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Team Fanatics,
Hello and welcome to the first Starting Lineup of 2017. I’d like to take a moment to look back on an eventful 2016. We made significant advancements in our business to strategically set the foundation for our future. No other company in our industry came close to moving as fast as we did on so many fronts in parallel.
Some of the highlights from 2016 include (and by no means is this the complete list): • Signed industry-changing jersey and apparel deal with MLB • 78% growth for Fanatics Branded • Second straight year of incredible growth and efficiencies in Internet Marketing • MLBShop migration and launch – didn’t hurt the Cubs won in the same year! • Successful Fanatics International integration following Kitbag acquisition • Added more than 15 e-commerce and retail/in-venue partners • Debuted end-to-end beta of new triple crown tech platform in Q4 on plan • Officially launched Fanatics as a brand! • Formed an alliance with Uber to revolutionize on-demand delivery of fan gear • Strengthened company leadership across many levels
It takes a true OneFanatics effort to make all this happen and it’s really important to continue to win with integrated execution across all of our teams because that’s when we’re at our best. Thank you everyone for making Fanatics great and truly embodying the team spirit. I look forward to an even more exciting 2017!
Doug Mack, CEO
Super Bowl 51 was a game for the record books. The New England Patriots erased a Super Bowl record 25-point deficit to beat the Atlanta
Falcons in the game’s first-ever overtime. In a year of Super Bowl firsts, this year’s game also marked our first as the exclusive provider of Trophy Collection (aka Locker Room) gear, which could be seen on the players and coaches immediately after the win. The merchandise was available to the team’s retail operations through wholesale and exclusivity across the Fanatics platform.
“We were absolutely committed to building a better fan assortment than past competitors thinking through fit, fabric and art. We took
this opportunity very seriously and showed the NFL our ability to assort and create special and unique products for the world’s biggest sporting event,” said Raphael Peck, President of Fanatics Branded.
(Continued on page 5)
5 Golden Rings- Patriots take Super Bowl LI into OT to defeat the Falcons
NBA Store Celebrates Rookie Season Just a year old and the NBA Store has proven it is fit to deck out basketball fans in the Big Apple. The 5th Ave. store opened its doors on December 19, 2015, in NYC as our new retail flagship. It’s first year saw many great events and engaging fan moments, including surprise visits by top NBA players and the launch of our Fanatics Branded “RUN-CTY” collection, a collaboration with the iconic hip-hop group RUN-DMC. The highly anticipated event also proved to be a great opportunity to host Fanatics Loyalty Members for a private tour, meet-and-greet and shopping spree. Black Friday 2016 was another monumental occasion as the new NYC store set a record for Black Friday sales at any NBA Store flagship location, past or present.
Youth Golden State Warriors Stephen
Curry adidas Jersey
Men’s Dallas Cowboys Dak Prescott Pro Line
Jersey
Men’s Pittsburgh Penguins Sidney
Crosby Reebok Jersey
Chicago Cubs New Era 2016 World Series Champions
Locker Room Hat
Top Selling Items, By League, in Peak 2016
Fanatics International’s First HolidayHappy First Birthday Fanatics International! 2016 was a milestone year for us, as we officially became a global company through the ac-quisition of the Manchester based company Kitbag. We look forward to many new record breaking milestones to come in this location.
11%More units shipped compared to 2015
100%Growth of US Sports
in Europe in 2016
32%Call volume increased
over last peak
31%More jerseys personalized
on busiest day
Delivering Joy, The Fanatics WayLast December, five lucky Phoenix families got an early holiday surprise knocking at their doors when Arizona Cardinals running back David Johnson teamed up with Fanatics and ESPN in our company’s first-ever nationally televised holiday delivery segment. Johnson, decked out in disguises ranging from Santa Clause to an undercover Fanatics deliveryman, surprised actual customers in the area who had recently purchased Cardinals gear, including Johnson jerseys. The segment aired on the special Christmas Eve edition of ESPN Sunday NFL Countdown and included footage of the Cardinals gear starting its trek at our Mighty Ohio Distribution Center. David’s “fan-first” mentality made him the perfect ambassador and partner for this heartwarming holiday activation. This segment was seen by more than 2 million fans live on ESPN and millions more online via ESPN.com
2 3
Peak 2016- Our Biggest Yet!Mid-November to December 23rd represents our Peak Season, when sales ramp-up for all sports and the holidays. This season was our biggest and most successful peak to date. In some cases, we more than doubled our numbers from the previous year. These images of the inbound dock in our Ohio fulfillment center show the volume of merchandise we handle during this busy time.
14,478,610Total number of units shipped
the 2016 peak season28%
Increase in online orders over fourth
quarter 2015
170,174Record number of units
shipped in one shift from Ohio Fulfillment Center
30%Increase in sales
compared to Peak 2015
52,683Calls received on
busiest day by Fan Services
12,076Record number of
merchandise printed in one shift at Bulls Bay
48%More printed/customized
units produced at Bulls Bay and NTP year-over-year
466,652 Record number of units
shipped in one day from all facilities
Nov. 2016 Dec. 2016
`
Duke2015
Villanova2016
Alabama2015
Clemson2016
NCAA FOOTBALL SALES NCAA BASKETBALL SALES
$5.1M $3.3M $2.8M $2.5M
Making the Major Deals2016 was a monumental year for signing key long-term extensions with top leagues in an effort to continue building out our new, revolutionary vertical merchandising model. Our new MLB deal, signed in November, grants us the right the as primary manufacturer and distributor of official fan gear (effective 2018) including jerseys, postseason apparel and hot market gear. Under Armour will take over the on-field rights previously owned by Majestic (effective 2020). Simply put, Fanatics will outfit the fans and Under Armour will outfit the players, in a new model introduced by MLB, allowing Fanatics and Under Armour to do what each company does best.
Late last year we announced our new exciting partnership with the NBA, which starting with the 2017-2018 season, will allow us to manufacture and
distribute a completely redesigned redesigned replica jersey created by Fanatics Branded with fan-first features and enhanced material for better comfort and versatility.
These vertically-integrated deals will continue providing fans and retailers with the widest assortment of products available, all created with quicker speed to market to satisfy our increasingly on-demand world.
In the world of Hot Markets, it’s not always the big cities that pack the largest punch. We’ve recently seen smaller market teams outperforming expectations and recording big sales numbers after their Championship wins.
Last month we watched Clemson pull out a last-second College Football Playoff (CFP) Championship over Alabama, and then pull another upset by outselling the Crimson Tide by nearly two million dollars vs. their 2015 CFP Championship.
This follows Villanova’s 2016 March Madness title which led to record breaking sales. Our Fanatics Branded team has been able to pounce on these HM’s through our direct ties to both schools, creating a wide range of Championship gear for fans to commemorate the victories.
The Fanatics Branded team hit a major milestone this peak, surpassing $221M in Fanatics Branded sales, a whopping $100M in growth over last year. Seeing this
growth not only puts us in the running with other major sports merchandise brands, but also illustrates how much growth the brand has made.
“This past year was incredible.” Raphel Peck said. “When we consider that almost two thirds of our growth comes from chasing business and developing product within a three month cycle it really shows the scale the team is creating. The most exciting thing to consider is we have just started,
I can’t wait to push the limits to becoming the #1 sports licensed brand in the industry. We couldn’t have grown to this scale without the support and
partnerships from the business development, buying and ops teams to make our engine go.”
Fans flock to our websites seconds after a championship clinch, but in our increasing on-demand world they crave products ASAP without having to wait in long lines at traditional retailers. In order to satisfy instant demands for local fans, Fanatics teamed up with Uber, a like-minded on-demand company, to deliver Hot Market gear to fans using the Uber app. After a successful test pilot in LA to memorialize the Rams’ NFL return, Fanatics and Uber created a delivery option for fans in and around Chicago the day after the Cubs’ Historic World Series title, running
40 dedicated cars at 100% delivery utilization. Fans also had the opportunity to purchase HM gear through the app in Clemson, SC, following the CFP National Championship and again in Boston, MA, after the Patriots’ 5th Super Bowl title. Our partnership with Uber continues to evolve and find new ways to uniquely reach fans in the ever-changing on-demand world.
Fanatics Branded in the Big Leagues
The E-commerce Future in an On-demand WorldSmaller Markets Make Big Champions
4 5
LOCKER ROOM COLLECTION
Teams in Buying, Fanatics Branded and Products Admin began weeks in advance to create products for both teams, in preparation of either outcome. 1,153 total Super Bowl products were developed and built, nearly 200 of those were Fanatics Branded apparel.
The records didn’t stop on the field, sales for Patriots gear in the first 7 days alone out-sold the 30-day hot market sales for the Broncos win last year. This championship title is our biggest NFL hot market ever. And second best hot market in company history behind the Cubs World Series
Patriots Win, Breaks Sale Records
The first 7 days following the Super Bowl set the highest ever NFL hot market sales. Beating out any 30-day sales of previous Super Bowl Champions
(From Page 1)
EPIC, which stands for Ensuring Peak Is Covered, is an operations program aimed at helping to develop employee’s leadership skills while ensuring that the business is prepared to handle the high volume of calls, orders and inventory during our busiest time of the year. Employees selected to serve as EPIC leads display strong leadership skills and have solid product knowledge needed to lead and inspire their colleagues. EPIC leaders are given training in multiple areas such as: Athlete Recognition, Influence and Leader’s Walk.
“The greatest lesson that I learned this peak, was not only the ability to process huge volumes in a shift but the importance of developing empathy with the fellow Athletes. It was important to me to learn everyone’s story in order for my team to be successful.” -Brent Rogers (Bulls Bay)
“I love sports and I love people. I feel like peak went really well, we’ve got some awesome people on our team. I feel like we were prepared and everything fell into place.” –Letasha Prince (Fan Services)
“To win the CHAMPIONSHIP of Peak, get out your play book and position all your athletes to their strengths. FORGET about all the problems you may endure and FOCUS on the SOLUTION to win”. -Staci Brittle (NTP)
“The Epic program helped us establish leaders in all areas of our business to help manage peak demand. It is a tool to develop our future leaders. The unique daily challenges made it rewarding for our leaders. Most of them have already expressed into in full time leadership. This is exactly what the program is about. Our goal in the coming years, is to identify these leaders early and build the confidence necessary to make it a win for all”. –Sam Blankson (Commonwealth)
“I think having the training program in place with the books and visuals really helped this year. It helped to get Athletes up to speed faster and freed Leads up for more engagement.” -Rebecca Osborn (Frazeysburg)
EPIC Leaders at Work
6 7
By Fans...For Fans
Senior Director of Operations Dom Strada gives a shout out to Andrew Fong, Area Lead as an excellent example of dedication and hard work. “Andrew’s leadership has included running some of the best start-up
and after-lunch stand ups in the building, some of which would include him singing to 150 employees after lunch– it was amazing” Dom said. “Andrew did this regularly as one way to inspire his team – his work ethic and dedication is a great example for all of us to follow.”
Andrew has been with Fanatics for 3 years, at the Commonwealth Fulfillment Center, and credits his leadership talents to his background in rugby. He was the Captain of the Jamaican Rugby team for 5 years and played with the team for 17 years. “This peak went really well. The more my team understood the new operating system, the more we were able to master it and get all orders out on time for the holiday season. My motto is to lead by example and set the trend for my team. I love working for Fanatics because I know what we are doing is putting a smile on a customer’s face.”
Employee Spotlight
In Memoriam- John GordonThe Fanatics family recently lost one of our own. John Gordon, a 5-year employee at both our Commonwealth and Bulls Bay facilities, was a military veteran and father of two. Anyone that met him knew what a huge Clemson Tiger fan he was and could see his passion for sports. On December 13, the Bulls Bay team dressed in orange and purple in remembrance of their teammate. His presence will be greatly missed, but... Never Forgotten.
#OneFanatics and #ByFansForFans Winners
#OneFanatics. Thanks you to everyone for Tweeting out your recognition, the following employees have been chosen from to receive a tailgate package from their favorite sports team:
Danny Noll
Melissa Moye
Denise Hutchinson
LeAnne Sherwood
Tommy Hwang
Greg Dawson
Tyler Paulus
Ryan Hausman
Terri Guy
Josh Zirkel
Matthew Tomlinson
Romain Audouin
In our last newsletter we featured two contests, asking employees to recognize a coworker that goes above & beyond on twitter as well as show us your best fan moment on Instagram. We received hundreds of entries from all locations globally. Congratulations to the following employees that have been chosen as our winners!
#ByFansForFans
Ian Caswell, Fanatics International Ciara Seleen, Merchandising (NW) Meghan Farmer, Marketing (NW)
Reactions- Joy of Winning and the Agony of Defeat
Hot Off the Presses
Caught on Camera
8
Introducing our Blooper reel. In the tradition of outtakes, Funniest Home Videos, Not
Top-Ten Lists and other hilarious shows that spotlight the lighter side of sports, you
will now find a spot for humor gracing our Back Page
“The Fanatics distribution warehouse is the closest thing to Santa’s workshop for the NFL fan during the holiday season.” -David Johnson Delivers Holiday Joy
“With NBA replica and the other rights amassed recently, Fanatics now owns some of the most valuable rights in sports apparel licensing... It’s a great model for Fanatics. They are becoming more vertical, so they can pay the big (league) royalties and still make some money. But it’s smart for Fanatics and smart for the leagues to have a piece of that.” -Fanatics into NBA Replica Jerseys
Fanatics employees, and die-hard Patriots and Falcons fans, were asked to give their reaction to the outcome of Super Bowl LI and what it meant to them:
“It was all sorts of emotions throughout the game, from sitting back in the recliner to sitting at the edge of my seat to jumping up and slamming high fives. It was an amazing thing to experience and be a part of as a fan of a team that has won a lot over the last decade, but has also been through a great deal since last year’s season.” -Lindsay Sawyer, Image Edit Supervisor
“I am a lifelong Pats fan, but I work with Matt Ryan and he is one of the greatest guys you could meet. It was nice to see the Pats pull it out and I think it ends the conversation about the best QB ever but I felt awful for Matt. The record breaking sales speaks volumes about the Boston fan base. They are loyal and never take it for granted!” -Sean Morgan, Dir Athlete Relations
“The Super Bowl in one word…devastating. The Falcons were so close to winning our city’s first Super Bowl and to blow the biggest lead in Super Bowl history and come up short is very disappointing and something that I will never forget. For me, my fandom does not change whether we win or lose. My loyalty is bigger than one game.” -Wade Whitehurst, Sr Mgr Licensing & Events
“Fanatics expects to process more than 10 million orders between Black Friday and Christmas, with nearly half the orders coming via mobile devices. It expects more than 70 million unique visitors to Fanatics.com and the rest of its platform of web sites.” -’Tis the Season for 560,000 Square Feet of Sports Paraphernalia
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