After restructuring staff and selling off its Gregory Mountain Products brand earlier this summer, Black Diamond Inc. unveiled its future path for the company on Monday. It includes new leadership, a reduction in hardgoods SKUs and establishing a robust, global omni-channel business.
The company, which also includes Poc Sports and Pieps brands, named former Sony and Gap executive Zeena Freeman as its new president. In addition, Freeman is slated to succeed Black Diamond Inc. CEO Peter Metcalf by June 30, 2015.
“Zeena brings Black Diamond a wonderful combination of leadership, strategic thinking, brand management and consumer product and omni-channel expertise,” Metcalf said. “She is precisely the kind of strategic merchant and dynamic brand leader that we have been seeking, and we see her perfectly positioned to lead Black Diamond’s fastest growing brands through a multi-channel environment over the next decade.”
Metcalf said he intends to remain with Black Diamond for the long-term, transitioning to the role of director and senior executive responsible for public policy, advocacy and activism on behalf the company’s customers. He also plans to play a “meaningful role” with product and brand positioning.
Metcalf said Freeman’s hiring — notably someone outside the outdoor industry — signals the company’s quest to evolve with a changing retail landscape and technologies.
“If you look at the Black Diamond, Poc and Pieps team, I think we have a great degree of experience, skill, acumen in the gear and equipment world on a global basis in the wholesale channels,” Metcalf told investors during the company’s second-quarter conference call on Monday. “However, as you all know, a very substantial part of our future growth is predicated upon building an omni-channel business … doing that on a global basis and apparel. Our experience at the senior level and tenure in those areas, it’s just not where we would like it to be relative to the ambitions we have. Zeena comes here with an impeccable track record of being a truly global executive, having comfortably moved into leadership assignments in foreign countries proving her capability to get those things going, operate with top-flight senior people, compete and do an excellent job.
Metcalf said under Freeman’s leadership the brand will develop its omni-channel strategy over the next 12 to 18 months, “which is likely to involve some form of owned retail business and a significant business in our global direct-to-consumer capability.”
Freeman previously worked at Sony Corp., where she was the general manager of global retail, responsible for Sony’s worldwide store and e-commerce businesses. Prior to that, she served as the CEO of People, a fashion and lifestyle brand in India, (part of the $40 billion Aditya Birla Group), where she was responsible for creating a new specialty retail apparel business with global standards in design, merchandising and retail management, and oversaw its growth from inception to the roll out of stores in key cities in India. She also held senior merchandising and management positions within Gap Inc.’s apparel brands.
SNEWS has set up an interview with Freeman to talk more about her new role at Black Diamond. That article is slated to run Aug. 18.
In addition to naming new leadership, Metcalf told investors that the company plans a 25-percent reduction in its hardgoods product SKUs. While saying that reduction would be spread out across categories, he acknowledged “a slight weighting [of the reductions] to the fall-winter and ski line.”
Changes also are slated on the manufacturing end of hardgoods, involving the development of “alternative sourcing strategies for some climbing hardware, some of which will likely be North American-based,” Metcalf said. Key goals are to speed up product development lead times and flexibility for just-in-time orders. Officials expect to save about $10 million in costs with the changes by the end of 2016.
Second quarter results
Somewhat buried in the all the structural changes were Black Diamond’s second-quarter 2014 financial results, which showed an 18 percent increase in sales to $34.4 million, but a worsening quarterly net loss of nearly $5 million, versus a net loss of $2.7 million during the same period a year ago.
Officials pointed to investments in Black Diamond apparel and Poc cycling gear and apparel as main reasons for the losses, but it’s also evident that the above leadership and structural changes, including the sale of Gregory, are intended to shore up the company’s books.
Gregory sold to Samsonite for $84 million and Black Diamond is using the proceeds to pay down its debt to near zero, officials said, along with slating the rest of the funds toward its omni-channel strategy and existing brand re-investment.
Looking ahead, Black Diamond projects it sales to increase 14 to 17 percent to between $192 and $197 million in 2014. In addition, officials gave a projection of 10 to 13 percent annual growth in 2015.
That latter projection raised eyebrows among some investors on the call, who expected better growth numbers, given the divestiture of Gregory, which was targeted as the slowest growing brand. Black Diamond CFO Aaron Kuehne called the estimate “conservative” noting the company’s planned 25 percent reduction in hardgoods SKUs and the unaccounted-for (expected positive) influence of the company’s new president, Freeman.
Investors remained skeptical, sending Black Diamond’s stock (Nasdaq: BDE) down more than 8 percent Tuesday to a near-52-week low of $8.09 a share.