By Eric Smith
Jack Wolfskin, the German-based outdoor gear and apparel brand that’s owned by Carlsbad, CA-based Callaway Golf Co., this week formally announced plans to build a North America headquarters in Utah and create 50 jobs over the next five years.
The announcement was made on the Utah Governor’s Office of Economic Development (GOED) website.
“We’re thrilled to expand Jack Wolfskin North America in Utah,” said Diana Seung, general manager of Jack Wolfskin in North America, in the release. “This state is a perfect reflection of our brand tenets of living an adventurous, active outdoor life.”
Utah is providing a tax rebate to Jack Wolfskin for expanding its operations there, which includes opening the facility and creating the jobs. The state estimates tax revenue of $0.7 million on a capital investment of $0.5 million, while Jack Wolfskin expects to create 50 jobs with combined wages of $12.5 million over the next five years.
“Jack Wolfskin will be an excellent addition to our outdoor industry sector,” said Val Hale, GOED executive director. “Utah has a great love for the outdoors and welcomes excellent brands like Jack Wolfskin into our vibrant outdoor ecosystem.”
Jack Wolfskin has traveled a challenging journey to be part of Utah’s “vibrant outdoor ecosystem.” It began when Callaway paid $476 million (and a multiple of 12x) for Jack Wolfskin in a deal that was announced in November 2018 and completed in January.
Callaway, a publicly traded company that also owns Ogio (bags) and TravisMathew (apparel), is best known for making golf equipment and apparel under the Callaway brand. So the concept of a golf company nurturing a core outdoor brand like Jack Wolfskin—a European one, no less—initially raised some eyebrows, and the companies indeed faced tough sledding in their first six months together.
Not too long after the deal closed, an activist investor rankled Callaway by allegedly pushing the company to explore a possible sale, which some analysts said might lead to the divestiture of Jack Wolfskin.
And in the fourth quarter of 2018 and the first quarter of 2019, Jack Wolfskin was a drag on Callaway’s earnings. But then the brand bolstered its parent company in Q2 and notched a “solid” performance for Callaway in Q3.
But Callaway CEO Chip Brewer never wavered in his confidence that Jack Wolfskin could be a significant contributor to the company, as he told SGB for a Q&A earlier this year.
Callaway further stabilized Jack Wolfskin by announcing Salt Lake City as the brand’s headquarters and naming Seung as general manager, a pair of moves that SGB first reported in September.
“Diana will be essential to the launch of Jack Wolfskin in North America, and will work very closely under the direction of Jack Wolfskin CEO, Melody Harris-Jensbach, who is based in Germany, as well as other functional business partners throughout the organization to develop a successful business strategy,” the company told SGB at the time. “With hiring already underway, Diana and team are eager to open an office in the Salt Lake City area to align with the ‘At Home Outdoors’ DNA of the Jack Wolfskin brand.”
Seung herself told SGB in an email “I am excited to join a brand that has a strong footprint in Europe and China and launch it in the North American market. I couldn’t think of a better fit as Jack Wolfskin is a family brand with deep roots in sustainability led by some amazing female leaders across the globe and backed by a strong organization, Callaway Golf. What a privilege it is to have an opportunity like this and build a team from scratch!”
Now her goal of building that team is truly coming into focus with this latest announcement. The state added that Jack Wolfskin could earn up to 15 percent of the new state taxes it will pay over the five-year life of the agreement in the form of a Utah Legislature-authorized Economic Development Tax Increment Finance (EDTIF) tax rebate.
The GOED Board has approved a post-performance tax rebate not to exceed $105,461. Each year that Jack Wolfskin meets the criteria in its contract with the state, it will earn a portion of the total tax rebate.
“This company reached out to us in late September,” said Theresa A. Foxley, president and CEO of EDCUtah. “The speed at which this project came together is a testament to Utah’s business friendliness, the responsiveness of our partners, and the customer’s degree of organization and focus. The brand power of Callaway and Jack Wolfskin is an exciting addition to our state’s outdoor products industry.”
Look for more on Jack Wolfskin’s ambitious plans to grow in North America in future editions of SGB Executive.
Photo courtesy Jack Wolfskin