It was a week of ups and downs for the public companies in the sporting goods market as the first round of investor conferences kicked in for the new year, prompting more than one company to offer revised guidance for the 2005 fourth quarter and the year. While most of the news from the companies was business as usual, there were a few that saw sales shortfalls or heavier expenses impact their expectations for the period.
The ICR XChange conference is quickly becoming one of the premier events each year for anyone tracking the sporting goods industry. While the conference addresses a broader range of consumer companies, Sports Executive Weekly estimates that nearly a third of the companies in attendance were affiliated with the sporting goods business. The conference, held this year at the Ritz Carlton in Naples, Fla. over a three day period, boasted an overflow crowd of analysts and investors. The 4th Annual SG Cowen Consumer Conference, which features presentations by a number of companies in our space, ran for two days in New York last week as well.
The mood at both events was generally upbeat as retailers came off another holiday period with fairly decent results in hand. Analysts were attempting to get a better grasp of the health of the business through the holidays and most found that results for the sporting goods sector were fairly flat to the year-ago period. Results appear to be better for those retailers that were able to capitalize on the colder weather in November and December this past year, but some of that improvement was also offset a bit by a further decline of other traditional holiday gift items like games, and more recent popular items like paintball. The sector has clearly been impacted by the continuing shift of the younger consumer dollars to electronics, with iPods a lot more popular this year than poker.
Most appear to be looking to Nike and the launch of the Air Max 360 this month as an energy driver for the fiscal fourth quarter through January, with teens tapping into the gift cards that have been burning a hole in their pockets since Christmas.
One of the more interesting sessions at the ICR XChange involved a teen panel that gave a lunchtime crowd a taste of teens appetites in fashion and other trends. It was apparent the group of kids from local Gulf Coast high schools were not a clear reflection of the nation as a whole, since warmer weather plays such a large role in what they buy and wear. On the subject of footwear, the girls — almost across the board sent the message that heals and flip-flops were the silhouettes of choice, a potential source of concern for the sneaker brands. On the guys side, athletic shoes were clearly the footwear of choice when the mercury plunges below 60 degrees in South Florida, with Nike, K-Swiss, and Converse the clear leaders. Puma also got some mention, but this little slice of the planet was still on the Classics bandwagon. On the apparel front, the vertical retailers in the mall got the nod, with most of the kids pointing to Hollister and A&F, along with Nautica and Polo, as the brands of choice. These kids make no differentiation between vendor brands and retail brands. There was a question from the moderator about Under Armour, and the feedback was quite positive from the guys that were wearing the product for a sports activity. The girls that were playing sports were also picking up on the brand. Addressing footwear trends, the group got a laugh when one girl signaled that “those boots with the fur coming out the top were sooo over,” a reference most saw as a commentary on the UGG phenomenon. SEW wonders if a panel of teens from New York would feel the same way.
