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DPA
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Nicola Mira
Published
Apr 15, 2019
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Jack Wolfskin keen to expand in USA

By
DPA
Translated by
Nicola Mira
Published
Apr 15, 2019

German outdoor brand Jack Wolfskin is keen to get back on the growth track after recently being acquired by US golf equipment manufacturer Callaway.


Jack Wolfskin CEO Melody Harris-Jensbach



Backed by the new owner, Jack Wolfskin has the opportunity to expand into the lucrative US market, its CEO Melody Harris-Jensbach told German press agency DPA.

“Our competitors do significant business in the USA. We too intend to expand greatly on this market,” Harris-Jensbach said, adding that the US sportswear market is highly competitive “but not yet saturated.”

Also, Harris-Jensbach said that the outdoor apparel specialist — based in Idstein, close to Frankfurt - is likely to be successful in the USA thanks to its European look and English-language name. Apparel style often plays an important role for US consumers, who would be undoubtedly attracted by Jack Wolfskin’s quality. The label’s US expansion is expected to kick off from the north of the country.

Currently, Jack Wolfskin only generates a fraction of its revenue in the USA, where US brand Columbia is slightly cheaper. However, Jack Wolfskin’s CEO isn’t worried by the strong local competition: “We are positioned in the same price bracket as The North Face and Patagonia,” Harris-Jensbach said. “We generate 40% of our sales [outside Germany], and this percentage is set to increase."

Callaway bought Jack Wolfskin at the start of the year, spending €418 million, thus broadening its brand portfolio (previously consisting mostly of golf equipment manufacturers) with the addition of the German brand as well as bag manufacturer Ogio and fashion label Travis Mathew. Jack Wolfskin is also a useful complement for Callaway from a geographical point of view: the US group is strong on its domestic market and in Japan, while the German brand's business is mostly concentrated in Europe and China.

The acquisition by Callaway is a huge opportunity for Jack Wolfskin according to Harris-Jensbach, who is in charge of the brand since 2014. “It would have otherwise been impossible for us to penetrate the US market,” she said. In 2018, Callaway generated a revenue of approximately €1.1 billion, three times as much as Jack Wolfskin, and it will also put at the latter’s disposal its sales and client service departments. Initially, Jack Wolfskin is expected to enter the US market through department stores and e-commerce - the brand isn’t for the time being planning to open monobrand stores.




Harris-Jensbach is also hoping to find new distribution outlets in Japan, focusing on more expensive products than in Germany, notably the lightweight jackets from the brand’s high-end collection, which she intends to price at several hundred euro. “We are barely represented in Japan, where demand for technically sophisticated products is very high,” she said.

Taking advantage of the growing appeal of outdoor clothes in the last decade, Jack Wolfskin had already extended its footprint in China. The brand grew rapidly between 2006 and 2010, and opened several stores. A growth which attracted an investor, Blackstone, which put a significant amount of money into backing the brand. The outerwear and mountain footwear range were extended. Apart from some niche trekking and camping products, Jack Wolfskin's product range covers most everyday needs. In the meantime though, the market began to saturate, and competition became even fiercer, causing Jack Wolfskin to go through a very troubled patch.

It recovered after a group of investors poured fresh funds into the brand in summer 2017. They have since then converted their loans into equity, becoming majority shareholders. According to Harris-Jensbach, Jack Wolfskin is now back on a positive trajectory. “We paid back our debts and made a profit in 2018,” she said.

The company, which employs 1,200 people, managed to tap the popularity of the outdoor sector with young consumers, many of whom publish pictures of their excursions on social media. Jack Wolfskin launched web campaigns encouraging young people to share their outdoor experiences by posting videos, and remunerated them with promotional deals. The brand wants to rejuvenate its image: pensioners, who were its main customer group until recently, had given Jack Wolfskin a rather old-fashioned flavour.

To begin with, Callaway's expectations for Jack Wolfskin are prudent. Revenue is expected to remain stable, on par with the last financial year (€334 million), and should only rise in the medium term. EBITDA rose by one fifth in 2018, reaching €42 million, and should diminish in 2019. “We need to invest in marketing, design and infrastructure,” said Harris-Jensbach. E-tail, which accounts for 5% of sales, must link up more closely with the brand’s brick-and-mortar operations, without however handicapping Jack Wolfskin’s 160 German stores. “We are not forecasting any major closure,” said Harris-Jensbach.

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