Fleet Feet Looks To 100 Stores

(Wednesday, February 01, 2006) - Fleet Feet, Inc. recorded 22% growth in overall sales in 2005, surpassing $52 million in revenue, compared to $43 million in 2004. Comparative store sales in 2005 were up 14% on top of the 12% increase posted in 2004. Fourth quarter comps were up in the mid-teens. The franchisor now boasts 67 stores in 32 states, opening six stores in the first half of the year on top of the twelve stores opened in 2004. They expect to close the Santa Monica store in 2006.

Much of the growth came from outside of its historically strong footwear business, with the Bra FIT program in particular adding a lot of energy to the women's business. Based on the success of that program, and the brand partnership program with Moving Comfort and Champion, it was probably no surprise that Moving Comfort walked away with the Apparel Vendor of the Year award this year.

The Personal FIT Process is also paying big dividends in accessories. Superfeet reportedly sold 45,000 pair of insoles in 2005, adding another $35 at a 60%+ margin to every sale.

The retailer also pointed to its brand partnership program as a success. New Balance, which has been the lone footwear brand participating, saw its share at Fleet Feet come in around 50% higher than its national average in running specialty. Brooks has joined the program for 2006.

Looking ahead, Fleet Feet expects to have 100 stores by the end of 2008, with seven to nine stores planned for 2006 and 10 to 12 more in 2007. Company CEO Tom Raynor said that Fleet Feet is projecting 15% annual growth over the same period.

Jeff Phillips, president of Fleet Feet, Inc., said that the newer stores really contributed to the comp store sales gain for the year, but stores opened before 1993 still averaged a 9% comp sales gain for the year, about the same as the stores opened between 1993 and 1998.

Stores opened between 1998 and 2000 saw comps increase more than 20% on average, while the stores that opened since 2000 posted average comp store sales increases that exceeded 35% versus the previous year.

Asics was the fastest growing footwear brand in 2005, with sales jumping 45.4% for the year. Mizuno was second in footwear with sales increasing 30.3%, while Brooks rounded out the top three with a 27.1% increase for 2005

New Balance sales were up 13.1% on the strength of their brand partnership program, while Saucony was flat and Nike (-15.3%) and adidas (-11.5%) both declined for the year.

Raynor said he sees opportunity for running specialty brands like Fila, Montrail and others going forward. This appears to be trending across the RSR channel as an increasing number of specialty shops look for more differentiation from the big box guys and family footwear chains.

Columbia Sportswear must be seeing this trend play out as well after the company announced it had acquired Montrail last month in a deal worth approximately $20 million.

In apparel, Asics also took home the prize for the biggest percentage increase, jumping 64.2% in 2005. Moving Comfort posted a 57.6% increase to take the second spot and Brooks delivered a 40.2% increase to round out the top three.

Nike still has life here in apparel, growing 22.1% for the year. Hind was up 5.4% and Sugoi posted a 5.3% increase. adidas was down 16.8% in apparel sales for the year.

Fleet Feet said they are seeing more brand instability than ever, thanks to the rate of consolidation in the market and the shifting of brands in their mix.

No wonder there is some apprehension on the part of Running Specialty Retailers when six out of the top nine brands at Fleet Feet have been acquired in the last two years.

In 2003, no brand represented more than 15% of the total sales mix at Fleet Feet. While the chart below represents total sales, Asics now has a footwear share number in the high 20's, while Nike received a boost from it's apparel business. The Mizuno number accounts only for footwear.

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