to April 2013. In the sporting goods world, he served as the chairman of Golfsmith International Holdings Inc., from April 2007 to November 2012, and was its CEO from June 2008 to November 2012. He left soon after Golfsmith’s merger with Canada’s Golf Town.
From September 1998 to August 2003, he served as the CEO of The Sports Authority Inc., and served as chairman from November 1999 through June 2004. He similarly left TSA soon after the Gart Sports merger.
Prior to TSA, he was president and COO of Staples Inc., where he met
Tom Stemberg, the founder of Staples and managing general partner with Highland.
Hanaka admits he has been semi-retired and had even retired following TSA’s sale to Gart Sports but joked, “Retirement is overrated. I like to be active and relevant and my golf game isn’t any good.”
Indeed, Hanaka continues to be excited about the opportunity for City Sports to expand in the sporting goods space. He believes the chain, with 26 retail stores in metropolitan locations in MA, RI, NY, Washington D.C., PA, MD, NJ and VT, continues to stand out with its high level of customer service.
“We’re really true specialty,” said Hanaka. “We promise a ‘Find Your Fit’ experience so we’ll fit you for a sport bra, we’ll fit you for footwear using a gait analysis, etc. It’s something I learned at Golfsmith, where we had real professionals on the selling floor. So City Sports puts a lot of investment into technology and training to make sure we provide a full specialty service.”
The chain also stands out for its mix that may include Nike, Under Armour, Adidas and The North Face, but also deep assortments of Brooks and Saucony for its running consumers as well as Marmot, Merrell and even more niche brands not found at the big boxes. In the women’s space, for example, City Sports stocks Onzie, a colorful bra and tights line; Oiselle, the fashion-forward women’s running apparel line; and Lucy.
Other unique items include Ciele, the cap line known for its innovative color-blocking; Janji, the lifestyle t-shirt vendor that donates a portion of its sales to address the global water crisis; as well as Hoka One One and Newton Running on the footwear side.
The stores are located in urban centers of dense suburban areas. Said Hanaka, “Our locations are different, our brands are different.”
In the near term, Hanaka said City Sports will slow its expansion after opening three stores in 2014 to refocus on reinvesting more in “core tools and training” in the existing business. Planned investments include updating fixturing to better sell some of the newer tech gear as well as around point-of-purchase systems to give store associates “more agility and functionality” to better service shoppers. City Sports also plans to pursue “endless aisle,” or being able to fulfill any in-store out-of-stock with inventory from its website or other stores. Said Hanaka, “We can be just as big as anybody on the planet and sell everything.”
Further investments will also improve the functionality of City Sports’ e-commerce website, which has been experiencing strong gains.
City Sports, which was founded in 1983, is also planning three remodels in January and February with some locations not being updated “in while,” he said. No stores are being scheduled to open for now.
Longer term, Hanaka still sees strong potential for expansion. The chain only has three stores in New York City; and also only a few in Philadelphia and Washington, D.C. Hanaka also sees the opportunity to eventually expand to Chicago, Toronto and Montreal with a focus on colder markets.
Serving colder climates is part of City Sports’ “heritage,” said Hanaka. But he also learned at Sports Authority, which had a heavy base of stores in the south, and City Sports learned itself with a past location in Atlanta that the merchandise mix can vary significantly in cold versus warmer markets. The margin opportunity in colder markets is also much higher. Hanaka added, “Your average order is a lot higher selling pairs of outdoor shoes or a heavyweight jackets than a lot of tees and shorts.”
Hanaka also feels even more enthusiastic about the opportunity in sporting goods than his time at Sports Authority given the technology innovations transforming the space. Said Hanaka, “I could never have imagined where the technology is today compared to what it was even ten years ago and how it’s changing everyday life. We’re going to see apparel in technology that can measure blood flow. But it’s also changing retail and the way people shop. You better be ready to evolve with the market.”
Said Highland’s Stemberg in a statement, “We have an established leader and a real visionary in Marty Hanaka. Marty is an extremely accomplished CEO with unparalleled experience in creating industry-leading operations. His knowledge in retail, specifically in the sports lifestyle industry, is as impressive as his vision for present day consumers and the ever-evolving retail landscape.”
Sequential Brands Q2 Gets Boost from Avia/And1
Sequential Brands Group reported sales grew 189 percent in the second quarter, to $20.2 million compared to $7.0 million in the prior year quarter, helped by strength from its active brands, Avia and And1. Strong sellers were footwear and apparel for And1 and wearables with Avia.
On a conference call with analysts, Yehuda Shmidman, CEO, said both Avia and And1 “continue to perform well at Wal-Mart and we continue to see additional opportunities for these brands in new channels and new categories.”
Among its other brands, Ellen Tracy and Jessica Simpson sold well. Sequential Brands fully integrated the Jessica Simpson brand into its platform, and also signed a definitive agreement to acquire Martha Stewart Living Omnimedia.
Revo, its sunglass brand, on July 24 partnered with U2 lead singer Bono to help prevent vision impairment and blindness in more than 5 million people by 2020. When a consumer purchases a new pair of Revo sunglasses, $10 from the sale of every pair, up to a total of $10 million, will be donated by Revo to the “Buy Vision, Give Sight” initiative
The company also owns Heelys, William Rast, Revo, Caribbean Joe, DVS and The Franklin Mint. It licenses its brands in various consumer categories to retailers, wholesalers and distributors.
Adjusted EBITDA for the quarter increased to $12.4 million, from $3.7 million in the prior year quarter. On a non-GAAP basis, earnings tripled to $3.3 million, or 8 cents per share, from $1.1 million, or 4 cents, in the prior year quarter. On a GAAP basis, Sequential Brands’s loss widened to $1.3 million, or 3 cents, compared to $0.6 million, or 2 cents, in the prior year quarter.