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ISSUE 1406 FEBRUARY 10, 2014

The Weekly Digital Magazine for the Sporting Goods Industry


Group Publisher Editor In Chief James Hartford james@sportsonesource.com 303.997.7302

ISSUE 1406 FEBRUARY 10, 2014

The Weekly Digital Magazine for the Sporting Goods Industry Senior Business Editor Thomas J. Ryan tryan@sportsonesource.com 917.375.4699 Contributing Editors Bill Kendy, Charlie Lunan, Matt Powell Editorial & Creative Director Teresa Hartford teresa@sportsonesource.com Senior Graphic Designer Camila Amortegui camila@sportsonesource.com Advertising Sales Account Managers Buz Keenan buz@sportsonesource.com 201.887.5112 Katie O'Donohue katieo@sportsonesource.com 828.244.3043 Circulation & Subscriptions subs@sportsonesource.com

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Photo courtesy Moving Comfort

SportsOneSource Publications Print Magazines: SGB, SGB Performance Digital Magazine: SGB Weekly Newsletters: The B.O.S.S. Report Sports Executive Weekly News Updates: SGB, Footwear Business, Outdoor Business, Sportsman’s Business, TEAM Business

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MAKING NEWS 4 Mizuno's Profits Jump in Fiscal Nine-Month Year-to-Date Asics Nine-Month Profits Rise 19.6 Percent 5 RSG Acquires VA Runner 6 Reebok Launches "Live with Fire" Campaign Saucony Launches Virrata and Mirage 7 Adidas Invites World to Run Boston Marathon Through #WeAllRunBoston

FEATURES 8 Under Armour Debuts Speedform Apollo 10 Brooks Juggernaut Continues 14 Moving Comfort and Brooks Apparel Refocus

SGB INTERVIEW 16 Rich Harshbarger, President, Running USA 2151 Hawkins St. • Suite 200 • Charlotte • NC • 28203 t. 704.987.3450 • f. 704.987.3455 SportsOneSource.com

STAFF PICK 18 Retro New Balance Copyright 2014 SportsOneSource, LLC. All rights reserved. The opinions expressed by writers and 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; 704.987.3450. Send address changes to SGB WEEKLY, 2151 Hawkins Street, Suite 200, Charlotte, NC 28203; 704.987.3450

FEBRUARY 10, 2014 | SGBWeekly.com

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NEWS

MIZUNO'S

ASICS

PROFITS JUMP IN FISCAL NINE-MONTH YEAR-TO-DATE

NINE-MONTH PROFITS RISE 19.6 PERCENT

Driven by double-digit revenues in footwear and a recovery in its golf segment in the Americas, Mizuno Corp reported revenue rose 9.3 percent to ¥132.2 million ($1.31 bn). Operating profit stood at ¥3.6 billion ($35.5 mm), up 52.5 percent. Net income was ¥2.1 billion yen (20.7 mm), up 52.1 percent. Although the gross margin declined 0.7 points because of higher costs such as raw materials and personnel expenses, profits increased significantly as a result of efforts to curb SG&A expenses. Mizuno doesn't break out third-quarter figures. Subtracting six month results from nine month figures indicates that sales in the third quarter grew 10.9 percent to ¥43.9 million ($433.7 mm) from ¥39.6 million. Operating earnings reached ¥1.02 billion ($10.0 mm) against a loss of ¥627 million in the same three-month period a year ago. Net income was ¥758 million ($7.5 mm) versus a loss of ¥331 million. In the Americas, revenues in the nine months improved 31.6 percent to ¥22.3 billion ($220.3 mm) and grew 9.0 percent on a currency-neutral (C-N) basis. Operating profits climbed 67.5 percent to ¥1.09 billion ($10.8 mm). Mizuno said running shoes continued to be strong in the Americas, with the Mizuno Wave performing well in both North and South America. The Wave Sayonara, launched in July, won awards from major running specialty journals and gained significant support from runners. The golf segment saw a 20 percent revenue gain while its volleyball business also contributed to higher revenue. In the third quarter, sales in the Americas region grew 38.0 percent to ¥7.23 billion ($7.14 mm) from ¥5.24 billion. Operating earnings reached ¥248 million ($2.45 mm) against a loss of ¥8 million.

Asics, Inc. reported net earnings climbed 19.6 percent in the nine months ended December 31 on a 25.1 percent sales gain, benefiting from a weakening yen and strength in running shoes worldwide. The company also raised its forecast for the year for both sales and earnings. The company does not break out quarterly results. Subtracting out six month results from nine month figures indicates that sales in the third quarter rose 32.4 percent to ¥84.6 billion ($834.4 mm) from ¥63.9 million. Operating profits jumped 79.6 percent to ¥9.7 billion ($95.7 mm) from ¥5.4 billion. Net income gained 5.2 percent to ¥7.05 million ($69.5 mm) from ¥6.7 million. In the Americas region, sales in the nine months increased 37.1 percent (an increase of 13.4 percent on a currency-neutral (C-N) basis) to ¥70.5 billion ($693.8 mm), due to the strong sales of running shoes and the effect of foreign exchange rates. Moreover, segment income increased 76.4 percent (an increase of 45.9 percent on a C-N basis) to ¥8.2 billion ($80.7 mm), mainly due to the improvements of the cost of sales ratio. In the third quarter, sales in the Americas region climbed 45.2 percent to ¥24.1 billion ($237.7 mm) from ¥16.6 billion. Operating profits grew 114.3 percent to ¥3.0 billion ($29.6 mm) from ¥1.4 billion. For the full fiscal year through March 31, Asics now expects companywide sales of ¥327 billion, up 25.7 percent over the prior fiscal year. Operating income is expected to reach ¥25.5 billion, representing a 36.6 percent gain. Net income is expected to reach ¥15 million, up 8.9 percent. When it reported six-month results on November 6, it projected revenues for the year to rise 21.1 percent, operating income to grow 31.3 percent, and net income to increase 5.3 percent.

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Photo courtesy VA Runner

RSG ACQUIRES VA RUNNER Running Specialty Group (RSG) has acquired the two VA Runner stores with locations in Fredericksburg and Woodbridge, VA south of Washington D.C. from current owner Carol Van Horn. The addition of the two stores will bring the total number of RSG retail stores nationwide to 49. Terms of the sale were not disclosed. Van Horn will assist through the transition period and current employees will continue their employment under the new ownership. The first VA Runner opened in Fredericksburg in July 1999 with 3,400 square feet and the Woodbridge store, also approximately 3,400 square feet, opened in April 2003. Both specialtyrunning stores are known for their community focus and match the profile of other stores acquired by RSG in the past 18 months. Besides their knowledgeable staff, the two VA Runner stores are known for developing relationships with their customers, sponsoring local races and fun runs, providing training opportunities, and offering outreach programs to elementary and secondary schools in the region to foster interest and involvement in sports and activity for youth. It plays a sponsorship role in all of the Fredericksburg Area Runner’s Club (FARC) race events, including the upcoming Coldwell Banker Elite Grand Prix Series that kicks off its 12-race series on February 9 with the Sweethearts 4ever 4mile run. “We feel that RSG is the best company to carry on our mission by keeping the stores and staff local,” explained Van Horn. “We believe that caring about our community and our customers is a vital part of a specialty running store and we feel that RSG also shares this outlook. Being part of a larger company like RSG will enable VA Runner to have an even bigger impact in our area,” she added. “When we find running stores that have the same goal of connecting, not just selling, to their customers, we are very interested in helping them expand their ability to reach more runners and walkers by utilizing our existing platform and resources,” explained Ken Gart of Gart Capital Partners. “That philosophy aligns with our vision of what a running specialty store should be and is what provides value to the customer.” The Denver-based RSG, a joint venture partnership between Finish Line and Gart Capital Partners, has nearly doubled in size during the past year - growing from a collection of 25 to 49 stores in the past 13 months. Key acquisitions have included Run On!, Boulder Running Co., BlueMile and Bob Roncker’s Running Spot. It will reach 50 locations with the opening of store in Cherry Creek, CO, in February.

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NEWS

REEBOK LAUNCHES "LIVE WITH FIRE" CAMPAIGN Reebok launched its new, fully Integrated marketing campaign – "Live With Fire," continuing the brand's mission to change how people perceive and experience fitness. With its campaign, Reebok shows how living an active lifestyle can inspire people to live their lives with passion, intent and purpose – and inspire others to do the same. The initiative builds off the brand's 2012 campaign, "The Sport of Fitness Has Arrived," which featured CrossFit as a symbol of the rapidly changing fitness landscape. The campaign illustrated how CrossFit builds community and confidence and fosters a spirit of competition and camaraderie. With "Live With Fire," Reebok is broadening its message and issuing an invitation to people to pursue their passions and to live life in a way that will inspire others to follow. In addition to featuring Reebok's core pillars of training and running, the campaign reinforces Reebok's commitment to women's fitness through the introduction of its dance and yoga collections, and a renewed focus on walking. "At Reebok, our mission is to empower people to be fit for life, but we don't want people to move for the sake of movement; we believe movement is the path to becoming physically, mentally and socially stronger," said Matt O'Toole, chief marketing officer, Reebok. "Since we've sharpened our focus on fitness, we've seen how reaching goals and accomplishing new feats changes people and their lives. We find our inspiration in these people, who live their lives with renewed passion and intensity, and affect others with their attitude. Among our employees and our consumers we're building a community that pushes people to do and be more, and we want to inspire others to join this movement."

Yan Martin, vice president of brand marketing, said: "We offer a different perspective on a healthy lifestyle and creative expression. We're not featuring the aspirational actions of today's superstar millionaires in this campaign; we're celebrating individuals who find purpose by pursuing their passions. We believe that everyone has the potential to transform their lives through fitness and creativity, and want to encourage this discovery, whether it's through CrossFit or group training workouts, running clubs or Spartan races, high-energy Latin Dance classes or physicallychallenging Yoga classes, intense fitness walks or another active pursuit."

SAUCONY LAUNCHES VIRRATA AND MIRAGE Virrata

Saucony announced the roll out of Virrata 2 and Mirage 4 running shoes, which celebrate the design elements from the brand’s Natural Motion series. The first Virrata was named “Gear of the Year” by Outside Magazine Buyer’s Guide Spring 2013 and the Mirage 3 was recognized as “Best Update” by Runner’s World in the publication’s 2013 Spring Shoe Guide. The Virrata 2, offered at $90, is a featherweight, natural motion running shoe that weighs in at 6.5 ounces (men’s size 9), translating into plenty of speed with a barely-there feel. Yet, this zero-drop trainer offers plenty of protection from the road with an 18mm midsole of high abrasion EVA+ foam − a lighter alternative to rubber – that positions the shoe as one of the most cushioned shoes for its weight on the market. It also features a breathable and quick-drying mono mesh upper and an internal booty for

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Mirage

a sock-like fit that adapts and moves with the runner’s foot throughout the entire stride. With a 4mm offset, the Mirage 4 pairs a more durable mesh in the upper with FlexFilm technology redesigned to be more ergonomic and breathable. The shoes lightweight FlexFilm, welded onto the seamless mesh upper, secures and stabilizes the foot, simultaneously reducing layers to the shoe while increasing flexibility. Offered at $110. “When we innovate, we win,” said Pat O’Malley, SVP of global product for Saucony. “The Virrata 2 and Mirage 4 are the result of an innovative product philosophy focused on every aspect of the runner’s stride. Just as their predecessors have done before, these two new updates will continue to set industry benchmarks solidifying the brand’s preeminent position in natural running.”


ADIDAS INVITES WORLD TO RUN BOSTON MARATHON THROUGH #WEALLRUNBOSTON

The B.A.A. (Boston Athletic Association) launched a Boston Marathon World Run app that virtually connects runners around the world and their social networks with the 2014 Boston Marathon. The mobile app, available on Apple and Android, and website allows runners to participate in the athletic spirit of the event regardless of ability or geography.

Participants, whether individually or in teams, will be logging miles alongside past champions and elite athletes and can achieve their self-determined running goals by April 21 to receive bib numbers and digital training and finisher badges. Boston Marathon World Run encourages runners to contribute to One Fund Boston through voluntary online contributions, which will be updated in real time.

In support of the Boston Marathon and the B.A.A's new digital platform released, Boston Marathon World Run, Adidas is inviting the world to unify with Boston. Leading up to the marathon, official race partner Adidas is rallying around the cause by sharing personal stories and uniting cities around the world in the spirit of Boston through graphics of iconic landmarks. The stories are being shared at #WeAllRunBoston.

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FEBRUARY 10, 2014 | SGBWeekly.com

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CLICK TO PLAY VIDEO

UNDER ARMOUR DEBUTS SPEEDFORM APOLLO By Thomas J. Ryan As part of the brand's four-day take-over of New York City's Grand Central Terminal over Super Bowl weekend, Under Armour debuted at a star-studded event the UA SpeedForm Apollo Running Shoe and "This Is What Fast Feels Like," the newest iteration of the brand's I WILL global marketing campaign. Under Armour Founder and CEO Kevin Plank unveiled the latest spot and introduced the running shoe, which was recently named "Best Debut" by Runner's World magazine in the 2014 Spring Shoe Guide. NFL Pro Bowler Cam Newton, MMA legend Georges St-Pierre and American Ballet Theatre soloist Misty Copeland joined Plank at the event. In an interview with SGB Weekly, Dave Dombrow, senior creative director of footwear, said the $100 SpeedForm Apollo follows on the heels of the SpeedForm RC, which was released last year and sells for $120. The RC claimed to be the first shoe made in a bra factory, and the Apollo was made in the same place. But the Apollo promises to reach a broader spectrum of runners than the RC, which was built more as a racer. Compared to the RC, Dombrow said the biggest difference is the model has “substantially more” cushion underfoot and is a “little more stable” with a stability bar in the base of the shoe. A supportive TPU curve also helps with stability. The “guided fit” forefoot design in the RC, which featured a rib-like construction, has been replaced by a flat, more traditional one. Strategically placed abrasion rubber has been placed in high wear areas for durability and traction. At 6.5 ounces, the Apollo is slightly heavier than the RC’s 6.0 ounces. But the sleek appearance is similar to the RC with its perforated breathable upper and it also features the same responsive Micro G midsole and seamless 3D heel cup as the RC. “I don’t want to put a distance on it but for myself it’s a great half marathon shoe and maybe even a marathon shoe if you’re a pretty efficient runner,” said Dombrow. “But you can put some distance in this and this really could be your everyday running and training shoe.” The distribution will be wider than the RC since it reaches a broader audience although run specialty accounts will have access to special color ways, special graphics and other unique features. With its wider reach, the Apollo has the potential for a bigger payback than the RC, which had limited distribution. 8 SGBWeekly.com | FEBRUARY 10, 2014

“This may very well be our next defining product,” Plank said on the Thursday before the Super Bowl on the company’s fourth-quarter conference call with analysts. “I’m not ready to claim that it is, but it has that potential.” Dombrow said that while Under Armour has had some successes such as the Spine, the RC and Apollo fit closer to Under Armour’s apparel DNA since it was made in a bra factory. The company has regularly claimed it reinvented the T-shirt with its arrival in 1996. “One of the things we say is ‘This is the shoe we were born to make’ and it goes back to leveraging our apparel DNA. We’re kind of reinventing footwear manufacturing and that goes back to how the company was started. It’s even made in an apparel factory. And it also gives you a different sensation on the foot as well. So in a lot of ways, this shoe is kind of a big point from the innovation side for us,” said Dombrow. Dombrow went on to say that the brand continues to grow “quite rapidly” in both the run specialty channel as well as in its core sporting goods accounts and at mall specialty. He said while the brand’s foundation remains in sporting goods, “we know that to be an innovative brand in the future we need to keep reaching and servicing run specialty as well. Of course, it’s going to take time. You have to build trust and trust takes time and that’s what we’re building.” Backing up the launch will be the "This Is What Fast Feels Like" spot that features a character - not unsurprisingly - named, "Apollo," who takes viewers through an athlete's journey “as he passes by some of the fastest innovations ever created while forging a new -- and even faster – path,” according to Under Armour’s marketing copy. Click on video above to view. Peter Berg, director of the true military drama, Lone Survivor, collaborated with Under Armour's creative team and directed the shoot at March Airfield Base in Riverside, CA. The campaign makes its broadcast debut on February 22 during the NFL Network's coverage of the Scouting Combine, followed by placement during ESPN's Golden State Warriors vs. New York Knicks NBA telecast on Februrary 28. The campaign will extend through digital via a number of media partners including NBA.com, NFL.com, YouTube. ■


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BROOKS JUGGERNAUT CONTINUES By Thomas J. Ryan Brooks Running Company is showing little signs of slowing down as the recently crowned leader of the running space reported solid double-digit growth in 2013. Brooks also announced several organizational changes to support its growth down the road, particularly in Japan and Europe.

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Photos courtesy Brooks


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rooks Running Company is showing little signs of slowing down as the recently crowned leader of the running space reported solid double-digit growth in 2013. Brooks also announced several organizational changes to support its growth down the road, particularly in Japan and Europe. Revenues in 2013 increased 17 percent, driven by a 16 percent increase in the U.S. and a 27 percent increase in Europe. “We’re growing everywhere that matters,” said Jim Weber, CEO, at a breakfast meeting before the start of the second day at Outdoor Retailer Winter Market. “We had a great year in the U.S., both in footwear and apparel. And we had a fantastic year in Europe, the brand has really tipped there.” Highlights of the year include Brooks growing its No. 1 Jim Weber, market share position at specialty running account stores CEO (SRAs) nationwide with 29 percent running footwear Brooks retail dollar share. In the neutral running footwear cat- Running egory, Brooks accounted for 46 percent of total running shoes sold at SRA. The trend toward a more cushioned running experience was evidenced by the success of the Ravenna, Glycerin, and Ghost, which grew by 72, 53, and 52 percent respectively, according to the company’s 2013 fiscal results. Its apparel business grew 16 percent year-over-year. Brooks, a subsidiary of Berkshire Hathaway, also earned a variety of awards: »» »» »» »» »» »»

Editor’s Choice award from Runner’s World magazine for the Ghost 6 for the fourth year in a row; Editor’s Choice award from Runner’s World magazine for the Cascadia 8; Best Buy award from Runner’s World magazine for the PureConnect 2; Best Trail Shoe award from Women’s Health magazine for the Cascadia 8; 2013 Vendor of the Year award from the Independent Running Retailers Association (IRRA) for the third year in a row; and 2013 Shoe of the Year award from the Independent Running Retailers Association for the Ghost 6.

Weber admitted that like many other vendors, Brooks continues to ride a strong trend toward people looking to engage in active lifestyles and the ongoing popularity of running that’s “right in the middle of this fitness lifestyle.” He added, “Every place we look there are more people running.” He noted that 26,000 races were held in 2013 and 19 million people in the U.S ran at least twice a week. Of that group, only 40 percent signed up for a race. He added, “So racing is just an element of what’s happening in this lifestyle. The fitness phenomenon is amazing.” Around demographics, 47 percent of runners are under 35 years old in

the U.S., with the sport’s attraction “not just boomers trying to feel young and alive.” In Japan, the “running boom is absolutely happening.” Europe is also growing, and while women are now leading the running craze in the U.S., that’s only starting to happen in Europe. But Weber also credited Brooks’ efforts to “lead with product” and its Run Happy campaign that’s resonating with frequent runners. One measure of Brooks’ success is the fact that Brooks’ average retail price was $97 in the last 12 months versus the top other six brands ranging from $56 to $88. Weber said this reflected Brooks premium-positioning emphasis. He added, “We don’t build shoes under $90. Our best sellers are $120 and up.” The brand’s connection to frequent runners is evident by the shoe counts it does at races. At last year’s Marine Corps Marathon, a race Brooks sponsors, 26 percent of all runners wore Brooks, the highest mark ever achieved by the brand. At the Boston Marathon, Asics led the way with 22 percent, but Brooks was second at 18 and the next brand was 12 percent. Weber said connecting with frequent runners is critical to Brooks’ success because “they’re discerning, they care about their gear and we always felt if we can win with them, we’re going to build cachet and credibility as a brand. They also buy 2.6 pairs a year on average. So if you can win them over, you’ve got a loyal customer.” Critical to reaching both frequent and new runners are strong partnerships with SRA doors. Weber noted that only three brands have led the SRA channel, starting with Nike from the first running boom until the early nineties, then led by Asics for a spell before Brooks took over the top spot two years ago. Weber said Brooks recognizes the benefits of that leadership position. He elaborated, “We think you have to earn it there every day because it’s all about fantastic product and then you have to service that channel well too, which we’re pretty focused on.” The continuing importance of the SRA channel was again showed by a survey of 1,400 runners, a similar one the company has done for the last 5 years. The survey showed that 31 percent of frequent runners bought their last running shoes at an SRA account. At the same time, the number two channel was the Internet, at 28 percent. Weber said the “dynamic with the Internet is a huge topic right now.” Runners often choose to buy their second or third shoe from the Internet largely due to convenience. But he still added that there’s “no question that’s a place runners go when they know their shoe. But we absolutely see clear view from even younger people that they value that community running store. It’s something they really value if they’re into this lifestyle.” Among other channels, sporting goods made up 13 percent and family footwear, only 4 percent. Added Weber, “We’re not missing a lot of runners by not being at family footwear. We’re following runners wherever they go.” FEBRUARY 10, 2014 | SGBWeekly.com

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Weber noted that “product experience is king,” but the past year has shown that “cushioning matters,” with a shift away from the trend toward minimalist toward more-cushioned models. As such, PureProject didn’t hit projections. The minimalist offerings have come back to represent about 8 to 10 percent of the marketplace, which Weber said was “kind of where lightweight always was.” With the lightweight category “clearly overassorted,” cushioning, as exemplified by its new plush Transcend shoe, is back in vogue. In particular, comfort needs to be instantly recognized in front of the shoe wall but also proven at “mile 20.” Brooks still remains “super excited where PureProject fits” and expects all four models to become franchises with dedicated fans. Weber concluded, “We love the fact that there’s multiple running experiences that people were trying, they just didn’t buy the second shoe and went back to traditional cushioning technology. We’re super excited that we embrace it all. We never looked at this barefoot phenomenon as the enemy.” On the marketing front, Weber believes the “Run Happy” marketing mantra is certainly helping differentiate the brand from competitors on the footwear side as well. Said Weber, “We still believe the way we’re positioned and the spirit and ethos of our brand is like nothing else out there. We really feel we’re in control of our destiny if we control that.” Weber said Brooks is “basically running quite ahead of ” its 10-year plan initiated in 2009 to become a billion brand while achieving a “frontrunner position” in the run category with 15 percent share globally. The vision has involved investments in culture, people, process and systems with a full reset of its global structure over the last two years. Last week, Brooks announced several moves to help better manage its business by region. Its EMEA (Europe, the Middle East and Africa) headquarters will relocate from Münster, Germany to Amsterdam, a move that allows it to deepen ties with runners across the region. Current Brooks President and COO David Bohan will assume the role of president of EMEA. Heiner Ibing will serve as managing director of the DACH region (Germany, Austria and Switzerland). Two long-time company leaders are also relocating from global headquarters to posts abroad. Hamish Stewart 12 SGBWeekly.com | FEBRUARY 10, 2014

joins the UK team as UK country manager and Dan Rickfelder takes on the role of brand manager, Spain. Rob Langstaff, a former president at Adidas America, has transitioned from the Brooks board of advisors to tackle the role of SVP and managing director Asia Pacific and Latin America Regions. A special focus will be on Japan, the world’s second largest running market. In North America, Brooks Canada will operate as a wholly owned subsidiary, strengthening its presence in the Canadian running community. Dan Sheridan will continue to lead North America. On the product side as part of changes last year, Dave Larson oversees running footwear and global marketing while Anne Cavassa manages apparel, both for the Brooks brand and Moving Comfort. John Rangel, formerly at K2, joined Brooks last year as CFO. Kevin Gosney, formerly at Converse, runs operations. Anne Reeve heads up human resources. In 2014, Brooks will be celebrating its centennial year with a new global headquarters in Seattle, just off the popular Burke-Gilman Trail. A celebratory event will be held in May for its retail and other industry partners. Some heritage styles are also being brought back for the first time since they were retired in 2001. Looking ahead, Weber believes while Brooks products and “Run Happy” messaging are clicking in the marketplace, execution will become even more critical in the years ahead. “We’re executing very well,” said Weber. “We’ve got a great product pipeline. But doing that at a billion is our goal. And we want to be as good at executing our strategy then as we are today.” ■


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MOVING COMFORT AND BROOKS APPAREL REFOCUS The Outdoor Retailer Winter Market marked the unveiling of a new positioning for Moving Comfort and Brooks apparel but also somewhat of a coming out party for Anne Cavassa, VP of global apparel at Brooks Running. By Thomas J. Ryan

Photo courtesy Moving Comfort

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peaking at a breakfast meeting before the start of the second day at the show, Cavassa noted that she had more than 20 years of design and merchandising experience with past stints at Ibex, Nike, EMS, Reebok, Tommy Bahama, and Eddie Bauer. In April 2013, she became the first person put in charge of both Moving Comfort and Brooks apparel brand. The new position was created to help each brand heighten its differentiation in the marketplace, leverage their unique strengths, and improve engagement with consumers. But in taking the job, Cavassa was especially enthused about “taking our apparel to the next level and on equal status with footwear.” However, she spent considerable time detailing the challenges Brooks has as well as the overall SRA channel faces in the apparel category. Runners have an “emotional connection” to footwear with the products ability to drive peak performance and offer injury protection. In the same way, a women will be “absolutely loyal” to a sports bra that works. In both areas, Brooks and Moving Comfort also have leading share in the SRA channel. By contrast, apparel is a “highly competitive” space led by “multi-billion giants” like Nike, Under Armour and Lululemon. Brooks also recognized that “as a niche brand we can’t stand out as a brand by copying the big styles. We had to have a standout strategy that differentiates us. And we have to be great and just can’t be good.” Ultimately, Brooks recognized that it had to change its internal thinking from being “a footwear brand that has apparel product” to making a commitment to be “great in all categories.” For Moving Comfort, that led to the move in late November to discontinue its apparel offerings by the end of 2014. Cavassa stressed that it was far from an “easy decision” and even an “emotional” one. The apparel side, which accounted for 20 to 25 percent of sales, was showing a “bit of momentum on a really small base” and the overall positioning as a women’s fitness brand appears “a little more sexy” than just focusing on bras. But she likened the move to Brooks’ similar shift in 2001 from being a diverse athletic footwear vendor to focus solely on run. The overall sports bra category had become “much more competitive” since Moving Comfort was founded in the late seventies to pioneer the category. The singular focus would force Moving Comfort’s team to “absolutely have to lead in sports bras.” Brooks also recognized the necessity to not only lead in product but also “brand experience” with in-store engagement. Cavassa added, “When you think about sports bras, it’s not just an ultimate piece of gear. When you get a women in the right sports bra, it’s transformative.” Moving Comfort also has substantial room left to grow in bras. While the brand has the dominant 70 percent leadership in the bra category in the SRA channel, SRA makes up only about 1 percent of all sports bras in the marketplace. That points to significant opportunities to grow in the sporting goods channel, where Moving Comfort has about 10 percent share, as well as at department stores. At the same time, Moving Comfort has a dominant share in the high-impact (control) category of bras, but still has substantial room to expand in the low-impact (secure) and medium-impact (stabilizer) categories across channels, including SRA. Besides greater innovations being set for the secure and stabilizer categories, Moving Comfort will also build on its leadership position with brand education by working to bring more of an “experiential story” to retail based on a woman’s needs and the specific activities she’s doing,

...we are not looking to be the biggest, we’re looking to be the brand that captures hearts.”

Anne Cavassa, VP of global apparel at Brooks Running

rather than the largely “transactional” one that exists currently. Said Cavassa, “You’ll see us bring to life a secure, stabilizer and control story. It’s about giving your body a hug, finding that perfect balance.” In apparel with Brooks, Cavassa believes that alongside competitors like Nike, Under Armour and Lululemon, Brooks has a unique positioning within the active apparel space, particularly as a run-centered brand and with its “Run Happy” marketing mantra. But internally, a greater commitment is being made toward Brooks being the “number one performance running lifestyle brand” across categories and not just footwear. That’s led to a rethinking of strategies in apparel that is impacting everything from R&D to retail relationships and overall brand stories. In design, Cavassa also said Brooks apparel - also about 20 to 25 percent of Brooks brand sales - needs to be more differentiated, noting that it’s “hard to tell the difference in apparel if you take the labels or logos off all the product.” Apparel will also need to “strike that right balance” between performance and fashion elements. While performance innovation needs to be elevated to meet the demand of the performance runner with looks inspired by track & field, Brooks’ apparel team is also focused on performance lifestyle, or what Brooks internally calls the “anti-uniform” that the runner can wear for running or hanging out with friends. Cavassa added, “We know that an aesthetic that connects those two things is absolutely critical from a brand perspective and that driving fashion throughout is important.” The new Pure collection offers a hint at that direction but a full reset is expected to be in place by fall 2015. Brooks’ apparel challenge also involves reviving the category at SRA. With Lululemon’s success, apparel overall has been losing share at SRA. Moreover, SRA features “footwear experts but not necessarily [experts] from the apparel perspective.” Toward this end, Brooks’ apparel team is shifting from “a wholesale mentality to a retail mentality” to better understand how its apparel positioning stories are received by consumers as well as redoubling its efforts to bring story-telling elements around its premium positioning. Ultimately, Cavassa said that while look, feel, and fit are all essential ingredients around its premium brand positioning, stature is especially important. Brooks’ overall mission is to position itself as a “love brand” by scores of runnners. That goal is important to making further inroads in apparel because apparel is more about matching an individual’s lifestyle. “It’s a magical mix and it’s a lofty goal and we know were playing in a real competitive marketplace,” said Cavassa. “But as product people we believe that product comes first. And if we deliver the best product out there, people will respond. And we are not looking to be the biggest, we’re looking to be the brand that captures hearts.” ■ FEBRUARY 10, 2014 | SGBWeekly.com

15


SGB INTERVIEW

Rich Harshbarger President Running USA

R

unning USA, the non-profit organization for the running industry, recently selected Rich Harshbarger as its new CEO succeeding Susan Weeks. Harshbarger, 44, was formerly VP of consumer marketing and communications for Detroit Media Partnership since May 2008. His responsibilities included overseeing the day-to-day marketing functions for the most used media brands in Metro Detroit including: The Detroit News, Detroit Free Press and their award winning websites. Harshbarger also acts as executive race director for the Detroit Free Press Marathon, an annual event with nearly 30,000 runners. A California Bay Area native, Harshbarger is a former competitive swimmer and now a fitness runner. Running USA was formed in 1999 as a joint venture between a coalition of leading road races, race services companies, runningrelated media companies, the athletic industry and USA Track & Field with a goal of building and promoting the sport. Its website, runningusa.com, is known as the leading worldwide source for racing statistics. Why did you take the role? I am excited to join this leading national non-profit organization and to help advance and grow the sport. Running USA is the authority for the industry and I am looking forward to adding value for our members and sponsors. What are some key priorities for Running USA for 2014? The priorities will continue to be promotion of the sport and helping our members and sponsors receive value for their investments. Running USA is a respected resource for the media, event directors and partners, and I look forward to deepening the value we provide. What trends are you seeing in racing? With a record of more than 16 million finishers last year, racing of all distances continues to 16 SGBWeekly.com | FEBRUARY 10, 2014

be popular. Certainly themed events continue to pop up across the USA - from zombies to obstacle, mud courses to color runs - there is something for every level of runner. It typically comes down to the overall experience participants have if the event will continue to be successful. These innovations in themes and types of races ultimately help the sport to continue to grow and reach new audiences. We’ve seen many healthy trends around running participation. What concerns you? A few things our industry should keep an eye on include safety and costs. Nearly one year after Boston, security at events has been scrutinized and rightly so. What is the right amount? How much is too much? We need to continue discussing this to learn from one another and to help ensure events are accessible to spectators and volunteers while also protecting all involved. At the upcoming Running USA 2014 conference, we have a panel discussing this important topic. Regarding costs, events and merchandise appear to be climbing. Clearly in many cases this is because the quality of those items is also getting better. However, we should be cautious about the market and understand where the ceiling is. What’s on tap for the current year? I am looking forward to attending our upcoming conference in San Diego that takes place from February 9-11, meeting with partners and members to get a better sense of what's on their minds. What keeps them up at night? Knowing the concerns of our constituents will be a driving factor in how Running USA will help address them. How is Running USA supporting the running vendor and retail community? At Running USA, we want to be a resource to all influencers in the sport. For example, we distribute our annual member event calendar through running specialty stores. Also, what works in Des Moines for a running store, might scale or fit in Detroit. Certainly inspiring new runners is a goal. I think the growth in themed events is helping with that, and The Color Run has done an amazing job of reaching a previously untapped segment. As CEO, I plan to speak to as many people in the industry as possible to continue to grow the sport and this thriving industry. ■


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