At the recent Thomas Weisel Consumer Conference and the Piper Jaffray Consumer Conference in London, several outdoor brands offered their views of the global market today and the strategies they will use to grow going forward. In London, Deckers, Under Armour, and Crocs explained their international expansion plans, while Wolverine World Wide and Cabela’s gave analysts a peek into their business plans in New York.


Decker’s CEO Angel Martinez began his presentation with an overview of the company’s largest brand, UGG. The brand has seen nine consecutive years of double-digit growth and management expects that by 2010 to 2012 it will be at $500 million. UGG’s business today is predominantly in the United States with very little revenue, until very recently, from outside the U.S.


Going forward, Martinez intends to increase domestic penetration and at the same time grow internationally. Domestic growth will come from flattening out the seasonality of the brand and increasing penetration geographically. In 1999, 60.6% of UGG’s business was in the Western U.S. and only about 7.5% of the business was in the Northeast. That distribution has evened out considerably since then, with the western states continuing to grow. Outside the United States, the UK now represents the majority of UGG’s international business with Benelux following.


Teva has formed a new mission statement stating that the brand “is to be the brand of choice for the new outdoor athlete.” Martinez pointed out that athletics has changed and is now focusing on more individual sports. He also pointed out the difficulty he put Teva into when he was running the Keen brand. “Keen [was able to] take a very large chunk of Teva's market share… and Teva really was stuck selling the old style and flip flops to make up for its loss of a high-end premium product. In 2006 we said, ‘okay, we're going to stop the bleeding because we were beginning to go onto a very significant downward spiral without innovation and new product.’ In 2007, I'm happy to say, we did that. We've stopped the bleeding; we've actually turned the brand around.”


He said that by 2010 Teva will be a $175 million brand. Part of his objective in doing this is to get rid of the “45-year-old wearing Tevas with white socks” image in some consumers’ minds. To accomplish this goal, Teva is focusing innovation and investing heavily in marketing. Martinez also pointed to retailer co-sponsored events and new POP displays. He pointed out that a year ago, some of the displays they are rolling out were not possible, because there wasn't enough product available.


While Simple is Deckers’ smallest brand, Martinez feels like it is the one with the largest opportunity. By becoming the “world leader in sustainable footwear,” Deckers’ management feels that Simple can become the largest brand in their portfolio.


Deckers’ currently has $100 million of cash in the bank and management feels that the best usage of that cash is to invest in their business. Deckers will likely double capital expenditures next year, because the accelerated growth is causing accelerated expansions of distribution centers to accommodate the growth. In addition, Deckers’ management is looking for an acquisition. They said that it has to be a lifestyle brand that fits current goals and comes with a management team.


Under Armour was highlighting the same growth they’ve had since their pre-IPO road show. First, grow the core men's apparel business; second, grow the core women's apparel business; third, enter and grow footwear; and fourth, take each one of these product categories and sell them country by country across the globe. Today, the company is focused on the opportunity presented internationally, and according to UA CEO Kevin Plank, that means Europe, and primarily Western Europe.


Outside of the U.S. is a long-term strategy for the company. Canada and   Japan are currently the strongest international markets and Europe is the next international focus.


UA opened their EU headquarters in Amsterdam roughly 18 months ago and have had sports marketing on the ground for the last four years in Europe. There's a three-prong strategy that the company put in place for Europe, the first of which is to find the right team of people to lead the company on the continent. The second component is authenticity on field, where the company is taking a similar marketing approach to what it has done in the U.S. market. The third component is having the right distribution.


The company is not expecting to take the market by storm like it did in the U.S., rather they are taking a long term approach with European sports. UA is not going to do any big signings immediately, but they will invest in multiple types of sports. This tactic is an effort not to get locked into one sport – so the brand does not become the EU soccer brand or tennis brand. They are looking at soccer and tennis athletes, but they are also looking at hockey, team handball and volleyball.


On the outdoor side, Plank highlighted the brand’s recent launch into outerwear as an entry point into the “mountain category.” He said that the strategy is not just to sell a lot of outerwear, but to use this as an entry point to sell base layers. Their goal is to take on “a lot of niche labels” in mountain base layers and pull the entire category under one brand – Under Armour.


Crocs is also looking at Europe as a major opportunity. This most recent quarter, the company was getting roughly 42% of its revenue from the EU and the other 52% from the U.S. Longer term, the company sees both regions equaling roughly 1/3 of sales with the Far East taking the final 1/3. The brand is currently “very strong” in the U.K, Benelux, Germany and Scandinavia.


The company has about 27,000 doors now around the world. This is about 500 doors more than at the end of Q2. Over the past two years CROX has built its global infrastructure with its own offices in most of the major countries around the world. The company is not licensing the product or using distributors in most major markets.


CROX is direct in Japan, China, Brazil, India and many other areas.


Crocs will also look at acquisitions as it has in the past. The company has completed deals so far including Ocean Minded, Jibbitz and Bite. Ocean Minded and Bite are both footwear brands that will be rolling out new designs using Crocs Crosslite material. Management compared Bite to Merrell in the outdoor market.


Wolverine World Wide’s Outdoor group is roughly 1/3 of wolverine’s business and is still the fastest growing segment. While the footwear category is a mature category globally, growing at about 2-3% per year, Wolverine has several strategies to expand at a faster rate. Management’s growth target for its portfolio is roughly two to three times the overall global growth rate in footwear.


They are doing this partially by capturing more market share in their existing territories, but more so by expanding internationally. International business is growing at a faster rate than the U.S. domestic business. Management still feels that WWW’s brands are under represented in most international markets.


Wolverine currently owns the distribution for all of its brands in the UK and most major markets in Europe. Central and South America is primarily operated under licensing and distribution agreements, as is the Far East. Europe is considered the biggest growth opportunity for the company since its market penetration is about 25% of what it is in the U.S. The opportunity was said to be the strongest for Merrell in this market.


The Far East was described as a “longer term play” since the company is present mainly in some of the more mature markets like Japan. The company is in the early stages of “pioneering” the Chinese market with Hush Puppies and Merrell. These initiatives are expected to pay off in five to seven years.


Wolverine is targeting operating margins of 11.5% for fiscal 2008, 70-80 basis points higher than the 2006 results. Management said that they are on-track to hit that target and they will be “a little more” that half way there in 2007. The increase is driven primarily by gross margin expansion, which is helped by the weakening dollar. This margin increase is also the result of strategic decisions to exit some lower margin businesses in the recent past. Management feels that their portfolio will allow them to expand beyond this 11.5% operating margin in the future.


The Merrell Apparel initiative, after two years of development, is finally seeing some action at retail. Management said that they looked at licensing the brand to an apparel company when they first conceived the idea, but they didn’t want Merrell to be the “fifth or sixth brand in someone’s portfolio… we felt it is more important than that.”


So far, a little more than half of the apparel line’s sales have been in the international markets, because there are more Merrell brand concept shops abroad than there are in the U.S. In addition, Merrell’s international partners have been “demanding” apparel for several seasons. In the U.S., the line has been focused on outdoor specialty shops and chains. WWW management said that they do not expect the line to be in Dick’s or REI at this stage in its development, but longer term, it will be appropriate there.                 


Wolverine also said that they may have been “too casual and not active or athletic enough” in some of their product assortments. They also feel that they need to be stronger on the branding of the product to let people know that it’s Merrell.


Wolverine also thinks that apparel could be appropriate for the Sebago brand with high-end nautical apparel. Long term, Wolverine sees it’s Merrell apparel initiative as one of the components in turning Merrell into WWW’s first billion dollar brand, with apparel accounting for roughly 25% of that number.


Cabela’s president & CEO, Dennis Highby, told the audience in New York about the market share and square footage battle taking place in hunt/fish outdoor retail. CAB is opening six new stores over the next nine weeks, the most rapid expansion the retailer has seen in its history. To put this in perspective, when the company first went public in 2005, there were only eight Cabela’s stores in the country. Today, there are 26 stores and the company feels there is room for at least 50 large format locations. Cabela’s is now also saying that there is room in the market for as many as 100 smaller, 80,000 square foot stores in smaller markets.


Currently the company’s merchandise mix is roughly 33% Cabela’s branded products. Roughly 35% of the retailer’s sales come from apparel, 15% to 20% come from camping hardgoods, and the remainder comes from “various hardgoods.”


Since it has started aggressively expanding its retail storefronts, Cabela’s has found that customers that shop only one channel, usually internet or catalog, average about $200 per year. When they shop two channels, that number goes up to $300. When they get a retail door within driving distance, that number goes up to $400. One example of what their retail presence is doing for direct sales is Utah. Before the 165,000 square foot Salt Lake City store opened, the retailer was doing about $11 million in business in the state of Utah. Now they are doing roughly $60 million in business in the state.


While the return on invested capital is lower at brick & mortar retail than it is on-line or through catalogs, the company is still expecting ROIC rates of approximately 12%. The shift to brick & mortar will also shift most of Cabela’s sales and profits to the fourth quarter.