Meet the New Black Diamond: Winter Product Count Reduced — CEO Metcalf to Step Down

A renamed ski line, CEO Peter Metcalf to step down “no later than June 2015,” and an approximately “25% reduction” in the fall-winter collection. Those are some of the changes at Black Diamond Equipment we’ve learned are coming soon due to what they call a “strategic pivot.”

Is all this just B-to-B blather that’s irrelevant to cold powder snow, or something you WildSnow readers can use as backcountry skiers? We think the latter, as we know you do use gear and use it hard, and need to know what the players in the “outdoor equipment space” are up to. Forthwith:

A few days ago I had the golden opportunity for a formal sitdown with four of the main guys responsible for Black Diamond’s ski hardgoods “going forward.” The discussion ranged from marketing to design. Soon after, I listened to BD’s 2nd quarter financial conference call.

Behind the scenes, WildSnow does tend to deal with marketing people more than any other job description. So I was glad to find during our meeting that BD will be running two marketing folks, one for hardgoods and one for softgoods. That might be a little too B-to-B for some of you, but what makes it relevant to blogging (and overall gear infos) is in the case of the ski line we’ll have a go-to person within BD who is focused on the ski line. Combine that with our contacts in Black Diamond’s outside PR agency, and we’ll have more story than we’d ever need, which we’ll of course make every effort to de-spin.

So, in terms of parsing I have some good info that goes beyond the mundane.

In the skiing part of Black Diamond, it was said in our meeting that they’d indeed be reducing the number of ski models. How significant this will be is unknown. During yesterday’s 2nd quarter earnings conference call it was said they’d be doing a 25% “SKU rationalization” of their hardgoods line, weighted to their fall-winter collection.

During the earnings call, CEO Peter Metcalf was asked pointblank by an analyst to be more specific about how this affected the ski line, and he was not forthcoming. So we’ll have to keep reading between the lines.

Bear in mind that each individual SKU (“stock keeping unit”) is unique to every item sold, e.g., every length of a given ski model. Thus, simply eliminating a couple of ski models out of what is possibly an excessively complex variety can result in significant reduction of SKUs — do that with say a few harnesses and ice gear, and your “25%” reduction is complete.

Word at our meeting was they’ll keep the carbon ski versions, and for their more conventional builds they’ll concentrate on ski designs that work well for what they’ll be calling the “boundary,” which in the BD marketing glossary is defined as the interface of ski resorts with the backcountry, the zone that their research indicates is where most backcountry skiing in North America happens. (If you have an issue with this metric, I agree. For example consider the 10th Mountain Huts in Colorado have around 55,000 user nights a year — and consider the Canadian human powered touring lodges/huts. On the other hand consider places such as Whistler and Jackson, feeding skiers to the sidecountry like moving people through the ticket gate to a rock concert.)

My take on this: we’ll be seeing skis that indeed are designed as a quiver of one (or two), but more importantly, the often confusing array of BD skis will become a simpler and tighter line. Yes, it’ll be called the “Boundary Series.”

During our meeting I brought up the fact that from what I’ve seen in Europe most “backcountry skiing” is actually _not_ “boundary” skiing. In other words, the market in Europe for specialized “human powered” ski touring gear will continue to be larger than ours. More, as our North American infrastructure for human powered skiing is developed (huts, lodges, guidebooks, guides, etc.) we will see significant growth that has little to do with ski lifts. This especially true in view of the fact that expanding or adding ski resorts in North America is about as easy as doing a strip mining startup.

Yes, Black Diamond is indeed a global brand, especially with their climbing gear, but as far as I know their ski gear has only taken a tiny share of the European market, especially their boots. So their choice was either try to compete in the “pure” ski touring segment, or focus on what’s being done here at home on the “boundary” and translate that to their European marketing as best as possible. Obviously they’re now doing the latter. To clarify, at our meeting the boys did say the ski line would be “less resort oriented,” which after discussion I took to mean they’d indeed be backing off from apparently trying to be an alpine ski company — a goal I always thought was a bit misguided — while at the same time finding a special place (sidecountry) with a need they can fill.

Overall, I think this is a decent strategy for business (at least in the short term) but will have mixed results in how it serves ski touring and human powered backcountry skiing. Clearly, if Black Diamond has chosen to simplify their ski line, doing so requires focus. So it’s basically a question of picking a valid focus and going for it. Sidecountry skiing sounds fine by me and perhaps it’s a niche that could be filled. If that’s strong, I’m sure specialized touring skis will follow.

In terms of you reading this, this all likely means Black won’t be focusing on making cutting-edge touring skis, but on the other hand they’ll be working hard on versatile downhill ski performance. If you’re a sidecountry skier or focus on “freeride touring” they’ll thus have viable and perhaps even exciting choices for you. (And as mentioned elsewhere herein, they claim they’ll continue with their carbon skis, of which we feel the Convert model is a winner.)

To me, Black Diamond’s “boundary” scheme is more problematic when it comes to ski boots. Factor MX is an excellent beef boot in a mature state of design. From what I gathered during our meeting it will be the Boundary Line’s flagship shoe. Yet the trend in our opinion is that even sidecountry skiers are finding they don’t need the biggest boot out there. As they do more and more walking, they often discover that a slight change in technique and attitude results in increased fun on boots that walk easier and lighter, while still doing fine inside resort boundaries. *(This is not always the case, of course, see note at end of this article.)

It did sound like they’ll be keeping the Quadrant ski boot model in the pipeline through this coming winter. While apparently somewhat of an unintended consequence of the mold making and design process, Quadrant _is_ a wider boot, something greatly appreciated by skiers with wide feet who struggle fitting the commonly somewhat to quite narrow offerings from other companies. Thus, Quadrant is more than “just another AT boot.”

Nonetheless, add the fact that in SKU rationalization an easy target is to eliminate footwear, as each model has multiple SKUs due to the size run, as well as male/female versions. Thus, we wouldn’t be surprised by winter 2016/1017 to see just one BD ski boot model (in male/female) on the market. Eventually, even that one boot might be a victim of SKU rationalization — it is incredibly expensive to develop a ski boot model all the way to retail.

To elaborate, as with skis, boot models have a lifespan. As technology changes across the industry, a given model will begin to look dated and perhaps fail to compare favorably with more current models. To remedy that, you have to come up with a new model and that often requires making another full set of molds (one for each size). Skis, on the other hand, can use the same molds and simply get a revamp of materials and graphics, validly creating a new model.

Boot molds are expensive. Rule of thumb is a new boot model costs $1,000,000 just for the molds (one mold for each shell size), not to mention design and development. That million has to be made back, along with profit, within a finite period. In other words, you have to sell quite a few boots. We will thus not be surprised if the Quadrant goes away. And again, depending on the success of this “Boundary” product line story we feel the Factor could eventually fade away as well due to the alpine boot companies entering the fray in an ever bigger way.

My advice to you shoppers? Don’t worry about Black Diamond boots being orphaned. If you like the Factor or Quadrant, enjoy. Black Diamond customer service most certainly has your back and will keep your boots running as long as is reasonable. If the boots do fade away in a few years, by then the choice in AT boots from other companies will be a ridiculous bounty you’ll probably want to sample anyway. In fact, we’re already there.

Continuing on to the overall culture of Black Diamond Equipment as they continue their “strategic pivot.” Firstly, it was obvious from their 2nd quarter conference call that their apparel campaign will be firing all guns, and is poised to be quite profitable. The success of their clothing line is in our view mostly due to Black Diamond’s brand equity, but their clothing does have appeal with a growing emphasis on technical innovation as well as quick response to fit and tailoring for the type of person who tends to be their customer (e.g., a “trimmer, more european” fit going forward).

Secondly in terms of culture, Black Diamond acquired the POC helmet company some time ago. With the addition of a cycling line as well as constant innovation in their helmets (and attention to styling), POC is a _major_ player in keeping Black Diamond profitable. In my view, this means that to a cold-hearted “SKU rationalization” something like a ski boot development project might possibly be less attractive than a new helmet style. Yes, the two business are segmented to some degree — I make this point more in a cultural sense, in terms of management decisions in the future.

And last but not least, Black Diamond CEO Peter Metcalf. More than 30 years ago in 1989, Peter led another “strategic pivot” that rose Black Diamond Equipment from the ashes of Chouinard Equipment. Along with his management team and a vast variety of passionate employees, he built BD to a 100 million dollar company. His leadership has been critical, and he’s been a very public face for the company. But we’ve all expected for some time now that Peter was close to “retiring.” That’s probably the wrong terminology for what’s going on, as Peter is a workaholic and he’s not going away. But according to his statement and BD press release he’s hired respected executive Zeena Freeman. Metcalf will step down and Freeman will become CEO “no later than June 30, 2015.”

Beyond all the yammering about SKUs and where the Black Diamond ski line is going, in terms of what we’ll see in the future I think this leadership change is the biggie. Metcalf is core. He’s a pioneer Alaskan alpinist and is incredibly passionate about the outdoor industry. While he claims Freeman is an outdoors person (we have no doubt, and web research does indicate she does things such as Himalayan trekking), there is no other Peter Metcalf. He’s been a friend and even a mentor of ours for years. Truly, we are grieved to see him go, and while Freeman will probably do good for Black Diamond as a business, their corporate culture is led by the top and not having a core alpinist as a CEO will have to be different.

Metcalf does claim he will remain in some sort of role with BD. He’s not specific about it, but said in the earnings call that he’d be “championing issues of great importance…advocacy, activism, public policy.” Here at WildSnow we’ve always felt Peter could do a lot of good if he got more heavily into politics — and that he’d be excellent in the public leadership arena. Just thinking out loud, but hey, our crystal ball has been accurate in the past.

Meanwhile, just like many of you readers, we’re fans of Black Diamond. Their continued support of WildSnow is one of the main reasons for our success as a professional blogging endeavor. Years ago, they had faith in my career as an author to the extent of writing a large check for a book tour — something they were not exactly known for at the time. Presently, they’re a customer for our banner advertising and have a nice looking campaign scheduled to begin display in September. Oh, and lest we forget, their gear has ensured mine and my family’s lives countless times during alpine adventures. We are also fans of doing business in a sustainable way — environmentally, culturally and financially. Until shown otherwise, we’re confident Peter Metcalf, Zeena Freeman and all of BD are what it takes to shoot for exceptional performance in those areas, and they’ll continue to be a valued partner for all of us, WildSnow readers as well as bloggers, as we go to the wild and receive the bounty. Thanks BD and we wish you the best with your “strategic pivot!”

Previous post about recent Black Diamond business issues.

Notes:
*Brief theory on why skiers tend to want beefier boots within resorts: In my view, main reason (beyond how good 4 buckles look while having a beer) is simply that the pace of the day is faster when you’re riding lifts, so you tend to want more boot and ski for the kind of performance you trend to (not to mention shoes designed for alpine step-in bindings). Adding to that, on a physiological level, skiing asks a lot from the small and numerous muscles in your feet. A couple of human powered runs in the backcountry or sidecountry don’t fatigue those muscles. Multiple laps in the resort quickly wear out your “micro muscles” and you feel the need for more boot to compensate, that is unless you’ve trained yourself in a style of skiing that works for more vert in softer boots.

Also clarified in our meeting: They claimed Jetforce avalanche airbag project is full speed ahead, with “limited retail” beginning this fall. When I asked for clarification, they said the way this works is as a retail customer you need to get on a waiting list at your favorite retailer. It wasn’t clear how the number of packs being made would balance with demand. Should be interesting. But seriously, if you’re an early adopter and want a fan backpack, get on the list!

Oh, and more news about Jetforce development. It was said that while the backpack worked well in real-world testing, the TUV certification process needed more air pressure from the fan. Luckily a new hire on the Jetforce team just happened to have a Masters degree in aerodynamics. The fan needed more pressure? Done. To say we’re looking forward to the retail launch of Jetforce is an understatement. Fascinating in so many ways. Disruptive to the business, as well as a possible paradigm shift in avalanche safety. Who said writing isn’t fun?!