The year again saw two companies emerge as central platforms in the outdoor and winter sports space, joining the ranks of powerhouse brands like Columbia, Timberland, and Salomon in size and importance.
K2 Inc. certainly made the blockbuster deal of the year in the outdoor/winter sports market, snatching up Marmot, Marker, and Volkl in mid-year deals that make it the largest ski company in the world while providing the company with a solid base to develop apparel for a number of their brands. The Dana Design business was later rolled up under Marmot with the Marmot reps taking on Dana sales responsibilities as well. KTO further established the apparel platform by moving Steve Crisafulli, former CEO of Marmot, to oversee all apparel operations for the corporation. They added one last piece before the end of the year, acquiring the Watermark PFD business and rolling it up under the Sterns division.
The $200 million acquisition of Marker and Volkl now gives K2 a solid foothold in Europe, which has been a tough market for the U.S. brand. K2 Inc. management clearly understands the implications of brand purity in Europe though and has opted to set up a separate European Winter Sports business unit. The acquisition of Marker also gives K2 a binding company that will enable to build a long-term program to develop ski systems, probably the most talked about trend in the ski industry the last few years.
VF Corporation not only went and found new brands to roll into its Outdoor Coalition business, it moved to consolidate that business as well. The company also expanded their European presence with the acquisition of the Italy-based Napapijiri in April, then expanded that footprint with the addition of the Kipling brand in June. But the biggest deal of the year for the company was clearly the $396 million acquisition of Vans Inc. in June that gives the company a solid footwear base.
VFC continued to fine-tune the Outdoor Coalition operation throughout the year, promoting Mike Egeck, president of The North Face, to president of the ODC for the Americas, essentially rolling all brands under his control. That control was further strengthened late in the year as VFC made the move to consolidate the Jansport business near TNFs headquarters in San Leandro, while the Eastpak business rolled under the Vans operation.
The VF Outdoor Coalition accounted for more than 69% of the total sales gain for VF Corporation in the last fiscal quarter.
The other big play came on the retail side as Dicks Sporting Goods picked up Galyans after a not-so-subtle pounding on their home turf. While most didnt see this as a blockbuster deal like the TSA/Gart merger of 2003, it may prove to be far more significant if Dicks is able to integrate the Galyans business quickly and rapidly expand their operating prowess to the West sooner than expected. The move makes Dicks a far bigger threat to TSA now as they move into their backyard out West while still maintaining growth plans for the Northeast and South.
The question here will be how both companies play in the outdoor and winter sports categories. Galyans was already moving away from some outdoor equipment lines, and the DKS deal clearly accelerated the exit of more than one brand that always called out Galyans in their top three. The new TSA has also made recent rumblings about the weakness of the outdoor categories, so this could signal a shift from those big-box guys to others. In winter sports, TSAs Northeast and Upper Midwest regions were expected to get a nice lift from the expertise that the Gart management brought to the table. The weather hasnt cooperated with their plans, so it remains to be seen how it will play out. As for Dicks, they have been reluctant to commit to the ski category, even at the former Galyans stores that had a presence in ski. They hinted at an early spring decision on direction.
Spyder was acquired by a private equity firm Apax partners in an August deal worth $100 million and then management turned heads with plans to take the business to $300 million over the next few years, mainly on the prospect of developing a summer apparel business.
The industry also saw further consolidation in the helmet and protective gear market after Fenway Partners, which owns the Riddell Sports business, in August acquired Bell Sports, which owns the Bell and Giro brands, in a deal worth approximately $240 million that saw the two helmet companies merged into Bell Sports. The surviving entity expanded their scope in late December, acquiring Sports Instruments.
Forzani Group Ltd. became an unlikely player in the acquisition game last year as well as they moved to diversify their retail business and establish a wholesale business. The retailer moved to strengthen its close-out offerings and get into the wholesale end of the business, partnering with former Gen-X Sports execs Jamie Salter and Ken Finklestein to acquire the Gen-X close-out business from Huffy Corporation in March. Salter and Finklestein werent through buying back their former company from Huffy, announcing a deal in December that enabled them to re-acquire their former Lamar and LTD snowboard brands for $2.6 million through a Huffy Corp. bankruptcy auction.
Burton picked up four lesser snowboard labels in its summer acquisition of Four Star Distribution, which owned the Forum, Jeenyus, Foursquare and Special Blend brands. And Bain Capital saw a nice return on its investment in Jack Wolfskin, reportedly selling the brand off in December for approximately $200 million after buying the brand from Johnson Outdoors in 2002 for less than $63 million. Gregory Mountain was picked up in November by security products firm Armor Holdings as part of its deal to acquire Gregory parent Bianchi International. At retail The Sportsmans Guide moved into golf with its acquisition of Golf Warehouse.
The other outdoor deals throughout the year included a management buy-out at Eastern Mountain Sports and footwear deals included Rocky Shoes & Boots December deal to acquire EJ Footwear for nearly $100 million and Phoenix Footwears mid-year acquisition of Altama footwear.
