sgb weekly 1132

AUGUST 8 2011

The Weekly Digital Magazine for the Sporting Goods Industry

IN A TOUGH ECONOMY

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Releva

nceA collection of casual footwear insoles and accessories that are easy to merchandise and sellA 45 year track record of products that keep people healthy and active Great pricing Terrific customer service

Sound relevant to your business Then its time to take a second look at Spenco

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Call 1-800-877-3626 or visit wwwspencopromocom to order a free sample today PROMO CODE SGBYUMI Expires Aug 31 2011

WEEK 1132 | SGBweeklycom 3

Copyright 2011 SportsOneSource LLC All rights reserved The opinions expressed by writers amp contributors to SGB WEEKLY are not necessarily those of the editors or publishers SGB WEEKLY is not responsible for unsolicited manuscripts photographs or artwork Articles appearing in SGB WEEKLY may not be reproduced in whole or in part without the express permission of the publisher SGB WEEKLY is published weekly by SportsOneSource LLC 2151 Hawkins Street Suite 200 Charlotte NC 28203 7049873450 Send address changes to SGB WEEKLY 2151 HAWKINS STREET SUITE 200 CHARLOTTE NC 28203 7049873450

NEWS 4 AMER SPORTS Reports Q2 Loss of $18 million But Outlook Is Hopeful SPORTS SUPPLY Acquires Bethlehem Sporting Goods 5 GILDAN Reports Q3 Earnings Up 42 Percent BY THE NUMBERS 6 NSSF Files Suit Against ATF to Stop Multiple Sales Reporting of Rifles SPEEDO Parent Reports Moderate Revenue Growth in Q2

FEATURES 8 SGB QUESTION What Do You Think Of The Resurgence In MampA Activity 12 THE RETURN OF THE BLOCKBUSTER DEAL- The Floodgates Have Opened For Mergers amp Acquisition Deals

DEPARTMENTS

18 CLASSIFIEDS


AUGUST 8 2011

wwwspencocom

Releva

nce

A collection of casual footwear insoles and accessories that are easy to merchandise and sellA 45 year track record of products that keep people healthy and active Great pricing Terrific customer service




8

Editor In ChiefJames Hartford (7049873450 x104)

jamessportsonesourcecom

Senior Business EditorThomas J Ryan (9173754699)

tryansportsonesourcecom

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kconradsportsonesourcecom

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Graphic DesignerCamila Amortegui

Advertising Sales DirectorCasey Vandenoever (3039977302)

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Advertising Sales Account ManagerKatie OrsquoDonohue (7049873450 x110)

katieosportsonesourcecom

Circulation amp Subscriptionssubssportsonesourcecom

TechnologyChief Information Officer Mark Fine

VP Research amp Development Gerry AxelrodManager Database Operations Cathy Badalamenti

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Group PublisherBill Garrels

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Page

4 SGB WEEKLY AUGUST 8 2011

NEWS

Global Sports equipment manufacturer Amer Sports Corp whose brands include Atomic Salomon and Wilson among others reported a net loss of euro126 million ($18 million) as sales slipped 1 percent during the companyrsquos seasonally slow second quarter

Amer Sportsrsquo revenues dipped to euro3156 million ($454 mm) for the April-through-June period compared to sales of euro3175 million ($405 mm) in the year-ago period

The Finnish maker of sporting goods said that translated to 6 percent growth on a local currency basis

Except for Racquet Sports and Golf all business areas exceeded the Grouprsquos average growth rate of 6 percent management said in its quarterly report Sales rose 145 percent to euro1334 million ($192 mm) in Winter and Outdoor declined 114 percent to euro1363 million

SPORTS SUPPLY ACQUIRES BETHLEHEM SPORTING GOODSSports Supply Group which is changing its name to BSN Sports Inc has acquired Bethlehem Sporting Goods according to a report in The Morning Call in Allentown PA

Bethlehem Sporting Goods is one of Lehigh Valleys oldest privately owned sporting goods merchants started on the citys South Side as a place to buy anything from baseball bats to trendy attire The article noted that the business focus changed in 2005 when it moved from its W 4th Street location to a 20000-square-foot building on Monocacy Street in the city shifting from retail sales to largely selling athletic gear to high school and college sports teams

AMER SPORTS REPORTS Q2 LOSS OF $18 MILLION BUT OUTLOOK IS HOPEFUL

($196mm) in Ball SportsWilson and slipped 25 percent to $459 million ($66 mm) in FitnessPrecor

In local currencies EMEA increased by 10 percent and the Americas by 7 percent and Asia Pacific decreased by 7 percentAmer Sports management said the second quarter is seasonally slow in Winter and Outdoor as all focus is directed toward order intake Sales for Winter Sports Equipment improved 3 percent in local currenciesGroup EBIT was -euro109 million (-$16 mm) an improvement from last yearrsquos -euro169 (-$22 mm) In local currencies increased sales volumes contributed euro63 million to EBIT growth partly offset by -euro19 million due to lower gross margins The gross margin declined 40 basis points to 423 percent in April-June 2010 due to Racquet Sports Operating expenses decreased by euro24 million

GILDAN REPORTS Q3 EARNINGS UP 42 PERCENT

Gildan Activewear reported earnings jumped 417 percent in the third quarter ended July 3 to $941 million or 77 cents a share Higher net selling prices combined with manufacturing efficiencies and the 3-cents-per-share accretive impact of the acquisition of GoldToeMoretz more than offset the unfavorable impact of significantly higher cotton and other input costs and lower unit sales volumes management said Year-ago results were adjusted for last years comparative results to reflect a restructuring charge of US 1 cent a share related to the consolidation of US retail distribution activities All figures are in US dollars

Net sales in the third quarter amounted to US $5298 million up 340 percent from $3953 million in the third quarter of fiscal 2010 The company had previously forecasted that third quarter sales would be close to $550 million Sales of activewear and underwear amounted to $4246 million up 209 percent from fiscal 2010 and sales of socks were $1052 million up 1391 percent from last year

Management said the growth in sales of activewear and underwear compared to the third quarter of fiscal 2010 was due to an approximate 26 percent increase in average net selling prices partially offset by a 39 percent reduction in unit volume shipments which were down from last year and lower than forecast due to capacity constraints and low inventory availability combined with lower industry demand which continued to deteriorate throughout the quarter

Gross margins in the third quarter were 283 company compared to 271 company in the third quarter of fiscal 2010 due to manufacturing efficiencies and the impact of the GoldToeMoretzrsquo acquisition The impact of higher net selling prices on percentage gross margins offset the impact in the quarter of the higher cost of cotton

+46 percent consolidated comps growth for July according to the International Council of Shopping Centers (ICSC) which tracks 27 major retail chains excluding Wal-Mart

+35 percent industry comps excluding fuel sales The July fuel price lift of 11 percentage points compared with an average lift of 14 percentage points during the prior month

+14 percent consolidated comps growth for apparel chains in July compared to a 55 percent comp improvement in June Some of the slowdown from June can be contributed to better-sell through of clearance merchandise in June while merchandise that didnrsquot sell in June was marked down even further in July

+80 percent comp growth of luxury retailers in July boosted by a 156 percent jump from Neiman Marcus

-46 percent comp decline for Kohlrsquos which has been consistently strong Kohlrsquos missed estimates badly which some analysts attributed to the company launching discounts earlier in the month to gain an advantage in a competitive environment Although management called the monthly results ldquodisappointing - particularly given the strong June resultshelliprdquo the retailer upped Q2 guidance citing better inventory management and expense control

+41 percent comp growth for Target remained solid on better sales of groceries and healthybeauty products

-50 percent decrease in comps for Gap disappointed due to weakness from Gap NA (-6 percent) Banana Republic (-4 percent) Old Navy (-3 percent) and the International business (-10 percent)

BY THE NUMBERS


The National Shooting Sports Foundation (NSSF) the trade association for Americas firearms industry has filed a lawsuit challenging the legal authority of the Bureau of Alcohol Tobacco Firearms and Explosives (ATF) under the Gun Control Act to compel 8500 federally licensed firearms retailers in Arizona California New Mexico and Texas to report the sale of two or more rifles

Specifically the regulation calls for reporting multiple sales of any semi-automatic rifle larger than 22 caliber and capable of accepting a detachable magazine that are purchased following an FBI background check by the same individual within five consecutive business days

NSSFs lawsuit filed in the US District Court for the District of Columbia seeks an injunction to block ATF from implementing the reporting requirement ATF has sent demand letters to firearms retailers in the four states to inform retailers they must begin reporting such sales by August 14

Despite its lawsuit NSSF is encouraging all retailers not just those along the Southwest border to continue to cooperate with law enforcement and report any suspicious activity to the ATF The firearms industry and NSSF take pride in having a longstanding cooperative relationship with ATF said NSSF President and CEO Steve Sanetti Retailers have long been considered a vital source of information for law enforcement in combating illegal firearm trafficking

SPEEDO PARENT REPORTS MODERATE REVENUE GROWTH IN Q2

Warnaco Group reported sales at its Swimwear Group which includes Speedo improved 33 percent in the second quarter to $787 million from $762 million a year ago Operating profits climbed 196 percent to $107 million from $895 million a year agoOverall Warnaco whose primary business is Calvin Klein Jeanswear and Underwear reported net revenues increased 14 percent to $5914 million compared to the prior year quarter

International net revenues increased 32 percent compared to the prior year quarter while direct-to-consumer net revenues increased 38 percent

All three of the companys segments (Sportswear Intimates and Swimwear) reported growth led by Sportswear and Intimates which were up 173 percent and 137 percent respectively The companys international net revenues rose more than 32 percent compared to the prior year quarter reflecting the powerful growth in the Calvin Klein and direct-to-consumer businesses which more than offset a 4 percent decline in the US net revenues

NSSF FILES SUIT AGAINST ATF TO STOP MULTIPLE SALES REPORTING

OF RIFLES

NSSF President Steve Sanetti

TO MAKE AN APPOINTMENTGRENDENE USA800-509-8889salesgrendeneusacom

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WHAT DO YOU THINK OF THE RESURGENCE IN MampA ACTIVITY If your brand isnt performing you dont have the resources to add value and youre seeing significant manufacturing cost increases your future doesnt look good Access to capital is such a huge factor in whether or not a business can reach its goals If a company like Deckers or VF can continue to diversify and acquisition gives other brands the resources they need to get to the next level it can be a win for both parties At the end of the day customers dont know or care that Brooks is owned by Berkshire Hathaway or that Chaco is owned by Wolverine World Wide They just want the best value and performance from brands they trust

Ted Kushion Merchandise Manager Gazelle Sports

I feel the current trend of consolidation is indicative of the current business climate Companies faced with declining revenues and tighter margins are looking for ways to compete at lower costs or to spread the costs of doing business over a larger revenue stream I dont see this trend changing for the next two to five years It hurts the small business but it is a means of survival for many companies that are struggling in the current economy

Anonymous President Team Dealer

I believe that as publicly traded corporations have gotten comfortable with the new economic state MampA has increased as an easier method of growth to service ROI demands of shareholders Natural expected and much easier than achieving growth by building a better mouse trap Good for the growth of these brands yes Good for the industry no Driven by profit and growth a publicly traded corporation provides the least amount of product at the highest possible price and pays its suppliers and employees the least it can Authenticity and innovation are traded for predictability and homogenization Like an invasive species in a natural environment the resources are gobbled up and the healthy wild natives are choked out Passionate visionary people that want to make a difference for the love of their sport lifestyle are traded out for career corporate politicians that fit better into the new mega-corp culture

Brad Ford Director Brad Ford Branding

AS BIG FISH SWALLOW LITTLE FISH THE BIG FISH WILL EVENTUALLY DIE AND THE LITTLE FISH WILL COME BACK TO TAKE OVER SUCH IS THE CYCLE OF LIFE AND BUSINESS

Richard Burrows Independent Rep Golf Military Resort and

Each month SGB enrolls subscribers in discussions about the top stories affecting the market This month SGB asked the industry about the recent uptick in big merger amp acquisition deals Here are a few responses To read more responses or to add your own comments go to sgbquestioncom


All of the mergers happening for me are just business as usual Without them some brands would disappear in other cases this is exactly why they happen as the buyer with controlling interest will discontinue the brand to enhance their own reducing their competition The downside to some of these is that they become too large for efficient resources to continue to promote all of the various brands or the acquired brand is way outside their product knowledge eg QuicksilverRossignol These too big to fail businesses do not have the clout that the big banks have with the federal government to bail them out So if there is a miscue the entire house of cards will fall This in itself is not bad because all of the pieces have value and will be snapped up by smaller successful business plans This is capitalism at its normal behavior

Brian Dani Owner CBS Boardshop

I simply see it as the free flow of enterprise Many times a smaller company lacks the capital structure to implement initiatives to grow the business A larger corporation may have these resources that could allow a brand to flourish It isnt always necessary by any means and there are many large private companies that take investment but dont sell outright Is it good Who knows it really depends on the people and their objectives for selling and buying Is this a new trend in MampA Nah just normal process When opportunities present themselves someone will take advantage of it

Keith Reis President Sanitas Sales Group

ONE OF THE COMPANIES I WORKED FOR IN THE 1970S EMPLOYED OVER 250 SALESMEN CALLING ON RETAILERS THESE WERE GOOD PAYING JOBS NOW ALL NEARLY GONE FOREVER THE EMERGENCE OF WALMART COSTCO AND TARGET AS DOMINANT RETAILERS HAS CREATED LITTLE IN THE WAY OF OPPORTUNITY FOR VENDORS AND THE THOUSANDS OF JOBS THAT FORMERLY EXISTED A HANDFUL OF MERCHANDISERSDESIGNERS AND A FEW PEOPLE TRAVELING TO CHINA SOURCING WILL NEVER EQUAL THE VENDOR OPPORTUNITIES OR JOBS LONG SINCE LOSThellipGOOD LUCK YOUNG GUYS I HAVE NO IDEA WHO YOU WILL BE SELLING TO

Anonymous Shoe Sales

With very few exceptions the driving factor in these mergers is to leverage efficiencies of scale and drive revenue through direct-to-consumer models Good for these corporate behemoths and their legions of bean counters and soulless managers who are driven not by market inflection and opportunity but by an edict to the shareholders ROI That will create only further opportunity for smaller brands with a focus on their customer and consumer but it is an uphill battle

Rob Garrett Foreman The Foundry

IT LOOKS THAT AT THE END OF THE DAY THERE WILL BE ONE MAKER ONE CUSTOMER AND ONE FACTOR OUR INDUSTRY IS SHRINKING

Jack Vega Director Sportailor

Note To see all the responses to this monthrsquos SGB Question and review the SGB Question Archives or to add your own comments go to sgbquestioncom


MOST OF THE TIME ACQUISITIONS ARE GOOD FOR THE INDUSTRY THEY TAKE THE BEST OF BOTH COMPANIES AND MOVE UP STRONGER TO THE NEXT STEP OF THE LADDER THE WEAK ECONOMY MAKES THE PRICE OF SOME GOOD COMPANIES INTERESTING BARGAINS FOR CASHED BUYERS RUSSELL ATHLETICS ACQUISITION BY BERKSHIRE IN 2006 IS AN EXAMPLE OF BAD ACQUISITION THEY BOUGHT RUSSELL CORP TO MERGE JERZEES AND FRUIT OF THE LOOM BUT DRIED UP THE SPORTS BRANDS LIKE BIKE RA SPALDING MOSSY OAK ETC THAT BECAME MEANINGLESS IN THE MARKETPLACERoberto Alcalay Founder Sashay Sourcing LLC

Retailers are the major losers in these acquisitions Although shipping savings may be passed on wholesale prices rarely fall and almost always increase due to raw materials Retailers are the ones who have to make the painful decision to raise prices or to absorb them Another problem the supplier faces is what to do about outdated inventory which can be a struggle to sell or fill in with new and different looking packaging Being a dealer for one company does not automatically mean that you will be open with the newly acquired company due to the MampAs Technically speaking there will be more mergers on the horizon because it helps the suppliers bottom line This is free market capitalism at work

Tyler Greenebaum Sales Manager KM Sports


THE ACQUISITIONS ARE THE DIRECT RESULT OF CORPORATE POLICIES WHICH IGNORE THE CATASTROPHIC POLLUTION THEY ALLOW TO MAKE THEIR TEXTILES OFF SHORE ESPECIALLY IN CHINA AND OTHER PARTS OF ASIA BUNDLING GIVES THESE MEGA CORPORATIONS A VEIL TO HIDE WHO THEY ARE AND WHAT THEY DO

Doug Hoschek CEO Portland Woolen Mills

Amer with Salomon and Atomic and Ess VF with a number of softgood brands Jarden with Volkl K2 Marker Rossignol Dynastar Lange have gathered brands well over the free trade market concept simply because reducing the administrative and productive and logistic costs allows them to compete And not the least to reduce competition on innovation marketing creativity consumer demand building investment The result is that an exciting product becomes a dull commodity where you have a choice among cars as long as they are one model of black color Marketing teachers in business school name it mature market in the product life cycle Cost cutting is the priority

Richard Prothet Financial AdvisorFormer Head of Exports Rossignol


Where Strategic Decisions Begin

A Service of The SportsOneSource Group

SportScanInfocom

12 SGB WEEKLY AUGUST 8 2011Photo courtesy of Tecnica

ndeed the year will likely all but go down as the return of the mega-deal In June VF Corp announced plans to acquire

Timberland Co in a deal valued at $18 billion or just over 11 times Timberlandrsquos 2011 projected EBITDA (earnings before interest taxes depreciation and amortization) and 13 times revenue Kohlberg Kravis Roberts amp Co also last month revealed its intention to buy Academy Sports + Outdoors in a deal sources put in the $1 billion range also around 11 times forward EBITDA

Earlier in the year eBay acquired sporting goods e-commerce powerhouse GSI Commerce for $24 billion and Fila Korea (along with Mirae Asset Private Equity) will shell out $123 billion for Acushnet Golf the owner of Titleist and FootJoy Promising to create a sporting goods retailing powerhouse up north Canadian Tire reached an agreement to acquire Forzani Group Ltd in an $800 million deal Gildan Activewear plunked down $350 million to acquire GoldToeMoretz and Brown Shoe

THE RETURN OF THE BLOCKBUSTER DEALWith the economyrsquos steady recovery encouraging buyers to pull out their wallets the floodgates have opened for mergers amp acquisition dealsBy Thomas J Ryan

I Co acquired American Sporting Goods the owner of the Avia Ryka and And 1 brands for $145 million in cash plus assumed debt

A few of the industryrsquos up-and-comers are also finding new parents in 2011 PPR the French luxury goods group that controls Gucci and Puma bought the hip action sports apparel company Volcom for $6075 million in a deal also valued at a lofty 11 times EBITDA Deckers Outdoor parent of UGG and Teva acquired fast-growing sandals maker Sanuk for $120 million - nearly three times the $43 million in revenues Sanuk recorded in 2010

Other deals have included Genescorsquos acquisition of UK footwear retailer Schuh Cramerrsquos recent buy of Stromgren and Schuttrsquos acquisition of Adams USArsquos football helmetfaceguard assets Weyco Group Inc the parent of Florsheim acquired The Combs Co which owns the BOGS and Rafters outdoor and work footwear brands

With both strategic as well as private equity buyers scouring the marketplace for

Joe Pellegrini managing director Robert W Baird amp Co based in Charlotte NC likewise sees almost a ldquoperfect storm of MampA activity probably more robust than the environment that existed from 2004 to 2006rdquo


THE RETURN OF THE BLOCKBUSTER DEAL

new deals the healthy MampA trend shows little sign of letting up according to investment bankers working the industry

ldquoThe MampA market today is very healthy particularly compared to last year and during the downturnrdquo said Christopher Kampe managing director at Tully amp Holland an investment banking firm in Wellesley MA ldquoThere are now clearly more buyers than there are sellers and competition among buyers is fierce for quality assets and that is driving robust valuationsrdquo

He added ldquoAll of the factors for a big MampA trend are present ndash lots of cheap capital available a multitude of private equity buyers changing attitudes toward MampA from strategics and a strong stock marketrdquo


First banks are again willing to finance transactions Liquidity constraints stemming from the debt crisis in 2008 that froze most MampA activity for nearly two to three years have evaporated Second private equity firms ldquohave substantial capital sitting in check books and they are eager to put it to work in new investment opportunitiesrdquo But Pellegrini believes much of the MampA activity is being driven by well-positioned and stronger strategic buyers looking for authentic brands and new growth platforms

ROBUST MULTIPLES

Particularly supporting strategic deals is that many of the leading ldquoaspirationalrdquo sporting goods companies such as Lululemon VF Corp Under Armour Wolverine World Wide Columbia Sportswear as well as Nike and Adidas are trading near 5-year all-time valuation multiples on the public stock market Pellegrini said a basket of such aspirational stocks trades at 13-14x TTM (trailing twelve months) EBITDA versus 85X for the SampP 500 index ndash representing almost a 30 percent premium to the overall market

Plump stock multiples leads to a lower cost of capital especially if acquirers use their stock as currency for consideration in engineering a transaction while also justifying paying an above average premium multiple for quality acquisitions Separate from growth prospects for any acquired brand expected cost savings and other synergies gained from combining businesses can quickly make a transaction accretive to the bottom line earnings he said

Moreover many strategics are sitting on sizable cash positions on their balance sheet earning at-best 50 to 100 basis points interest compared to significantly higher returns when used in an acquisition Finally many leading sporting goods and outdoor operators are searching for new sources of top-line growth after spending the last few years shoring up balance sheets and strengthening internal competencies in wake of the 2008 financial crisis and surge in sourcing costs largely emanating from China The positive is that those years of internal rationalization put many acquirers in a much ldquostronger financial positionrdquo to pursue acquisitions than in the past

ldquoWhen the downturn took place the strong companies in the industry werenrsquot shrinking or standing stillrdquo said Pellegrini ldquoThey were reinvesting in their business models and building resiliency and improved competencies to become stronger and more nimble Although theyrsquore not completely immunized against further global volatility and production shocks theyrsquore more capable to adjust and consistently outperform weaker competitors Given these dynamics the strong franchises have prospered and are now trading at much higher market multiples both nominally and relatively They are also generating strong cash flows and along with a formidable balance sheet As a result yoursquove got all the pieces in place to drive MampA activityrdquo

At the same time both strategic and PE buyers overall have become less risk averse

ldquoI think whatrsquos happened is that decision makers are becoming more comfortable that the financial world might not fall off a second cliffrdquo said Pellegrini ldquoAs perceived risks have evaporated multiples have expanded It all goes hand and hand Would it have been smarter to make acquisitions when the blood was flowing in the streets Sure But when emotions and uncertainty run high it is human nature to seek cover And when things looked horrible we didnrsquot know just how bad things were going to berdquo

Tripp Baird founding principal at Partnership Capital Growth in San Francisco said the fact that therersquos more private equity capital than at any time in history will also drive deals while pushing up valuations Deal volumes fell in the downturn but have since begun to rebound and capital remains abundant He noted that PE firms typically have a 5-to-7 year window to invest the funds and those deadlines are approaching Said Baird ldquoThe US has a private

ldquoThe US has a private equity ldquooverhangrdquo of nearly $500B and funds are anxious to invest previously ldquodormantrdquo capital often making them competitive with strategic buyers on valuationrdquoTripp Baird founding principal at Partnership Capital Growth


equity lsquooverhangrsquo of nearly $500B and funds are anxious to invest previously lsquodormantrsquo capital often making them competitive with strategic buyers on valuationrdquo

While Academy Sports + Outdoors represented the meaty part of such deals the more likely sized-PE investments will be Fireman Capital Partners (FCP)rsquos cash infusion in June of roughly $20 million in Newton Running Fireman Capital is run by Paul Fireman the former chairman and CEO of Reebok International LTD and his son Founding Partner Dan Fireman Clymbcom which offers flash sales of outdoor gear just received $2 million in funding from former Microsoft design guru and Xbox executive J Allard along with the Oregon Angel Fund Walden Venture Capital and other individual investors

Baird likewise concurred that strategic buyers have strong balance sheets after weathering the recession but anemic organic growth Said Baird ldquoThey need to buy growth and are willing to pay for it Competition among strategic and financial investors has driven robust valuationsrdquo

Baird also said the sports industry generally is seen as attractive to the investment community because of a strong trend toward health amp wellness and active lifestyles His firm is dedicated to supporting healthy active sustainable living companies and those firms ndash also including fitness clubs and healthy foods makers - have continued to see meaningful price premiums in deals

Nathan Pund who heads up the Outdoor Investment Banking Group at DA Davidson amp Co also sees continued strong participation in outdoor activities driving future growth and innovation and thus continued interest to invest in the sector

ldquoThe outdoors continues to be a great place for people to recreate whether skiing cycling climbing action sports or whatever the activity people are doing more of it and that is good for the industryrdquo

said Pund ldquoSome are looking to such activities as a way to enjoy their older age others are looking to those activities to relieve stress or be healthier in their lives or to get back with nature On top of that people have adopted the outdoor lifestyle as part of their everyday lifestyle so you see them incorporating items like soft shell jackets and trail running shoes into their work and every day routine This lsquoaspirationrsquo towards the outdoors has been a strong trend and continues to drive a lot of spending in the categoryrdquo

SELLERS SEE HIGHER PRICES For sellers the primary reasons to sell are obviously that valuations have rebounded While many of the publicized deals were quoted at a lofty 11X other deals are still getting done at healthy multiples in the high-single-digit range in the sector

Kira Spivak owner of CFO Services in Denver believes many sellersrsquo grand expectations of what they could fetch in a merger have been beat up in the past two years bringing them a little closer to being able to close a deal with a strategic buyer

ldquoItrsquos a good time to sell if yoursquove got a solid proven business if you donrsquot feel a huge urgency and if your expectations for valuation are realisticrdquo observes Spivak ldquoBuyerrsquos will always be opportunistic in any market The question is more as to where yoursquove proven yourself within your niche as compared to other opportunities to the buyerrdquo

At the same time she believes the fact that many companies have tested their business model during the grueling recession provide buyers with more confidence to invest

ldquoI believe buyers are getting more comfortable in seeing the differences between what was just a dip with the recession vs a core business issuerdquo said SpivakrdquoNervous buyers might look at dealsbuyers close dealsrdquo

ldquoThere are now clearly more buyers than there are sellers and competition among buyers is fierce for quality assets and that is driving robust valuationsrdquo

Christopher Kampe managing director at Tully amp Holland investment banking firm

ldquoItrsquos getting better every day but I donrsquot think the MampA activity is anywhere near

what it was like in 2007 which was

obviously a record breakerrdquo

Nathan Pund Outdoor Investment Banking Group at DA Davidson amp Co

Note (1) indicates deal approval closing pending

ACQUIRED COMPANY ACQUIRED COMPANYBUYER BUYERMONTH MONTHYEAR YEAR

The Athletersquos Foot Levine Leichtman Capital Partners

Brand Athletics Genesco (Hat World)

Coachrsquos Sports Corner Sport Supply Group

Greg Larson Sports Sport Supply Group

Black Diamond Clarus Corp

Gregory Clarus Corp

Lendal Celtic Paddles

Dragonfly Innovation Corp Lifetime Products

April Sportsstuff Kwik Tek

March Body Bar Craig Williams

Feb Integral Designs Equip Outdoor Technologies (Rab)

Cloudveil Windsong Brands

JT Sports KEE Action Sports

Jan Soffe Accessory Assets EMC Sports

Merkel Steyr Arms

Above The Rim Collective Brands

AmeriBag Cerf Brothers Bag Co

Isis for Women Kellwood

Talon Lacrosse Easton-Bell Sports

Barnes Bullets Freedom Group (Remington)

Dec 2009 Pro-Line Athletic Badger Sport

Yakima Kemflo International Co

Zapposcom Amazoncom

Swellcom Billabong

Brunton Fenix Outdoor

Joystick Skiing Surface Ski Collaboration LLC

Oval Concepts Advanced Sports

Nov Highgear Implus Footcare

Sports Fan-Attic Genesco (Lids Sports)

Rugged Shark SG Footwear

Oct Hot WheelsCircle Bikes Dorel Industries

Sep Great Plains Sports Genesco (Lids Sports)

Aug 5th amp Ocean New Era Cap

Gemini Bicycles Dorel Industries

July Iron Horse Bicycle Co Dorel Industries

Har-Bell Athletic Goods Sport Supply Group

Eddie Bauer Golden Gate Capital

June Gus Doerner Sports Sport Supply Group

Websterrsquos Team Sports Sport Supply Group

May Forefront Holdings Dynamic Brands

END Footwear LaCrosse Footwear

Snosuit Frabill

April Tacktick Suunto

Gekko Brands Delta Apparel

Terry Precision Bicycles Elisabeth Robert

March Impact Sports Hat World

Jan Zoot Sports Jarden Outdoor (K2 Sports)

Chaco Wolverine World Wide

Cushe Wolverine World Wide

Ahnu Deckers Outdoor Corp

Little Hotties Warmers Implus Footwear

RackandRoll Yakima

July 2011 Sanuk Deckers Outdoor Corp

June Schuh Genesco Inc

Stromgren Cramer Products

Adams USArsquos Football Assets Schutt Sports

Volcom PPR SA

Timberland Co VF Corp(1)

Buckeye Corner Stores Genesco Inc (Lids Sports)

Academy Sports + Outdoors Kohlberg Kravis Roberts amp Co (1)

Chariot Carriers Thule Groupay

ProSteel Security Products Promus Equity Partners

Smith Hockey Warrior Hockey

Acushnet Golf Fila Korea (1)

Forzani Group Ltd Canadian Tire (1)

Asana Activewear ActivewearUSAcom

April Ed Hardy Iconix Brand Group

Crosman Corp Wellspring Capital Management

Redmond Athletic Supply Kimmel Athletic Supply

GoldToeMoretz Gildan Activewear

GSI Commerce Ebay

March BogsRafters Weyco Group

Feb Fanatics GSI Commerce

Sebile Fishing Lure Assets Pure Fishing

Jan Victory Archery Aldila Inc

Acorn Products Totes Isotoner

Dec 2010 MARC4 New Era

LED Lenser Flashlights Leatherman Tool Group

Hubco Automotive Yakima

Nov Acquires TracRac Thule

Gear For Sports Hanesbrands

Oct Arena The Riverside Company

Lone Wolf Knives Benchmade Knife Company

Ross Outdoor Sports Specialties 3M

Sept Palrsquos Sports Center Sport Supply Group

Tapout Authentic Brands Group

Anaconda Sports Genesco (Lids Sports)

Aug West 49 Billabong

Sport Supply Group Oncap Management Partners

OutDry Technologies Columbia Sportswear

FORM Athletics K-Swiss

July Haglofs Asics

RVCA Billabong

Delong Rock Creek Athletics

The Designated Hitter ProMounds

Nokona Cutters

The Cotton Exchange Delta Apparel

June Bette amp Court Golf Sport-Haley

Cobra Golf Puma

Maverik Lacrosse Bauer Hockey

Mountain Khakis Remington Arms

Becker Surf and Sport Billabong

May Sports Avenue Genesco (Lids Sports)

Kattus Pro Team Sports Sport Supply Group

RECENT SPORTING GOODS INDUSTRY MERGERS amp ACQUISITIONS


Baird noted that while weaker companies are still being ignored strong brands or companies are receiving premiums due to a dearth of quality opportunities amid all the buyers

ldquoIf your objective is to maximize valuation I do believe now is a pretty good timerdquo said Baird ldquoI wouldnrsquot say we turned a corner but it feels the recession is largely behind us And while Irsquo m not going to say people are throwing money around the way there were in 2007 the pricing environment seems to be pretty strongrdquo

For many brands moreover are reaching the stage in their development where partnering with a larger player and tapping into their resources can to help them reach that next level of growth The greater sourcing challenges have become a newer lever to encourage such partnering up

Pellegrini said that while therersquos been a few casualties over the years the recent track record of mergers ndash citing Merrell with Wolverine Converse with Nike and both The North Face and Vans with VF ndash gives sellers confidence

ldquoPeople have seen how you can take a brand and plug it into the right kind of infrastructure with the right kind of support and create significant growthrdquo said Pellegrini

IPO MARKET REAWAKENS Another option for prospective companies looking to sell is to go public via an IPO although Pund describes that market as still lagging behind the general MampA market and much more ldquoficklerdquo overall Freedom Group the owner of Remington Arms postponed their planned IPO earlier this year but Bauer went public last year on Torontorsquos stock exchange and pending offerings at press time are scheduled for action sports chain Tillyrsquos bicycle component giant SRAM International and Skullcandy the maker of maker of audio headphones and accessories geared toward the action sports and outdoor world

Pund said the pros of going public are that the owners typically donrsquot have to sell majority ownership in the company ndash unlike most strategic and PE deals ndash and may wind up earning more back on their sweat equity through follow-on offerings in the future if the business continues to perform That said the IPO market except perhaps for social media firms is still not as robust as it once was and the costs and requirements of an offering and being a public company continue to skew the market towards larger business that can better support those costs and reporting requirements

The investment bankers caution that any pullback in bank funding could quash the thirst for MampA deals

The Greek debt crisis the USrsquos own debt ceiling and another terrorist strike are just a few issues that could easily rattle the USrsquos shaky economic recovery

Pund believes that current MampA activity would be even more robust if not for the ongoing uncertainty about the economy and its impact on consumer spending

ldquoItrsquos getting better every day but I donrsquot think the MampA activity is anywhere near what it was like in 2007 which was obviously a

record breakerrdquo said Pund ldquoUnemployment is still high Housing prices are still very low And so when people are uncertain where their next paycheck may come from and worried about their own net worth be it savings or the depressed equity in their homes thatrsquos going to impact their buying habits and that translates to less sales growth for outdoor companiesrdquo

That said Pund believes the MampA market continues to improve and part of that improvement is because the market rewards entrepreneurs for bringing innovation to the marketplace while motivating the next group of entrepreneurs to drive future innovations and be rewarded with a high payout for that success

ldquoSuccesful transactions help support the vitality of the industry by providing a reward to entrepreneurs for product innovation and brand strength and in turn larger companies can further support the growth of those brands and products thereby providing consumers with better choices for them to spend their money onrdquo said Pund

Admitting that hersquos a capitalist Pellegrini agreed that MampA first off provides entrepreneurs the opportunity to realize a payback for their successes For the brands financial buyers often provide growth capital typically at the early stages of their growth while strategics provides ldquogreat homesrdquo for more-developed ones to take them to the next level

ldquoAs long as acquirers are taking time and really thinking long and hard about the integration strategy I think itrsquos goodrdquo said Pellegrini ldquoWe are living in a world where just having a brand sitting in a shelf because itrsquos recognized is not enough It has have a meaning and connection to the consumer So I have every high hope that these acquirers are going to deploy resources and intelligence to make the brands stronger and operations betterrdquo

Baird believes MampA and consolidation are ldquoinevitablerdquo ldquoBrands and companies will be bought up and folded into larger

strategics and whether those companies will succeed or execute well with them is a mixed bagrdquo said Baird ldquoAt the same time there will always be innovation in the lower middle market wherersquos therersquos new products and new product categories that drive growth ala the barefoot running movement and that just kind of continues So itrsquos neither good nor badrdquo

Kira Spivak owner of CFO Services

ldquoIt might be a good time to sell if yoursquove got a solid proven business if you donrsquot feel a

huge urgency and if your expectations

for valuation are realisticrdquo

RUN

eccousacom

To experience the SS12 ECCO Collection visit us at WSA Outdoor Retailer Atlanta Shoe Show and FFANY eccousacom - 8008863226

NATURAL MOTION GOES OFFROAD

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FOR INFORMATION CONTACT SAM FONDA AT 7049873450 EXT 108OR SPORTSJOBSSPORTSONESOURCECOM

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Development Design EngineerMacNeill EngineeringThe DevelopmentDesign Engineer is to effectively lead and manage full development projects The position will ensure projects meet schedules cost results and technical expectations through effective project leadership The role is also responsible for deploying engineering and tooling know-how to staff and manufacturing vendors to successfully support the execution of projects of the company along with assisting in company manufacturing production efficiencies

Senior DesignerAthletic Performance ApparelFox Head IncSenior DesignerAthletic Performance Apparel is responsible for designing and creating athletic training and running apparel that is leading in design innovation function and quality Duties include full ownership of the athletic apparel design process while working in conjunction with the Director to fill and expand upon the ideas required to complete the line plan

Sr Product ManagerMens TrainingAdidasResponsible for developingmanaging business strategy to achieve net sales net margins and SKU productivity establish long-term goals and strategy for assigned category to ensure global brand vision and that corporate objectives are met for the US Market Candidates are responsible for building a consumer network for consistent product feedback for future sell-insell-through including participation in consumer focus groups and assist in developing the marketing and product strategy of assigned category

Jr Mechanical EngineerFallTechWe are looking for a competent and skilled mechanical engineer to join our product development team working closely with design and industry professionals in developing and launching new products for manufacturing The ideal candidate would be proficient and have a demonstrated record of success in building 3D CAD models and drawing packages for the purpose of both validation testing and final production release

Product Integrity Lab TechnicianUnder ArmourUnder Armour is looking for a qualified driven Product Integrity Lab Technician The Innovation team works with internal partners external partners universities material suppliers corporate RampD groups and private inventors to create the next great product for Under Armour He or she will manage day-to-day operation and maintenance of materials testing equipment and work with Innovation team members to develop and validate novel test methods to evaluate the performance attributes of key materials

Sales RepAgencyRespect Your Universe We are looking for motivated intelligent sales reps to grow and earn a substantial income with a rapidly growing company The position is responsible for growing sales and realization of brand market potential within the territory Duties include coordinating and executing all sales activities (forecasting planning prospecting sales presentations closing service and follow up) for accounts in the assigned territory He or she must develop strong relationships with key retailers that represent the major brand image and sales volume within the territory

Independent Sales RepMavic IncMavic has a long successful history as an innovative creator of technical cycling products From our world class rims and wheels to our footwear and apparel we make products that help you ride better Our business is growing and we are looking for a motivated independent sales rep for the ArizonaNevada territory with non-competing lines This candidate must have proven sales experience and posses the necessary skills in developing new business and territory management

Brand ManagerLead DesignerMahco OutdoorsSeeking lead designerbrand manager to create all products across multiple categories including apparel packs hunting accessories camp furniture flashlights and more Duties include creating original designs exclusive to Mahco that achieve sales performance brand and quality goals and an understanding of markets and trends to identify new products while maintaining brand identity and business strategy

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DEPARTMENTS

18 CLASSIFIEDS


AUGUST 8 2011

wwwspencocom

Releva

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SGB

TEAM Business


The BOSS Report


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SGB Weekly


SportScanInfo

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SOS Research





Page


NEWS






















BY THE NUMBERS











OF RIFLES




VISIT US AT



11-3120indd 1 71411 400 PM


































SportScanInfocom


















ROBUST MULTIPLES



































Gregory Clarus Corp









Merkel Steyr Arms








Zapposcom Amazoncom

Swellcom Billabong


















Snosuit Frabill










RackandRoll Yakima





Volcom PPR SA














GSI Commerce Ebay





















July Haglofs Asics

RVCA Billabong



Nokona Cutters



Cobra Golf Puma






























RUN

eccousacom



SS12 BIOM TRAIL



Job Classifieds



OBJ COM



















DEPARTMENTS

18 CLASSIFIEDS


AUGUST 8 2011

wwwspencocom

Releva

nce





8

















SGB

TEAM Business


The BOSS Report


SGB Update





SGB Weekly


SportScanInfo

OIA VantagePoint

SOS Research





Page


NEWS






















BY THE NUMBERS











OF RIFLES




VISIT US AT



11-3120indd 1 71411 400 PM


































SportScanInfocom


















ROBUST MULTIPLES



































Gregory Clarus Corp









Merkel Steyr Arms








Zapposcom Amazoncom

Swellcom Billabong


















Snosuit Frabill










RackandRoll Yakima





Volcom PPR SA














GSI Commerce Ebay





















July Haglofs Asics

RVCA Billabong



Nokona Cutters



Cobra Golf Puma






























RUN

eccousacom



SS12 BIOM TRAIL



Job Classifieds



OBJ COM
















NEWS






















BY THE NUMBERS











OF RIFLES




VISIT US AT



11-3120indd 1 71411 400 PM


































SportScanInfocom


















ROBUST MULTIPLES



































Gregory Clarus Corp









Merkel Steyr Arms








Zapposcom Amazoncom

Swellcom Billabong


















Snosuit Frabill










RackandRoll Yakima





Volcom PPR SA














GSI Commerce Ebay





















July Haglofs Asics

RVCA Billabong



Nokona Cutters



Cobra Golf Puma






























RUN

eccousacom



SS12 BIOM TRAIL



Job Classifieds



OBJ COM



























BY THE NUMBERS











OF RIFLES




VISIT US AT



11-3120indd 1 71411 400 PM


































SportScanInfocom


















ROBUST MULTIPLES



































Gregory Clarus Corp









Merkel Steyr Arms








Zapposcom Amazoncom

Swellcom Billabong


















Snosuit Frabill










RackandRoll Yakima





Volcom PPR SA














GSI Commerce Ebay





















July Haglofs Asics

RVCA Billabong



Nokona Cutters



Cobra Golf Puma






























RUN

eccousacom



SS12 BIOM TRAIL



Job Classifieds



OBJ COM

























OF RIFLES




VISIT US AT



11-3120indd 1 71411 400 PM


































SportScanInfocom


















ROBUST MULTIPLES



































Gregory Clarus Corp









Merkel Steyr Arms








Zapposcom Amazoncom

Swellcom Billabong


















Snosuit Frabill










RackandRoll Yakima





Volcom PPR SA














GSI Commerce Ebay





















July Haglofs Asics

RVCA Billabong



Nokona Cutters



Cobra Golf Puma






























RUN

eccousacom



SS12 BIOM TRAIL



Job Classifieds



OBJ COM

















VISIT US AT



11-3120indd 1 71411 400 PM


































SportScanInfocom


















ROBUST MULTIPLES



































Gregory Clarus Corp









Merkel Steyr Arms








Zapposcom Amazoncom

Swellcom Billabong


















Snosuit Frabill










RackandRoll Yakima





Volcom PPR SA














GSI Commerce Ebay





















July Haglofs Asics

RVCA Billabong



Nokona Cutters



Cobra Golf Puma






























RUN

eccousacom



SS12 BIOM TRAIL



Job Classifieds



OBJ COM
















































SportScanInfocom


















ROBUST MULTIPLES



































Gregory Clarus Corp









Merkel Steyr Arms








Zapposcom Amazoncom

Swellcom Billabong


















Snosuit Frabill










RackandRoll Yakima





Volcom PPR SA














GSI Commerce Ebay





















July Haglofs Asics

RVCA Billabong



Nokona Cutters



Cobra Golf Puma






























RUN

eccousacom



SS12 BIOM TRAIL



Job Classifieds



OBJ COM
































ROBUST MULTIPLES



































Gregory Clarus Corp









Merkel Steyr Arms








Zapposcom Amazoncom

Swellcom Billabong


















Snosuit Frabill










RackandRoll Yakima





Volcom PPR SA














GSI Commerce Ebay





















July Haglofs Asics

RVCA Billabong



Nokona Cutters



Cobra Golf Puma






























RUN

eccousacom



SS12 BIOM TRAIL



Job Classifieds



OBJ COM









































Gregory Clarus Corp









Merkel Steyr Arms








Zapposcom Amazoncom

Swellcom Billabong


















Snosuit Frabill










RackandRoll Yakima





Volcom PPR SA














GSI Commerce Ebay





















July Haglofs Asics

RVCA Billabong



Nokona Cutters



Cobra Golf Puma






























RUN

eccousacom



SS12 BIOM TRAIL



Job Classifieds



OBJ COM






































RUN

eccousacom



SS12 BIOM TRAIL



Job Classifieds



OBJ COM
















Job Classifieds



OBJ COM















sgb weekly 1132

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sgb weekly

sgb question

business editorthomas

bethlehem sporting goods

sporting goods industryin

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