DETROIT—Xenith L.L.C. was lined up for a record revenue hike in 2020 before the coronavirus pandemic blitzed its business. Now it's trimming and pivoting its business to cross the goal line.
The Detroit-based football equipment maker was forced to lay off between 30 percent and 40 percent of its staff in recent weeks and draw up another new business model in its hunt for profitability.
"There's 16 states that aren't playing high school football this fall, our home state of Michigan being one of them," CEO Ryan Sullivan told Crain's. "Not only has participation been heavily impacted by COVID, but also budgets. Football equipment as a budget line item is not the same priority that it has been in years past."
Sullivan said revenue at the Dan Gilbert-owned company is expected to be down 10-30 percent this year. Prior to the pandemic in January, the company was projecting sales to be up 35 percent year-over-year. The company does not disclose revenue. Crowdsourcing data site Owler estimated it to be $5 million in 2019.
"Think about what a swing that has been for us," Sullivan said.
Xenith made its name by designing helmets with shock-absorbing technology meant to minimize concussions. Its helmets have been worn by a few dozen players at the NFL and NCAA levels. Its Shadow XR helmet debuted in January as its most successful product launch to date. It also makes shoulder pads and other equipment.
The professional and college markets are dominated by behemoths Riddell Sports Group and Schutt Sports. Xenith's primary customers are youth football leagues, including in the Detroit Public Schools Community District. For the most part, those leagues are being sidelined due to COVID-19.
Although the pandemic has plunged Xenith deeper into the red, it has been able to sustain the blow thanks to the deep pockets of its owner. Gilbert, who bought a majority share of Xenith and moved it to Detroit in 2015, recently infused an undisclosed sum of money into the company.
"We've made all the necessary changes to our business for the foreseeable future," Sullivan said. "We have support from our ownership group for this new business model that we have going forward, so we're very confident in the outlook of the business model."