NEW YORK — Speedo North America executives are keenly interested in the Olympic Winter Games in Turin, but for different reasons than most spectators.
The swimwear brand has been building its business outside of the swimming pool, and is using the Olympics in Turin to launch its first winter apparel performance suits for the athletes in luge and skeleton events.
Speedo’s move into winter sports is among several initiatives under the direction of Sheree Waterson, who this month is completing her first year as the iconic brand’s North American president.
“We want to layer on the cool factor,” Waterson said during an interview at the company’s showroom here. “We are taking Speedo out of the water and onto land.”
Among the company’s key moves, in addition to introducing winter sports apparel, are:
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- Pumping up the new activewear line with more fashion-forward products.
- A comprehensive marketing campaign intended to show the brand in a fresh way.
- Growing accessories, particularly footwear.
- Improved operations through better sourcing.
- More fashionable looks in the core performance swim offerings and the introduction of new performance technologies.
Speedo North America, a division of Warnaco Swim Group, is a key piece in Warnaco’s overall strategy to aggressively build up its swim division. In addition to Speedo, Warnaco’s other swim brands include Anne Cole, Catalina and Calvin Klein, and the company makes swimwear under licenses for Nautica and Michael Kors. Warnaco bought Op in August 2004, and that business is seen as a significant growth driver for the company and is now part of the swim division.
In the recent nine-month period, Warnaco had overall sales of $1.14 billion, and swimwear sales were up 22 percent in the third quarter, company executives said on a recent call. Nonetheless, the company said in January it would miss its sales and target profits for the year, and blamed it partly on lower sales of higher-margin swimwear in the fourth quarter ended Dec. 31. The stock closed Monday at $23.41 on the Nasdaq, down from its 52-week high of $28.22 in January.
Waterson is focused on using the brand’s past to guide its future. “What is important about Speedo is that we never want to be something we’re not,” Waterson said. “We are building on our heritage to take this brand forward.”
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Waterson, who was vice president of women’s apparel at Levi’s before joining Speedo and has a 25-year track record in the industry, brings a distinct sense of fashion to the company. A petite and lively redhead with a penchant for brands such as Lanvin and Chanel, Waterson wore a black turtleneck, jeans and heavy motorcycle boots during her recent visit here.
She has scrutinized Speedo top to bottom and has worked with consultants to help identify the brand’s key strengths.
“I look at the brand and I see so much that we could be,” Waterson said. “There is so much history to Speedo.”
Speedo North America reported wholesale sales last year of about $250 million, while retail sales of the brand worldwide topped $1 billion. Speedo is by far the largest U.S. athletic swim brand, with overall market share of about 50 percent, according to SportsScanInfo, a sporting goods market research company. The next closest competitor is Nike, which has 17 percent of the athletic swim market.
The brand long has been known for its swimwear, but in the past two years, it has sought to move beyond its core into activewear and innerwear with the Axcelerate Engineered by Speedo brand.
The Axcelerate activewear line, which bowed at retail last year, has been picked up by stores including Marshall Field’s, Nordstrom, Foley’s and Paragon Sports. For fall, the line is being expanded to include fleece items and warm-up pieces, Waterson noted.
“We see this as a very relevant category that is in need of a distinctive look and we think we can provide that,” she said. “The line is becoming more defined. There is a base of bodywear components that can be worn to the gym, as well as tank tops and layering looks that can be mixed with everyday apparel.”
On the technology front, Speedo last year introduced Endurance, a chlorine-resistant fabric made of a polyester and blend that also has UV protection. This is a key initiative for Speedo for 2006 and is used in the performance and racing categories. Another new technology is called XD Skin, which dries faster and has water-repellent features. This new proprietary fabric is being used in Speedo’s elite products this year in swimwear and triathlon apparel.
Growing accessories, particularly footwear, is another key focus. The footwear business is now a stand-alone division, and sales rose 35 percent to $28 million in 2004, Roger Williams, president of the Warnaco Swimwear Group, said on a call with analysts last year.
“We are broadening the footwear line to be not only casual, but technical, footwear,” Waterson said, noting that the line includes thong styles and water shoes, and boots will be introduced in 2007.
By having a presence at the Winter Games and introducing winter performance apparel, Speedo is looking to build on its strength as a brand for Olympic athletes. At the 2004 Athens Summer Games, Speedo-sponsored Olympic athletes including Michael Phelps, Natalie Coughlin and Amanda Beard were crowd favorites who helped the U.S. take home more than two dozen medals in the swim competitions, including 12 golds.
In Turin, Speedo is sponsoring luge and skeleton athletes, including Vonetta Flowers, Todd Hays, Chris Soule and Jean Prahm. The Fastskin FSII Ice Speed Suit the athletes wear builds on the aerodynamic technology Speedo used in its performance swimsuits at the 2004 Summer Games and in Sydney in 2000. They are designed to reduce friction drag by fitting like a second skin, Waterson said.
“The Winter Olympics are very important for us,” she said. “We spent a lot of time testing and developing these suits. People came to us to develop these suits because they wanted something for speed, and they know we specialize in speed in the water. They also wanted something that was stylish, and that not only performs technically, but also helps them feel great and look great while they do it.”
The new direction of Speedo will be more apparent to consumers because of a multimillion-dollar national marketing campaign kicking off next month that is designed to convey energy and emotion, Waterson said. The images were developed by KraftWorks and shot by Michael Thompson. They feature Beard in active poses and in products from footwear, sportswear and swim from Axcelerate, and also prominently feature the company’s boomerang logo.
The campaign will include outdoor advertisements on billboards, taxis and bus stops, as well as events and print advertising in magazines including Elle, Self, Lucky, W, Nylon and Surface. Speedo last year launched its first national ad campaign in six years, also featuring Beard, to showcase its new direction, but those ads were developed in-house.
“This campaign is to show that we are becoming a lifestyle brand,” said Waterson, adding that the company has never advertised before in directional publications such as Nylon. “We want this ad campaign to be one that is connecting more with image-leading consumers. We are looking to leverage the attributes of this brand to create a unique look and feel for Speedo.”