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K2, Volkl, Dalbello, Marker, Marmot, Full Tilt and Line..What Does the Future Hold for Them?
- Joined
- Nov 12, 2015
- Posts
- 6,329
Hey Jason thanks for stopping by and thanks for the original Mothership. Probably the reason I'm so hooked on skiing today ( actually can I sue you for the damage to my bank balance?
I pretty much agree with your analysis - hold tight you might get a buyer who'll cut you a deal on your brands.
Thanks jason, good insights. I do stick to my original thoughts though that the sale price, particularly if they want to sell it as a single entity (which makes a lot of sense as doing a break-up incurs significant additional transaction costs and diversion of management time) will be a lot less than people are expecting and may not make triple digits. this leaves a buyer (most likely some form of PE/VC) enough scope to do some divestments and break-ups and remain ahead. Of course the purchase price is only the first part. I suspect the working capital requirements are horrendous!
Thanks for the great insight, Jason. Really interesting.
I have had a couple of conversations with friends in the investment banking business who can't get into details. But both have the impression that Newell's bankers completely overestimated the level of interest in the entire portfolio as a whole. Felt that a number of buyers might want it all.
Evidently not so. And, as you mention ALL that Newell wants to see is their stock trade at a higher price. They have already told the analysts who follow them that these brands will be gone, soon.
Do you think that there is a player who would buy it all, presumably at a deep discount {based on Newell's evident desire to make it all go away, quickly}? They then could presumably sell off the individual brands, and have the sum of the parts exceed the price paid for it all?
On the face of it, it seems logical. You are right on point that public companies are serving very different masters, and moving the brands might be more important that moving them at the right price. I also can easily see why they don't want to be left with 3-4 at the end. Let somebody else deal with it.
I hope the pieces fall together the right way, for a lot of people, and a lot of reasons.
Interestingly, a very similar situation is unfolding in the ski area business with CNL. CNL, and their bankers have been evidently digging in, holding firm in selling the resort portfolio to one buyer. There has not been one to come to the table and close the deal in two years.
There are some coveted properties, and some "challenges." I'm under the impression that they may be at the point where a buyer may buy it all, at the right price, keep what they want, sell off the rest.....coming close to giving away a few of them.
Similar to Newell, CNL, a very successful business with no real ski area/resort experience probably can't wait to have it over and behind them.
Agree with SS, there are a number of PE firms who might be opportunistic and interested. You have probably spoken to a couple. The timing to get rid of this is Newell's motivator. They have already made that bed with the street. The price is not, IMO, the big factor. I can't imagine it is.
I think SS's thoughts ^^^ are very much on point.
Good luck! And thanks for the insight.
I have had a couple of conversations with friends in the investment banking business who can't get into details. But both have the impression that Newell's bankers completely overestimated the level of interest in the entire portfolio as a whole. Felt that a number of buyers might want it all.
Evidently not so. And, as you mention ALL that Newell wants to see is their stock trade at a higher price. They have already told the analysts who follow them that these brands will be gone, soon.
Do you think that there is a player who would buy it all, presumably at a deep discount {based on Newell's evident desire to make it all go away, quickly}? They then could presumably sell off the individual brands, and have the sum of the parts exceed the price paid for it all?
On the face of it, it seems logical. You are right on point that public companies are serving very different masters, and moving the brands might be more important that moving them at the right price. I also can easily see why they don't want to be left with 3-4 at the end. Let somebody else deal with it.
I hope the pieces fall together the right way, for a lot of people, and a lot of reasons.
Interestingly, a very similar situation is unfolding in the ski area business with CNL. CNL, and their bankers have been evidently digging in, holding firm in selling the resort portfolio to one buyer. There has not been one to come to the table and close the deal in two years.
There are some coveted properties, and some "challenges." I'm under the impression that they may be at the point where a buyer may buy it all, at the right price, keep what they want, sell off the rest.....coming close to giving away a few of them.
Similar to Newell, CNL, a very successful business with no real ski area/resort experience probably can't wait to have it over and behind them.
Agree with SS, there are a number of PE firms who might be opportunistic and interested. You have probably spoken to a couple. The timing to get rid of this is Newell's motivator. They have already made that bed with the street. The price is not, IMO, the big factor. I can't imagine it is.
I think SS's thoughts ^^^ are very much on point.
Good luck! And thanks for the insight.
Last edited:
Thread Starter
TS
Thanks @JLev for joining us. A bit of a sidebar note, through @Cyrus Schenck I was able to reach out to Jason to get his opinion on the topic and I appreciate his candidness. Jason and I and a great conversation on the phone today about this and the state of the industry. I hope Jason will be able to check in from time to time.
Awesome. And thanks to you BOTH, and to Cyrus.
Having worked for private companies, public companies, and having taken a private one public, I absolutely understand Jason's comments. Being part of a large publicly traded diversified concern would seem like a total misfit for an on Snow business.
Interesting stuff. Thanks. Great conversation and content.
Having worked for private companies, public companies, and having taken a private one public, I absolutely understand Jason's comments. Being part of a large publicly traded diversified concern would seem like a total misfit for an on Snow business.
Interesting stuff. Thanks. Great conversation and content.
Thread Starter
TS
I really can't see someone coming and buying it all, there is just too many fractures that have been discussed early on this thread. K2 having a factory in China making K2, Line and Volkl. Dalbello in Italy making Dalbello and now K2 boots, not sure where FT's are being made. Volkl/Marker being German based. It is too fractured to break up and too much for one to buy. I am not sure anyone looking for a turnkey ski conglomerate and if so they run into all the other problems that have happened in this scenerio, satisfying the shareholders. Breaking them up is the issue for Newell, the time and effort it takes for their accountants to structure all the deals, it might just be easier for them to take the writeoff and close the doors...but they said they would not do that and we knw they are not going to go back on their word. . I do think this last statement was them just buying time..no one is out of the woods yet.
. I do think this last statement was them just buying time..no one is out of the woods yet.
Thread Starter
TS
I agree with @ScotsSkier, it will not be the initial cost but the day to day operating costs that will be stagering.
I really can't see someone coming and buying it all, there is just too many fractures that have been discussed early on this thread. K2 having a factory in China making K2, Line and Volkl. Dalbello in Italy making Dalbello and now K2 boots, not sure where FT's are being made. Volkl/Marker being German based. It is too fractured to break up and too much for one to buy. I am not sure anyone looking for a turnkey ski conglomerate and if so they run into all the other problems that have happened in this scenerio, satisfying the shareholders. Breaking them up is the issue for Newell, the time and effort it takes for their accountants to structure all the deals, it might just be easier for them to take the writeoff and close the doors...but they said they would not do that and we knw they are not going to go back on their word.
I don't see any one group buying it to operate all of these brands, either. But I can clearly see why Newell might not want to undertake ALL of the BS involved in breaking it up. There are people who specialize in that. I can see a scenario where somebody buys it all from Newell, and then does the surgery to cut it up, pretty quickly. Acquired at the right price, with a handle on what each piece would yield, they might do quite well. Those working for Newell on the deal right now likely have too tight a deadline to do this themselves. I think that looks clear. These winter sports brands were an aggravating throw-in in the $15 Bil deal.
Think that we're sort of seeing it play out the same way.
Or, at least I hope it plays out with them surviving!
Thread Starter
TS
From ISPO.
News that skiing brands K2, Völkl and Marker are up for sale really took retailers in the winter sports industry by surprise. Could some of the most renowned skiing brands soon be disappearing from the shops? ISPO.com gets four industry experts to explain the market situation.
Two days after the news that K2, Völkl and Maker are set to be sold by American holding company Newell Brands, the mother company assuaged the concerns of the public. In a press release the American company gave assurance that the brands would not be ditched if no buyer could be found. Although retailers are now relieved, they still speak of how the news shocked the entire sector. Here you can read what they told us.
Werner Haizmann, President of the Verbands Deutscher Sportfachhandel (Association of German Sports Retailers)
Werner Haizmann, president of VDS, talks about the shock news.
“K2 is a premium brand with a cult following and it has had a lot of success in the USA. Völkl is an established brand which is important to Germany. The news was a massive shock. I immediately thought about how it reflects the state of the winter sports industry. Theoretically, the news was bad for the sector. But it’s wonderful if there is a chance that the brands could be kept. Our goal must now be to re-enthuse people for skiing – just as Tobias Gröber, the Director of ISPO, has already written at ISPO.com. The retailers aren’t interested in who the holding company behind the brand is. It’s only if the brand completely disappears that the customers will then go to other brands. For the industry, the disappearance of the brands wouldn’t be so bad.”
Andreas Rudolf, CEO of Sport 2000
The winter sports market is “too bloated,” thinks Andreas Rudolf, CEO of Sport 2000.
“When you see such notices of sale, it initially causes great concern. It’s often not at all about the performance of individual brands. In particular, Völkl and K2 both have an unbelievably good image and great innovation strength. The sale of companies such as these weakens the whole of the winter sports industry and is a warning sign that the whole image needs to listen to intently. Those in positions of responsibility need to realize that the whole industry has become much too bloated."
Thomas Scheck, Director of Product Management, Intersport Germany
“Business is carrying on as normal,” says Thomas Scheck, Director of Product Management at Intersport.
“Our customers think of us as experts when it comes to winter sports. We’ve built up this reputation over many years through the wide range of products and services that our retailers offer. An especially significant building block has been our successful partnership with well-known ski brands such as K2 and Völkl. They represent product quality, performance and innovation in winter sport. Because of this, it’s very important that such strong and trustworthy brands remain visible in the future. For us, business with K2, Völkl and others is carrying on as normal. We have a contract in six countries with the respective umbrella organization and are already working in close coordination with the brand managers on the new season.”
Bernd Geiling, CEO of the Online Store xspo.de
For retailers the owner plays hardly any role, according to Bernd Geiling, CEO of xspo.de.
“I was completely certain that brands such as K2 and Völkl would not disappear. But when you see how US companies work, then the news that we’ve seen is also no surprise – it’s all about maximizing profits. For retailers, the owner is irrelevant as long as production is continuing. Before you let such long-established companies go, you always look for a buyer. On one hand the collapse of the companies would be very sad, but on the other hand skiing equipment would still be bought just as much, because people won’t simply stop skiing. They’ll simply buy equipment from other brands. It would still be a shame, because the choice wouldn’t be as wide.”
Article by Gregor Röslmaier, author
News that skiing brands K2, Völkl and Marker are up for sale really took retailers in the winter sports industry by surprise. Could some of the most renowned skiing brands soon be disappearing from the shops? ISPO.com gets four industry experts to explain the market situation.
Two days after the news that K2, Völkl and Maker are set to be sold by American holding company Newell Brands, the mother company assuaged the concerns of the public. In a press release the American company gave assurance that the brands would not be ditched if no buyer could be found. Although retailers are now relieved, they still speak of how the news shocked the entire sector. Here you can read what they told us.
Werner Haizmann, President of the Verbands Deutscher Sportfachhandel (Association of German Sports Retailers)
Werner Haizmann, president of VDS, talks about the shock news.
“K2 is a premium brand with a cult following and it has had a lot of success in the USA. Völkl is an established brand which is important to Germany. The news was a massive shock. I immediately thought about how it reflects the state of the winter sports industry. Theoretically, the news was bad for the sector. But it’s wonderful if there is a chance that the brands could be kept. Our goal must now be to re-enthuse people for skiing – just as Tobias Gröber, the Director of ISPO, has already written at ISPO.com. The retailers aren’t interested in who the holding company behind the brand is. It’s only if the brand completely disappears that the customers will then go to other brands. For the industry, the disappearance of the brands wouldn’t be so bad.”
Andreas Rudolf, CEO of Sport 2000
The winter sports market is “too bloated,” thinks Andreas Rudolf, CEO of Sport 2000.
“When you see such notices of sale, it initially causes great concern. It’s often not at all about the performance of individual brands. In particular, Völkl and K2 both have an unbelievably good image and great innovation strength. The sale of companies such as these weakens the whole of the winter sports industry and is a warning sign that the whole image needs to listen to intently. Those in positions of responsibility need to realize that the whole industry has become much too bloated."
Thomas Scheck, Director of Product Management, Intersport Germany
“Business is carrying on as normal,” says Thomas Scheck, Director of Product Management at Intersport.
“Our customers think of us as experts when it comes to winter sports. We’ve built up this reputation over many years through the wide range of products and services that our retailers offer. An especially significant building block has been our successful partnership with well-known ski brands such as K2 and Völkl. They represent product quality, performance and innovation in winter sport. Because of this, it’s very important that such strong and trustworthy brands remain visible in the future. For us, business with K2, Völkl and others is carrying on as normal. We have a contract in six countries with the respective umbrella organization and are already working in close coordination with the brand managers on the new season.”
Bernd Geiling, CEO of the Online Store xspo.de
For retailers the owner plays hardly any role, according to Bernd Geiling, CEO of xspo.de.
“I was completely certain that brands such as K2 and Völkl would not disappear. But when you see how US companies work, then the news that we’ve seen is also no surprise – it’s all about maximizing profits. For retailers, the owner is irrelevant as long as production is continuing. Before you let such long-established companies go, you always look for a buyer. On one hand the collapse of the companies would be very sad, but on the other hand skiing equipment would still be bought just as much, because people won’t simply stop skiing. They’ll simply buy equipment from other brands. It would still be a shame, because the choice wouldn’t be as wide.”
Article by Gregor Röslmaier, author
The world seems sort of sad at the moment... in many regards.
Thread Starter
TS
This will get resolved but is shows how small this industry and our little world is.
I read today that Newell is selling its tool divisions (Irwin and some others) to Stanley. For a lot of money. I have no idea if it was a good deal for Stanley but it was a lot more money than I guess the winter sports would sell for.
Not every corporation is in business just to maximize profits. Some reflect the passion of the ownership group (even if publicly traded). If we get a consortium of enough $1000 investors here to buy K2, we won't put profits first.
Eric
Not every corporation is in business just to maximize profits. Some reflect the passion of the ownership group (even if publicly traded). If we get a consortium of enough $1000 investors here to buy K2, we won't put profits first.
Eric
Thread Starter
TS
I bet Newell makes more from Rubbermaid Kitchen packs than they make from the ski holdings, the same even with the tool divisions they just sold, because simply they are 12 month businesses. We might be able to get the money together to buy...but the operating colds will be the killer.
First, this is higher level conversation, like so many of the threads on PugSki, and I hope we're all enjoying it. Nice work P&T!
I noticed the news in the WSJ about Newell selling the tool group to Stanley, Black & Decker. Big deal. The tool group is fetching $2Bil. Fits into the $15Bil price paid for Newell.
It's very different than this winter sports group.
Some of the recent posts are very interesting. Jason's and Lorenzo's in particular. It filled in the puzzle for me. I can visualize just how Newell is positioning this with the analysts who follow them. That's an important group. And it seems logical that the winter sports businesses are being positioned as something they just want to unload. A drag.
My dad was the head of a big publicly traded company. 150 year old manufacturer that had morphed into a pretty diversified international conglomerate. In the late 70's, they were acquired, by a group who threw a tender offer out to their shareholders, at what got worked up to a 30% premium. The acquiring group then broke it up, and sold off every piece of it. The operating companies, factories, office buildings, etc. Every single asset. They made a killing. It was one of the first "greenmail" deals. I remember my dad being crushed. 44 years at that company. How could he miss that the sum of the parts was worth SO MUCH more? And this is lightyears before today's world of executive compensation. It sucked.
Well the stock market, and how it's manipulated these days, was entirely different. The thousands of different financial services organizations that dot the landscape, specializing in very narrow niches hadn't be dreamt of. No internet, no instant information, or trades. Decades later, I found myself being a big part of quarterly analyst calls, and of helping manage a big company quarter to quarter. All about the stock price. All about outpacing the market, "exceeding expectations", blah blah. I have had conversations about how we planned to sell off businesses that we positioned as being a drag on the organization's progress, and considered internally to be dogs. We told all of our people about long term plans, and it was quarter to quarter at the longest. I got out of it.
To those in this ski business, let alone we fans on the lunatic fringe, these are all potentially very attractive businesses and brands. Some are truly Iconic. To Newell, they are a pain in the ass. They are the crap that came along with the Jarden deal. It's a toxic junk pile. They don't fit, at all! And as big as they seem to ud, they are small to Newell.
It would be GREAT for the ski business if Newell would sell them off individually, as the prices might be rock bottom. But that takes time, people and money. So, their bankers {Goldman,I think} will certainly find a buyer for the whole thing, and that buyer will cut it up, and I imagine will find buyers for every piece. An opportunity to flip them and do well.
I think that Newell is selling the street on the fact that this will be all gone in a couple of quarters at most. It's been odd to see the press releases. Would not have been my plan or advice. In that world nobody is paying any attention to ski brands, though. When Newell paints their vision, it sure doesn't include this stuff!
We see and hear a lot of comments to the effect that people working for a number of the ski businesses are not concerned. Many have been bought and sold three-four times. So, we'll have a new owner. No big deal.
It seems to me that this might be a tipping point, where the existing management of a number of these companies might be able to acquire them. Get complete control. Make some employee owned. Being able to buy a business that you know, at a deep discount, if it has decent growth prospects, can be a compelling pitch. There is a lot of money out there.
I now think all of the brands will survive. It's going to be interesting to see how it unfolds. This might turn out to be a very good thing for the industry. Have some people reenergized, being forced to change how things have always been done, getting creative. Changing it up.
My thinking has shifted from kind of gloomy, to thinking this could be a shot in the arm. And it's largely because this doesn't fit with a big public company. As a result of how they are moving this, relative deals should be realized.
Fingers crossed.
I noticed the news in the WSJ about Newell selling the tool group to Stanley, Black & Decker. Big deal. The tool group is fetching $2Bil. Fits into the $15Bil price paid for Newell.
It's very different than this winter sports group.
Some of the recent posts are very interesting. Jason's and Lorenzo's in particular. It filled in the puzzle for me. I can visualize just how Newell is positioning this with the analysts who follow them. That's an important group. And it seems logical that the winter sports businesses are being positioned as something they just want to unload. A drag.
My dad was the head of a big publicly traded company. 150 year old manufacturer that had morphed into a pretty diversified international conglomerate. In the late 70's, they were acquired, by a group who threw a tender offer out to their shareholders, at what got worked up to a 30% premium. The acquiring group then broke it up, and sold off every piece of it. The operating companies, factories, office buildings, etc. Every single asset. They made a killing. It was one of the first "greenmail" deals. I remember my dad being crushed. 44 years at that company. How could he miss that the sum of the parts was worth SO MUCH more? And this is lightyears before today's world of executive compensation. It sucked.
Well the stock market, and how it's manipulated these days, was entirely different. The thousands of different financial services organizations that dot the landscape, specializing in very narrow niches hadn't be dreamt of. No internet, no instant information, or trades. Decades later, I found myself being a big part of quarterly analyst calls, and of helping manage a big company quarter to quarter. All about the stock price. All about outpacing the market, "exceeding expectations", blah blah. I have had conversations about how we planned to sell off businesses that we positioned as being a drag on the organization's progress, and considered internally to be dogs. We told all of our people about long term plans, and it was quarter to quarter at the longest. I got out of it.
To those in this ski business, let alone we fans on the lunatic fringe, these are all potentially very attractive businesses and brands. Some are truly Iconic. To Newell, they are a pain in the ass. They are the crap that came along with the Jarden deal. It's a toxic junk pile. They don't fit, at all! And as big as they seem to ud, they are small to Newell.
It would be GREAT for the ski business if Newell would sell them off individually, as the prices might be rock bottom. But that takes time, people and money. So, their bankers {Goldman,I think} will certainly find a buyer for the whole thing, and that buyer will cut it up, and I imagine will find buyers for every piece. An opportunity to flip them and do well.
I think that Newell is selling the street on the fact that this will be all gone in a couple of quarters at most. It's been odd to see the press releases. Would not have been my plan or advice. In that world nobody is paying any attention to ski brands, though. When Newell paints their vision, it sure doesn't include this stuff!
We see and hear a lot of comments to the effect that people working for a number of the ski businesses are not concerned. Many have been bought and sold three-four times. So, we'll have a new owner. No big deal.
It seems to me that this might be a tipping point, where the existing management of a number of these companies might be able to acquire them. Get complete control. Make some employee owned. Being able to buy a business that you know, at a deep discount, if it has decent growth prospects, can be a compelling pitch. There is a lot of money out there.
I now think all of the brands will survive. It's going to be interesting to see how it unfolds. This might turn out to be a very good thing for the industry. Have some people reenergized, being forced to change how things have always been done, getting creative. Changing it up.
My thinking has shifted from kind of gloomy, to thinking this could be a shot in the arm. And it's largely because this doesn't fit with a big public company. As a result of how they are moving this, relative deals should be realized.
Fingers crossed.
Last edited:
Thread Starter
TS
@Muleski, first thank you for the complement but if it wasn't for members like you and the others here, it would be any other ski site.
Now, how long can we move the chess pieces around before they start falling off the table or get taken? The ski industry under it's current model is jus tnot profitable. It is still just a 5 season sport, maybe actually longer on snow but the buying season is 5 months...in a good year. Let's talk about a subject that has been a problem that we have addressed and even @JLev who hasn't been but a couple of days immediately brought it up when we talked on the phone, the over production of product. There were rumors of Rossignol having 100 thousand pairs of overstocked skis from the Quicksilver years. One company having 800 plus pairs of blems to sell at the end of a season. This over production numbers just does not make sense in a weather dependant sport. There is an issue on the softgoods side where the following years orders need to be in by December..some shops haven't even opened yet. At least on the softgoods end they have non skiers buying the product, not jsut skiers, thats jsut not the case with hardgoods.
Are we seeing a change in the production side with smaller companies like a J-Skis, Renoun or a ON3P that are building skis basically on demand or as they need them? Do we need redundancy in brands & models, the same ski being offered by two differenct brands under the same umbrella, just look at the race wall. What are the budgets for the pools and to run the teams and brand name dilution. Will we see more of what the Rossignol group do in remving their name from the bindings and just offering then under the Look name?
So, is this a wake up call for the industry? Maybe, but will it learn? I doubt it, it wan't the last half dozen times it happened. Why doen't a brand concentrate on 5-10 great skis verses 15-25 good ones with some mediocre ones mixed in to fill gaps and be "segment busters"? I remember talking to my Volkl rep about "Premium Skis" and he was offended that I didn't consider Volkl as a premium brand. I replied, "At one time Volkl was a premium brand, but once they started offering $399 package skis and sold them in Sports Authority, they forfeited the right to be called a premium brand" I also did say, that they still offer premium products but the brand is not exclusive as it once was when they had P9's and Rentigers. The cost in increased production is exclusivity.
I maybe thinking too narrowly here but it seems that Marker is the golden goose here but anyone who has money already has a binding unber their umbrella. Marker brings volume but what does it bring that they don't alreay have already? Will the addition in market share outweigh the cost of the purchase because I cannot see Volkl NOT being attached to it. Jason inquired abotu Line & FT, while Newell didn't want to sell it to him, it will very well get packaged with K2 and whoever buys that peice might be happy to just pass them off to him to cover some of their costs. Who knows, maybe we just gave some VC guy another way to put the deal together. If so, remember where you read it and we are accepting finders fees.
Now, how long can we move the chess pieces around before they start falling off the table or get taken? The ski industry under it's current model is jus tnot profitable. It is still just a 5 season sport, maybe actually longer on snow but the buying season is 5 months...in a good year. Let's talk about a subject that has been a problem that we have addressed and even @JLev who hasn't been but a couple of days immediately brought it up when we talked on the phone, the over production of product. There were rumors of Rossignol having 100 thousand pairs of overstocked skis from the Quicksilver years. One company having 800 plus pairs of blems to sell at the end of a season. This over production numbers just does not make sense in a weather dependant sport. There is an issue on the softgoods side where the following years orders need to be in by December..some shops haven't even opened yet. At least on the softgoods end they have non skiers buying the product, not jsut skiers, thats jsut not the case with hardgoods.
Are we seeing a change in the production side with smaller companies like a J-Skis, Renoun or a ON3P that are building skis basically on demand or as they need them? Do we need redundancy in brands & models, the same ski being offered by two differenct brands under the same umbrella, just look at the race wall. What are the budgets for the pools and to run the teams and brand name dilution. Will we see more of what the Rossignol group do in remving their name from the bindings and just offering then under the Look name?
So, is this a wake up call for the industry? Maybe, but will it learn? I doubt it, it wan't the last half dozen times it happened. Why doen't a brand concentrate on 5-10 great skis verses 15-25 good ones with some mediocre ones mixed in to fill gaps and be "segment busters"? I remember talking to my Volkl rep about "Premium Skis" and he was offended that I didn't consider Volkl as a premium brand. I replied, "At one time Volkl was a premium brand, but once they started offering $399 package skis and sold them in Sports Authority, they forfeited the right to be called a premium brand" I also did say, that they still offer premium products but the brand is not exclusive as it once was when they had P9's and Rentigers. The cost in increased production is exclusivity.
I maybe thinking too narrowly here but it seems that Marker is the golden goose here but anyone who has money already has a binding unber their umbrella. Marker brings volume but what does it bring that they don't alreay have already? Will the addition in market share outweigh the cost of the purchase because I cannot see Volkl NOT being attached to it. Jason inquired abotu Line & FT, while Newell didn't want to sell it to him, it will very well get packaged with K2 and whoever buys that peice might be happy to just pass them off to him to cover some of their costs. Who knows, maybe we just gave some VC guy another way to put the deal together. If so, remember where you read it and we are accepting finders fees.
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- Oct 12, 2016
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Exactly! Necessity is the mother of invention. If all ski brands were privately owned today, we'd have a much more healthy industry operating based on what's best for the sport, not wallstreet.
It's impossible for any brand to maintain it's position / stay true to it's strengths because that requires saying "no" more than yes which once publicly owned is impossible. The only conversation at public owned board room meetings and I sat through too many is how do we cut costs, and build more different products to sell to more different people for less than our competition. You eventually stand for nothing trying to sell everything to everyone. As far as why so much product in the market which definitely destroys the market, it's because some factories in europe have labor laws where companies can not reduce employees due to smaller business so instead they over build and dump it on the market. It's also because when public ski companies set budgets and goals and factory orders, it's over a year in advance of delivery, and 6 months prior to getting actual orders from shops. If shops don't order as much as they hoped, too late... they're stuck with it. It's also public companies pushing the brands to push their sales goals/budget which obviously requires building product. LIke Muleski said, if the people working at these companies actually owned them and had skin on the line, they'd make really great decisions that would long term benefit their brand's and ultimately the health of the industry.
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- Sep 14, 2016
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If we want to understand the direction in which Newell might go, we need to look beyond the basic idea that publicly traded companies' principal underlying motivation is to maximize shareholder returns. Consider this analysis published in Forbes, which concludes that Newell's acquisition of Jarden benefited the Newell executive team, at the expense of Newell shareholders (http://www.forbes.com/sites/greatsp...-creates-no-shareholder-value/4/#1cbe1854243b):
"Under the terms of Newell Rubbermaid’s executive compensation plan, the performance goals executives must meet to earn their bonuses consist of core sales, normalized EPS, and normalized gross margin. Conveniently, two of these items are the top financial implications highlighted in Newell’s presentation of the acquisition. By acquiring Jarden, the new company can show sales growth and EPS growth with no regard to the economics, i.e. the costs, of the acquisition. Another name for this trick is the high-low fallacy....We think it is clear that this management team is more focused on lining its pockets than investors."
So if you want to understand what Newell will do with its ski brands, don't ask "What would most benefit Newell economically?" Instead ask "What will be in the best interest of the Newell executive team?"
"Under the terms of Newell Rubbermaid’s executive compensation plan, the performance goals executives must meet to earn their bonuses consist of core sales, normalized EPS, and normalized gross margin. Conveniently, two of these items are the top financial implications highlighted in Newell’s presentation of the acquisition. By acquiring Jarden, the new company can show sales growth and EPS growth with no regard to the economics, i.e. the costs, of the acquisition. Another name for this trick is the high-low fallacy....We think it is clear that this management team is more focused on lining its pockets than investors."
So if you want to understand what Newell will do with its ski brands, don't ask "What would most benefit Newell economically?" Instead ask "What will be in the best interest of the Newell executive team?"
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Very good points, and pretty much a part of every big publicly traded company these days,I think. The top dogs always nail their compensation hurdles, no matter how very mediocre the overall performance may be.
However, there is a game that's orchestrated from quarter to quarter, to drive up your stock price. No question about it. That is where the Sr. Mgt can earn the huge money, depending on how generous the board's compensation committee is with options, restricted stock,etc.
Dealing with the analysts who follow your company, set the expectations {like EPS} and in effect determine how the market views you {for example are you a growth play, worthy of a high multiple?} is never ending. My boss, our Chairman/CEO used to refer to dealing with them as "The Bullshit Waltz", and we put incredible effort into it. Nuts looking back on it.
So, yep, no surprise to me that the compensation, including the amount of annual option grants, deferred comp, etc. in addition to bonus awards, are based on a handful of simple metrics that are easy to hit. And not reflective of the shareholder value. Heck, we need to take care of ourselves. Maybe not with this much brash......
I worked with a very, very savvy CFO. Wall St. background. Whenever we had problems on the horizon that could potentially tank our stock for years, he would say "Well, we need to do a deal. The wonders of purchase accounting can make all of this just go away."
And sure enough, we would.
Newell made a huge deal, for any number of reasons, and it's pretty evident now that they think they {let's say the management and ultimately the shareholders} can benefit by just unloading this non Rubbermaid, non Walmart, seasonal ski stuff. Or, that's how I see it.
Moves like these go on ALL the time. And they are all designed to drive up the stock price, which creates the shareholder gains. And makes money for the top dogs. Generally.
Not saying that the Newell guys did not stack the deck to be able to nail maximum compensation right out of the gate. No doubt they did. The "less than invisible hand of self interest" is always on the table! The Jarden guys no doubt did just fine as well.
But these moves now, all seem to be playing to the street. Along with that, they likely will help max out compensation for the top group.
My point is that this way of running a brand empire just does NOT fit with ski or snow related businesses. My gut tells me that returning to private ownership, with PE and investor partners as needed just makes it so much cleaner. It's not easy either way.
I can clearly visualize what Jason has seen. I can only imagine trying to run a ski business
while playing one on one defense with the corporate CFO and hitting his numbers....which likely make no sense.
If these brands can be bought at attractive prices, even deep discounts, and fully invested owners can run them with all of this external "crap", I have a hunch that it could be really good. Things will change, for sure.
Really interesting insight about the various manufactuting and selling cycles, BTW. And PP's comments and questions about all of the redundancy, etc. Gets you thinking.
Good stuff.
However, there is a game that's orchestrated from quarter to quarter, to drive up your stock price. No question about it. That is where the Sr. Mgt can earn the huge money, depending on how generous the board's compensation committee is with options, restricted stock,etc.
Dealing with the analysts who follow your company, set the expectations {like EPS} and in effect determine how the market views you {for example are you a growth play, worthy of a high multiple?} is never ending. My boss, our Chairman/CEO used to refer to dealing with them as "The Bullshit Waltz", and we put incredible effort into it. Nuts looking back on it.
So, yep, no surprise to me that the compensation, including the amount of annual option grants, deferred comp, etc. in addition to bonus awards, are based on a handful of simple metrics that are easy to hit. And not reflective of the shareholder value. Heck, we need to take care of ourselves. Maybe not with this much brash......
I worked with a very, very savvy CFO. Wall St. background. Whenever we had problems on the horizon that could potentially tank our stock for years, he would say "Well, we need to do a deal. The wonders of purchase accounting can make all of this just go away."
And sure enough, we would.
Newell made a huge deal, for any number of reasons, and it's pretty evident now that they think they {let's say the management and ultimately the shareholders} can benefit by just unloading this non Rubbermaid, non Walmart, seasonal ski stuff. Or, that's how I see it.
Moves like these go on ALL the time. And they are all designed to drive up the stock price, which creates the shareholder gains. And makes money for the top dogs. Generally.
Not saying that the Newell guys did not stack the deck to be able to nail maximum compensation right out of the gate. No doubt they did. The "less than invisible hand of self interest" is always on the table! The Jarden guys no doubt did just fine as well.
But these moves now, all seem to be playing to the street. Along with that, they likely will help max out compensation for the top group.
My point is that this way of running a brand empire just does NOT fit with ski or snow related businesses. My gut tells me that returning to private ownership, with PE and investor partners as needed just makes it so much cleaner. It's not easy either way.
I can clearly visualize what Jason has seen. I can only imagine trying to run a ski business
while playing one on one defense with the corporate CFO and hitting his numbers....which likely make no sense.
If these brands can be bought at attractive prices, even deep discounts, and fully invested owners can run them with all of this external "crap", I have a hunch that it could be really good. Things will change, for sure.
Really interesting insight about the various manufactuting and selling cycles, BTW. And PP's comments and questions about all of the redundancy, etc. Gets you thinking.
Good stuff.