Eye on Columbia vs. The North Face (VFC)

The North Face has been the rock star of VFC’s portfolio for the past three years. Similarly, Columbia Sportswear has been the perennial share-loser in the Outerwear category. Recent data suggests that the tides may be turning, which is consistent with my view on each company.

The chart below shows that The North Face dollar share in the sporting goods channel is on a downtrend – hitting parity with year-ago levels after 12 months of impressive share gains. Average price point (a proxy for retailer discounting activity) is flattish to down slightly. Conversely, we’re seeing both average price and dollar market share pick up for Columbia. Note that Columbia’s 20% share of the category in this channel is dwarfed by TNF’s 65%.

I usually don’t get too bent out of shape about this data, but there a couple of things I’d point out. 1) I track the real trends on a trailing 3 week basis, and this is the 3rd week in a row we’re seeing such gains for COLM. I think we can say that this is more than a simple blip. 2) I’ve warmed to COLM in a more meaningful way over the past six months, largely due to the increased investment spending it is allocating to its core content. COLM has been a share loser for a long time – bc it has not invested enough. This share gain is probably not an accident.

As it relates to TNF – it is important to note that the Brand is incrementally growing in its own retail stores. As such, more marginal distribution channels (some of which are in the sample analyzed) are likely seeing smaller allocations. That’s smart from where I am sitting. But that said, I’m not sold yet on TNF’s retail strategy. The company has not proven that it ‘gets retail.’ It’s easy to make money in a store when a brand is hot. But when a brand is cooling, that’s where being a good retailer makes a difference, and is where I think VFC will expose its weakness.
Source: SportscanINFO

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