The Return of an Iconic Golf Label


Dicks Sporting Goods (DKS), the largest golf retailer in the U.S., has announced the return of the iconic golf label Tommy Armour. Using innovative technology, not widely available in the country, to “promote forgiveness and distance”; DKS developed a line of game improvement woods and irons for mid-to-high handicap golfers. Designworks, a subsidiary of the BWM Group, designed the equipment; which DKS has priced lower than comparable products.

Howie Long-Short: Tiger Woods is back, but the decision to build an in-house golf brand has more to do with DKS’ “private label comp growth significantly outpacing the company average” and interest in increasing profit margins, than it does Sunday TV ratings. On the Q4 ’17 earnings call, CEO Ed Stack said that moving forward the company would be allocating more shelf space to private labels (i.e. Second Skin, Calia by Carrie), than they had received in years’ past. The decision to grow its private label business is a wise one. Its reliance on Nike (and other athletic apparel/sneaker companies that have chosen to pursue more DTC business) is among the leading reasons company share price is down 28% over the last 12 months.

Fan Marino: The Tommy Armour brand is named after the “Silver Scot”, Thomas Dickenson Armour, winner of 3 majors (’27 U.S. Open, ’30 PGA Championship, ’31 Open Championship). The label has been around since the 1970s, achieving peak success in the 80’s with their 845 irons (sold 600,000+ sets). Armour’s grandson Tommy III, a former PGA player with 2 tour wins (’90 Phoenix Open, ’03 Valero Texas Open), is currently active on the Champions Tour; he finished t-41st (-1) at the Toshiba Classic, the tour’s most recent event (March 9-11).

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NFL Merchandise Sales +40 YOY, Remains Biggest, Fastest Growing League

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NFL TV ratings were down another 10% for the 2017 season, indicating the league may not be as popular as it once was; but, Fanatics sales figures tell another story. The company reported that NFL fans spent 40% more on team apparel (jerseys, shirts, jackets etc.) YTD, then they did in Q1 ‘17. CEO Doug Mack also put to rest any talk that the NFL is losing popularity. Despite being Fanatics’ biggest league partner in terms of merchandise sales, it’s the company’s fastest growing league partner (YOY).

Howie Long-Short: The NFL acquired 3% of Fanatics in May 2017 for $95 million, at a $3.17 billion valuation; which was more than 2x revenue at the time. Noteworthy, as retailers Dick’s Sporting Goods (DKS) and Hibbett Sports, Inc. (HIBB) currently have market caps ($3.68 billion, $444 million) worth roughly half of what they generated in 2017 sales ($7.92 billion$973 million). That’s of no concern to NFL owners though, one was quoted as saying he could see Fanatics growing “anywhere from 8-10x”.

Fan Marino: NFL draft season is upon us (draft is April 26-28). It’s a particularly heavy QB class, with 6 players (Darnold, Rosen, Allen, Mayfield, Rudolph, Jackson) having the chance to be selected on Day 1. The NYJ, looking for a QB since ’69, gave up 3 2nd round selections (to Indianapolis) for the right to move from the 6th spot to the 3rd spot. One would think that would guarantee the team a QB, but ProFootballTalk isn’t so sure; Mike Florio believes Saquon Barkley (RB, Penn State) is the guy the team is targeting. As a Jets fan, I know where this is going (WATCH).

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Dick’s Sporting Goods to End Sales of Assault-Style Rifles, Permanently This Time


In wake of the revelation that 17-year-old Stoneman Douglas High School shooter Nikolas Cruz purchased a gun (not the weapon used in the school shootings) at Dick’s Sporting Goods, Inc. (DKS), the company has announced that effective immediately it will cease sales of assault-style rifles (aka modern sporting rifles) at all 700+ stores. DKS’ new 4-point policy (also applies to subsidiaries Gold Galaxy, Field & Stream, True Runner and Chelsea Collective) will also prevent the sale of firearms to individuals under the age of 21, end the sale of high-capacity magazines and ensure the company “never will” sell bump stocks (it never has). CEO Edward Stack noted that while the company still supports the 2nd Amendment, “we hope that the Congress will come together” to pass gun control legislation.

Howie Long-Short: Back in May ’17, DKS announced it had failed to meet Q2 ’17 growth expectations, sending shares on their largest one-day decline in 3-years. Q3 ’17 wasn’t much better; while DKS beat analyst expectations, the company reported net income declined 24.5% YOY to $36.91 million. DKS shares are down 35% over the last 12 months, with declining gun sales among the reasons the company has struggled; a challenging retail environment and a decline in hunting related sales are also negatively influencing performance. The company will report Q4 ’17 and full-year 2017 financials on March 6th.

Fan Marino: Stack issued a definitive statement regarding the company’s position on assault-style rifle sales saying, “we’re taking these guns out of all of our stores permanently”; but, we’ve heard similar words before from the company. In the wake of the December ’12 Sandy Hook school shootings, DKS suspended the sale of modern sporting rifles; only to resume selling them when they opened a line of 35 Field & Stream stores in 2013, once the outrage had subsided. To be fair, the company did not state the word “permanently” in ’12; but, it’s hard for me to issue them credit knowing that revenue and politics overshadowed the deaths of 20 elementary school students (and 6 teachers), just 5 years ago. Better late than never; but, certainly late.

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Fanatics Announces American Express Jersey Assurance Program, Protects Fans from Free- Agency, Trades

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Fanatics announced the launch of the American Express (AXP) jersey Assurance program; enabling NBA fans who purchase a player jersey with an American Express card, within the Fanatics network (including,, to exchange said jersey if the player leaves the team (due to free agency or a trade) within 12 months of purchase. AXP has taken the initiative to back both Fanatics existing program (90 days) and to extend the protection (for those who purchase with an AMEX), offering fans the confidence required to spend $250 for a new authentic Nike (NKE) jersey; knowing unforeseen changes could occur at any time before, during or after the season. Should a player relocate (and over 100 are free agents in ’18), fans will have the option to trade their existing jersey for a model on their new team or another player on the existing team.

Howie Long-Short: The NFL bought 3% of Fanatics in May 2017 for $95 million, at a $3.17 billion valuation; which was more than 2x its revenue at the time. Noteworthy, as retailers Dick’s Sporting Goods (DKS) and Hibbett Sports, Inc. (HIBB) currently have market caps ($3.72 billion, $498 million) worth roughly half of what they generated in 2017 sales ($7.92 billion, $973 million). That’s of no concern to NFL owners though, one was quoted as saying he could see the Fanatics growing “anywhere from 8-10x”.

Fan Marino: If you’re requiring usage of a jersey assurance program, you’re doing it wrong; you must take the player’s potential longevity with the team in to consideration. Look for guys that will retire with the franchise or a rookie with star potential, not a journeyman! From October-December, the league’s Top 10 most popular jerseys were; Curry, James, Durant, Antetokounmpo, Porizingis, Embiid, Westbrook, Simmons, Leonard and Harden. Only those with a recently purchased James jersey (and maybe Leonard) need to worry about holding on to their receipts. I do need to point out though, that during the ’16-’17 season, 5 players with Top 8 most popular jerseys were traded or free agents (Irving, Wade, Butler, Rose and Anthony).

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Analyst Predicts 30% Decline for Under Armour, “No Fundamental Recovery in Sight”


Susquehanna Financial Group Analyst Sam Poser has urged investors to sell Under Armour (UAA), predicting the share price will drop 30% in 2018; gains the company realized over the last 2 months. Poser believes the company’s decision to advertise with low-end retailers (i.e. KSS, DSW) is having an adverse effect on its efforts to sell product to “better retailers” (i.e. DKS, HIBB); insisting “there is no fundamental recovery in sight.” Stifel Analyst Jim Duffy has a contrary opinion, he’s pleased with the company’s recent cost savings initiatives and improved performance and foresees growth opportunities both internationally and within their footwear division.

Howie Long-Short: Following release of Poser’s note on Monday morning, shares declined 5.5%; closing at $15.11, the lowest the stock has been priced at since Summer ’13. Need a reason to believe UAA can turn it around? In June ’17, the company hired Patrik Frisk (former ALDO Group CEO) as President and COO. The 30-year industry veteran is considered an expert in preparing companies for a sale.

Fan Marino: Sloane Stephens, Under Armour’s long-time top female tennis endorser, has parted ways with the company and signed with Nike (NKE). Stephens, who signed with the brand as a teenager in 2010, won the 2017 U.S. Open wearing UAA tennis apparel. Financial terms of the deal were not disclosed.

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Amazon Takes on The Sports World; 25 Companies That Will Be Affected

Amazon has been credited with killing everything from book stores to electronics retailers since its 1994 launch. Now, with a market cap +/- $570 billion and $16 billion in annual operating cash flow, the company is taking aim at the sports world. In our final newsletter of 2017, we look at 4 of AMZN’s recent initiatives and the 25 companies most likely to be affected in 2018.

Amazon Expands Brand Registry Program, Now Includes Nike

In June, Nike (NKE) agreed to join Amazon’s brand registry program; seeking to curb counterfeiting and non-licensed selling within the e-commerce marketplace. The partnership also supports the athletic apparel and sneaker brand’s initiative to boost revenue through a shift to digital and DTC sales, relying less on struggling retailers. Competitors Adidas (ADDYY) and Under Armour (UAA) already have direct-sales deals in place with AMZN.

Names to Watch: FINL, DKS, FL, HIBB, BGFV; LON: SPD, LON: JD

Howie Long-Short: Athletic apparel and sneaker retailers count on NKE (70% of FL business comes from NKE); but NKE launched its “Consumer Direct Offense” strategy in fiscal Q1 ’18, increasing e-commerce business 19% YOY. Mediocre retailers beware, the company is maintaining just a few dozen wholesale relationships as it looks to increase its e-commerce business (from 15% of revenue to 30% over the next 5 years).

Amazon Entering Private-Label Sportswear Business

In October, Amazon (AMZN) announced it was entering the private-label sportswear business and working with the same Taiwanese suppliers, Makalot Industrial Co. (TPE: 1477) and Eclat Textile Co. (TPE: 1476), that some of the world’s biggest athletic brands use. Elcat’s involvement is particularly noteworthy as the company manufactures high-performance sportswear for Nike (NKE), Lululemon Athletica (LULU) and Under Armour (UAA).

Names to Watch: NKE, UAA, ADDYY, LULU; TPE: 1476, TPE: 1477

Howie Long-ShortAMZN wants to be in the private-label clothing business because it pushes retailers to sell inventory on the e-commerce site. Should a retailer choose not to, AMZN will simply produce the item themselves and compete directly against the brand.

The Pursuit of Exclusive Broadcast Rights

In September, the company hired Brian Potter to lead its sports video business. In November, Jim DeLorenzo, head of sports, Amazon Video, said the company was pleased with viewership numbers, engagement and the reliability/quality of the cloud-based streaming service during its season long experiment streaming Thursday Night Football (10 games, $50 million); though it is too early to say if the company will pursue future exclusive sports broadcasting rights. The company has since done deals that will deliver Prime subscribers 37 ATP tour events (previously owned by SKYAY), the AVP Beach Volleyball tour each of the next 3 summers and docu-series on Michigan Football.


Howie Long-Short: NFL Senior VP, Digital Media, Vishal Shah recently said “we continue to think some of the best days are ahead [for traditional TV partners] despite some shifts in the media landscape.” That doesn’t sound like linear television will be excluded in the next round of negotiations, but the NFL is encouraging interested media companies to bid on both television and streaming rights for the leagues TNF package; leaving the door ajar for the tech giants to receive exclusivity for the first time.

Twitch: The Future of Game Broadcasts?

Twitch, the live-streaming platform most often associated with video games, has agreed to stream up to 6 live G-League (Gatorade sponsored NBA minor league) games. Broadcasts will include interactive overlays (viewers can click a team name/logo for player, team, game and season stats), a loyalty program to reward viewer engagement during broadcasts (i.e. custom emotes for group chat) and the ability for users to provide their own live commentary (over the game feed) via the Twitch co-streaming feature.


Fan Marino: NBA Commissioner Adam Silver has gone on record stating he’d like to see changes in the way sports broadcasts are presented; pointing out the lack of live stats and chatter surrounding the broadcast, that gamers have become accustomed to. I’m not ready to give up Mike Breen, Marv Albert and Ian Eagle for Towelliee; but it’s worth watching to see if anyone else is.

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California Treasurer John Chiang has urged state pension fund managers to divest holdings in companies that sell firearms and ammunition within other states, that are considered illegal in California. While this would be the first-time California, which has the nation’s largest state pension fund, has urged fund managers to excise connections to gun retailers in the state pension system; following the Sandy Hook massacre in 2012, state pension funds were asked to divest shares in gun manufacturers. Last year the New York City Employees’ Retirement system voted to divest shares of Dick’s Sporting Goods (DKS), Cabela’s (now private) and Big 5 Sporting Goods (BGFV).

Howie Long-Short: The California State Teachers’ Retirement System and the California Public Employee’s Retirement System own a combined $12.4 million worth of shares in DKS and an additional $1.7 million worth in BGFV. If this proposal were to pass, and in California that isn’t difficult to envision, public pressure could force other states to follow. I’m not ready to say a gun wholesale/retail sell-off is coming, but Chiang has sparked a movement that certainly could lead to one.

Fan Marino: Chiang sadly reported that 3 of the 59 killed in Las Vegas were California teachers.

California Treasurer Urges State Pension Funds to Drop Gun Sellers