By Seth Masia
The wholesale/retail scene was rocked in September when Newell Brands Inc, announced it would sell or fold K2 Sports and its subsidiaries.
Two of the oldest brands in skiing, Völkl and Marker, thus have cloudy futures. Völkl has been in more-or-less continuous production in the Bavarian town of Straubing since 1914; Marker was founded 150 miles south, in Garmisch, and has been in continuous production since 1952.
Major ski, boot and binding companies have been sold in the past, but few in a manner that threatened the future of the brand. In recent times, only Benetton’s failure, in 2003, comes close. Nordica was salvaged from that disaster through its sale to Tecnica, but the Kästle brand was shelved, to be revived four years later by an Austrian industrialist with no ties to the original company.
The sale of K2 Sports follows the April merger of Newell with Jarden, the consumer-products conglomerate that had purchased K2, along with its affiliated brands, in 2007. The merger created a $15 billion company, manufacturing 46 mass-market brands, including Rubbermaid, Papermate, Elmer’s, Coleman, Irwin Tools, Sunbeam and Mr. Coffee.
On October 4, Newell CEO Michael Polk told a group of investors that the company plans to sell the winter sports brands during the first half of 2017. Sales director Pete Iverson confirmed that Newell wants to sell the group as a package, and not as individual companies. In addition to K2, Völkl and Marker, the package would include Line skis, apparel lines Marmot and Zoot, Full Tilt ski boots, snowboard lines Ride, Morrow and 5150, plus snowshoe brands Tubbs and Atlas.
Polk indicated that “underperforming” brands, contributing about 10 percent of Newell’s annual revenue, would be unloaded, including Rubbermaid and Irwin. The tools division has already been sold to Stanley Black & Decker for $1.95 billion. Most of the brands for sale are “durable goods.” What would be left are “consumable” goods like office, restaurant and kitchen supplies – products that customers replenish several times each year.
Polk was widely quoted saying “Some of them are the kinds of businesses that would be difficult to sell and therefore, we should just shut down because they create no value for [investors] and they are a distraction for us.” On its face, this is a rash statement for an executive who hopes to realize any value from the assets, and Polk later said K2 Sports would remain open.
Iverson noted that in October K2 began showing next winter’s samples – including seven new skis and four new boots -- to key retailers and buying groups. Völkl and Marker were evidently on a similar schedule, though in early November other shop owners remained uncertain if all the brands would be deliverable next fall. Nonetheless, Iverson said, interest from potential buyers is keen. The K2 brand names – with or without the actual factories – may wind up in the hands of an outside investment group, or with an investor-backed group of K2 executives, at a bargain basement price. The intellectual property, especially Marker’s portfolio of patents, has value to its competitors.
Potential buyers for the K2 Sports group include its competitors, Amer (the Atomic/Salomon group), Rossignol/Dynastar/Lange, or Tecnica Group (including Nordica and Blizzard). But a senior executive at one of those companies said that, at press time, Newell had no sales presentation, financial data or advance orders available to show to potential buyers. That may mean that a buyer is already lined up.
Of the large manufacturing groups, Tecnica would be the best fit – it has only a single ski brand and is powerful in boots, where K2 is weak. Critically, Tecnica Group has no binding and should therefore be interested in Marker. But Tecnica, like many hardgoods companies, is skating on thin financial ice and would probably need to bring in an investment partner.
K2 was founded in 1962 by Bill and Don Kirschner of Vashon Island, Washington, and rose to world prominence as the ski supplier to Phil and Steve Mahre. After several changes in ownership, in 2001 production moved to Guangzhou Province, China and the Vashon factory closed. Cheaper production and improved margins allowed a new period of expansion, and K2 Sports -- parent company of the K2 brands -- bought Völkl, Marker and Marmot in 2004.
