Having just wrapped up our 5th full season (it seems like just yesterday that we broke ground!); we are once again pleased with where we find ourselves! Five years is a major milestone in the life of any business. While by no means “established” or in any way safe from failure, at the end of 5 years you should have a pretty good idea as to whether the business is worth continuing. When we consider what we have accomplished and against what odds (bad weather, high water, rough local economy, etc.), it is apparent to both Diana and I that we should stay the course for the next 5 years. At the end of 10 years, if KRO is still around it will be as much a part of the Maine landscape as any other business. So, we are closing the first chapter and opening the second one!
This does not mean however that 2006 was without its problems. First and foremost is that the Kennebec River experienced a second straight year of chronic high water of near epic proportions! As we did in 2005, we were forced to cancel a number of guided trips due to flows in excess of 10,000 cfs. We also had a number of customers opt out of their scheduled trips (sometimes prematurely I feel) after checking the internet, hot-lines, etc. After hearing from many locals that 2005 was the highest flows in 25 years on the Kennebec, 2006 ended up even worse. We also suffered a lengthy hot spell that started at exactly the wrong time! After a great and early start, by early July we had experienced more 90-degree days than we had the entire previous summer. That the year went as well as it did is a miracle and a testimony that our strategy (create a brand for “quality” angling and tackle) is sound.
The high water did however have a somewhat unexpected impact on the river. Specifically, it seems to have moved a lot of fish around. We saw more salmon below Madison and more rainbows below Solon than anytime in the last 5 years and according to some locals, more than they can ever remember. With any luck, maybe these two species will take hold in the respective sections of river that have been previously managed for stocked browns. Salmon do quite well in Solon (as far as natural reproduction and health factors go) and with the Sandy River dam now removed, might they will be able to do well in Madison? As for the rainbows in Solon, while I am sure they have always dropped down from Bingham, maybe we got enough of a base this year to establish a self-sustaining population (they will receive better protection then in the past due to the ALO, 1-Fish, 16” regulations).
On the local fisheries front, things were pretty much stagnant. At the state level however we made some progress by getting the “Heritage Brook Trout” bill passed in the legislature. This bill prohibits the DIF&W from stocking over (with any species), or allowing live-fish-as-bait on, never stocked brook trout lakes and ponds. That the legislature saw fit to pass this bill is a good sign. That SAM had to submit it in the first place shows just how far we have to go. Splake (brook/lake trout hatchery hybrids) continue to show up in the Kennebec in disturbing numbers both above and below Wyman Lake due to an ill-advised stocking program in the lake itself. While the DIF&W has reduced splake stocking numbers, they are standing by their decision to introduce them into the system. Ditto for the bass below Wyman Dam, they are increasing and they are now here to stay. The worse news is that shiners showed up in our favorite FFO wild brook trout pond.
As for guiding, we served roughly 20% more trips than we did in 2005 making 2006 by far our best year yet. We also did considerably more trips in Bingham this year. In fact, guide Mike Butler is now guiding Bingham almost exclusively. Guide Todd Steven on the other hand spent the bulk of his time in Solon making him one of the most frequently employed guides (and on his own time; anglers) on that stretch of river. As for the fishing, it was in my opinion off; with the exception of what I felt was a phenomenal early spring. In fact, May arguably produced the best dry fly fishing of the season and very few customers took advantage of it! There were times when I experienced dry fly fishing as good as it gets without another angler in site. High water and warm water temperatures clearly had a negative impact on the rest of the season. Consider booking a May trip next year…
The state recently kicked off a program called the “Kennebec Initiative” which has the potential to draw some real attention to the resource. Headed up by George Smith (Sportsman’s Alliance of Maine), the project intents to look at protecting the river while maximizing its value to the regional economies. The group now has a full-time “Project Manager” and has scheduled their first series of meetings for late January. Part of the project would be an improved fishery (let’s cross our fingers!). For this to happen; the group will need the cooperation of the local anglers and the DIF&W. Based on historic resistance to “Quality Fishing Initiatives” on both sides, this will be the toughest hurdle. It is unclear at this time as to what if any involvement we will have in this project. We do not want our involvement is not a distraction.
Boat (Scott and Radisson) sales were off to the fastest start ever (we were within 1 unit of our total 2005 sales by June!), but fell flat during the summer and fall. In the end, “Marine Products” sales were slightly off again for the 3rd year in a row. As for kayaks, after losing Walden to bankruptcy last year we sat still and watched the industry. With kayaks now in Wal-Mart, Dick’s, etc., and a noticeable decline in the market, we are glad we did nothing hasty. If we do anything at all in this regard it will be to add a high-end fiberglass line of kayaks. We never intended to be a boat dealer – we opened a “fly shop”. As such, anything we do is considered “gravy”.
On a personal note, we lost the shop Scott Hudson Bay (21’ Square Stern) to a car accident in downtown Bingham. When the smoke cleared we replaced it with a new one that was custom built for us with first-ever built-in center seat storage, a few design “tweaks”, and a slate-blue exterior with beige (spackled with black) interior for Diana! Anyone who is considering a Hudson Bay should take a look at our new shop boat.
As far as our core business, retail sales were up approximately 20% after being flat last year. In addition there were some shifts and trends that are worth noting. First is that fly and terminal tackle (leaders, tippet, etc.) sales were clearly off. I believe that this was a by-product of less than ideal fishing conditions – the river traffic was noticeably off. We also continued to see a shift toward mid and high priced tackle. In fact, while low priced tackle (primarily Redington) sales declined for the second straight year, we had our best season for true mid-price tackle ever (a historically weak area for KRO). We also noted a shift away from Redington and toward Scott, Sage and Winston in an area that Redington has traditionally dominated ($150-$200 rods). I attribute this to the addition of Scott (V2) and improved offerings by both Sage (Launch) and Winston (Ascent).
On the subject of rods, while Sage sales were down for the first time in 5 years, Winston sales were phenomenal and just 1 unit short of double our best year to date! Likewise, while we are still trying to establish ourselves as a Scott dealer, in only our second year with the product, we more than doubled our Scott sales over the first year. It is also interesting to note that our second year Scott sales were higher than our second year Winston sales. I assume that this is as much to due with the maturity of the business as it is the strength of the product. Regardless, the decision to add Scott to an already strong fly rod offering appears to have been a sound one – they can clearly stand on their own merits! To be able to offer the “Big-3” fly rods is something that I never dreamed would be possible.
As for reels, 2006 was all about “Ross”. Having grown in regard to sales each of the first 4 years we carried them, Ross sales went up 75% from 2005 in 2006! While the Evolution remained strong, CLA and Rhythm sales really picked up. When you consider what Ross has done for 2007 (the Momentum and the 3 “Worldwide” reels), it is fair to assume that Ross will do even better next year. In fact, I assume that the 3 new Ross Worldwide reels (Flystart, Flycast, and Flywater) will take a huge chunk out of our historically strong Redington reel market next year. In just our second year with Waterworks, they have clearly become our #2 reel. However, we are doing it with high-end product (Litespeed’s and ULA’s) more than the low and mid priced reels? Galvan, Bauer, Tibor and Abel sales were all somewhat flat. I assume that this has to do with a lack of “new” products. That will certainly change.
Moving on to softgoods, wader sales were what they always are. We see very little fluctuation from one year to the next in this regard? Boot sales were up roughly 15%. In this regard, both Simms and Korkers sales were strong. The new Korkers line-up and the Simms G3 should be strong in 2007. We had the best vest/pack sales ever due to in my opinion, a “merchandising” decision we made to move our vests off of cascade-style hangers and onto face-out style hangers located on an outside wall. We saw similar results with rain jackets and for the same reason – we moved them off the cloths rack and onto the wall. Chest/Tech packs continue to be a strong seller with Fishpond outpacing William & Joseph but both doing well. Another change was in regards to pants (mostly zip-leg) and shirts (tech), which are both starting to pay dividends. This reinforces the idea that we are in fact a “destination” shop as much or more than we are a “local retail” shop.
The biggest change in regard to our retail offering is in regard to fly tying. Having taken up better than 30% of our floor space while generating just 5% of our revenue for the first 3 years, something had to give. When faced with a need for more wall space for items that do sell, we decided to cut our fly tying inventory in half rather than build a costly addition. We gained the space we needed and hardly skipped a beat (tying sales did not go down?). We did the same thing this month and expect similar results – no real change… We now focus on what sells best by carrying a full line of vices, tools, hooks, thread, tinsels, wire, beads, and necks, along with a targeted line of strong selling fur (bucktail, rabbit, etc.), feather (Mallard, CDC, etc.), and dubbing (NE colors). The new strategy looks better, is far easier to manage, frees up a lot of space, and in fact allows us to focus on what we do best (fly fishing tackle, gear and clothing) while still addressing the primary needs of our local fly tyers.
As for the shop building itself, we did not make any changes and don’t expect to for a couple of years. Beyond some new trim out front and another coat of paint on the deck, we don’t anticipate any real changes in the near future. Likewise, after adding a major fly rod (Scott) and fly reel (Waterworks) line last year, we did not add anything new this year and don’t plan to in the immediate future. With Sage, Winston, Scott and Redington, we have what most shop owners would call a “dream” fly rod line-up! The same could be said for reels of which we now carry Ross, Waterworks, Tibor, Abel, Galvan and Bauer. Add to that Simms, Fishpond, William & Joseph, Outcast, Scientific Anglers (Mastery Dealer), RIO, Brodin, etc., and I believe that it is fair to say that “product” will not be the limiting factor in regard to the business… Now if we could just get some cooperation from Mother Nature!
Lastly, on the “Goodwill” end of things we had a very good year. Through the generosity of our vendors, reps, customers, shop help, forum users, DDAS, and a very understanding wife, we were able to raise money and provide free products to a number of good causes ranging from Kathy Scott’s youth fly fishing program in Fairfield, FFIM’s Conservation Fund, TU’s Kids Camp, Breast Cancer Research, Casting for Recovery program, childhood cancer research, MSAD #4 youth programs, etc. We also were able to make a few informal donations to specific local causes that while without the fanfare of larger and more visible “fund raisers” feels better than anything else we are able to do.
Sincerely and thanks for your continued support!
Bob & Diana Mallard – Owners / Kennebec River Outfitters