UPDATE 1-Outdoor clothing makers seek growth as Europe stagnates
* $12 bln European market may see sales drop in first half
* Has seen growth rates of over 10 pct
* Brands like Hagloefs, Deuter benefit from new owners
* M&A activity seen continuing, interest high from VC
FRIEDRICHSHAFEN, Germany, July 11 (Reuters) - Makers of outdoor goods from ski jackets to walking boots are looking to the financial clout of big investors, overseas growth and fashionable new products as they battle a European slowdown.
The market for outdoor goods has expanded rapidly over the last decade, with growth rates often reaching 10 percent, as people spend more time in the hills and mountains to keep fit and get away from the stress of work.
The two biggest markets for outdoor goods are Europe, where the market is worth over $12 billion euros, according to figures from the European Outdoor Group (EOG), and the United States, worth $6.5 billion, according to the Leisure Trends Group.
Growth has been such that outdoor products make up around 20 percent of the total sporting goods market. While full of small specialists such as Hagloefs and Schoeffel, with sales around $100 million, the sector stretches up to VF Corp -owned The North Face, which had sales of $1.9 billion in 2012.
However, growth in the outdoor market is slowing in Europe, where walking up mountains or racing down them on skis has a long tradition, and sales may even fall slightly in the first half of 2013, Mark Held from the EOG said at the Outdoor trade fair in the southern German town of Friedrichshafen on Thursday.
"The outdoor phenomenon is still there though," Held said. "There is a sense of optimism for 2014 onwards."
Outdoor is the biggest area for German retailer Sport2000, accounting for a fifth of its 1.55 billion euro ($2 billion) sales. It said brands needed to work harder. "The industry is still lacking in real innovation. Product design must meet customers' needs better," said Managing Director Andreas Rolf.
Private-equity owned Jack Wolfskin saw sales stagnate at 351 million euros in 2012, compared with growth of almost 23 percent the previous year. A lack of investment in new products during its sale meant it lost ground, some experts said.
"This year, Jack Wolfskin has definitely impressed with a young, colourful collection," Rolf said.
Another brand coming out with brightly coloured collection is Sweden's Hagloefs, which saw sales increase 14 percent last year to 690 million crowns ($102 million).
It too recently gained a new owner in the shape of Asics and said the Japanese running shoe maker has helped in various ways, both in entering the Asian market and giving it access to gel technology for its hiking and trail running shoes.
"It was like being given a candy box and being told we could pick what we wanted," Hagloefs CEO Nicolas Warchalowski said.
Since the takeover, the percentage of sales it makes in Asia has doubled to 10 percent, while its proportion of footwear sales has also doubled to 14 percent.
"They've given us access to top sporting managers and now when we say we want to increase our footwear sales, people take us seriously," Warchalowski told Reuters.
Other brands at the fair said a new, bigger owner had made life easier. Deuter, for example, has been part of the Schwan-Stabilo group, more usually known for its pens, since 2006.
"The consumers didn't see a change, but for us, it meant financing became much much easier," Bernd Kullmann, former head of Deuter and now running Schwan-Stabilo's outdoor unit, said. "Before we had to have lots of discussion on whether we could pay the money back."
Despite lower growth, outdoor is still attracting interest.
German sportswear brand Puma (majority owned by Kering ) is dipping its toe into the market, with plans to bring out trail running shoes. Canada Goose Inc is seeking new investors to help it expand.
Recent deals in the sector include Ontario Teachers' Pension Plan's acquisition of a majority stake in Norwegian outdoor clothing brand Helly Hansen for about $350 million, Blackstone's buy of Jack Wolfskin for about $900 million and Adidas's acquisition of Five Ten for $25 million.
"Consolidation is inevitable, judging from the amount of calls I get from venture capital firms," EOG's Held said.
But such interest is not always welcome.
Peter Schoeffel, the seventh generation of Schoeffels to run the eponymous company, has a prepared rejection letter to send out to interested parties, whether they be private equity or overseas rivals looking to break into the European market.
"It's a market that's interesting for M&A because it's growing and because of the brands. But I'm not going to sell."