en-us https://www.intensedebate.com/users/595062 Comments by JeffHarbaugh http://business.transworld.net/22280/features/market-watch-nikes-quarter-impact-on-industry-and-conference-call-quips/#IDComment37999517 Well, I think I'll just go away and let Jay and Cary take over this conversation. Great job gentlemen. J. Fri, 9 Oct 2009 15:59:30 +0000 http://business.transworld.net/22280/features/market-watch-nikes-quarter-impact-on-industry-and-conference-call-quips/#IDComment37999517 http://business.transworld.net/22280/features/market-watch-nikes-quarter-impact-on-industry-and-conference-call-quips/#IDComment37999356 Yeah right, The difference between Burton and Nike is that Burton needs the core shops a lot more. Remember- think like Nike. They are $11 (or is it $15- whatever) billion in revenue. Every thing they do is to grow that broader market and build their credibility. Burton sells snowboards, snowboard equipment and snowboard apparel to snowboarders. Mostly. Nike sells shoes and apparel to, well, everybody. If I were Nike, I think I'd work hard to maintain my core skate market credibility in the belief that it would generate sales of other Nike product that far exceeds what they can sell in skate shoes. But then, I don't get out very much. Thanks, J. Fri, 9 Oct 2009 15:57:42 +0000 http://business.transworld.net/22280/features/market-watch-nikes-quarter-impact-on-industry-and-conference-call-quips/#IDComment37999356 http://business.transworld.net/22280/features/market-watch-nikes-quarter-impact-on-industry-and-conference-call-quips/#IDComment37998823 Cary, Thanks- It's always good when somebody with real, actual numbers clarifies things. How did you resist the temptation to talk about gross margin return on inventory investment? J. Fri, 9 Oct 2009 15:52:05 +0000 http://business.transworld.net/22280/features/market-watch-nikes-quarter-impact-on-industry-and-conference-call-quips/#IDComment37998823 http://business.transworld.net/22363/features/market-watch-zumiezs-fireside-chat/#IDComment37846208 ihateddumptruckstoo, Sometimes it's so great to be able to post anonymously. Uh, as long as it wasn't me you were calling an idiot. thanks, J. Thu, 8 Oct 2009 15:53:09 +0000 http://business.transworld.net/22363/features/market-watch-zumiezs-fireside-chat/#IDComment37846208 http://business.transworld.net/22280/features/market-watch-nikes-quarter-impact-on-industry-and-conference-call-quips/#IDComment37845759 Jay, I think you and I are in violent agreement here. All they have the resources and credbility to do is try and protect the hard core market- even if that limits their growth potential. What growth there is for them has to come from building credibility and importance around the core and expanding that piece of the market. Hope we have the opportunity to continue this conversation over a beer sometime. J. Thu, 8 Oct 2009 15:48:20 +0000 http://business.transworld.net/22280/features/market-watch-nikes-quarter-impact-on-industry-and-conference-call-quips/#IDComment37845759 http://business.transworld.net/22363/features/market-watch-zumiezs-fireside-chat/#IDComment37506136 Bitter Beer, Well, I'm guessing all the people who shop there give a fuck. Whether we like it or not. And there seem to be enough of them that Zumiez has managed to open 390 or so shops and make a profitable business out of it so I guess somebody gives a fuck. And you're right- I don't spend as much time as I'd like talking to core shops. thanks for the comment. J. Tue, 6 Oct 2009 16:36:07 +0000 http://business.transworld.net/22363/features/market-watch-zumiezs-fireside-chat/#IDComment37506136 http://business.transworld.net/22280/features/market-watch-nikes-quarter-impact-on-industry-and-conference-call-quips/#IDComment37505359 Yeah right, Retailers, of course, will and should take as much Nike as they can as long as it sells quickly and at good margins and doesn't make them into a nike store, which I think is your point. If they sell well, then they are not too expensive. When distribution gets out of control, they won't sell so well, or at least not at the same prices. As we evaluate Nike and their action sports strategy, we need to think like a worldwide, multibillion giant and not like the skate industry. If Nike's whole plan was to sell just to specialty stores, the market wouldn't be be big enough to interest them. You're right to caution retailers about over dependence on Nike, or any other brand. Brands move out of specialty and into broader distribution. That's how it's always been. Nike may just move a little faster. Thanks, J. Tue, 6 Oct 2009 16:32:39 +0000 http://business.transworld.net/22280/features/market-watch-nikes-quarter-impact-on-industry-and-conference-call-quips/#IDComment37505359 http://business.transworld.net/22280/features/market-watch-nikes-quarter-impact-on-industry-and-conference-call-quips/#IDComment37503517 Jay, If your numbers are good, and given current economic conditions, it may be too late for a bunch of the "core" brands to take your advice. My concern is that most of them don't have the balance sheets to pursue your strategy. And at this point, they'd be playing catch up which is hard to do on a level playing field and perhaps damn near impossible against Nike and VF. I suspect that a more viable strategy is to hunker down and protect the market they've got left, and making those different shoes (perceived as very risky no doubt) might be a way to start. Thanks for the comment. J. Tue, 6 Oct 2009 16:25:08 +0000 http://business.transworld.net/22280/features/market-watch-nikes-quarter-impact-on-industry-and-conference-call-quips/#IDComment37503517 http://business.transworld.net/22280/features/market-watch-nikes-quarter-impact-on-industry-and-conference-call-quips/#IDComment37058638 Thanks. Hopefully, some of what I say at least makes people think about the business issues involved- whether they agree with me or not. J. Sat, 3 Oct 2009 17:31:37 +0000 http://business.transworld.net/22280/features/market-watch-nikes-quarter-impact-on-industry-and-conference-call-quips/#IDComment37058638 http://business.transworld.net/22280/features/market-watch-nikes-quarter-impact-on-industry-and-conference-call-quips/#IDComment37058534 Lance, I'm afraid I can't be much help on that one. I imagine you just have a bunch of phone and email work ahead of you to make the people who advertise on sites like yours aware that you exist. J. Sat, 3 Oct 2009 17:29:51 +0000 http://business.transworld.net/22280/features/market-watch-nikes-quarter-impact-on-industry-and-conference-call-quips/#IDComment37058534 http://business.transworld.net/features/zj-boarding-house-opens-billabong-and-hurley-partner-stores/#IDComment26068896 Samboy, This is one of those times when the devil is in the details, and we don't have the details, so let's be careful about our assumptions. I have not talked with Todd or Mikke since this came down so all I know for sure is what I read in their announcement. Along with most brands and most specialty retailers, I guess they got knocked up side the head by the recession. It was a bit of a surprise, it came on faster, and hit harder than anybody was prepared for. So sales fell and margins fell, leaving them with a lot less gross margin dollars to cover the same level of expenses. To manage that, you either boost your sales or your gross profit margin or cut your expenses. Boosting sales kind of isn't happening right now, so you focus on expenses and cut whatever you can. Along with everybody else, they did that I assume. But they probably found it wasn't enough. The next thing I might do is take a really close look at my gross margins and gross margin dollars earned on different product. Maybe they found that Hurley and Billabong were turning faster with higher margins and prices than some other brands. Like, for example, snowboard hard goods. Except Mervin stuff of course (Yes, I know they aren't selling any snowboard hard goods right now). So maybe Todd and Mikke said, "Any brand that can't carry its own weight no matter how cool has to go and we need to carry only those brands and products that turn fast and sell through. I hope to hell everybody is doing that. And then they might have said, "Yikes, we should have started doing that three years ago. It's a good plan, but we can't implement it in time to give us the cash flow we need." Having looked at their best selling big brands in this way, they decided that Hurley and Billabong were a couple they could do something with. So the brands approached them, or they approached the brands, or they fell over each other in a bar, or whatever. More likely, they talked to each other regularly, and maybe there were some overdue receivables and conversations about those were already ongoing and so the subject just naturally came up. I don't know what happened. And Hurley and Billabong people said, "We make money from ZJs Boarding House, and they've always been good to work with before, and their store has enough credibility that it's good for our brands to be in them." So they made a deal. I have no idea what any of the components of the deal are. Maybe there's a lot more space for those two brands. Maybe they kick in some money for certain expense of ZJs. Maybe ZJs doesn't have to pay Hurley and Billabong right away some money they owe them. Maybe a dozen or so other points as well. I have no idea. I've just seen this kind of deal done before. In fact, I've been involved in doing some of them myself. You may be right to say this doesn't increases ZJs overall sales in the short term. Or Hurley's or Billabong's. But it can buy them some time to complete the brand adjustment I describe above and help them to absorb some of their overhead at least on a temporary basis and just wait out this lousy market. Is there a marketing component for Hurley and Billabong? You bet! But they also keep a good customer and maybe expand their sales with that customer. I wrote years ago that big brands were no longer going to be able to get meaningful sales increases out of most specialty retailers, but that they should probably target 50 or 100 key retailers they needed to be in for image as well as sales. I'm guessing ZJs Boarding House qualifies as such a store in the eyes of many brands. Kind of a long answer, but it was a good though not simple question. Jeff Harbaugh. Wed, 1 Jul 2009 22:37:40 +0000 http://business.transworld.net/features/zj-boarding-house-opens-billabong-and-hurley-partner-stores/#IDComment26068896