It's the sneaker maker with the funny name and revenues slightly north of that paid to some high school basketball phenoms for endorsement contracts. In a $13 billion industry, Saucony (Nasdaq: SCNYB) remains one of the hidden players, with about 1% of the market.
To compete against the likes of industry powerhouses Nike (NYSE: NKE), Reebok (NYSE: RBK), and privately held New Balance, the company needs new angles to stand out from the crowd. It can't just keep turning out impressive earnings reports.
That's probably one of the reasons behind its introduction of the Saucony 26, 26 individuals who have overcome some hurdle to run in a major marathon, or who are running for someone else. The Peabody, Mass., company with the devoted following of runners introduced the concept in Los Angeles, symbolically representing one mile for each of the 26 miles in a marathon. Considering Nike was the race's "official" sponsor, it scored a media coup at the Boston Marathon with a local group of runners. Saucony says it will now be a part of its marketing going forward, particularly later this year at the Chicago and New York marathons.
It was a classic maneuver by an underdog company. So it was when it was picked for Motley Fool Hidden Gems last August, a sleeper recommendation that few would have thought would power ahead to 129% gains, becoming one of the newsletter's top performers.
On Thursday, Saucony announces results for its first quarter, which tends to be its weakest. Still, the company has issued guidance for top-line growth of 10% for the quarter and 14% for the year. Not bad, considering athletic footwear sales have declined by 10% in just the last year, trending toward so-called "brown shoes," or non-athletic shoes.
Nike has its basketball star endorsers and Reebok has its rap music mega-sellers like Jay-Z promoting its kicks, each spending tens of millions of dollars to protect its position. Saucony instead fetes local nurses, students, interns, and teachers who run in local marathons, in turn creating a fan base considered "fanatical" by NPD Group, an industry market-information firm.
Because Saucony shuns celebrity endorsements and the "lifestyle" marketing of its bigger competitors, the company is not beholden to the latest fad in sneakers, focusing instead on its core product and customers. That has allowed it to build incredible brand loyalty, according to NPD.
Thursday's numbers should be viewed not as a sprint to cross the finish line, but rather just another leg in its own turnaround marathon.
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Fool contributor Rich Duprey usually only runs to the local doughnut shop. He does not own any of the stocks mentioned in this article.
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