The athletic shoe market is no longer the strict province of the professional athlete. Weekend athletes and those who do not participate in any sports wear athletic shoes. Nor have the athletic shoes remained all-purpose: there are shoes for walking, running (on grass and hard surfaces), bicycling, tennis and so on. The variety of shoes available and the fact that athletic shoes are now considered acceptable leisure attire means that the industry has grown tremendously during the 1980s and early 1990s. Today, the industry as a whole had sales in excess of $10.1 billion in 1994, with 1995 sales expected to approach $11.5 billion. This research considers the recent performance of one American shoe manufacturer, LA Gear, and whether this company represents a good investment opportunity.
L.A. Gear, headquartered in Santa Monica, California, is the fourth-largest branded manufacturer of athletic and leisure footwear company in the United States, with a 5 percent market share in 1993. L.A. Gear designs, develops, and markets a broad range of moderately priced quality athletic and casual lifestyle footwear for adults and children, both domestically and internationally, with most of its footwear styles selling below $65 retail. L.A. Gear sells its products to leading retailers, including Footlocker, Lady Footlocker, Athlete's Foot, Champs, Nordstrom, and Macy's. International revenue accounted for 28 percent of 1993 revenue. L.A. Gear has recently begun a strategy of acquiring its international distributors.
In September 1991, $100 million of new capital was brought into L.A. Gear from Trefoil Capital Investors, L.P., an investment fund managed by Shamrock Holdings, Inc. The new investment group quickly took over control of the company and installed a new management team led by Stanley Gold, L.A. Gear's chairman and CEO, as well as president of Shamrock Holdings, and Mark Goldston, L.A. Gear's president and COO. Shamrock ...