With the explosion in popularity of niche sports and outdoor pursuits, owning the right brands has never mattered more to big business. Below, we take a dive into three high-profile acquisitions.
There’s been a marked move in acquisition activity in sports and outdoor pursuits, such as Dick’s Sporting Goods’ proposed acquisition of Foot Locker. These brands mean very different things depending on which side of the Atlantic you might be reading from, but the proposed $2.4bn acquisition marks what feels like a seminal moment in the sport and outdoor equipment industry.
Dick’s and Foot Locker: Two Brands, Two Audiences
Dick’s is a long-standing, family-friendly, performance-orientated brand, founded in the 40s. With a low-level presence in Hong Kong and China, Dick’s has remained steadfastly All-American and had probably its toughest test of brand loyalty when it announced it would be scaling back the supply of guns, ammunition and other firearms from its stores back in 2019. Such decisions aren’t taken lightly in the US and divide fierce opinions on both sides.
Meanwhile, Foot Locker has built its success on the fashion side of sporting footwear and, as such, has enjoyed long-held appeal with a much younger audience. With some 50 stores in the UK, we’re far more familiar with the brand and its ‘street cred’ approach. No less so in other territories, with Foot Locker enjoying a strong presence across Europe, Asia, the Middle East and Australia, alongside its home turf in the US.
Already, demographically and geographically, you can see why Foot Locker carries a significant attraction to Dick’s. Consolidation of market share, de-risking your operations and a fast-tracked route into new territories give them an edge in an industry that has had its fair share of turbulence in the last few years.
Diversification Beyond Core Categories
At the start of the summer, Kontoor Brands announced the completion of its $900m acquisition of Helly Hansen. Kontoor Brands, famed for owning brands like Lee and Wrangler, wanted to diversify beyond denim and functional workwear, and performance-related Norwegian giants Helly Hansen, who themselves turn $680m in annual revenues, look like a great fit. It also saw the ease at which Helly Hansen, an operation with more than 140 years under its belt, traded so successfully in a direct-to-consumer capacity. Kontoor is keen to learn more, not least so its other brands in Lee and Wrangler can make inroads into Levi’s market share in denim.
Brands going direct to consumer has been a common trend in retail for a number of years as digital capabilities have improved the ability for brands to connect directly with the consumer. However, the well-documented troubles with Nike, who appeared from the outside to go all-in on a D2C ticket, got them into the kinds of hot water many others now fear to dip their toes too deeply into.
Consolidation in the Outdoor Performance Market
The $290m sale of outdoor brand Jack Wolfskin to Amer Sports, who own a host of well-known outdoor and performance-related brands, looks to be a case of consolidating position in a very competitive market. With the intention of the acquisition announced earlier in the year, most commentators view the completion as a formality.
Among other sports and performance brands such as Wilson and Louisville Slugger, Amer Sports already owns premium technical outdoor wear brands like Arc’teryx, Salomon and Peak Performance. Combining Jack Wolfskin with these three additional brands offers Amer Sports an estimated $3.5bn annual revenue share of an outdoor performance wear industry valued in the region of $18 to $20bn.
Having a firm foothold with such a sizable chunk of the market spend across your portfolio will be the dream for most brands. The pent-up, post-Covid merger and acquisition of 2021 seems a long way off after some particularly lean periods, but dare we dream that we’re on a road to M&A recovery in the sports and outdoor industries?