Late Snowfall Gives Snow Sports Industry Weak Rebound this Winter

 

Snow Sports market sales were up a mere 0.4% to $2.26 billion from August through January compared to the same period a year earlier, according to the SIAs Retail Audit Report. Significant gains in apparel sales in the South, which saw record setting snowfalls, could not overcome the late arrival of winter at many mountain resorts in the West and Northeast, where sales of snowboard equipment were particularly weak.

 

However, the news in January was not all bad. Customers were more likely to buy this season’s models rather than closeout models as inventories of closeout equipment shrank. Specialty shops increased their margins and saw significant declines in inventory through January, resulting in improved cash flow and reduced risk of carrying extensive inventory at the end of the season, which would need to be sold off at or below cost.

 

There is less carryover right now than we had this time a year ago by a long shot, said Bob Dapper, director of mountain operations for Christy Sports, which operates 30 shops in mountain resorts and another 12 in the Denver and Salt Lake City areas. It probably compares to two years ago. Margins have been better. That’s the saving grace. Last year we were on sale right from the get go.

 

Weather patterns typical for El Niño drove sales in a colder and wetter southern region, but hampered sales in the Rockies and in the warmer than average Northwest. Sales likely accelerated in February thanks to more favorable weather in the West and record snows in the South and Mid-Atlantic. Christy Sports expects ski conditions at Colorado resorts to remain excellent through the end of National Forest Service leases in mid-April. The timing of Easter this year, in the first weekend of April compared to April 12 last year, should also boost sales compared to last year, Dapper said.

 

Still, the industry will likely only see a modest recovery in sales from last year, when sales fell 3% in units and 5% in dollars to $2.82 billion and profits plummeted as retailers resorted to deep discounts and a higher proportion of carryover product to drive sales.

 

I think we will end the season up maybe 2% to $2.9 billion said Kelly Davis, SIAs director of research. The recession is over, but that just means we have stabilized… I dont expect to see major recovery this year.

 

Regardless, many retailers may find it difficult to justify larger preseason orders for next winter. We are in the process of writing for next winter, which will be same as last winter, said Dapper. We will be conservative. Its a new era. We are not going back to the levels we had two years ago, three years ago or four years ago. 

 

Another big development this season has been a decline in snowboard gear and apparel sales. In the specialty channel, snowboard equipment unit sales were down 10% and dollars sold were down 8%. Sales of current models of fat skis, by comparison, increased by more than $4.5 million, while AT/Randonee ski sales rose 58% to 4,842 pair and sales of high performance alpine boots rose 16.5% in units and 19% in dollars.

 

Even snowshoe sales rose 7% in dollars, reaching 117,887 pairs sold at specialty snow sport shops. 

 

At Christy Sports, Dapper said he detects a gradual shift. We are definitely buying more skis for that demographic, he said. There is a lot of exciting stuff going on in the terrain parks with alpine skiers. 

 

The third big development this season is flattening Internet sales growth outside the snowboard categories. Online equipment sales rose 10% in units and 13% in dollars, but much of the growth was driven by gains in snow board sales of 16.5% and 15.6% respectively. Overall Internet sales, meanwhile, declined 2% in unit terms for the first time ever, even as dollar sales rose 7%. Its hard to determine what this means for brick-and-mortar retailers, since SIAs Internet sales figures include their online sales. However, as more and more specialty stores build up their web stores, perhaps the distinction is becoming less important.

 

Strong inventory management appears to be paying big dividends in the specialty brick-and-mortar channel. Equipment inventories were down 13% overall led by a 19% decline in alpine equipment units. Snowboard unit inventory was down 9%. Specialty apparel inventories were down 7% while 9% fewer accessories sat in inventory through January this season. Retail prices have increased about 7% overall in specialty-driving better margins (1.4% growth) and ensuring better cash flow for specialty retailers throughout the season. Snow Sports Specialty sales declined 7% in units, and rose just 0.3% in dollar to $1.33 billion season to date. The channels focus on service and product knowledge helped it grow equipment sales. Sales of alpine ski equipment increased 2% in dollars on strong sales of fat skis (>80mm waist width), high performance alpine boots, and high end bindings (DIN 12+).

 

Chain store sales were hardest hit through January with declining sales in every category of equipment, apparel and accessories. Sales declined 4% to $449 million, while unit sales were off 9%. Equipment sales continued their nosedive with a 17% decrease in units sold and a 9% decrease in dollars sold. Snowboard equipment sales were particularly hard hit with 21% fewer units and dollars sold. In fact, only one equipment category grew in dollar terms – alpine flat skis, which grew 2%. Even apparel sales in chain stores decreased in January with declines of 10% in units and 3% in dollars sold season to date.

 

Sales of accessories declined 7% in units and chain stores realized a very modest gain of 1.3% in accessories through January. Overall, consumers appear to choose chain stores less often for their equipment needs and chains are responding by minimizing their focus on equipment sales.