LaCrosse plunges into the athletic footwear market
Posted: May 16, 2009 by Ross
Portland Business Journal - Erik Siemers - May 15, 2009
END buy gives company access to global markets
LaCrosse has spent the majority of its 112-year history as a manufacturer of work boots.
But in one swoop last week, the Portland-based boot-maker plunged into the outdoor athletic shoe market, while simultaneously enhancing its image as a champion of sustainability.
In its first acquisition in about a decade, LaCrosse said it will buy Portland-based END, or Environmentally Neutral Design, a startup focused on sustainable outdoor footwear, in a $500,000 deal expected to close in coming weeks.
No question, it's a new channel of distribution in addition to new consumers - a younger consumer, more urban, said LaCrosse CEO Joe Schneider. It brings all new opportunities.
Officials with both companies, as well as analysts, believe the move - solicited by END - makes sense for both companies.
For LaCrosse it means moving into a new market segment with a brand that in a short period of time has grown in reach, brand recognition and critical acclaim.
For END, the move gives the young company's five employees the financial and logistical resources of a $128 million business.
We would not be growing globally for five or six years, said Paul Curran, a spokesman for END. But with LaCrosse, it will happen a lot faster.
Reed Anderson, a Minneapolis-based analyst with D.A. Davidson Co., said the move gives LaCrosse instant growth potential.
They've been trying to expand their product line, Anderson said. It's giving them a much bigger focus on active outdoor markets as opposed to work-related markets.
END won't have a huge impact on LaCrosse's revenue in the near future, which might explain why Wall Street's reaction to the deal has been tepid.
Shares spiked briefly in the first day of trading after the announcement, but have since dipped slightly in tandem with the market.
LaCrosse has annual revenue around $128 million, a 29 percent increase since 2005. The company's stock also outperformed the market in the past year.
END was launched in 2007 by Ben Finklea and award-winning footwear designer Andrew Estey, the former global design director for sport culture at Nike Inc.
The company made a splash last year by winning $250,000 in seed money in the Angel Oregon competition and by raising more than $1 million to launch the new brand.
END released its first product to retail markets in August, when it sold only on the Internet through four retailers: REI, Zappos, Rock Creek and Backcountry.com. It branched out to retail stores in January and quickly spread to 100 stores across the United States, Canada and Japan.
Critical acclaim followed. END's lightweight Stumptown shoe was anointed Best Trail Shoe Debut by Runner's World magazine in March.
Schneider said LaCrosse will likely leave END's creative team untouched, with LaCrosse take over the company's now out-sourced logistics operations.
Andrew and his team are very good at product, but they lacked the capacity to execute marketing the way we would like to do it, Schneider said.
The move into the outdoor athletic footwear market isn't a stretch, Schneider said.
It's footwear. It's high-end. It's functional, so we're not trying to dummy down, Schneider said.
The acquisition comes at a time when LaCrosse's principle business of producing boots for work and outdoor markets is reaching new heights on the strength of contracts with the United States military.
The company for the first time in 80 years added a second work shift and has grown its employment from 300 this time last year to 400 - the majority of which are employed in Portland.
Meanwhile, the company has gradually embraced sustainability.
Over the past year it has hired five former employees of Nau, a defunct Portland-based sustainable apparel company that earned attention for its earth-friendly products.
Among the hires were Adrian Moser, Nau's chief operating officer and now LaCrosse's senior vice president for sales and marketing; Debbie Hess, Nau's vice president of e-commerce who is serving a similar function at LaCrosse; and Bryan Finke, Nau's vice president of marketing who is now a marketing director at LaCrosse.
The acquisition of END bolsters LaCrosse's sustainability efforts.
It's a legitimate area of focus, said Anderson of D.A. Davidson. It's certainly top of mind for people and it adds a new element to their story.
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