Should You Take a Hint from These Sports Companies to Break Out of Your Branding Shell?

 

Last week, news broke that sports retailer Finish Line – an active wear retailer with more than 950 locations worldwide – has sold one of its offshoot brands, JackRabbit. JackRabbit was Finish Line’s specialty store, focusing solely on running gear. It was sold to CriticalPoint Capital LLC, an LA-based private investment firm.

Although the brand was responsible for 4.8 percent of their parent-company’s total sales in 2016, they believe it to be a “long-term growth strategy and profitability improvement plans” to simplify the business and focus solely on Finish Line’s brand. “As we exit the running specialty business, we dedicate our entire focus to serving our core Finish Line and Finish Line Macy’s customers and driving profitable results that provide return to our shareholders,” said Sam Sato, CEO of Finish Line.

The sale price was undisclosed, but is expected to be finalized by the end of this fiscal year. Employees will keep their jobs.

 

Introducing a new brand is an opportunity to break out of “your thing”

Many sportswear entrepreneurs have broken out their company into multiple brand names in order to expand their product line without seeming too ‘whacky’ or ‘off-brand’. Whether it is successful seems to depend on many variables including customer loyalty, market climate, and leadership choices.

Lululemon founder Chip Wilson created Kit & Ace to expand his product assortment to lounge and casual wear in addition to the market Lululemon has dominated for years – yoga clothing. Although a bit different than the case of JackRabbit and Finish Line (Kit & Ace was founded by the same man but isn’t legally tied to Lululemon), the two were widely publicized as being sister companies.

Kit & Ace exploded onto the scene in 2014, quickly opening about 60 stores worldwide. But reports began to roll in of widespread layoffs within their offices, the first of which was in February of 2015 when 10 percent of their head office’s employees were let go. More recently, we’ve heard rumblings of another 20 percent of jobs being cut.

 

Industry insiders seem to attribute the push by Kit & Ace leadership for rapid growth for the quick rise-and-fall of the brand: “The problem, it seems, was an inflexibility on the speed to realize this vision when cracks started showing in quality in product and elsewhere,” said David Ian Gray, principal at Vancouver-based retail consultancy DIG360.

There are, however, some brands who are longstanding examples of the potential for this sort of business model. Adidas, who owns TaylorMade and Reebok, had a record-setting year in 2016. Both Reebok and Adidas proper exceeded sales expectations – up 6 and 12 percent, respectively – through diverse marketing campaigns and product design. “We are in great shape. Our strategic business plan ‘Creating the New’ with a clear focus on driving brand desirability has already started to pay off,” writes Herbert Hainer, Adidas Group CEO.

While TaylorMade continues to dominate the golf industry, Adidas focused on collaborative celebrity campaigns including big names in the music industry like Kanye West and Pharell Williams to make their sales. If you live in one of a few major cities in the US and Canada, you’re likely to have seen line-ups spanning blocks to get their hands on a pair of Yeezys.

Reebok used last year to tap into the nostalgic Nu Lad athleisure trend to sell their line of classics, which was met with wild success.

Overall, the company brought in more than $770 million, which is up a full 12 percent from the previous fiscal year. “Operating profit [is] expected to grow at double-digit rates” says their annual report.

 

*Image via Kit & Ace

Amy Van Es

Amy Van Es

Amy is our Multimedia Specialist at Hubba. With a background in design; journalism experience; and a mounting obsession with new media theory, Amy thrives on impactful narratives, clean layouts, and lattes.

Tweet her @Amy_VanEs
Amy Van Es

Discussion