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Volume 21 No. 31
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Expansion helping Outerstuff to grow into adult market

Founder/CEO Sol Werdiger and executive vice president Stephen Werdiger operate Outerstuff from the Garment District.
Photos by: TERRY LEFTON / STAFF (2)
Sol Werdiger, founder and CEO of youth licensed sports apparel manufacturer Outerstuff, has a sheaf of data he’ll throw at any Silicon Valley executives who think their business is complex.

The vagaries of fusion technology or keeping up with Moore’s Law? Child’s play. From the heart of New York City’s Garment District, Werdiger passionately cites statistics supporting his contention that the sports licensed apparel business is more intricate and demanding than building the next million-dollar app.

“We have 600,000 SKUs in our NFL business alone,” said Werdiger, with a tone of disbelief at the statement. “At any given moment, we carry 4 or 5 million blanks [apparel without printing], and last year, we brought in and shipped more than 38 million garments.’’

KEY EXECUTIVES:
SOL WERDIGER: founder and CEO
JEFF MILLER: national sales head
STEPHEN WERDIGER: executive vice president
 SAM MEYER: CFO

KEY LICENSES:
MLB, MLS, NBA, NFL, NHL, U.S. Olympic Committee, more than 150 colleges/universities

KEY RETAILERS:
Almost any sports specialty, mass merch or sporting goods store.

Werdiger’s numbers give an indication of the scale required in a business where escalating rights fees and a soft retail landscape have many looking for a new model. The largest athletic footwear companies justify paying large league licensing fees as marketing expenses. For those solely in the business of selling licensed sports apparel, it is all about finding scale. So, while Outerstuff has kids/youth master licenses with every big U.S. stick-and-ball sports league, more than 150 colleges, and the U.S. Olympic Committee, the 33-year-old company is seeking a larger presence across the licensed sports apparel landscape.

“League deals are getting very costly and we don’t sell shoes, so we have to make money serving the apparel market,” said Werdiger, one of the few licensed product companies to sell through all classes of retail distribution. “We identified a great niche in kids. Now that we’ve aggregated all of the youth rights, obviously the next logical step would be for us to go and bid for the adult rights. With the complexities in sizing that we have in kids, that should be easy.”

From Kids to Adults

Outerstuff started in 1983 as a manufacturer of children’s outerwear. Within a few years, it was making licensed jackets as a supplier for Starter, a pioneer in the 1980s and 1990s licensing boom.

Outerstuff got its first league license in 1986 for MLB jackets, and then began to transform from an outerwear manufacturer to one exploiting the youth market. At the time, the youth business was around a tenth the size of the adult licensed sports apparel market. Outerwear, including pricey jackets, was a big piece. Today, licensed jackets are just 5 percent of Outerstuff’s business, while youth apparel is more than 25 percent the size of the adult market.

Aside from a well-earned reputation for solid service and supply-chain expertise across a disparate base of retailers, recent additions to Outerstuff’s domestic production capabilities and an expanded team of designers, which totals more than 100 in New York, are helping Outerstuff grow into adult sizing. Its U.S Olympic Committee rights now include adult apparel, which is sold in retailers including Gap and Old Navy, which rarely sells sports licensed apparel. Some of Outerstuff’s collegiate rights also include adult togs.

Outerstuff has kids licenses across top U.S. leagues
While total revenue of the company could not be determined, an investment by the Blackstone Group two years ago will help provide the means for Outerstuff’s next moves. The NFL also has an investment in the company.

Outerstuff is also looking to complement its strength in licensed sports apparel with a branded play. It recently took a license for the 92-year-old Umbro soccer brand, owned by Iconix Brand Group. Outerstuff will sell Umbro-logoed men’s, women’s and youth apparel beginning in January. Werdiger thinks it could be a $30 million wholesale business in its initial year and says he’ll “do whatever we can to get that brand on the field again.”

Outerstuff has already signed two soccer pros to back Umbro’s relaunch: Mix Diskerud of the MLS NYCFC and the NWSL Washington Spirit’s Cheyna Williams.

Longtime MLB jersey rights holder Majestic is up for sale by its parent, VF, and Werdiger said Outerstuff is “aggressively going after” the portion of VF’s business sold through mid-tier and mass retail channels. That would allow Outerstuff the rights to make and sell sports apparel through these mass merchandise and big box stores. An athletic footwear brand, likely Nike or Under Armour, is expected to buy VF’s remaining “upstairs” retail rights.

At the top of the licensed-sports apparel market, elite sports properties are selling deals based more on the value of TV exposure than on what their apparel rights are worth at retail. If and when the top athletic footwear brands no longer find value in that arrangement, Outerstuff is their logical successor.

“There are two parts of this business today,” Werdiger said. “One is like renting billboards. The other is servicing retailers by building scale and providing the level of service any big league needs. Similar to what Fanatics has been doing in building and aggregating e-commerce rights, we’re looking to expand and protect the traditional retail channel. [Fanatics] can max out e-commerce; we’ll be happy to be the sports licensee that’s maxing out the brick-and-mortar licensed sports apparel business.”