First Team Sports: A Fleet No. 2 In The Rollerblade Derby

It's spring, and Lycra-clad young athletes are out in force, Ultrawheeling across pavements everywhere. O.K., so the sport is really known as Rollerblading for the company that pioneered it, Rollerblade Inc. But that hasn't stopped First Team Sports Inc. from profiting handsomely from the fast-growing market for in-line roller skates.

The No.2 U.S. skatemaker is competing head-on with Rollerblade. True, Rollerblade's $110 million in revenues dwarfs those of First Team and the 30 other in-line skating competitors. But First Team CEO David G. Soderquist, 44, and Vice-President John J. Egart, 43, who founded the company in 1986, still see opportunity in Rollerblade's tracks.

So far, the former sporting-goods salesmen have been right. First Team's sales rose 41%, to $38.2 million in fiscal 1993, ended in February. Profits jumped 56%, to $3 million. As a result, First Team has skated to No.15 on BUSINESS WEEK's 1993 Hot Growth list.

To be sure, it hit a few bumps along the way. Some stockholders are still angry at Soderquist, Egart, and other executives for selling stock shortly before the company announced flat sales growth at the end of 1991. The executives insist they merely wanted to recoup some of their initial investment in First Team. Another problem: Rollerblade filed a complaint in February with the U.S. International Trade Commission against First Team and other competitors that import skate parts, alleging patent infringement.

Most analysts say First Team can easily settle its legal dispute with Rollerblade by giving its competitor a licensing fee or modifying its skate design. Neither would cause a big hit to earnings. Instead, the biggest challenge, they say, will be expanding First Team's market share in the face of Rollerblade's lead.With that in mind, the Mounds View (Minn.) company has signed up big names such as hockey star Wayne Gretzky to hawk its products. First Team is also moving overseas. It recently negotiated deals with distributors in Europe and Asia. "Five years from now, we should be virtually in every continent," boasts Egart.

One hitch in First Team's plans: To speed delivery to customers, it has begun shifting manufacturing from Taiwan to Minnesota. But the move is taking longer than expected, and the order backlog is growing. Still, the two executives reckon that a few scraped knees may be what it takes to keep First Team rolling.

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