Outdoor Insight

outdoorinsightmag.com N E W S / A N A L Y S I S OUTDOOR EYE A s tensions over an all-out global trade war mounted earlier this summer, particularly with the first salvo in the U.S.-China tariff spat that imposed duties on $34 billion worth of China- and U.S.-made goods July 6, the sporting/outdoor goods and footwear/apparel industries were initially spared any direct consequence. But worry will mount in the months ahead, prompting swift actions, if any more trade rhetoric out of Washington or Beijing turns into further action, or other U.S. trading partners in Canada, Germany and Mexico implement retaliatory measures. The U.S. Federal Reserve has already warned that the trading conflicts are impairing the stock market and could hurt overall economic growth going forward. Supply chain executives remain on high alert and deeply concerned. With many Americans on 4th of July holiday, China accelerated its dialogue on what the ongoing U.S.-China trade climate could mean for American consumers and businesses as analyst fears about the Trump Administration's threat to levy duties on essentially all China exports to the U.S., some $500 billion worth, mounted. I n a s t a t e m e n t , C h i n a ' s Commerce Ministry charged the U.S. with "typical trade bullying" that "will impact innocent multi- national companies, ordinary enterprises and consumers alike." Additionally, the Chinese government accused the U.S. of violating World Trade Organization rules and igniting "the largest trade war in economic history to date." For its part, the Trump Administration has argued its trade measures are needed to force China to make changes, including ending its practice of requiring companies to hand over valuable technology and making its markets more accessible to U.S. companies. "We strongly urge the (Trump) administration to abandon its plans for tariffs on another $200 billion in Chinese imports, which would destroy thousands of American jobs and raise prices on virtually everything sold in our stores," National Retail Federation President and CEO Matthew Shay said. "Reining in China's abusive trade policies is a goal shared by many countries, but a strategy based on unilateral tariffs is the wrong approach and it has to stop." But with no immediate signs that either nation was on the verge of blinking in the standoff, the biggest concern to U.S. companies already selling their branded products in China, beyond any additional tariffs, is the possibility the Chinese government will employ a strategy to stoke anti-American sentiment among its consumers in coming months to hamper sales of U.S. brands in the market. Nike, which realized an 18 percent currency-neutral sales increase in China during its FY ended May 31, sees "extraordinary long-term growth potential" coming from Greater China, citing favorable economics, the rise of sport and fitness in the market, the scale and impact of digital and the strength of its brand. On the manufacturing side, smaller footwear and apparel brands who don't generate the same volume as their larger competitors may be particularly vulnerable in any prolonged U.S.-China trade tiff. Larger firms, which have diversified their supply chains in recent years, are more protected. Jefferies retail analyst Randy Konick recently told CNBC that the apparel and footwear industries are most exposed in China right now since the country manufactures an esti- mated 80 of their unit volume while golf equipment firms and boat makers are "less exposed" in China. T h e A m e r i c a n A p p a r e l & Footwear Association scored an important victory for the trade when the administration opted to remove most of the equipment and machinery used in domestic textile, apparel and footwear manufacturing from the initial 25-percent additional tariff placed on imports from China. But, AAFA president and CEO Rick Helfenbein remains concerned about the current trade environment. "Any new tariffs present an immense burden for the American people. Further, China has already made clear that it will retaliate swiftly," commented the trade group executive. "China previously identified almost $1 billion worth of American cotton exports to China as a target, which will hurt American farmers and U.S. textile manu- facturers, and add costs to our supply chains." Closer to home, a new North American Free Trade Agreement (NAFTA) was unlikely to be signed until after the mid-term elections in November. But the recent election of leftist leader Andrés Manuel López Obrador as president of Mexico is expected to delay the finaliza- tion of any new NAFTA pact further. The other NAFTA partner, Canada, in response to new U.S.-imposed tariffs, slapped new duties on $12.6 billion of U.S. products on July 1. — Bob McGee A Trade War 'Halo Effect' Could Be Damming # T H E B U Z Z Fleet Feet is freshening up. The Carrboro, NC-based running franchiser announced last month that it was rebranding as "Fleet Feet" (no more Sports) with a new logo to go with it. The streamlined new torch logo will be the centerpiece of a new digital brand-building cam- paign called "Let's Go," which will run on social media for the next few months. Louis Garneau Sports has acquired performance apparel brand Sugoi and mountain bike apparel brand Sombrio from Dorel Industries. With the sale, Dorel is exiting the performance apparel line of business to focus on its core stra- tegic businesses of bikes, parts and accessories and electric ride-ons. Garneau sees the acquisitions as a way to reinforce its positioning. "This acquisition will enable Garneau Group to rapidly increase its sales and become a world leader in cycling apparel," according to president and founder Louis Garneau. With the arrival of the second generation of the Garneau family in the company, LGS is undergoing a transformation and regeneration of its business model. William, 28, is GM of the company while Edouard, 25, is sales director. The youngest, Victoria, 21, has just finished her studies in fashion design and will soon be joining her brothers full-time in the family company. W.L. Gore & Associates is intro- ducing Gore-Tex 3D fit footwear, a new waterproof, breathable tech- nology that contours to the shape of your foot (like a sock) and will be part of the firms' "Guaranteed to Keep You Dry" product brand. Shoes featuring the new technol- ogy are in the pipeline from adidas Terrex, Salomon and Under Armour for Spring 2019. The Gore technol- ogy will give manufacturers access to a waterproof breathable insert, offering seamless comfort in a light- weight stretchy material that can be used in a variety of lighter-weight athletic and lifestyle shoes. Retailers Eddie Bauer and Pacific Sunwear, controlled by Golden Gate Capital entity PSEB, each have new senior leadership. At Eddie Bauer, Damien Huang has been promoted from SVP–merchan- dising and design to president. At PacSun, Alfred Chang was promoted to president from EVP–men's mer- chandising and design. Amazon Effect: There were 1.4 million new Amazon Prime member sign-ups between November 2017 and April 2018. Approximately 3.9 percent of Amazon's sales were generated by the Sports & Outdoors segment during the November to December 2017 timeframe. According to research by channeladvisor.com, 60 percent of shoppers say they discover new products on Instagram. 4 • Outdoor Insight • August 2018 What a Trade War Could Mean for Business.

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