Drop in Sales Could Further Erode Company's Support for Inline Events
Sales of K2 inline skates dropped $9.4 million worldwide during the first nine months of 2005, the company reported yesterday.
While appearing significant, the drop is less than half the size of last year's decline, suggesting the inline slump may be hitting bottom.
"It feels like from our perspective that things can only go up," said Mike Powell, K2's skate marketing manager.
The company's third-quarter report covers the first nine months of 2005, which ended Sept. 30.
It provides dollar amounts for the decline in skate sales in the U.S. and international markets. But it doesn't give an overall figure for total skate sales.
No Action, Jackson?
It does, however, report that sales for K2's Action Sports divsion, which includes inline skates, dropped $14.6 million compared to the same nine-month period last year. Sales so far this year were $308.7 million.
Aside from inline skates, the Action Sports division includes skis, snowboards, snowshoes, bikes and paintball products.
The only segment that grew this year was skis. Paintball products fell by $20 million; snowboards by $14.4 million, inline skates by $9.4 million, and bikes by $2.7 million. (Offsetting the declines were sales from two new K2 acquisitions: Volkl and Marker.)
Skate sales fell $2.2 million in the United States and $7.2 million elsewhere, the report says.
K2 blames the decline on "soft consumer demand in the industry."
Last year, K2 skate sales fell $19.8 million during the first three quarters with most of the decline, $15.2 million, coming in the international market.
Moving It Off the Shelves
One good sign this year is that the company is selling most of its inventory of 2005 models, Powell said.
"I think that's the first time that has happened in three years," he said.
If the company can sell most of its 2005 skates, it will help to prevent a glut on the market, which results in discount prices that cut profits for skate makers.
So far, the slump in sales doesn't appear to have had a dramatic effect on the company's product line.
Its 2006 catalog boasts 29 skate models, six more than this year's. On the other hand, many of the '06 models are holdovers from last year with only a few changes, such as improved fit, suggesting that the company may be scrimping on innovation.
Don't Come Knocking
Powell said the slump in sales will likely hurt the company's ability to support skate events.
"Our support for the catagory is not where we would want it to be," he said. "But unfortunately, that's based on sales."
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(posted on Nov. 10, 2005)
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Copyright © 2005 by Robert Burnson
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