Deckers’ Solid Quarter:  Your Retail Strategy Had to be Right Before There Was Ever a Pandemic

Deckers produced a strong result in their quarter ended December 31.  I guess either because or in spite of covid.  Probably both.  Which is an interesting thing to say and I’ll have to explain it.

Revenue rose 14.8% from $938.7 million in last year’s quarter (LYQ) to $1.078 billion in this year’s.   The gross margin rose from 54.1% to 57.0%, “…primarily due to higher full-priced selling and rate expansion, favorable channel mix resulting from increased penetration of DTC, and favorable changes in foreign currency exchange rates.”

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On the Surface, It’s All About the COVID.  But Not Really:  VF’s Quarter

I’m sure you’ll all be stunned to learn that VF’s financial results for its December quarter were impacted by the pandemic.  We’ll take a brief look at the numbers, but I won’t review VF’s virus related adjustments.  They are broadly the same as what other companies did.

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The Long Term, Historical Context for Running Your Business- This Time Is Not Different.  Probably.

Is this a business article?  Yes.  But politics, economics and history are going to rear their ugly heads.  Let’s put things in the context of history none of us were around to experience, because you’re going to live this context for some years to come.

In some number of months things are going to begin to normalize- covid wise at least.  The catch is that I have no idea what that normal will look like.  I do know that we need all of you to run your businesses well to provide employment and stability and be part of your communities.

You have all known for years that we were over retailed.  Too many stores and too many brands selling too many similar products.  You also know that consolidation began in earnest around 2008.  The pandemic “merely” accelerated it.  With a vengeance.

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Zumiez’s Quarter: It’s Not the Numbers, It’s the Strategy

Well sure, we’ll spend some time on the numbers.  You can see the impact of the pandemic for both better and worse. More importantly, their data systems, the trade areas, the way they treat brick and mortar and online as one sales channel and their culture are coming together in unprecedented economic and competitive conditions we are all facing, allowing Zumiez to accelerate a strategy that was already in place.

Rahm Emanuel is credited with being the first to say, “Never let a good crisis go to waste.”  It’s not just politicians who do that.  Bluntly, when times are tough and there’s “no choice” resistance to change declines.

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Whose Customer Am I Anyway?  Amazon is a Utility- Not a Retailer

I bought something from a brand. I bought it on their Amazon store. Amazon shipped it to me. I decided not to keep it. I returned it to a Kohl’s.  I don’t remember who actually delivered it.

When I returned it, I didn’t buy anything at Kohl’s. But I had to walk through the store and down the aisles and through various products to get to the Amazon return counter. I’m sure nobody set it up like that on purpose.

The return receipt I got from Kohl’s offered me a 25% discount on anything I bought at the store.  Kohl’s hopes that I’ll become a customer because I’m in the store doing an Amazon return.

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“Morning Boys.  How’s the Water?”

A few days ago, I posted an article called “Maybe There’s More to This Than Just Trying to Meet Demand.” Among other things, I ask you to take a little time and a deep breath and think about what the future looked like.  Towards the end I repeated a Mark Twain reputed quote; “It ain’t what you don’t know that gets you into trouble.  It’s what you know for sure that just ain’t so.”

A day or two later Sam Rines, the Chief Economist of Avalon Advisors published one of his occasional notes with a few charts asking, “What if a vaccine does not alter the overall trajectory of the economy?”

Here’s a link to that note.  Talk about hiding in plain sight and things you know that just ain’t so.  Remember, we were in a recession before the pandemic.  The Great Recession took us years and years to get over.  So somehow, we’re going to get a vaccine, which we have to assume works and enough people take, and suddenly the economy is going to be okay.  Better?  Hell yes.

But the virus may have scrambled the economy in ways we don’t completely know yet, so why are we imagining that resolving the pandemic means suddenly the economy will be strong?  Could it just sort of limp back into the recession we were already experiencing but be further beat up by a gigantic pandemic hangover?

How did I manage to confuse my personal pandemic recovery, where I can go to a bar, take my wife to dinner, have friends and family over and maybe even consider a vacation, with the economy recovering?

What does it mean if they are two separate issues?  Think about it.

Two young fish, out on a morning swim, bump into an older fish. He says: ‘Morning boys, how’s the water?’ The younger fish nod in appreciation and swim on. A few minutes later, one looks to the other and says: ‘What the hell is water?

We’re all swimming in that water, but sometimes it’s hard to notice it.

 

Maybe There’s More to This Than Just Trying to Meet Demand

Recently, somebody sent me a link to the split board binding company SPARK R&D.  Their home page has the title “Production and Inventory Notes,”  where they explain how explosive demand and having to stop and restart production (all virus related) has lead to a shortage of their products and how they are working to meet demand.

I know a lot of you feel SPARK’s pain.  Plenty of brands first reduced orders then had to increase them and have struggled to get enough of the right product in the right place at the right time.  I want to ask if that’s all you’re thinking about.  Perhaps it shouldn’t be.

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Sweatpants, Women Only, Vermont Resorts, Cities Like Skateparks? Four Articles Worth a Few Minutes

NOTE: I recognize there are paywalls and not all of you can read these.  Often though, you can get a few free articles every month.

About four weeks ago I got a new shoulder so I’ve been quiet for a while. This had been coming on for decades. It’s healing fine but leaves me with only one arm to type with. Happily, I’m discovered dictating in Word. We’ll see how that works.

This shoulder is what made me give up snowboarding about five years ago. We’ll see if things change next season.

Meanwhile, there’s a lot going on, and with the drugs out of my system I’m hoping to address them coherently.

I’m going to start with some articles I’ve discovered.  Between the virus, the weather here in the Northwest, and my shoulder I’ve had lots of time to read.

From the New York Times Magazine last August comes “Sweatpants Forever,” by Irina Aleksander.  “Even before the pandemic, the whole fashion industry had started to unravel. What happens now that no one has a reason to dress up?”

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Fashion in Games, 3D Printing (kind of), and Some Historical Perspective

I should really be analyzing Kathmandu and the BOA deal.  I will- I’m actually ready to start writing about Kathmandu- but wanted to take a short detour.

I’ve come across three articles I recommend you read. The first two are from The Robin Report and the third by a geopolitical analyst by the name of George Friedman.  He’s the guy who founded the Stratfor Group.  I’ll get to why I think you should read it.

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Zumiez’s Quarterly Results:  Interesting Things They Say, But Don’t Quite Say

Zumiez reported a solid August 3rd quarter, and their balance sheet remains rock solid.  They had to deal with the same pandemic issues as everybody else, and their responses were similar.  But what we are reminded of in the 10Q and the conference call, like for the 50th time, is Zumiez’s is confidence in their culture, their balance sheet, that ecommerce and brick and mortar as one channel, and that their data systems and trade area concept coupled with instore ecommerce fulfillment offers them an advantage as retail changes.

The faster things change, the bigger the advantage may be.  First the numbers.  Then a little deeper dive into some of the things they don’t quite say but are maybe implying that you should think about.

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