K2 Inc. announced Oct. 20 that it acquired WinterQuest, parent company of Tubbs Snowshoes, Atlas Snowshoe Co. and Little Bear Snowshoes, for an undisclosed amount. The purchase price includes stock, cash and the assumption of debt. WinterQuest had total sales of $18.6 million for the year ending March 21, 2003.
Tubbs, Atlas and Little Bear will remain in their current locations, and there will be minimal immediate impact on the employees of the brands, said Ed Kiniry, chief executive officer of WinterQuest. However, some WinterQuest manufacturing operations may eventually move overseas.
"It is fair to say that we will look at overseas manufacturing as opportunities present themselves," said Robert Marcovitch, president of K2 Sports Group.
Kiniry told SNEWS that when he bought Tubbs in 1988, "I knew a time would come that a single-season, weather-dependent company would get big enough that it would need to become part of a bigger entity."
Anyone in the wintersports business knows the weather hasn't been too friendly the last few seasons. Kiniry said that 2002 marked the first time that WinterQuest saw flat sales, due to unfavorable weather conditions. Now, K2 will provide WinterQuest a certain amount of financial stability. "At our size, we couldn't afford to have back-to-back years like we had in 2002 without damaging our ability to grow the market and provide opportunities for our employees," said Kiniry.
Now he can base his business on annual plans, rather than stretching to make ends meet each month. Now that WinterQuest lies sheltered beneath the K2 umbrella, Kiniry is not worried about his company's ability to grow the snowshoe market, which he said could double in the next three to five years.
He also expects K2 to provide some synergies in manufacturing, which will help make the snowshoe brands more profitable. Further, WinterQuest is poised to benefit from K2's international presence. "With our wholly owned subsidiaries around the world (K2 Japan, K2 Korea, K2 Canada, K2 Europe), working with successful worldwide distributors already on board, we can grow the global business for Tubbs and Atlas in a more cohesive fashion," said Marcovitch of K2.
SNEWS View: As a business owner, Ed Kiniry is as sharp as the claws on the bottom of his snowshoes. He melded two of the best snowshoe brands into a market juggernaut, which now commands 80 percent of the snowshoe market. We think he's just made another smart move. You can hardly name a wintersports-oriented company that hasn't suffered from a dull string of bad snow years. With this move he has secured a financial safety net for the dry times, and lessened the financial strains put on any seasonal business. As for K2, this allows the company to round out its wintersports portfolio -- something it failed to do with its own snowshoe that required a Clicker binding. And more importantly for K2, in one fell swoop, it acquired the number one and number two snowshoe brands, effectively cornering the market. If the smaller shoe companies thought WinterQuest was a force to reckon with before, we can only imagine how nervous they're feeling now.