Posted: July 8, 2004

Athletics: State of the Sport Part I - the Running Industry

Running Strong Component of Recovering Sporting Goods Industry

Apparel and Shoe Sales
The U.S. sporting goods industry as defined by SGMA International's "Recreation Market Report" released on June 29 totaled $68.6 billion in 2003 compared to $68.3 in 2002 and $66.9 in 2001. The largest category, sports apparel, experienced a slight decline in sales to $22.8 billion while athletic footwear increased by 4.2% to $9.73 billion. The SGMA numbers are based on manufacturer's shipments (including imports) in the U.S. market and are expressed in wholesale dollar values.

Within this relatively flat market, running products have performed well. The retail sales figures tracked in "The Sporting Goods Market in 2004" by the National Sporting Goods Association also documented a decline in purchases of athletic and sport clothing from 2002 to 2003. Yet the value of clothing purchased for running and jogging ($651,100,000) grew by 10%- the largest increase of all sports tracked in the clothing category.

According to the same NSGA report, sales of running and jogging shoes grew for the fifth consecutive year with 35,981,000 pairs purchased (up 6%) for a total of $1,802,014,000 (up 4%). The value of track shoes increased by 9% to $40,165,000 whereas trail running shoe dollars declined by 9% to $23,986,000.

Vendors and Manufacturers
The most popular type of vendor for running/jogging shoes reported by NSGA continues to be the specialty athletic footwear store (21.4% of units and 28.3% of dollars). The average retail price of running/jogging shoes in 2003 was $50.08 compared to $50.99 in 2002. The highest average price paid for running/jogging shoes in 2003 ($66.90) came from mail order sources which accounted for only 2.2% of the total units.

Nike, USA Track & Field's National Team Sponsor, had the largest market share in the running/jogging shoe category with 33% according to the NSGA 2003 Brand Share Report and the manufacturer with the greatest increase in share was New Balance -18.8% in 2003 compared to 16.7% in 2002. The top four U.S. shoe-centered companies listed in order of 2003 revenues in the June issue of SGMA's "Sports Edge" were Nike ($10.697 billion), adidas America ($7.4 billion), Reebok ($3.4853 billion) and Puma ($1.5991 billion). Fourth-quarter earnings reported by Nike increased by 24% in part because of popularity of the Shox running shoes and an improved relationship with their primary customer, Footlocker.

Nike also joined other manufacturers and vendors who are experiencing substantial profits in 2004. Sales in the quarter which ended May 31 climbed 17 percent to $3.49 billion from $2.99 billion. Brooks' year-to-date domestic sales through May 2004 reportedly grew 34.7% in the specialty running retail channel, and overall company sales grew more than 33.2%, when compared to the same timeframe in 2003.

One of the most successful athletic specialty retailers, Finish Line, had revenues of $757.7 million in 2003 and reported a 24% increase in net sales for the first quarter of 2004. Finish Line CEO Alan Cohen had the following to say about how the evolving sport has affected sales at the company's 550 stores. "At Finish Line we are seeing a resurgence of interest in the running category for performance footwear by our customers. We believe this resurgence will be further enhanced by the introductions of new and exciting products and marketing campaigns from key athletic vendors in conjunction with the upcoming Olympics."

Running media
News is also good from the print media sector of the sport. Carol Lasseter Rice, Publisher of Running Times reports that circulation for 2003 was up over 12% and 2004 should be higher as well. Also, web traffic to runningtimes.com in 2003 was 100% greater than 2002 and advertising revenue in 2004 is more than 5% ahead of last year.

According to President Larry Eder, the Running Network has added four publications, for a total of 31 in 2004. Sales this year are ahead of 2003 by 11% and 1.6 to 2 million individuals visit runningnetwork.com each month. He attributes growth in the U.S. to the refocus by the industry on running footwear - especially the authentic and real heritage products promoted by ASICS, Nike, New Balance, Reebok and Brooks - and the youth market.

Runner's World ad pages in 2003 were up 12.6% over 2002 according to PIB (Publishers Information Bureau), and for the first six months of 2004, ad pages are up an impressive 20.4% over the same time period in 2003. In recognition of the magazine's successful circulation management efforts, Runner's World recently earned the top Circulation Excellence Award in the 400,000 - 999,999 size category for consumer magazines.

Future Reports
Part II describes the American runner and compares today's participants to those of 1993 and 1998. Part III examines trends in U.S. road races and presents the largest races lists for 2003.

Sources
NSGA = National Sporting Goods Association. To obtain information on any of the NSGA publications cited above email info@nsga.org, phone (847) 296-6742 or go to: www.nsga.org.
SGMA International = Sporting Goods Manufacturers Association. To obtain information on the SGMA publication cited above go to: www.sgma.com.

From: Running USA Wire.