Outdoor Insight

N E W S / A N A L Y S I S OUTDOOR EYE A s of press time in late October, the Trump Administration was showing no signs of backing down from a trade war with China as it moved ahead with its America First trade policy and strategy to establish what is described by the administration as a "fairer, more balanced" trade environment with other nations. Trade experts opine one of the most important stipulations of any future deal will be limitations on trading partners striking separate pacts with China. Additionally, the U.S. has moved forward with its intention to slap $200 billion in retaliatory tariffs on certain products from China, reported the Outdoor Industry Association, including backpacks, sport bags, headwear and some leather gloves and camping gear. An additional 10 percent tariff on these products and others, which went into effect on Sept. 24, rises to 25 percent on Jan. 1, 2019. There will be a process for companies to file a petition with the government to remove products from the list. As it relates to the current trade climate between the U.S. and China, brands are strategizing. "For context, about 11 percent of VF's total cost of goods sold come directly to the U.S. from China," Steve Rendle, chair- man, president and CEO of VF Corporation, said in a mid-October earnings call. "By leveraging our global supply chain, we have positioned ourselves to address any additional changes in the overall trade environment with China. And we have the ability to reposition our global sourcing footprint in the near to mid-term to mitigate the potential negative impact of additional tariffs should they materialize." Added Rendle, "To date, we have not seen any price increases as our supply chain team looks to manage our global sourcing footprint. It doesn't mean to say that there couldn't be. I think as we work so well with our group of vendors across each of our businesses, we're able to really level set production by country based on where the most favorable tariff situation is for each of those inbound sets of goods." Rendle noted that VF has been working to reduce its reliance on China for "many, many years." He added, "where you see us now at 11 percent for our U.S. imports, we can lever that down if need be or we can maintain it. It's really paying very close attention to everything that each one of us reads in the news every day and the work that we're doing in Washington with our partners there." Meanwhile, Jim Weber, CEO of Brooks Running, told CNBC that the company is considering shifting some of its sourcing operations to Vietnam from China due to the current U.S.-China trade war. He noted that any move would likely be permanent. — Bob McGee Tariff and Trade Update # T H E B U Z Z Revenues for The North Face are forecast to rise 7-8 percent in the second half of the fiscal year, with DTC up 13 percent overall and digital growth at 35 percent. "Where we've [North Face] seen really nice growth, and we've talked about this previously, is more of that Mountain Lifestyle compo- nent, the more contemporary logo-ed sportswear pieces that are taking their influence from the Mountain Sports cat- egory," VF Corp. president and CEO Steve Rendle told analysts last month. Meanwhile, the strategy to relocate VF's outdoor brands to Denver in Fall 2019 is moving ahead and VF's deci- sion to split into two companies, via a spinoff of its Jeans business, is on schedule to occur by April 30, 2019. Implus has added kinesiology tape brand RockTape to its portfolio of brands, which now includes Sof Sole, Balega, Yaktrax, apara, Airplus, Sneaker Balls, Sof Comfort, Little Hotties, Penguin, Perfect Fitness, ICETrekkers, FitDeck, DryGuy, TriggerPoint, Harbinger, FuelBelt, Spenco, STABIL, SKLZ and RockTape. Premium cooler brand Yeti filed for a $100 million IPO earlier this fall. The filing detailed changes undertaken by Yeti over the last 18 months, including DTC and international expansions and an 88 percent increase in company staff to more than 500. Yeti's DTC sales jumped to $194.4 million in 2017 from $14.1 million in 2013. The com- pany opened a flagship store in Austin in 2017 and has plans for additional retail stores in in 2019. Independent retailers accounted for 37 percent of Yeti's revenues in the fiscal year 2017. Joe Prebich is out at Mammut North America just months after he was appointed CEO and managing direc- tor in March. Neither the brand nor Prebich commented on the reason for his departure. Kris Kuster, Mammut Switzerland's managing director, is serving as interim CEO. Cabot Hosiery Mill, home to sock brand Darn Tough Vermont, is cel- ebrating 40 years in business. Having not only survived, but rather thrived by keeping textile manufacturing in small town Northfield, Vermont following the mass exodus of many manufacturers to overseas factories, Cabot Hosiery Mill has been a cornerstone of the town and region. The mill employs nearly 300 in a town whose population is just shy of 3000. "What we're doing here is what we've always done; working hard, supporting our community, and dem- onstrating that businesses can grow and prosper without leaving the state of Vermont or having to manufacture else- where," says Ric Cabot, Darn Tough Vermont President, CEO and Founder. Shopping trends: 79 percent of adults say they would be interested in the abil- ity to pay for an in-store purchase using a retailer's mobile app without needing to interact with a sales associate. Sixty- percent would provide their name and email for access to free Wi-Fi. (Source: Ruckus Networks) "To date, we have not seen any price increases as our supply chain team looks to manage our global sourcing footprint. It doesn't mean to say that there couldn't be." 4 • Outdoor Insight • November 2018 outdoorinsightmag.com

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