Lotto Sport Italia last week announced that it had acquired Etonic Worldwide, giving the Italian brand a broader presence in the U.S. Lotto, which has been primarily known as a soccer and tennis brand — outside of a few years in the late 80’s when it saw some moderate success in the urban market — will now have a solid foothold in golf and running. Terms of the sale were not disclosed, but Lotto Sport Italia did say that company President Andrea Tomat will also become president of Etonic. Tom Seeman, CEO of Etonic sat down with Sports Executive Weekly to talk about how the deal came about and what he sees for the future of the combined companies.

“The way that this came about was over the past say year,” said Mr. Seeman. “We’d been approached by several major American based footwear companies about their interest in possibly talking to us. So it began to give us the idea. We acquired this company in April of ‘03, when it was losing $3 million, we’ve cleaned it up substantially. We’ve turned it around, we re-launched golf in ‘04, we launched bowling on ’05, and now we have running and walking. And I think that the launch of the running and walking, which is a huge part of the heritage of the brand also — and we have a really nice trade show booth and everything — so the brand looks like its coming back. And certainly the sales figures would suggest that given that when we first bought it in April of ‘03, for the rest of that year, the nine months of that year, we had $5+ million in sales and now we’re around $30 [million].”

Seeman sees Lotto contributing to Etonic’s growth in several areas. “Number one, they’re strong outside the U.S. and we’re naturally stronger within the U.S. A big example would be, they have a big warehouse in Europe. Right now, we distribute in Europe through distributors who buy a certain amount of product and if something sells well, they can’t really get anymore in time, because they have to place another order. Whereas, if we have a warehouse in Europe and stock our product there, it will help our distribution throughout.”

While Seeman expects the European opportunity to develop quickly, the consolidation in the U.S. may take a little longer.

Domestically, “[Lotto has] a distribution agreement with someone for the U.S. that will end at the end of ‘07. So Etonic’s offices here will become the focus of their American presence. So this entity here, as we add more people to do it, will become responsible for building the Lotto brand within the United States.”

In addition to the distribution help both in the U.S. and across the pond, Seeman anticipates Lotto’s Italian fashion sensibilities helping the Etonic brand, “They have very strong design resources in both Italy and in China that will help us. In China we tended to outsource everything, whereas they have a pretty big presence in China, which will once again make us more valid and powerful. They have materials expertise that we have been seeking and they have several employees in Taiwan that focus on materials.”

Finally, Seeman views Lotto as a company with a similar culture to that at Etonic: “I think the cultures fit very well. Actually, the people get along very well. They are a young dynamic company. Lotto was purchased by this current group around ‘99 and they have built it up, much they way we have started to build up Etonic. So there’s a shared history there, there’s a shared understanding of what we’re doing, because they just did it with their brand.”

“The range of Etonic products is wholly complementary to that of Lotto's without any overlap” stated Andrea Tomat, president of Lotto Sport Italia SpA. “I'm certain we will generate important synergies between the innovative solutions introduced by Lotto in its chosen markets and those developed by Etonic, which has always enjoyed the reputation of being an R&D leader.”

The current Etonic management team, which is comprised of former Dexter and Etonic golf executives, in 2003 acquired the Etonic name and its golf shoe and glove business from the old KKR-owned Spalding company in a deal reportedly worth $10 million. Prior to selling Etonic, Spalding had inked a licensing deal with a company called Kinetic Sports to produce running and walking footwear under the Etonic name. That deal ended December 31, 2005, with an inventory sell-off period running to mid-2006.

Etonic said it started shipping their own running product in January 2006.


>>> So its not just the big getting bigger. The smaller guys have to find safety in numbers as well. Consolidation of the U.S. sales operations won’t necessarily yield big dividends since soccer, golf, and running tend to be very different animals…