Licensed sports apparel plays catch-up ball: new fads and teams help offset strike-impacted sales - includes article about 1996 Olympics mascot Izzy

Discount Store News, Feb 6, 1995 by James Mammarella

NATIONWIDE DSN REPORT -- Licensed sports apparel sales in recent years have hit one home run after another.

Even with last season's baseball strike and hockey lockout, the business is still swinging for the fences.

Whenever the market has seemed ready to fall off the pace, new fads helped push revenues higher. Cross-licensing team sports with animated character art spurred volume to new levels over the last two years. Exciting developments in major sports -- record-setting years by major league baseball stars, new teams added to the national roster in both hockey and baseball -- seemed likely to drive new earnings last year.

Finally, in the fourth quarter of 1994, discounters received bad news in the form of a one-two punch against licensed sports apparel sales. The bitter baseball strike wore on, and greed won as the World Series was canceled. Then NHL hockey, at its most opportune moment for marketing power, crashed in a heap as the owners kept players locked out.

Discounters across the country concur that fourth quarter 1994 sales were off -- the ballpark figure ranged from 5% to 15% below 1993 -- in a lack of consumer enthusiasm. The best outlook now is for a revenue plateau in 1995 and ahead.

This view has not kept some vendors from announcing bold new plans in a crowded supplier market. For instance, Wrangler is due to launch a team sports enterprise with Cutler within the year, and major discount vendor Accessory Network is shipping an all-new line of tote bags and backpacks with newly designed MLB, NBA, NFL and NHL art. But these experienced heavyweights admit they are muscling their way into a soft zone.

A soft lines gmm for a regional discounter said: "It's not a growing business. Everybody has maxed it out, given it the prime real estate. It doesn't warrant that anymore."

Another merchant characterized the trend in a similar way. "It's a business now rather than a boom," said Matthew Sudhalter, dmm at 20-store discounter Stuarts. He added this is particularly true in the men's sizes, where he called team sports apparel "a mature business."

One bright spot that still offers growth potential is in boys' wear. "It's a trade-up opportunity in some cases," Sudhalter noted, explaining that during late 1994 Stuarts found that rather than settling for T-shirts, many customers chose to buy $16.99 rugby shirts with popular team logos.

In men's sizes, some team sports good news came from a sub-professional level. "Colleges came back for us," Sudhalter said, crediting mens' wear buyer Dave Elmer for assembling an assortment that scored great sell-through.

Sheila Terry, dmm men's wear for the Doneger Group, retail buying agents, said the big picture on team licensed apparel is clear. "It has peaked. It's going to eventually trend down," she said, noting that discounters are nevertheless benefiting from a lack of involvement by upstairs chains. "Department stores have left it to specialty stores and the mass market."

Even 1996 Olympics marketing is affected, said James Sparks, gmm for men's and boy's apparel at Bradlees. "If you're close to Atlanta, you'll get business in 1995 -- but it will not replace the team business." He predicted the bulk of Olympics licensed apparel sales will occur much closer to the Games, and suggested that Olympic excitement may translate into greater sales after the Summer 1996 Games end. Overall, he indicated, stronger licensed sports apparel sales could be netted by local micro-marketing.

Maria Stefan, executive director of the Sporting Goods Manufacturers Association, pointed to opportunities in "licensing in a broader sense, with resorts, with events like the PGA Tour and outdoorsoriented identities." She added that the licensing fortunes of stock car racing organization NASCAR are still rising. Stock car racing may well be America's favorite spectator sport, and it represents another sizable wedge of potential for apparel merchandisers.

Speaking with DSN on the eve of the SuperShow, Stefan asserted that of 10,000 exhibitor booths, 800 are taken by licensed sports apparel suppliers, and the waiting list includes more. She said licensed sports apparel is approximately a $9.5 billion business at present.

She noted the bad timing of the cancellation of half the NHL season, which could have capitalized on baseball's absence in late 1994. NHL licensed goods sales, she said, rose from about $500 million to $2 billion in the last two years. The would-be pinnacle hoped for in 1994 never got a chance to materialize.

Asserting the licensed sports category still offers discounters good sell-through, Stefan noted that active wear in general "is a struggle. It's at the saturation point at retail in the mass channel." Doneger's Terry agreed. "Active needs a big shot in the arm," she said. "There's nothing new and exciting going on. It needs fresh appeal for the customer."

Sometimes brand power can provide that appeal. VF Corporation, which provides apparel for all channels of distribution, recently announced a new joint venture between two of its divisions that foreshadows new team sports apparel product lines for the mass market. In January, VF said the Lee Company and Nutmeg Mills will jointly produce the Lee Sports line of licensed sports active wear. Mackey McDonald, president and coo of VF Corp., said that even with the current apparel malaise and the labor troubles of bigtime sports, vendors could look to prosper over the long term. He said a savvy sourcing organization, fresh graphics and a strong commitment to supporting consumer brand franchises would make the difference.