Fox Factory, which makes some of the best suspension forks and shocks, has recently announced, like almost all the major brands, a sharp decline in sales in its cycling-related businesses. Blaming higher levels of inventory across various channels – aka too much stock and nobody buying. Fox announced sales had been expected to hit a "low water mark" in the third quarter, but the results were $25 million lower than the company expected and saw a drop in net sales of 58 percent from $173.9 million last year to $72 million this year.
Fox Factory seems to be covering all its bases by announcing the $572 million purchase of baseball brand Marucci, along with Marucci’s parent company, Wheelhouse Holdings, Inc., from Compass Diversified. Marucci owns Lizard Skins, which started as a bar tape company in Utah almost over 30 years ago, but now has an extensive range of mountain bike grips, gloves and protective frame wraps as well as selling grip tape for bats and racquets.
Compass Diversified is a holding company that is well known for making short-term investments in sports brands, and it purchased Marucci for $200 million in April 2020. Marucci's main business is selling baseball and softball equipment, including wooden and metal bats, under the Marucci and Victus brands. They acquired Lizard Skins in October 2021 for an undisclosed amount, Lizard Skins also owns Oury Grips.
Fox has made many purchases related to its vehicle business in recent years, and this new deal is the brand's first acquisition of a sports brand since it acquired Marzocchi MTB suspension in 2015. In addition to moving into a new sports category, the Marucci purchase could also see Fox diversify its offering to the direct consumer market, with the additional range of baseball and softball goods now under the brand's umbrella. Previously, around 47 percent of Fox's revenue across all its many divisions has been to original equipment manufacturers (in MTB's case parts for complete bikes), and with OEMs potentially cutting back production, direct to consumer sales could be something Fox would be keen to develop.
So does an expansion of Fox's sports offerings mean more revenue for the brand and perhaps cheaper prices and better options for the person (mountain biker) on the street? At this stage, it’s hard to tell, but it's an eye-watering amount of money being thrown around from a cycling/motor sports brand in what has proven to be a struggling sector of late.
