First Team Sports to be sold to Canadian firm
Melissa Levy
Star Tribune
Tuesday, July 17, 2001
First Team Sports Inc., the Anoka-based company that rode the wave of the in-line skating craze and counts hockey legend Wayne Gretzky as a longtime endorser,
said Monday that it has agreed to be acquired by Gen-X Sports Inc. for $10.6 million.
The Toronto-based, privately held Gen-X would pay First Team shareholders $1.76 a share in cash. The merger is subject to a shareholder vote, which First Team
officials hope to hold in September.
First Team's stock closed Monday at $1.49, up 29 cents. Its shares traded above $3 last year, and had reached more than $30 during the mid-1990s heyday of in-line
skating.
Founded in 1986, First Team is best known for its UltraWheels in-line skates and the Hespeler Hockey Co. subsidiary that it purchased in 1997.
As sporting goods chains have consolidated and specialty retailers have closed, it has become essential for product manufacturers to offer a broad line that covers
multiple seasons, said First Team President and CEO John Egart.
Gen-X, with annual sales of about $115 million, has products across such categories as golf, snowboarding and "action sports" such as scooters.
"They needed our warehouse and we needed some of their product" diversity, said Egart, who plans to remain in the Twin Cities to lead Gen-X's U.S. operations.
First Team has about 55 employees at its headquarters and distribution center in Anoka. It plans to distribute its products and the Gen-X lines locally, and First
Team's sales and product development positions will be maintained here, company spokeswoman Debbie Favilla said.
It is unclear what administrative overlap might exist between the two firms, she said.
First Team -- struggling with a weaker economy and holiday shoppers' preference for trendy scooters -- reported a net loss of $1.6 million on sales of $43.6 million
for its 2001 fiscal year that ended Feb. 28.
The company's 2002 fiscal first quarter, which ended May 31, was no better. First Team posted a loss of $883,363 on sales of $8.1 million. It blamed poor spring
weather and an oversupply of inventory that made retailers cautious about placing new orders.
A late start to summer can cause in-line enthusiasts to delay the purchase of new skates, Egart said. "We depend on the weather like the ski industry depends on the
snow," he said.
But in-line skate sales have gone downhill since peaking in 1996, according to industry reports.
Manufacturers' sales of inline skates were about $270 million last year, compared with the $625 million level reached in 1996, according to the Sporting Goods
Manufacturers Association. The Florida-based trade group predicts that sales will decrease another 5.5 percent this year.
The Twin Cities also was home to Rollerblade, perhaps the best-known in-line skate manufacturer. That company was sold to Italian conglomerate Benetton
Group, and its operations moved to New Jersey in the late 1990s.
-- Melissa Levy is at mlevy@startribune.com .
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