What were the primary causes for the level of supply that snowboarding gear reached last year, particularly for hardgoods, that saw such drastic reductions in pricing and the commoditization of gear?
Burton has made significant changes in its production planning and inventory management processes. The recent challenges in the US retail economies and the ongoing consolidation in the retail channels require every industry to re-think how their stock status is managed. Burton’s stock positions have been significantly reduced from past seasons and we foresee a continued reduction in our reorder stock positions going forward into 2011.
More than ever before, Burton has carefully managed its factory orders and our current season inventory has dramatically improved. Retail fall-out continues to contribute to vendor on-hand positions but overall inventory levels are significantly lower across all categories and brands. Prior year inventory continues to impact current season sales, however, recently retail sales and events have been strong and industry-wide we are seeing current season sales improve as prior year inventories sell down.
What are you doing to right size supply to meet demand?
Significant reductions in our reorder stock positions will reduce the level of goods in the market. Ultimately making product more difficult to get will bring more value to product, thus bringing more margin to the retailer. In addition, we are strengthening our product segmentation strategies with new product stories and technologies in 2011. Our 2011 hardgoods sales programs will offer our dealers the opportunity to build stronger margin platforms that will deliver greater maintained margins.
What direction do you think the industry as a whole needs to go to combat this?
We see hardgoods opportunities in several areas in the coming season. The youth business continues to grow and Burton is fully committed to providing young riders with product and technologies that make their on-snow experience fun. Board technologies continue to evolve and our 2011 line-up will provide every rider a choice of the absolute best performing product on the mountain. Trickling down our high-end product technologies into mid and lower price points will drive increased demand in the best selling price levels. As mentioned earlier a redesigned product segmentation strategy will provide our specialty dealer greater differentiation than in past years. 2011 will be a year of evolutions in the Burton hardgoods product line and it’s the evolution of product design that will provide the opportunity to grow sales.
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